Das v. WMC Mortg. Corp.

831 F.Supp.2d 1147

Madhvamuni K. DAS, Geetha M. Das, Plaintiffs,

v.WMC MORTGAGE CORP.; American Mortgage Network; the CIT Group; First American Title Insurance Company; Mers; Old Republic Default Management Services; Bonafide Financial; Westwood Associates; Central Mortgage Company; America's Servicing Company; GMAC Mortgage Corp.; Does 1–100, Defendants.

Case No. 10–CV–00650–LHK.

United States District Court,

N.D. California,

San Jose Division.

Nov. 28, 2011.

Madhvamuni K. Das, San Jose, CA, pro se.

Geetha M. Das, San Jose, CA, pro se.

Jeremy E. Shulman, Michael Rapkine, Anglin Flewelling Rasmussen Campbell & Trytten LLP, Pasadena, CA, William Guy Malcolm, Malcolm & Cisneros A Law Corporation, Irvine, CA, Richard A. Bunn, Stephanie J. Shulman, Shulman Bunn LLP, Newport Beach, CA, Amiel Lee Wade, Wade & Silverstein A Professional Corporation, Gilroy, CA, for Defendants.

ORDER GRANTING MOTION TO DISMISS

LUCY H. KOH, District Judge.

Presently before the Court is Defendant American Mortgage Network's (“AmNet”) motion to dismiss Plaintiffs' second amended complaint, ECF No. 116. After considering the parties' briefing and oral arguments, the Court GRANTS AmNet's motion for the reasons explained below.

I. Factual Background

A. Judicial Notice

A court may take judicial notice of facts that are not subject to reasonable dispute and are either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resort to resources whose accuracy cannot be reasonably questioned. Fed.R.Evid. 201(b). The Court may consider, under the incorporation by reference doctrine, documents that are connected to the loan transaction at issue, as to which AmNet makes a request for judicial notice. ECF No. 117. For purposes of ruling on a motion to dismiss under Rule 12(b)(6), the pleadings are deemed to include “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.” See Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.1998). The Court may also take judicial notice of matters of public record. See Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001).

Defendant requests that the Court take judicial notice of: (1) Plaintiffs' Deed of Trust executed on September 13, 2006, and recorded with the Santa Clara County Recorder's Office on September 21, 2006; (2) a Notice of Default regarding Plaintiffs' loan, recorded with the Santa Clara County Recorder's Office on May 22, 2009; and (3) Notice of Trustee Sale regarding the subject property, recorded with the Santa Clara County Recorder's Office on November 25, 2009. See Request for Judicial Notice (“RJN”), ECF No. 117 Exs. A–C.

The Court concludes that the public documents submitted by Defendant are not subject to reasonable dispute and are proper subjects of judicial notice. See Karimi v. GMAC Mortg., No. 11–CV–00926–LHK, 2011 WL 3360017, at *1 (N.D.Cal. Aug. 2, 2011) (taking judicial notice of nearly identical documents). Accordingly, the Court GRANTS AmNet's request for judicial notice.

B. Facts

On a motion to dismiss, “all allegations of material fact are taken as true and construed in the light most favorable to [Plaintiffs].” Facebook, Inc. v. MaxBounty, Inc., 274 F.R.D. 279, 282 (N.D.Cal.2011) (citing Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996)).

Plaintiffs allege that, since 2006, they have at all times resided at 5978 Allen Avenue, San Jose, California (“the Subject Property”). SAC ¶ 8. Plaintiffs allege they are immigrants and minorities. SAC ¶ 8. They further allege that AmNet is an authorized mortgage lender. SAC ¶ 9.

Plaintiffs claim that on or about September 2006 all Defendants induced Plaintiffs to take out a home loan in the amount of $945,000.00, secured by a first deed of trust recorded against the subject property (the “Loan”), despite knowing that Plaintiffs had limited income and did not qualify for the Loan. See SAC ¶¶ 19, 24, 27. As of May 21, 2009, Plaintiffs owed $24,740.16 for “Installment of Principal and Interest plus impounds and/or advances which became due on 2/1/2009 plus late charges, and all subsequent installments of principal, interest, balloon payments, plus impounds and/or advances and late charges that become payable.” RJN EX. B.¹ Plaintiffs allege that AmNet represented to Plaintiffs in 2006, when Plaintiffs sought to refinance loans secured against the Subject Property, that AmNet would provide Plaintiffs with an affordable loan. SAC ¶ 23. Plaintiffs allege that AmNet represented to Plaintiffs that they would not obtain better rates anywhere and that Plaintiffs relied on these promises. SAC ¶¶ 23, 26. On or about September 2006, Plaintiffs executed a promissory note, a deed of trust, and other related documents to obtain the Loan. SAC ¶ 24. The deed of trust identified AmNet and Defendant CIT as the lenders. Id. Plaintiffs allege that the Loan was subject to a finance charge that was initially payable to AmNet and CIT. SAC ¶ 29. Plaintiffs allege that they did not receive all the required documents and disclosures under TILA. SAC ¶ 32. Plaintiffs admitted at the hearing that they did not read the loan documents when they signed them, and that the first time they reviewed the loan documents was in November 2009.

