Long v. Bank of America, N.A., et al

Filing 21

ORDER signed by Judge Garland E. Burrell, Jr. on 3/28/2013. Defendants' 12 Motion to Dismiss 11 First Amended Complaint is GRANTED in part and DENIED in part. Plaintiff is GRANTED 14 days from date Order is filed to submit a Second Amended Complaint addressing deficiencies in her RESPA claim. Plaintiff is warned that dismissal of this claim could be with prejudice if she fails to file an Amended Complaint within the prescribed time period. (Marciel, M)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ALLEYNE H. LONG, an individual,
Plaintiff,

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v.

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BANK OF AMERICA, N.A., a
National Association, successor
in interest to COUNTRYWIDE BANK,
a California Corporation; and
RECONTRUST COMPANY, N.A., a
wholly-owned subsidiary of BANK
OF AMERICA, N.A.;

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Defendants.
________________________________

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2:12-cv-00542-GEB-CKD
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTION TO DISMISS AND
REMANDING STATE CLAIMS

Defendants move under Federal Rule of Civil Procedure (“Rule”)
12(b)(6) for dismissal with prejudice of Plaintiff’s Verified First
Amended Complaint (“FAC”). (Defs.’ Not. of Mot. and Mot. to Dismiss FAC
(“Defs.’ Mot.”), ECF No. 12.) Plaintiff opposes the motion. (Pl.’s Opp’n
to Defs.’ Mot. (“Pl.’s Opp’n”), ECF No. 13.) Plaintiff alleges the
following claims in the Verified FAC: fraud in the origination of the
loan, wrongful foreclosure, violation of California Civil Code § 2923.6,
violation of the Real Estate Settlement Procedures Act (“RESPA”), breach
of contract, breach of the covenant of good faith and fair dealing,
violation of the Truth in Lending Act (“TILA”), rescission, predatory
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lending (violation of California Business & Professions Code § 17200),

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Unfair

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declaratory relief, and quiet title. (FAC ¶¶ 57–254.)

and

Deceptive

Business

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Act

Practices

(“UDAP”),

negligence,

I. LEGAL STANDARD

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Decision

on

Defendants’

Rule

12(b)(6)

dismissal

motion

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requires determination of “whether the complaint’s factual allegations,

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together with all reasonable inferences, state a plausible claim for

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relief.” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., 637 F.3d 1047,

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1054 (9th Cir. 2011) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678-79

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(2009)). “A claim has facial plausibility when the plaintiff pleads

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factual content that allows the court to draw the reasonable inference

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that the defendant is liable for the misconduct alleged.” Iqbal, 556

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U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556

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(2007)).

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When determining the sufficiency of a claim, “[w]e accept

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factual allegations in the complaint as true and construe the pleadings

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in the light most favorable to the non-moving party[; however, this

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tenet does not apply to] . . . legal conclusions . . . cast in the form

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of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir.

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2011) (citation omitted) (internal quotation marks omitted). “Therefore,

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conclusory

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insufficient to defeat a motion to dismiss.” Id. (citation omitted)

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(internal quotation marks omitted); see also Iqbal, 556 U.S. at 678

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(quoting Twombly, 550 U.S. at 555) (stating “[a] pleading that offers

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‘labels and conclusions’ or ‘a formulaic recitation of the elements of

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a cause of action will not do’”).

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//

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//

allegations

of

law

and

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unwarranted

inferences

are

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II. FACTUAL ALLEGATIONS

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“On or about November 11, 2006, Plaintiff obtained an Option

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Adjustable Rate Mortgage, OPTION ARM, from COUNTRYWIDE, secured by a

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Deed of Trust, in the amount of $420,000.00 for her primary residence

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[“Subject Property”]. . . .” (FAC ¶ 18.) “In or around early November

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2006, Plaintiff was contacted by telephone, by an Agent for COUNTRYWIDE,

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Silver Tree Lending Funding (“Agent”), for the purpose of obtaining the

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loan to purchase the Subject Property.” (Id. ¶ 19.) Agent told Plaintiff

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that she would probably qualify for a $420,000 first mortgage, with a

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monthly payment of $1,385.00, and a $52,000 second mortgage, with a

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monthly payment of $476.35. (Id. ¶¶ 20–21.)

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“[T]he entire [loan] transaction was consummated within ten

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(10) days from [Plaintiff’s] initial contact with Agent.” (Id. ¶ 25.)

