Salondaka v. Countrywide Financial Corporation et al, No. 2:2009cv01550 - Document 26 (E.D. Cal. 2010)
Court Description: ORDER granting 17 MOTION to DISMISS by Countrywide Home Loans, Inc. signed by Judge John A. Mendez on 1/28/10. (Kaminski, H)
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Salondaka v. Countrywide Financial Corporation et al 1 2 3 4 Doc. 26 MICHAEL J. STEINER (State Bar No. 112079) JOSHUA E. WHITEHAIR (State Bar No. 244900) SEVERSON & WERSON A Professional Corporation One Embarcadero Center, Suite 2600 San Francisco, CA 94111 Telephone: (415) 398-3344 Facsimile: (415) 956-0439 5 6 Attorneys for Defendant COUNTRYWIDE HOME LOANS, INC. 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 SACRAMENTO DIVISION 11 12 JAMES SALONDAKA, Case No.: 2:09-cv-01550-JAM-JEM 13 ORDER GRANTING COUNTRYWIDE HOME LOANS, INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT WITH PREJUDICE 14 Plaintiff, vs. 15 COUNTRYWIDE HOME LOANS, INC., a business entity form unknown; MORTGAGE 16 ELECTRONIC REGISTRATIONS SYSTEMS, INC., a business entity form 17 unknown; KIRSTEN WISE, an individual; JULIE YOUNG, an individual; all persons or 18 entities unknown claiming any legal or equitable right, title estate, lien or interest in 19 the property described in this Complaint adverse to Plaintiff's title thereto, and DOES 1 20 through 25, inclusive, 21 Defendants. 22 23 24 25 26 27 28 The Motions of defendant Countrywide Home Loans, Inc. (“Countrywide” or “Defendant”) for an order dismissing the First Amended Complaint (“FAC”) of plaintiff James Salondaka (“Plaintiff”) pursuant to Rules 41(b) and 12(b)(6) of the Federal Rules of Civil Procedure, having been duly noticed and served on all interested parties, came on regularly for hearing before this Court, on January 20, 2010, at 9:30 a.m., the Honorable John A. Mendez -111952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM Dockets.Justia.com 1 presiding. Reuben L. Nocos, Esq. appeared on behalf of Plaintiff. Joshua E. Whitehair, Esq. 2 appeared for Defendant. 3 4 5 All arguments, papers and evidence considered and good cause appearing, the Court hereby ORDERS as follows: The FAC was filed two and a half weeks after the filing deadline set by the Court. 6 Plaintiff did not seek leave of court to extend the filing deadline. He has raised and submitted 7 reasons why he was late. But the fact is that he was in violation of the Court’s order. And under 8 the Federal Rules of the Civil Procedure 41(b), the Court does have the authority to dismiss the 9 FAC for that reason alone. 10 The only argument against that is the argument that cases should be decided on the merits. 11 Turning to the merits, in the FAC, there are a number of new allegations that were raised 12 regarding the loan processing which actually hurt rather than help the Plaintiff in his case. 13 Plaintiff is a broker who regularly processed loan applications that were submitted to Defendant. 14 He was not allowed to process his own loan. 15 Therefore, it was processed by representatives of Defendant, Kristen Wise and Julie 16 Young, who were named for the first time in the FAC but have not been served. Because 17 Plaintiff was in a rush, he chose to drive to the title company, pick up the final loan documents 18 that needed his signature, drive to the notary’s office, sign the forms, and then return them to the 19 title company, apparently without bothering to read the loan documents or get copies. 20 The FAC alleges that neither Wise, Young, nor any representative of Defendant was 21 present when Plaintiff picked up or returned the documents at the title office. Despite this, the 22 FAC goes on to allege that Plaintiff was not given an opportunity to read the documents before 23 signing them, was not given copies, and was unaware of the true terms of the loan. The evidence 24 obviously contradicts that. 25 The FAC also raises a number of new fraud based claims because of these alleged actions 26 by the Defendant. Defendant has also brought a motion to strike which was not addressed in any 27 way by the opposition. The Court is not going to reach the motion to strike because it grants the 28 motion to dismiss in its entirety for each of the following reasons. -211952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM 1 With respect to the Truth in Lending Act (“TILA”) claim, Count 1, Plaintiff alleges that 2 the defendants have violated TILA, arguing and alleging that defendants did not provide the 3 required disclosures. This allegation and the vague statement in the FAC are not sufficient to 4 meet the pleading standards of the district courts. 5 The Court already found Plaintiff’s claim also to be time-barred. An action for damages 6 under TILA, the Truth in Lending Act, must be brought within one year of the violation. 15 7 U.S.C. § 1640(e). A TILA violation occurs on the date of consummation of the transaction. 