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

Filing 28

ORDER granting 10 Motion to Dismiss. The remainder of this case is REMANDED to the Superior Court in Santa Clara County. The clerk shall close this file. (ejdlc4S, COURT STAFF) (Filed on 7/17/2013)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8

NORTHERN DISTRICT OF CALIFORNIA

9

SAN JOSE DIVISION

United States District Court
For the Northern District of California

10

ANH QUACH,

11
12
13

Plaintiff,
v.
BANK OF AMERICA, N.A., ET AL.,

14
15

Defendants.

16
17

)
)
)
)
)
)
)
)
)
)
)
)

Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS

[Re: Docket Item No. 10]

Presently before the Court in this mortgage foreclosure action is Defendants Bank of

18

America, N.A. (“Bank of America”), the Bank of New York, Recontrust Company, Inc.

19

(“Recontrust”), and Mortgage Electronic Registration Systems, Inc.’s (“MERS”) (collectively,

20

“Defendants”) Motion to Dismiss Plaintiff Anh Quach’s (“Ms. Quach”) Complaint. Docket Item

21

No. 10. The Court found this matter suitable for decision without oral argument pursuant to Civil

22

Local Rule 7-1(b) and previously vacated the hearing. Having fully reviewed the parties’ briefing,

23

and for the following reasons, the Court GRANTS Defendants’ motion.

24

I. Background

25

A. Factual Background

26

Ms. Anh Quach is the successor-in-interest to her now-deceased spouse, Mr. Thanh N.

27

Kim. Compl. ¶ 3. On May 17, 2006, Mr. Kim signed a Deed of Trust, putting a lien on his

28

property (“the property” or “Ms. Quach’s property”) at 1110 Alvernaz Drive, San Jose, California
1
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

95121-2502, in order to secure a promissory note with America’s Wholesale Lender. Compl. ¶ 10,

2

Ex. B. On June 6, 2006, the Deed of Trust was recorded with the Santa Clara County Recorder’s

3

Office. Compl. ¶ 10, Ex. B. The Deed of Trust named MERS as the beneficiary and nominee for

4

America’s Wholesale Lender. Id. The Deed of Trust grants the lender the power to foreclose on

5

and sell Ms. Quach’s property if the mortgage goes unpaid. Compl. Ex. B.

6

On June 30, 2006, America’s Wholesale Lender securitized and sold the promissory note to

7

the CWALT Series 2006-OA11 Trust. Compl. ¶ 10, Ex. C at 21. Ms. Quach alleges that this

8

action occurred in breach of the Pooling and Servicing Agreement for the trust, and that the Bank

9

of New York is the assignee of the beneficial interest as trustee for the securitized trust. Compl. ¶

United States District Court
For the Northern District of California

10

11, Ex. C at 23, 37-38. Bank of America collected mortgage payments as servicer to the loan

11

securitizing the Deed of Trust. Compl. ¶ 13.

12

On June 24, 2011, MERS recorded an Assignment of the Deed of Trust in Santa Clara

13

County, conveying its interest in Ms. Quach’s property to the Bank of New York, as trustee of the

14

CWALT Series 2006-OA11 Trust. Compl. ¶ 23. Ms. Quach asserts that Alice Rowe served as the

15

signer of record for MERS, but that Ms. Rowe is a so-called “robo-signer,” employed with Bank of

16

America who does not actually have the authority to sign for MERS. Id.

17

On March 13, 2012, Recontrust, purporting to act as agent of the Bank of New York,

18

recorded a Notice of Default and Election to Sell Under Deed of Trust (“Notice of Default”) in

19

Santa Clara County against Ms. Quach’s property. See Compl. Ex. E. Ms. Quach asserts that the

20

Notice of Default was signed by Martha Casillas without the requisite authority. Compl. ¶ 27, Ex.

21

E. The Notice of Default is accompanied by a California declaration of compliance, signed by

22

Mark Alexander. Id. Ms. Quach identifies him as another “robo-signer,” who signed this

23

document without the required authority. Id.

24

Thereafter, Recontrust issued a Notice of Trustee’s Sale, setting a sale date for Ms. Quach’s

25

property of January 9, 2013. Compl., Ex. F. Defendants assert that the property has not yet been

26

sold; Ms. Quach does not allege that her property has been sold. Def.’s Mot. to Dismiss at 22; see

27

generally Compl.

