Proa et al v. Wells Fargo Bank, N.A. et al, No. 3:2013cv00759 - Document 12 (S.D. Cal. 2013)
Court Description: ORDER Granting 6 7 Motions to Dismiss Complaint. Plaintiffs' Complaint is Dismissed for failure to state a claim. The Court will grant Plaintiffs one opportunity to amend their complaint. If Plaintiffs choose to do so, the amended complaint must be filed within 15 days of the entry of this Order. Signed by Judge Barry Ted Moskowitz on 8/22/2013. (All non-registered users served via U.S. Mail Service)(rlu)
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Proa et al v. Wells Fargo Bank, N.A. et al Doc. 12 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 MARCOS A PROA and CHRISTINA J. PROA, as individuals, v. Case No. 13cv0759 BTM(WVG) ORDER GRANTING MOTIONS TO DISMISS COMPLAINT Plaintifsf, 14 15 16 WELLS FARGO BANK, N.A., et al., Defendants. 17 18 Motions to dismiss have been filed by (1) Fidelity National Title Company; 19 and (2) Wells Fargo Bank, N.A., and U.S. Bank National Association, as 20 Trustee, Successor in Interest to Wachovia Bank, National Association, as 21 Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-Through 22 Certificates, Series 2004-BB. For the reasons discussed below, Defendants’ 23 motions to dismiss are GRANTED. 24 25 I. FACTUAL BACKGROUND 26 On October 12, 2004, Plaintiffs Marcos A. Proa and Christina J. Proa 27 borrowed $480,000 from Wells Fargo Bank, N.A. (“Wells Fargo”), to refinance 28 the property located at 10108 Fabled Waters Court, Spring Valley, California 1 13cv0759 BTM(WVG) Dockets.Justia.com 1 91977 (the “Property”). The loan was secured by a Deed of Trust on the 2 Property. (Compl., Ex. A.) The Deed of Trust identified the Trustee as Fidelity 3 National Title Ins. Co. 4 On May 14, 2012, Wells Fargo assigned its beneficial interest in the Deed 5 of Trust to U.S. Bank National Association, as Trustee, Successor in Interest 6 to Wachovia Bank, National Association, as Trustee for Wells Fargo Asset 7 Securities Corporation, Mortgage Pass-Through Certificates, Series 2004-BB 8 (“U.S. Bank”). 9 On April 1, 2011, a Notice of Default and Election to Sell under Deed of 10 Trust was recorded by LSI Title Company, as agent for Fidelity National Title 11 Company. (Compl., Ex. B.) According to the Notice of Default, Plaintiffs were 12 in arrears in the amount of $11,591.14 as of March 24, 2011. (Id.) 13 In a Substitution of Trustee executed on April 12, 2011 and recorded on 14 July 7, 2011, Wells Fargo substituted Fidelity National Title Company 15 (“Fidelity”) as Trustee in lieu of Fidelity National Title Ins. Co. (Compl., Ex. C.) 16 Notices of Trustee’s Sale were recorded on July 7, 2011 and January 24, 2013. 17 (Compl., Exs D & I.) 18 On March 15, 2013, the Property was sold at a trustee’s sale. On March 19 25, 2013, a Trustee’s Deed Upon Sale was recorded, reflecting the sale of the 20 Property to Granite Ranch Opportunities, LLC. (Fidelity’s RJN Ex. B.) 21 Plaintiffs commenced this action on March 29, 2013. In their Complaint, 22 Plaintiffs assert the following claims: (1) violation of Cal. Bus. & Prof. Code § 23 17200, 24 misrepresentation; (4) fraudulent concealment; (5) declaratory relief; 25 (6) violation of 15 U.S.C. § 1611, et seq.; (7) violation of 26 U.S.C. § 2605 et 26 seq.; (8) violation of 15 U.S.C. § 1602, et seq.; (9) violation of 15 U.S.C. § 1692 et. seq.; (2) intentional misrepresentation; (3) negligent 27 28 2 13cv0759 BTM(WVG) II. STANDARD 1 2 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) 3 should be granted only where a plaintiff's complaint lacks a "cognizable legal 4 theory" or sufficient facts to support a cognizable legal theory. Balistreri v. 5 Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). When reviewing a 6 motion to dismiss, the allegations of material fact in plaintiff’s complaint are 7 taken as true and construed in the light most favorable to the plaintiff. See 8 Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 9 Although detailed factual allegations are not required, factual allegations “must 10 be enough to raise a right to relief above the speculative level.” Bell Atlantic v. 11 Twombly, 550 U.S. 544, 555 (2007). 