-RBB Gonzalez v. EJ Mortgage, Inc. et al, No. 3:2009cv02812 - Document 14 (S.D. Cal. 2010)
Court Description: ORDER granting Defendant Chase Home Finance LLC, Citibank NA, EMC Mortgage Corporation's 8 Motion to Dismiss First Amended Complaint. The Amended Complaint is dismissed w/o prejudice as to Moving Dfts, but claims still remain against Dfts EJ Mortgage and Southstar Funding. Plaintiff has 21 days from the filing of this Order to file a Second Amended Complaint. Signed by Judge Barry Ted Moskowitz on 5/17/2010. (jah)
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-RBB Gonzalez v. EJ Mortgage, Inc. et al Doc. 14 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 REYNALDO GONZALEZ, 14 Case No. 09cv2812 BTM (RBB) Plaintiff, ORDER GRANTING MOTION TO DISMISS v. 15 EJ MORTGAGE, INC., et al., 16 Defendant. 17 18 19 20 Defendants Chase Home Finance, LLC (“Chase”), Citibank, N.A., and EMC Mortgage Corporation (collectively, “Moving Defendants”) have filed a Motion to Dismiss the First Amended Complaint [Doc. 8]. For the following reasons, the Court GRANTS the motion. 21 I. BACKGROUND1 22 23 24 25 26 In January 2007, Plaintiff refinanced his home at 5424 Stirrup Way, Oceanside, CA. He borrowed $456,000 and got a $57,000 home equity line of credit, both secured by deeds of trust. Defendant EJ Mortgage was the broker on the deal, and Defendant Southstar Funding was the lender (neither Defendant has appeared). Defendant Quality Loan Service 27 1 28 The following are merely allegations in the First Amended Complaint and not the Court’s factual findings. Some facts are taken from Defendants’ Request for Judicial Notice and the attached loan documents. 1 09cv2812 BTM (RBB) Dockets.Justia.com 1 Corporation is now the trustee under the deed of trust.2 And Defendant Chase now services 2 the loan. Defendant Citibank holds all beneficial interests in the deeds of trust. 3 Plaintiff claims that Defendants violated the law in several ways when they issued him 4 his loans. He alleges eight causes of action: (1) intentional misrepresentation, (2) fraudulent 5 concealment, (3) breach of fiduciary duty, (4) constructive fraud, (5) quiet title, (6) violation 6 of the Real Estate Settlement Procedures Act (“RESPA”), (7) accounting under RESPA, and 7 (8) violation of the Truth in Lending Act (“TILA”). The Court discusses the factual allegations 8 relevant to each claim below. 9 10 II. LEGAL STANDARD 11 Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth 12 a “short and plain statement of the claim showing that the pleader is entitled to relief,” and 13 “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” 14 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). When reviewing a motion to 15 dismiss, the allegations of material fact in plaintiff’s complaint are taken as true and 16 construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. 17 Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). But only factual allegations must be 18 accepted as true—not legal conclusions. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). 19 “Threadbare recitals of the elements of a cause of action, supported by mere conclusory 20 statements, do not suffice.” Id. Although detailed factual allegations are not required, the 21 factual allegations ”must be enough to raise a right to relief above the speculative level.” 22 Twombly, 550 U.S. at 555. Furthermore, “only a complaint that states a plausible claim for 23 relief survives a motion to dismiss.” Iqbal, 129 S. Ct. at 1949. 24 In ruling on a motion to dismiss, a court may take judicial notice of matters of public 25 record that are not subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 26 689 (9th Cir. 2001). 27 28 2 Quality Loan has filed a declaration of non-monetary status, to which Plaintiff has not objected. 2 09cv2812 BTM (RBB) 1 III. DISCUSSION 2 3 A. Intentional Misrepresentation Claim 4 The elements of an intentional misrepresentation claim are (1) a misrepresentation, 5 (2) knowledge of its falsity, (3) intent to induce reliance, (4) justifiable reliance, and (5) 6 resulting damage. Anderson v. Deloitte & Touche, 56 Cal. App. 4th 1468, 1474 (1997). 7 Intentional misrepresentation must be pled with particularity, and the plaintiff must allege 8 “how, when, where, to whom and by what means the representations were tendered.” 9 Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 993 (2004) (citing Lazar v. 10 Superior Court, 12 Cal. 4th 631, 645 (1996)); see also Moore v. Brewster, 96 F.3d 1240, 11 1245 (9th Cir. 1996). 12 Here, Plaintiff failed to plead the elements of intentional misrepresentation with 13 particularity. Plaintiff alleges that Southstar and EJ Mortgage misrepresented his income on 14 the loan application. But Plaintiff cannot plead reasonable reliance on income figures written 15 by Defendants because he knew or should have known his actual income. Moreover, 16 Plaintiff signed the adjustable rate rider, which stated the monthly payments on the loan. 17 Whatever representations Southstar and EJ Mortgage made about his income on the loan 18 application, Plaintiff knew his income and he signed documents showing that he would have 19 to pay $1,947.50 in interest in each month. He cannot now claim to have relied on 20 misrepresentations which he had the opportunity to review. See Brown v. Wells Fargo Bank, 21 N.A., 168 Cal. App. 4th 938, 958–59 (2008) (no reasonable reliance where aggrieved party 22 had reasonable opportunity to discover terms of contract). 