Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-01033/USCOURTS-cand-4_16-cv-01033-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1601 Truth in Lending

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

KEYHAN MOHANNA,

Plaintiff,

v.

BANK OF AMERICA, N.A.,

Defendant.

Case No. 16-cv-01033-HSG 

ORDER DENYING PLAINTIFF’S 

MOTION FOR DEFAULT JUDGMENT

Re: Dkt. No. 17

Pending before the Court is Pro Se Plaintiff Keyhan Mohanna’s (“Plaintiff”) motion for 

default judgment against Defendant Bank of America, N.A. (“Defendant”), pursuant to Federal 

Rule of Civil Procedure 55(b)(2) (“FRCP”). Dkt. No. 17. This motion arises from Plaintiff’s suit 

alleging Defendant’s violation of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601. Dkt. No. 

1 (“Compl.”). Defendant has not appeared in this case, nor has it responded to Plaintiff’s motion. 

Pursuant to FRCP 55(a), the clerk entered default as to Defendant on May 6, 2016. Dkt. No. 16. 

For the reasons set forth below, the Court DENIES Plaintiff’s motion for default judgment.

I. BACKGROUND

A. Factual Allegations

Plaintiff alleges that on May 23, 2005 and June 24, 2005, he refinanced his single family 

residence located at 1405 Greenwich Street, Apt. #5, San Francisco, CA 94109 (“Subject 

Property”) with a consumer loan from Countrywide Bank, N.A (“Countrywide”).

1 Compl. at 7. 

Along with the loan, Countrywide also took a security interest in the Subject Property in the form 

of a deed of trust. Id. On July 1, 2008, Defendant acquired Countrywide, and succeeded to its 

 

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In his complaint, Plaintiff cites both May 23, 2005 and June 24, 2005 as the date he entered into 

the relevant loan transaction. However, in his motion for default judgment Plaintiff cites only the 

May 23, 2005 date. Compare Dkt. No. 1 at 7, with Dkt. No. 17 at 3. The reason for this 

inconsistency is unclear. 

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interests. Id. at 4. 

In 2012, after hearing news regarding the financial mortgage crisis, Plaintiff decided to 

investigate the ownership of his debt. Compl. at 8. Based on information he received from 

Defendant and a forensic loan auditor he hired, Plaintiff learned that his debt had been transferred, 

assigned, or otherwise sold to a private securitized trust known as the ARLP Securitization Trust 

2014-1. Id. at 8-9. Plaintiff alleges that, based on his research, Countrywide was not the true 

provider of funds for the loan transaction. Id. at 11. Instead, Plaintiff alleges that the funds came 

from an unknown “warehouse lender,” a third party from which Countrywide borrowed on terms 

that also remain unknown to him. Id. at 11-12. Plaintiff alleges that because Defendant failed to 

disclose the identity of the true provider of the funds, he is entitled to exercise his right to rescind 

the entire loan transaction under TILA. See id. at 13.

Accordingly, on August 15, 2015, Plaintiff sent a Notice of Rescission to his financial 

servicer, BSI Financial Services, to cancel his debt obligation. Compl. at 9. Defendant has not 

challenged Plaintiff’s Notice of Rescission. Id. at 7. Plaintiff contends that because Defendant 

failed to challenge the Notice within the 20 days provided by TILA, Defendant’s interest in the 

Subject Property is void. Id. at 18; 15 U.S.C. § 1635(b).

B. Procedural History

On March 1, 2016, Plaintiff filed three related actions against two financial institutions: 

(1) Mohanna v. Bank of Am., N.A., No. 16-cv-1033-HSG (the “present action”); (2) Mohanna v. 

Wells Fargo Bank, N.A., No. 16-cv-1035-HSG (the “1035 Action”); and (3) Mohanna v. Wells 

Fargo Bank, N.A., No. 16-cv-1036-HSG (the “1036 Action”). On December 12, 2016, Plaintiff 

voluntarily dismissed the 1035 and 1036 Actions. See Dkt. No. 46 in the 1035 Action; Dkt. No. 

