Dyachishin v. America's Wholesale Lendeders et al, No. 2:2009cv02639 - Document 32 (E.D. Cal. 2010)
Court Description: ORDER granting WITH PREJUDICE 11 Motion to Dismiss signed by Judge John A. Mendez on 1/14/10. (Kaminski, H)
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1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 12 15 16 17 18 19 ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS Plaintiffs, 13 14 Case No. 2:09-CV-02639-JAM-GGH PETER DYACHISHIN AND GALINA DYACHISHIN, v. AMERICA’S WHOLESALE LENDERS; COUNTRYWIDE FINANCIAL CORPORATION; RECONTRUST COMPANY; BANK OF AMERICA CORPORATION; WASHINGTON MUTUAL BANK; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. and DOES 1-50 inclusive, 20 21 Defendants. ______________________________/ 22 23 This matter comes before the Court on Defendants 24 Countrywide Home Loans d/b/a America’s Wholesale Lenders 25 26 (“AWL”), Countrywide Financial Corporation (“CFC”),Recontrust 27 Company (“Recon”), Bank of America Corporation (“BofA”), and 28 Mortgage Electronic Registration Systems, Inc. (“MERS”), 1 1 2 (“Defendants’”) Motion to Dismiss Plaintiffs’ Peter Dyachishin and Galina Dyachishin (“Plaintiffs’”) Complaint (“Complaint”), 3 for failure to state a claim pursuant to Federal Rule of Civil 4 5 6 Procedure 12(b)(6). (Doc. #11). Plaintiffs oppose the motion. 1 (Doc. #27). 7 8 Pro se Plaintiffs filed an opposition to Defendants’ Motion to Dismiss. (Doc. #14). After Defendants replied to the 9 opposition (Doc. #20), pro se litigants hired an attorney (Doc. 10 11 #24), who filed a second opposition. (Doc. #27). This second 12 opposition also appears to be directed at Defendants. Defendants 13 replied to this opposition as well. (Doc. #29). Though the court 14 would not typically allow Plaintiffs to file two oppositions, 15 because they filed the first opposition pro se and are now 16 17 18 represented, the court will only consider the second opposition filed by their attorney. 19 20 I. FACTUAL AND PROCEDURAL BACKGROUND 21 In February 2007, Plaintiffs obtained a mortgage loan to 22 refinance their residential property located at 8280 Mariposa 23 24 Avenue, Citrus Heights, CA 95610 (“subject property”). The terms 25 of the loan were memorialized in the promissory Note which was 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). 2 1 2 secured by a Deed of Trust on the subject property. The lender was AWL. 3 In July 2007, Plaintiffs obtained a Home Equity Line of 4 5 Credit on the subject property. The terms of the loan were 6 memorialized in the promissory Note which was secured by a Deed 7 of Trust on the subject property. JPMorgan, not a party to this 8 motion, was the lender. Plaintiffs allege that they did not 9 understand the terms of the loan, and that Defendants mislead 10 11 12 them. Plaintiffs bring the present lawsuit alleging violations of state and federal law. 13 14 II. A. OPINION Legal Standard 15 A party may move to dismiss an action for failure to state 16 17 a claim upon which relief can be granted pursuant to Federal 18 Rule of Civil Procedure 12(b)(6). In considering a motion to 19 dismiss, the court must accept the allegations in the complaint 20 as true and draw all reasonable inferences in favor of the 21 plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1975), 22 overruled on other grounds by Davis v. Scherer, 468 U.S. 183 23 24 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that 25 are mere “legal conclusions,” however, are not entitled to the 26 assumption of truth. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 27 (2009) (citing Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 28 (2007)). To survive a motion to dismiss, a plaintiff needs to 3 1 2 plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Dismissal is appropriate 3 where the plaintiff fails to state a claim supportable by a 4 5 6 7 8 cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). Upon granting a motion to dismiss, a court has discretion to allow leave to amend the complaint pursuant to Federal Rule 9 of Civil Procedure 15(a). “Dismissal with prejudice and without 10 11 leave to amend is not appropriate unless it is clear . . . that 12 the complaint could not be saved by amendment.” Eminence 13 Capital, L.L.C. v. Aspeon, Inc., 316 F. 3d 1048, 1052 (9th Cir. 14 2003). 15 Generally, the Court may not consider material beyond the 16 17 pleadings in ruling on a motion to dismiss for failure to state 18 a claim. Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. 