Miller v. GMAC Mortgage, LLC et al

Filing 20

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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 MARK MILLER, 12 Plaintiff, 13 14 No. 2:11-cv-00257-MCE-DAD MEMORANDUM AND ORDER v. 16 GMAC MORTGAGE, LLC; QUICKEN LOANS INCORPORATED; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and DOES 1 through 50, inclusive, 17 Defendants. 15 18 19 ----oo0oo---- 20 21 Through this action, Plaintiff Mark Miller (“Plaintiff”) 22 seeks redress for the alleged deceit and negligence of Defendants 23 GMAC Mortgage, LLC (“GMAC”), Quicken Loans Inc. (“Quicken”), and 24 Mortgage Electronic Registration Systems, Inc. (“MERS”) 25 (collectively “Defendants”) in connection with a home mortgage 26 transaction. 27 /// 28 /// There are two matters presently before the Court. 1 1 First, on February 2, 2011, Defendants GMAC and MERS filed an 2 Amended Motion to Dismiss for failure to state a claim upon which 3 relief can be granted pursuant to Rule 12(b)(6) of the Federal 4 Rules of Civil Procedure.1 5 filed a timely opposition to that motion. 6 February 17, 2011, Quicken filed a separate Motion to Dismiss 7 pursuant to Rule 12(b)(6). 8 timely opposition to Quicken’s motion to dismiss. 9 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.) 10 BACKGROUND3 11 12 13 The instant dispute arises out of an alleged mortgage 14 transaction between Plaintiff and Quicken. In December 2007, 15 Plaintiff spoke with Suren Srabian (“Srabian”), a mortgage broker 16 employed by Quicken, about purchasing real property. 17 allegedly provided Srabian with his financial information so that 18 Srabian could complete Plaintiff’s loan application. 19 Plaintiff’s actual monthly income was $6,083.33, Srabian 20 allegedly listed Plaintiff’s income on the application as 21 $8,125.00. Plaintiff Although 22 23 1 24 25 26 27 28 All subsequent references to ‘rule’ or ‘rules’ are to the Federal Rules of Civil Procedure unless otherwise noted. 2 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). 3 The factual assertions in this section are based on the allegations in Plaintiffs’ Complaint (ECF No. 1) unless otherwise specified. 2 1 As a result, Plaintiff’s monthly income on the mortgage 2 application was inflated by $2,041.66. 3 Quicken agreed to issue a loan to Plaintiff. 4 Based on the application, On January 11, 2008, Plaintiff signed the loan documents in 5 the presence of a notary, who was sent to Plaintiff’s home by 6 Quicken to execute the documents. 7 purportedly did not explain the terms of the loan, and did not 8 counsel Plaintiff to read the documents carefully. 9 further claims that he was rushed when signing the loan Quicken, and/or Srabian, Plaintiff 10 documents, and did not have an adequate opportunity to read them. 11 Srabian and Quicken allegedly guaranteed that the loan would 12 become more affordable as Plaintiff’s salary increased, and that 13 the loan could later be refinanced. 14 Plaintiff alleges that GMAC is currently the servicer of the 15 subject loan, and that MERS is the beneficiary on the deed of 16 trust. 17 collection proceedings, and threatened foreclosure, Plaintiff 18 does not allege that foreclosure proceedings have actually been 19 instituted. 20 that Plaintiff is current on his payments, and that foreclosure 21 proceedings have not been initiated. Although Plaintiff alleges that Defendants have initiated In its pending motion to dismiss, Quicken asserts 22 STANDARD 23 24 25 On a motion to dismiss for failure to state a claim under 26 Rule 12(b)(6), all allegations of material fact must be accepted 27 as true and construed in the light most favorable to the 28 nonmoving party. 3 1 Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 2 1996). 3 of the claim showing that the pleader is entitled to relief,” to 4 “give the defendant fair notice of what the...claim is and the 5 grounds upon which it rests.” 6 550 U.S. 544, 555 (2007) (internal citations and quotations 7 omitted). 8 motion” need not contain “detailed factual allegations, a 9 plaintiff's obligation to provide the ‘grounds’ of his 10 ‘entitlement to relief’ requires more than labels and 11 conclusions, and a formulaic recitation of the elements of a 12 cause of action will not do.” 13 Allain, 478 U.S. 265, 2869 (1986)). 14 allegations must be enough to raise a right to relief above the 15 speculative level.” 16 Practice and Procedure § 1216 (3d ed. 2004) (“[T]he pleading must 17 contain something more...than...a statement of facts that merely 18 creates a suspicion [of] a legally cognizable right of 19 action.”)). 20 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 21 blanket assertion, of entitlement to relief. Without some 22 factual allegation in the complaint, it is hard to see how a 23 claimant could satisfy the requirements of providing ...grounds 24 on which the claim rests.” 