8 Consummation means the time that a consumer becomes contractually obligated on a credit 9 transaction. The doctrine of equitable tolling may suspend the limitations period until the 10 borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that 11 form the basis of the TILA action. King vs. California, 784 F.2d 910 (9th Cir. 1986). 12 In order to claim equitable tolling, a plaintiff must allege circumstances showing that he or 13 she could not have discovered the facts underlying the claim through the exercise of reasonable 14 diligence, or that extraordinary circumstances beyond his control made it impossible to file the 15 claim on time. 16 In this case, Plaintiff fails to allege facts upon which this Court could find equitable 17 tolling. Plaintiff was a broker who regularly processed loans with Defendant, and, therefore, he 18 would have known what disclosures were required by TILA and could have easily checked to see 19 if the disclosures were there or not. Furthermore, Plaintiff alleged that he realized within days 20 that his interest rate was higher than he thought it would be, but he failed to request copies of his 21 loan documents for review for another five months. Higher than expected mortgage bills would 22 put any reasonable person on notice of claims relating to the amount and terms of the loan 23 agreement. 24 Equitable estoppel is another possible basis for tolling the statute of limitations, but that 25 would require the plaintiff to plead with particularity active misconduct by defendant to prevent 26 the plaintiff from suing in time, actual and reasonable reliance on the misconduct in failing to sue 27 in time, and lack of actual or constructive knowledge of the facts constituting the claim, despite 28 due diligence. Guerrero vs. Gates, 442 F.3d 697 (9th Cir. 2006). Plaintiff has not adequately -311952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM 1 pled these requirements. He showed no diligence, despite being a broker and signing a $1.8 2 million loan. He has also not pled any misconduct by Defendant in attempting to prevent him 3 from suing on time. For all these reasons, the TILA claim for damages is dismissed with 4 prejudice. 5 Count 2 is a rescission or cancellation claim under California Civil Code 1689. Plaintiff is 6 requesting rescission of his loan on the grounds that he was fraudulently induced into entering the 7 loan, but he has failed to allege that he can and will tender the amount he borrowed. Tender is 8 required for rescission, and rescission is a remedy, not a cause of action. Hafiz v. Greenpoint 9 Mortgage Funding, Inc., 652 F.Supp2d.1039 (N.D. Cal. 2009). 10 Furthermore, where the fraud claims fail, so does the claim for rescission based on fraud. 11 Since all of the fraud claims brought by Plaintiff fail, and for these reasons, this rescission claim 12 is dismissed with prejudice. 13 The third cause of action is for actual fraud under Civil Code Section 1572. This is one of 14 many fraud based claims which Plaintiff has brought in his FAC. Plaintiff must plead the fraud 15 allegations with the heightened particularity standard of the Ninth Circuit, including 16 differentiating between the actions of multiple defendants. Plaintiff must also plead allegations 17 that are facially plausible and that allow the Court to draw reasonable inferences that the 18 defendant is liable for the misconduct alleged. 19 The allegations of fraud raised by plaintiff are simply not plausible claims for relief. 20 Plaintiff alleges that terms of the loan were misrepresented and concealed, that he was prevented 21 from reading the loan before signing, and that his income was misrepresented in the loan 22 application documents. However, the interest rate and other loan terms were written on the loan 23 documents, had he bothered to read them. Plaintiff claims that he was prevented from reading 24 them. However, he was the one who picked them up, took them to a notary, and signed them. No 25 representative of Defendant was present. Thus, it isn't plausible that Defendant prevented 26 Plaintiff from reading the documents in his possession. Furthermore, though he claims his 27 income and assets were falsified on the loan application, he signed the application with that 28 allegedly false information. Everything that he claims was fraudulently misrepresented or -411952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM 1 concealed was right there in his loan application and loan documents. A person who knows the 2 true facts cannot be said to have reasonably relied on a misstatement of those facts. Ostayan v. 3 Serrano Reconveyance Co., 77 Cal.App.4th 1411 (2000). 4 The claims for intentional misrepresentation, the fourth cause of action, and for 5 concealment, the fifth cause of action, are also fraud based. And, for the same reasons as the 6 Court’s reasons for dismissing Count 3 and the other fraud based claims, these claims, Counts 4 7 and 5, are dismissed. 8 Count 6 is a claim under the California Business and Professions Code Section 17200, et 9 seq., unfair business practice. To bring a claim under this section of unfair business practice, the 10 plaintiff must allege some other violation that constitutes an unfair practice. Again, Plaintiff’s 11 claim is based on alleged fraudulent behavior by Defendant. Accordingly, just as all the fraud 12 claims fail, this claim fails as well, and it is dismissed. 