Miller v. GMAC Mortgage, LLC et al
Filing
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ORDER signed by Judge Morrison C. England, Jr on 4/21/11 GRANTING 10 and 12 Motions to Dismiss with leave to amend, except pltf's sixth cause of action is DISMISSED without leave to amend as to dft Quicken; amended complaint due within 20 days. (Manzer, C)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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MARK MILLER,
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Plaintiff,
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No. 2:11-cv-00257-MCE-DAD
MEMORANDUM AND ORDER
v.
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GMAC MORTGAGE, LLC; QUICKEN
LOANS INCORPORATED; MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.; and DOES 1 through 50,
inclusive,
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Defendants.
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----oo0oo----
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Through this action, Plaintiff Mark Miller (“Plaintiff”)
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seeks redress for the alleged deceit and negligence of Defendants
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GMAC Mortgage, LLC (“GMAC”), Quicken Loans Inc. (“Quicken”), and
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Mortgage Electronic Registration Systems, Inc. (“MERS”)
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(collectively “Defendants”) in connection with a home mortgage
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transaction.
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There are two matters presently before the Court.
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First, on February 2, 2011, Defendants GMAC and MERS filed an
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Amended Motion to Dismiss for failure to state a claim upon which
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relief can be granted pursuant to Rule 12(b)(6) of the Federal
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Rules of Civil Procedure.1
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filed a timely opposition to that motion.
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February 17, 2011, Quicken filed a separate Motion to Dismiss
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pursuant to Rule 12(b)(6).
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timely opposition to Quicken’s motion to dismiss.
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For the reasons set below, both motions are granted.2
(ECF No. 10.)
(ECF No. 12.)
Plaintiff has not
Second, on
Plaintiff did file a
(ECF No. 15.)
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BACKGROUND3
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The instant dispute arises out of an alleged mortgage
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transaction between Plaintiff and Quicken.
In December 2007,
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Plaintiff spoke with Suren Srabian (“Srabian”), a mortgage broker
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employed by Quicken, about purchasing real property.
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allegedly provided Srabian with his financial information so that
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Srabian could complete Plaintiff’s loan application.
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Plaintiff’s actual monthly income was $6,083.33, Srabian
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allegedly listed Plaintiff’s income on the application as
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$8,125.00.
Plaintiff
Although
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All subsequent references to ‘rule’ or ‘rules’ are to the
Federal Rules of Civil Procedure unless otherwise noted.
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Because oral argument will not be of material assistance,
the Court orders this matter submitted on the briefs. E.D. Cal.
Local Rule 230(g).
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The factual assertions in this section are based on the
allegations in Plaintiffs’ Complaint (ECF No. 1) unless otherwise
specified.
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As a result, Plaintiff’s monthly income on the mortgage
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application was inflated by $2,041.66.
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Quicken agreed to issue a loan to Plaintiff.
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Based on the application,
On January 11, 2008, Plaintiff signed the loan documents in
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the presence of a notary, who was sent to Plaintiff’s home by
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Quicken to execute the documents.
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purportedly did not explain the terms of the loan, and did not
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counsel Plaintiff to read the documents carefully.
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further claims that he was rushed when signing the loan
Quicken, and/or Srabian,
Plaintiff
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documents, and did not have an adequate opportunity to read them.
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Srabian and Quicken allegedly guaranteed that the loan would
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become more affordable as Plaintiff’s salary increased, and that
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the loan could later be refinanced.
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Plaintiff alleges that GMAC is currently the servicer of the
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subject loan, and that MERS is the beneficiary on the deed of
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trust.
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collection proceedings, and threatened foreclosure, Plaintiff
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does not allege that foreclosure proceedings have actually been
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instituted.
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that Plaintiff is current on his payments, and that foreclosure
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proceedings have not been initiated.
Although Plaintiff alleges that Defendants have initiated
In its pending motion to dismiss, Quicken asserts
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STANDARD
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On a motion to dismiss for failure to state a claim under
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Rule 12(b)(6), all allegations of material fact must be accepted
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as true and construed in the light most favorable to the
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nonmoving party.
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Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.
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1996).
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of the claim showing that the pleader is entitled to relief,” to
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“give the defendant fair notice of what the...claim is and the
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grounds upon which it rests.”
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550 U.S. 544, 555 (2007) (internal citations and quotations
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omitted).
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motion” need not contain “detailed factual allegations, a
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plaintiff's obligation to provide the ‘grounds’ of his
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‘entitlement to relief’ requires more than labels and
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conclusions, and a formulaic recitation of the elements of a
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cause of action will not do.”
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Allain, 478 U.S. 265, 2869 (1986)).
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allegations must be enough to raise a right to relief above the
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speculative level.”
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Practice and Procedure § 1216 (3d ed. 2004) (“[T]he pleading must
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contain something more...than...a statement of facts that merely
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creates a suspicion [of] a legally cognizable right of
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action.”)).
