Middleton v. Wells Fargo, N.A. et al

Filing 4

ORDER granting 1 Motion/Application for Leave to Proceed in forma pauperis.; Amended Complaint deadline: 2/23/2017. Clerk of Court shall not issue summons. Signed by Magistrate Judge Peggy A. Leen on 1/23/2017. (Copies have been distributed pursuant to the NEF - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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ANN GATES MIDDLETON,

Case No. 2:15-cv-01875-LDG-PAL

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Plaintiff,

v.

ORDER

WELLS FARGO, N.A., et al.

(IFP App. – ECF No. 1)
Defendants.

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This matter is before the court on Plaintiff Ann Gates Middleton’s Application to Proceed

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In Forma Pauperis (ECF No. 1). This Application is referred to the undersigned pursuant to 28

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U.S.C. § 636 (a) and Local Rules LR IB 1-3 and 1-7 of the Local Rules of Practice.

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I.

IN FORMA PAUPERIS APPLICATION

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Ms. Middleton is proceeding in this action pro se, which means that he is not represented

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by an attorney. See LSR 2-1. Pursuant to 28 U.S.C. § 1915 and LSR 1-1 of the Local Rules of

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Practice, any person who is unable to prepay the fees in a civil case may apply to the Court for

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authority to proceed in forma pauperis (“IFP”), meaning without prepaying the full $400 filing

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fee. Here, Ms. Middleton has requested authority to proceed IFP and submitted the affidavit

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required by § 1915(a) showing that she is unable to prepay fees and costs or give security for them.

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Accordingly, her request to proceed IFP will be granted. The court will now review the Complaint.

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II.

SCREENING THE COMPLAINT

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After granting a litigant’s IFP request, a federal court must screen the complaint and any

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amended complaints filed prior to a responsive pleading pursuant to § 1915(e). Lopez v. Smith,

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203 F.3d 1122, 1129 (9th Cir. 2000) (en banc) (§ 1915(e) applies to “all in forma pauperis

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complaints”). If the complaint states a valid claim for relief, the court will direct the Clerk of the

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Court to issue summons to the defendant(s) and the plaintiff must then serve the summons and
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complaint within 90 days. See Fed. R. Civ. P. 4(m). When a court dismisses a complaint pursuant

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to § 1915(e), a plaintiff is ordinarily given leave to amend with directions as to curing its

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deficiencies, unless it is clear from the face of the complaint that the deficiencies could not be

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cured by amendment. Cato v. United States, 70 F.3d 1103, 1106 (9th Cir. 1995).

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A.

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This action involves a mortgage note and deed of trust for the real property of 7754 Pink

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Ginger Street, Las Vegas, Nevada (the “Property”). See Compl. (ECF No. 1-1) at 3. Ms.

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Middleton alleges she executed a mortgage loan on March 15, 2012. Id. On March 12, 2015,

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Middleton sent defendants Wells Fargo Bank and Guaranteed Rate, Inc. a notice of rescission

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pursuant to Federal Reserve Board Regulation Z, 12 C.F.R. § 226.23, and 15 U.S.C. § 1635, which

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are statutes and regulations regarding the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601–

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1667f. However, she alleges that defendants have not complied with their statutory obligations as

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a lender under the notice of rescission. Id. In August 2015, Ms. Middleton recorded a Notice of

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Release of Mortgage under operation of law. Id. at 4. Defendants did not respond. Id. Middleton

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seeks a declaratory judgment that the mortgage note related to the Property is terminated, released,

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void, and invalid. Id. at 4–6. Additionally, she seeks restitution based on Carrington’s non-

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compliance with statutory requirements. Id. at 6–7.

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Middleton’s Factual Allegations and Claims for Relief

For the reasons discussed below, the court finds that the complaint fails to state a claim
upon which relief can be granted.

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B.

Legal Standard

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Federal courts are required to dismiss an in forma pauperis action if the complaint fails to

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state a claim upon which relief may be granted, is legally “frivolous or malicious,” or seeks

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monetary relief from a defendant who is immune from such relief. 28 U.S.C. § 1915(e)(2). In

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determining whether a complaint is frivolous and therefore warrants complete or partial dismissal,

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a court is not bound to accept without question truth of plaintiff’s allegations. Denton v.

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Hernandez, 504 U.S. 25, 32 (1992). Allegations are frivolous when they are “clearly baseless,”

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id., or lack an arguable basis in law and fact. Neitzke v. Williams, 490 U.S. 319, 325 (1989).

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Frivolous claims include those based on legal conclusions that are untenable (e.g., claims against
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defendants who are immune from suit or claims of infringement of a legal interest that clearly does

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not exist), as well as claims based on fanciful factual allegations (e.g., fantastic or delusional

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scenarios). Id. at 327–28; McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991). The standard

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for determining whether a plaintiff has failed to state a claim upon which relief can be granted

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under § 1915 is the same as the standard under Rule 12(b)(6) of the Federal Rules of Civil

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Procedure1 for failure to state a claim. Watison v. Carter, 668 F.3d 1108, 1112 (9th Cir. 2012).

