Henderson v. Select Portfolio Services, Inc. et al

Filing 24

Order by Hon. James Donato granting 11 and 17 Motions to Dismiss. (jdlc3S, COURT STAFF) (Filed on 3/17/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 DONAVON HENDERSON, 7 Plaintiff, 8 ORDER GRANTING MOTION TO DISMISS v. 9 SELECT PORTFOLIO SERVICES, INC., et al., 10 11 United States District Court Northern District of California Case No. 3:15-cv-03028-JD Re: Dkt. Nos. 11 and 17 Defendants. 12 BACKGROUND 13 In late 2005, plaintiff Donavon Henderson (“Henderson”) obtained a loan in the amount of 14 $825,000 from defendant American Mortgage Express Corp. (“AMEC”), which was secured by a 15 16 17 18 19 deed of trust on the real property located at 3 Woodgate Place, Novato, CA 94945. Dkt. No. 1 ¶¶ 6, 10, 23; Dkt. No. 11-1, Ex A at 1-3.1 Henderson defaulted on his loan and on June 23, 2008, a Notice of Default and Election to Sell Under Deed of Trust was recorded. Dkt. No. 11-1, Ex. B. On April 18, 2011, the beneficiary of the original loan who is not party to this case transferred its interest to defendant U.S. Bank National Association (“USBNA”). Dkt. No. 11-1, Ex. C. 20 21 22 23 24 On June 30, 2015, Henderson brought this action against AMEC and USBNA, as well as Select Portfolio Servicing Inc. (“Select Portfolio”) and Bank of America, N.A. (“BANA”). The role the latter parties play in the case is somewhat opaque. Henderson says Select Portfolio is a loan servicing company, but it is unclear whether it serviced the original loan. Dkt. No. 1 ¶ 2. BANA’s role is even less clear. The complaint suggests that AMEC transferred its interest to 25 26 27 28 1 The Court takes judicial notice of Dkt. No. 11-1, Exs. A-C, and Dkt. No. 18, Exs. 1-3 under the “incorporation by reference” doctrine. “[E]ven though the plaintiff does not explicitly allege the contents of th[ese] document[s] in the complaint,” the plaintiff’s claim “depends on the contents of [these] documents,” and “the parties do not dispute the authenticity of the document[s].” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). 1 BANA, which then assigned its interest to USBNA. Id. ¶¶ 23, 33. But according to defendant 2 BANA, BANA was a former servicer of the loan and Select Portfolio is the current servicer. Dkt. 3 No. 17 at 2. 4 In any event, Henderson seeks statutory damages and rescission of his loan on the ground 5 that he never received the original mortgage disclosures required under the Truth in Lending Act, 6 15 U.S.C. § 1601 et seq., (“TILA”) and that he served defendants AMEC and BANA a notice of 7 rescission on June 21, 2011. Dkt. No. 1 ¶¶ 14, 17, 19-21, 25-30. Henderson also claims that 8 defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., (“FDCPA”) 9 by continuing to enforce the loan despite his purported rescission. Id. ¶¶ 31-32. In addition, under the Declaratory Judgment Act, 28 U.S.C. § 2201, (“DJA”), Henderson seeks a declaratory relief 11 United States District Court Northern District of California 10 that defendants’ security interest in the loan is void. Id. ¶ 33. Defendants Select Portfolio and USBNA move to dismiss the complaint as time-barred, 12 13 among other reasons. Dkt. No. 11 at 5-8. BANA moves to dismiss largely on the same arguments 14 and for failure to satisfy Fed. R. Civ. P. 8(A). Dkt. No. 17 at 4-10. The Court finds the case suitable for resolution without a hearing. Civil L.R. 7-1(b). After 15 16 carefully reviewing the parties’ submissions, the Court dismisses the complaint with leave to 17 amend. 18 19 DISCUSSION As an initial matter, Henderson’s rescission claim under TILA is time-barred. The statute 20 “grants borrowers an unconditional right to rescind for three days, after which they may rescind 21 only if the lender failed to satisfy the Act’s disclosure requirements.” Jesinoski v. Countrywide 22 Home Loans, Inc., 135 S. Ct. 790, 792 (2015). “Even if a lender never makes the required 23 disclosures, the ‘right of rescission . . . expire[s] three years after the date of consummation of the 24 transaction or upon the sale of the property, whichever comes first.’” Id. (citing 15 U.S.C. § 25 1635(f)). Henderson does not dispute in any of his opposition papers that his mortgage transaction 26 was consummated before October 28, 2005, when the deed of trust was recorded. Dkt. No. 11-1, 27 Ex. A. Consequently, even assuming that defendants did not provide the requisite disclosures, 28 Henderson’s right to rescind expired, at the latest, on October 28, 2008, and his notice of 2 1 rescission allegedly sent on June 21, 2011 was untimely by more than two and a half years. 2 Henderson’s invocation of equitable tolling does not save the rescission claim. See Dkt. 3 No. 1 ¶¶ 14-16. The Ninth Circuit has held that the 3-year limitation in § 1635(f) is a statute of 4 repose that “extinguishes [borrower’s] right to rescission . . . three years after the consummation of 5 the loan,” and is not subject to tolling. McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325, 6 1320 (9th Cir. 2012); see id. at 1329-30 (holding that the existence of a tolling agreement did not 7 extend the statute of repose for a TILA rescission claim); see also Balam-Chuc v. Mukasey, 547 8 F.3d 1044, 1048-50 (9th Cir. 2008) (explaining that unlike statute of limitations, statute of repose 9 is not subject to equitable tolling). 