Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01617/USCOURTS-casd-3_12-cv-01617-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

 SOUTHERN DISTRICT OF CALIFORNIA

ROSALIA MARIZ,

Plaintiff,

v.

JP MORGAN CHASE BANK, et al.,

Defendants.

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Case No. 12-cv-1617-L(JMA)

ORDER GRANTING MOTION TO

DISMISS WITHOUT LEAVE TO

AMEND [DOC. 7]

Plaintiff Rosalia Mariz commenced this action against JP Morgan Chase Bank (“JP

Morgan”) and Laguna Equity Funding, among others. On June 28, 2012, the two defendants

removed this action to this Court. This case arises out of the foreclosure of Plaintiff’s home in

Vista, California. Also, Laguna Equity Funding has since been voluntarily dismissed without

prejudice. (Doc. 9.) Defendant JP Morgan now moves to dismiss the Second Amended

Complaint (“SAC”). Plaintiff opposes.

The Court found this motion suitable for determination on the papers submitted and

without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 11.) For the following reasons, the Court

GRANTS WITHOUT LEAVE TO AMEND Defendant’s motion to dismiss.

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I. BACKGROUND

On or about December 26, 2007, Plaintiff entered into a mortgage loan with Defendant

for $810,000.00 secured by a Deed of Trust (“DOT”) for property located at 30159 Disney Lane,

Vista, California, 92084 (also defined as the “subject property”). (SAC ¶ 15–16.) On January 7,

2008, the DOT was recorded with the San Diego County Recorder’s Office, which lists

Defendant as the lender and beneficiary, Plaintiff as the borrower, and Chicago Title as the

Trustee. (Id. ¶ 15.) 

On June 25, 2009, a Notice of Default and Election to Sell Under Deed of Trust was

executed and then recorded with the San Diego County Recorder’s Office. (SAC ¶ 24.) Four

days later, a Substitution of Trustee was executed, naming NDEX West, LLC as the new trustee,

which was recorded sometime thereafter. (Id. ¶ 25.)

In September 2009, the Notice of Trustee’s Sale was executed and then recorded. (SAC ¶

26.) On December 21, 2009, Plaintiff contacted Defendant via mail, and requested a loanmodification arrangement, citing severe hardship. (Id. ¶ 27.) During the period from April 14,

2010 to July 14, 2010, Plaintiff exchanged six emails regarding loan modification and rescission

of the sale of the subject property with Tiffany Waiyaki from the Home Lending Executive

Office for Chase Home Finance. (Id. ¶¶ 29, 31.) Plaintiff alleges that “Tiffany Waiyaki had

assured Plaintiff that the sale of the property would not take place, because she was in the

process of a loan modification.” (Id. ¶ 30.)

However, on May 26, 2010, the subject property was sold at a public auction. (Id. SAC ¶

28.) On June 3, 2010, a Trustee’s Deed Upon Sale was executed and then recorded, which

indicates that Southland Home Mortgage, LLC purchased the subject property. (Id.) Then, on

June 9, 2010, Tiffany Waiyaki sent Plaintiff an email stating that Defendant was in the process

of rescinding the sale to Southland but that the process would take time. (Id. ¶ 31; SAC Ex. 7.) 

Plaintiff has three remaining claims alleged in her SAC: (1) breach of the implied

covenant of good faith and fair dealing; (2) violation of the Truth in Lending Act (“TILA”); and

(3) violation of Real Estate Settlement and Procedures Act (“RESPA”). Defendant now moves

to dismiss the SAC. Plaintiff opposes.

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II. LEGAL STANDARD

The court must dismiss a cause of action for failure to state a claim upon which relief can

be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal

sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court

must accept all allegations of material fact as true and construe them in light most favorable to

the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d

972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily

assume the truth of legal conclusions merely because they are cast in the form of factual

allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003)

(internal quotation marks omitted). In fact, the court does not need to accept any legal

conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, — , 129 S. Ct. 1937, 1949 (2009) 

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed

factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the

allegations in the complaint “must be enough to raise a right to relief above the speculative

level.” Id. “To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at

1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Id. “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. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory

or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749

F.2d 530, 534 (9th Cir. 1984).

