Padilla et al v. One West Bank, No. 4:2010cv04080 - Document 21 (N.D. Cal. 2010)
Court Description: ORDER GRANTING DEFENDANTS 11 MOTION TO DISMISS AND VACATING CASE MANAGEMENT CONFERENCE. Signed by Judge Claudia Wilken on 12/20/2010. (ndr, COURT STAFF) (Filed on 12/20/2010)
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Padilla et al v. One West Bank Doc. 21 1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 United States District Court For the Northern District of California 10 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND VACATING CASE MANAGEMENT CONFERENCE Plaintiffs, 8 9 No. 10-04080 CW RONALD C. PADILLA & EVA K. PADILLA, v. ONE WEST BANK, Defendant. 11 / 12 13 14 This case involves Defendant's attempt to foreclose on a deed 15 of trust that is secured by Plaintiffs’ residence. 16 West Bank moves to dismiss all of the claim asserted in Plaintiffs’ 17 complaint. 18 oppose the motion. 19 papers. 20 Court grants the motion to dismiss and dismisses all claims without 21 leave to amend, except that Plaintiffs are granted leave to amend 22 their claim under the Real Estate Settlement Procedures Act. 23 24 Defendant One Plaintiffs Ronald C. and Eva K. Padilla, acting pro se, The matter was taken under submission on the Having considered all the papers filed by the parties, the BACKGROUND Plaintiffs' complaint is composed, for the most part, of 25 general allegations about the mortgage industry. 26 allegations are that Plaintiffs “entered into a consumer contract 27 for the refinance of a primary residence located at 2555 Spyglass The only specific 28 Dockets.Justia.com 1 Hills Road, Livermore, California.” 2 then alleges that “Defendants, acting in concert and collusion with 3 others, induced Petitioner to enter into a predatory loan agreement 4 with Defendant.”1 5 Bank and do not allege how One West Bank has caused the violations 6 they assert in their complaint. 7 Comp. at 1. The complaint Plaintiffs do not identify Defendant One West From the documents submitted by Defendant One West Bank, of 8 which the Court takes judicial notice, the following facts can be 9 ascertained.2 Plaintiffs purchased the Property in July, 2006. United States District Court For the Northern District of California 10 Request for Judicial Notice (RJN), Ex. 1, Grant Deed recorded July 11 12, 2006. 12 against the Property, securing a mortgage loan in the amount of 13 $467,100. 14 that Plaintiffs were the borrowers of the loan; Mortgageit, Inc. 15 was the lender; North American Title was the trustee; and Mortgage 16 Electronic Registration Systems, Inc. (MERS) was the beneficiary, 17 as nominee for the lender. 18 adjustable rate rider indicating that the loan contained provisions 19 that would allow the interest rate and monthly payments to change. 20 On April 1, 2010, after Plaintiffs accrued approximately Also, on July 12, 2006, a Deed of Trust was recorded RJN, Ex. 2, Deed of Trust. The Deed of Trust indicates Attached to the Deed of Trust is an 21 $16,249 in mortgage payment arrearages, a notice of default was 22 recorded against the property. 23 indicates that, to find out how much they must pay and to arrange 24 for payment to stop the foreclosure, Plaintiffs should contact the RJN, Exhibit 3. The notice 25 1 26 27 28 Although Plaintiffs' allegations speak of "Defendants," they name only one Defendant, One West Bank. 2 The Court grants Defendant’s request for judicial notice. 2 1 Bank of America, in care of Meridian Foreclosure Service. 2 21, 2010, a Substitution of Trustee form was signed by One West 3 Bank, on behalf of the Bank of America, to substitute Meridian 4 Trust Deed Service (MTDS) as Trustee on the Deed of Trust. 5 Exhibit 4. 6 1, 2010. 7 Inc., assigned its beneficial interest in the Deed of Trust to the 8 Bank of America. 9 was recorded on July 2, 2010. On April RJN, This Substitution of Trustee form was recorded on July Id. On June 24, 2010, MERS, as nominee for Mortgageit, RJN, Exhibit 6. This Assignment of Deed of Trust Id. On July 1, 2010, MTDS recorded United States District Court For the Northern District of California 10 a Notice of Trustee’s Sale of the Property, setting the foreclosure 11 sale date as July 23, 2010. 12 indicates that the foreclosure sale has been postponed. 13 RJN, Exhibit 5. One West Bank In its motion, One West Bank refers to itself as the servicer 14 of Plaintiffs' loan. 15 West Bank once, representing that they have alleged that One West 16 Bank "committed fraud by representing to the court that One West 17 Bank is a real party in interest in the contract of sale and has 18 standing to take said property from Defendant [sic] when no such 19 claim exists." 20 that the lack of the original loan document means One West Bank 21 lacks standing to foreclose. 22 is insufficient to forestall foreclosure. 23 to establish that One West Bank lacks standing to foreclose. 