-GWF Hall v. MortgageIt, Inc. et al, No. 2:2009cv02233 - Document 64 (D. Nev. 2011)
Court Description: ORDER Denying without prejuduce 57 Motion to Amend. Granting 50 and 53 Motion's to Dismiss. Signed by Judge James C. Mahan on 7/6/2011. (Copies have been distributed pursuant to the NEF - SLR)
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-GWF Hall v. MortgageIt, Inc. et al Doc. 64 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 8 CYNTHIA HALL, 9 10 11 2:09-CV-2233 JCM (GWF) Plaintiff, v. MORTGAGEIT, INC., et al., 12 Defendants. 13 14 ORDER 15 Presently before the court is defendants Countrywide Home Loans, Inc.’s and Mortgage 16 Electronic Registration Systems, Inc.’s (hereinafter “MERS”) motion to dismiss for failure to state 17 a claim (doc. #50). Defendant MortgageIt, Inc., has joined Countrywide’s and MERS’ motion. (Doc. 18 #61). Defendant Chicago Title has also moved to dismiss the complaint (doc. #53). Plaintiff 19 Cynthia Hall has opposed defendants Countrywide Home Loans, Inc.’s and MERS’ motion to 20 dismiss and alternatively has requested leave to amend (doc. #57), to which defendants Countrywide 21 and MERS have filed a reply (doc. #60). 22 Plaintiff’s complaint (doc. #1) stems from the alleged wrongful foreclosure on her property 23 located at 1361 Cranston Ct., Las Vegas, Nevada. In January of 2007, plaintiff executed two 24 promissory notes with MortgageIt and secured the notes with first and second deeds of trust (doc. 25 #50). The deeds of trust were recorded with MERS as the nominee of the beneficiary (doc. #50). 26 In July of 2008, plaintiff’s home was foreclosed upon due to her default on the first deed of trust 27 (doc. #50). 28 James C. Mahan U.S. District Judge Dockets.Justia.com 1 Plaintiff commenced her suit in 2009 in the Eighth District Court of Clark County, Nevada, 2 which was then later removed to the MERS multi-district litigation (“MDL”) in the U.S. District 3 Court, District of Arizona (doc. #57). The Honorable Judge Teilborg of the MERS court remanded 4 to this court claims unrelated to the formation and/or operation of the MERS system on May 17, 5 2010 (doc. #26). The MDL court recently dismissed plaintiff’s remaining non-remanded claims due 6 to plaintiff’s failure to respond to defendants’ March 2011 motion to dismiss (doc. #51). 7 As to the remanded claims before this court, a month after the defendants filed a motion to 8 dismiss these claims in June of 2010, plaintiff filed for bankruptcy. Thereafter, plaintiff filed a 9 motion to stay (doc. #45). Because the property was sold before bankruptcy was filed, defendants 10 filed a motion to lift the stay, which was granted when plaintiff failed to file an opposition and failed 11 to appear for the hearing on the motion (doc. #51). Thus, the defendants’ present motions are 12 properly before the court as the stay has now been lifted (doc. #51). 13 The remanded claims, which are the subjects of the instant motion to dismiss, consist of 14 claims (3) fraudulent concealment, (4) unconscionability, and part of claim (5) unjust enrichment 15 (doc. #26). These claims deal with the “loan origination and collection practices, or otherwise stray 16 from the common factual core of the MDL (multi-district litigation).” (Doc. #26). 17 I. Chicago Title’s Motion to Dismiss 18 Defendant Chicago Title is also seeking to dismiss remanded claims three, four, and five 19 against it (doc. #53). Plaintiff to date has not filed a response to defendant Chicago Title’s motion 20 to dismiss. Local Rule 7-2 treats an opposing party’s failure “to file points and authorities in 21 response to any motion” as “consent[ing] to the granting of the motion.” But see Ghazali v. Moran, 22 46 F.3d 52 (9th Cir. 2003) (suggesting courts cannot dismiss a case solely because a party did not 23 comply with the local rules). However, in considering the present motion along with the Ghazali 24 factors, the court dismisses the claims against defendant Chicago Title without prejudice. 25 II. Motion to Dismiss 26 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted 27 as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 28 James C. Mahan U.S. District Judge -2- 1 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Where a 2 complaint pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops short of the 3 line between possibility and plausibility of entitlement to relief.’” Id. (citing Twombly, 550 U.S. at 4 557). However, where there are well pled factual allegations, the court should assume their veracity 5 and determine if they give rise to relief. Id. at 1950. 