12 ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 13 conclusions, and a formulaic recitation of the elements of a cause of action will 14 not do.” Id. “[W]here the well-pleaded facts do not permit the court to infer 15 more than the mere possibility of misconduct, the complaint has alleged - but 16 it has not show[n] that the pleader is entitled to relief.” Ashcroft v. Iqbal, 565 17 U.S. 662, 679 (2009) (internal quotation marks omitted). Only a complaint that 18 states a plausible claim for relief will survive a motion to dismiss. Id. “A plaintiff’s obligation to prove the 19 III. DISCUSSION 20 21 Fidelity and Wells Fargo move to dismiss the Complaint in its entirety for 22 failure to state a claim. As discussed below, the Court agrees that dismissal 23 is warranted. 24 25 A. Claims for Intentional Misrepresentation, Negligent Misrepresentation, and Fraudulent Concealment 26 27 Plaintiffs’ claims for intentional misrepresentation (second cause of 28 action), negligent misrepresentation (third cause of action), and fraudulent 3 13cv0759 BTM(WVG) 1 concealment (fourth cause of action) are based on allegations that due to 2 invalid assignments of interest and defects in recorded documents pertaining 3 to the Deed of Trust and nonjudicial foreclosure, Fidelity and Wells Fargo had 4 no standing to foreclose upon the Property. 5 supported by the facts. These allegations are not 6 Plaintiffs allege that Defendants attempted but failed to assign or transfer 7 Plaintiffs’ note to Wells Fargo. (Comp. ¶ 19.) This allegation makes no sense 8 because Wells Fargo was the original lender. 9 Plaintiffs allege that the Substitution of Trustee was void because it did 10 not comply with Paragraph 24 of the Deed of Trust, which provides that “[t]he 11 instrument shall contain the name of the original Lender, Trustee and Borrower, 12 the book and page where this Security Instrument is recorded and the name 13 and address of the successor trustee.” However, the Substitution of Trustee 14 in fact included the name of the beneficiary who is also the original lender 15 (Wells Fargo), the names of the borrowers (Plaintiffs), the name of the original 16 trustee (Fidelity National Title Ins. Co) and the identifying information for the 17 security instrument (“Deed of trust dated 10/12/2004 and Recorded on 18 10/20/2004 as Instrument No. 2004-0995729 of official records in the Office of 19 the Recorder of San Diego County, California.”). (Compl., Ex. C.) 20 Plaintiffs also contend that the Assignment of Deed of Trust is invalid 21 because it was notarized by an employee of Wells Fargo, the assignor. 22 (Compl. ¶¶ 32-41.) Plaintiffs point to an excerpt from the Pocketbook for Iowa 23 Notaries Public (Compl., Ex. H.), which explains that because a notary is 24 supposed to act as an impartial witness, “[i]f the notary stands to make a 25 financial gain by notarizing such a document or is a party or a representative 26 of a party to the document, they should refer it to another notary and avoid the 27 risk of a lawsuit based upon the financial interest in the agreement.” Even 28 assuming the Wells Fargo employee stood “to make a financial gain” from 4 13cv0759 BTM(WVG) 1 notarizing the document, Plaintiffs do not provide any authority that this 2 circumstance would make the notarized document void as a matter of law. 3 Plaintiffs allege that the Notice of Default was defective because it did not 4 attach a Declaration of Due Diligence as required by Cal. Civ. Code § 2923.5. 5 (Compl. ¶ 27.) 