23 Moreover, Plaintiff does not allege that any of the Moving Defendants made 24 misrepresentations to him. Plaintiff provides no legal support for imputing to them the 25 allegedly tortious conduct of Southstar and EJ Mortgage. 26 27 For these reasons, the Court DISMISSES without prejudice Plaintiffs’ claim for intentional misrepresentation as against all Defendants. 28 3 09cv2812 BTM (RBB) 1 B. Fraudulent Concealment Claim 2 The elements of fraudulent concealment are “(1) the defendant must have concealed 3 or suppressed a material fact, (2) the defendant must have been under a duty to disclose the 4 fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the 5 fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact 6 and would not have acted as he did if he had known of the concealed or suppressed fact, 7 and (5) as a result of the concealment or suppression of the fact, the plaintiff must have 8 sustained damage.” Marketing West, Inc. v. Sanyo Fisher (USA) Corp., 6 Cal. App. 4th 603, 9 612 (1992). Actions for fraudulent concealment must be pleaded with particularity. See 10 Moore, 96 F.3d at 1245. 11 Here, Plaintiff alleges that Southstar and EJ Mortgage failed to provide required 12 disclosures to Plaintiff in connection with his loan application. But there are several problems 13 with his claim. First, Plaintiff does not allege that he “would not have acted as he did if he 14 had known of the concealed or suppressed fact.” Id. Second, Plaintiff does not allege any 15 action by the Moving Defendants in connection with the alleged fraudulent concealment, and 16 provides no support for his belief that they are liable for this claim as assignees of Southstar 17 and EJ Mortgage. And third, he does not plead any facts supporting an inference that 18 Southstar and EJ Mortgage failed to make the proper disclosures with the intent to defraud 19 him. He does not plead exactly who at Southstar and EJ Mortgage failed to make the 20 disclosures with the intent to defraud him. 21 22 For these reasons, the Court DISMISSES without prejudice Plaintiff’s fraudulent concealment claim as against all Defendants. 23 24 C. Breach of Fiduciary Duty and Constructive Fraud Claims 25 Plaintiff asserts breach of fiduciary duty and constructive fraud claims against EJ 26 Mortgage only. EJ Mortgage has not appeared and the other Defendants have not moved 27 to dismiss this claim. These claims survive. 28 4 09cv2812 BTM (RBB) 1 D. Quiet Title Claim 2 The purpose of a quiet title action is to “establish one’s title against adverse claims to 3 real property.” Santos v. Countrywide Home Loans, No. 09-2642, 2009 WL 3756337 at *4 4 (E.D. Cal. Nov. 6, 2009). 5 California law provides that a complaint seeking to quiet title should be verified (which 6 Plaintiffs’ complaint is not) and include (1) a description of the property; (2) the title of the 7 plaintiff, and the basis for that title; (3) the adverse claims to plaintiff’s title; (4) the date as of 8 which the determination is sought; and (5) a prayer for the determination of plaintiff’s title 9 against the adverse claims. Cal. Code Civ. Proc. § 761.020(a)-(e). 10 Most courts have held that an action for quiet title must at least allege that the plaintiff 11 can tender the amount due, and if it does not, the appropriate treatment is to dismiss the 12 action without prejudice. See Gomez v. Wachovia Mort. Corp., No. 09-2111, 2010 WL 13 291817 at *7 (N.D. Cal. Jan. 19, 2010); Jozinovich v. JP Morgan Chase Bank, No. 09-3326, 14 2010 WL 234895 at *2–3 (N.D. Cal. January 14, 2010); Valdez v. America’s Wholesale 15 Lender, No. 09-2778, 2009 WL 5114305 at *8 (N.D. Cal. Dec. 18, 2009). If it is manifest that 16 plaintiffs cannot pay what they owe, a quiet title claim can be dismissed with prejudice. See 17 Phillips v. Wells Fargo Bank, No. 09-CV-1486, 2009 WL 3756698 at *5 (S.D. Cal. Nov. 6, 18 2009). Plaintiff makes no representations relating to their ability to tender, and his claim for 19 quiet title is therefore DISMISSED without prejudice as to all Defendants. 20 21 E. RESPA Claim Under 12 U.S.C. § 2607 22 Plaintiff asserts that Defendants EJ Mortgage, Southstar, EMC Mortgage, and Chase 23 violated 12 U.S.C. § 2607 by receiving improper kickbacks or fees. The statute of limitations 24 for Plaintiff’s claim is one year, starting from the date of the violation. 12 U.S.C. § 2614. The 25 violation allegedly occurred when Plaintiff received his loan in January 2007. Plaintiff filed 26 suit in December 2009, well beyond the one-year limit. He fails to plead facts sufficient to 27 toll this claim, and the Court therefore DISMISSES without prejudice this cause of action 28 as against all Defendants. 5 09cv2812 BTM (RBB) 1 2 F. RESPA Claim Under 12 U.S.C. § 2605(e) 3 Plaintiff alleges that EMC Mortgage and Chase violated RESPA by failing to respond 4 to a Qualified Written Request (“QWR”). He claims he sent a QWR to EMC, but EMC’s 5 response did not comply with RESPA. The provision of RESPA at issue provides: 6 7 (e) Duty of loan servicer to respond to borrower inquiries (1) Notice of receipt of inquiry 8 (A) In general 9 12 If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period. 