Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03490/USCOURTS-caed-2_09-cv-03490-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

STEVE LINDER, 

 Plaintiff, 

 v. 

AURORA LOAN SERVICING, LLC; 

HOMECOMINGS FINANCIAL, LLC; 

ROGER O’KEEFE, individually; 

UNION FIDELITY MORTGAGE, INC.; 

and DOES 1 through 100, 

inclusive, 

 Defendants. 

______________________________/

 

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2:09-CV-03490-JAM-KJM 

ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS

This matter comes before the Court on Defendant Aurora Loan 

Services, LLC’s, (“Defendant’s”) Motion to Dismiss Plaintiff 

Steve Linder’s (“Plaintiff’s”) Complaint (“Complaint”)for 

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failure to state a claim pursuant to Federal Rule of Civil 

Procedure 12(b)(6). Plaintiff opposes the motion.1 

I. FACTUAL AND PROCEDURAL BACKGROUND 

On April 3, 2007, Plaintiff obtained a loan of $576,000, 

secured by property located at 2632 Westview Drive, Lincoln, 

California (“subject property”). The terms of the loan were 

memorialized in the promissory Note, which was secured by a Deed 

of Trust on the subject property. Homecomings Financial, LLC, 

(“Homecomings”) was the lender. Defendant was the servicing 

company for Homecomings. 

On September 9, 2009, Quality Loan Service Corp 

(“Quality”), acting as agent for the beneficiary, Mortgage 

Electronic Registration Systems, Inc. (“MERS”), recorded a 

Notice of Default and Election to Sell. On October 21, 2009, 

MERS substituted Quality as the new Trustee. On December 10, 

2009, Quality recorded a Notice of Trustee’s Sale of the subject 

property. 

Plaintiff filed his Complaint in state court on November 

20, 2009, alleging ten causes of action, including federal and 

1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). Additionally, the Court 

sanctions Defendant’s attorney for failure to follow the Court’s 

order regarding page limits (See Doc. 4). Defendant’s attorney 

is sanctioned $150 for the Reply brief. This sanction must be 

paid to the Clerk of the Court, within ten days. 

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state claims. The Complaint was subsequently removed to this 

Court. 

II. OPINION 

A. Legal Standard

A party may move to dismiss an action for failure to state 

a claim upon which relief can be granted pursuant to Federal 

Rule of Civil Procedure 12(b)(6). In considering a motion to 

dismiss, the court must accept the allegations in the complaint 

as true and draw all reasonable inferences in favor of the 

plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1975), 

overruled on other grounds by Davis v. Scherer, 468 U.S. 183 

(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that 

are mere “legal conclusions,” however, are not entitled to the 

assumption of truth. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 

(2009), citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 

(2007). To survive a motion to dismiss, a plaintiff needs to 

plead “enough facts to state a claim to relief that is plausible 

on its face.” Twombly, 550 U.S. at 570. Dismissal is 

appropriate where the plaintiff fails to state a claim 

supportable by a cognizable legal theory. Balistreri v. 

Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 

Generally, the Court may not consider material beyond the 

pleadings in ruling on a motion to dismiss for failure to state 

a claim. Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. 

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Cal. Mar. 30, 2009) (internal citations omitted). There are two 

exceptions: when material is attached to the complaint or relied 

on by the complaint, or when the court takes judicial notice of 

matters of public record, provided the facts are not subject to 

reasonable dispute. Id. Here, Defendant requests judicial notice 

of the Deed of Trust, Notice of Default, Substitution of Trustee 

and Notice of Trustee Sale. (Request for Judicial Notice 

(“RJN”), Ex. A, B, C, D). Plaintiff does not dispute the 

authenticity of these documents, all of which are either matters 

of public record or relied on by the Complaint. Accordingly, the 

Court takes judicial notice as requested. The Court will also 

consider the attachments to Plaintiff’s Complaint. 

Upon granting a motion to dismiss for failure to state a 

claim, the court has discretion to allow leave to amend the 

complaint pursuant to Federal Rule of Civil Procedure 15(a). 

