Osei v. Countrywide Home Loans

692 F. Supp.2d 1240

Patrick OSEI, Plaintiff, v. COUNTRYWIDE HOME LOANS; Lending 1st Mortgage; Mortgage Electronic Registration Systems, Inc.; Delta Mortgage & Real Estate; Jeffrey Alan Pelletier; Jeffrey Paul Olson; Jeff Bryan Delora; and Does 1-20, inclusive, Defendants.

No. Civ. S-09-1981 LKK/JFM.

United States District Court, E.D. California.

March 3, 2010.

Randolph Cooke, Randolph Cooke Law Firm, Sacramento, CA, for Plaintiff.

Laju Obasaju, Bryan Cave LLP, Santa Monica, CA, Matthew Corin Bradford, Bradford Law Offices, Stockton, CA, for Defendants.

ORDER

LAWRENCE K. KARLTON, Senior District Judge.

This case concerns plaintiff's mortgage and foreclosure thereon. Plaintiff's First Amended Complaint ("FAC") names seven defendants and enumerates nine causes of action. Defendants Countrywide Home Loans, Inc. ("CHL") and Mortgage Electronic Registration Systems ("MERS") moved to dismiss all claims against them and moved to strike portions of the FAC. Defendants Pelletier Finance, Inc. dba Delta Mortgage and Real Estate ("Delta"), Jeffrey Allen Pelletier ("Pelletier"), and Jeffrey Paul Olson ("Olson") moved to dismiss all but two claims against them, or in the alternative, for a more definite statement. For the reasons stated below, the motions to dismiss are granted in part.

I. BACKGROUND

Defendants CHL and MERS moved to dismiss and to strike on September 28, 2009; defendants Delta, Pelletier, and Olson moved to dismiss on September 25, 2009. Plaintiff filed oppositions to both motions on October 27, 2009 and October 23, 2009, respectively. Hearings were vacated for all motions.

A. Initial Loan¹

Plaintiff alleges that on or about August 24, 2006, Jeff Bryan Delora ("Delora"), an employee of defendant Delta, solicited plaintiff Patrick Osei ("Plaintiff" or "Osei") to refinance his home. FAC ¶¶ 13, 23. Delora offered plaintiff a fixed rate loan with a low interest rate and no prepayment rider. Id. at ¶ 26. Plaintiff claims that he was told his mortgage payment would be $1,274.39. Id. Plaintiff was advised that if the loan ever became unaffordable, defendants would refinance it to an affordable loan. Id. at ¶ 28. Plaintiff alleges that he was not provided with copies of loan documents prior to closing, and at closing was only given a few minutes to sign the documents. Id. at ¶ 29. Plaintiff claims to have received no required copies of a proper notice of cancellation. Id. The loan was finalized on November 24, 2006. Id. at ¶ 31.

Plaintiff claims that contrary to Delora's representations he was sold an adjustable rate loan, negatively amoritizing, with a large prepayment rider. Id. at ¶ 26. Plaintiff's payments were initially $1,274.39, but later increased to $3,048.73. Id. Plaintiff contends that Delora inflated his income on his loan application, without plaintiff's knowledge, by $7,640. Id. at ¶ 27. Plaintiff alleges that defendant Lending 1 Mortgage ("Lending") paid their employees commissions based on the volume of loans they sold to consumers. Id. at ¶ 35. Further, plaintiff alleges that Lending's loan officers received greater commissions or bonuses for placing borrowers in loans with high yield spread premiums. Id. According to the plaintiff, this resulted in borrowers being steered by Lending into loans with unfavorable terms and for which they were not qualified. Id. The deed of trust for plaintiff's mortgage lists defendant Mortgage Electronic Registration Systems ("MERS") as nominee for the lender and the lender's successors and assigns. It also indicates that MERS is the beneficiary under the instrument. Lending 1st Mortgage is listed as the lender.

B. Foreclosure of Plaintiff's Home Loan

It is not clear from the face of plaintiff's FAC when, or how, foreclosure was brought against the plaintiff. Plaintiff contends that MERS is not in possession of the promissory note for plaintiff's mortgage, and does not have the right to payment under the note. FAC ¶¶ 34, 37.

