Mason et al v. Wells Fargo Bank, N.A. et al

Filing 21

ORDER Denying Plaintiffs' 10 Motion to Remand to State Court and 19 Motion to Strike. Defendants' 5 Request for Judicial Notice and 4 Motion to Dismiss with prejudice is Granted. The court shall enter judgment accordingly and close the case. Signed by Judge James C. Mahan on 2/23/2015. (Copies have been distributed pursuant to the NEF - SLD)

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7
8

ALPHONSO MASON & SONJA BARNUM
MASON,

ORDER
Plaintiff(s),

9
v.

10
11

Case No. 2:14-CV-1709 JCM (NJK)

WELLS FARGO BANK, et al.,
Defendant(s).

12
13

Presently before the court is a motion to remand filed by pro se plaintiffs Alphonso Mason

14

and Sonja Barnum Mason (hereinafter “plaintiffs”). (Doc. # 10). Defendants Wells Fargo Bank,

15

N.A. (“Wells Fargo”) and Linear Financial, LP, dba Pardee Home Loans (“Linear Financial”)

16

(hereinafter “defendants”) filed a response. (Doc. # 13). Plaintiffs did not file a reply, and the

17

deadline to reply has now passed.

18

Also before the court is defendants’ motion to dismiss. (Doc. # 4). Plaintiffs filed a

19

response, (doc. # 16), defendants filed a reply, (doc. # 17), and plaintiffs filed a “supplemental

20

opposition,” (doc. # 18).

21

Also before the court is defendants’ request for judicial notice. (Doc. # 5).

22

Finally before the court is plaintiffs’ motion to strike defendants’ request for judicial notice.

23

(Doc. # 19). Defendants filed a response. (Doc. # ). Plaintiffs did not file a reply, and the deadline

24

to reply has now passed.

25

I.

Background

26

On or about December 15, 2005, plaintiffs obtained a mortgage from Linear Financial in

27

the principal amount of $246,550.00, to purchase their property. (Doc. # 4). On or about

28

December 21, 2005, Linear Financial transferred the loan to Wells Fargo by assigning the deed of

James C. Mahan
U.S. District Judge

1

trust. (Doc. # 4).

2

To obtain the loan, plaintiff Sonja Barnum Mason (“Mrs. Mason”) met with defendants’

3

representatives to negotiate a mortgage agreement. (Doc. # 1-1). Plaintiff attended the meeting

4

alone and explained that she had little experience with mortgage negotiations. (Doc. # 1-1).

5

Defendants’ representatives assured Mrs. Mason that the agreement and interest rates were

6

the best available. (Doc. # 1-1). The agreement requires plaintiffs to make 120 payments of

7

$1181.39, 239 payments of $1930.84, and one payment of $1931.36, over a thirty year period.

8

(Doc. # 1-1).

9

Plaintiffs allege that defendants never attempted to determine whether plaintiffs had the

10

means to repay the loan. (Doc. # 1-1). Defendants omitted many of plaintiffs’ everyday expenses

11

in determining their financial status. (Doc. # 1-1).

12

Defendants’ representatives assured Mrs. Mason that she could apply for refinancing if she

13

could not make her payments. (Doc. # 1-1). Since obtaining the loan, plaintiffs have applied for

14

loan modifications on two occasions. (Doc. # 1-1). These requests were denied by defendants.

15

(Doc. # 1-1).

16

On September 26, 2014, plaintiffs filed a complaint in state court against defendants

17

alleging fraud and deceit, misrepresentation, unconscionability, and violations of NRS 598D.100

18

and NRS 598D.110.

19

unconscionable because defendants knew that plaintiffs lacked the financial means to repay the

20

loan.

23

Plaintiffs claim that the mortgage agreement was

On October 16, 2014, defendants removed the case to this court on diversity grounds.

21
22

(Doc. # 1-1).

(Doc. # 1). The parties then filed the instant motions to remand and dismiss the action.
II.

Legal Standard

24

i.

Motion to remand

25

For a district court to have diversity jurisdiction under 28 U.S.C. § 1332, the parties must

26

be completely diverse and the amount in controversy must exceed $75,000. See 28 U.S.C. §

27

1332(a); Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1098 (9th Cir. 2003).

