Burley et al v. OneWest Bank, FSB et al

Filing 31

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 12/2/2014 GRANTING 22 Motion to Dismiss; GRANTING the plaintiffs twenty days to file a second amended complaint. (Michel, G)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 14 15 SILVIA BURLEY, as chairperson of the California Valley Miwok Tribe; and the CALIFORNIA VALLEY MIWOK TRIBE, as a federally recognized tribe of the Miwok people, 18 19 20 MEMORANDUM AND ORDER RE: MOTION TO DISMISS Plaintiffs, 16 17 CIV. NO. 2:14-1349 WBS EFB v. ONEWEST BANK, FSB; MERIDIAN FORECLOSURE SERVICE; DEUTSCHE BANK NATIONAL TRUST COMPANY; and DOES 1-10, inclusive, Defendants. 21 22 23 24 ----oo0oo---Plaintiffs Silvia Burley and the California Valley 25 Miwok Tribe (“Miwok Tribe”) brought this action against 26 defendants OneWest Bank, FSB (“OneWest”), Deutsche Bank National 27 Trust Company (“Deutsche Bank”), and Meridian Foreclosure Service 28 1 1 (“Meridian”) to recover title over land and damages in connection 2 with the alleged wrongful foreclosure and sale of the plaintiffs’ 3 real property. 4 (“Aug. 26, 2014 Order”) dismissing plaintiffs’ case for lack of 5 subject matter jurisdiction and giving plaintiffs’ twenty days to 6 file an amended complaint.1 7 their First Amended Complaint (“FAC”) asserting claims under the 8 Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691, et 9 seq., the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601, et On August 26, 2014, this court issued an order (Docket No. 17.) Plaintiffs filed 10 seq., and several state law claims essentially repeated from 11 their original Complaint. 12 I. (Docket No. 18.) Factual & Procedural History 13 Burley is the chairperson of the Miwok Tribe, which is 14 a federally-recognized Indian tribe. 15 29, 2002, the Miwok Tribe purchased a parcel of land in Stockton, 16 California. 17 issued a resolution authorizing Burley to obtain a loan for the 18 property and to take title to the property on behalf of the Miwok 19 Tribe. 20 refinanced the property on behalf of the Miwok Tribe in 2006 and 21 2007, and quitclaimed the property back to the Miwok Tribe in 22 2008. 23 24 25 26 27 28 (Id. ¶ 14.) (Id. ¶¶ 25, 28.) (Id. ¶¶ 19-24.) (FAC ¶¶ 20-21.) On March Shortly after doing so, the Miwok Tribe After receiving title, Burley allegedly Financing was originally provided by 1 The August 26, 2014 Order addressed two related cases: Burley v. OneWest Bank, FSB, Civ. No. 2:14-1349 WBS EFB, and Deutsche Bank National Trust Co. v. Burley, Civ. No. 2:14-1567 WBS EFB. The court dismissed the first action, Burley v. OneWest Bank, FSB, for lack of subject matter jurisdiction, (see Aug. 26, 2014 Order at 8-9), and the court remanded the second action, Deutsche Bank National Trust Co. v. Burley, to the San Joaquin County Superior Court pursuant to 28 U.S.C. § 1447, (id at 13.) 2 1 IndyMac Bank (“IndyMac”). 2 IndyMac entered bankruptcy, OneWest purchased the assets of 3 IndyMac from the Federal Deposit Insurance Corporation (“FDIC”), 4 including the beneficial interest in plaintiffs’ loan. 5 59) 6 (Id. ¶ 22.) In March 2009, after (Id. ¶ Burley and the Miwok Tribe allege that they are waiting 7 for funds owed to them by the Revenue Sharing Trust Fund.2 8 ¶ 46, 86.) 9 payments for the property. (Id. In the meantime, plaintiffs fell behind on loan (See id. ¶ 57.) On February 19, 10 2010, OneWest recorded a Notice of Default and initiated 11 foreclosure proceedings. 12 Sale recorded in San Joaquin County on November 6, 2013, reflects 13 that Deutsche Bank purchased the property at a foreclosure sale 14 for roughly one-third of the alleged amount of unpaid debt. 15 ¶ 72.) 16 (Id. ¶¶ 61, 88.) A Trustee’s Deed Upon (Id. Plaintiffs allege that the terms of financing reflected 17 in the Deed of Trust filed with the Official Records of San 18 Joaquin County on April 30, 2007, are different from the terms 19 that plaintiffs had originally agreed to during discussions with 20 the defendants’ representatives. 