Nunez et al v. U.S. Bank National Association, No. 2:2010cv01276 - Document 16 (E.D. Cal. 2010)

Court Description: FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Gregory G. Hollows on 8/26/2010 RECOMMENDING that 10 defendant's motion to dismiss, be granted with prejudice, and that the court decline to exercise jurisdiction over plaintiffs' state law claims. Objecitons due 14 days after being served with these F & R's; Referred to Judge Garland E. Burrell, Jr. (Reader, L)
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Nunez et al v. U.S. Bank National Association Doc. 16 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 JOSE NUNEZ, et al., 11 12 13 Plaintiffs, No. CIV S-10-1276 GEB GGH PS vs. US BANK, FINDINGS AND RECOMMENDATIONS Defendant. 14 _______________________________/ 15 16 Plaintiffs are proceeding in this action pro se. Presently before the court is 17 defendant U.S. Bank’s motion to dismiss, filed May 27, 2010.1 Plaintiffs did not file an 18 opposition.2 After reviewing the moving papers, the court now issues the following findings and 19 recommendations. 20 BACKGROUND 21 Defendant U.S. Bank National Association, Successor in Interest to Federal 22 23 24 25 26 1 This matter was scheduled for hearing on July 29, 2010, but was taken under submission without a hearing after plaintiffs failed to file an opposition, and it was determined that oral argument was unnecessary. 2 On July 26, 2010, days after the undersigned took the motion under submission, a substitution of counsel was filed on behalf of plaintiffs. Counsel will be permitted to advocate on plaintiffs’ behalf in their objections to these findings and recommendations. 1 1 Deposit Insurance Corporation as Receiver for Downey Savings and Loan Association, F.A., 2 removed this action to federal court on May 24, 2010. The complaint, filed April 19, 2010 in 3 superior court by Jose and Cesar Nunez, claim that defendant negligently failed to perform a loan 4 modification on plaintiffs’ property, and after plaintiffs made payments, defendant escalated the 5 payments to an “outrageous amount.” (Compl., ¶ 12.) Plaintiffs also allege that defendant 6 wrongfully attempted to sell their property. (Id., ¶ 7.) The complaint alleges a violation of the 7 Truth in Lending Act (“TILA”), negligence, and unfair business practices (Cal. Bus. & Prof. 8 Code § 17200). The complaint seeks injunctive and declaratory relief, as well as damages. 9 DISCUSSION 10 I. Legal Standards 11 In order to survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), 12 a complaint must contain more than a “formulaic recitation of the elements of a cause of action;” 13 it must contain factual allegations sufficient to “raise a right to relief above the speculative 14 level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). “The 15 pleading must contain something more...than...a statement of facts that merely creates a suspicion 16 [of] a legally cognizable right of action.” Id., quoting 5 C. Wright & A. Miller, Federal Practice 17 and Procedure § 1216, pp. 235-236 (3d ed. 2004). “[A] complaint must contain sufficient factual 18 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 19 ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). 20 “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to 21 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 22 In considering a motion to dismiss, the court must accept as true the allegations of 23 the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740, 96 S. 24 Ct. 1848, 1850 (1976), construe the pleading in the light most favorable to the party opposing the 25 motion and resolve all doubts in the pleader’s favor. Jenkins v. McKeithen, 395 U.S. 411, 421, 26 89 S. Ct. 1843, 1849, reh’g denied, 396 U.S. 869, 90 S. Ct. 35 (1969). The court will “‘presume 2 1 that general allegations embrace those specific facts that are necessary to support the claim.’” 2 National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 256, 114 S.Ct. 798, 803 3 (1994), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 2137 (1992). 4 Moreover, pro se pleadings are held to a less stringent standard than those drafted by lawyers. 5 Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 596 (1972). 6 The court may consider facts established by exhibits attached to the complaint. 7 Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The court may also 8 consider facts which may be judicially noticed, Mullis v. United States Bankruptcy Ct., 828 F.2d 9 1385, 1388 (9th Cir. 1987); and matters of public record, including pleadings, orders, and other 10 papers filed with the court, Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 11 1986). The court need not accept legal conclusions “cast in the form of factual allegations.” 12 Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). 13 A pro se litigant is entitled to notice of the deficiencies in the complaint and an 14 opportunity to amend, unless the complaint’s deficiencies could not be cured by amendment. See 15 Noll v. Carlson, 809 F. 2d 1446, 1448 (9th Cir. 1987). 16 17 II. Analysis Defendant moves to dismiss for failure to state a claim under Rule 12(b)(6), and 18 to properly plead under Rule 8. In particular, defendant claims that plaintiffs cannot challenge 19 the foreclosure of their property because they have not tendered the undisputed obligation on 20 their loan, that the TILA claim is time barred and deficiently pled, and that plaintiff’s state law 21 claims either fail to state a claim or are deficiently pled. 22 A. TILA 23 Defendant correctly argues that plaintiffs are barred by the statute of limitations 24 which requires that an action be brought within one year for damages claims, and three years for 25 rescission claims. 