6 A. 7 Plaintiff’s third claim for relief, fraudulent concealment, alleges that defendants failed to 8 inform the plaintiff that, based solely on her stated income, her credit rating, and the ratio of her 9 assets and liabilities, she could not qualify for the subject loans. Fraudulent Concealment 10 Fraudulent concealment occurs when a seller of real or personal property purposely conceals 11 information about the item being purchased that would be material to the purchaser’s decision to 12 purchase the property. See Villa v. First Guar. Financial Corp., No. 2:09-cv-02161-GMN-RJJ, 2010 13 WL 2953954, at *4 (D. Nev. July 23, 2010). The claim consists of five elements: 14 15 16 17 18 (1) [T]he defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; that is, the defendant concealed or suppressed the fact for the purpose of inducing the plaintiff to act differently than she would have if she had known the fact; (4) the plaintiff was unaware of the fact and would have acted differently if she had known of the concealed or suppressed fact; (5) and, as a result of the concealment or suppression of the fact, the plaintiff sustained damages. 19 Dow Chemical Co. v. Mahlum, 970 P.2d 98, 110 (Nev. 1998), overruled in part on other grounds 20 by GES, Inc. v. Corbitt, 21 P.3d 11 (Nev. 2001). 21 However, the claim asserted in the complaint is essentially one of “suitability” labeled as 22 “fraudulent concealment.” See also Villa, 2010 WL 2953954, at *4 (suggesting that the plaintiffs’ 23 fraudulent concealment claim, on the basis that the lender failed to inform plaintiffs that they would 24 not qualify for the loan, was essentially a “suitability” claim for relief). Plaintiff alleges that the 25 defendants had a duty to issue a loan suitable to plaintiff’s financial situation. She also claims that 26 she was not adequately informed about the full terms of the loan agreement, interest rate, risks and 27 disadvantages of the loan. However, the court, viewing the complaint in a light most favorable to 28 James C. Mahan U.S. District Judge -3- 1 the plaintiff, will evaluate the claim under both standards. 2 Assuming this is a “suitability” claim, which concerns the relationship between lenders and 3 borrowers, lenders do not owe borrowers fiduciary duties, a finding of which would be required to 4 sustain such a claim. See Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 882 (9th Cir. 2007) 5 (suggesting that the Nevada Supreme Court would not recognize a fiduciary relationship as a matter 6 of law between a lender and borrower); Weingartner v. Chase Home Fin. LLC, 707 F.Supp.2d 1276, 7 1288 (D. Nev. 2010) (noting that a fiduciary duty exists in Nevada between doctor and patient, 8 between attorney and client, but not between lender and debtor – indeed such parties are 9 “adversaries, not fiduciaries.”). 10 Moreover, the lender’s efforts to determine creditworthiness and ability to repay by a 11 borrower are for “the lender’s protection, not the borrower’s.” Renteria v. United States, 452 12 F.Supp.2d 910, 922–23 (D. Ariz. 2006) (noting that the borrower has a duty to rely on their own 13 judgment and risk assessment to determine whether or not to accept the loan). Furthermore, even 14 assuming such a duty existed, plaintiff does not allege that she relied on defendants to verify her 15 income. Rather, plaintiff included the information on the loan application herself. Finally, the terms 16 of the loan are clear; although somewhat complex, they are not concealed. 17 Even evaluating the claim as one of fraudulent concealment, the claim fails. Plaintiff does 18 not explain how the defendants could be responsible for any misrepresentations or omissions when 19 they did not participate in the loan origination process or communicate with the plaintiff regarding 20 loan origination whatsoever (doc. #50). To meet the standard of Federal Rule of Civil Procedure 21 9(b), the plaintiff must present details regarding the “time, place, and manner of each act of fraud, 22 plus the role of each defendant in each scheme.” Lancaster Com. Hosp. v. Antelope Valley Hosp. 23 Dist., 940 F.2d 397, 405 (9th Cir. 1991). Plaintiff has failed to meet this higher pleading standard. 24 Accordingly, claim three is dismissed. 25 B. 26 Plaintiff has dismissed her unconscionability claim against defendants MERS and 27 Countrywide Home Loans, Inc. (doc. #57). She seeks to amend this claim only as to defendant Unconscionability 28 James C. Mahan U.S. District Judge -4- 1 MortgageIt (doc. #57). 2 Unconscionability is not a claim for relief, but rather is a defense to a breach of contract 3 claim; therefore, plaintiff’s claim will be treated as a request for declaratory judgment that the 4 mortgage is unconscionable and unenforceable. See Villa, 2010 WL 2953954, at *5. Generally, both 5 procedural and substantive unconscionability must be present in order for a court to exercise its 6 discretion to refuse to enforce a contract on this ground. Burch v. County of Washoe, 49 P.3d 647, 7 650 (Nev. 2002); see also Villa, 2010 WL 2953954, at *5 (stating plaintiffs’ claim for 8 unconscionability with regards to their mortgage default was implausible because there was no 9 procedural unconscionability, hence the court need not consider substantive unconscionability). 10 Procedural unconscionability exists when a party lacks a meaningful opportunity to agree 11 to a contract’s terms; it often involves the use of fine print or complicated, misleading language. 