13 Count 7 is breach of fiduciary duty. The elements of this claim are: The existence of a 14 fiduciary duty, a breach of that fiduciary duty, and resulting damage. Pellegrini vs. Weiss, 165 15 Cal.App.4th 515 (2008). In the lending context, financial institutions owe no duty of care to a 16 borrower when the institution’s involvement in the loan transaction does not exceed the scope of 17 its conventional role as a mere lender of money. Nymark vs. Heart Federal Savings & Loan 18 Association, 231 Cal.App.3d 1089 (1991). Although California law imposes a fiduciary duty on a 19 mortgage broker, no such duty is imposed on a lender. Price vs. Wells Fargo Bank, 213 20 Cal.App.3d 465 (1989). That case holds that a debt is not a trust, and there is not a fiduciary 21 relationship between the debtor and creditor as such. The same principle should apply with even 22 greater clarity to the relationship between a bank and its loan customers. Defendant Countrywide 23 is a lender, not a broker. Plaintiff argues that Defendant was acting like a mortgage broker, which 24 isn't plausible since a broker is hired to negotiate with the lender. And, here, Plaintiff did not hire 25 Defendant to negotiate with itself. This claim is dismissed. 26 In Count 8, Plaintiff raises a fraud in the execution allegations; namely, that the deed of 27 trust and promissory note were not proper, and that he was misled and did not realize this at the 28 time he signed them. He argues that he did not realize that the deed of trust contained payment -511952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM 1 terms or created a legal relationship with Mortgage Electronic Registration Systems, and that he 2 didn't realize that the note was a note. Again, the terms are contained in the documents, which 3 are clearly labeled, and which he signed. Fraud allegations can be contradicted by judicially 4 noticeable documents, and the Court has taken judicial notice of these documents. If Plaintiff had 5 bothered to read the documents, he would have known about the terms, and he can’t plausibly 6 claim that he didn’t understand what he was signing because he is a broker himself. This general 7 claim of fraud fails for the same reason as the other fraud based claims and is dismissed. 8 9 10 Count 9 is a cause of action to void the contract. This claim is based on the same flawed theory about the terms of the deed of trust and promissory note which the Court previously discussed. And that claim failed, as does this one, and is dismissed. 11 Count 10 is a claim to void and cancel the deed of trust. This is, again, based on fraud 12 and suffers from the same defect as the other fraud claims in this FAC, and it also is dismissed. 13 Count 11 is for slander of title. In this claim, Plaintiff alleges that Defendant slandered 14 the property title by recording a notice of default. This, however, is a privileged act. The 15 mailing, publication, and delivery of notice as required by this section constitute privileged 16 communications pursuant to Section 47, citing California Civil Code Section 2924(d)(1). Notice 17 of default is required by Section 2924(a)(1) and (3), and, hence, it is privileged conduct under 18 Civil Code Section 47. There is a split in authority as to whether the privilege is absolute or 19 qualified for nonjudicial foreclosures. However, even if the privilege is only qualified, Plaintiff 20 must show actual malice on the part of defendant in order to evade the qualified privilege. 21 Kachlon vs. Markowitz, 168 Cal.App.4th 316 (2008). 22 Count 12 is to quiet title. But a borrower cannot quiet title without discharging his debt. 23 The cloud upon title persists until the debt is paid. And, again, Plaintiff’s claim for quiet title fails 24 if, as in this case, he does not allege that he offered to return the principal amount. Pagtalunan 25 vs. Reunion Mortgage, Inc., 2009 W.L. 961995, *5 (N.D. Cal. Apr. 8, 2009). 26 27 The FAC fails to allege Plaintiff offered to tender borrowed amounts or has the ability to so tender, and, therefore, this claim should be dismissed. 28 -611952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM 1 For all the reasons stated by the Court, the First Amended Complaint and each and every 2 cause of action set forth therein is dismissed with prejudice. The motion to dismiss is granted in 3 its entirety with prejudice. 4 5 IT IS SO ORDERED. DATED: January 28, 2010 /s/ John A. Mendez____________ United States District Court Judge 6 7 8 Approved As To Form: 9 10 11 /S/ Reuben L. Nocos Reuben L. Nocos, Esq. Attorney for Plaintiff 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -711952/0078/786244.1 PDF created with pdfFactory trial version www.pdffactory.com [Proposed] Order Granting Motion to Dismiss Case No. 2:09-cv-01550-JAM-JEM
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