41 in the 1036 Action. 

Defendant in the present action was served on March 18, 2016, though Defendant has not 

made an appearance. See Dkt. No. 13. Plaintiff seeks to enforce his alleged right of rescission 

under TILA, and requests declaratory relief to void Defendant’s interest in the Subject Property 

and vest that interest in himself. Compl. at 2, 25. Plaintiff moved for entry of default on May 2, 

2016, and the Clerk of Court entered default on May 6, 2016. See Dkt. Nos. 15, 16. Plaintiff filed 

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the present motion, to which Defendant has not responded, on June 9, 2016. See Dkt. No. 17.2

II. LEGAL STANDARD

When a party has failed to plead or defend against a complaint, the clerk “must enter the 

party’s default.” Fed. R. Civ. P. 55(a). Following an entry of default, the Court may enter a 

default judgment upon request. Fed. R. Civ. P. 55(b)(2). However, the Court’s decision to enter a 

default judgment is “discretionary.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). 

When default has been entered, the “factual allegations of the complaint, except those relating to 

the amount of damages, will be taken as true.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 

917-18 (9th Cir. 1987). 

In assessing a request for default judgment, the Court must first confirm proper jurisdiction 

and service of process. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Upon determination of 

jurisdiction, the Court then evaluates the merits of the default judgment request based on seven 

factors (the “Eitel factors”): (1) the possibility of prejudice to Plaintiff; (2) the merits of Plaintiff’s 

substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; 

(5) the possibility of a dispute concerning material facts; (6) whether the default was due to 

excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure 

favoring decisions on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 

III. ANALYSIS

A. Jurisdiction and Service of Process

In considering an entry of default judgment, a district court has an “affirmative duty” to 

examine its jurisdiction over “both the subject matter and the parties.” In re Tuli, 172 F.3d at 712. 

A court must also assess whether there was proper service of process on the defendant. Craigslist, 

Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1054 (N.D. Cal. 2010).

i. Subject Matter Jurisdiction

Federal district courts have original jurisdiction over all civil actions “arising under the 

 

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Plaintiff also filed a request for judicial notice regarding the following published judicial 

opinions: Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015); Yamamoto v. Bank 

of New York, 329 F.3d 1167 (9th Cir. 2003); and Yvanova v. New Century Mortg. Corp. 62 Cal. 

4th 919 (2016). Dkt. No. 18. The Court need not take “judicial notice” of relevant case law.

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Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Because this is a civil 

action alleging a violation of TILA, a federal statute, subject matter jurisdiction is proper. 15 

U.S.C § 1601.

ii. Personal Jurisdiction

While Plaintiff has not affirmatively asserted that personal jurisdiction is proper, the Court 

nevertheless undertakes such an inquiry. See Compl. at 2; In re Tuli, 172 F.3d at 712 (holding that 

“when a court is considering whether to enter a default judgment, it may dismiss an action sua 

sponte for lack of personal jurisdiction”). Defendant is a national banking institution licensed to 

do business in the State of California. See Compl. at 4. By acquiring an interest in the Subject 

Property from which this action arises and which is located in California, Defendant has 

purposefully availed itself of the privilege of conducting activities in California. See 

Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004); see also Square 1 

Bank v. Lo, 128 F. Supp. 3d 1257, 1262-63 (N.D. Cal. 2015) (finding personal jurisdiction proper 

where defendant purchased property located in California and executed subsequent transfers of the 

property). The Court’s exercise of personal jurisdiction in this case is thus reasonable, since it will 

provide convenient and effective relief for Plaintiff, California has an interest in resolving disputes

over California properties, it will lead to the efficient resolution of the suit, and Defendant—

having never appeared—has failed to demonstrate why Plaintiff’s minimum contacts with the state 

“render jurisdiction unreasonable.” See Lake v. Lake, 817 F.2d 1416, 1421-22 (9th Cir. 1987). 

iii. Service of Process

Finally, the Court must also determine if service of process was proper. Craigslist, 694 F. 