On or about May 28, 2009, plaintiff sent a Qualified Written Request ("QWR") to defendant CHL, which included a demand for rescission of the loan under TILA. Id. at ¶ 33. Plaintiff alleges that CHL did not properly responded to the request. Id.

Plaintiff filed his first complaint on June 17, 2009, and filed the amended complaint at issue here on September 11, 2009.

II. STANDARD

A. Standard for a Fed.R.Civ.P. 12(b)(6) Motion to Dismiss

A Fed.R.Civ.P. 12(b)(6) motion challenges a complaint's compliance with the pleading requirements provided by the Federal Rules. In general, these requirements are established by Fed.R.Civ.P. 8, although claims that "sound in" fraud or mistake must meet the requirements provided by Fed.R.Civ.P. 9(b). Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-04 (9th Cir.2003).

1. Dismissal of Claims Governed by Fed.R.Civ.P. 8

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The complaint must give defendant "fair notice of what the claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal quotation and modification omitted).

To meet this requirement, the complaint must be supported by factual allegations. Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). "While legal conclusions can provide the framework of a complaint," neither legal conclusions nor conclusory statements are themselves sufficient, and such statements are not entitled to a presumption of truth. Id. at 1949-50. Iqbal and Twombly therefore proscribe a two step process for evaluation of motions to dismiss. The court first identifies the non-conclusory factual allegations, and the court then determines whether these allegations, taken as true and construed in the light most favorable to the plaintiff, "plausibly give rise to an entitlement to relief." Id.; Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007).

"Plausibility," as it is used in Twombly and Iqbal, does not refer to the likelihood that a pleader will succeed in proving the allegations. Instead, it refers to whether the non-conclusory factual allegations, when assumed to be true, "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988).

The line between non-conclusory and conclusory allegations is not always clear. Rule 8 "does not require `detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). While Twombly was not the first case that directed the district courts to disregard "conclusory" allegations, the court turns to Iqbal and Twombly for indications of the Supreme Court's current understanding of the term. In Twombly, the Court found the naked allegation that "defendants `had entered into a contract, combination or conspiracy to prevent competitive entry . . . and had agreed not to compete with one another,'" absent any supporting allegation of underlying details, to be a conclusory statement of the elements of an anti-trust claim. Id. at 1950 (quoting Twombly, 550 U.S. at 551, 127 S.Ct. 1955). In contrast, the Twombly plaintiffs' allegations of "parallel conduct" were not conclusory, because plaintiffs had alleged specific acts argued to constitute parallel conduct. Twombly, 550 U.S. at 550-51, 556, 127 S.Ct. 1955.

Twombly also illustrated the second, "plausibility" step of the analysis by providing an example of a complaint that failed and a complaint that satisfied this step. The complaint at issue in Twombly failed. While the Twombly plaintiffs' allegations regarding parallel conduct were non-conclusory, they failed to support a plausible claim. Id. at 566, 127 S.Ct. 1955. Because parallel conduct was said to be ordinarily expected to arise without a prohibited agreement, an allegation of parallel conduct was insufficient to support the inference that a prohibited agreement existed. Id. Absent such an agreement, plaintiffs were not entitled to relief. Id.

In contrast, Twombly held that the model pleading for negligence demonstrated the type of pleading that satisfies Rule 8. Id. at 565 n. 10, 127 S.Ct. 1955. This form provides "On June 1, 1936, in a public highway called Boylston Street in Boston, Massachusetts, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway." Form 9, Complaint for Negligence, Forms App., Fed. Rules Civ. Proc., 28 U.S.C.App., p. 829. These allegations adequately "`state . . . circumstances, occurrences, and events in support of the claim presented.'" Twombly, 550 U.S. at 555 n. 3, 127 S.Ct. 1955 (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1202, at 94, 95 (3d ed.2004)). The factual allegations that defendant drove at a certain time and hit plaintiff render plausible the conclusion that defendant drove negligently.

2. Dismissal of Claims Governed by Fed.R.Civ.P. 9(b)

A Rule 12(b)(6) motion to dismiss may also challenge a complaint's compliance with Fed.R.Civ.P. 9(b). See Vess, 317 F.3d at 1107. This rule provides that "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." These circumstances include the "time, place, and specific content of the false representations as...