6 2923.5(a)(2) provided, “A mortgagee, beneficiary, or authorized agent shall 7 contact the borrower in person or by telephone in order to assess the 8 borrower's financial situation and explore options for the borrower to avoid 9 foreclosure.” Section 2923.5(b) further provided, “A notice of default filed 10 pursuant to Section 2924 shall include a declaration that the mortgagee, 11 beneficiary, or authorized agent has contacted the borrower, has tried with due 12 diligence to contact the borrower as required by this section, or that no contact 13 was required pursuant to subdivision (h).” The Notice of Default recorded in 14 this case complied with the requirements of § 2923.5 by including the following 15 language in its last paragraph: 16 17 18 19 20 At the time the Notice of Default was recorded, section The mortgagee, beneficiary or authorized agent for the mortgagee or beneficiary pursuant to California Civil Code § 2923.5(c) declares that the mortgagee, beneficiary or the mortgagee’s or beneficiary’s authorized agent has either contacted the borrower or tried with due diligence to contact the borrower as required by California Civil Code § 2923.5. (Compl., Ex. B.)1 21 Plaintiffs also challenge the validity of the Notices of Trustee’s Sale. 22 According to Plaintiffs, the notices did not list a sale date. (Compl. ¶¶ 31, 43.) 23 However, the first Notice of Sale included a sale date of July 27, 2011 (Compl., 24 25 26 27 28 1 Section 2923.5 was revised by 2012 legislation (Stats.2012, c. 87 (S.B. 900)). Now, section 2923.5 specifies that the mortgage servicer shall contact the borrower. In their Opposition, Plaintiffs argue that the declaration in the Notice of Default is invalid because the Notice of Default was signed by an agent of the Trustee, not the “mortgage servicer.” However, under the version of the statute in effect in 2011, contact could be made by the mortgagee, beneficiary, or authorized agent. Furthermore, section 2923.5 does not require that the mortgage servicer execute the declaration, just that the notice of default include a declaration that the mortgage servicer contacted or attempted to contact the borrower. 5 13cv0759 BTM(WVG) 1 Ex. D), and the second Notice of Sale included a sale date of February 13, 2 2013. (Compl., Ex. I.) 3 Plaintiffs have not made out a plausible claim that Defendants recorded 4 false documents and/or lacked standing to foreclose upon the Property. 5 Therefore, Plaintiffs’ claims for intentional misrepresentation, negligent 6 misrepresentation, and fraudulent concealment fail. 7 8 B. Federal Statutory Claims 9 Plaintiffs allege that Defendants violated federal laws, including 15 U.S.C. 10 § 1611 (Truth in Lending Act - “TILA”), 15 U.S.C. § 1602 (Home Ownership and 11 Equity Protection Act - “HOEPA”), 26 U.S.C. § 2605 (Real Estate Settlement 12 Procedures Act - “RESPA”), and 15 U.S.C. § 1692 (Fair Debt Collection 13 Practices Act - “FDCPA”). Plaintiffs have failed to state a claim under these 14 federal statutes. 15 16 1. TILA & HOEPA 17 In their sixth and eighth causes of action, Plaintiffs allege that Defendants 18 violated TILA and HOEPA by failing to make a full accounting, by failing to 19 make required disclosures, and by extending credit to Plaintiffs without regard 20 to repayment ability. Plaintiffs’ TILA and HOEPA claims are barred by the 21 statute of limitations. Damages claims under TILA and HOEPA must be 22 brought “within one year from the date of the occurrence of the violation.” 15 23 U.S.C. § 1640(e). Generally, the limitations period starts at the consummation 24 of the transaction. King v. California, 784 F.2d 910, 915 (9th Cir. 1986). This 25 lawsuit was filed more than eight years after the loan at issue closed. 