Wende v. Countrywide Home Loans, Inc. et al

Filing 25

ORDER Granting (Doc. 18 ) Defenants' Motion to Dismiss With Leave To Amend. Plaintiff must file an amended complaint or a notice of election not to file an amended complaint no later than April 4, 2011. Signed by Judge M. James Lorenz on 3/21/2011. (srm)(av1).

-BLM Wende v. Countrywide Home Loans, Inc. et al

Doc. 25

1 2 3 4 5 6 7 8 9 10 11 JOSE WENDE, 12 13 14 15 16 17 ) ) ) Plaintiff, ) ) v. ) ) COUNTRYWIDE HOME LOANS, INC., ) et al., ) ) Defendants. ) _________________________________ ) Civil No. 10cv205-L(BLM) ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

In this mortgage foreclosure action Defendants Countrywide Home Loans, Inc., BAC

18 Home Loans Servicing , LP and Bank of America, N.A.1 (collectively "Moving Defendants") 19 filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed an 20 opposition. For the reasons which follow, the motion is GRANTED WITH LEAVE TO 21 AMEND. 22 / / / / / 23 24 The motion was filed by "Bank of America, N.A. (erroneously sued as 25 `Countrywide Bank, N.A.')." Bank of America, N.A. ("Bank of America") is not a named party and therefore cannot file documents in this case. Civ. Loc. Rule 5.1(h) ("Except as provided in 26 the federal rules, or by leave of court, no document will be filed in any case by any person not a party thereto."). The motion was accepted for filing because it was also filed in behalf of two 27 named Defendants. If Bank of America intends to file papers in this case, it must comply with Federal Rules of Civil Procedure 25(c) or any other applicable Federal Rule of Civil Procedure 28 providing for joinder or substitution of parties.
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According to the operative first amended complaint ("Compl."), Plaintiff owns a property

2 located at 528 Bayona Loop in Chula Vista, California ("Property"). On May 10, 2006 Plaintiff 3 refinanced the Property with Defendant Countrywide Home Loans, Inc. ("Countrywide"), by 4 signing a note and deed of trust. On June 19, 2006 Plaintiff borrowed more funds from 5 Defendant Countrywide Bank, N.A. ("Bank"), by signing another note and deed and trust. Both 6 loans were secured by the Property. Subsequently, Plaintiff fell behind on his payments and 7 attempted unsuccessfully to modify the loans. Some of the Defendants commenced foreclosure 8 proceedings against the Property. 9 On October 29, 2009 Plaintiff filed a complaint in State court to resist the foreclosure

10 proceedings. Defendants removed the action to this court based on federal question jurisdiction 11 under 28 U.S.C. Section 1331. 12 Plaintiff subsequently filed the operative first amended complaint. ("Compl.") He claims

13 that the terms of the two loans were not as promised, that he did not receive proper disclosures, 14 that the loans were improperly serviced, and that Defendants engaged in loan modification 15 proceedings in bad faith. He asserted causes of action for violation of the Real Estate Settlement 16 Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA"), Truth in Lending Act, 15 U.S.C. § 1601 et 17 seq. ("TILA"), Fair Debt Collection Practice Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), 18 Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq., California Civil 19 Code Section 1632, California Business and Professions Code § 17200 et seq., negligent 20 misrepresentation, fraud, rescission, quasi contract, determination of validity of lien, conspiracy 21 and aiding and abetting. He requested damages and rescission among other remedies. 22 The Moving Defendants filed a motion to dismiss for failure to state a claim upon which

23 relief can be granted. A Rule 12(b)(6) motion tests the sufficiency of the complaint. Navarro v. 24 Block, 250 F.3d 729, 732 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) 25 motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide 26 the grounds of his entitlement to relief requires more than labels and conclusions, and a 27 formulaic recitation of the elements of a cause of action will not do. Factual allegations must be 28 enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550
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1 U.S. 544, 555 (2007) (internal quotation marks, brackets and citations omitted). In reviewing a 2 motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations 3 and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty 4 Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Legal conclusions need not be taken as true 5 merely because they are cast in the form of factual allegations. Roberts v. Corrothers, 812 F.2d 6 1173, 1177 (9th Cir. 1987); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). 7 Similarly, "conclusory allegations of law and unwarranted inferences are not sufficient to defeat 8 a motion to dismiss." Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). 9 The Moving Defendants argue that the first cause of action for RESPA violations should