“Dismissal with prejudice and without leave to amend is not 

appropriate unless it is clear . . . that the complaint could 

not be saved by amendment.” Eminence Capital, L.L.C. v. Aspeon, 

Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 

B. Federal Causes of Action

I. Violation of Truth in Lending Act, First Cause of Action

 Plaintiff alleges that Defendant violated the Truth in 

Lending Act, (“TILA”), 15 U.S.C. §1601 et seq., and seeks 

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damages and rescission. Defendant’s alleged violations include 

failing to provide required disclosure statements, failing to 

make required disclosure clearly and conspicuously in writing, 

failing to timely deliver to Plaintiff required notices, and 

failing to disclose all finance charge details. 

An action for damages under TILA must be brought within one 

year of the violation. 8 U.S.C. §1640(e). A TILA violation 

occurs on “the date of consummation of the transaction,” King v. 

California, 784 F.2d 910, 915 (9th Cir. 1986), and 

“consummation” means “the time that a consumer becomes 

contractually obligated on a credit transaction.” 12 C.F.R. 

§226(a)(13). Accordingly, Defendant argues that the claim for 

damages is time barred. The doctrine of equitable tolling, 

however, 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, 

784 F.2d at 915. 

Here, Plaintiff consummated his loan in April 2007, but the 

Complaint was not filed until November 20, 2009, well over a 

year after the consummation of the transaction. The Complaint 

alleges that “[t]he misrepresentations and allegations stated 

herein were all discovered within the past year, such that any 

applicable statutes of limitations are extended or should be 

extended pursuant to the equitable tolling doctrine or other 

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equitable principles.” Complaint ¶ 30. Beyond this conclusory 

statement, the Complaint does not contain any relevant dates or 

similar information to provide a basis from which to allege 

equitable tolling. See also Ashcroft v. Iqbal, 129 S. Ct. 1937, 

1950 (2009) (“Threadbare recitals of the elements of a cause of 

action, supported by mere conclusory statements, do not 

suffice.”). Accordingly, Plaintiff’s TILA claim for damages is 

dismissed, with prejudice. 

Plaintiff also brings a claim for rescission under TILA. 

Plaintiff contends that as a result of Defendant’s failure to 

provide the required disclosures, Plaintiff has a continuing 

right to rescind the loan under TILA. Defendant argues that 

Plaintiff’s claim for rescission should be dismissed because 

Plaintiff does not allege his ability to tender the full amount 

of the loan. 

The Ninth Circuit has held that rescission under TILA 

“should be conditioned on repayment of the amounts advanced by 

the lender.” Keen v. Am. Home Mortgage Serv., Inc., 2009 WL 

3380454 at *4 (E.D. Cal. Oct. 21, 2009) (quoting Yamamoto v. 

Bank of N.Y., 329 F.3d 1167, 1170 (9th Cir. 2003)). 

Additionally, the Ninth Circuit has explained that prior to 

ordering rescission based on a lender’s alleged TILA violations, 

a court may require borrowers to prove ability to repay loan 

proceeds, and “there is no reason why a court that may alter the 

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sequence of procedures after deciding that rescission is 

warranted, may not do so before deciding that rescission is 

warranted. . . the court does not lack discretion to do before 

trial what it could do after.” Garza v. Am. Home Mortgage, 2009 

WL 188604 at *4 (E.D. Cal. Jan. 27, 2009) (quoting Yamamoto, 329 

F.3d at 1173). 

The court in Keen noted that a number of California 

district courts have required plaintiffs to plead facts 

demonstrating ability to tender the loan principal in order to 

withstand a 12(b)(6) motion to dismiss and proceed with a claim 

for rescission under TILA. Id. at *4-5 (citing Garza, 2009 WL 

188604; Serrano v. Sec. Nat’l Mortgage Co., 2009 U.S. Dist. 

LEXIS 71725 (S.D. Cal. Aug. 14, 2009); Pesayco v. World Sav.

Inc., 2009 U.S. Dist. LEXIS 73299 (C.D. Cal. July 29, 2009). 

Here, Plaintiff’s claim under TILA for rescission fails 

because the Complaint contains no allegations that Plaintiff is 

able to tender the full amount of the loan, nor pleads any facts 

that would allow the court to make such an inference. 

Accordingly, Plaintiff’s claim for rescission under TILA is 

dismissed, with prejudice. 