Plaintiffs allege that sometime after closing the loan, AmNet and CIT substituted Old Republic as the trustee on the deed in place and instead of AmNet and CIT. See SAC ¶ 33.

Plaintiffs allege that all Defendants initiated a wrongful non-judicial foreclosure by filing a Notice of Default on May 21, 2009. SAC ¶¶ 35, 39; RJN Ex. B. Plaintiffs allege that all Defendants “are jointly and severally responsible for the acts of the others” because each Defendant “was the agent of the other.” SAC ¶ 40. They further allege that each Defendant knew the other Defendants “would commit wrongful acts against Plaintiffs” and “gave substantial assistance or encouragement to the other Defendant to commit wrongful acts against Plaintiffs.” Id.

II. Procedural Background

The present motion seeks to dismiss the following eighteen claims currently being asserted against AmNet: (1) violation of TILA, 15 U.S.C. § 1601; (2) violation of California Residential Mortgage Lending Act (“CRMLA”), Cal. Fin.Code § 5001 et seq.; (3) violation of Cal. Civ.Code § 1916.7(10); (4) violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691; (5) violation of the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200; (6) rescission under Cal. Civ.Code § 1689(b); (7) violation of the Real Estate Settlement Practices Act (“RESPA”), 12 U.S.C. § 2601; (8) unconscionability under Cal. Civ.Code 1670.5(a), 1770(s); (9) breach of contract; (10) breach of implied covenant of good faith and fair dealing; (12) intentional infliction of emotional distress; (13) intentional misrepresentation; (14) fraudulent concealment; (15) negligent misrepresentation; (18) negligence; (19) breach of fiduciary duty; and (21) quiet title.²

Plaintiffs filed the original complaint in this action on February 16, 2010. The original complaint contained 22 claims, including all of the claims at issue in the instant motion and a few others not at issue here.

On March 12, 2010, Defendants WMC and First American Title Insurance Company filed separate motions to dismiss. ECF Nos. 7, 10. On March 25, 2010, Defendants Central Mortgage Company (“CMC”) and MERS filed a joint motion to dismiss. ECF No. 11. On March 29, 2010, Defendant Bonafide Financial also filed a motion to dismiss. ECF No. 14. On April 9, 2010, the parties stipulated to dismissing all claims against Wells Fargo, N.A., dba America's Servicing Company. ECF No. 18. On April 20, 2010, DefendantOld Republic Default Management Services joined all of the above motions to dismiss the original complaint. Each of the motions to dismiss attacked the sufficiency of the pleadings and argued that Plaintiffs' claims were time-barred by the applicable statutes of limitations. CMC and MERS's joint motion also argued that Plaintiffs had not alleged equitable tolling. ECF No. 11, at 6–7.

On April 30, 2010, Plaintiffs filed a First Amended Complaint (“FAC”) in lieu of responding to the above motions to dismiss. ECF No. 32. The FAC contained twenty-three claims, including the sixteen claims at issue in the instant motion and seven not at issue here. Plaintiffs added, among other things, allegations that equitable tolling applied to some of their claims, including those under TILA, CRMLA, RESPA, and the breach of implied covenant of good faith and fair dealing. FAC ¶¶ 60 (TILA), 66 (CRMLA), 100 (RESPA), 123 (breach of implied covenant of good faith and fair dealing). Plaintiffs then opposed Defendants' motions, arguing that the original complaint was mooted by the filing of the FAC. ECF Nos. 35–39.

On May 12, 2010, CMC and MERS filed a joint motion to dismiss the FAC, again arguing that each of the claims in the FAC either did not apply to CMC and MERS, failed to state a claim, or were otherwise time-barred. ECF No. 41. On May 18, 2010, Defendant First American Title Insurance Company filed a reply in support of its motion to dismiss the original complaint arguing that the Plaintiffs had filed their FAC beyond the deadline without leave from the court, that the original complaint was therefore the operative complaint, and consequently First American Title's motion to dismiss the original complaint was not moot. ECF No. 48.

On June 8, 2010, Plaintiffs responded to CMC and MERS's joint motion to dismiss the FAC, arguing, among other things, that CMC and MERS had failed to consider the doctrine of equitable tolling. ECF No. 54, at 3–4, 15–16. On June 8, 2010, Plaintiffs filed an opposition. ECF No. 54. On June 24, 2010, CMC and MERS filed a reply. ECF No. 58.

On October 29, 2010, 2010 WL 4393885 (N.D.Cal. Oct. 29, 2010), Magistrate Judge...