21 result, plaintiffs contend that OneWest listed an “excessive” 22 amount on its Notice of Default, wrongfully foreclosed on the 23 property, and initiated an unlawful detainer action against 24 Burley. 25 discriminated against plaintiffs during their application for the (Id. ¶¶ 61, 63, 75.) (Id. ¶ 38, 45-46.) As a Defendants also allegedly 26 27 28 2 The Revenue Sharing Trust Fund redistributes money from Indian tribes in California that operate gaming establishments to those, like the Miwok Tribe, that do not. 3 1 loan, (id. ¶¶ 17, 77-79), and failed to comply with certain 2 requirements of foreclosure over tribal land, (id. ¶ 63). 3 Defendants now move to dismiss all claims in the FAC pursuant to 4 Federal Rule of Civil Procedure 12(b)(6) for failure to state a 5 claim upon which relief can be granted. 6 II. (Docket No. 22.) Discussion 7 On a motion to dismiss under Rule 12(b)(6), the court 8 must accept the allegations in the complaint as true and draw all 9 reasonable inferences in favor of the plaintiff. See Scheuer v. 10 Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by 11 Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 12 319, 322 (1972). 13 must plead “only enough facts to state a claim to relief that is 14 plausible on its face.” 15 544, 570 (2007). 16 for more than a sheer possibility that a defendant has acted 17 unlawfully,” and where a plaintiff pleads facts that are “merely 18 consistent with a defendant’s liability,” it “stops short of the 19 line between possibility and plausibility.” 20 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). 21 22 A. To survive a motion to dismiss, a plaintiff Bell Atl. Corp. v. Twombly, 550 U.S. This “plausibility standard,” however, “asks Ashcroft v. Iqbal, Equal Credit Opportunity Act Claim It is well established that “[a] district court may 23 dismiss a claim ‘[i]f the running of the statute is apparent on 24 the face of the complaint.’” 25 Loans, Inc., 656 F.3d 1034, 1045 (9th Cir. 2011) (quoting Jablon 26 v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980)). 27 “However, a district court may do so ‘only if the assertions of 28 the complaint, read with the required liberality, would not Cervantes v. Countrywide Home 4 1 permit the plaintiff to prove that the statute was tolled.’” 2 Id. The ECOA prohibits a creditor from discriminating 3 against an applicant for credit “on the basis of race, color, 4 religion, national origin, sex or marital status, or age,” as 5 well as use of “any public assistance program,” or “because the 6 applicant has in good faith exercised any right under this 7 chapter.” 8 “any person who applies to a creditor directly for an extension, 9 renewal, or continuation of credit, or applies to a creditor 15 U.S.C. § 1691(a). The ECOA defines “applicant” as 10 indirectly by use of an existing credit plan for an amount 11 exceeding a previously established credit limit.” 12 § 1691a(b). 13 and equitable remedies against “[a]ny creditor who fails to 14 comply with any requirement imposed” by the ECOA. Id. Aggrieved applicants may bring an action for damages Id. § 1691e. 15 However, § 1691e(f) requires an applicant to bring any 16 claim within five years “after the date of the occurrence of the 17 violation.” 18 express exception to this limitation allowing for an applicant to 19 bring an action “not later than one year after” the commencement 20 of a proceeding or action by the Attorney General or any agency 21 having responsibility for administrative enforcement under 22 § 1691(c) against the creditor, if the Attorney General or agency 23 itself commenced its action within five years of the occurrence 24 of the violation. Id. § 1691e(f). The same subsection provides an Id. 25 Here, plaintiffs’ FAC alleges that defendants 26 discriminated against the Miwok Tribe during its loan application 27 and refinancing. 