19 Cal. Mar. 30, 2009) (internal citations omitted). There are two 20 exceptions: when material is attached to the complaint or relied 21 on by the complaint, or when the court takes judicial notice of 22 matters of public record, provided the facts are not subject to 23 24 reasonable dispute. Id. Here, Defendants request judicial notice 25 of the loan documents in connection with the first mortgage and 26 the Deed of Trust. Plaintiffs do not dispute the authenticity of 27 these documents, all of which are either matters of public 28 4 1 2 record or relied on by the Complaint. Accordingly, the Court takes judicial notice as requested. 3 4 5 6 7 8 B. Federal Law Claims I. Violation of the Truth in Lending Act (“TILA”) In the Opposition to the Motion to Dismiss, Plaintiffs raise the argument that Defendant violated the Truth in Lending 9 Act, (“TILA”), 15 U.S.C. §1601 et seq., thereby seeking 10 11 rescission and damages. “The focus of any Rule 12(b)(6) 12 dismissal. . . is the complaint. This precludes the 13 consideration of new allegations that may be raised in 14 plaintiff’s opposition to a motion to dismiss brought pursuant 15 to Rule 12(b)(6).” Cordell v. Tilton, 515 F. Supp. 2d 1114, 1128 16 17 (S.D. Cal. 2007)(internal citations omitted). Because the TILA 18 allegation was first raised in the Opposition, the Court will 19 not consider this cause of action. 20 21 II. Violation of the Real Estate Settlement Procedures Act 22 (“RESPA”) 23 24 Within the fourth and fifth causes of action, Plaintiffs 25 allege that Defendants violated RESPA, 12 U.S.C. §§2601-17, by 26 failing to comply with disclosure requirements and engaging in 27 predicate unlawful business acts. In the Opposition, Plaintiffs 28 merely restate that Defendants failed to comply with RESPA. 5 1 2 Plaintiffs’ broad and conclusory allegation that Defendants failed to comply with RESPA is without merit. Without stating 3 specific sections that Defendants violated or any facts to 4 5 support the allegation, the Court cannot analyze this cause of 6 action. Accordingly, the RESPA claim is dismissed, with 7 prejudice. 8 9 C. State Law Claims 10 11 12 13 14 I. Quiet Title To allege a cause of action to quiet title, the complaint must state (1) a legal description of the property; (2) the title of the plaintiff and the basis of the title; (3) the 15 adverse claims to the title of the plaintiff; (4) the date as of 16 17 which the determination is sought; and (5) a prayer for the 18 determination of the title of the plaintiff against the adverse 19 claims. Cal. Code Civ. Proc. § 761.020. “The purpose of a quiet 20 title action is to establish one’s title against adverse claims 21 to real property. A basic requirement of an action to quiet 22 title is an allegation that plaintiffs are the rightful owners 23 24 of the proper, i.e., that they have satisfied their obligations 25 under the Deed of Trust. A mortgagor cannot quiet his title 26 against the mortgagee without paying the debt secured.” Santos 27 v. Countrywide Home Loans, 2009 WL 3756337, at *4 (E.D. Cal. 28 Nov. 6, 2009). 6 1 2 Here, Plaintiffs’ claim fails because Plaintiffs have not paid the debt secured on the loan, nor have they alleged their 3 ability to repay the loan. Accordingly, the claim for quiet 4 5 title is dismissed, with prejudice. 6 7 8 II. Rescission Based on Violation of Cal. Civ. Code § 1632 Plaintiffs allege that Defendants provided loan documents 9 in the English language, in spite of the fact that Plaintiffs’ 10 11 primary language is Slavic. Civil Code § 1632 requires that “any 12 person engaged in a trade or business who negotiates primarily 13 in Spanish, Chinese, Tagalog, Vietnamese, or Korean, ... in the 14 course of entering into any of the following, shall deliver to 15 the other party to the contract ... a translation of the 16 17 contract or agreement in the language in which the contract or 18 agreement was negotiated ...” This includes “loan[s] ... secured 19 other than by real property.” Cal. Civ. Code § 1632(b)(2). Thus, 20 Section 1632 generally does not apply to loans secured by real 21 property. 22 Moreover, Section 1632 does not require Defendants to 23 24 translate documents into Slavic. Thus, Plaintiffs fail to state 25 a claim under Section 1632. Accordingly, the claim for 26 rescission based on Section 1632 is dismissed, with prejudice. 