26 Although equitable tolling of TILA cases is available in some cases, see 27 King, 784 F.2d at 915, Plaintiffs have not alleged any facts suggesting that the 28 doctrine of equitable tolling is applicable here. “In order for the doctrine of 6 13cv0759 BTM(WVG) 1 equitable tolling to be applied in a TILA action, the Plaintiff must show that his 2 creditor fraudulently concealed the violation.” Kelley v. Galveston Autoplex, 3 196 F.R.D. 471, 478 (S.D. Tex. 2000). See also Hubbard v. Fidelity Federal 4 Bank, 91 F.3d 75, 79 (9th Cir. 1996) (holding that one-year statute of limitations 5 was not tolled as to initial TILA disclosures because “nothing prevented 6 [plaintiff] from comparing the loan contract, Fidelity’s initial disclosures, and 7 TILA’s statutory and regulatory requirements.”). Plaintiffs have not alleged any 8 facts showing that Defendants engaged in conduct to prevent them from 9 discovering their claim. It seems that nothing prevented Plaintiffs from looking 10 into whether Wells Fargo made all of the required disclosures. Similarly, there 11 is no apparent reason why Plaintiffs could not have timely discovered their 12 claim that credit was extended without proper regard to their ability to pay. 13 Plaintiffs also seek rescission under TILA . (Compl. ¶ 99.) Under TILA, 14 the borrower may rescind the loan agreement if the lender fails to deliver 15 certain forms or make proper disclosures. 15 U.S.C. § 1635. Initially, the 16 borrower has three days following the consummation of the transaction or the 17 delivery of the disclosure forms to notify the creditor of his intent to rescind. 15 18 U.S.C. § 1635(a). If, however, the creditor fails to provide notice of the 19 borrower’s right of rescission or fails to make a material disclosure, the “right 20 of rescission shall expire three years after the date of consummation of the 21 transaction or upon the sale of the property, whichever occurs first . . . .” 15 22 U.S.C. § 1635(f). 23 Even if Plaintiffs’ right to rescind was extended to three years, that time 24 expired long before Plaintiffs gave notice of rescission by filing this suit. 25 Section 1635(f) “completely extinguishes the right of rescission at the end of 26 the 3 year period.” Beach v. Ocwen Federal Bank, 523 U.S. 410, 412 (1988). 27 The Ninth Circuit explains, “§ 1635(f) is a statute of repose, depriving the courts 28 of subject matter jurisdiction when a § 1635 claim is brought outside the three7 13cv0759 BTM(WVG) 1 year limitation period.” Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 2 (9th Cir. 2002). Thus, the three-year period for rescission is not subject to 3 equitable tolling. See Kimball v. Flagstar Bank F.S.B., 2012 WL 3030102, at 4 *8 (S.D. Cal. July 25, 2012); Khan v. ReconTrust Co., 2012 WL 2571312, at *4 5 (N.D. Cal. July 2, 2012). 6 7 2. RESPA 8 In their seventh cause of action, Plaintiffs allege that Defendants violated 9 RESPA, by placing Plaintiffs in a loan “for the purpose of unlawfully increasing 10 or otherwise obtaining yield spread fees and sums in excess of what would 11 have been lawfully earned.” (Compl. ¶ 105.) 12 Plaintiffs’ claim is barred by RESPA’s one-year statute of limitations. 12 13 U.S.C. § 2614. As discussed above, although Plaintiffs’ loan closed in October 14 2004, this action was not filed until March 2013. 15 16 3. FDCPA 17 In their ninth cause of action, Plaintiffs allege that Defendants violated the 18 FDCPA, 15 U.S.C. § 1692g, by failing to validate Plaintiffs’ debt. (Compl. ¶ 19 119.) Plaintiffs also suggest that Defendants violated the FDCPA by enforcing 20 the Deed of Trust through nonjudicial foreclosure even though they had no 21 legal right to do so. (Compl. ¶ 19.) 22 Plaintiffs’ claim for violation of 15 U.S.C. § 1692g fails because Wells 23 Fargo, the party to whom any request for debt validation would have been 24 directed, is a mortgage servicer, and mortgage servicers are not “debt 25 collectors.” The FDCPA defines a “debt collector” as “any person who uses 26 any instrumentality of interstate commerce or the mails in any business the 27 principal purpose of which is the collection of any debts, or who regularly 28 collects or attempts to collect, directly or indirectly, debts owed or due or 8 13cv0759 BTM(WVG) 1 asserted to be owed or due another.” 