26 TILA violations include the failure to provide the required disclosures pursuant to 3 1 15 U.S.C. § 1631 and the failure to clearly and conspicuously disclose information relating to the 2 “annual percentage rate” and the “finance charge” pursuant to 15 U.S.C. § 1632. To recover 3 damages arising from alleged TILA violations, a plaintiff must file an action “within one year 4 from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). 5 The loan transaction at issue was executed on January 3, 2006. (Compl. ¶¶ 6, 9; 6 RJN, Ex. A.)3 The statute of limitations therefore expired on January 3, 2007. Plaintiffs filed the 7 instant action on April 19, 2010. Therefore, their claim for damages under TILA is time barred. 8 Any claim for rescission is also time barred. Section 1635(b) provides for the 9 return of money or property upon rescission.4 Where the required forms and disclosures have not 10 been delivered to the obligor, 15 U.S.C. § 1635(f) provides that “[a]n obligor’s right of rescission 11 shall expire three years after the date of consummation of the transaction or upon the sale of the 12 property, whichever occurs first.” 13 Providing notice of rescission within the three year period is irrelevant to whether 14 plaintiff timely files a claim seeking rescission. Falcocchia v. Saxon Morg., Inc., No. Civ. 15 S-09-2700 LKK GGH, 2010 WL 582059, *6 (E.D. Cal. Feb.12, 2010). Plaintiff must file a 16 complaint seeking rescission before the statute of limitation expires. The three year period for 17 filing TILA rescission claims is an absolute statute of repose that cannot be tolled. Miguel v. 18 Country Funding Corp., 309 F.3d 1161 (9th Cir. 2002). 19 Setting aside the issue of whether the required forms and disclosures were made 20 3 21 A court may take judicial notice of court records. See MGIC Indem. Co. v. Weisman, 803 F.2d 500, 505 (9th Cir. 1986); United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980). 22 4 23 When an obligor exercises his right to rescind under subsection (a) of this section, he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. . . . 24 25 26 15 U.S.C. § 1635(b) provides in pertinent part: 4 1 to plaintiff, the transaction was consummated on or about January 3, 2006. (Compl. ¶¶ 6, 9; RJN 2 Ex. A.) Plaintiffs filed this action on April 19, 2010. Therefore they are barred from seeking 3 rescission. 4 Furthermore, the Ninth Circuit has held that rescission under TILA “should be 5 conditioned on repayment of the amounts advanced by the lender.” Yamamoto v. Bank of N.Y., 6 329 F. 3d 1167, 1170 (9th Cir. 2003) (emphasis in original). District courts in this circuit have 7 dismissed rescission claims under TILA at the pleading stage based upon the plaintiff’s failure to 8 allege an ability to tender loan proceeds. See, e.g., Garza v. Am. Home Mortgage, 2009 WL 9 188604 at *5 (E.D. Cal. 2009) (stating that “rescission is an empty remedy without [the 10 borrower’s] ability to pay back what she has received”); Ibarra v. Plaza Home Mortgage, 2009 11 WL 2901637 at *8 (S.D. Cal. 2009); Ing Bank v. Korn, 2009 WL 1455488 at *1 (W.D. Wash. 12 2009). In this case, plaintiffs have failed to allege any facts relating to their ability to tender the 13 loan proceeds, or that they in fact ever tendered the loan proceeds. 14 15 Accordingly, the court finds that plaintiffs’ claim under the Truth in Lending Act is barred by the statute of limitations. 16 B. State Law Claims 17 As there are no federal claims remaining, this court declines to exercise 18 supplemental jurisdiction over plaintiff’s possible state law claims. See 28 U.S.C. § 1367(c)(3) 19 (The district courts may decline to exercise supplemental jurisdiction over a claim ...if – the 20 district court has dismissed all claims over which it has original jurisdiction”); see also, Acri v. 21 Varian Associates, Inc., 114 F.3d 999, 1000-1001 (9th Cir. 1997) (“ ‘in the usual case in which 22 all federal-law claims are eliminated before trial, the balance of factors . . . will point toward 23 declining to exercise jurisdiction over the remaining state-law claims’ ”), quoting 24 Carnegie-Mellon University. v. Cohill, 484 U.S. 343, 350, n. 7, 108 S. Ct. 614, 619, n. 7 (1988). 25 \\\\\ 26 \\\\\ 5 1 CONCLUSION 2 Accordingly, IT IS HEREBY RECOMMENDED that defendant’s motion to 3 dismiss, filed May 27, 2010, (dkt. # 10), be granted with prejudice, and that the court decline to 4 exercise jurisdiction over plaintiffs’ state law claims. 5 These findings and recommendations are submitted to the United States District 6 Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within 7 fourteen (14) days after being served with these findings and recommendations, any party may 8 file written objections with the court and serve a copy on all parties. Such a document should be 9 captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the 10 objections shall be served and filed within fourteen (14) days after service of the objections. The 11 parties are advised that failure to file objections within the specified time may waive the right to 12 appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 13 DATED: 08/26/10 /s/ Gregory G. Hollows 14 GREGORY G. HOLLOWS UNITED STATES MAGISTRATE JUDGE 15 GGH:076 16 17 18 19 20 21 22 23 24 25 26 Nunez1276.mtd.wpd