10 be dismissed because it is alleged with insufficient particularity. Plaintiff alleged that on July 11 22, 2009 he sent a qualified written request pursuant to 12 U.S.C. Section 2605 to Bank of 12 America Home Loans and that Defendants "failed to adequately respond" to it. (Compl. at 913 10.) 14 Plaintiff did not allege sufficient facts in support his RESPA claim to meet the notice

15 pleading requirements of Rule 8(a) of Federal Rules of Civil Procedure. Although Rule 8 does 16 not require that the complaint include all facts necessary to carry the plaintiff's burden, it must 17 allege plausible grounds to infer the existence of a claim for relief. Al-Kidd v. Ashcroft, 580 18 F.3d 949, 977 (9th Cir. 2009). This calls for enough facts to raise a reasonable expectation that 19 discovery will reveal evidence to prove that claim. Id. 20 The first amended complaint falls short of this requirement. Section 2605(e), which

21 imposes a duty to respond to certain borrower inquiries, applies to loan servicers. 12 U.S.C. 22 § 2605(e). Plaintiff did not allege that Bank of America Home Loans was a loan servicer on 23 either one of the two loans. Moreover, Plaintiff did not name Bank of America Home Loans as a 24 defendant. Furthermore, the duty applies only to certain types of borrower requests which 25 comply with the requirements of section 2605(e)(1)(B). Plaintiff did not allege any facts which 26 could support an inference that his letter was a qualified written request under RESPA, and does 27 not even state whether the request referred to his first or second loan. Last, Plaintiff did not 28 allege what he requested Bank of America Home Loans to do or provide, what response he
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1 received, or in which respect the response failed to comply with section 2605(e)(2). The 2 conclusory allegation that Defendants "failed to adequately respond" is insufficient to allege a 3 RESPA violation. 4 In the first cause of action Plaintiff also alleged that "[Countrywide, Bank], their

5 predecessors and other Defendants were required to give Plaintiff notice of transfer" as required 6 by section 2605(d) and that he was improperly imposed a late fee within 60 days of transfer in 7 violation of section 2605(d). (Compl. at 10.) Plaintiff did not include, however, any allegation 8 to indicate that he did not receive the requisite notice. 9 Based on the foregoing, Plaintiff did not allege sufficient facts to state a claim for

10 violation of 12 U.S.C. Sections 2605(d) or (e). The Moving Defendants' motion to dismiss the 11 first cause of action for RESPA violations is GRANTED. 12 Next, the Moving Defendants contend that the second cause of action for TILA violations

13 is time barred. Plaintiff asserted this claim based on alleged failures to provide him with 14 disclosures and a notice of right to cancel. (Compl. at 10-11; see also id. at 20.) He requested 15 damages and rescission. 16 The statute of limitations for damage claims under TILA is "one year from the date of the

17 occurrence of the violation." 15 U.S.C. § 1640(e). "[T]he limitations period in Section 1640(e) 18 runs from the date of consummation of the transaction . . .." King v. California, 784 F.2d 910, 19 915 (9th Cir. 1986). Both loans were consummated more than three years prior to Plaintiff's 20 filing of the initial complaint. (See Compl. at 3.) Accordingly, the statute of limitations for 21 damages expired long before the filing. Although Plaintiff correctly notes that the statute of 22 limitations may be subject to equitable tolling, see King, 784 F.2d at 915, he did not allege any 23 facts in support of tolling in this case. (See Compl. at 10-11.) 24 "A motion to dismiss based on the running of the statute of limitations period may be

25 granted only `if the assertions of the complaint, read with the required liberality, would not 26 permit the plaintiff to prove the statute was tolled.'" Supermail Cargo, Inc. v. United States, 68 27 F.3d 1204, 1206-07 (9th Cir. 1995), quoting Jablon v. Dean Witter & Co., 614 F.2d 677, 682 28 (9th Cir. 1980). The untimeliness must appear beyond doubt on the face of the complaint before
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1 a claim will be dismissed as time-barred. See Supermail Cargo, 68 F.3d at 1206-07. 2 Because the expiration of the statute of limitations appears on the face of the complaint

3 and because Plaintiff did not allege any facts in support of equitable tolling, his TILA claim for 4 damages is dismissed as time-barred. 5 The Moving Defendants also argue that Plaintiff cannot state a claim for rescission under