28 allege that IndyMac refused to allow the Miwok Tribe to use (FAC ¶¶ 17, 77-79.) 5 Plaintiffs specifically 1 property that it owned in its own name as security for that loan. 2 (See id. ¶ 79.) 3 take title in her own name to any property used as security and 4 that her name, not the Tribe’s, be used on the loan origination 5 and refinancing. 6 Instead, IndyMac allegedly insisted that Burley (See id.) Plaintiffs’ allegations in their FAC, (FAC ¶¶ 14, 44), 7 as well as the Deed of Trust dated April 20, 2007 that is 8 attached to the FAC and lists “IndyMac Bank” as the lender and 9 “Silvia Burley” as the borrower, (FAC Ex. B-7), clearly show that 10 plaintiffs refinanced the property at issue in 2007. Because the 11 discriminatory conduct giving rise to plaintiffs’ ECOA claim 12 allegedly occurred when plaintiffs sought financing through 13 IndyMac, (see FAC ¶¶ 17, 79), the alleged discrimination could 14 not have occurred later than April 20, 2007--the date Burley 15 signed the Deed of Trust on the property. 16 It is therefore clear from the face of plaintiffs’ FAC 17 that the five-year statute of limitations has run on plaintiffs’ 18 ECOA claim. 19 plaintiffs’ claim ran no later than April 20, 2012. 20 U.S.C. § 1691e(f). 21 was brought by the Attorney General or authorized agency within 22 the meaning of § 1691e(f), which plaintiffs neither allege nor 23 suggest occurred, plaintiffs would need to have commenced this 24 action no later than April 20, 2013. 25 Under the normal five-year limitation period, See 15 Even assuming that some enforcement action Id. Moreover, court finds no basis in plaintiffs’ FAC that 26 might plausibly support equitable tolling in this case. 27 applies equitable tolling “in situations where, despite all due 28 diligence, the party invoking equitable tolling is unable to 6 A court 1 obtain vital information bearing on the existence of the claim.” 2 Cervantes, 656 F.3d at 1045 (quoting Socop–Gonzalez v. I.N.S., 3 272 F.3d 1176, 1193 (9th Cir. 2001)). 4 alleged circumstances beyond their control that prevented them 5 from discovering defendants’ alleged acts of discrimination. 6 fact, because plaintiffs’ base their claim of discrimination on 7 the fact that defendants refused to let the Miwok Tribe use its 8 own land as security for the loan, there is no question that 9 plaintiffs were aware of the alleged facts constituting their 10 The plaintiffs have not In claim when they applied for the loan in or before 2007. 11 Accordingly, because it is clear from plaintiffs’ FAC 12 and the April 20, 2007 Deed of Trust attached to it that the 13 applicable statute of limitations for any ECOA claim based on 14 alleged discrimination during plaintiffs’ application for credit 15 in 2007 ran well before plaintiffs filed this action, the court 16 must grant defendants’ motion to dismiss this claim. 17 Cervantes, 656 F.3d at 1045-46. 18 19 B. See Truth In Lending Act Claim Among the various obligations of creditors created by 20 TILA is the requirement that “not later than 30 days after the 21 date on which a mortgage loan is sold or otherwise transferred or 22 assigned to a third party, the creditor that is the new owner or 23 assignee of the debt shall notify the borrower in writing of such 24 transfer.” 25 fails to comply with the requirement to give notice to a borrower 26 of a mortgage loan sale under § 1641(g) “with respect to any 27 person is liable to such person.” 28 liability provision contains a one-year statute of limitations 15 U.S.C. § 1641(g)(1). 7 Under TILA, any creditor who Id. § 1640(a). TILA’s 1 accruing from the date of the violation. 