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“On or about November 11, 2006, Plaintiff executed the closing loan

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documents at her home [spending] no more than fifteen (15) minutes with

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Agent, and was never explained what she was signing or the contents

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therein.” (Id. ¶ 29.) “During the loan application process, Plaintiff

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was never given the opportunity to review the Application [or] informed

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of the contents therein.” (Id. ¶ 24.) “It was not until June 2010, when

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she

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Application stated that her income was $12,400.00 per month and that she

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was self-employed for 4 years and 3 months.” (Id.) Plaintiff never

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“discuss[ed]

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Agent[,] . . . Plaintiff had told Agent that her income was $2,700.00

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per month and she was employed as an engineer technician.” (Id.)

attempted

to

these

modify

income

her

loan

figures

that

and

she

discovered

employment

that

information

her

with

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“On or about June 10, 2010, . . . Plaintiff default[ed] on the

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Loan.” (Id. ¶ 32.) “Plaintiff sent a qualified written request (“QWR”)

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and a validation of debt (VOD) to Defendants on or about September 6,
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2011[, to which] Defendants failed to properly respond.” (Id. ¶ 114.)

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“On or about May 16, 2011, without [contacting Plaintiff], BOA, through

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its alleged trustee, RECON, recorded a Notice of Default on the Subject

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Property.” (Id. ¶ 38.) “On or about August 18, 2011, BOA, through its

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alleged trustee, RECON, recorded a Notice of Trustee’s Sale[, which]

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stated that the total amount [owed was] $479,677.25. The Trustee's sale

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was scheduled for September 13, 2011.” (Id. ¶ 39.)

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III. DISCUSSION

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Plaintiff’s Verified FAC contains both federal and state

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claims. Plaintiff commenced the instant lawsuit in state court on

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January 26, 2012; Defendants removed that case to federal court, and

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Plaintiff subsequently filed her verified FAC. Since Plaintiff’s state

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claims and issues appear to substantially predominate over Plaintiff’s

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federal claims, the portion of the motion challenging the sufficiency of

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Plaintiff’s federal claims will be addressed first. Plaintiff alleges

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federal claims under TILA (seventh claim) and RESPA (fourth claim).

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A. TILA Claim (Seventh Claim)

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Defendants argue that Plaintiff’s TILA claim “relate[s] to the

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origination of the Loans [in November 2006] and [is] accordingly time-

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barred.” (Defs.’ Mot. 9:2–3 (citing FAC).) Defendants argue that “the

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statute of limitations on any claims related to the origination began to

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run in November 2006.” (Id. 9:8–9.) Plaintiff rejoins that a claim “does

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not accrue ‘until the discovery, by the aggrieved party, of the facts

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constituting the fraud or mistake.’” (Pl.’s Opp’n 3:13–14 (quoting Cal.

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Code Civ. Proc. § 338(d)) (citing Broberg v. Guardian Life Ins. Co. of

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Am., 171 Cal. App. 4th 912, 920 (2009)).) Plaintiff argues that since

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she “did not discover the fraudulent facts[] (inflated income) used by

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Defendants to qualify her for the loan until [she] reviewed the original
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loan

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modification application[, her] claims accrued from discovery at this

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time.” (Id. 3:27–4:2 (citation omitted) (citing FAC ¶ 24).)

documents

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In

in

or

pertinent

around

part,

June

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2010

U.S.C.

§

while

preparing

1635(f)

a

loan

prescribes:

“An

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obligor’s right of rescission shall expire three years after the date of

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consummation of the transaction or upon sale of the property, whichever

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occurs first.” 15 U.S.C. § 1635(f). A TILA action for damages may be

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brought “within one year from the date of the occurrence of the

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violation.” 15 U.S.C. § 1640(e).

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1. Rescission

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“Unlike TILA’s one year period for civil damages claims, the

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three year period for TILA rescission claims is an ‘absolute’ statute of

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repose that cannot be tolled.” Falcocchia v. Saxon Mortg., Inc., 709 F.

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Supp. 2d 860, 867. (E.D. Cal. 2010); see also McOmie-Gray v. Bank of Am.

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Home Loans, 667 F.3d 1325, 1329 (9th Cir. 2012) (“Because § 1635(f) is

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a

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rescission . . . three years after the consummation of the loan.”).

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Here, Plaintiff avers in the verified FAC that “[o]n or about November

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11, 2006, Plaintiff executed the closing loan documents at her home.”

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(FAC ¶ 29.) Since Plaintiff did not commence the instant lawsuit in

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state court until January 26, 2012, Plaintiff’s right to rescission

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under TILA is time barred.