Generally, courts may not consider material outside the complaint when ruling on a

motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19

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(9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity

is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1

(9th Cir. 1995) (superceded by statutes on other grounds). Moreover, the court may consider the

full text of those documents, even when the complaint quotes only selected portions. Id. It may

also consider material properly subject to judicial notice without converting the motion into one

for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 1

III. DISCUSSION

A. Plaintiff Fails to Allege a Contractual Obligation to Serve as a Basis for Her

Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing.

Every contract “imposes upon each party a duty of good faith and fair dealing in its

performance and its enforcement.” McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th 784, 798

(2008). “To establish a breach of an implied covenant of good faith and fair dealing, a plaintiff

must establish the existence of a contractual obligation, along with conduct that frustrates the

other party’s rights to benefit from the contract.” Fortaleza v. PNC Fin. Servs. Grp., Inc., 642 F.

Supp. 2d 1012, 1021-22 (N.D. Cal. 2009) (citing Racine & Laramie v. Dep’t of Parks &

Recreation, 11 Cal. App. 4th 1026, 1031 (1992)). “It is universally recognized the scope of

conduct prohibited by the covenant of good faith is circumscribed by the purposes and express

terms of the contract.” Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th

342, 373 (1992).

This claim arises from the allegation that “Plaintiff was assured by Tiffany Waiyaki that

the Subject Property would not be sold while Plaintiff was in the middle of a loan modification

process.” (See SAC ¶ 24.) However, Plaintiff fails to allege in her a SAC a specific contractual

obligation on which to premise her claim for the breach of the implied covenant of good faith

and fair dealing. See Fortaleza, 642 F. Supp. 2d at 1021-22.

 Defendant requests judicial notice for several documents recorded with the San Diego 1

County Recorder’s Office. (Doc. 7-2.) Plaintiff has not opposed. Thus, the Court GRANTS

Defendant’s request for judicial notice. 

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Alternatively, she argues that “the Deed of Trust (“DOT”) can be the contract upon which

this claim is based,” specifically identifying the provision that states “in case of default the

‘[l]ender may invoke the power of sale and any other remedies permitted by Applicable Law.” 

(Pl.’s Opp’n 3:15–4:2 (emphasis and alteration in original).) But the provision identified shows

that Defendant was within its right to exercise the power of sale. That provision in no way

shows that the implied covenant of good faith and fair dealing imposed an obligation on

Defendant that prevented it from exercising its right to sell the property. Therefore, the alleged

misconduct is outside the scope of the covenant of good faith as circumscribed by the

aforementioned provision in the DOT. See Carma Developers, 2 Cal. 4th at 373. And on a final

note, Plaintiff also fails to show that Defendant’s alleged misconduct frustrated any of her rights

to benefits under the DOT. See Fortaleza, 642 F. Supp. 2d at 1021-22. 

Accordingly, the Court DISMISSES WITH PREJUDICE Plaintiff’s claim for the

breach of the implied covenant of good faith and fair dealing.

B. Plaintiff’s TILA Damages Claim Is Time Barred.

“TILA protects consumers from fraud, deception, and abuse within the residential secured

lending marketplace by mandating that lenders disclose certain information to borrowers.” 

McOmie-Gray v. Bank of Am. Homes Loans, — F.3d — , 2012 WL 390167, at *2 (9th Cir.

2012). Under TILA, damage claims are subject to a one-year statute of limitations, 15 U.S.C. §

1640(e), and rescission claims are subject to a three-year statute of limitations, 15 U.S.C. §

1635(f). The statute of limitations begins to run at the time the loan documents were signed. 

Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003) (“The failure to make the

required disclosures occurred . . . at the time the loan documents were signed.”).

The doctrine of equitable tolling may “suspend the limitations period until the borrower

discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the

basis of the TILA action.” King v. State of Cal., 784 F.2d 910, 915 (9th Cir. 1986). Equitable

tolling “applies in situations . . . ‘where the complainant has been induced or tricked by his

adversary’s misconduct into allowing the filing deadline to pass.’” Velazquez v. GMAC Mortg.