15 U.S.C. § 162a(6). The Court agrees 2 with the courts that hold that a mortgagor or mortgage servicing company 3 ordinarily is not a “debt collector” within the meaning of the FDCPA. See e.g., 4 Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (holding that 5 FDCPA’s definition of debt collector “does not include the consumer’s creditors, 6 a mortgage servicing company, or any assignee of the debt, so long as the 7 debt was not in default at the time it was assigned.”); Walker v. Equity 1 8 Lenders Group, 2009 WL 1364430, * 7 (S.D. Cal. May 14, 2009); Nool v. 9 Homeq Servicing, 653 F. Supp. 2d 1047, 1053 (E.D. Cal. 2009). 10 To the extent Plaintiffs mean to assert a claim under § 1692f(6)(A), which 11 provides that it is an unfair debt collection practice to take or threaten to take 12 any nonjudicial action to effect dispossession or disablement of property “if 13 there is no present right to possession of the property claimed as collateral 14 through an enforceable security interest,” Plaintiffs have not alleged facts 15 showing that Defendants lacked the right to enforce the Deed of Trust through 16 nonjudicial foreclosure. To the extent Plaintiffs intend to assert a claim under 17 § 1692e, which prohibits false, deceptive, or misleading representations in 18 connection with the collection of any debt, Defendants’ actions in initiating 19 nonjudicial foreclosure proceedings do not constitute debt collection activity 20 within the scope of § 1692e . See Hulce v. Ocwen Federal Bank, FSB, 195 F. 21 Supp. 2d 1188, 1204 (D. Or. 2002); Izenberg v. ETS Servs., LLC, 589 F. Supp. 22 2d 1193, 1198-99 (C.D. Cal. 2008).2 23 Accordingly, Defendants’ motions to dismiss are granted as to Plaintiffs’ 24 25 26 27 28 2 Section 1692a(6) specifies that for the purposes of § 1692f(6), the term debt collector “also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests,” meaning that such a person does not fall within the scope of the general definition of a debt collector. Therefore, the acts Defendants took to enforce a security interest do not qualify as debt collection within the scope of § 1692e. See Natividad v. Wells Fargo Bank, N.A., 2013 WL 2299601, at * 9 (N.D. Cal. May 24, 2013). 9 13cv0759 BTM(WVG) 1 FDCPA claim. 2 3 C. Declaratory Relief Claim and Claim for Violation of Cal. Bus. & Prof. Code 4 § 17200 5 In their first cause of action, Plaintiffs allege that Defendants violated Cal. 6 Bus. & Prof. Code § 17200 by wrongfully foreclosing on the Property. In their 7 fifth cause of action, Plaintiffs seek a declaration that Defendants lack standing 8 to authorize and conduct foreclosure and that any sale of the Property is 9 therefore void. These claims are premised on Plaintiffs’ other claims, which the 10 Court has determined are subject to dismissal. As discussed above, Plaintiff 11 has not made out a plausible claim that Defendants lacked standing to 12 foreclose on the Property and/or violated federal statutes in connection with 13 extending the loan or pursuing nonjudicial foreclosure. Therefore, Defendants’ 14 motions to dismiss are granted as to these claims as well. 15 IV. CONCLUSION 16 17 For the reasons discussed above, Defendants’ motions to dismiss are 18 GRANTED. Plaintiffs’ Complaint is DISMISSED for failure to state a claim. 19 The Court will grant Plaintiffs one opportunity to amend their complaint. If 20 Plaintiffs choose to do so, the amended complaint must be filed within 15 days 21 of the entry of this Order. 22 IT IS SO ORDERED. 23 DATED: August 22, 2013 24 25 BARRY TED MOSKOWITZ, Chief Judge United States District Court 26 27 28 10 13cv0759 BTM(WVG)
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