Figueroa et al v. Citibank, NA, as Trustee for the Holders of BSABS 2007-SD3 et al

Filing 7

ORDER Granting 5 Motion to Dismiss; Denying as Moot Motion for More Definite Statement and Granting Leave to Amend: Plaintiffs are granted leave to file an amended complaint within 10 days of the filing of this Order. Signed by Judge M. James Lorenz on 4/15/2009. (mjj) (kaj).

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1 2 3 4 5 6 7 8 9 10 11 QUIRINO FIGUEROA and ARACELI P. FIGUEROA, 12 Plaintiffs, 13 v. 14 CITIBANK, N.A. as Trustee for the 15 Holders of BSABS 2007-SD3, 16 17 18 Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Civil No. 08cv2214 L(AJB) ORDER GRANTING MOTION TO DISMISS; DENYING AS MOOT MOTION FOR MORE DEFINITE STATEMENT and GRANTING LEAVE TO AMEND [doc. #5] UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA Plaintiffs, who are represented by counsel, filed this action in the Superior Court of 19 California, County of San Diego on October 10, 2008. Defendant Citibank, N.A. as Trustee for 20 the Holders of BSABS 2007-SD3 ("Citibank") timely removed this action. Plaintiffs have 21 asserted claims under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601; the Home 22 Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1639; Fair Debt Collection 23 Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.; the Real Estate Settlement Procedures Act 24 ("RESPA"), 12 U.S.C. § 2614 and RICO. 25 Defendant moves to dismiss the case under Federal Rule of Civil Procedure 12(b)(6) or 26 alternatively for a more definite statement [doc. #5]. The Court notes that under the Civil Local 27 Rules, plaintiffs' response to defendant's motion was due on or before February 23, 2009. See 28 CIV. L.R. 7.1(e)(2). To date, plaintiffs neither filed a response nor sought additional time in 08cv2214 1 which to file a response in opposition to defendant's motion. 2 When an opposing party does not file papers in the manner required by Civil Local Rule 3 7.1(e.2), the Court may deem the failure to "constitute a consent to the granting of a motion or 4 other request for ruling by the court." CIV. L.R. 7.1(f.3.c). Notwithstanding plaintiffs' failure to 5 file an opposition, the Court will review the motion on the merits to determine whether any legal 6 issue exists that would preclude granting defendant's motion to dismiss. 7 8 1. Legal Standard A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings. De 9 La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). A complaint may not be dismissed for 10 failure to state a claim under Rule 12(b)(6), "unless it appears beyond a doubt that the plaintiff 11 can prove no set of facts in support of his claim which would entitle him to relief." Conley v. 12 Gibson, 355 U.S. 41, 45-46 (1957). In ruling on a motion pursuant to Rule 12(b)(6), a court 13 must construe the pleadings in the light most favorable to the plaintiff, and further, must accept 14 as true all material allegations in the complaint, as well as any reasonable inferences to be drawn 15 therefrom. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). But a complaint may be 16 dismissed for failure to state a claim under Rule 12(b)(6) where the factual allegations do not 17 raise the "right to relief above the speculative level." Bell Atlantic v. Twombly, 127 S. Ct. 1955, 18 1965 (2007). 19 20 21 2. Motion to Dismiss A. Possession of the Original Note Plaintiffs defaulted on a home mortgage loan. Citibank purchased the property that 22 secured the loan at a foreclosure sale conducted on September 3, 2008. But plaintiffs contend 23 that Citibank had no right to initiate foreclosure proceedings because it did not have "in its 24 possession the original note properly endorsed to it or assigned to it as of a date preceding the 25 notice of default recorded by the Trustee." (Compl. at 2.) California law does not require that 26 the original note be in the possession of the party initiating non-judicial foreclosure. See Cal. 27 Civ. Code § 2924. Plaintiffs' allegation about the necessity of possessing the original note is 28 without merit and must be dismissed with prejudice. 2 08cv2214 1 2 B. Unfair Debt Collection Practices As defendant correctly notes, plaintiffs fail to state a claim against Citibank because as a 3 trustee pursuant to a deed of trust, it is not a debt collector under the FDCPA. The "activity of 4 foreclosing on [a] property pursuant to a deed of trust is not the collection of a debt within the 5 meaning of the FDCPA." Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp.2d 1188, 1204 (D. Or. 6 2002); see also Williams v. Countrywide Home Loans, Inc., 504 F. Supp.2d 176, 190 (S.D. Tex. 7 2007) ("Mortgage companies collecting debts are not `debt collectors'). 8 Similarly, plaintiffs fail to state a claim under California's fair debt collection act which 9 prohibits collecting consumer debts by inter alia, threats, physical force, obscene language, 10 annoying telephone calls, false representations, simulating or threatening legal action. CAL. CIV. 11 CODE §§ 1788.10, 1788.11, 1788.13, 1788.16. The complaint is devoid of allegations of 12 conduct falling within the Act; therefore, plaintiff has failed to state a claim under Rule 12(b)(6). 