Supp. 1039 at 1054. A plaintiff may serve a corporation, partnership, or association by delivering 

a copy of the summons and complaint to an agent “authorized by appointment or by law to receive 

service of process.” Fed. R. Civ. P. 4(h)(1)(B). Here, it appears that Plaintiff properly served 

Defendant by delivering a copy of the summons and complaint to the designated agent for service 

of process, C T Corporation System, on March 18th, 2016.3 Dkt. No. 13. Service of process was

 

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The website for the California Secretary of State indicates that C T Corporation System is the 

designated agent for service of process for Bank of America Corporation. See

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therefore sufficient. 

B. The Eitel Factors 

Having found that jurisdiction and service of process are both proper, the Court turns to the 

application of the Eitel factors. 

i. Possibility of Prejudice to Plaintiff

First, the Court must consider the possibility of prejudice to Plaintiff. Eitel, 782 F.2d at 

1471. A plaintiff may be prejudiced when, in the absence of a default judgment, plaintiff would 

be left with no “other recourse for recovery.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 

1172, 1177 (C.D. Cal. 2002). Courts have found such prejudice when a defendant has failed to 

appear or defend against a suit, and the plaintiffs could not otherwise seek relief. See, e.g., id; 

Fulton v. Bank of Am., N.A., No. 2:16-cv-04870, 2016 WL 7156440, at *3 (C.D. Cal. Dec. 6, 

2016). Because Defendant has failed to respond to this suit, Plaintiff would potentially suffer 

prejudice if the Court were to deny his motion for default judgment, as he would be without other 

means of recovery. See PepsiCo, 238 F. Supp. 2d at 1177. This factor thus weighs in favor of 

granting the motion for default judgment.

ii. Merits of Plaintiff’s Substantive Claim and Sufficiency of the Complaint

The second and third Eitel factors consider the merits and sufficiency of Plaintiff’s claim. 

Guifu Li v. A Perfect Day Franchise, Inc., No. 5:10-cv-01189, 2012 WL 2236752, at *6 (N.D. 

Cal. June 15, 2012). These two factors are often analyzed together, and require the Court to 

consider whether Plaintiff has “state[d] a claim on which [he] may recover.” Id.; see also

PepsiCo, 238 F. Supp. 2d at 1175. With the exception of facts relating to damages, courts must 

take as true all other factual allegations pled in the complaint. TeleVideo Sys., Inc., 826 F.2d at 

917-18. Of all the Eitel factors, courts often consider the second and third factors to be “the most 

important.” Sanrio, Inc. v. Jay Yoon, No. 5:10-cv-05930, 2012 WL 620451, at *4 (N.D. Cal. Feb. 

24, 2012); see also Fulton, 2016 WL 7156440, at *5 (citing Fed. Nat’l Mortg. Ass’n v. George, 

No. 5:14-cv-1679, 2015 WL 4127958, at *3 (C.D. Cal. July 7, 2015)). 

 

https://businesssearch.sos.ca.gov/ (Search “Bank of America”; then follow link for “Bank of 

America Corporation” with “Active” status) (last visited Mar. 7, 2017)

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The Truth in Lending Act gives borrowers the unconditional right to rescind a loan “until 

the midnight of the third business day following the consummation of the transaction or the 

delivery of [disclosure forms required]. . . . whichever is later.” 15 U.S.C. 1635(a); see also 

Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790, 792 (2015). After this three-day 

window, borrowers may rescind “only if the lender failed to satisfy [TILA’s] disclosure 

requirement.” Jesinoski, 135 S. Ct. at 792. However, even if the lender failed to make required 

disclosures, the “conditional right does not last forever.” Id. Instead, it expires “three years after 

the date of consummation of the transaction or upon the sale of the property, whichever comes 

first.” Id. (quoting 15 U.S.C. § 1635(f)). Within the meaning of TILA, “consummation” “means 

the time that a consumer becomes contractually obligated on a credit transaction.” 12 C.F.R. 