 

II. Violation of Real Estate Settlement Procedures Act 

(“RESPA”), Fourth Cause of Action

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Plaintiff alleges that Defendant violated RESPA, 12 U.S.C. 

§2605 et seq., by failing to make correct disclosure 

requirements, and by “engaging in a pattern or practice of noncompliance with the requirements of the mortgage servicer 

provisions of RESPA as set forth in 12 U.S.C. §2605.” Complaint 

¶ 67. Defendant argues that Plaintiff failed to state a claim 

under RESPA because the Complaint only states conclusions and 

bare allegations. In the Opposition, Plaintiff merely states 

that alleging Defendant failed to comply with disclosure 

requirements is sufficient to establish a violation of RESPA. 

Plaintiff’s broad and conclusory allegation that Defendant 

failed to comply with RESPA is not sufficient. Without stating 

specific sections that Defendant violated or any facts to 

support the allegation, Plaintiff has failed to plead enough 

facts to support a plausible claim. Accordingly, the RESPA 

claim is dismissed, with prejudice. 

C. State Law Claims

I. Unfair Debt Collections Act

Plaintiff alleges that Defendant violated the California 

Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) by 

“threatening to take actions not permitted by law, 

including...collecting on a debt not owed to the Defendant, 

making false reporting to credit report agencies, falsely 

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stating the amount of a debt, increasing the amount of a debt by 

including amounts that are not permitted by law or contract and 

using unfair and unconscionable means in an attempt to collect a 

debt.” Complaint ¶ 54. 

The RFDCPA was enacted "to prohibit debt collectors from 

engaging in unfair or deceptive acts or practices in the 

collection of consumer debts, and to require debtors to act 

fairly in entering into and honoring such debts." Cal. Civ. 

Code § 1788.1. However, based on the language of the statute, 

courts have declined to regard a residential mortgage loan as a 

‘debt’ under the RFDCPA. See Cal. Civ. Code § 1788.2(e)-(f); 

Ines v. Countrywide Home Loans, Inc., 2008 WL 4791863, at *3 

(S.D. Cal. 2008) (stating plaintiff's mortgage debt claim did 

not fall within the meaning of the RFDCPA); Pittman v. Barclays 

Capital Real Estate, Inc., 2009 WL 1108889, at *3 (S.D. Cal. 

April 24, 2009) (dismissing plaintiff's mortgage-related RDFCPA 

claim for failing to "invoke statutory protections"). 

Plaintiff has failed to demonstrate that the RFDCPA applies 

to Defendant as the loan servicer because a residential mortgage 

is not a debt under RFDCPA. All of Plaintiff’s allegations 

arise out of or exist in connection with the residential loan 

mortgage. As such, Plaintiff has not stated a plausible claim 

under RFDCPA. Accordingly, the claim for unfair debt collection 

practices is dismissed, with prejudice. 

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II. Negligence

In his negligence claim, Plaintiff contends that Defendant 

owed a duty to the Plaintiff to perform acts as the servicing 

company to the lender. Defendant claims it owes no duty to 

Plaintiff. 

In order to state a cause of action for negligence, a 

plaintiff must allege: (1) the defendant has a legal duty to use 

due care; (2) the defendant breached such legal duty; (3) the 

defendant’s breach was the proximate or legal cause of the 

resulting injury; and (4) damage to the plaintiff. Ladd v. 

County of San Mateo, 12 Cal. 4th 913, 917 (1996). The existence 

of a legal duty on the part of the defendant is a question of 

law to be determined by the court. Ky. Fried Chicken of Cal., 

Inc. v. Superior Court, 14 Cal. 4th 814, 819 (1997); Isaacs v. 

Huntington Mem’l Hosp., 38 Cal. 3d 112, 124 (1985). When not 

provided by statute, the existence of such a duty depends upon 

the foreseeability of the risk and a weighing of policy 

considerations for and against the imposition of liability. 

Jacoves v. United Merch. Corp., 9 Cal. App. 4th 88, 105 (1992). 

