Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-00043/USCOURTS-casd-3_09-cv-00043-1/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

EVA L. WATTS,

Plaintiff,

CASE NO. 09 CV 0043 JM (BLM)

ORDER:

1) GRANTING MOTION FOR

JUDGMENT ON THE

PLEADINGS BY DECISION ONE

MORTGAGE COMPANY, LLC;

and

2) DENYING PLAINTIFF’S

REQUEST FOR LEAVE TO

AMEND

Doc. No. 25

vs.

DECISION ONE MORTGAGE COMPANY,

LLC; COUNTRYWIDE HOME LOANS;

SAXON MORTGAGE SERVICES, INC.;

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.,

Defendants.

On October 9, 2008, Plaintiff Eva L. Watts (“Plaintiff”) filed a complaint in the Superior Court

of the State of California, County of San Diego, raising claims arising out of a mortgage loan

transaction. (Doc. No. 1, Exh. A, “Complaint.”) The proceeds of the loan were used to purchase

Plaintiff’s principal dwelling (the “Property”), which is now subject to nonjudicial foreclosure.

Following service of the Summons and Complaint, Defendant Countrywide Home Loans, Inc.

(“Countrywide”) timely removed the action to federal court on January 12, 2009. (Doc. No. 1.)

Defendant Decision One Mortgage Company, LLC (“Decision One”) filed an Answer on April 27,

2009. (Doc. No. 22.) 

Now pending before the court is Decision One’s Motion for Judgment on the Pleadings

Case 3:09-cv-00043-JM-BLM Document 36 Filed 06/11/09 Page 1 of 9
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pursuant to Federal Rule of Civil Procedure (“Rule”) 12(c). (“Mot.,” Doc. No. 25.) Plaintiff

submitted a tardy opposition, accompanied by a “request to file amended complaint pursuant to FRCP

15(a).” (“Opp.,” Doc. No. 32.) Decision One provided its reply brief on May 29, 2009. (“Reply,”

Doc. No. 33.)

Pursuant to Civ.L.R. 7.1(d), the matter was taken under submission by the court on June 5,

2009. For the reasons set forth below, the court GRANTS Decision One’s Motion for Judgment on

the Pleadings and DENIES Plaintiff’s request for leave to file an amended complaint.

BACKGROUND

According to the Complaint, Decision One offered Plaintiff a home mortgage loan to finance

the purchase of the Property and the loan closed on August 7, 2006. (Compl. at ¶¶ 12, 26.) Plaintiff

later defaulted on the loan, leading to entry of a Notice of Default on September 2, 2008. (Compl. at

¶ 35.) The present status of any pending or completed sale is unclear from the parties’ submissions.

Against all defendants, Plaintiff asserted federal causes of action under the Racketeer Influenced and

Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”), the Truth in Lending Act, 15 U.S.C.

§ 1601 et seq. (“TILA”), and the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq.

(“RESPA”). Plaintiff also raised state law claims to quiet title and for fraud, negligent infliction of

emotional distress, negligence, cancellation based on impossibility, and slander of title. Plaintiff

sought injunctive relief (labeled as a “first cause of action”), damages, attorneys’ fees and costs,

declaration that the loan and Deed of Trust are null and void, and rescission.

The court previously granted a motion to dismiss by Defendants Countrywide and Mortgage

Electronic Registration Systems, Inc. (“MERS”), in which Defendant Saxon Mortgage Services

(“Saxon”) joined, resulting in the dismissal of all claims against these three defendants except for the

claims for negligence and negligent infliction of emotion distress against Saxon. Judgment was

entered in favor of Countrywide and MERS on April 17, 2009. The two remaining claims against

Saxon are the subject of a separate motion for judgment on the pleadings, not addressed here. (Doc.

No. 31.)

//

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Case 3:09-cv-00043-JM-BLM Document 36 Filed 06/11/09 Page 2 of 9
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DISCUSSION

I. Legal Standards 

A Rule 12(c) motion challenges the legal sufficiency of an opposing party’s pleadings. See

FRCP 12(c). As with a Rule 12(b)(6) motion, the court must assume the truthfulness of the material

facts alleged in the complaint and must construe all inferences reasonably drawn from the allegations

in favor of the responding party. See Gen. Conference Corp. of Seventh-Day Adventists v. SeventhDay Adventist Congregational Church, 887 F.2d 228, 230 (9th Cir. 1989). “Judgment on the

pleadings is proper when the moving party clearly establishes on the face of the pleadings that no

material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Hal

Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). Thus, judgment

on the pleadings in favor of a defendant is not appropriate if the complaint raises issues of fact that,

if proved, would support the plaintiff’s legal theory. Gen. Conference Corp., 887 F.2d at 230.

Notably, in her opposition, Plaintiff does not counter any of the arguments presented by

Decision One but rather states that if she is granted leave to amend, she “will abandon the TILA and

RESPA claims, and the vast majority of the California common law claims.” (Opp. at 2-3.) Despite

Plaintiff’s apparent acquiescence to the entry of judgment on most of her claims, the court reviews the

motion on its merits.