25 (internal citations omitted). 26 “enough facts to state a claim to relief that is plausible on its 27 face.” 28 /// Twombly, 550 U.S. at 555 n.3 A pleading must therefore contain Id. at 570. 4 1 If the “plaintiffs...have not nudged their claims across the line 2 from conceivable to plausible, their complaint must be 3 dismissed.” 4 Id. Once the court grants a motion to dismiss, they must then 5 decide whether to grant a plaintiff leave to amend. Rule 15(a) 6 authorizes the court to freely grant leave to amend when there is 7 no “undue delay, bad faith, or dilatory motive on the part of the 8 movant.” Foman v. Davis, 371 U.S. 178, 182 (1962). 9 leave to amend is generally only denied when it is clear that the In fact, 10 deficiencies of the complaint cannot possibly be cured by an 11 amended version. 12 957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police 13 Dept., 901 F. 2d 696, 699 (9th Cir. 1990) (“A complaint should 14 not be dismissed under Rule 12(b)(6) unless it appears beyond 15 doubt that the plaintiff can prove no set of facts in support of 16 his claim which would entitle him to relief.”) (internal 17 citations omitted). See DeSoto v. Yellow Freight Sys., Inc., 18 ANALYSIS 19 A. 20 Motion To Dismiss By GMAC And MERS 21 22 On February 4, 2011, GMAC and MERS filed the pending Amended 23 Motion to Dismiss for failure to state a claim upon which relief 24 can be granted pursuant to Rule 12(b)(6). 25 filed a timely opposition to that motion as is required by Local 26 Rule 230(c). 27 GMAC and MERS is granted with leave to amend. 28 /// Plaintiff has not As a result, the amended motion to dismiss filed by 5 1 B. Motion To Dismiss By Quicken 2 3 On February 17, 2011, Quicken filed a motion to dismiss 4 pursuant to Rule 12(b)(6) for failure to state a claim upon which 5 relief can be granted. 6 to Quicken’s motion to dismiss. However, after consideration of 7 the merits of the motion, the Court concludes that Quicken’s 8 motion to dismiss is also granted. Plaintiff has filed a timely opposition 9 1. 10 Deceit 11 12 Under California law, a claim for deceit is essentially a 13 allegation of fraud, and a plaintiff must prove the following 14 elements: (1) misrepresentation; (2) “knowledge of falsity;” 15 (3) intent to defraud; (4) justifiable reliance; and (5) 16 “resulting damage.” 17 365 F.3d 835, 839 (9th Cir. 2004). 18 fraud must additionally meet the heightened pleading requirements 19 of Rule 9(b), which requires that a party must “state with 20 particularity the circumstances constituting fraud or mistake.” City Solutions, Inc. v. Clear Channel Comm., In addition, any claim for 21 Plaintiff alleges that Defendants are liable for deceit 22 presumably based on allegedly false statements made to Plaintiff 23 by broker Suren Srabian. 24 specifically what statements are at issue, or when and where they 25 were made. 26 alleged to constitute deceit with sufficient particularity, 27 Quicken’s motion to dismiss as to this cause of action is 28 granted. However, Plaintiff does not allege Because Plaintiff has not pled the underlying facts 6 2. 1 Civil Conspiracy 2 3 Plaintiff alleges in his Second Cause of Action that 4 Defendants are liable for civil conspiracy. Civil conspiracy is 5 not an independent tort in California. 6 LLC v. Sherwood Partners, Inc., 131 Cal. App. 4th 802, 823 (Cal. 7 Ct. App. 2005). 8 member of a conspiracy jointly liable for an underlying tort. 9 Id. Berg & Berg Enterprises, Instead, it is a legal doctrine making each The Court fails to follow Plaintiff’s reasoning as to why 10 any claim for civil conspiracy should stand, and therefore, 11 Defendant’s Motion to dismiss as to this cause of action is 12 granted with leave to amend. 13 3. 14 Negligence 15 16 Plaintiff asserts negligence as its Third Cause of Action. 17 The existence of duty is the threshold element of a negligence 18 cause of action. 19 463 (Cal. Ct. App. 2003). 20 of care to a borrower unless it exceeds the scope of a its 21 “conventional role as a mere lender of money.” 22 Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089, 1096 (Cal. Ct. 23 App. 1991). 24 owes a duty of care after balancing the following factors: 25 /// 26 /// 27 /// 28 /// 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” 7 1 (a) the extent to which the transaction was intended to affect 2 the plaintiff; (b) the foreseeability of harm to him; (c) the 3 degree of certainty that the plaintiff suffered injury; (d) the 4 closeness of the connection between the defendant’s conduct and 5 the injury suffered; (e) the moral blame attached to the 6 defendant’s conduct; and (f) the policy of preventing future 7 harm. Id. at 1098. 