In the lending context, “financial institutions owe no duty 

of care to a borrower when the institution’s involvement in the 

loan transaction does not exceed the scope of its conventional 

role as a mere lender of money.” Nymark v. Heart Fed. Sav. & 

Loan Ass’n, 231 Cal. App. 3d 1089, 1096 (1991). Although 

California law imposes a fiduciary duty on a mortgage broker, no 

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such duty is imposed on a lender. Price v. Wells Fargo Bank, 

213 Cal. App. 3d 465, 476 (1989). 

Plaintiff’s negligence claim against Defendant fails to 

establish a claim upon which relief can be granted. Defendant 

is the servicing company to the lender. As the “mere lender of 

money,” Defendant has no duty towards Plaintiff. As such, 

without the required existence of a duty, Plaintiff has no claim 

for negligence against Defendant. Accordingly, the negligence 

claim is dismissed, with prejudice. 

III. Breach of Fiduciary Duty

Plaintiff alleges that Defendant “owed a fiduciary duty to 

the Plaintiff to act primarily for his benefit...and owed 

Plaintiff a duty of loyalty and a duty to deal fairly with him 

at all times.” Complaint ¶¶ 75-76. Plaintiff alleges this duty 

was breached by placing Plaintiff in a loan with unfavorable 

terms that he could not ultimately afford, by not disclosing the 

negative consequences of the loan, and by not complying with 

TILA and RESPA. Complaint ¶ 77. 

“The elements of a cause of action for breach of fiduciary 

duty are: 1) the existence of a fiduciary duty; 2) a breach of 

the fiduciary duty; and 3) resulting damage.” Pellegrini v. 

Weiss, 165 Cal. App. 4th 515, 524 (2008). “A fiduciary duty . . 

. can arise when confidence is reposed by persons in the 

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integrity of others, and if the latter voluntarily accepts or 

assumes to accept the confidence, he or she may not act so as to 

take advantage of the other’s interest without that person’s 

knowledge or consent.” Pierce v. Lyman, 1 Cal. App. 4th 1093, 

1101-02 (1991). As explained above, a financial institution, 

acting as a mere lender of money, owes no duty of care to a 

borrower. Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal. App. 

3d 1089, 1096 (1991). 

Plaintiff’s breach of fiduciary duty allegations against 

Defendant fail to establish a claim upon which relief can be 

granted. As stated above, as the servicer of the loan, 

Defendant holds no fiduciary duty towards Plaintiff. Without 

the required existence of a fiduciary relationship, there can be 

no claim for relief against Defendant. Accordingly, the breach 

of fiduciary duty claim is dismissed, with prejudice.

IV. Fraud

“In all averments of fraud or mistake, the circumstances 

constituting fraud or mistake shall be stated with 

particularity. Malice, intent, knowledge and other conditions 

of the mind of a person may be averred generally.” Fed. R. Civ. 

P. 9(b). A claim of fraud must have the following elements: 

“(a) a misrepresentation (false representation, concealment, or 

nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) 

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intent to defraud, i.e., to induce reliance; (d) justifiable 

reliance; and (e) resulting damage.” In re Estate of Young, 160 

Cal. App. 4th 62, 79 (2008) (quoting Lazar v. Superior Court, 12 

Cal. 4th 631, 638 (1996) (internal quotation marks omitted)). 

The Ninth Circuit has “interpreted Rule 9(b) to mean that the 

pleader must state the time, place and specific content of the 

false representations as well as the identities of the parties 

to the misrepresentation. Alan Neuman Prods., Inc. v. Albright, 

862 F.2d 1388, 1393 (9th Cir. 1988). 

Plaintiff has not alleged fraud with the required 

particularity to state a plausible claim for relief. Plaintiff 

alleges that Defendant increased Plaintiff’s income on the loan 

application without Plaintiff’s knowledge or permission so that 

Plaintiff was forced into an unfavorable and unaffordable loan. 

Aside from this factual allegation, Plaintiff alleges that 

Defendant’s “material misrepresentations were false” and 

Plaintiff relied on Defendant’s false material representations. 

Complaint ¶¶ 85, 87. These vague legal conclusions and minimal 

facts are insufficient. Accordingly, the fraud claim is 

dismissed, with prejudice. 