24 Although One West Bank does not provide a specific document in 25 which the Bank of America appoints it to be the servicer of 26 Plaintiffs' loan, the recorded documents establish that the Bank of 27 America is the assignee of the beneficial interest of the loan. 28 In their opposition, Plaintiffs mention One Opp. at 7. This appears to be an attempt to argue For the reasons discussed below, this 3 It is also insufficient 1 One West Bank has signed several of the documents on behalf of the 2 Bank of America, thus corroborating the former’s statement that it 3 is the servicer of Plaintiffs' loan. 4 Plaintiffs assert the following causes of action: (1) breach 5 of fiduciary duty; (2) negligence and negligence per se; (3) fraud; 6 (4) breach of the covenant of good faith and fair dealing; (5) 7 violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et 8 seq.; and (6) intentional infliction of emotional distress. 9 Plaintiffs pray for damages in the amount of $1,230,891, punitive United States District Court For the Northern District of California 10 damages in the amount of $3,692,675, rescission of the loan 11 contract, quiet title to the property and an injunction enjoining 12 Defendant(s) from engaging in fraudulent, deceptive, predatory and 13 negligent acts.3 14 15 LEGAL STANDARD A complaint must contain a “short and plain statement of the 16 claim showing that the pleader is entitled to relief.” 17 Civ. P. 8(a). 18 12(b)(6) for failure to state a claim, dismissal is appropriate 19 only when the complaint does not give the defendant fair notice of 20 a legally cognizable claim and the grounds on which it rests. 21 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 22 considering whether the complaint is sufficient to state a claim, 23 the court will take all material allegations as true and construe 24 them in the light most favorable to the plaintiff. Fed. R. When considering a motion to dismiss under Rule In NL Indus., Inc. 25 26 27 28 3 Plaintiffs allude to other statutes in the “General Allegations” section of their complaint. However, only these six causes of action are listed after the heading, “Causes of Action.” 4 1 v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 2 principle is inapplicable to legal conclusions; “threadbare 3 recitals of the elements of a cause of action, supported by mere 4 conclusory statements,” are not taken as true. 5 ___ U.S. ___, 129 S. Ct. 1937, 1949-50 (2009) (citing Twombly, 550 6 U.S. at 555). 7 However, this Ashcroft v. Iqbal, When granting a motion to dismiss, the court is generally required to grant the plaintiff leave to amend, even if no request 9 to amend the pleading was made, unless amendment would be futile. 10 United States District Court For the Northern District of California 8 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 11 F.2d 242, 246-47 (9th Cir. 1990). 12 would be futile, the court examines whether the complaint could be 13 amended to cure the defect requiring dismissal "without 14 contradicting any of the allegations of [the] original complaint." 15 Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). In determining whether amendment 16 DISCUSSION 17 As stated above, Plaintiffs allude to several statutes and 18 claims, such as civil conspiracy, criminal conspiracy and violation 19 of the Federal Trade Commission Act (FTCA),4 in their general 20 allegations, which they do not include in their asserted causes of 21 action. In its motion, One West Bank moves to dismiss these 22 claims. In their opposition, Plaintiffs only mention the FTCA 23 claim. 24 alluded to in the general allegations of the complaint is granted, Therefore, One West Bank's motion to dismiss all the claims 25 26 4 27 Defendant correctly points out that there is no private right of action under the FTCA. See Carlson v. Coca-Cola Co., 483 F.2d 279, 280 (9th Cir. 1973). 28 5 1 with the exception of the claim for violation of the Real Estate 2 Settlement Procedures Act (RESPA), as discussed below.5 3 I. Claims Predicated on Production of Original Promissory Note 4 One West Bank notes that Plaintiffs appear to premise their 5 causes of action on the fact that a trustee’s sale would be 6 improper because One West Bank has not produced, upon Plaintiffs’ 7 request, the original promissory note. 8 Cal. App. 4th 822, 830 (1994), One West Bank argues that it has met 9 its legal obligations under California Civil Code §§ 2924 et seq. Citing Moeller v. Lien, 25 United States District Court For the Northern District of California 10 by recording the Notice of Default in the Alameda County recorder’s 11 office, thus beginning the non-judicial foreclosure sale process. 12 Plaintiffs, in their opposition, do not respond to this argument. 13 Moeller recited the procedures, under § 2924, that must take place 14 before a non-judicial foreclosure sale may proceed. 