8 In the instant case, Plaintiff alleges that Srabian 9 misstated Plaintiff’s income on the loan application, and that 10 Quicken issued a loan knowing that the application misstated 11 Plaintiff’s monthly income. 12 suggest that Quicken’s actions exceeded the conventional role of 13 a mere lender. 14 Nymark factors. 15 affect Plaintiff. 16 the inflated monthly income listed in the application. 17 Similarly, harm to Plaintiff may have been foreseeable, because 18 it is less likely that Plaintiff could afford the loan payments 19 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 20 However, it is far from certain that Plaintiff suffered 21 injury caused by Quicken’s allegedly negligent acts, because 22 foreclosure proceedings have not been initiated against 23 Plaintiff. 24 has suffered any cognizable injury, the closeness of the 25 connection between Defendants’ conduct and the injury weighs 26 against finding a duty. 27 the facts as pled in the Complaint do not support a finding that 28 Quicken owed Plaintiff a duty of care. Further, given that it is not certain that Plaintiff As a result, the Court concludes that 8 1 Plaintiff contends that Watkinson v. Mortgageit Inc. offers 2 authority for finding a duty of care in the instant case. 3 However, Watkinson does not alter the Court’s analysis as it is 4 distinguishable and non-binding on this Court. 5 lender overstated a borrower’s income and the value of the 6 property in a loan application. 7 2196083 (S.D. Cal. June 1, 2010). 8 “arguably owed [borrower] a duty of care in processing 9 [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 10 case, the court reasoned that the transaction was intended to 11 affect the borrower, and that the harm was foreseeable. 12 However, the lender in Watkinson had initiated foreclosure 13 proceedings. 14 proceedings in the instant case, the Nymark factors do not 15 similarly weigh in favor of finding that Quicken owed Plaintiff a 16 duty of care. 17 duty of care, Quicken’s motion to dismiss is granted as to this 18 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 19 4. 20 Breach of Fiduciary Duty 21 22 Plaintiff purports to state a claim for breach of fiduciary 23 duty as its Fourth Cause of Action. However, a lender does not 24 owe a fiduciary duty to a borrower. Smith v. Home Loan Funding, 25 Inc., 192 Cal. App. 4th 1331, 1335 (Cal. Ct. App. 2011). 26 contrast, a mortgage broker does owe a fiduciary duty to a 27 borrower. 28 Quicken acted as a lender. Id. In In the instant case, Plaintiff alleges only that (See Compl. ¶ 3.) 9 1 Because Plaintiff has not provided any evidence that Quicken 2 acted as a broker in the subject mortgage transaction, Quicken 3 does not owe a fiduciary duty to Plaintiff under the facts as 4 pled. 5 Fourth Cause of Action is granted. As a result, Quicken’s motion to dismiss Plaintiff’s 6 5. 7 Violations of Business and Professions Code § 17200 et seq. 8 9 As his Fifth Cause of Action, Plaintiff asserts that 10 Defendants’ conduct constituted “unfair and/or fraudulent 11 business practices, as defined by California Business and 12 Professions Code § 17200 et seq.” 13 beyond the bare assertion that Defendants engaged in unfair 14 and/or fraudulent business practices, the Complaint does not 15 include any specific factual allegations in support of the cause 16 of action. 17 specific section of the California Business and Professions Code. 18 As a result, Plaintiff has not provided Quicken with fair notice 19 of his claim as required by Rule 8(a) and Twombly. 20 Quicken’s motion to dismiss is granted as to Plaintiff’s Fifth 21 Cause of Action. (Compl. ¶ 122.) However, Moreover, Plaintiff does allege a violation of any Consequently, 22 23 6. Declaratory and Injunctive Relief 24 25 Plaintiff expressly concedes that dismissal of the Sixth 26 Cause of Action against Quicken for declaratory and injunctive 27 relief is appropriate. 28 Action against Quicken is dismissed without leave to amend. As a result, Plaintiff’s sixth Cause of 10 CONCLUSION 1 2 3 Based on the foregoing, Defendants’ Motions to Dismiss (ECF 4 Nos. 10 & 12.) are GRANTED with leave to amend, except 5 Plaintiff’s Sixth Cause of Action is dismissed without leave to 6 amend as to Defendant Quicken. 7 complaint not later than twenty (20) days after the date this 8 Memorandum and Order is filed electronically. 9 complaint is filed within said twenty (20)-day period, without Plaintiff may file an amended If no amended 10 further notice, Plaintiff’s claims will be dismissed without 11 leave to amend. 12 13 IT IS SO ORDERED. DATED: April 21, 2011 14 15 16 17 _______________________________________ MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 11

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