28
2
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1
2

B. Procedural History
On January 3, 2013, Ms. Quach filed a complaint in California Superior Court in Santa
Clara County, alleging eight causes of action including breaches of express and implied

4

agreements, slander of title, and wrongful foreclosure, as well as violations of California Civil

5

Code section 2923.5, the federal Truth in Lending Act (“TILA,” 15 U.S.C. § 1601, et seq.), the

6

federal Racketeer Influenced and Corrupt Organizations Act (“RICO,” 18 U.S.C. § 1961, et seq.),

7

and California’s unfair competition law (Cal. Bus. & Prof. Code § 17200). On February 4, 2013,

8

the action was removed to federal court on the basis of federal question jurisdiction pursuant to 28

9

U.S.C. §§ 1331 and 1441(b). Docket Item No. 1. On February 11, 2013, Defendants filed a

10
United States District Court
For the Northern District of California

3

motion to dismiss as to all causes of action. Docket Item No. 10. The Court now turns to the

11

substance of that motion.

12

II. Legal Standard

13

A complaint must contain a statement of the court’s basis for jurisdiction, a short and plain

14

statement that the complainant is entitled to relief, and a demand for the relief sought. Fed. R. Civ.

15

P. 8(a). A claim may be attacked by a motion to dismiss if it fails to demonstrate the subject-

16

matter jurisdiction of the court or fails to state a claim upon which relief may be granted. See Fed.

17

R. Civ. P. 12(b)(1), 12(b)(6). At the motion to dismiss stage, the court must read and construe the

18

complaint in the light most favorable to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80

19

F.3d 336, 337-38 (9th Cir. 1996). However, in order to give a defendant “fair notice of what the …

20

claim is and grounds upon which it rests,” a plaintiff must plead each claim with sufficient

21

specificity. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations

22

omitted). Therefore, dismissal is appropriate when the claim lacks a legally cognizable theory or

23

fails to allege sufficient facts in support of a legally cognizable theory. Mendiondo v. Centinela

24

Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). While a court will generally accept as true

25

all well-pled factual allegations, it need not accept as true legal conclusions “couched as a factual

26

allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009) (citing Twombly, 550 U.S. at 555).

27

Factual allegations also must be plausible on their face and more than merely speculative.

28

Twombly, 550 U.S. at 556-57. Determining the plausibility of a claim is a “context-specific task,”
3
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

which requires a court to draw on “judicial experience and common sense.” Iqbal, 556 U.S. at 679.

2

At the same time, a complaint need not contain detailed factual allegations to survive a motion to

3

dismiss. Twombly, 550 U.S. at 555.

4

III. Discussion

5

The present Complaint contains two causes of action invoking the original jurisdiction of

6

this Court: the Sixth Cause of Action for violation of TILA and the Seventh Cause of Action for

7

violation of the federal RICO Act. Neither claim can be maintained.

8
9

A. Quach’s Sixth Cause of Action: Violation of TILA (15 U.S.C. § 1601, et seq.)
Though Ms. Quach alleges violation of TILA in her Complaint, she does not address

United States District Court
For the Northern District of California

10

Defendants’ arguments in her responsive pleadings. See generally Pl.’s Opp’n to Def.’s Mot. to

11

Dismiss. To the extent that she maintains this claim, however, this cause of action is barred by the

12

applicable statutes of limitations.

13

The purpose of TILA is to provide borrowers with ready access to understandable, accurate

14

loan information so that they can avoid assuming undesired financial risks. 15 U.S.C. § 1601(a).

15

TILA has the intended collateral benefit of improving competition in the lending markets by

16

allowing consumers an easy means for comparing credit products side-by-side. Id. TILA

17

accomplishes these ends by forcing lenders to disclose certain standard information about offered

18

loans. See, e.g., 15 U.S.C. §§ 1631-1639h (discussing loan disclosure requirements). Ms. Quach

19

alleges that Defendants violated TILA by failing to provide her with “accurate material disclosures

20

required under TILA and not taking into account the intent of the . . . Legislature in approving

21

[this] statute which was to fully inform home buyers of the pros and cons of adjustable rate

22

mortgages in a language . . . that they can understand and comprehend.” Compl. ¶ 66. She

23

requests damages—including statutory and punitive damages—as well as equitable restitution and

24

disgorgement of profits obtained by Defendants. Compl. ¶¶ 69-71.