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2. Damages

statute

of

repose,

it

extinguished

[the

plaintiff’s]

right

to

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Under 15 U.S.C. § 1640(e), “[a]ny action under this section

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may be brought within one year from the date of the occurrence of the

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violation.” 15 U.S.C. § 1640(e). “[T]he doctrine of equitable tolling

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may,

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limitations period until the borrower discovers or had reasonable

in

the

appropriate

circumstances,

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suspend

the

applicable

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opportunity to discover the fraud or nondisclosures that form the basis

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of the TILA action.” King v. State of Cal., 784 F.2d 910, 915 (9th Cir.

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1986). Here, Plaintiff avers in the Verified FAC that “when Plaintiff

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reviewed her Loan documents when [she] began the loan modification

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process . . . (in or about June 2010) . . . [she] acquired knowledge of

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the withheld disclosures.” (FAC ¶ 67.) Assuming without deciding that

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equitable tolling applies to Plaintiff’s TILA damages claim, Plaintiff

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would have needed to file her TILA damages claim by June 2011. Since

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Plaintiff did not commence the instant lawsuit in state court until

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January 26, 2012, Plaintiff’s right to damages under TILA is time

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barred. For the stated reasons, Plaintiff’s TILA claim (seventh claim)

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is dismissed with prejudice.

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B. RESPA Violation (Fourth Claim)

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Defendants argue that “Plaintiff fails to state a claim under

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RESPA because she fails to allege pecuniary damages [in her claim] and

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because she neglects to show a causal connection between the alleged

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RESPA violations and any purported damage.” (Defs.’ Mot. 17:6–8.)

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Plaintiff rejoins that she “sustained pecuniary damages including but

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not limited to copying charges and postal fees in preparing and sending

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Defendants the [Qualified Written Request (“QWR”)] and lost income from

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Plaintiff spending considerable time away from her employment preparing

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the QWR and attempting to contact Defendant[s] to inquire about the

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whereabouts of Defendant[s’] responses.” (Opp’n 9:27–10:2 (citing FAC

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¶ 123).) Plaintiff also argues that “as a result of Defendants’ actions

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Plaintiff has sustained damages,” which were “proximately caused by

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Defendants’ failure to respond to Plaintiff’s QWR and violation of

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§ 2505(e).” (Id. 10:6–7.)

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“‘[C]ourts

have

interpreted

th[e]

requirement

[to

plead

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pecuniary loss under RESPA] liberally.” Allen v. United Fin. Mortg.

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Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009) (alterations in

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original) (quoting Greenpoint Mortg. Funding, Inc., No. CIV. S-09-1504

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LKK/KJM, 2009 WL 2880393, at *15 (E.D. Cal. Sept. 9, 2009)). For

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example, “[p]laintiffs [have] pl[ed] such a loss by claiming that they

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had suffered negative credit ratings as a result of violations of

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RESPA.” Id. (citing Hutchinson v. Del. Sav. Bank FSB, 410 F. Supp. 2d

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374, 383 (D.N.J. 2006)). Here, Plaintiff has alleged that “Defendants’

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failure to comply with 12 U.S.C. § 2605(e)(3) regarding Defendants’

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prohibition from reporting Plaintiff’s overdue payments to any consumer

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reporting agency has caused Plaintiff significant injury to her credit

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score.” (FAC ¶ 124.) Therefore, Plaintiff has alleged pecuniary damages.

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However,

Plaintiff’s

allegations

regarding

causation

are

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merely conclusory statements. See Urbano II, 2013 WL 359655, at *7

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(finding Plaintiff’s conclusory statement regarding causation “fatal” to

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RESPA claim). Here, Plaintiff alleges that “[a]s a proximate result of

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Defendants’ actions, Plaintiff has been damaged”; “Defendant’s failure

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to comply with 12 U.S.C. § 2605(e)(3) . . . has caused Plaintiff

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significant

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Defendants’ actions, Plaintiff has suffered damages.” (FAC ¶¶ 122,

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124–25.) “The fatal problem with Plaintiff’s claim . . . is that she

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fails to allege facts sufficient to state a claim that Defendants’

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alleged failure to comply with RESPA caused the harm.” Urbano II, 2013

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WL 359655, at *7. Further, “to the extent the [F]AC alleges that

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[D]efendants violated 12 U.S.C. § 2605(e)(3) . . . , this allegation, on

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its own, is insufficient to assert a violation of § 2605(e)(3) [since

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i]t is wholly conclusory and fails to describe when and to whom

injury

to

her

credit

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score”;

and

“[a]s

a

result

of

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Defendants allegedly provided the information.” Id. (citing

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Downey Sav. & Loan Ass’n, F.A., 834 F. Supp. 2d 95, 110–12 (E.D.N.Y.