15 procedures include providing the debtor/trustor several 16 opportunities to cure the default and avoid the loss of the 17 property. 18 its servicer, to produce the original note to the debtor/trustor. 19 Therefore, any general claim premised on the requirement that One 20 West Bank produce the original promissory note before foreclosure 21 may proceed is dismissed. Id. Id. These The statute does not require the beneficiary, or 22 23 5 24 25 26 27 28 Defendant also argues that all the claims must be dismissed because Plaintiffs have failed to tender the amount of the secured debt. Defendant’s cases involve actions seeking to cancel a voidable sale under a deed of trust, see e.g., Karlsen v. American Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 117 (1971), and are not applicable to the instant case where a sale has not yet occurred. However, as discussed below, this defense is applicable to Plaintiffs' claim for rescission under TILA. 6 1 2 II. Breach of Fiduciary Duty Citing Oaks Mgmt. Corp. v. Superior Court, 145 Cal. App. 4th 3 453, 466 (2006), One West Bank argues that there is no fiduciary 4 relationship between a lender and a borrower. 5 opposition, do not respond to this argument. 6 that, absent special circumstances, a loan transaction, like all 7 ordinary banking transactions, does not establish a fiduciary 8 relationship between the borrower and lender. 9 Bank correctly notes, it was not a party to the original loan Plaintiffs, in their Oaks stated the rule Id. As One West United States District Court For the Northern District of California 10 transaction and, therefore, had no duty to make any disclosures to 11 Plaintiffs regarding their loan. 12 fiduciary relationship between a loan servicer and a borrower. 13 Castaneda v. Saxon Mortg. Servs., Inc., 2010 WL 726903, *7 (E.D. 14 Cal.) (applying California law). 15 is granted. 16 amendment would be futile. 17 III. Negligence and Negligence Per Se 18 Furthermore, there is no The motion to dismiss this claim It is dismissed without leave to amend because Under their negligence causes of action, Plaintiffs allege 19 that Defendants [sic] owed a general duty of care to perform due 20 diligence as to their loan and to avoid marketing loans they knew 21 that borrowers could not afford. 22 The allegations of this cause of action focus on the original 23 loan agreement, which Plaintiffs entered into in 2006. 24 Bank was appointed as servicer of the deed of trust after the loan 25 was assigned to the Bank of America in 2010. 26 Bank could not have undertaken any of the improper acts alleged in 27 this cause of action. 28 One West Therefore, One West Further, as correctly noted by One West 7 1 Bank, it owes Plaintiffs no legal duty of care, an essential 2 element of a claim based on negligence. 3 negligence causes of action are dismissed without leave to amend, 4 because amendment would be futile. 5 IV. Fraud 6 Therefore, Plaintiffs’ In this cause of action, Plaintiffs allege that unnamed 7 “Agents” made misrepresentations with the intention of inducing 8 Plaintiffs to act in reliance on them. 9 Because all of Plaintiffs’ allegations of fraud address the United States District Court For the Northern District of California 10 loan origination and closing procedures, they do not implicate One 11 West Bank, which became the servicer of the loan after it was 12 assigned to the Bank of America. 13 the proper Defendant on this claim. 14 lack the specificity required under Federal Rule of Civil Procedure 15 9(b) for all claims sounding in fraud. 16 (“In all averments of fraud or mistake, the circumstances 17 constituting fraud or mistake shall be stated with 18 particularity.”); also see, Wool v. Tandem Computers, Inc., 818 19 F.2d 1433, 1439 (9th Cir. 1987) (allegations must include the time, 20 place and nature of the alleged fraudulent activities). 21 One West Bank's motion to dismiss this claim is granted. 22 claim is dismissed without leave to amend because amendment would 23 be futile. 24 V. Breach of the Covenant of Good Faith and Fair Dealing 25 Therefore, One West Bank is not Also, Plaintiffs’ allegations See Fed. R. Civ. P. 9(b) Therefore, This Under California law, "[t]he prerequisite for any action for 26 breach of the implied covenant of good faith and fair dealing is 27 the existence of a contractual relationship between the parties, 28 8 1 since the covenant is an implied term in the contract." 2 City & County of San Francisco, 225 Cal. App. 3d 38, 49 (1990). 3 Plaintiffs have not alleged that they have any direct Smith v. 4 contractual relationship with One West Bank. 5 Plaintiffs do not address Defendant’s argument on this point. 6 Therefore, Plaintiffs' claim for breach of the covenant of good 7 faith and fair dealing is dismissed without leave to amend, because 8 amendment would be futile. 