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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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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,

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MEMORANDUM AND ORDER RE: MOTION
TO DISMISS

Plaintiffs,

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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.

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----oo0oo---Plaintiffs Silvia Burley and the California Valley

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Miwok Tribe (“Miwok Tribe”) brought this action against

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defendants OneWest Bank, FSB (“OneWest”), Deutsche Bank National

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Trust Company (“Deutsche Bank”), and Meridian Foreclosure Service

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(“Meridian”) to recover title over land and damages in connection

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with the alleged wrongful foreclosure and sale of the plaintiffs’

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real property.

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(“Aug. 26, 2014 Order”) dismissing plaintiffs’ case for lack of

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subject matter jurisdiction and giving plaintiffs’ twenty days to

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file an amended complaint.1

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their First Amended Complaint (“FAC”) asserting claims under the

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Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691, et

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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

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seq., and several state law claims essentially repeated from

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their original Complaint.

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I.

(Docket No. 18.)

Factual & Procedural History

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Burley is the chairperson of the Miwok Tribe, which is

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a federally-recognized Indian tribe.

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29, 2002, the Miwok Tribe purchased a parcel of land in Stockton,

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California.

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issued a resolution authorizing Burley to obtain a loan for the

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property and to take title to the property on behalf of the Miwok

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Tribe.

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refinanced the property on behalf of the Miwok Tribe in 2006 and

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2007, and quitclaimed the property back to the Miwok Tribe in

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2008.

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(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

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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.)

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IndyMac Bank (“IndyMac”).

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IndyMac entered bankruptcy, OneWest purchased the assets of

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IndyMac from the Federal Deposit Insurance Corporation (“FDIC”),

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including the beneficial interest in plaintiffs’ loan.

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59)

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(Id. ¶ 22.)

In March 2009, after

(Id. ¶

Burley and the Miwok Tribe allege that they are waiting

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for funds owed to them by the Revenue Sharing Trust Fund.2

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¶ 46, 86.)

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payments for the property.

(Id.

In the meantime, plaintiffs fell behind on loan
(See id. ¶ 57.)

On February 19,

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2010, OneWest recorded a Notice of Default and initiated

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foreclosure proceedings.

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Sale recorded in San Joaquin County on November 6, 2013, reflects

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that Deutsche Bank purchased the property at a foreclosure sale

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for roughly one-third of the alleged amount of unpaid debt.

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¶ 72.)

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(Id. ¶¶ 61, 88.)

A Trustee’s Deed Upon

(Id.

Plaintiffs allege that the terms of financing reflected

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in the Deed of Trust filed with the Official Records of San

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Joaquin County on April 30, 2007, are different from the terms

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that plaintiffs had originally agreed to during discussions with

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the defendants’ representatives.

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result, plaintiffs contend that OneWest listed an “excessive”

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amount on its Notice of Default, wrongfully foreclosed on the

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property, and initiated an unlawful detainer action against

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Burley.

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discriminated against plaintiffs during their application for the

(Id. ¶¶ 61, 63, 75.)

(Id. ¶ 38, 45-46.)

As a

Defendants also allegedly

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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.
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loan, (id. ¶¶ 17, 77-79), and failed to comply with certain

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requirements of foreclosure over tribal land, (id. ¶ 63).

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Defendants now move to dismiss all claims in the FAC pursuant to

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Federal Rule of Civil Procedure 12(b)(6) for failure to state a

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claim upon which relief can be granted.

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II.

(Docket No. 22.)

Discussion

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On a motion to dismiss under Rule 12(b)(6), the court

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must accept the allegations in the complaint as true and draw all

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reasonable inferences in favor of the plaintiff.

See Scheuer v.

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Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by

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Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S.

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319, 322 (1972).

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must plead “only enough facts to state a claim to relief that is

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plausible on its face.”

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544, 570 (2007).

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for more than a sheer possibility that a defendant has acted

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unlawfully,” and where a plaintiff pleads facts that are “merely

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consistent with a defendant’s liability,” it “stops short of the

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line between possibility and plausibility.”

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556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

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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

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dismiss a claim ‘[i]f the running of the statute is apparent on

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the face of the complaint.’”

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Loans, Inc., 656 F.3d 1034, 1045 (9th Cir. 2011) (quoting Jablon

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v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980)).

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“However, a district court may do so ‘only if the assertions of

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the complaint, read with the required liberality, would not

Cervantes v. Countrywide Home

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permit the plaintiff to prove that the statute was tolled.’”

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Id.

The ECOA prohibits a creditor from discriminating

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against an applicant for credit “on the basis of race, color,

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religion, national origin, sex or marital status, or age,” as

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well as use of “any public assistance program,” or “because the

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applicant has in good faith exercised any right under this

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chapter.”

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“any person who applies to a creditor directly for an extension,

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renewal, or continuation of credit, or applies to a creditor

15 U.S.C. § 1691(a).

The ECOA defines “applicant” as

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indirectly by use of an existing credit plan for an amount

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exceeding a previously established credit limit.”

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§ 1691a(b).

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and equitable remedies against “[a]ny creditor who fails to

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comply with any requirement imposed” by the ECOA.

Id.

Aggrieved applicants may bring an action for damages

Id. § 1691e.

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However, § 1691e(f) requires an applicant to bring any

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claim within five years “after the date of the occurrence of the

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violation.”

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express exception to this limitation allowing for an applicant to

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bring an action “not later than one year after” the commencement

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of a proceeding or action by the Attorney General or any agency

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having responsibility for administrative enforcement under

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§ 1691(c) against the creditor, if the Attorney General or agency

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itself commenced its action within five years of the occurrence

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of the violation.

Id. § 1691e(f).

The same subsection provides an

Id.

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Here, plaintiffs’ FAC alleges that defendants

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discriminated against the Miwok Tribe during its loan application

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and refinancing.

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allege that IndyMac refused to allow the Miwok Tribe to use

(FAC ¶¶ 17, 77-79.)

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Plaintiffs specifically

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property that it owned in its own name as security for that loan.

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(See id. ¶ 79.)

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take title in her own name to any property used as security and

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that her name, not the Tribe’s, be used on the loan origination

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and refinancing.

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Instead, IndyMac allegedly insisted that Burley

(See id.)

Plaintiffs’ allegations in their FAC, (FAC ¶¶ 14, 44),

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as well as the Deed of Trust dated April 20, 2007 that is

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attached to the FAC and lists “IndyMac Bank” as the lender and

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“Silvia Burley” as the borrower, (FAC Ex. B-7), clearly show that

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plaintiffs refinanced the property at issue in 2007.

Because the

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discriminatory conduct giving rise to plaintiffs’ ECOA claim

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allegedly occurred when plaintiffs sought financing through

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IndyMac, (see FAC ¶¶ 17, 79), the alleged discrimination could

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not have occurred later than April 20, 2007--the date Burley

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signed the Deed of Trust on the property.

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It is therefore clear from the face of plaintiffs’ FAC

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that the five-year statute of limitations has run on plaintiffs’

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ECOA claim.

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plaintiffs’ claim ran no later than April 20, 2012.

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U.S.C. § 1691e(f).

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was brought by the Attorney General or authorized agency within

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the meaning of § 1691e(f), which plaintiffs neither allege nor

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suggest occurred, plaintiffs would need to have commenced this

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action no later than April 20, 2013.

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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

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might plausibly support equitable tolling in this case.

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applies equitable tolling “in situations where, despite all due

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diligence, the party invoking equitable tolling is unable to
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A court

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obtain vital information bearing on the existence of the claim.”

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Cervantes, 656 F.3d at 1045 (quoting Socop–Gonzalez v. I.N.S.,

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272 F.3d 1176, 1193 (9th Cir. 2001)).

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alleged circumstances beyond their control that prevented them

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from discovering defendants’ alleged acts of discrimination.

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fact, because plaintiffs’ base their claim of discrimination on

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the fact that defendants refused to let the Miwok Tribe use its

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own land as security for the loan, there is no question that

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plaintiffs were aware of the alleged facts constituting their

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The plaintiffs have not

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claim when they applied for the loan in or before 2007.

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Accordingly, because it is clear from plaintiffs’ FAC

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and the April 20, 2007 Deed of Trust attached to it that the

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applicable statute of limitations for any ECOA claim based on

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alleged discrimination during plaintiffs’ application for credit

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in 2007 ran well before plaintiffs filed this action, the court

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must grant defendants’ motion to dismiss this claim.

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Cervantes, 656 F.3d at 1045-46.

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B.

See

Truth In Lending Act Claim
Among the various obligations of creditors created by

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TILA is the requirement that “not later than 30 days after the

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date on which a mortgage loan is sold or otherwise transferred or

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assigned to a third party, the creditor that is the new owner or

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assignee of the debt shall notify the borrower in writing of such

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transfer.”

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fails to comply with the requirement to give notice to a borrower

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of a mortgage loan sale under § 1641(g) “with respect to any

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person is liable to such person.”

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liability provision contains a one-year statute of limitations

15 U.S.C. § 1641(g)(1).

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Under TILA, any creditor who

Id. § 1640(a).

TILA’s

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accruing from the date of the violation.

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Id. § 1640(e).

Here, plaintiffs allege two transfers of their loan for

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which they received no notice as required by § 1641(g)(1):

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First, in March 2009, IndyMac allegedly transferred plaintiffs’

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loan to OneWest.

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loan was allegedly transferred again to Deutsche Bank.

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61, 168.)

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creditors to provide notice to plaintiffs of these transfers thus

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expired in April 2009 and July 2010, respectively.

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(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

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ran on plaintiffs’ first alleged violation in April 2010 and

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their second alleged violation in July 2011.

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Similar to their ECOA claim, the FAC has no allegations

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suggesting that equitable tolling may save this claim.

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Plaintiffs’ FAC shows that plaintiffs were informed of IndyMac’s

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transfer of the loan to OneWest in February 19, 2010, when

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OneWest recorded a Notice of Default and initiated foreclosure

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proceedings against the property in question.

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Plaintiffs even attach the Notice of Default, which shows that it

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was filed on “Fri Feb 19 08:59:52 PST 2010” with the San Joaquin

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County Recorders and lists “OneWest Bank, FSB,” along with

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contact information for OneWest’s office in San Diego, as the

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sender.

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case where “despite all due diligence, the party invoking

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equitable tolling is unable to obtain vital information bearing

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on the existence of the claim.”

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Plaintiffs could have easily discovered that a loan transfer had

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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.

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began to foreclose the secured property.

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limitations was tolled until February 19, 2010, the time for

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plaintiffs to bring their TILA claim still ran in 2011.

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Even if the statute of

Similarly, plaintiffs state in their FAC that “[o]n

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June 21, 2010, an Assignment of Deed of Trust was recorded in the

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Official Records of San Joaquin County . . . to grant the Deed of

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Trust to Deutsche Bank National Trust Company, as Trustee of the

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IndyMac INDA Mortgage Loan Trust 2007-AR3.”

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Plaintiffs do not attach this Deed of Trust or documentation of

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its assignment to their FAC, but the court must still assume the

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truth of their allegation that an assignment of the Deed of Trust

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was “recorded in the Official Records of San Joaquin County” on

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June 21, 2010.

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alleges no facts that might explain why plaintiffs, exercising

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due diligence as required by the equitable tolling standard,

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could not have learned of the assignment of the loan to Deutsche

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Bank at that time.

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equitably toll a statute of limitations because “plaintiffs have

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not alleged circumstances beyond their control” that prevented

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them from understanding loan documents that were readily

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accessible to them).

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statute of limitations ran on plaintiffs’ TILA claim for this

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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

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Accordingly, because the applicable statute of

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limitations for plaintiffs’ TILA claim based on these two alleged

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violations ran before plaintiffs brought this action, the court

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must grant defendants’ motion to dismiss this claim.

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1045-46.
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See id. at

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C.

The Court Declines to Exercise Supplemental

Jurisdiction Over Plaintiffs’ State-Law Claims

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Under 28 U.S.C. § 1367, a federal court may exercise

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supplemental jurisdiction over state-law claims that are

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sufficiently related to those claims over which they have

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original jurisdiction.

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of Am. v. Gibbs, 383 U.S. 715, 725 (1966).

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court “may decline to exercise supplemental jurisdiction over a

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claim . . . if . . . the district court has dismissed all claims

28 U.S.C. § 1367(a); United Mine Workers
However, a district

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over which it has original jurisdiction.”

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§ 1367(c)(3); see also Acri v. Varian Assocs., Inc., 114 F.3d

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999, 1000 (9th Cir. 1997).

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its preference that district courts do not exercise supplemental

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jurisdiction over a plaintiffs’ state-law claims when the court

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has dismissed all of plaintiffs’ federal-law claims before trial.

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See Acri, 114 F.3d at 1001.

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28 U.S.C.

In fact, the Ninth Circuit has stated

Accordingly, because the court will dismiss all

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plaintiffs’ federal-law claims for failure to state a claim upon

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which relief can be granted, the court declines to exercise

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supplemental jurisdiction over plaintiffs’ remaining state-law

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claims pursuant to 28 U.S.C. § 1367(c)(3).

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D.

Leave to Amend
The decision to grant leave to amend the pleadings “is

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within the sound discretion of the district court.”

ABM Indus.,

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Inc. v. Zurich Am. Ins. Co., 237 F.R.D. 225, 227 (N.D. Cal. 2006)

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(citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th

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Cir. 1987)).

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“the court should freely give leave [to amend] when justice so

In exercising its discretion, Rule 15 counsels that

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requires.”

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Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“We

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have stressed Rule 15’s policy of favoring amendments, and we

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have applied this policy with liberality.”).

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be granted where the amendment of the complaint would cause the

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opposing party undue prejudice, is sought in bad faith,

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constitutes an exercise in futility, or creates undue delay.”

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Ascon Properties, 866 F.2d at 1160.

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Fed. R. Civ. P. 15(a)(2); see also Ascon Properties,

But “leave need not

The court dismissed plaintiffs’ initial Complaint for

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want of federal question jurisdiction,3 and granted plaintiffs

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leave to amend. (See Aug. 26, 2014 Order at 9.)

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responded by filing the instant FAC, which abandons the claim

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upon which they originally predicated federal jurisdiction and

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substitutes two, new, federal claims for violations of the ECOA

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and TILA.

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failure to state a claim upon which relief can be granted.

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Plaintiffs

The court now dismisses these two federal claims for

Having already given leave to amend once, the court has

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granted plaintiffs ample opportunity present their best federal

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claims to support jurisdiction in this court.

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plaintiffs have raised their new federal claims under the ECOA

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and TILA for the first time in their FAC, the court will afford

However, because

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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.”).
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them one more opportunity to amend those claims and only those

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claims to state a claim upon which relief can be granted.

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is not granted to add new or additional claims not included in

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the FAC.

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Leave

IT IS THEREFORE ORDERED that OneWest Bank, FSB and

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Deutsche Bank National Trust Company’s motion to dismiss, be, and

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the same hereby is, GRANTED.

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Plaintiffs have twenty days to file a second amended
Complaint, addressing the deficiencies in their claims for an

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ECOA violation and/or TILA violation, if they can do so

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consistent with this Order.

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Dated:

December 2, 2014

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