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Review under Rule 12(b)(6) is essentially a ruling on a question of law. N. Star Intern. v. Ariz.

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Corp. Comm’n, 720 F.2d 578, 580 (9th Cir. 1983).

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For the purposes of § 1915’s screening requirement, a properly pled complaint must

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provide “a short and plain statement of the claim showing that the pleader is entitled to relief.”

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Fed. R. Civ. P. 8(a)(2); accord Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The

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simplified pleading standard set forth in Rule 8(a) of the Federal Rules of Civil Procedure applies

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to all civil actions with limited exceptions. Alvarez v. Hill, 518 F.3d 1152, 1159 (9th Cir. 2008).

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Although Rule 8 does not require detailed factual allegations, it demands “more than labels and

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conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal,

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556 U.S. 662, 678 (2009) (citation omitted). This requires a plaintiff to state “enough facts to raise

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a reasonable expectation that discovery will reveal evidence” of the allegations charged. Cafasso,

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United States ex rel. v. General Dynamics C4 Systems, Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)

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(quoting Twombly, 550 U.S. at 556). Mere recitals of the elements of a cause of action supported

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only by conclusory allegations do not suffice. Iqbal, 556 U.S. at 679–80. A complaint “must

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contain sufficient allegations of underlying facts to give fair notice and to enable the opposing

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party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Secondly,

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where the claims in the complaint have not crossed the line from plausible to conceivable, the

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complaint should be dismissed. Twombly, 550 U.S. at 570. Stated differently, the factual

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allegations “must plausibly suggest an entitlement to relief, such that it is not unfair to require the

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opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652

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F.3d at 1216.

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All references to a “Rule” or the “Rules” in this Order refer to the Federal Rules of Civil Procedure.

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Allegations in a pro se complaint are held to less stringent standards than formal pleading

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drafted by lawyers. Erickson v. Pardus, 551 U.S. 89, 94 (2007); Hebbe v. Pliler, 627 F.3d 338,

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342 n.7 (9th Cir. 2010) (joining five other circuits finding that liberal construction of pro se

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pleadings is still required after Twombly and Iqbal). However, pro se litigants “should not be

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treated more favorably than parties with attorneys of record,” Jacobsen v. Filler, 790 F.2d 1362,

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1364 (9th Cir. 1986); rather, they must follow the same rules of procedure that govern other

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litigants. Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995).

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C.

Ms. Middleton’s Allegations Fail to State a Colorable Claim Under TILA

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“As a comprehensive consumer protection statute, TILA seeks to protect consumers by

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requiring certain disclosures to consumers for certain types of loans.” Amonette v. IndyMac Bank,

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F.S.B., 515 F. Supp. 2d 1176, 1181 (D. Haw. 2007). TILA seeks “to protect consumers’ choice

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through full disclosure and to guard against the divergent and at times fraudulent practices

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stemming from uninformed use of credit.” King v. California, 784 F.2d 910, 915 (9th Cir. 1986)

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(citing Mourning v. Family Publ’ns Serv., Inc., 411 U.S. 356, 363–64 (1973)). Under TILA, a

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borrower has a cause for action against any lender who violates the disclosure requirements.

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Vargas v. JP Morgan Chase Bank, N.A., 30 F. Supp. 3d 945, 949–50 (C.D. Cal. 2014) (citing 15

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U.S.C. § 1640(a)). To state a colorable TILA claim, a plaintiff must allege a defect in the lender’s

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“material” disclosures. 12 C.F.R. § 226.23(a)(3); see also Romero v. Countrywide Bank, N.A., 740

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F. Supp. 2d 1129, 1143 (N.D. Cal. 2010). The material disclosures include: the annual percentage

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rate, the finance charge, the amount financed, the total of payments, the payment schedule, the

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amount borrowed, the amount of regular monthly (or other periodic) payments, the amount of any

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balloon payment, a statement regarding variable-rate transactions, and any prepayment penalties.

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12 C.F.R. §§ 226.23(a)(3), 226.32(c), 226.35(b)(2).

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TILA requires that loan documents specifically state the last date on which a borrower may

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rescind the loan agreement without penalty. Semar v. Platte Valley Federal Sav. & Loan Ass'n,

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791 F.2d 699, 701 (9th Cir. 1986).

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“borrowers three business days to rescind, without penalty, a consumer loan that uses their

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principal dwelling as security.” Semar, 791 F.2d at 701; 15 U.S.C. § 1635(a). TILA and

TILA’s so-called “buyer’s remorse provision” gives

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Regulation Z require that a lender’s loan documents tell borrowers “the specific date on which the

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three-day rescission period expires.” Garcia v. Wachovia Mortg. Corp., 676 F. Supp. 2d 895, 901

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(C.D. Cal. 2009) (citing Semar, 791 F.2d at 701; 15 U.S.C. § 1635(a)). If a lender omits the

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expiration date and fails to subsequently cure the omission by providing the information, a

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borrower may rescind the loan within three years after its execution. Semar, 791 F.2d at 701–02

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(citing 15 U.S.C. § 1635(f)). TILA “grants borrowers an unconditional right to rescind for three

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days, after which they may rescind only if the lender failed to satisfy the Act’s disclosure

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requirements.” Jesinoski v. Countrywide Home Loans, Inc., --- U.S. ----, 135 S. Ct. 790, 792

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(2015) (emphasis added).