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Corp., 605 F. Supp. 2d 1049, 1061 (C.D. Cal. 2008) (quoting O’Donnell v. Vencor, Inc., 465

F.3d 1063, 1068 (9th Cir. 2008)). A court may only grant a motion to dismiss based on the

running of the statute-of-limitations period “if the assertions of the complaint, read with the

required liberality, would not permit the plaintiff to prove that the statute was tolled.” Supermail

Cargo, Inc. v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995).

Plaintiff indicates that she consummated her loan with Defendant in December 2007. 

(SAC ¶ 15.) Based on that date, the statute of limitations expired in December 2008. Plaintiff

concedes that the limitations period indeed ended in December 2008, but she “did not become

aware of the alleged violations until after the subject property had been sold at public auction.” 

(Pl.’s Opp’n 4:12–15.) However, the statute of limitations begins to run at the time the loan

documents were signed. Meyer, 342 F.3d at 902. Based on the July 2010 date when Plaintiff

commenced this action, she brought this action over two and a half years after the statute of

limitations had expired. See id. Plaintiff also fails to demonstrate that the doctrine of equitable

tolling applies. See Velazquez, 605 F. Supp. 2d at 1061. Therefore, Plaintiff’s TILA damages

claim are time barred.

Accordingly, the Court DISMISSES WITH PREJUDICE Plaintiff’s TILA damages

claim.

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C. Plaintiff’s RESPA Claim Is Time Barred.

RESPA creates a private right of action for only three types of wrongful acts: (1) payment

of a kickback and unearned fees for real estate settlement services, 12 U.S.C. § 2607(d); (2)

requiring a buyer to use a title insurer selected by the seller, 12 U.S.C. § 2608(b); and (3) the

failure by a loan servicer to give proper notice of a transfer of servicing rights or to respond to a

qualified written request for information about a loan, 12 U.S.C. § 2605(f). Patague v. Wells

 Additionally, “Plaintiff concedes that her to rescission under TILA has been 2

extinguished,” and that she is unable to tender the amount of the loan transaction. (Pl.’s Opp’n

4:25–5:7.) Thus, the Court also DISMISSES WITH PREJUDICE Plaintiff’s TILA rescission

claim.

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Fargo Bank, N.A., No. C 10-03460, 2010 WL 4695480, at *3 (N.D. Cal. Nov. 8, 2010). The

statute of limitations for a RESPA claim is three years for violations of 12 U.S.C. § 2605, and

one year for violations of § 2607 or § 2608, “from the date of the occurrence of the violation[.]” 

12 U.S.C. § 2614.

Here, though it is not clear based on the allegations in the SAC, Plaintiff indicates in her

Opposition that she asserts a RESPA claim under § 2607. (Pl.’s Opp’n 5:17–6:11.) As

discussed above, Plaintiff indicates that she consummated her loan in December 2007, and based

on that date, the statute of limitations expired in December 2008. See 12 U.S.C. § 2614. Based

on the July 2010 when Plaintiff commenced this action, she brought this action over two and a

half years after the statute of limitations had expired. See id. Moreover, though Plaintiff

contends that she is entitled to equitable tolling, she fails to provide any legal or factual basis to

support that contention. (Pl.’s Opp’n 5:14–16.) Rather, she merely declares that “equitable

tolling applies to RESPA claims.” (Id.) In sum, Plaintiff fails to demonstrate that her RESPA

claim is entitled to equitable tolling, and thus her RESPA claim is time barred.

Accordingly, the Court DISMISSES WITH PREJUDICE Plaintiff’s RESPA claim.

IV. CONCLUSION & ORDER

In light of the foregoing, the Court GRANTS WITHOUT LEAVE TO AMEND

Defendant’s motion to dismiss. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d

1034, 1041 (9th Cir. 2011) (“[A] district court may dismiss without leave where . . . amendment

would be futile.”). 

IT IS SO ORDERED.

DATED: October 16, 2012

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. JAN M. ADLER

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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