28
James C. Mahan
U.S. District Judge

-2-

1

Under 28 U.S.C. § 1441, “any civil action brought in a State court of which the district

2

courts of the United States have original jurisdiction, may be removed by the defendant or the

3

defendants, to the district court of the United States for the district and division embracing the

4

place where such action is pending.” 28 U.S.C. § 1441(a).

5

Removal of a case to a United States district court may be challenged by motion. 28 U.S.C.

6

§ 1441(c). A federal court must remand a matter if there is a lack of jurisdiction. Id. Removal

7

statutes are construed restrictively and in favor of remanding a case to state court. See Shamrock

8

Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980 F.2d 564, 566

9

(9th Cir. 1992).

10

On a motion to remand, the removing defendant faces a strong presumption against

11

removal, and bears the burden of establishing that removal is proper. Gaus, 980 F.2d at 566-67;

12

Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996).

13

ii.

Motion to strike

14

Federal Rule of Civil Procedure 12(f) provides that “[t]he court may strike from a pleading

15

an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.

16

Civ. P. 12(f). The court may do so “on motion made by a party . . . within 21 days after being

17

served with the pleading.” Fed. R. Civ. P. 12(f)(2).

18

iii.

Judicial notice

19

Federal Rule of Evidence 201 provides for judicial notice of adjudicative facts. Under Rule

20

201(b)(2), the court may “judicially notice a fact that is not subject to reasonable dispute because

21

it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably

22

be questioned.” Fed. R. Evid. 201(b)(2). “The court may take judicial notice at any stage of the

23

proceeding.” Fed. R. Evid. 201(d).

24

Rule 201(c)(2) states that the court “must take judicial notice if a party requests it and the

25

court is supplied with the necessary information.” Fed. R. Evid. 201(c)(2). The court may take

26

judicial notice of public records if the facts noticed are not subject to reasonable dispute. See

27

United States v. Corinthian Colls., 655 F.3d 984, 998-99 (9th Cir. 2011); see also Intri-Plex Tech.,

28
James C. Mahan
U.S. District Judge

-3-

1

Inv. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007) (citations and quotation marks

2

omitted).

3

In addressing a motion to dismiss, a court may “consider certain materials—documents

4

attached to the complaint, documents incorporated by reference in the complaint, or matters of

5

judicial notice—without converting the motion to dismiss into a motion for summary judgment.”

6

United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

7

iv.

Motion to dismiss

8

A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which relief

9

can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and

10

plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2);

11

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed

12

factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the

13

elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

14

“Factual allegations must be enough to rise above the speculative level.” Twombly, 550

15

U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual

16

matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation

17

omitted).

18

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply

19

when considering motions to dismiss. First, the court must accept as true all well-pled factual

20

allegations in the complaint; however, legal conclusions are not entitled to the assumption of

21

truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by

22

conclusory statements, do not suffice. Id.

23

Second, the court must consider whether the factual allegations in the complaint allege a

24

plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint

25

alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the

26

alleged misconduct. Id. at 678.

27
28
James C. Mahan
U.S. District Judge

Where the complaint does not permit the court to infer more than the mere possibility of

-4-

1

misconduct, the complaint has “alleged – but it has not shown – that the pleader is entitled to

2

relief.” Id. at 679 (internal quotations omitted). When the allegations in a complaint have not

3

crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550

4

U.S. at 570.
The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202,

5
6

1216 (9th Cir. 2011). The Starr court held,

7

10

First, to be entitled to the presumption of truth, allegations in a complaint or
counterclaim may not simply recite the elements of a cause of action, but must
contain sufficient allegations of underlying facts to give fair notice and to enable
the opposing party to defend itself effectively. Second, the factual allegations that
are taken as true must plausibly suggest an entitlement to relief, such that it is not
unfair to require the opposing party to be subjected to the expense of discovery and
continued litigation.

11

Id.

12

v.

13

Allegations of fraud are subject to a heightened pleading standard. See Fed. R. Civ. P. 9(b)

14

(“[A] party must state with particularity the circumstances constituting fraud . . . .”). Federal Rule

15

of Civil Procedure 9(b) provides that “[m]alice, intent, knowledge, and other conditions of a

16

person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b).

