Fowler v. Bank

JANA FOWLER, Plaintiff,

v.WELLS FARGO BANK, N.A. et al., Defendants.

No. 10-3933-EDL

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Filed: January 18, 2011

ORDER GRANTING MOTION TO DISMISS

I. INTRODUCTION

On October 21, 2010, Plaintiff Jana Fowler filed a first amended complaint ("FAC") against Defendant Wells Fargo Bank, N.A. ("Wells Fargo") alleging three claims: ¹ violation of the Truth in Lending Act ("TILA"), violation of the Fair Credit Reporting Act ("FCRA"), and wrongful foreclosure pursuant to 12 C.F.R. § 226.23(h).² On November 12, 2010, Defendant filed a motion to dismiss or transfer the case for improper venue pursuant to Rule 12(b)(3), or alternatively to dismiss the entire action pursuant to Rule 12(b)(6). Plaintiff opposed the motion on grounds that venue in this district is proper and that she has adequately stated her claims. Plaintiff alternatively requested that, should the Court find venue improper, the Court transfer the case to Hawaii instead of dismissing it. During oral argument, Defendant raised a new argument in favor of dismissal (that Plaintiffs notice of rescission was deficient and therefore untimely) and the Court questioned the parties about the impact of Plaintiffs failure to allege willingness or ability to tender on her TILArescission claim. The parties submitted additional briefing on these topics following oral argument. Having considered all of the papers filed in connection with this motion, the parties' arguments during oral argument, and the record in this case, the Court hereby GRANTS Defendant's motion to dismiss for improper venue. The Court finds that the interests of justice do not favor transfer because each of Plaintiffs claims fail as a matter of law and thus transfer would be futile.

II. BACKGROUND

Plaintiff is an individual who owns a home at 114 Kahana Nui Road, Lahaina, Hawaii ("the Property"). FAC ¶ 1. In 2004, Plaintiff obtained a mortgage on the Property from Wells Fargo for $584,500.00. FAC ¶ 29; see Wells Fargo's Request for Judicial Notice ("RJN"), Ex. A. In 2006, Plaintiff refinanced the Property for $747,500.00 with Wells Fargo Home Mortgage of Hawaii, LLC, a division of Wells Fargo. FAC ¶ 29; see Wells Fargo's RJN, Ex. B. Plaintiff alleges that Wells Fargo violated TILA in connection with the 2006 refinancing loan. FAC ¶¶ 33, 34; see Pl.'s Opp. at 2 ("The FAC claims that Wells Fargo, in the course of the 2006 loan origination, violated TILA amongst other claims."). Plaintiff alleges generally that her loan is structured unfairly, difficult to understand, and that Defendant did not meaningfully consider whether Plaintiff could afford her loan. FAC at ¶ 7. Further, Plaintiff asserts that Defendant rewarded unfair and deceptive lending practices and did not provide adequate oversight of mortgage brokers. FAC at ¶ 10.

Plaintiff claims that in October, 2009, she rescinded the loan by letter, but that Defendant has improperly refused to agree to rescind the loan. FAC ¶ 31; see FAC, Ex. A. (Notice to Rescind, dated October 18, 2009). Plaintiffs FAC alleges that Defendant has now initiated the foreclosure process on the Property, although the exact status of the foreclosure is unclear. FAC at ¶ 15. Plaintiffs FAC does not allege that she is willing or able to tender her debt, but her Opposition to Defendant's Supplemental Brief states that "Plaintiff is prepared to sell the properly in question should this Court deem tender as a preliminary requirement to rescission." Dkt. # 23 at 4. Plaintiffs Opposition to the Motion to Dismiss asserts that she now resides in Sonoma County, and that the headquarters for Wells Fargo Bank are in San Francisco. Pl.'s Opp. at 3-4. However, she has provided no evidence to support either of these points.