§ 226.2(a)(13).4 Accordingly, a borrower’s right to seek rescission under TILA is subject to a 

three-year statute of repose. 15 U.S.C. § 1635(f); Mohanna v. Bank of Am., N.A., No. 16-CV1033, 2016 WL 1729996, at *4 (N.D. Cal. May 2, 2016); see also Ramos v. U.S. Bank, No. 12-

CV-1820, 2012 WL 4062499, at *1 (S.D. Cal. Sept. 19, 2012). Any attempt by the borrower to 

rescind more than three years after the date of “consummation of the transaction” is absolutely 

time-barred. Jesinoski, 135 S. Ct. at 792; Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998) 

(holding that “[section] 1635(f) completely extinguishes the right of rescission at the end of the 3-

year period.”); Mohanna, 2016 WL 1729996 at *4. In addition, because § 1635(f) is a statute of 

repose, it is not subject to tolling. Mohanna, 2016 WL 1729996 at *4 (citing McOmie-Gray v. 

Bank of Am. Home Loans, 667 F.3d 1325, 1329-30 (9th Cir. 2012), abrogated on other grounds by 

Jesinoski, 135 S. Ct. at 792); see also Ramos, 2012 WL 4062499, at *1 (finding that TILA threeyear statute of repose is “an absolute bar . . . to which equitable tolling is unavailable”); Sotanski v. 

HSBC Bank USA, Nat’l Assoc., No. 15-CV-01489, 2015 WL 4760506, at *6 (N.D. Cal. Aug. 12, 

2015) (finding that equitable tolling does not apply to § 1635(f)’s deadline), aff’d, No. 15-16798, 

2016 WL 7407292, at *1 (9th Cir. 2016). 

 

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State law controls whether and when a consumer has become contractually obligated under 

TILA. See Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989). Under California law, contractual 

obligation inheres when (1) the parties are capable of consenting, (2) there is consent, (3) there is a 

lawful object, and (4) there is sufficient cause or consideration. See Cal. Civ. Code § 1550. 

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Plaintiff’s claim is time-barred. Plaintiff sent his notice of rescission on August 15, 2015, 

more than ten years after he executed his mortgage loan with Defendant. See Compl. at 6-7 & Ex. 

C. Even assuming that Plaintiff’s loan transaction with Defendant was consummated on the later 

of his two proffered dates—June 24, 2005—his right to rescind expired on June 24, 2008 at the 

latest. See Compl. at 7; Beach, 523 U.S. at 412.

In defense of his untimeliness, Plaintiff contends that his claims are not barred by the

three-year statute of repose because “material facts were never disclosed to [him].” Compl. at 13. 

Specifically, Plaintiff argues that because Defendant failed to disclose the identity of the “third 

party warehouse lender” who was the true provider of funds, he could not assent to the formation 

of the loan contract such that no contract was ever formed, and there was thus no consummation of 

the loan transaction. Id. at 12, 16. Plaintiff therefore alleges that the three-year deadline has not 

started to run. Id. at 16. This argument is unpersuasive. Courts, including this Court, have found 

that a lender’s use of an undisclosed third party lender does not preclude consummation under 

TILA. Mohanna, 2016 WL 1729996 at *5; see also, e.g., Sotanski, 2015 WL 4760506, at *6 

(holding that a lender’s use of a third-party lender does not preclude contract formation); Ramos, 

2012 WL 4062499, at *1 n.1 (where loan paperwork “plainly identified” a lender, “the loan was 

consummated regardless” of who was the “true lender”); Mbaku v. Bank of Am., N.A., No. 12-CV00190, 2013 WL 425981, at *5 (D. Colo. Feb. 1, 2013) (because the “deed of trust identifies [] the 

lender[,]” “plaintiffs were obligated on their mortgage to [that lender]” without regard to any third 

party involvement). 