13 (B) Qualified written request 14 For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that-- 10 11 15 16 (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and 17 (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. 18 19 20 (2) Action with respect to inquiry 21 Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall-- 22 23 ... 24 25 26 27 28 (B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes-(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide 6 09cv2812 BTM (RBB) 1 2 assistance to the borrower; or (C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes-- 3 4 (i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and 5 6 (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower. 7 12 U.S.C. § 2605(e). Plaintiff admits that EMC Mortgage responded to the QWR, but claims 8 that EMC “did not fully provide the requested information.” But most of the information 9 Plaintiff asked for is not covered by Section 2605(e). The servicer must only respond with 10 (1) reasons why the account is correct or (2) reasons why the information requested is 11 unavailable. Id. at § 2605(e)(2). In both case, the servicer must also provide contact 12 information of someone who can assist the borrower. Id. Plaintiff’s request far exceeds the 13 scope of § 2605(e), and Plaintiff fails to allege that EMC Mortgage did not give reasons why 14 the account is correct, why the information is unavailable, and contact information for 15 someone who can assist the borrower. 16 Lastly, Plaintiff fails to allege specifically how EMC Mortgage’s response to the QWR 17 cause him to actual suffer damages, which is a required element of his claim. See id. at 18 §2605(f); Hutchinson v. Del. Sav. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006) 19 (“[A]lleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiffs 20 must, at a minimum, also allege that the breach resulted in actual damages.”). Plaintiff also 21 makes this same RESPA claim against Chase, but he fails to allege that he even sent Chase 22 a QWR. For these reasons, Plaintiff’s fails to state a claim against EMC Mortgage and 23 Chase for a RESPA violation. 24 Plaintiff also seeks an accounting from EMC and Chase. Generally, to state a claim 25 for an accounting, a plaintiff must allege a fiduciary relationship to the defendant and a 26 balance due from the defendant that can only be ascertained by an accounting. 5 Witkin, Cal. 27 Proc. 5th (2008) Pleading § 820. Plaintiff makes neither allegation. 28 The Court DISMISSES without prejudice Plaintiff’s § 2605 claim as against all 7 09cv2812 BTM (RBB) 1 Defendants. 2 3 G. TILA Claim 4 An action for damages under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et 5 seq., must be brought within one year of the loan execution. 15 U.S.C. § 1640(e); see King 6 v. California, 784 F.2d 910, 915 (9th Cir. 1986). Here, Plaintiff executed the loan documents 7 in January 2007. He filed this suit well beyond the one-year limitations period. Although 8 courts may equitably toll TILA claims “in certain circumstances” such as fraudulent 9 concealment, King v. State of California, 784 F.2d 910, 914–15 (9th Cir. 1986), Plaintiffs 10 have not alleged any facts justifying equitable tolling. He also fails to state a claim against 11 EMC and Chase, because they are servicers and only a creditor or its assignee can be liable 12 for TILA violations. 15 U.S.C. §§ 1640–41; Chow v. Aegis Mortg. Corp., 286 F. Supp. 2d 13 956, 959 (N.D. Ill. 2003). The Court therefore DISMISSES Plaintiff’s TILA damages claim 14 as against all Defendants. 15 In addition to his damages claim, Plaintiff also seeks rescission of his loan based on 16 the alleged TILA violations. In a rescission action, the party seeking rescission must restore, 17 or offer to restore, to the non-rescinding party all consideration received under the contract. 18 See Cal. Civ. Code § 1691(b); see also Yamamoto v. Bank of New York, 329 F.3d 1167, 19 1173 (9th Cir. 2003) (Courts have the power to confirm that a borrower “could repay the loan 20 proceeds before going through the empty (and expensive) exercise of a trial on the merits.”). 21 Plaintiff, however, has not done so. Nor has he demonstrated that he is capable of doing so. 22 Karlsen v. Amer. Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 118 (1971) (“Simply put, if the 23 offeror ‘is without the money necessary to make the offer good and knows it . . .’ the tender 24 is without legal force or effect”). 25 For these reasons, The Court DISMISSES without prejudice Plaintiff’s TILA claim 26 as against all Defendants. 27 // 28 // 8 09cv2812 BTM (RBB) 1 IV. CONCLUSION 2 For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss [Doc. 3 8]. The Amended Complaint is DISMISSED without prejudice as to the Moving 4 Defendants, but claims still remain against Defendants EJ Mortgage and Southstar Funding. 5 Plaintiff has twenty-one days from the filing of this order to file a Second Amended Complaint 6 addressing the deficiencies described above. 7 IT IS SO ORDERED. 8 DATED: May 17, 2010 9 10 11 Honorable Barry Ted Moskowitz United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 09cv2812 BTM (RBB)
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