III. LEGAL STANDARD

A. Improper Venue

A party may bring a motion asking the court to dismiss the action for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). When venue is improper, the court "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a). It is the Plaintiffs burden to show that venue is proper. See Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979) ("Plaintiff had the burden of showing that venue was properly laid in the Northern District of California."). On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3), "the pleadings need not be accepted as true, and the court may consider facts outside of the pleadings." Murphy v. Schneider National, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004) (citations omitted). Dismissal, rather than transfer, may be appropriate where the transfer would be futile because the case would be dismissed even after transfer. See Altin Havayolu Tasamaciligi Turizm Ve Tic v. Sinnarajah, 2008 WL 691851, *5 (N.D.Cal., 2008) (citing King v. Russell, 963 F.2d 1301, 1304 (9th Cir.1992)).

B. Failure To State A Claim

Under Federal Rule of Civil Procedure 12(b)(6), the court may dismiss a claim for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A Rule 12(b)(6) dismissal is proper only if there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Johnson v. Riverside Healthcare System, LP, 534 F.3d 1116, 1122 (9th Cir. 2008) (internal quotations and citations omitted). A complaint will survive a motion to dismiss if it contains "sufficient factual matter... to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007)).

The reviewing court's "inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff." Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). A court need not, however, accept as true the complaint's "legal conclusions." Iqbal, 129 S. Ct. at 1949. "While legal conclusions can providethe framework of a complaint, they must be supported by factual allegations." Id at 1950. Thus, a reviewing court may begin "by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. Courts must then determine whether the factual allegations in the complaint "plausibly give rise to an entitlement of relief." Id. Though the plausibility inquiry "is not akin to a probability requirement, " a complaint will not survive a motion to dismiss if its factual allegations "do not permit the court to infer more than the mere possibility of misconduct...." Id. at 1949 (internal quotation marks omitted), 1950. That is to say, plaintiffs must "nudge[ ] their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570.

C. Request For Judicial Notice

When considering a motion to dismiss, a court does not normally look beyond the complaint in order to avoid converting a motion to dismiss into a motion for summary judgment. See Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986), overruled on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104 (1991). The two exceptions to this rule are: 1) the court may properly take judicial notice of material which is included as part of the complaint or relied upon by the complaint; and 2) the court may properly take judicial notice of matters in the public record. See Lee v. City of Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001). Under Federal Rule of Evidence 201, judicially noticeable facts are those "not subject to reasonable dispute" because they are generally known within the jurisdiction of the court or capable of verification by reliable sources. Fed. R. Evid. 201(b).

Here, Defendants request judicial notice of two mortgage documents (the original and refinanced loans), both recorded with the State of Hawaii Bureau of Conveyances. See Wells Fargo's RJN, Ex. A, B. While the original loan does not appear to be at issue in this case, Plaintiff does refer to the original loan in her complaint, and does not challenge the submission of either the original or the refinancing loan documents. Because Plaintiffs complaint relies on these loan documents for her claims and the documents are public records not subject to any dispute, the Court takes grants Defendant's request and takes judicial notice of the two mortgages.

IV. ANALYSIS

A. Whether Plaintiffs FAC Should Be Dismissed Or Transferred For Improper Venue

1. Venue Is Improper Due To The "Local Action Doctrine"

Defendant argues that venue is improper and asks the Court to dismiss the FAC in its entirety pursuant to Rule 12(b)(3), or in the alternative to transfer this case to the District of Hawaii. Defendant argues that even though venue is generally governed by 29 U.S.C. §§ 1391 and 1406, in this instance, the "local action doctrine" controls. Under this doctrine, "[a] local action involving real property can only be brought within the territorial boundaries of the state where the land is located." Durbin v. Nat'l Loan Investors, 2002 WL 31052430, *1 (N.D. Cal. Aug 28, 2002) (quoting Hayes v. Gulf Oil Corp., 821 F.2d 285, 287 (5th Cir.1987)), rev'd on other grounds, 111 Fed. Appx. 485 (9th Cir. 2004).

In Prawoto v. PrimeLending, 720 F.Supp.2d 1149, 1154 (C.D. Cal. 2010), the court relied on a California appellate case which held that rescission actions for sale of land are local actions. Id. at 1158 (citing Massae v. Superior Court, 118 Cal. App. 3d 527, 539, (Cal. App. 1 Dist. 1981) (holding that since the plaintiff sought rescission of the power of sale, which had a direct impact on real property, "[t]he action is thus 'local' and should be tried in the county in which the real property is situated.")). Prawoto held that a plaintiff seeking rescission of her mortgage in order to avoid foreclosure...