12 D.R. Horton, Inc. v. Green, 96 P.3d. 1159, 1162 (Nev. 2004). A contract is substantively 13 unconscionable when the contract’s terms and the circumstances at the time of the execution are so 14 one-sided as to oppress or unfairly surprise an innocent party. Guerra v. Hertz Corp., 504 F.Supp.2d 15 1014, 1021 (D. Nev. 2007) (citation omitted). 16 Here, the plaintiff’s claim for unconscionability fails. She does not claim she lacked a 17 meaningful opportunity to agree to the contract terms, nor does she allege that the terms of the loan 18 agreement are substantively unconscionable. Furthermore, the procedures and processes concerning 19 home loans and mortgages are strictly regulated by numerous federal acts including the Truth In 20 Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.; the Home Ownership and Equity Protection Act 21 (“HOEPA”), within Regulation Z, 12 C.F.R. § 226; and the Real Estate Settlement Procedures Act 22 (“RESPA”), 12 U.S.C. § 2601 et seq. The defendants have to abide by these standards to ensure that 23 the loans made to the plaintiff are substantively fair. Plaintiff has not alleged that the defendants 24 failed to do so here. 25 Even had plaintiff asserted claims under TILA or RESPA on the face of the complaint, her 26 claims are nonetheless time-barred under the applicable one-year statute of limitations. See 15 27 U.S.C. § 1640(e); 12 U.S.C. § 2614. Therefore plaintiff’s claim of unconscionability is dismissed 28 James C. Mahan U.S. District Judge -5- 1 as to defendant MortgageIt. 2 C. 3 Plaintiff’s fifth claim for relief alleges unjust enrichment (doc. #1). Unjust enrichment is a 4 quasi-contract theory that allows the court to prevent “the unjust retention of money or property of 5 another against the fundamental principles of justice or equity and good conscience.” Asphalt 6 Products Corp. v. All Star Ready Mix, Inc., 898 P.2d 699, 701 (Nev. 1995). However, “an action 7 for unjust enrichment is not available when there is an express written contract, because no 8 agreement can be implied when there is express agreement.” Leasepartners Corp. v. Robert L.. 9 Brooks Trust, 924 P.2d 182, 187 (Nev. 1997). Unjust Enrichment 10 Whereas the court has declined to rescind the contract as unconscionable under claim four, 11 an “express agreement” exists between the parties. Accordingly, plaintiff has not alleged a viable 12 claim of unjust enrichment, and claim five is dismissed. See Topaz Mut. Co., Inc. v. Marsh, 839 13 P.2d 606, 613 (Nev. 1992) (finding that an unjust enrichment cannot lie where there is an express 14 written agreement) (citation omitted). 15 III. Motion to Amend 16 In plaintiff’s reply (doc. #57), she asks this court for leave to amend her complaint. Federal 17 Rule of Civil Procedure 15(a) provides that leave to amend “shall be freely given when justice so 18 requires,” and absent a showing of an “apparent reason,” such as undue delay, bad faith, dilatory 19 motive, prejudice to the defendants, futility of the amendments, or repeated failure to cure 20 deficiencies in the complaint by prior amendment. Moore v. Kayport Package Express, Inc., 885 21 F.2d 531, 538 (9th Cir. 1989). Furthermore, the local rules of federal practice in the District of 22 Nevada require that a plaintiff submit a proposed amended complaint along with a motion to amend. 23 LR 15-1(a). 24 Here, plaintiff has not complied with Local Rule 15-1(a) and has failed to attach a proposed 25 amended complaint to her motion. However, the court also notes that this does not provide, on its 26 own, sufficient grounds to deny the motion to amend. 27 noncompliance with a local rule, the district court is required to weigh several factors: “(1) the 28 James C. Mahan U.S. District Judge -6- Before dismissing an action for 1 public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) 2 the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases of their 3 merits; and (5) the availability of less drastic sanctions.” Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 4 1995) (citing Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986)). 5 Weighing the factors identified in Ghazali, the court finds that amendment would be futile. 6 Plaintiff has not shown how amending the complaint will cure any of its defects listed above. See 7 Universal Mortg. Co., Inc. v. Prudential Ins. Co., 799 F.2d 458, 459-460 (9th Cir. 1986) (stating that 8 there is no need to grant amendment when it would be futile) (citation omitted). 9 10 11 12 13 14 15 16 Accordingly, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiff Hill’s motion to amend (doc. #57) be, and the same hereby is, DENIED without prejudice. IT IS FURTHER ORDERED that defendants MortgageIt Inc.’s, Countrywide Home Loans, Inc.’s, and MERS’ motion to dismiss (doc. #50) be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that defendant Chicago Title’s motion to dismiss (doc. #53) be, and the same hereby is, GRANTED. DATED July 6, 2011. 17 18 19 UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -7-
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