Because Plaintiff’s right to rescind expired in 2008, his claims are time-barred. The 

second and third Eitel factors thus weigh heavily against granting Plaintiff’s motion.

iii. The Sum of Money at Stake

The fourth Eitel factor requires the Court to weigh the “amount of money at stake in 

relation to the seriousness of Defendant’s conduct.” PepsiCo, 238 F. Supp. 2d at 1176. When the 

money at stake in the litigation is “substantial or unreasonable,” default judgment is discouraged. 

Chanel, Inc. v. Gupton, No. C 14-03405, 2015 WL 1094849, at *6 (N.D. Cal. Mar. 2, 2015) 

(citation omitted). However, district courts are divided as to whether this factor weighs for or 

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against granting default judgment where, as here, the relief sought is nonmonetary and relates only 

to interest in real property. Compare Phelan v. Mecom Equip., LLC., No. 2:10-cv-1651, 2013 WL 

1313960, at *8 (E.D. Cal. Apr. 1, 2013) (finding that this factor favors entry of default judgment 

where a plaintiff seeks only quiet title rather than monetary damages), with Fulton, 2016 WL 

7156440, at *4 (finding that this factor weighs against a default judgment, because a plaintiff’s 

claim to vest property title in himself “places at stake the value of the [s]ubject [p]roperty”); see 

also Wells Fargo Bank, N.A. v. United States, No. 2:10-cv-1546, 2013 WL 2551518, *3 (D. Nev. 

Jun. 10, 2013) (finding that this factor weighs “neither in favor nor against granting default 

judgment” where the property was secured with a loan but a plaintiff seeks equitable relief). The 

Court therefore finds this factor neutral. 

iv. Possibility of Dispute Concerning Material Facts

The fifth Eitel factor examines the “possibility of dispute as to any material facts in the 

case.” PepsiCo, Inc., 238 F. Supp. 2d at 1177. Where a plaintiff fails to adequately plead a legal 

claim, this factor “is either neutral or disfavors default [judgment].” Fulton, 2016 WL 7156440, at 

*5 (citing Stuckey v. Lucas, No. 3:11-cv-05196, 2012 WL 5948959, at *4 (N.D. Cal. Sept. 12, 

2012)). Because Plaintiff here has not pled a legally viable claim, this factor weighs against entry 

of default judgment.

v. Default Due to Excusable Neglect

The sixth Eitel factor considers the possibility that Defendant’s default resulted from 

excusable neglect. PepsiCo, Inc., 238 F. Supp. 2d at 1177. Courts have found that where 

defendants were “properly served with the complaint, the notice of entry of default, as well as the 

paper in support of the [default judgment] motion,” there is no evidence of excusable neglect. 

Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). Here, 

Plaintiff served Defendant’s agent for service of process with the summons and complaint on 

March 18, 2016. See Dkt. No. 13. Plaintiff also served Defendant’s agent by mail with his 

request for entry of default and motion for default judgment on April 27, 2016 and June 9, 2016, 

respectively. See Dkt. Nos. 15, 17. Defendant has made no appearance in this case and has not 

responded to Plaintiff’s complaint or motion. As there is no evidence that Defendant’s failure to 

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appear is due to excusable neglect, this factor weighs in favor of granting default judgment.

vi. Strong Policy Favoring Decisions on the Merits

The seventh Eitel factor emphasizes that “[c]ases should be decided upon their merits 

whenever reasonably possible.” Eitel, 782 F. 2d at 1472. While this preference does not preclude 

a court from granting default judgment, see PepsiCo, 238 F. Supp. 2d at 1177, the general rule is 

that “default judgments are ordinarily disfavored.” Eitel, 782 F. 2d at 1472. This factor thus

weighs against granting default judgment.

IV. CONCLUSION

After careful consideration of the Eitel factors, the Court finds that an entry of default 

judgment would be inappropriate. Although the first and sixth factors weigh in favor of Plaintiff’s 

request, the remaining factors are all either neutral or weigh against default judgment. Given the 

emphasis courts must place on the second and third factors, the Court finds that the untimeliness 

of this action weighs heavily against granting default judgment. The Court therefore DENIES

Plaintiff’s motion.

IT IS SO ORDERED.

Dated:

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

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