Frison v. WMC Mortgage Corporation et al

Filing 43

ORDER Granting Motions to Dismiss 28 , 29 ; Frison's TILA and RESPA claims are dismissed with prejudice. The remaining claims are dismissed without prejudice but without leave to amend. The complaint in its entirety is dismissed without leave to amend. Other requests are denied as moot and all pending dates are vacated. Signed by Judge Larry Alan Burns on 9/29/11. (kaj)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 VIOLA FRISON, 12 CASE NO. 09cv1733-LAB (NLS) Plaintiff, ORDER GRANTING MOTIONS TO DISMISS vs. 13 14 WMC MORTGAGE CORPORATION, et al., 15 Defendants. 16 17 18 This case concerns Plaintiff Viola Frison who has defaulted on her mortgage, and the 19 subsequent attempt by the lender to foreclose on Frison’s real property that serves as 20 security for that mortgage. After dismissal of the original complaint, Frison filed her First 21 Amended Complaint (FAC). The FAC seeks for the loan to be forgiven, damages, costs, 22 and attorney’s fees. The FAC identifies eight causes of action against claims, including: (1) 23 Violation of the Real Estate Settlement Practices Act (RESPA), 12 U.S.C. §§ 2605 et seq., 24 against Defendant Saxon Mortgage Services (“Saxon”); (2) Violation of the Truth in Lending 25 Act (TILA), 15 U.S.C. §§ 1601 et seq. against Defendants Deutsche Bank National Trust 26 Company (“Deutsche Bank”), WMC Mortgage, LLC (“WMC”) and Saxon; and various state 27 claims for violation of Cal. Bus. & Prof. Code § 17200, fraud, and negligent 28 misrepresentation. -1- 09cv1733 1 The FAC also identifies remedies such as rescission and determination of the validity 2 of the lien as causes of action. Quasi contract is also identified as a cause of action, 3 although in fact it is a theory by which Frison seeks to hold Saxon liable for wrongdoing 4 named in the other claims even if it is found to have no contract with Frison. 5 I. Legal Standard 6 A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. 7 Block, 250 F.3d 729, 732 (9th Cir.2001). In ruling on a motion to dismiss, the Court accepts 8 all allegations of material fact in the complaint as true and construes them in the light most 9 favorable to the non-moving party. Cedars-Sinai Medical Center v. National League of 10 Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). While the scope of review on a 11 motion to dismiss for failure to state a claim is ordinarily limited to the contents of the 12 complaint as well as any “documents whose contents are alleged in a complaint and whose 13 authenticity no party questions, but which are not physically attached to the pleading, may 14 be considered in ruling on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d 15 449, 454 (9th Cir.1994), overruled on other grounds by Galbraith v. County of Santa Clara, 16 307 F.3d 1119 (9th Cir. 2002). The court may treat such a document as “part of the 17 complaint, and thus may assume that its contents are true for purposes of a motion to 18 dismiss under Rule 12(b)(6).” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 19 Frison in her opposition to the motions to dismiss again cites the old standard set forth 20 in Conley v. Gibson, 355 U.S. 41, 45–46 (1957), under which a Rule 12(b)(6) dismissal was 21 appropriate only where "it appears beyond doubt that the plaintiff can prove no set of facts 22 in support of his claim which would entitle him to relief." But as the Court has pointed out 23 (see Docket no. 19 at 10:17–24), the Supreme Court expressly repudiated that standard in 24 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), holding that a complaint must “give the 25 defendant fair notice of what the . . . claim is and the grounds upon which it rests” and its 26 factual allegations must “raise the right to relief above a speculative level.” Id. at 555. The 27 complaint must contain enough factual allegations that, if accepted as true, would state a 28 claim for relief that is “plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1939, 1949 (2009). -2- 09cv1733 1 II. Discussion 2 Defendants raise a number of arguments and defenses, but the Court need not reach 3 them all, because it is clear the FAC must be dismissed. Much of the Court’s reasoning here 4 mirrors its reasoning in the order dismissing the original complaint, Docket no. 19, reported 5 at Frison v. WMC Mortg. Corp., 2010 WL 3894980 (S.D.Cal., Sept. 30, 2010). 