10 To the extent Henderson seeks statutory damages under Section 1640 of TILA, Dkt. No. 1 United States District Court Northern District of California 11 ¶ 19, this claim is also time-barred. A request for damages under TILA is subject to a one-year 12 statute of limitations. McOmie-Gray, 667 F.3d at 1328; 15 U.S.C. § 1640(e). In Meyer v. 13 Ameriquest Mortgage Co., 342 F.3d 899 (9th Cir. 2003), the Ninth Circuit held that a Section 14 1640 damages claim based on the defendant’s failure to make the required TILA disclosures 15 accrued “at the time the loan documents were signed,” when the plaintiffs “were in full possession 16 of all information relevant to the discovery of a TiLA violation.” 342 F.3d at 902. Henderson’s 17 damages claim accrued on October 21, 2005 when he signed his loan documents, Dkt. No. 11-1, 18 Ex. A at 12, and long expired by June 30, 2015 when he filed this suit, Dkt. No. 1 at 13. 19 Henderson argues that defendants’ fraud prevented him from discovering the violation and 20 should suspend the one-year statute of limitations. Dkt. No. 1 ¶¶ 14-16. But to seek equitable 21 tolling for fraudulent concealment, Henderson has the burden of establishing that “he has been 22 pursuing his rights diligently” and that “some extraordinary circumstances stood in his way.” 23 Credit Suisse Sec. (USA) LLC v. Simmonds, 132 S. Ct. 1414, 1419 (2012). Other than 24 conclusively asserting that Henderson “conducted his due diligence,” Dkt. No. 12 at 5, neither the 25 complaint nor Henderson’s opposition papers establishes the two elements. In his opposition 26 papers, Henderson alleges that he “hired a forensic loan auditor . . . [and] discovered several 27 inconsistencies and fraudulent documents recorded by Defendants.” Id. But again this does not 28 explain why Henderson could not have hired the auditor earlier. Henderson admits that once the 3 1 audit revealed defendants’ “wrongdoing,” he “immediately” sent his notice of rescission. Id. This 2 means, at the very least, by June 21, 2011 when he allegedly sent his notice of rescission, Dkt. No. 3 1 ¶ 14, Henderson must have known that defendants had not made the required disclosures. Since 4 Henderson did not file his claim until more than four years later, his TILA claim for statutory 5 damages is time-barred. 6 The FDCPA claim also cannot survive defendants’ motions to dismiss. The FDCPA prohibits “debt collector[s]” from “making false or misleading representations and from engaging 8 in various abusive and unfair practices.” Heintz v. Jenkins, 514 U.S. 291, 292 (1995). Rather than 9 plead the elements of an FDCPA claim, Henderson asserts only that he “believes” defendants “are 10 simply just going to attempt to take their home without even proving they have the right to do so.” 11 United States District Court Northern District of California 7 Dkt. No. 1 ¶ 32. This barest of allegations does not come close to stating an FDCPA claim. As an 12 initial matter, Henderson does not say which defendant might take the actions he alleges. On the 13 face of the complaint, it is unclear whether any defendant has taken any action at all against him. 14 At most, Henderson asserts a subjective belief or fear that defendants “are . . . going to attempt” 15 foreclosure in the future. Id. That does not fit within the purview of the FDCPA’s concerns and 16 falls short of satisfying Fed. R. Civ. P. 8(a), which requires a complaint to “say enough to give the 17 defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Tellabs, 18 Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319 (2007) (citation and internal quotation 19 marks omitted). 20 Even assuming that defendants did attempt to foreclose Henderson’s property by using 21 “abusive and unfair practices,” Heintz, 514 U.S. at 292, the FDCPA claim is unlikely to survive. 22 Although the Ninth Circuit has not spoken on the issue of whether non-judicial foreclosure 23 activities constitute “debt collection” within the meaning of the FDCPA, the vast majority of 24 district courts within this circuit that have considered the issue have concluded that they are not. 25 Cromwell v. Deutsche Bank Nat. Trust Co., No. 11-cv-2693-PJH, 2012 WL 244928, at *2 (N.D. 26 Cal. 2012) (collecting cases). 27 28 Since TILA and FDCPA claims fail, Henderson cannot maintain a valid cause of action under the DJA. Dkt. No. 1 ¶ 33. The DJA is a remedial statute, and does not confer an 4 1 independent subject matter jurisdiction. Countrywide Home Loans, Inc., v. Mortgage Guar. Ins. 2 Corp., 642 F.3d 849, 853 (9th Cir. 2011). Because Henderson has not established subject matter 3 jurisdiction over his claims under any other statute, the Court dismisses Henderson’s claim for a 4 declaratory relief. CONCLUSION 5 6 The complaint is dismissed in its entirety, with leave to amend. Although the Court is 7 doubtful that Henderson can cure the deficiencies of the complaint by amendment, considering his 8 pro se status, it will afford an opportunity to do so. See Ramirez v. Galaza, 334 F.3d 850, 861 (9th 9 Cir. 2003) (“Leave to amend . . . should be granted more liberally to pro se plaintiffs.”). If Henderson chooses to file an amended complaint, he may not add any new claims or parties to the 11 United States District Court Northern District of California 10 complaint, and the amended complaint must be filed within twenty-one (21) days of the date this 12 order is filed. Failure to amend within the designated time will result in the dismissal of this 13 action with prejudice. 14 15 IT IS SO ORDERED. Dated: March 17, 2016 16 17 JAMES DONATO United States District Judge 18 19 20 21 22 23 24 25 26 27 28 5

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