6 TILA. A borrower's right to rescind expires after three-years. 15 U.S.C. § 1635(f). The three7 year period commences with the "consummation of the transaction." Id. When it expires, the 8 right to rescind is completely extinguished and the court lacks jurisdiction over the claim. 9 Miguel v. Country Fuding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002). Because Plaintiff filed 10 this action more than three years after he entered into the loan transactions, he no longer has the 11 right to seek rescission under TILA. 12 Based on the foregoing, Plaintiff's TILA claim is time-barred. The Moving Defendants'

13 motion to dismiss the second cause of action is therefore GRANTED. 14 The Moving Defendants also maintain that Plaintiff's third cause of action for FDCPA

15 violations should be dismissed because they are not debt collectors. Plaintiff alleged that 16 Defendants violated the FDCPA when they entered into loan modification negotiations with 17 him, although they knew that he could not comply with the terms, and when they instructed him 18 to stop making mortgage payments in order to be eligible for loan modification, only to later use 19 the lack of payments in furtherance of their foreclosure efforts. (Compl. at 11-12.) 20 The FDCPA applies to debt collectors. See 15 U.S.C. § 1692; see also id. §§ 1692e &

21 1692f. A debt collector is "any person who uses any instrumentality of interstate commerce or 22 the mails in any business the principal purpose of which is the collection of any debts, or who 23 regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be 24 owed or due another." Id. § 1692a(6). Excluded from the definition are creditors and their 25 employees who collect debts on behalf of the creditor. Id. § 1692a(6)(a). Included in the 26 definition is "any creditor who, in the process of collecting his own debts, uses any name other 27 than his own which would indicate that a third person is collecting or attempting to collect such 28 debts." Id. § 1692a(6). Plaintiff did not allege any facts to support an inference that any
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1 Defendant was a debt collector as defined in the FDCPA, including that any Defendant acted in 2 a way which would lead Plaintiff to believe that it was a third party collecting a debt for a 3 creditor. Accordingly, the Moving Defendants' motion to dismiss the third cause of action for 4 FDCPA violations is GRANTED. 5 Based on the foregoing, the Moving Defendants' motion is granted with respect to all the

6 federal claims alleged in the first amended complaint. Having dismissed these claims, the court 7 must next consider whether Plaintiff should be granted leave to amend. See Schreiber Distrib. 8 Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 2004). Rule 15 advises the 9 court that leave to amend shall be freely given when justice so requires. Fed. R. Civ. P. 15(a). 10 "This policy is to be applied with extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 11 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks and citation omitted). 12 13 14 In the absence of any apparent or declared reason -- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules require, be "freely given."

15 Foman v. Davis, 371 U.S. 178, 182 (1962). Dismissal with prejudice and without leave to 16 amend is not appropriate unless it is clear that the complaint could not be saved by amendment. 17 Id. Because it appears that Plaintiff may potentially be able to amend the federal claims, the 18 first, second and third causes of action are DISMISSED WITH LEAVE TO AMEND. 19 Because all federal claims are dismissed and none remain in this action, the court declines

20 to exercise supplemental jurisdiction over the remaining state law claims. 28 U.S.C. § 1367(c). 21 They are DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction. 22 Should Plaintiff choose to file a second amended complaint, he may re-allege his state law 23 claims. 24 Finally, the court notes that Plaintiff repeatedly fails to comply with the legibility

25 requirements set forth in the local rules. Civ. Loc. Rule 5.1(a). Counsel is advised that any 26 further failure to comply with the Local Rules, Electronic Case Filing Administrative Policies 27 and Procedures Manual, or order of the court may lead to sanctions pursuant to Civil Local Rule 28 83.1 or Federal Rule of Civil Procedure 41(b).
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Accordingly, it is hereby ORDERED as follows: 1. The Moving Defendants' motion to dismiss is GRANTED WITH LEAVE TO

3 AMEND. 4 2. No later than April 4, 2011 Plaintiff must file and serve either an amended complaint

5 in compliance with this order, or a notice of election not to file an amended complaint. Failure 6 to comply with this order will result in dismissal of the action pursuant to Federal Rule of Civil 7 Procedure 41(b). 8 3. Defendants' response to the amended complaint, if any, must be filed and served

9 within the time set forth in Federal Rule of Civil Procedure 15(a)(3). 10 11 12 DATED: March 21, 2011 13 14 COPY TO: 15 HON. BARBARA L. MAJOR 16 UNITED STATES MAGISTRATE JUDGE 17 ALL PARTIES/COUNSEL 18 19 20 21 22 23 24 25 26 27 28
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IT IS SO ORDERED.

M. James Lorenz United States District Court Judge