6 The FAC identifies federal question jurisdiction and supplemental jurisdiction as the 7 two jurisdictional bases. The FAC points out the TILA and RESPA claims are federal claims, 8 and argues that the Court should also exercise supplemental jurisdiction over the remaining 9 state law claims. 10 A. 11 The loan agreement was executed October 12, 2004, and Frison didn’t file this action 12 until August 10, 2009, nearly five years later. Frison was put on notice that the limitations 13 period under TILA was at issue by the Court’s order dismissing her original complaint. 14 Defendants again argue that the TILA claim is time-barred. Frison does not dispute that, 15 absent tolling, the limitations period has run. For TILA damages claims, the one-year 16 limitations period may be suspended “until the borrower discovers or had reasonable 17 opportunity to discover the fraud or nondisclosures that form the basis of the TILA action.” 18 King, 784 F.2d at 915. TILA Claims and Statute of Limitations 19 Frison’s TILA claims are are based on alleged failure to provide disclosures at the 20 time of the loan’s origination (FAC, ¶¶ 54–62.) Frison specifically cites certain disclosures 21 that must be made (id., ¶ 57), though the pleadings show she is claiming only for a few 22 failures to disclose. (Id., ¶¶ 58–59.) 23 Under Fed. R. Civ. P. 12(b)(6), claims may be dismissed where the running of the 24 statute of limitations is apparent on the face of the complaint. Cervantes v. Countrywide 25 Home Loans, Inc., ___ F.3d ___, 2011 WL 3911031, slip op. at *8 (9th Cir. Sept. 7, 2011). 26 If the running of the limitations period appears on the face of the complaint, the Court 27 considers whether the complaint, construed with the required liberality, would support a 28 /// -3- 09cv1733 1 determination of tolling. Id. The standard for construction of pleadings is set forth in 2 Twombly and Iqbal. 3 In Cervantes, for example, the panel first determined the running of the limitations 4 period was “apparent on the face of the complaint because the plaintiffs obtained their loans 5 in 2006, but commenced their action in 2009.” 2011 WL 3911031, slip op. at *8. The panel 6 then considered whether the plaintiffs had “demonstrated a basis for equitable tolling of their 7 claims.” Id. 8 The Court follows this same line of inquiry. Because the running of the limitations 9 period is apparent on the face of the complaint, the Court asks whether Frison has 10 adequately alleged facts that would show tolling is available. 11 The FAC’s allegations in support of tolling are sparse, and are contained in ¶¶ 38, 55, 12 and 75. Paragraphs 55 and 75 are blanket allegations that “[a]ll defendants have concealed 13 facts upon which the existence of Plaintiff’s claims is based . . . .” (though paragraph 75 adds 14 further alleges they were “fraudulently concealed”). These conclusory allegations are 15 inadequate to support tolling. 16 Paragraph 38, the most detailed of the three, alleges generally that WMC and 17 Oceanfront misled her into entering into an unfavorable agreement. 18 allegations mention only the actions of Daniel Pate, acting as agent for Oceanfront (which 19 has already been dismissed as a party). Pate, the FAC alleges, rushed Frison through the 20 signing and failed to point out important terms. This paragraph mentions several omissions 21 in the paperwork she was given (omission of date contract signed, date of right to rescind, 22 and outline of distribution of loan proceeds). The FAC also alleges contradictions between 23 different documents (interest rate of 7.990% on the Note, but 8.390% on the TILA 24 disclosure). Moreover, this paragraph makes clear that even with the omissions, Plaintiff 25 was given copies of the documents. It mentions no facts to explain why she waited so long 26 to sue. Nor does it allege when she discovered the nondisclosures, although obviously she 27 did so at some point before filing suit. 28 /// -4- But the factual 09cv1733 1 Frison’s oppositions to the motions to dismiss likewise do not identify any facts that 2 would support tolling. They instead rely primarily on legal arguments suggesting that tolling 3 should be readily available until a borrower actually discovers the nondisclosure, which is 4 incorrect. 