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Here, the complaint fails to allege a defect in defendants’ material disclosures. Plaintiff

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indicates the mortgage was dated March 15, 2012. See Compl. (ECF No. 1-1) at 3. Thus, her

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unconditional right to rescind expired three business days later. After the three-business day period

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but within three years after the execution of the mortgage loan, Plaintiff could rescind only if

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defendants failed to satisfy TILA’s disclosure requirements. Additionally, a borrower must allege

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“an ability to tender the principal balance of the subject loan” to state a TILA claim for rescission.

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Garcia, 676 F. Supp. 2d at 901 (collecting cases). She has not alleged that defendants failed to

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satisfy TILA’s disclosure requirements or that she has the ability to tender the loan balance,

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therefore, she did not allege sufficient facts to state a valid claim for relief.

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In addition, Plaintiff’s claim for damages is time-barred. TILA requires that plaintiffs bring

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damages claims within one year of the date of the loan transaction. 15 U.S.C. § 1640(e); see also

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Romero v. Countrywide Bank, N.A., 740 F. Supp. 2d 1129, 1143 (N.D. Cal. 2010). In this case,

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Plaintiff executed the mortgage on the Property in March 2012. Thus, any damages claim was

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time barred after March 2013.

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Based on the deficiencies explained, the complaint will be dismissed with leave to amend.

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If Plaintiff chooses to file an amended complaint, she must do so by February 23, 2017. Plaintiff

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is advised to support each of her claims with factual allegations, because all complaints must

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contain sufficient factual allegations to give fair notice to defendants and to raise a reasonable

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expectation that discovery will expose evidence of her allegations. See Starr, 652 F.3d at 1216;
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Cafasso, 637 F.3d at 1055. When claims are alleged against multiple defendants, the complaint

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should clearly indicate which claims apply to which defendant. McHenry v. Renne, 84 F.3d 1172,

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1178 (9th Cir. 1995). When multiple claims are alleged, the complaint should identify which

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factual allegations give rise to each particular claim. Id. The amended complaint must contain a

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short and plain statement of: (1) the grounds for the court’s jurisdiction; (2) any claim she has

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showing she is entitled to relief; and (3) a demand for the relief she seeks. See Fed. R. Civ. P. 8(a).

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The amended complaint should set forth the claims in short and plain terms, simply, concisely,

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and directly. See Swierkeiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). Rule 8(a) “ generally

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requires only a plausible ‘short and plain’ statement of the plaintiff’s claim, not an exposition of

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his legal argument.” Skinner v. Switzer, 562 U.S. 521, 530 (2011).

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Plaintiff is also informed that the court cannot refer to a prior pleading (i.e., the original

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complaint) in order to make the amended complaint complete. Local Rule 15-1 requires that an

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amended complaint be complete in itself without reference to any prior pleading. See LR 15-1(a).

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This is because, as a general rule, an amended complaint supersedes the original complaint.

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Ramirez v. Cty. of San Bernardino, 806 F.3d 1002, 1008 (9th Cir. 2015). Once a plaintiff files an

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amended complaint, the original pleading no longer serves any function in the case. Ferdik v.

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Bonzelet, 963 F.2d 1258, 1262 (9th Cir. 1992). Therefore, in an amended complaint, as in an

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original complaint, each claim and the involvement of each defendant must be sufficiently alleged.

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Accordingly,

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IT IS ORDERED:

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1. Plaintiff Ann Gates Middleton’s Application to Proceed in Forma Pauperis (ECF

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No. 1) is GRANTED. She shall not be required to pay the $400 filing fee.
2. Ms. Middleton is permitted to maintain this action to conclusion without the necessity
of prepayment of any additional fees or costs or the giving of a security therefor.
3. The Clerk of the Court SHALL FILE the Complaint (ECF No. 1-1), but SHALL NOT
issue summons.

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4. Plaintiff shall have until February 23, 2017, to file an amended complaint if she

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believes she can correct the noted deficiencies. The amended complaint must be a
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complete document in and of itself and will supersede the original complaint in its

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entirety. Any allegations, parties, or requests for relief from prior papers that are not

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carried forward in the amended complaint will no longer be before the court.

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5. Plaintiff shall clearly title the amended complaint as such by placing the words “FIRST

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AMENDED COMPLAINT” in the caption on the first page and write 2:15-cv-01875-

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LDG-PAL in the space for “Case No.”

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6. Plaintiff’s failure to comply with this Order by submitting an amended complaint on

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the correct form before the February 23, 2017, deadline will result in a

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recommendation to the district judge that this case be dismissed.

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DATED this 23rd day of January, 2017.

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PEGGY A. LEEN
UNITED STATES MAGISTRATE JUDGE

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