8
9

Rule 9(b)

17

Rule 9(b) operates “to give defendants notice of the particular misconduct which is

18

alleged,” requiring plaintiffs to identify “the circumstances constituting fraud so that the defendant

19

can prepare an adequate answer from the allegations.” Neubronner v. Milken, 6 F.3d 666, 671 (9th

20

Cir. 1993) (citations omitted).

21

III.

Discussion

22

i.

Motion to remand

23

Plaintiffs allege that removal was improper because defendants and plaintiffs are all

24

citizens of Nevada. (Doc. # 10). Plaintiffs also contend that defendants are forum shopping. (Doc.

25

# 10). Plaintiffs attach business search results for defendants’ companies, which they believe show

26

Nevada citizenship. (Doc. # 10).

27
28
James C. Mahan
U.S. District Judge

-5-

1

Defendants respond that plaintiffs’ exhibits show complete diversity of citizenship. (Doc.

2

# 13). Plaintiffs’ exhibits show that Linear Financial is a limited partnership registered in

3

Delaware, and that its only listed partner is a citizen of Iowa. (Doc. # 10).

4

Plaintiffs include evidence that Wells Fargo appointed a registered agent in Nevada. (Doc.

5

# 10). They do not provide otherwise support their contention that Wells Fargo is a citizen of

6

Nevada. (Doc. # 10).

7

The fact that defendants have registered agents in Nevada does not make them citizens of

8

Nevada. As defendants note, “under [28 U.S.C.] § 1348, a national banking association is a citizen

9

only of the state in which its main office is located.” Rouse v. Wachovia Mortg., FSB, 747 F.3d

10

707, 715 (9th Cir. 2014) (holding, on this basis, that Wells Fargo is a citizen of South Dakota).

11

Defendants bear the burden to show that removal is proper. Gaus v. Miles, Inc., 980 F.2d

12

564, 566 (9th Cir. 1992). In their petition for removal, defendants state that Wells Fargo is a citizen

13

of South Dakota and Linear Financial is a citizen of Delaware. (Doc. # 1).

14

Further, plaintiffs do not dispute that the amount in controversy requirement is met in the

15

instant case. (Doc. # 10). Plaintiffs’ requested relief includes $90,000.00 for their down payment

16

as well as numerous other requests for damages in excess of $10,000.00. (Doc. # 1-1). Defendants

17

cite plaintiffs’ $90,000.00 down payment request, as well as the fact that plaintiffs received a loan

18

for $244,689.33, as evidence that plaintiffs’ claims satisfy the amount in controversy. (Doc. # 1).

19

It is facially apparent from plaintiffs’ complaint that their claims exceed $75,000.00.

20

Moreover, defendants have shown that the amount in controversy requirement is met. See Singer

21

v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, see also Matheson v. Progressive Specialty Ins.

22

Co., 319 F.3d 1089-1090 (9th Cir. 2003) (“Where it is not facially evident from the complaint that

23

more than $75,000 is in controversy, the removing party must prove, by a preponderance of the

24

evidence, that the amount in controversy meets the jurisdictional threshold.”).

25

Based on the foregoing, defendants have met their burden of showing that the court

26

possesses diversity jurisdiction over the instant case. See 28 U.S.C. § 1332(a). Plaintiffs have not

27

provided sufficient evidence to refute defendants’ assertion of jurisdiction based on diversity of

28

citizenship.

James C. Mahan
U.S. District Judge

-6-

1

Additionally, plaintiffs’ forum shopping argument is without merit. Removing a case to

2

federal court on proper jurisdictional grounds does not constitute forum shopping. Accordingly,

3

plaintiffs’ motion to remand will be denied.

4

ii.

Motion to strike

5

Plaintiffs moved to strike defendants’ request for judicial notice. Plaintiffs argue that any

6

matters submitted by defendants outside the pleadings should be stricken pursuant to Federal Rule

7

of Civil Procedure 12(f). (Doc. # 19).

8

The court sees no grounds to strike anything filed by defendants. Pursuant to the legal

9

standard above, the court may consider and take judicial notice of matters of public record in ruling

10

on a motion to dismiss. Defendants’ request for judicial notice does not constitute an “insufficient

11

defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f).