II. Analysis

 A. Fraud

Plaintiff argues, in essence, that Defendants are liable for fraud because they misrepresented

to Plaintiff that she could afford the mortgage payments. (Compl. at ¶¶ 39, 42.) Decision One offers

that Plaintiff’s fraud cause of action must be dismissed because it has not been pled with particularity

with respect to any defendants, as required by Rule 9(b). (Mot. at 4-5.) The court agrees.

“Rule 9(b)’s particularity requirement applies to state-law causes of action.” Vess v. CibaGeigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). On a claim for fraud, then, a “pleading is

sufficient under rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can

prepare an adequate answer from the allegations.” Moore v. Kayport Package Express, Inc., 885 F.2d

531, 540 (9th Cir. 1989)(citations omitted). “While statements of the time, place and nature of the

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alleged fraudulent activities are sufficient, mere conclusory allegations of fraud” are not. Id. Further,

Rule 9(b) requires a plaintiff to attribute particular fraudulent statements or acts to individual

defendants. Id. Here, Plaintiff has not identified any particular statements or misrepresentations,

much less linked them to specific defendants. Plaintiff’s fraud cause of action is therefore dismissed.

 B. RICO

A claim under RICO must also satisfy Rule 9(b)’s particularity requirements. In her RICO

claim, brought under 18 U.S.C. § 1962(c), Plaintiff alleges Defendants were involved in “racketeering

activity” by virtue of their allegedly collusive participation in indictable activities including mail fraud

(18 U.S.C. § 1341), wire fraud (§ 1343), obstruction of justice (§ 1503), obstruction of criminal

investigations (§ 1510), and obstruction of State or local law enforcement (§ 1511). See 18 U.S.C.

§ 1961(B). However, as pointed out by Decision One (Mot. at 6-9), Plaintiff’s Complaint is

completely void of factual support for these wildly broad, conclusory, and largely irrelevant

statements. “To state a claim under 18 U.S.C. § 1962(c), a plaintiff must allege ‘(1) conduct (2) of

an enterprise (3) through a pattern (4) of racketeering activity.’” Odom v. Microsoft Corp., 486 F.3d

541, 547 (9th Cir. 2007)(quoting Sedima, S.P.R.L. v. Imprex Co., 473 U.S. 479, 496 (1985). Plaintiff

does not allege that Decision One committed multiple illegal acts under the statute or was engaged

in a “pattern” of wrongful activity that would trigger RICO. Because Plaintiff’s Complaint fails to

properly allege all elements to state a RICO claim and does not meet the Rule 9(b) particularity

standard, the RICO claim against Decision One is dismissed. Plaintiff’s request to amend this claim

is addressed below.

 C. TILA and RESPA

Plaintiff alleges Defendants failed to provide her with the required early Disclosure Statement

under 12 C.F.R. § 226 (“Regulation Z”), and did not properly disclose material loan terms, including

applicable finance charges, interest rate, and total payments as required by 15 U.S.C. § 1632. (Compl.

at ¶¶ 74-75.) Plaintiff seeks rescission of the mortgage loan as well as damages and attorneys’ fees.

(Compl. at ¶ 78, p. 19.). 

Plaintiff’s request for damages relating to improper disclosures under TILA is subject to a oneyear statute of limitations, typically running from the date of loan execution. See 15 U.S.C. §1640(e)

Case 3:09-cv-00043-JM-BLM Document 36 Filed 06/11/09 Page 4 of 9
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(any claim under this provision must be made “within one year from the date of the occurrence of the

violation.”). Plaintiff alleges the loan closed on August 7, 2006. (Compl. at ¶ 12.) The instant suit

was not filed until October 9, 2008, well over two years later. (Compl. Summons.) Plaintiff fails to

state relevant facts to support a TILA claim, and has not demonstrated any entitlement to equitable

tolling. For these reasons, Plaintiff’s claim against Decision One for damages under TILA is

dismissed.

Decision One argues Plaintiff’s request for rescission under TILA, 15 U.S.C. § 1635, fails as

a matter of law because this provision does not apply to Plaintiffs’ loan. Residential mortgage

transactions are expressly excluded from TILA’s rescission provisions. See 15 US.C. § 1635(e)(1).

A “residential mortgage transaction” is defined by 15 U.S.C. § 1602(w) to include “a mortgage, deed

of trust, ... or equivalent consensual security interest...created...against the consumer’s dwelling to

finance the acquisition...of such dwelling.” Thus, while home equity loans and refinancing

transactions could be amenable to rescission, Plaintiff’s purchase money mortgage for is not. (See

Compl. at ¶ 14.) Plaintiff’s TILA rescission claim is therefore dismissed.

In her RESPA claim, Plaintiff alleges Defendants violated section 8(a), 12 U.S.C. § 2607(a),

by giving and accepting improper fees or kickbacks, by “driving up settlement costs, by failing to

disclose business relationships between service providers, by failing to properly follow notice of

transfer provisions, [and] by failing to properly inform Plaintiff about all closing costs.” (Compl. at

¶ 84.) