Bernardino et al v. Wells Fargo Bank NA et al
Filing
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ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS WITH LEAVE TO AMEND(SI, COURT STAFF) (Filed on 10/27/2011)
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NOT FOR PUBLICATION
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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EDUARDO BERNARDINO, and
ANA BERNARDINO,
United States District Court
For the Northern District of California
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ORDER GRANTING DEFENDANTS’
MOTIONS TO DISMISS WITH LEAVE
TO AMEND
Plaintiffs,
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No. C 11-03738 SI
v.
WELLS FARGO BANK, et al.,
Defendants.
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Defendants Kondaur Capital Corporation (“Kondaur”) and First American Trustee Servicing
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Solutions (“First American”) have moved to dismiss plaintiffs’ complaint. Defendant Wells Fargo Bank
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(“Wells Fargo”) has joined in Kondaur’s motion. (Docket No. 11). The motions are scheduled for a
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hearing on October 28, 2011. Pursuant to Civil Local Rule 7-1(b), the Court determines that the matters
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are appropriate for resolution without oral argument, and VACATES the hearing. For the reasons set
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forth below, the Court GRANTS defendants’ motions to dismiss.
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BACKGROUND
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In June 2007, Wells Fargo loaned plaintiffs Eduardo and Ana Bernardino $584,000. Compl. ¶¶
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2, 20. The loan was an “optional adjustable rate mortgage, interest only” and was secured by a deed of
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trust for plaintiffs’ residence, located at 68 E. Moltke St., Daly City, CA, 94104 (“Property”). Compl.
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¶ 2; Def. Kondaur’s Mot. to Dismiss, Request for Judicial Notice Docket No.10, Ex. A. The loan fell
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into default and a notice of default was recorded on July 13, 2009. Id. at Ex. C. The property was
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foreclosed upon and sold at a public auction on June 29, 2011, and the sale was recorded on July 5,
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2011. Id. at Ex. E. Plaintiffs, acting in pro per, initiated this action on June 21, 2011 by filing a
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complaint in San Mateo County Superior Court. The complaint was removed to this Court on July 29,
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2011, pursuant to 18 U.S.C. § 1331. Federal question jurisdiction is based on plaintiffs’ allegations
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under TILA, 15 U.S.C. § 1601 et seq, and RESPA, 12 U.S.C. § 2601 et seq. The complaint also alleges
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a variety of California state law claims.
Kondaur moved to dismiss plaintiffs’ complaint on August 31, 2011. Wells Fargo joined in
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Kondaur’s motion to dismiss. First American moved to dismiss on September 20, 2011. With respect
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to plaintiffs’ TILA and RESPA claims, both Kondaur and First American argue that the claims are
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barred by the relevant statutes of limitations. Defendants have also requested that the court take judicial
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United States District Court
For the Northern District of California
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notice of certain documents recorded in the San Mateo County Recorder’s Office. On September 28,
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2011, the Court ordered plaintiffs to show cause why their complaint should not be dismissed. Plaintiffs
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responded to Kondaur’s motion to dismiss on September 28, 2011 and to the Court’s order to show
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cause on October 7, 2011. Plaintiffs also attached oppositions to the motions of Wells Fargo and First
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American to their response to the Court’s October 7th order.
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LEGAL STANDARD
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Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it
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fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss,
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the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl.
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Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff
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to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.”
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Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).
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Pro se complaints are held to “less stringent standards than formal pleadings drafted by lawyers.”
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Haines v. Kerner, 404 U.S. 519, 520 (1972). Where a plaintiff is proceeding pro se, a court has an
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obligation to construe the pleadings liberally and to afford the plaintiff the benefit of any doubt. Bretz
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v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc). However, pro se pleadings must still
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allege facts sufficient to allow a reviewing court to determine whether a claim has been stated. Ivey v.
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Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). In considering a motion to
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dismiss, the court may take judicial notice of matters of public record outside the pleadings. Fed. R. of
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Evid. § 201(b)(2); MGIC Indemn. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).
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If a court dismisses the complaint, it must then decide whether to grant leave to amend.
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Dismissal of a pro se complaint without leave to amend is proper only if it is “absolutely clear that the
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deficiencies of the complaint could not be cured by amendment.” Noll v. Carlson, 809 F.2d 1446, 1448
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(9th Cir. 1987) (quoting Broughton v. Cutter Labs., 622 F.2d 458, 460 (9th Cir. 1980)).
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DISCUSSION
As a preliminary matter, both Kondaur and First American have requested that the Court take
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United States District Court
For the Northern District of California
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judicial notice of certain documents recorded in the San Mateo County Recorder’s Office. Plaintiffs
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oppose defendants’ requests for judicial notice on the ground that the documents do not satisfy the
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requirements of Federal Rules of Evidence § 201. Pls’ Opp. to Def.’s Mot. to Dismiss at 36. The Court
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disagrees, and takes judicial notice of the documents submitted by the defendants, because they are
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matters of public record and thus “capable of accurate and ready determination by resort to sources
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whose accuracy cannot be reasonably questioned.” Fed. R. of Evid. § 201(b)(2).
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I.
TILA Claims
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Plaintiffs’ fifth cause of action alleges that defendants violated TILA by failing to provide
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plaintiffs with “accurate material disclosures.” Compl. ¶ 77. Kondaur and First American both claim
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that the TILA cause of action is time-barred, because plaintiffs brought their TILA claims after the
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expiration of both the three-year statute of limitations for claims for rescission, and the one-year statue
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of limitations for monetary damages. Def. Kondaur’s Mot. to Dismiss at 6; Def. First American’s Mot.
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to Dismiss at 6. Plaintiffs contend, however, that they are entitled to equitable tolling, because the
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violations could not have been discovered by due diligence during the statutory period. Compl. ¶ 78.
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An action under TILA for monetary damages must be brought within one year from the date of
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the consummation of the loan. King v. California, 784 F.2d 910, 913-15 (9th Cir. 1986). The doctrine
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of equitable tolling suspends the limitations period, however, when the borrower did not have reasonable
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opportunity to discover the alleged fraud or nondisclosures. Id. at 915. In order to establish a claim for
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equitable tolling at the pleading stage, a plaintiff must allege facts demonstrating that the alleged
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violations could not have been discovered by due diligence during the one-year statutory period. See
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Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003). Conclusory allegations that a
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lender concealed or purposefully hid the facts surrounding a mortgage are insufficient to make a claim
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for equitable tolling at the pleading stage. See Lingad v. Indymac Fed. Bank, 682 F. Supp. 2d 1142,
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1148 (E.D. Cal. 2010) (denying equitable tolling in the context of a motion to dismiss where the plaintiff
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failed to allege facts demonstrating how the lender concealed the terms of the mortgage loan). An action
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under TILA for rescission is not subject to equitable tolling and is extinguished at the end of the
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three-year period. Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412-13 (1998).
United States District Court
For the Northern District of California
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The Court agrees with defendants that plaintiffs’ claims under TILA are time-barred. Plaintiffs
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brought their claim for monetary damages in June 2011, over a year after the loan’s consummation in
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June 2007. Thus, their damages claim is untimely unless they qualify for tolling. Plaintiffs fail to
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explain why they could not have discovered the alleged violation by reasonable due diligence during
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the one-year statutory period. Plaintiffs do not allege facts demonstrating how the lender concealed the
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terms of the mortgage loan. Plaintiffs do claim that they lack adequate control of the English language,
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and that they “were never given loan documents in [their] native tongue,” but do not explain why they
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could not have translated the loan documents within the one-year statutory period and thus discovered
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the alleged violations of TILA by due diligence. Pls.’ Opp. To Def.’s Mot. to Dismiss at 15; see
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Mendoza v. Wilmington Fin., C-10-5792 SC, 2011 WL 2182914, at *3 (N.D. Cal. June 6, 2011) (Conti,
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J.). Accordingly, the Court dismisses plaintiffs’ TILA claim for damages with leave to amend.
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Plaintiffs may amend their complaint if they can truthfully allege circumstances that would equitably
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toll the statute of limitations.
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Plaintiffs’ rescission claim is also time-barred, because it was first brought in June 2011, more
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than three years after the loan’s consummation in June 2007, and equitable tolling is not available for
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a claim of rescission. See Beach, 523 U.S. at 412-13. Accordingly, the Court dismisses plaintiffs’
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TILA claim for rescission without leave to amend.
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II.
RESPA Claims
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Plaintiffs’ sixth cause of action alleges that defendants violated RESPA because Wells Fargo
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was paid unearned and unreasonable fees. Compl. ¶ 89. Kondaur and First American both claim that
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the RESPA cause of action is time-barred by the statute’s one-year statue of limitations for violations
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of § 2607 or 2608, or its three-year statue of limitations for violations of § 2605. Def. Kondaur's Mot.
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to Dismiss at 7; Def. First American's Mot. to Dismiss at 7. Plaintiffs again contend that they are
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entitled to equitable tolling, because “[p]laintiffs pled that the facts surrounding this loan transaction
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were purposefully hidden and continue to be hidden from [them] to this day.” Pls.’ Opp. To Def.’s Mot.
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to Dismiss at 29.
United States District Court
For the Northern District of California
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The Court agrees with defendants that plaintiffs’ claims under RESPA are time-barred. When
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“more than three years [have] passed between the execution of the loans and the filing date, and . . .
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plaintiffs have not alleged any facts in the [pleadings] that would warrant tolling the statute of
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limitations, plaintiffs’ claims for damages under RESPA are time-barred and therefore must be denied
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without leave to amend.” Rivera v. BAC Home Loans Servicing, L.P., 756 F. Supp. 2d 1193, 1199 (N.D.
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Cal. 2010) (Seeborg, J.) (citing Huseman v. Icicle Seafoods, Inc., 471 F.3d 1116, 1120 (9th Cir. 2006)).
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Plaintiffs have not established grounds for equitable tolling of their RESPA claims for the same reasons
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that their claim for equitable tolling fails under TILA: conclusory allegations of the defendants’ alleged
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concealment of the facts surrounding the mortgage, even where plaintiffs face language barriers, is
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insufficient to demonstrate that the alleged violations could not have been discovered by reasonable due
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diligence. Accordingly, the Court dismisses plaintiffs’ RESPA claims. Plaintiffs may amend their
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complaint if they can truthfully allege circumstances that would equitably toll the statute of limitations.
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III.
State Claims
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Plaintiffs also allege numerous California state law claims. Because the Court has dismissed
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plaintiffs’ federal claims, the Court declines to exercise supplemental jurisdiction over the remaining
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state law claims at this time. See 28 U.S.C. § 1367(c)(3).
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CONCLUSION
For the foregoing reasons, the Court GRANTS defendants’ motions to dismiss. If plaintiffs wish
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to amend the complaint, they must do so by November 18, 2011.
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(Docket Nos.10, 11, 13)
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IT IS SO ORDERED.
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Dated: October 27, 2011
SUSAN ILLSTON
United States District Judge
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United States District Court
For the Northern District of California
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