12

Plaintiffs’ motion to strike is also untimely, as it was filed almost three months after defendants’

13

request for judicial notice was filed. See Fed. R. Civ. P. 12(f)(2) (providing that the court may

14

strike a pleading pursuant to a motion to strike filed within 21 days).
For these reasons, plaintiffs’ motion to strike defendants’ request for judicial notice will be

15
16

denied.

17

iii.

Judicial notice

18

Defendants ask the court to take judicial notice of copies of the deed of trust and assignment

19

of the deed of trust on plaintiffs’ property. (Doc. # 5). Both of these documents are matters of

20

public record. Plaintiffs do not dispute the existence of these documents, and the court finds that

21

they are not subject to reasonable dispute. These documents are therefore judicially noticeable.

22

Accordingly, defendants’ request for judicial notice will be granted.

23

iv.

24

As an initial matter, the court acknowledges that the complaint was filed pro se and is

25

therefore held to less stringent standards. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“A

26

document filed pro se is to be liberally construed, and a pro se complaint, however inartfully

27

pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.”)

28

(internal quotations and citations omitted). However, “pro se litigants in the ordinary civil case

James C. Mahan
U.S. District Judge

Motion to dismiss

-7-

1

should not be treated more favorably than parties with attorneys of record.” Jacobsen v. Filler,

2

790 F.2d 1362, 1364 (9th Cir. 1986).

3

Defendants argue that plaintiffs’ complaint should be dismissed because plaintiffs’ causes

4

of action (1) fail to meet the applicable statutes of limitations, and (2) fail to state plausible claims

5

for relief. (Doc. # 4). The court will address each of plaintiffs’ claims in turn.

6

a. Unfair lending practices

7

Defendants assert that plaintiffs’ claims for unfair lending practices under Nevada Revised

8

Statute sections 598D.100 and 598D.110 are time-barred because the statute of limitations for

9

these provisions is two years. Alternatively, defendants argue that NRS 598D.100 and 598D.110

10

are inapplicable to the conduct at issue. Further, defendants contend that even if the statutes did

11

apply, plaintiffs fail to state a claim under them. (Doc. # 4).

12

Plaintiffs filed the instant action almost nine years after entering into the instant loan. (Doc.

13

# 1-1). Claims under Nevada Revised Statute 598D.100 and 598D.110 are subject to a two year

14

statute of limitations. See NRS 11.190(4)(b) (providing two year statute of limitations for an action

15

upon a statute for a penalty or forfeiture, except where the statute prescribes a different limitation);

16

NRS 598D.100 et. seq. (failing to provide specific limitations period); Qiang Guo Mai v. Wells

17

Fargo Home Loan Servicing, LP, No. 3:09-cv-00754-KJD-PAL, 2013 WL 321575, at *3 (D. Nev.

18

Jan. 25, 2013) (finding that two-year statute of limitations applies to claims under NRS 598D.100

19

et seq.); Freeto v. Litton Loan Servicing LP, 3:09-cv-00754-LRH-VPC, 2010 WL 2730596, at *2

20

(D. Nev. July 6, 2010) (same).

21

Based on the foregoing, the court finds that plaintiffs’ claims for unfair lending practices

22

are time-barred. Accordingly, the court will grant the motion to dismiss as to these claims, and

23

need not address defendants’ alternative arguments. Plaintiffs’ first and second causes of action

24

for unfair lending practices will be dismissed.

25
26
27

b. Fraud and deceit

28
James C. Mahan
U.S. District Judge

-8-

1

Defendants next argue that plaintiffs’ claim for fraud is time-barred because it is subject to

2

a two-year statute of limitations. (Doc. # 4). Alternatively, defendants assert that plaintiffs fail to

3

plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b). (Doc. # 4).

4

Defendants also claim that this cause of action fails as a matter of law. (Doc. # 4).

5

Plaintiffs respond that defendants’ fraudulent actions constituted bank fraud, which is

6

subject to a ten-year statute of limitations. See 18 U.S.C. § 1344; United States v. Najjor, 255 F.3d

7

979, 983 (9th Cir. 2001) (“Under 18 U.S.C. § 3293, the statute of limitations for violations of 18

8

U.S.C. § 1344 is ten years.”). Plaintiffs attach correspondence that they sent to and received from

9

Wells Fargo regarding home loan modifications. (Doc. # 16). They state that they could readily

10

amend their complaint to allege bank, mail, and wire fraud. (Doc. # 16).

11

As defendants note, bank fraud is a criminal offense that relates to the defrauding of a

12

financial institution. See 28 U.S.C. § 1344. As a result, a cause of action for bank fraud is

13

inapplicable to the instant case. Mail and wire fraud are similarly inapposite because they are also

14

prescribed by criminal statutes. See 18 U.S.C. §§ 1341, 1343. Plaintiffs do not have the ability to

15

sue to enforce criminal statutes in this manner. Granting plaintiffs leave to amend to include claims

16

for mail, wire, and bank fraud would therefore be futile.

17

Plaintiffs rely on the factual allegations in their complaint as support for their fraud claim.

18

(Doc. # 1-1). Plaintiffs’ complaint does not include allegations as to when plaintiffs discovered

19

the particular facts constituting the fraud or mistake. (Doc. # 1-1). However, plaintiffs argue that

20

defendants engaged in continuing violations that did not cease until 2012. Plaintiffs conclude that

21

their fraud claim is therefore timely filed. (Doc. # 16).

22

Plaintiffs unsuccessfully attempt to circumvent the statute of limitations by characterizing

23

defendants’ conduct as a continuing offense. As previously discussed, plaintiffs cannot bring a

24

claim for bank fraud. The cases that plaintiffs cite are not convincing, as they involve statutes that

25

do not apply to plaintiffs’ claims. See United States v. Nash, 115 F.3d 1431, 1441 (9th Cir. 1997)

26

(addressing applicability of sentencing guidelines to continuing bank fraud offense); Havens

27

Realty Corp. v. Coleman, 455 U.S. 363, 380-81 (1982) (discussing statute of limitations for

28
James C. Mahan
U.S. District Judge

-9-

1

continuing discrimination under the Fair Housing Act); Garcia v. Brockway, 526 F.3d 456, (9th

2

Cir. 2008) (same).

3

The three-year statute of limitations for fraud in Nevada Revised Statute 11.190(3)(d)

4

applies here. This cause of action accrues upon discovery of the facts constituting the fraud or

5

mistake. NRS 11.190(3)(d). The parties executed the mortgage agreement at issue in 2005. (Doc.

6

# 1-1).

7

modifications were denied. (Doc. # 1-1).

At the latest, plaintiffs “discovered” the alleged fraud when their requested loan

8

Plaintiffs state that they received a letter communicating such denial in April 2010. (Doc.

9

# 16). Plaintiffs filed the instant action on September 26, 2014. (Doc. # 1). Accordingly,

10

plaintiffs’ fraud claims were not timely filed, and must be dismissed.

11

In arguing against dismissal, plaintiffs attach a consent decree between defendants and the

12

Department of Justice, which they believe proves that “defendants have admitted to most of the

13

allegations in the complaint.” (Doc. # 18). The referenced consent judgment resulted from an

14

enforcement action in the United States District Court for the District of Columbia and has no

15

bearing on the instant case.

16

Because plaintiffs fail to comply with the applicable statute of limitations, the court need

17

not consider defendants’ alternative arguments on the merits of plaintiffs’ claims. The court will

18

grant defendants’ motion to dismiss as to plaintiffs’ cause of action for fraud and deceit.

19

c. Misrepresentation

20

Defendants also seek dismissal of plaintiffs’ cause of action for misrepresentation. (Doc.

21

# 4). Defendants contend that the two-year statute of limitations for negligence is applicable to

22

plaintiffs’ misrepresentation claim. Alternatively, defendants note that a three-year statute of

23

limitations applies to intentional misrepresentation claims. Defendants also argue that plaintiffs’

24

misrepresentation claim fails as a matter of law. (Doc. # 4).

25

Negligence actions are subject to a two-year statute of limitations. See NRS 11.190(4)(e).

26

As previously discussed, a three-year statute of limitations applies to actions for fraud or mistake.

27

NRS 11.190(3)(d).

28
James C. Mahan
U.S. District Judge

- 10 -

1

It is unclear based on plaintiffs’ complaint whether plaintiffs allege intentional or negligent

2

misrepresentation. Plaintiffs rely on their factual statements to support their misrepresentation

3

claims. They allege that defendants’ representatives assured Mrs. Mason that she could apply for

4

refinancing, when in fact her requests for modifications were denied. (Doc. # 1-1).

5
6
7

Plaintiffs’ claim for misrepresentation fails for the same reasons as their fraud and deceit
claim. Accordingly, the court will grant defendants’ motion to dismiss as to this claim.
d. Unconscionability

8

Plaintiffs’ complaint finally includes a claim for “unconscionability.” (Doc. # 1-1).

9

Plaintiffs allege that their mortgage agreement with defendants was clearly unconscionable based

10

on the amount of payments required. (Doc. # 1-1). Plaintiffs seek damages and a declaratory

11

judgment that the deed of trust, mortgage, and loan agreement are null and void. (Doc. # 1-1).

12

Defendants argue in their motion to dismiss that unconscionability is a defense to a breach

13

of contract claim, not an independent cause of action. (Doc. # 4). Alternatively, defendants argue

14

that dismissal is appropriate because plaintiffs fail to “allege any fine print or complicated,

15

incomplete or misleading language in the mortgage contract.” (Doc. # 4). Defendants maintain

16

that plaintiffs’ only argument for unconscionability is that “the contract requires them to pay more

17

for their home loan than they now wish to, which does not meet any of the required elements of

18

unconscionability.” (Doc. # 17).

19

Plaintiffs do not address these arguments in their response. (Doc. # 16). They simply state

20

that “since plaintiffs have appropriately pleaded claims for violations of the federal bank fraud

21

statute, which has a ten year statute of limitations, dismissal is not appropriate here.” (Doc. # 16).

22

Plaintiffs’ complaint also fails to include any legal authority in support of their claim for

23

unconscionability. (Doc. # 1-1). Defendants accordingly move to dismiss plaintiffs’ cause of

24

action for unconscionability on two grounds, which will be addressed in turn.

25

A. Statute of limitations

26

Defendants first argue that plaintiffs’ claim for unconscionability, properly treated as a

27

request for a declaratory judgment, fails to meet the applicable statute of limitations. (Doc. # 4).

28

“A claim for declaratory relief is subject to a statute of limitations generally applicable to civil

James C. Mahan
U.S. District Judge

- 11 -

1

claims.” Zuill v. Shanahan, 80 F.3d 1366, 1369-70 (9th Cir. 1996); see also Levald v. City of Palm

2

Desert, 998 F.2d 680, 688 (9th Cir. 1993) (noting that statute of limitations applicable to damages

3

action applies equally to claims for declaratory judgment).

4

Defendants contend that a request for a declaratory judgment under a mortgage contract is

5

subject to a one-year statute of limitations under the federal laws governing mortgages. See Wong

6

v. Citi Home Loans Servicing LP, 2:11-cv-1428-ECR, 2012 WL 1900947 at *2-3 (D. Nev. May

7

23, 2012); Hall v. Mortgagelt, Inc., No. 2:09-cv-2233-JCM-GWF, 2011 WL 2651870, at *4 (D.

8

Nev. July 6, 2011). Alternatively, defendants point to the six-year statute of limitations for actions

9

on a contract under NRS 11.190(1)(b). (Doc. # 4).

10

Plaintiffs’ claim for unconscionability fails under either statute of limitations. Plaintiffs

11

brought suit approximately nine years after they entered into the relevant loan agreement. (Doc.

12

# 1-1). Accordingly, dismissal of plaintiffs’ unconscionability claim for failure to comply with the

13

applicable statute of limitations would be proper under either standard above.

14

Nevertheless, the court also finds it appropriate to address plaintiffs’ cause of action for

15

unconscionability under Federal Rule of Civil Procedure 12(b)(6). Because this claim also fails

16

under that standard, it will be dismissed.

17

B. Sufficiency of pleadings

18

As this court has previously held, “[u]nconscionability is not a claim for relief, but rather

19

is a defense to a breach of contract claim . . . .” Hall v. Mortgagelt, Inc., No. 2:09-cv-2233-JCM-

20

GWF, 2011 WL 2651870, at *3 (D. Nev. July 6, 2011). However, as is appropriate here, this court

21

has treated a claim for unconscionability as a request for a declaratory judgment that a mortgage

22

is unenforceable. See id.

23

“Generally, both procedural and substantive unconscionability must be present in order for

24

a court to exercise its discretion to refuse to enforce a contract or clause as unconscionable.” Burch

25

v. County of Washoe, 49 P.3d 647, 650 (Nev. 2002). Procedural unconscionability generally

26

results from unequal bargaining power or misleading language in a contract. Guerra v. Hertz

27

Corp., 504 F. Supp. 2d 1014, 1021 (D. Nev. 2007) (citing D.R. Horton, Inc. v. Green, 96 P.3d

28

1159, 1162 (Nev. 2004)).

James C. Mahan
U.S. District Judge

- 12 -

1

A contract is substantively unconscionable “only when the clauses of that contract and the

2

circumstances existing at the time of the execution of the contract are so one-sided as to oppress

3

or unfairly surprise an innocent party.” Bill Stremmel Motors, Inc. v. IDS Leasing Corp., 514 P.2d

4

654, 657 (Nev. 1973).

5

First, plaintiffs’ unconscionability claim fails as to defendant Wells Fargo because Wells

6

Fargo was not a party to the original mortgage agreement. See Lalatag v. Money First Fin. Servs.,

7

Inc., 2:09-cv-02268-LRH-RJJ, 2010 WL 2925875 at *2 (D. Nev. July 20, 2010) (dismissing cause

8

of action for unconscionability on grounds that defendants were not involved in the origination of

9

the mortgage loan).

10

Further, as defendants correctly note, plaintiffs’ complaint does not state a claim for

11

unconscionability. See Brown v. Investors Mortg. Co., 121 F.3d 472, (9th Cir. 1997) (rejecting

12

plaintiff’s allegations that high loan payments were unconscionable on grounds that they “do not

13

rise to the level of unfairness required to sustain a claim of unconscionability”).

14

With regard to procedural unconscionability, plaintiffs do not allege that the contract

15

contained any misleading language. (Doc. # 1-1). By contrast, plaintiffs suggest that the contract’s

16

terms are “plainly unconscionable.” (Doc. # 1-1). While plaintiffs note that Mrs. Mason was a

17

layperson with little experience regarding mortgage negotiations, they do not allege that this

18

resulted in unequal bargaining power that somehow left her without a meaningful choice regarding

19

the loan. Therefore, even taking plaintiffs’ well-pled allegations as true and construing them

20

liberally, plaintiffs’ complaint does not sufficiently claim procedural unconscionability.

21

Pursuant to the foregoing legal standard, plaintiffs’ claim fails due to the absence of

22

procedural unconscionability. See Burch, 49 P.3d at 650 (holding that courts generally require

23

both procedural and substantive unconscionability). Nevertheless, plaintiffs’ allegations regarding

24

substantive unconscionability are similarly inadequate. The circumstances and terms of plaintiffs’

25

loan as set out in their complaint were not so one-sided as to oppress or unfairly surprise. While

26

the agreement at issue required plaintiffs to pay interest on their loan, plaintiffs incurred these

27

obligations in exchange for defendants’ willingness to loan plaintiffs $246,550.00. (Doc. # 1-1).

28
James C. Mahan
U.S. District Judge

- 13 -

1

Based on the foregoing, the court will grant defendants’ motion to dismiss plaintiffs’ claim

2

for unconscionability. Because the court finds it appropriate to dismiss each of plaintiffs’ claims,

3

defendants’ motion to dismiss will be granted in its entirety.

4

IV.

Conclusion

5

Accordingly,

6

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiffs’ motion to

7
8
9
10
11
12
13

remand, (doc. # 10), be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that plaintiffs’ motion to strike, (doc. # 19), be, and the same
hereby is, DENIED.
IT IS FURTHER ORDERED that defendants’ request for judicial notice, (doc. # 5), be,
and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that defendants’ motion to dismiss, (doc. # 4), be, and the
same hereby is, GRANTED.

14

The court shall enter judgment accordingly and close the case.

15

23, 2015
DATED February 25, 2015.

16
17

__________________________________________

18

UNITED STATES DISTRICT JUDGE

19
20
21
22
23
24
25
26
27
28
James C. Mahan
U.S. District Judge

- 14 -