V. Violation of Bus. & Prof. Code § 17200, et seq.

The California Business & Professions Code § 17200 

prohibits unfair competition including any “unlawful, unfair or 

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fraudulent business act or practice and unfair, deceptive, 

untrue or misleading advertising.” This statute has a “broad 

scope that allows for ‘violations of other laws to be treated as 

unfair competition that is independently actionable’ while also 

‘sweep[ing] within its scope acts and practices not specifically 

proscribed by any other law.’” Hauk v. JPMorgan Chase Bank USA, 

552 F.3d 1114, 1122 (9th Cir. 2009) (quoting Kasky v. Nike, 

Inc., 27 Cal. 4th 939, 949 (2002)). While the statute is broad 

in scope, a plaintiff must still plead his claim so as to 

establish a violation of the “other law” or unfair practice in 

question. See Constantini v. Wachovia Mortg. FSB, 2009 WL 

1810122 at *3 (E.D. Cal. June 24, 2009) (citing Walker v. 

Countrywide Home Loans, Inc., 98 Cal. App. 4th 1158, 1169-70 

(2002)). 

Here, Plaintiff alleges unfair competition based on the 

allegations in the Complaint of Defendant’s wrongful acts. As 

mentioned above, Plaintiff has failed to state a claim for any 

of these causes of action upon which the wrongful acts are 

based. Accordingly, Plaintiff’s cause of action for unfair 

business practices is dismissed, with prejudice. 

VI. Breach of Contract

In California, “[a] cause of action for breach of contract 

requires proof of the following elements: (1) existence of the 

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contract; (2) plaintiff's performance or excuse for 

nonperformance; (3) defendant’s breach; and (4) damages to 

plaintiff as a result of the breach.” CDF Firefighters v. 

Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). 

 Plaintiff alleges the contract was breached when Defendant 

failed to exercise due diligence resulting in Plaintiff entering 

a loan not in his best interest, failed to submit an accurate 

loan application, failed to supervise, failed to provide loan 

documents prior to closing, and failed to explain the loan 

documents to Plaintiff. 

However, despite these allegations, Plaintiff never alleges 

where in his mortgage loan contract, or any contract, these 

promises were explicitly memorialized. A breach of contract 

claim rests upon the actual terms of the contract, but Plaintiff 

fails to allege any breach of the express provisions of the loan 

agreement. Consequently, Plaintiff’s claim for breach of 

contract fails and this cause of action is dismissed, with 

prejudice. 

 

VII. Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiff alleges that Defendant breached the implied 

covenant of good faith and fair dealing by failing to provide 

disclosures, misstating Plaintiff’s income on the loan 

application, forcing Plaintiff into a loan that was not in the 

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best interest of Defendant, and failing to comply with 

applicable laws.

“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. Group, Inc., 2009 U.S. Dist. LEXIS 64624 

**15-16 (N.D. Cal. July 27, 2009). 

Here, Plaintiff cannot establish a plausible claim for 

relief because Plaintiff and Defendant did not have any 

contractual relationship, which Plaintiff admits in the 

Opposition. Further, with respect to Plaintiff’s argument that 

successor liability exists, this argument fails because although 

Plaintiff recites law from a California case, Plaintiff does not 

support the argument with facts from the instant case. Thus, 

without the existence of a contract, Plaintiff cannot state a 

claim for relief against Defendant. Accordingly, Plaintiff’s 

cause of action for breach of implied covenant of good faith and 

fair dealing is dismissed, with prejudice. 

VIII. Injunctive Relief

“It is appropriate to deny an injunction where there is no 

showing of reasonable probability of success, even though the 

foreclosure will create irreparable harm, because there is no 

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justification in delaying that harm where, although irreparable, 

it is also inevitable.” Jessen v. Keystone Savings & Loan 

Ass’n., 142 Cal. App. 3d 454, 459 (1983). Plaintiff has not 

shown a reasonable probability of success on the merits. 

Additionally, although foreclosure will create irreparable harm, 

foreclosure is inevitable because Plaintiff has not repaid the 

loan nor alleged his ability to repay the loan. Accordingly, 

Plaintiff’s claim for injunctive relief is dismissed, with 

prejudice. 

III. ORDER 

For the reasons set forth above, Defendant’s Motion to 

Dismiss is GRANTED, With Prejudice. 

IT IS SO ORDERED. 

DATED: April 14, 2010 

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