25

Such an action seeking redress for TILA violations is subject to TILA’s distinct statutes of

26

limitations. See id. §§ 1635(f), 1640(e). Ordinarily, for an action pursuing damages, a plaintiff

27

must bring suit within one year of the signing of the loan documents. Id. § 1640(e); see also Meyer

28

v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003). Similarly, an action seeking
4
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

rescission must be filed within three years of the same date and is not subject to equitable tolling.

2

15 U.S.C. § 1635(f); Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998) (disallowing equitable

3

tolling for TILA rescission claims). By Ms. Quach’s admission, her husband and predecessor-in-

4

interest, Mr. Kim, signed the relevant Deed of Trust and accompanying promissory note on May

5

17, 2006. Compl. ¶ 10, Ex. B. In order to timely bring an action under TILA for damages, she

6

should have filed a complaint for TILA violations against Defendants by the same date in 2007. In

7

order to seek rescission in this case, she should have filed suit in 2009. Ms. Quach’s original

8

complaint, filed in Santa Clara County Superior Court, is dated January 3, 2013. This action

9

therefore comes several years too late: TILA’s statute of limitations absolutely bars any claim for

United States District Court
For the Northern District of California

10

rescission and presumptively bars claims for damages. 15 U.S.C. §§ 1635(f), 1640(e); Ocwen, 523

11

U.S. at 412.

12

The Complaint does contain assertions that Defendants’ failure to provide required TILA

13

disclosures and “violations of prohibitions regarding high-rate, high-fee loans” tolls the relevant

14

statutes of limitations. Compl. ¶ 67. This claim misstates the law—the mere existence of TILA

15

violations does not support equitable tolling of TILA’s statutes of limitations. Garcia v. Wachovia

16

Mortg. Co., 676 F. Supp. 2d 895, 906 (C.D. Cal. 2009). Rather, “[e]quitable tolling is generally

17

applied in situations where the claimant has actively pursued his judicial remedies by filing a

18

defective pleading during the statutory period, or where the complainant has been induced or

19

tricked by his adversary's misconduct into allowing the filing deadline to pass.” O’Donnell v.

20

Vencor Inc., 465 F.3d 1063, 1068 (9th Cir. 2006) (internal quotations omitted). The Complaint

21

contains no allegations that Ms. Quach pursued judicial remedies during the statutory period or that

22

Defendants tricked her into allowing the filing deadline to pass. See generally Compl. Ms. Quach

23

submits no opposition to Defendants’ argument on this point (see generally Pl’s Opp’n to Def.’s

24

Mot. to Dismiss). This lack of factual allegation and opposition demonstrates that amendment here

25

would be futile. See Miller v. Rykoff-Sexton, 845 F.2d 209, 214 (9th Cir. 1988) (providing

26

standard for determining futility of amendment).

27
28

The Court therefore finds that TILA’s statutes of limitations bar Ms. Quach’s TILA claims,
that the Complaint contains insufficient factual allegations in support of equitable tolling, and that
5
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

amendment would be futile. Accordingly, the Court GRANTS Defendant’s Motion to Dismiss as

2

to the Sixth Cause of Action WITHOUT LEAVE TO AMEND.

3
4

B. The Seventh Cause of Action: Violation of RICO Act (18 U.S.C. § 1961, et seq.)
The federal RICO Act creates civil liability for engaging in a pattern of racketeering. 18

5

U.S.C. § 1962(c). Under RICO a plaintiff must sufficiently allege the (1) conduct (2) of an

6

enterprise (3) through a pattern (4) of racketeering activity (5) causing injury to his or her business

7

or property. Id. §§ 1964, 1962(c); Sedima, SPRL v. Imrex, Co., 473 U.S. 479, 496 (1985);

8

Grimmet v. Brown, 75 F.3d 506, 510 (9th Cir. 1996). The fourth element, “racketeering activity,”

9

consists of a list of so-called “predicate acts” enumerated in 18 U.S.C. § 1961(1). Grimmet, 75

United States District Court
For the Northern District of California

10

F.3d at 510. A complaint founded on a violation of the RICO Act must expressly identify the acts

11

which constitute such “predicate acts.” Pineda v. Saxon Mortg. Servs., No. SACV 08-1187 JVS

12

(ANx), 2008 WL 5187813 (C.D. Cal. Dec. 10, 2008). Because of RICO’s quasi-criminal nature,

13

courts are encouraged to root out improper RICO allegations at early stages of litigation. See

14

Wagh v. Metris Direct, Inc., 348 F.3d 1102, 1108 (9th Cir. 2003).