9 V. Truth in Lending Act United States District Court For the Northern District of California 10 In their opposition, TILA was enacted “to assure a meaningful disclosure of credit 11 terms so that the consumer will be able to compare more readily the 12 various credit terms available to him and avoid the uninformed use 13 of credit." Yamamoto v. Bank of New York, 329 F.3d 1167, 1169 (9th 14 Cir. 2003) (citing 15 U.S.C. § 1601(a)). If required disclosures 15 are not made, the consumer may obtain damages or seek to rescind the 16 loan. Id. at 1170; Martinez v. EMC Mortg. Corp., 2009 WL 2043013, 17 *5 (E.D. Cal.). 18 The only parties who can be liable for TILA violations are the 19 original creditor and assignees of that creditor. 15 U.S.C. 20 §§ 1640, 1641; Redic v. Gary H. Watts Realty Co., 762 F.2d 1181, 21 1185 (4th Cir. 1985); Nevis v. Wells Fargo Bank, 2007 WL 2601213, *2 22 (N.D. Cal.). Servicers of consumer obligations are not treated as 23 assignees for purposes of imposing liability unless they are also 24 the owner of the obligation. 15 U.S.C. § 1641(f); Chow v. Aegis 25 Mortg. Corp., 286 F. Supp. 2d 956, 959 (N.D. Ill. 2003). 26 Here, Mortgageit was the original lender of the loan and the 27 Bank of America is the assignee. One West Bank is the loan servicer 28 9 1 on behalf of the Bank of America. Because One West Bank is not the 2 original lender or the assignee of the lender, it is not a proper 3 party to a TILA action, and, therefore, this claim is dismissed. 4 Moreover, One West Bank cannot be liable for damages because 5 the one-year statute of limitations has expired. 6 § 1640(e). 15 U.S.C. Plaintiffs executed the loan agreement in July, 2006 but 7 they filed their lawsuit in September, 2010. Thus, the claim for 8 damages is untimely. 9 Further, as One West Bank correctly argues, Plaintiffs’ claim United States District Court For the Northern District of California 10 for rescission fails because they have not alleged the present 11 ability to tender amounts owed under the loan. Courts have 12 discretion to condition rescission under TILA on tender by the 13 borrower of the property he received by the lender. Yamamoto, 329 14 F.3d at 1171; Martinez v. EMC Mortgage Corp., 2009 WL 2043013 *6 15 (E.D. Cal.) (noting “absent meaningful tender, TILA rescission is an 16 empty remedy, not capable of being granted”). Plaintiffs do not 17 respond to Defendant’s argument that they must tender amounts owed 18 under the loan. Furthermore, the right of rescission under TILA 19 cannot be brought more than three years after the consummation of 20 the transaction. Beach v. Ocwen Federal Bank, 523 U.S. 410, 411 21 (1998) (15 U.S.C. § 1635(f) provides that right of rescission 22 expires three years after loan closes or upon the sale of secured 23 property, whichever is earlier). Because Plaintiffs’ complaint was 24 filed more than three years after the consummation of the loan 25 transaction, the claim for rescission is untimely. 26 For all of the reasons above, the Court grants One West Bank’s 27 motion to dismiss the TILA claim. 28 Dismissal is without leave to 10 1 amend because amendment would be futile. 2 VI. Real Estate Settlement Procedures Act (RESPA) 3 Although Plaintiffs do not include a claim for violation of 4 RESPA, 12 U.S.C. § 2601 et seq., in the section of the complaint 5 titled, "Causes of Action," the Court addresses it because 6 Plaintiffs mention it several times in the “General Allegations” 7 section of their complaint. 8 One West Bank argues that RESPA does not provide a private 9 right of action. This is incorrect. There are three sections in United States District Court For the Northern District of California 10 RESPA that provide a private right of action: (1) § 2605 requires 11 disclosure to a loan applicant of whether the servicing of the loan 12 may be assigned, sold or transferred; notice to the borrower at the 13 time of transfer; and responses by the loan servicer to qualified 14 written requests by the borrower; (2) § 2607 prohibits kickbacks; 15 and (3) § 2608 prohibits sellers from requiring buyers to purchase 16 title insurance on a property as a condition of its sale. 17 Although Plaintiffs do not make clear under which sections of 18 RESPA they bring their claim, they allege that they made a request 19 for the production of the original promissory note and imply that 20 One West Bank did not respond. Comp. at 2. This may be a claim 21 under § 2605 for a response to a qualified written request. 22 The statute of limitation for § 2605 claims is three years, see 23 12 U.S.C. § 2614, and thus, a § 2605 claim premised on Plaintiffs’ 24 request for documents from One West Bank is not time-barred. RESPA 25 places a duty upon loan servicers to respond to “qualified written 26 requests.” Lawther v. Onewest Bank, 2010 WL 4936797, *6 (N.D. Cal.) 27 A qualified written request is one that includes identifying 28 11 1 information about the borrower and provides “a statement of the 2 reasons for the belief of the borrower, to the extent applicable, 3 that the account is in error or provides sufficient detail to the 4 servicer regarding other information sought by the borrower.” 