2 Id. § 1640(e). Here, plaintiffs allege two transfers of their loan for 3 which they received no notice as required by § 1641(g)(1): 4 First, in March 2009, IndyMac allegedly transferred plaintiffs’ 5 loan to OneWest. 6 loan was allegedly transferred again to Deutsche Bank. 7 61, 168.) 8 creditors to provide notice to plaintiffs of these transfers thus 9 expired in April 2009 and July 2010, respectively. 10 (FAC ¶¶ 59, 168.) Second, in June 2010, the (Id. ¶¶ The 30-day window in which § 1641(g)(1) required the The statute of limitations under § 1640(e) therefore 11 ran on plaintiffs’ first alleged violation in April 2010 and 12 their second alleged violation in July 2011. 13 Similar to their ECOA claim, the FAC has no allegations 14 suggesting that equitable tolling may save this claim. 15 Plaintiffs’ FAC shows that plaintiffs were informed of IndyMac’s 16 transfer of the loan to OneWest in February 19, 2010, when 17 OneWest recorded a Notice of Default and initiated foreclosure 18 proceedings against the property in question. 19 Plaintiffs even attach the Notice of Default, which shows that it 20 was filed on “Fri Feb 19 08:59:52 PST 2010” with the San Joaquin 21 County Recorders and lists “OneWest Bank, FSB,” along with 22 contact information for OneWest’s office in San Diego, as the 23 sender. 24 case where “despite all due diligence, the party invoking 25 equitable tolling is unable to obtain vital information bearing 26 on the existence of the claim.” 27 Plaintiffs could have easily discovered that a loan transfer had 28 taken place when the new creditor notified them of default and (See id. Ex. E-15.) (FAC ¶ 61.) Therefore, this is plainly not a Cervantes, 656 F.3d at 1045. 8 1 began to foreclose the secured property. 2 limitations was tolled until February 19, 2010, the time for 3 plaintiffs to bring their TILA claim still ran in 2011. 4 Even if the statute of Similarly, plaintiffs state in their FAC that “[o]n 5 June 21, 2010, an Assignment of Deed of Trust was recorded in the 6 Official Records of San Joaquin County . . . to grant the Deed of 7 Trust to Deutsche Bank National Trust Company, as Trustee of the 8 IndyMac INDA Mortgage Loan Trust 2007-AR3.” 9 Plaintiffs do not attach this Deed of Trust or documentation of 10 its assignment to their FAC, but the court must still assume the 11 truth of their allegation that an assignment of the Deed of Trust 12 was “recorded in the Official Records of San Joaquin County” on 13 June 21, 2010. 14 alleges no facts that might explain why plaintiffs, exercising 15 due diligence as required by the equitable tolling standard, 16 could not have learned of the assignment of the loan to Deutsche 17 Bank at that time. 18 equitably toll a statute of limitations because “plaintiffs have 19 not alleged circumstances beyond their control” that prevented 20 them from understanding loan documents that were readily 21 accessible to them). 22 statute of limitations ran on plaintiffs’ TILA claim for this 23 alleged violation in 2011. (FAC ¶ 66.) (Id.); see Scheuer, 416 U.S. at 236. The FAC See Cervantes, 656 F.3d at 1045 (declining to Therefore, the court concludes that the 24 Accordingly, because the applicable statute of 25 limitations for plaintiffs’ TILA claim based on these two alleged 26 violations ran before plaintiffs brought this action, the court 27 must grant defendants’ motion to dismiss this claim. 28 1045-46. 9 See id. at 1 2 C. The Court Declines to Exercise Supplemental Jurisdiction Over Plaintiffs’ State-Law Claims 3 Under 28 U.S.C. § 1367, a federal court may exercise 4 supplemental jurisdiction over state-law claims that are 5 sufficiently related to those claims over which they have 6 original jurisdiction. 7 of Am. v. Gibbs, 383 U.S. 715, 725 (1966). 