27 28 7 1 2 III. Rescission Based on Fraud (Non-Disclosure) Plaintiffs allege that their loan should be rescinded due 3 to fraud. A contract may be rescinded if the consent of the 4 5 party rescinding was obtained through fraud or mistake. Cal. 6 Civ. Code § 1689(b)(1). “In all averments of fraud or mistake, 7 the circumstances constituting fraud or mistake shall be stated 8 with particularity. Malice, intent, knowledge and other 9 condition of mind of a person may be averred generally.” Fed. 10 11 R. Civ. Proc. 9(b). A claim of fraud must have the following 12 elements: “(a) a misrepresentation (false representation, 13 concealment, or nondisclosure); (b) knowledge of falsity (or 14 ‘scienter’); (c) intent to defraud, i.e., to induce reliance; 15 (d) justifiable reliance; and (e) resulting damage.” In re 16 17 Estate of Young, 160 Cal. App. 4th 62, 79 (2008) (quoting Lazar 18 v. Superior Court, 12 Cal. 4th 631, 638 (1996) (internal 19 quotation marks omitted). The Ninth Circuit has “interpreted 20 Rule 9(b) to mean that the pleader must state the time, place 21 and specific content of the false representations as well as the 22 identities of the parties to the misrepresentation. Alan Neuman 23 24 Productions, Inc. v. Albright, 862 F. 2d 1388, 1393 (9th Cir. 25 1988). 26 Plaintiffs have not alleged fraud with the required 27 particularity to state a plausible claim for relief. Nowhere in 28 the Complaint do Plaintiffs describe the facts of the alleged 8 1 2 fraud, other than making vague legal conclusions that they were mislead regarding the loan terms. Accordingly, the fraud claim 3 is dismissed, with prejudice. 4 5 6 IV. 7 8 Unfair Debt Collection Practices Plaintiffs allege that Defendants violated the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). The RFDCPA limits 9 debt collection agencies and creditors’ ability to collect 10 11 debts. Cal. Civ. Code § 1788, et seq. Plaintiffs allege that 12 Defendants, through their actions, violated the RFDCPA. These 13 allegations are mere legal conclusions. Plaintiffs do not allege 14 specific actions by Defendants that amount to threats to collect 15 debt. 16 17 Moreover, Plaintiffs have failed to provide support 18 demonstrating that the RFDCPA applies to the Defendants in this 19 case, as it is impossible to support a claim under the RFDCPA 20 based on foreclosure of a residential mortgage. See Fuentes v. 21 Duetsche Bank, 2009 WL 1971610 (S.D. Cal. July 8, 2009) 22 (granting defendant’s motion for judgment on the pleadings 23 24 “[s]ince a residential mortgage is not a debt and a home 25 foreclosure is not debt collection within the meaning of the 26 statute”); Gamboa v. Trustee Corps, 2009 WL 656285 (N.D. Cal. 27 Mar. 12, 2009). Accordingly, the claim for unfair debt 28 collection practices is dismissed, with prejudice. 9 1 2 V. Unfair Business Practices 3 The California Business & Professions Code § 17200 4 5 prohibits unfair competition including any “unlawful, unfair or 6 fraudulent business act or practice and unfair, deceptive, 7 untrue or misleading advertising.” This statute has a “broad 8 scope that allows for ‘violations of other laws to be treated as 9 unfair competition that is independently actionable’ while also 10 11 ‘sweep[ing] within its scope acts and practices not specifically Hauk v. JP Morgan Chase Bank 12 proscribed by any other law.’” 13 USA, 552 F.3d 1114, 1122 (9th Cir. 2009) (quoting Kasky v. Nike, 14 Inc., 27 Cal. 4th 939, 949 (2002)). While the statute is broad 15 in scope, Plaintiffs must still plead their claim so as to 16 17 establish a violation of the “other law” or unfair practice in See Constantini v. Wachovia Mortg. FSB, No. 09-406, 18 question. 19 2009 WL 1810122 at *3 (E.D. Cal. June 24, 2009) (citing Walker 20 v. Countrywide Home Loans, Inc., 98 Cal. App. 4th 1158, 1169-70 21 (2002)). 22 Here, Plaintiffs allege unfair competition based on failure 23 24 to comply with disclosure requirements of California Civil Code 25 § 1632, RFDCPA, and RESPA. As mentioned above, Plaintiffs have 26 failed to state a claim for any of these causes of action. 27 Accordingly, Plaintiffs’ cause of action for unfair business 28 practices is dismissed, with prejudice. 10 1 2 VI. Breach of Fiduciary Duty 3 “The elements of a cause of action for breach of fiduciary 4 5 duty are: 1) the existence of a fiduciary duty; 2) a breach of 6 the fiduciary duty; and 3) resulting damage.” 7 Weiss, 165 Cal. App. 4th 515, 524 (2008). 8 Pellegrini v. In the lending context, “financial institutions owe no duty of care to a 9 borrower when the institution’s involvement in the loan 10 11 transaction does not exceed the scope of its convention role as 12 a mere lender of money.” 