5 U.S.C. § 2605(c)(1). 12 The request must be related to the servicing 6 of the loan, and the servicer must provide a written response 7 acknowledging receipt of the correspondence within twenty days, 8 unless the requested action is taken within that period. 9 2010 WL 4936797 at *6. A loan servicer must respond only if the 10 information requested is related to loan servicing. United States District Court For the Northern District of California Lawther, Id. If a loan 11 servicer fails to comply with the provisions of § 2605, a borrower 12 is entitled to any actual damages as a result of the failure. Id. 13 The plaintiff must include, at the pleading stage, a demonstration 14 of some actual pecuniary loss. Id. The plaintiff must also allege 15 a causal relationship between the alleged damages and the RESPA 16 violation. 17 Id. at *7. It is possible that Plaintiffs could state a claim under § 2605 18 against One West Bank as the servicer of their loan. However, they 19 have not alleged that they made a qualified request for information 20 related to the servicing of their loan, that One West Bank did not 21 respond to their request in accordance with § 2605 or that this 22 failure caused them to suffer damages. Therefore, the RESPA claim 23 is dismissed with leave to amend, if Plaintiffs can truthfully 24 correct these deficiencies. 25 VII. Intentional Infliction of Emotional Distress 26 The elements of a cause of action for intentional infliction of 27 emotional distress are (1) extreme and outrageous conduct 28 12 1 (2) intended to cause or done in reckless disregard for causing 2 (3) severe emotional distress and (4) actual and proximate 3 causation. 4 (1979). Cervantez v. J.C. Penney Co., 24 Cal. 3d 579, 593 The conduct must be so extreme as to "exceed all bounds of 5 that usually tolerated in a civilized community," id., and the 6 distress so severe "that no reasonable man in a civilized society 7 should be expected to endure it," Fletcher v. Western National Life 8 Ins. Co., 10 Cal. App. 3d 376, 397 (1970). Plaintiffs have not 9 alleged such conduct by One West Bank, nor can they, except on the United States District Court For the Northern District of California 10 basis of their putative RESPA claim, because One West Bank is not 11 the proper party against whom they can bring any other claim alleged 12 in their complaint. Therefore, One West Bank's motion to dismiss 13 this claim is granted. It is dismissed without leave to amend 14 because amendment would be futile. 15 VIII. Equitable Tolling 16 In their complaint, Plaintiffs make the general observation 17 that the statutes of limitations for RESPA and TILA claims are 18 subject to equitable tolling. In their opposition, Plaintiffs 19 assert that equitable tolling applies because: (1) they dealt only 20 with licensed individuals and, thus, Plaintiffs had cause to trust 21 their statements regarding the real estate market, the true value of 22 the property, and the propriety of the fees charged at loan closing; 23 (2) Defendants [sic] actively concealed the truth from Plaintiffs so 24 as to defraud them; and (3) Plaintiffs, once they learned of the 25 pervasive fraud affecting the real estate industry, acted 26 immediately and with due diligence to examine Defendants' [sic] 27 behavior and discovered the fraud alleged in the complaint. 28 13 The 1 Court finds that these conclusory statements are insufficient to 2 establish that equitable tolling applies to Plaintiffs' claims. 3 Because the only claim that is cognizable against One West Bank 4 is the RESPA claim under § 2605, which is not time-barred, 5 Plaintiffs do not have to re-plead equitable tolling in their 6 amended complaint. 7 8 CONCLUSION In summary, all claims are dismissed without leave to amend, 9 with the exception of the RESPA claim. The RESPA claim is dismissed United States District Court For the Northern District of California 10 with leave to amend for Plaintiffs to remedy, if they truthfully can 11 do so, the deficiencies noted in this Order. If Plaintiffs choose 12 to file an amended complaint, they must do so within fourteen days 13 from the date of this Order. If they do not file an amended 14 complaint within this time, the RESPA claim will be dismissed for 15 failure to prosecute. In their amended complaint, Plaintiffs may 16 not add any other claims against Defendant. The case management 17 conference scheduled for December 21, 2010 is vacated. 18 19 IT IS SO ORDERED. 20 21 Dated: 12/20/2010 CLAUDIA WILKEN United States District Judge 22 23 24 25 26 27 28 14
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