5 To the extent the nondisclosures would give rise to TILA claims, Frison had notice of 6 the nondisclosures at the time, either at the signing or shortly thereafter, when she began 7 making payments on the note. The fact that she did not actually discover gaps, omissions, 8 or contradictions in the paperwork, or did not realize their significance, is not controlling; the 9 limitations period runs from the time Frison reasonably could have discovered the 10 nondisclosures. King, 784 F.2d at 915; Hubbard v. Fidelity Fed’l Bank, 91 F.3d 75, 79 (9th 11 Cir. 1996) (per curiam) (declining to toll TILA's statute of limitations when “nothing prevented 12 [the borrower] from comparing the loan contract, [the lender’s] initial disclosures, and TILA's 13 statutory and regulatory requirements”). 14 The FAC also alleges Saxon’s failure to respond to qualified written requests, and 15 suggests that this prevented Frison from discovering the nondisclosures. But the alleged 16 qualified written requests were not sent until 2009, well after the statute of limitations had 17 run. 18 Because it is clear the statute of limitations has run on Frison’s TILA claims, and 19 because Frison was previously warned about failure to show why the statute of limitations 20 should be tolled (Docket no. 19 at 5:18–20), the TILA claims will be dismissed with prejudice. 21 B. RESPA Claims - Qualified Written Requests 22 The FAC identifies two communications as being qualified written requests (the 23 “QWRs” collectively, and “QWR 1" and “QWR 2,” respectively), alleging Frison sent both to 24 Saxon: QWR 1 on April 21, 2009 and QWR 2 on July 27, 2009. The FAC alleges Saxon 25 didn’t respond within the statutory time period. The Court’s earlier order of dismissal pointed 26 out that “the specifics of [the] two requests must be mentioned in the complaint . . . .” The 27 FAC does not adequately do this. Frison submitted the two QWRs as exhibits in support of 28 her opposition to Saxon’s earlier motion to dismiss. QWR 1 is attached as Exhibit B to -5- 09cv1733 1 Docket no. 9-1, while QWR 2 is attached as Exhibit C to the same document. The two are 2 similar and consist of a letter suggesting loan modification, and requesting voluminous 3 production of information. QWR1 offers to drop the request for information if the loan is 4 modified. QWR 2 is a follow-up letter repeating the request and using a form in which every 5 category of document and information is requested. 6 The FAC alleges that both QWRs reference a “dispute” but doesn’t say what the 7 dispute was. Looking at both QWRs, it is still not clear what the dispute was. The letters 8 merely attempt to engage Saxon in discussions about loan modification and request a great 9 deal of information for review. Significantly, QWR 1 suggests that if Saxon quickly agrees 10 to loan modification, Frison wouldn’t need responses. (See Docket no. 9-1 at 17 (“If we are 11 able to promptly resolve this matter, there may be no need for you to respond fully to the 12 Qualified Written Request transmitted in this letter.”).) 13 Saxon correctly points out the FAC doesn’t allege facts sufficient to show that QWR 14 1 and QWR 2 were in fact qualified written requests, even after having been warned in the 15 Court’s previous order of dismissal. Having reviewed them, it is still unclear to the Court why 16 they would actually be qualified written requests, rather than merely requests to negotiate 17 about loan modification. Nor has she alleged facts showing how she was harmed by the 18 failure to respond. 19 The FAC alleges that each of the QWRs requested 27 pieces or types of information. 