13 Ass’n, 231 Cal. App. 3d 1089, 1096 (1991). 14 Nymark v. Heart Fed. Sav. & Loan Although California law imposes a fiduciary duty on a mortgage broker, no such duty 15 is imposed on a lender. Price v. Wells Fargo Bank, 213 Cal. 16 17 18 App. 3d 465, 476 (1989). Plaintiffs do not state a claim for breach of fiduciary 19 duty. AWL was the “mere lender of money” in this case and holds 20 no fiduciary duty towards Plaintiffs. Plaintiffs also fail to 21 establish any fiduciary relationship with the other defendants, 22 CFC, Recon, BofA and MERS. As such, without the existence of a 23 24 fiduciary relationship, there can be no claim for relief against 25 Defendants. 26 fiduciary duty is dismissed, with prejudice. Accordingly, Plaintiffs’ claim for breach of 27 28 11 1 2 VII. Breach of Written Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Violation of HOEPA: Seventh, 3 Eighth, Ninth Causes of Action 4 5 6 7 8 Plaintiffs only allege these causes of action against Defendant CFC. In California, “[a] cause of action for breach of contract requires proof of the following elements: (1) existence of the 9 contract; (2) plaintiff's performance or excuse for 10 11 nonperformance; (3) defendant’s breach; and (4) damages to 12 plaintiff as a result of the breach.” 13 Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). 14 CDF Firefighters v. “To establish a breach of an implied covenant of good faith 15 and fair dealing, a plaintiff must establish the existence of a 16 17 contractual obligation, along with conduct that frustrates the Fortaleza 18 other party’s rights to benefit from the contract.” 19 v. PNC Fin. Servs. Group, Inc., 2009 U.S. Dist. LEXIS 64624, at 20 **15-16 (N.D. Cal. July 27, 2009). 21 To state a claim under Home Ownership and Equity Protection 22 Act (“HOEPA”), plaintiff must allege that defendant extended 23 24 credit without regard to the consumer’s ability to pay. 15 25 U.S.C. § 1639(h). 26 Plaintiffs fail to state a claim for relief against CFC 27 under any of these causes of action. Plaintiffs base all these 28 claims on the underlying contract. However, that contract is 12 1 2 between Plaintiffs and AWL, not CFC. Any negotiations or obligations under the contract do not involve CFC. Thus, without 3 the existence of a contract, Plaintiffs cannot state a claim for 4 5 relief against CFC. Accordingly, the claims for breach of 6 contract, breach of implied covenant of good faith and fair 7 dealing and HOEPA are dismissed, with prejudice. 8 9 VIII. Declaratory Relief 10 11 Plaintiffs’ tenth cause of action requests declaratory 12 relief in order for Plaintiffs to ascertain their right under 13 the contract and to determine Defendant’s right to proceed with 14 the non-judicial foreclosure. 15 “Declaratory relief is only appropriate (1) when the 16 17 judgment will serve a useful purpose in clarifying and settling 18 the legal relations in issue, and (2) when it will terminate and 19 afford relief from the uncertainty, insecurity, and controversy 20 giving rise to the proceeding.” Guerra v. Sutton, 783 F.2d 1371, 21 1376 (9th Cir. 1986) (citations omitted). 22 Plaintiffs have failed to state a claim to meet these 23 24 criteria. Accordingly, Plaintiffs’ tenth cause of action for 25 declaratory relief is dismissed, with prejudice. 26 27 28 13 1 2 IX. Injunctive Relief Plaintiffs’ tenth cause of action also requests injunctive 3 relief in the form of a preliminary injunction for the sale of 4 5 6 7 8 the subject property and permanent injunction preventing Defendant from engaging in wrongful conduct in the future. “It is appropriate to deny an injunction where there is no showing of reasonable probability of success, even though the 9 foreclosure will create irreparable harm, because there is no 10 11 justification in delaying that harm where, although irreparable, 12 it is also inevitable.” 13 Ass’n., 142 Cal. App. 3d 454, 459 (1983). 14 Jessen v. Keystone Savings & Loan Here, Plaintiffs have not paid the debt secured on the loan, nor have they shown a 15 reasonable probability of success on the merits, as indicated 16 17 18 above. Accordingly, Plaintiffs’ tenth cause of action for injunctive relief is dismissed, with prejudice. 19 20 III. ORDER 21 For the reasons set forth above, Defendant’s Motion to 22 Dismiss is hereby GRANTED, WITH PREJUDICE. 23 24 25 26 IT IS SO ORDERED. Dated: April 14, 2010 ____________________________ JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE 27 28 14
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