13 RESPA concerns charges and disclosures occurring at or before the closing of a real 14 estate sale or loan. The allegations in the complaint, however, deal with the foreclosure of the 15 property. Additionally, RESPA defines a mortgage servicer as "the person responsible for 16 servicing the loan." 12 U.S.C. § 2605(i)(2). RESPA further defines "servicing" as "receiving 17 any scheduled periodic payments from a borrower pursuant to the terms of any loan . . . and 18 making the payments of principal and interest and such other payments with respect to the 19 amounts received from the borrower as may be required pursuant to the terms of the loan." Id. § 20 2605(i)(3). Under the statutory language, defendant is not a servicer of the mortgage loan and 21 this claim must be dismissed. 22 23 C. Predatory Lending Practices Plaintiffs assert that Wells Fargo Bank, N.A., the originator of the loan, engaged in 24 predatory lending practices; therefore, Citibank is subject to defenses that would have been 25 available against Wells Fargo. Plaintiffs contend that the alleged predatory lending practices 26 violated HOEPA and TILA, Regulation Z. Plaintiffs state that "the specifics of those 27 [violations] . . . are unknown, but . . . are subject to discovery . . . ." (Compl. at 5.) 28 In the absence of any allegations showing that their claim is "above the speculative 3 08cv2214 1 level," plaintiffs' second cause of action is dismissed for failure to state a claim under Rule 2 12(b)(6). Bell Atlantic, 127 S. Ct. at 1965. 3 4 D. RICO "To state a claim under § 1962(c), a plaintiff must allege `(1) conduct (2) of an enterprise 5 (3) through a pattern (4) of racketeering activity.'" Odom v. Microsoft Corp., 486 F.3d 541, 547 6 (9th Cir. 2007), quoting Sedima , S.P.R.L. v. Imprex Co., 473 U.S. 479, 496 (1985). Plaintiffs 7 do not come close to sufficiently alleging all of the elements. Racketeering activity is defined in 8 18 U.S.C. § 1961(1) as any in the long list of crimes. Plaintiffs rely on wire and mail fraud. 9 (Compl. at 10, 11.) 10 The elements of wire fraud are: "(1) the formation of a scheme or artifice to defraud; (2) 11 use of the United States wires or causing a use of the United States wires in furtherance of the 12 scheme; and (3) specific intent to deceive or defraud." Id. at 554 (internal quotation marks and 13 citations omitted). Rule 9(b)'s requirement of particularity applies to the factual circumstances 14 of the fraud. Id. This requires allegations regarding the time, place and specific content of the 15 allegedly false representations as well as the identities of the parties to the misrepresentation. Id. 16 at 553 (internal quotation marks and citations omitted). Plaintiffs' allegations lack the requisite 17 specificity regarding times, places and the parties to the misrepresentations. (See Compl. at 1018 11.) Further, plaintiffs' allegations lack the specificity required to show participation in the 19 conduct of the enterprise's affairs through a pattern of racketeering. 20 21 3. Alternative Motion for a More Definite Statement Defendant alternatively moves for a more definite statement. Rule 8 sets forth general 22 rules of notice pleading in the Federal Courts. See Swierkiewicz v. Sorema, 534 U.S. 506 (2002). 23 Complaints are required to set forth (1) the grounds upon which the court's jurisdiction rests, (2) 24 a short and plain statement of the claim showing entitlement to relief; and (3) a demand for the 25 relief plaintiff seeks. Rule 8 requires only "sufficient allegations to put defendants fairly on 26 notice of the claims against them." McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991). 27 When a plaintiff's allegations are too vague and broad-sweeping to put defendants fairly on 28 notice of the claims against them, the notice requirement of Rule 8 is not satisfied. See Conley, 4 08cv2214 1 355 U.S. at 47. 2 Having reviewed the complaint, the Court notes that plaintiffs have not made an 3 allegation of wrongdoing on defendant's part under the statutes cited. As a result, defendant is 4 not on notice of plaintiffs' claims against it and cannot answer the complaint. Dismissal of the 5 complaint under Rule 8 is appropriately granted. Nevertheless, defendant's alternative motion 6 for a more definite statement is moot. 7 8 CONCLUSION Based on the foregoing, defendant's motion to dismiss the complaint is GRANTED and 9 its motion for a more definite statement is DENIED AS MOOT. Plaintiffs are granted leave to 10 file an amended complaint within 10 days of the filing of this Order. 11 IT IS SO ORDERED. 12 DATED: April 15, 2009 13 14 15 16 COPY TO: M. James Lorenz United States District Court Judge HON. ANTHONY J. BATTAGLIA 17 UNITED STATES MAGISTRATE JUDGE 18 19 20 21 22 23 24 25 26 27 28 5 08cv2214 ALL PARTIES/COUNSEL

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