8 court “may decline to exercise supplemental jurisdiction over a 9 claim . . . if . . . the district court has dismissed all claims 28 U.S.C. § 1367(a); United Mine Workers However, a district 10 over which it has original jurisdiction.” 11 § 1367(c)(3); see also Acri v. Varian Assocs., Inc., 114 F.3d 12 999, 1000 (9th Cir. 1997). 13 its preference that district courts do not exercise supplemental 14 jurisdiction over a plaintiffs’ state-law claims when the court 15 has dismissed all of plaintiffs’ federal-law claims before trial. 16 See Acri, 114 F.3d at 1001. 17 28 U.S.C. In fact, the Ninth Circuit has stated Accordingly, because the court will dismiss all 18 plaintiffs’ federal-law claims for failure to state a claim upon 19 which relief can be granted, the court declines to exercise 20 supplemental jurisdiction over plaintiffs’ remaining state-law 21 claims pursuant to 28 U.S.C. § 1367(c)(3). 22 23 D. Leave to Amend The decision to grant leave to amend the pleadings “is 24 within the sound discretion of the district court.” ABM Indus., 25 Inc. v. Zurich Am. Ins. Co., 237 F.R.D. 225, 227 (N.D. Cal. 2006) 26 (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th 27 Cir. 1987)). 28 “the court should freely give leave [to amend] when justice so In exercising its discretion, Rule 15 counsels that 10 1 requires.” 2 Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“We 3 have stressed Rule 15’s policy of favoring amendments, and we 4 have applied this policy with liberality.”). 5 be granted where the amendment of the complaint would cause the 6 opposing party undue prejudice, is sought in bad faith, 7 constitutes an exercise in futility, or creates undue delay.” 8 Ascon Properties, 866 F.2d at 1160. 9 Fed. R. Civ. P. 15(a)(2); see also Ascon Properties, But “leave need not The court dismissed plaintiffs’ initial Complaint for 10 want of federal question jurisdiction,3 and granted plaintiffs 11 leave to amend. (See Aug. 26, 2014 Order at 9.) 12 responded by filing the instant FAC, which abandons the claim 13 upon which they originally predicated federal jurisdiction and 14 substitutes two, new, federal claims for violations of the ECOA 15 and TILA. 16 failure to state a claim upon which relief can be granted. 17 Plaintiffs The court now dismisses these two federal claims for Having already given leave to amend once, the court has 18 granted plaintiffs ample opportunity present their best federal 19 claims to support jurisdiction in this court. 20 plaintiffs have raised their new federal claims under the ECOA 21 and TILA for the first time in their FAC, the court will afford However, because 22 23 24 25 26 27 28 3 The parties do not have diversity of citizenship that would allow this court to exercise subject matter jurisdiction pursuant to 28 U.S.C. § 1332, as Burley is a citizen of California, the Miwok Tribe is a federally-recognized tribal organization located in the San Joaquin Valley of California, and defendant OneWest is a federal savings bank with its principal place of business in California. (FAC ¶¶ 20-22; see August 26, 2014 Order at 4); 28 U.S.C. § 1332 (“[A] corporation shall be deemed to be a citizen of every State and foreign state . . . where it has its principal place of business.”). 11 1 them one more opportunity to amend those claims and only those 2 claims to state a claim upon which relief can be granted. 3 is not granted to add new or additional claims not included in 4 the FAC. 5 Leave IT IS THEREFORE ORDERED that OneWest Bank, FSB and 6 Deutsche Bank National Trust Company’s motion to dismiss, be, and 7 the same hereby is, GRANTED. 8 9 Plaintiffs have twenty days to file a second amended Complaint, addressing the deficiencies in their claims for an 10 ECOA violation and/or TILA violation, if they can do so 11 consistent with this Order. 12 Dated: December 2, 2014 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12

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