Kilgore v. Wells Fargo Home Mortgage et al

Filing 58

ORDER Granting Motion to Dismiss; ORDER Dismissing Action, signed by District Judge Anthony W. Ishii on 5/23/13. CASE CLOSED. (Verduzco, M)

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IN THE UNITED STATES DISTRICT COURT FOR THE
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EASTERN DISTRICT OF CALIFORNIA
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MARSHA KILGORE,

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Plaintiff,
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v.
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WELLS FARGO HOME MORTGAGE, )
REGIONAL TRUSTEE SERVICES
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CORPORATION, EMMITT LEWIS
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FRED LACKER,
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Defendants.
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____________________________________)

1:12-CV- 899 AWI SMS
ORDER GRANTING MOTION TO
DISMISS
ORDER DISMISSING ACTION
(Document #39)

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BACKGROUND
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On May 14, 2012, Plaintiff filed a complaint for damages in the Superior Court for the
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State of California, County of Fresno. The complaint concerns a loan and deed of trust against
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property located at 728 East Magill Avenue, Fresno, California 93710 (“the Property). Because
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the complaint raised causes of action brought under federal law, Defendant Wells Fargo Home
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Mortgage (“Defendant Wells Fargo”) removed the action to this court. The court dismissed the
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first amended complaint, and Plaintiff filed a second amended complaint. Defendant Wells
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Fargo then moved to dismiss the second amended complaint. Plaintiff has not opposed
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Defendant’s motion.
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LEGAL STANDARD
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Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the
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plaintiff’s “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A
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dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the

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absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside

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Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th

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Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all of the complaint’s material

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allegations of fact are taken as true, and the facts are construed in the light most favorable to the

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non-moving party. Marceau v. Balckfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008);

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Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The court must also assume that general

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allegations embrace the necessary, specific facts to support the claim. Smith v. Pacific Prop. and

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Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004). However, while such facts may provide the

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framework of a complaint, legal conclusions are not accepted as true and “[t]hreadbare recitals of

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elements of a cause of action, supported by mere conclusory statements, do not suffice.”

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Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); see also Warren v. Fox Family Worldwide,

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Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). Thus, “a complaint must contain sufficient factual

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matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 129 S.Ct. at

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1949. “A claim has facial plausibility when the plaintiff pleads factual content that allows the

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court draw the reasonable inference that the defendant is liable for the misconduct alleged.”

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Iqbal, 129 S.Ct. at 1949.

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DISCUSSION

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The second amended complaint’s facts allege fraud surrounding the original loan

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transaction in 2006 and Defendants’ alleged failure to honor Plaintiff’s notice of rescission.

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Plaintiff alleges that Defendants Emmit Lewis and Fred Lacker, along with other Defendants,

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failed to provide Plaintiff with material disclosures required by the Truth in Lending Act

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(“TILA”) when “explaining the pros and cons” of adjustable rate mortgages in language Plaintiff

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could comprehend, failing to advise Plaintiff to compare similar loan products, and failing to

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offer other loan alternatives that might be more advantageous to Plaintiff. In the second amended

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complaint, Plaintiff alleges that Defendants Emmit Lewis and Fred Lacker, along with other

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Defendants, provided Plaintiff with misleading information to create a windfall in violation of

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the Real Estate Settlement Procedures Act (“RESPA”). Plaintiff also alleges Defendant failed to
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accept her notice of recision. Finally, the second amended complaint alleges numerous counts of

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fraud in violation of California law concerning the events surrounding Plaintiff’s agreement to

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the loan and Plaintiffs attempts in 2006 and 2007 to rescind the loan or seek a modification.

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Defendant Wells Fargo contends that Plaintiff’s TILA, RESPA, a fraud claims are barred

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by the statute of limitations.

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of limitations period in which an action for damages may be filed under TILA. See 15 U.S.C. §

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1640(e); Beach v. Olwen Federal Bank, 523 U.S. 410, 412 (1998). A RESPA claim brought

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under 12 U.S.C. § 2605 is subject to a three year statute of limitations period and a RESPA claim

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brought under 12 U.S.C. § 2607 and § 2608 is subject to a one year statute of limitations.