20 Hardly any of these appear relevant to any type of dispute Frison might have wanted to 21 raise, and it is unclear how most of them pertain to the servicing of the loan. See 22 § 2605(e)(1)(A) (qualified written request asks “for information relating to the servicing of [a] 23 loan”). For example, it is difficult to imagine why Frison would need copies of HUD forms, 24 escrow instructions, personal contact information for all “owners,” and a loan modification 25 package in order to dispute anything she has mentioned in the pleadings at any point. Nor 26 is it clear how this would amount to information about the servicing of her loan. Some of it 27 appears to be the type of information Frison already knew or had, or could have known by 28 looking at her loan documents or statements (e.g., the type of loan, the total amount she -6- 09cv1733 1 borrowed, her present payment, copies of all loan applications, and all TILA disclosures). 2 Some of the requests more closely resemble requests for admissions (e.g., “Confirm that you 3 will not seek a deficiency in the event of foreclosure of this loan;” “Confirm that this loan was 4 characterized as a sub-prime loan,” etc.) 5 Under § 2605(e)(1)(B)(ii), a qualified written request must “include[] a statement of the 6 reasons for the belief of the borrower, to the extent applicable, that the account is in error 7 or provides sufficient detail to the servicer regarding other information sought by the 8 borrower.” Both QWRs fail to do this, and therefore do not appear to be genuine qualified 9 written requests even though they are labeled as such. 10 The FAC conclusorily alleges Frison suffered damages as a result of the failures to 11 respond, including fees and charges by Saxon, harm to her credit rating, legal fees and 12 costs, emotional distress, and missed work. But it does not allege how the failure to respond 13 to the QWRs caused any of these things. A claim under RESPA for failure to respond to 14 QWRs requires a showing that the violation proximately caused the plaintiff’s damages. 15 Hernandez v. Calif. Reconveyance Co., 2010 WL 1911244, slip op. at *3 (S.D.Cal., May 10, 16 2010). Conclusory and speculative allegations about the effects of failure to respond to a 17 QWR’s “laundry list” of requests for information are insufficient. Id.; see also Esoimeme v. 18 Wells Fargo Bank, 2011 WL 3875881, slip op. at *14 (E.D.Cal., Sept. 1, 2011) (where 19 plaintiff did not allege a specific inquiry constituting a qualified written request, and did not 20 allege pecuniary loss from alleged failure to respond, claim was insufficient and subject to 21 dismissal). 22 Because Frison has not successfully amended her complaint even after the defects 23 concerning qualified written request allegations were pointed out, because she has not 24 alleged harm as a result of the failure to respond to the QWRs, and because the QWRs do 25 not appear to be qualified written requests, the RESPA claims will be dismissed with 26 prejudice. 27 /// 28 /// -7- 09cv1733 1 C. Supplemental Jurisdiction 2 Because the two federal claims are being dismissed, the Court will decline to exercise 3 supplemental jurisdiction over the remaining state law claims, and they will be dismissed 4 without prejudice. See 28 U.S.C. § 1367(c)(3) (district courts may decline to exercise 5 supplemental jurisdiction over a claim if “the district court has dismissed all claims over which 6 it has original jurisdiction”); United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966) 7 (“[I]if the federal claims are dismissed before trial . . . the state claims should be dismissed 8 as well.”). 9 III. Conclusion and Order 10 For the reasons set forth above, Frison’s TILA and RESPA claims are DISMISSED 11 WITH PREJUDICE. The remaining claims are DISMISSED WITHOUT PREJUDICE BUT 12 WITHOUT LEAVE TO AMEND. The complaint in its entirety is DISMISSED WITHOUT 13 LEAVE TO AMEND. Other requests are DENIED AS MOOT and all pending dates are 14 VACATED. 15 16 17 IT IS SO ORDERED. DATED: September 29, 2011 18 19 HONORABLE LARRY ALAN BURNS United States District Judge 20 21 22 23 24 25 26 27 28 -8- 09cv1733

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