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Rule 8(a)(2) requires only “a short and plain statement
Bell Atl. Corp. v. Twombly,
Although “a complaint attacked by a Rule 12(b)(6)
Id. at 555 (quoting Papasan v.
A plaintiff’s “factual
Id. (citing 5 C. Wright & A. Miller, Federal
Further, “Rule 8(a)(2)...requires a ‘showing,’ rather than a
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blanket assertion, of entitlement to relief.
Without some
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factual allegation in the complaint, it is hard to see how a
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claimant could satisfy the requirements of providing ...grounds
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on which the claim rests.”
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(internal citations omitted).
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“enough facts to state a claim to relief that is plausible on its
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face.”
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Twombly, 550 U.S. at 555 n.3
A pleading must therefore contain
Id. at 570.
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If the “plaintiffs...have not nudged their claims across the line
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from conceivable to plausible, their complaint must be
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dismissed.”
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Id.
Once the court grants a motion to dismiss, they must then
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decide whether to grant a plaintiff leave to amend.
Rule 15(a)
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authorizes the court to freely grant leave to amend when there is
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no “undue delay, bad faith, or dilatory motive on the part of the
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movant.” Foman v. Davis, 371 U.S. 178, 182 (1962).
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leave to amend is generally only denied when it is clear that the
In fact,
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deficiencies of the complaint cannot possibly be cured by an
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amended version.
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957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police
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Dept., 901 F. 2d 696, 699 (9th Cir. 1990) (“A complaint should
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not be dismissed under Rule 12(b)(6) unless it appears beyond
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doubt that the plaintiff can prove no set of facts in support of
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his claim which would entitle him to relief.”) (internal
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citations omitted).
See DeSoto v. Yellow Freight Sys., Inc.,
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ANALYSIS
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A.
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Motion To Dismiss By GMAC And MERS
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On February 4, 2011, GMAC and MERS filed the pending Amended
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Motion to Dismiss for failure to state a claim upon which relief
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can be granted pursuant to Rule 12(b)(6).
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filed a timely opposition to that motion as is required by Local
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Rule 230(c).
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GMAC and MERS is granted with leave to amend.
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Plaintiff has not
As a result, the amended motion to dismiss filed by
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B.
Motion To Dismiss By Quicken
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On February 17, 2011, Quicken filed a motion to dismiss
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pursuant to Rule 12(b)(6) for failure to state a claim upon which
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relief can be granted.
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to Quicken’s motion to dismiss. However, after consideration of
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the merits of the motion, the Court concludes that Quicken’s
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motion to dismiss is also granted.
Plaintiff has filed a timely opposition
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1.
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Deceit
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Under California law, a claim for deceit is essentially a
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allegation of fraud, and a plaintiff must prove the following
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elements: (1) misrepresentation; (2) “knowledge of falsity;”
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(3) intent to defraud; (4) justifiable reliance; and (5)
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“resulting damage.”
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365 F.3d 835, 839 (9th Cir. 2004).
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fraud must additionally meet the heightened pleading requirements
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of Rule 9(b), which requires that a party must “state with
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particularity the circumstances constituting fraud or mistake.”
City Solutions, Inc. v. Clear Channel Comm.,
In addition, any claim for
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Plaintiff alleges that Defendants are liable for deceit
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presumably based on allegedly false statements made to Plaintiff
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by broker Suren Srabian.
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specifically what statements are at issue, or when and where they
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were made.
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alleged to constitute deceit with sufficient particularity,
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Quicken’s motion to dismiss as to this cause of action is
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granted.
However, Plaintiff does not allege
Because Plaintiff has not pled the underlying facts
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2.
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Civil Conspiracy
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Plaintiff alleges in his Second Cause of Action that
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Defendants are liable for civil conspiracy.
Civil conspiracy is
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not an independent tort in California.
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LLC v. Sherwood Partners, Inc., 131 Cal. App. 4th 802, 823 (Cal.
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Ct. App. 2005).
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member of a conspiracy jointly liable for an underlying tort.
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Id.
Berg & Berg Enterprises,
Instead, it is a legal doctrine making each
The Court fails to follow Plaintiff’s reasoning as to why
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any claim for civil conspiracy should stand, and therefore,
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Defendant’s Motion to dismiss as to this cause of action is
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granted with leave to amend.
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3.
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Negligence
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Plaintiff asserts negligence as its Third Cause of Action.
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The existence of duty is the threshold element of a negligence
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cause of action.
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463 (Cal. Ct. App. 2003).
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of care to a borrower unless it exceeds the scope of a its
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“conventional role as a mere lender of money.”
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Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089, 1096 (Cal. Ct.
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App. 1991).
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owes a duty of care after balancing the following factors:
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Friedman v. Merck & Co., 107 Cal. App. 4th 454,
A lender does not generally owe a duty
Nymark v. Heart
However, a court may conclude that a “mere lender”
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(a) the extent to which the transaction was intended to affect
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the plaintiff; (b) the foreseeability of harm to him; (c) the
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degree of certainty that the plaintiff suffered injury; (d) the
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closeness of the connection between the defendant’s conduct and
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the injury suffered; (e) the moral blame attached to the
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defendant’s conduct; and (f) the policy of preventing future
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harm.
Id. at 1098.
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In the instant case, Plaintiff alleges that Srabian
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misstated Plaintiff’s income on the loan application, and that
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Quicken issued a loan knowing that the application misstated
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Plaintiff’s monthly income.
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suggest that Quicken’s actions exceeded the conventional role of
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a mere lender.
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Nymark factors.
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affect Plaintiff.
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the inflated monthly income listed in the application.
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Similarly, harm to Plaintiff may have been foreseeable, because
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it is less likely that Plaintiff could afford the loan payments
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given his actual income.
Plaintiff alleges no facts to
As a result, it is necessary to consider the
The subject transaction was likely intended to
Plaintiff may have obtained the loan based on
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However, it is far from certain that Plaintiff suffered
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injury caused by Quicken’s allegedly negligent acts, because
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foreclosure proceedings have not been initiated against
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Plaintiff.
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has suffered any cognizable injury, the closeness of the
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connection between Defendants’ conduct and the injury weighs
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against finding a duty.
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the facts as pled in the Complaint do not support a finding that
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Quicken owed Plaintiff a duty of care.
Further, given that it is not certain that Plaintiff
As a result, the Court concludes that
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Plaintiff contends that Watkinson v. Mortgageit Inc. offers
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authority for finding a duty of care in the instant case.
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However, Watkinson does not alter the Court’s analysis as it is
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distinguishable and non-binding on this Court.
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lender overstated a borrower’s income and the value of the
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property in a loan application.
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2196083 (S.D. Cal. June 1, 2010).
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“arguably owed [borrower] a duty of care in processing
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[borrower’s] loan application.”
In Watkinson, a
No. 10-cv-327-IEG (BLM), 2010 WL
The court held that a lender
Id. at *8.
Like the instant
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case, the court reasoned that the transaction was intended to
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affect the borrower, and that the harm was foreseeable.
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However, the lender in Watkinson had initiated foreclosure
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proceedings.
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proceedings in the instant case, the Nymark factors do not
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similarly weigh in favor of finding that Quicken owed Plaintiff a
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duty of care.
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duty of care, Quicken’s motion to dismiss is granted as to this
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cause of action with leave to amend.
Id.
Id.
Because Quicken has not initiated foreclosure
Given that the facts as pled do not establish a
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4.
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Breach of Fiduciary Duty
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Plaintiff purports to state a claim for breach of fiduciary
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duty as its Fourth Cause of Action.
However, a lender does not
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owe a fiduciary duty to a borrower.
Smith v. Home Loan Funding,
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Inc., 192 Cal. App. 4th 1331, 1335 (Cal. Ct. App. 2011).
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contrast, a mortgage broker does owe a fiduciary duty to a
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borrower.
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Quicken acted as a lender.
Id.
In
In the instant case, Plaintiff alleges only that
(See Compl. ¶ 3.)
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Because Plaintiff has not provided any evidence that Quicken
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acted as a broker in the subject mortgage transaction, Quicken
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does not owe a fiduciary duty to Plaintiff under the facts as
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pled.
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Fourth Cause of Action is granted.
As a result, Quicken’s motion to dismiss Plaintiff’s
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5.
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Violations of Business and Professions Code
§ 17200 et seq.
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As his Fifth Cause of Action, Plaintiff asserts that
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Defendants’ conduct constituted “unfair and/or fraudulent
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business practices, as defined by California Business and
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Professions Code § 17200 et seq.”
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beyond the bare assertion that Defendants engaged in unfair
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and/or fraudulent business practices, the Complaint does not
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include any specific factual allegations in support of the cause
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of action.
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specific section of the California Business and Professions Code.
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As a result, Plaintiff has not provided Quicken with fair notice
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of his claim as required by Rule 8(a) and Twombly.
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Quicken’s motion to dismiss is granted as to Plaintiff’s Fifth
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Cause of Action.
(Compl. ¶ 122.)
However,
Moreover, Plaintiff does allege a violation of any
Consequently,
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6.
Declaratory and Injunctive Relief
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Plaintiff expressly concedes that dismissal of the Sixth
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Cause of Action against Quicken for declaratory and injunctive
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relief is appropriate.
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Action against Quicken is dismissed without leave to amend.
As a result, Plaintiff’s sixth Cause of
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CONCLUSION
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Based on the foregoing, Defendants’ Motions to Dismiss (ECF
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Nos. 10 & 12.) are GRANTED with leave to amend, except
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Plaintiff’s Sixth Cause of Action is dismissed without leave to
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amend as to Defendant Quicken.
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complaint not later than twenty (20) days after the date this
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Memorandum and Order is filed electronically.
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complaint is filed within said twenty (20)-day period, without
Plaintiff may file an amended
If no amended
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further notice, Plaintiff’s claims will be dismissed without
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leave to amend.
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IT IS SO ORDERED.
DATED: April 21, 2011
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_______________________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE
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