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As explained in the court’s prior orders, there is a one-year statute

Plaintiff’s remaining claims allege fraud and misrepresentation under California law.

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“The elements of fraud, which gives rise to the tort action for deceit, are (a) misrepresentation

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(false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c)

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intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.”

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Small v. Fritz Companies, Inc., 30 Cal.4th 167, 173 (2003); Lazar v. Superior Court, 12 Cal.4th

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631, 638 (1996). The statute of limitations in California for fraud is three years. Cal. Civ. Pro.

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Code § 338; Solomon v. North American Life and Cas. Ins. Co., 151 F.3d 1132, 1137-38 (9th Cir.

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1998); General Bedding Corp. v. Echevarria, 947 F.2d 1395, 1397 (9th Cir. 1991).

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According to the second amended complaint, Defendants made false statements to

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Plaintiff that caused her to refinance a loan and sign a deed of trust against the Property in 2006.

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The second amended complaint alleges the loan application was fabricated, listed the value of her

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house as higher than it was worth, and inflated Plaintiff’s income.

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never signed any loan application documents. The second amended complaint alleges that the

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day she signed loan papers, Plaintiff was very ill, but told she had to sign the documents. The

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second amended complaint then explains Plaintiff’s repeated attempts to rescind the loan the day

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after she signed the documents in 2006. The second amended complaint alleges Plaintiff again

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tried to cancel in 2007 and then began attempting to unsuccessfully refinance her loan. The

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second amended complaint alleges that from 2007 to 2008 Plaintiff was going through breast

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cancer reconstruction, and Plaintiff was generally too ill or too heavily medicated to deal with the
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Plaintiff alleges that she

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loan. The second amended complaint makes allegations concerning equitable tolling based on

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Plaintiff’s medical history.

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The complaint alleges Plaintiff was ill at the time the loan was signed in 2006 and

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completely unable to litigate matters about the loan from 2007 to 2008. In general, a plaintiff

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that seeks equitable tolling must establish two elements: (1) that she has been pursuing her rights

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diligently, and (2) that some extraordinary circumstance stood in her way. Pace v. DiGuglielmo,

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544 U.S. 408, 418 (2005). The doctrine of equitable tolling is to be applied sparingly. Scholar v.

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Pac. Bell, 963 F.2d 264, 267-67 (9th Cir. 1992). It would appear Plaintiff’s cancer and cancer

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treatments were an extraordinary circumstance outside her control.

However, assuming

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Plaintiff’s illness prevented her from litigating this action until the end of 2008, this action was

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not filed until four years later, in 2012.

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The court may also may apply “equitable tolling in situations where, despite all due

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diligence, the party invoking equitable tolling is unable to obtain vital information bearing on the

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existence of the claim.” Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1045-46

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(9th Cir. 2011). In this action, Plaintiff knew the basic facts of Defendants’ alleged fraud when

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they convinced Plaintiff to sign the loan documents and Defendants’ alleged failure honor

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Plaintiff’s notice to rescind in 2006. While Plaintiff continued to obtain additional evidence

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confirming that there may have been fraud surrounding the loan until 2008, Plaintiff knew the

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basic facts supporting her claims far earlier. Even if the court were to not start Plaintiff’s statute

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of limitations until 2008, this action was not filed until 2012.

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This action is barred by the statute of limitations. Even if the court were to find several

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years of equitable tolling appropriate, Plaintiff’s claims concerning the original loan transaction

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and the rescission are still barred by the statute of limitations. As Plaintiff has already been

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allowed to amend the complaint once to allege equitable tolling, no further leave to amend will

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be given.

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//

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ORDER

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Accordingly, the court ORDERS that:

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The motion to dismiss is GRANTED; and

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The complaint is DISMISSED;

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All pending motions are denied as moot; and

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The Clerk of the Court is DIRECTED to close this action.

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IT IS SO ORDERED.

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Dated:
9h0d30

May 23, 2013
SENIOR DISTRICT JUDGE

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