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2011); Jones v. Select Portfolio Servicing, Inc., No. 08–972, 2008 WL

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1820935, at *10 (E.D. Pa. Apr. 22, 2008)). Since all of Plaintiff’s

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allegations

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conclusory,” Plaintiff’s fourth claim is dismissed without prejudice.

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Urbano II, 2013 WL 359655, at *7.

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C. Supplemental Jurisdiction

in

the

fourth

claim

regarding

causation

Midouin v.

are

“wholly

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Since the only remaining federal claim is Plaintiff’s RESPA

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claim, assuming Plaintiff is able to allege a sufficient causation

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element,

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“substantially predominate” over Plaintiff’s federal RESPA claim.

the

issue

is

reached

whether

Plaintiff’s

state

claims

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When “the state issues substantially predominate [over a

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federal claim or claims], whether in terms of proof, of the scope of the

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issues raised, or of the comprehensiveness of the remedy sought,” the

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district court may decline to exercise supplemental jurisdiction so that

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the “state claims may be . . . left for resolution to state tribunals.”

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United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 727 (1966). The

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“discretion [whether] to decline to exercise supplemental jurisdiction

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over state law claims is triggered by the presence of one of the

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conditions in § 1367(c), [and] is informed by the Gibbs values of

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economy, convenience, fairness, and comity.” Acri v. Varian Assocs.,

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Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc) (internal quotation

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marks omitted) (citing Allen v. City of L.A., 92 F.3d 842, 846 (9th Cir.

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1996); Exec. Software N. Am. v. U.S. Dist. Court, 24 F.3d 1545, 1557

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(9th Cir. 1994)).

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Plaintiff alleges the following state claims: fraud in the

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origination of the loan, wrongful foreclosure, violation of California
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Civil Code § 2923.6, breach of contract, breach of the covenant of good

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faith and fair dealing, rescission, predatory lending (violation of

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California Business & Professions Code § 17200), Unfair and Deceptive

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Business Act Practices (“UDAP”), negligence, declaratory relief, and

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quiet title. Even if Plaintiff can allege a viable RESPA claim, it is

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evident that the extent of the state claims–“in terms of proof, of the

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scope of the issues raised, [and] of the comprehensiveness of the

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remed[ies] sought”–would greatly exceed the scope of the RESPA claim.

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Gibbs, 383 U.S. at 726.

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The state claims are based on factual allegations concerning

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loan origination, attempted acquisition of a loan modification, and the

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foreclosure process. In contrast, any actionable RESPA claim would be

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limited to a determination of whether Defendants violated 12 U.S.C.

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§ 2605(e), which requires a loan servicer to respond in a timely manner

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to a borrower’s inquiry about her mortgage loan. Further, recovery under

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RESPA is limited to “actual damages to the borrower as a result of the

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failure,” “additional damages, as the court may allow, in the case of a

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pattern or practice of noncompliance with the requirements of this

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section, in an amount not to exceed $2,000,” and “costs of the action,

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together with [reasonable] attorneys fees incurred in connection with

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such action.”

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claim has little factual overlap with her state claims, and the relief

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sought under the RESPA claim is distinct from that sought under the

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state claims.

12 U.S.C.§ 2605(f)(1), (3). Therefore, Plaintiff’s RESPA

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Since Plaintiff’s state claims substantially predominate over

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the dismissed RESPA claim, and comity, fairness, and judicial economy do

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not

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Plaintiff’s state claims under 28 U.S.C. § 1367(c)(2), Plaintiff’s state

weigh

in

favor

of

exercising

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supplemental

jurisdiction

over

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claims are remanded to the Superior Court of California, County of

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Solano.

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IV. CONCLUSION

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Plaintiff is granted fourteen (14) days from the date on which

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this Order is filed to file a Second Amended Complaint addressing the

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deficiencies in her RESPA claim. Plaintiff is warned that the dismissal

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of this claim could be with prejudice if Plaintiff fails to file an

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amended complaint within the prescribed time period.

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Dated:

March 28, 2013

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GARLAND E. BURRELL, JR.
Senior United States District Judge

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