15

Here, Ms. Quach’s Complaint notably lacks any factual allegation satisfying the

16

“enterprise” element. Compl. ¶¶ 72-78. She similarly does not clarify which Defendant allegedly

17

performed which actions that might constitute a RICO violation, leaving Defendants without “fair

18

notice of what the … claim is and [the] grounds upon which it rests.” Twombly, 550 U.S. at 555.

19

This lack of notice would be sufficient to dismiss this cause of action under Federal Rule of Civil

20

Procedure 8.

21

However, the analysis does not end here because Ms. Quach alleges that the predicate acts

22

in this case constitute fraud. Compl. ¶ 74. Such an allegation of fraud triggers the heightened

23

pleading standard of Federal Rule of Civil Procedure 9(b) (requiring fraud to be pled with factual

24

particularity). See Moore v. Kayport Package Express, Inc., 885 F.3d 531, 541 (9th Cir. 1989).

25

Ms. Quach alleges that the fraudulent acts here include “bringing suit on behalf of entities which

26

are not the real parties in interest,” and “concealing the parties’ lack of standing in . . . complaints

27

for foreclosure,” as well as the drafting of fraudulent or forged affidavits. Compl. ¶ 74. Rather

28

than pleading facts with particularity as required by Rule 9(b), the Complaint contains the
6
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

allegation that Defendants “intentionally participated in a scheme to defraud everyone” by sending

2

“fraudulent affidavits, assignments and pleadings to the clerks of court, judges, attorneys, and

3

defendants in foreclosure cases.” Compl. ¶¶ 74-75 (emphasis added). Ms. Quach’s opposition

4

does nothing to remedy this problem. Instead, it contains a number of claims citing individuals and

5

organizations that are not parties to this action, and stating that the “Defendants’ demurrer . . .

6

should be overruled.” See Pl’s Opp’n to Def.’s Mot. to Dismiss at 14-15 (naming an unknown

7

entity, called “Auora,” and citing various exhibits with page numbers that in no way match those

8

submitted with the Complaint).

9

This cause of action and the insufficiency of the factual pleading here are strikingly similar

United States District Court
For the Northern District of California

10

to other RICO claims encountered by this and sister courts in complaints challenging foreclosure.

11

See, e.g., Hoang v. JPMorgan Chase Bank, N.A., No. 5:13–CV–00582 EJD, 2013 WL 1436125

12

(N.D. Cal. April 9, 2013); Zacharias v. JPMorgan Chase Bank, N.A., No. 12–06525 SC, 2013 WL

13

588757 (N.D. Cal. Feb., 13, 2013); Johnson v. Wachovia Bank FSB, No. 2:10-CV-2839 GEB,

14

2012 WL 4092426, *1 n.2 (E.D. Cal. Sept. 17, 2012); Pineda, 2008 WL 5187813. The Court

15

adopts the reasoning behind these orders, and finds that the Complaint’s allegations are far from

16

plausible. In particular, Ms. Quach has put forward no facts supporting her “sweeping contention

17

that Defendants defrauded ‘everyone’” by bringing suit on behalf of entities without standing to

18

sue. Zacharias, 2013 WL 588757, at *3. 1 Indeed, it appears implausible that she could provide

19

such facts. Absent these required factual allegations, the Complaint “attempt[s] to cast a

20

straightforward foreclosure proceeding as a pattern of racketeering activity [and] is simply

21

improper.” Id.; see also Miller, 845 F.2d at 214 (noting that dismissal with prejudice is proper if

22

the claim made is legally insufficient or amendment would be futile). Accordingly, the Court

23

GRANTS Defendants’ Motion to Dismiss as to the Seventh Cause of Action WITHOUT LEAVE

24

TO AMEND.

25
1

26
27
28

Ms. Quach’s sole factual allegation in support of the recordation of fraudulent assignments appears to lie in her
contention that Alice Rowe, the individual who signed these instruments on behalf of MERS, was a “robo-signer,” with
no actual authority to sign for MERS. Compl. ¶ 23. She offers as evidence of the plausibility of this claim a number of
documents bearing Ms. Rowe’s signature and the assertion that these signatures differ. Id. Examination of the
documents so submitted reveals this claim to be manifestly implausible because the signatures in question clearly
belong to the same individual. Compare Compl., Ex. C at 40 with Compl., Ex. C at 41 and with Compl., Ex. C at 42.

7
Case No.: 5:13-CV-00467-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS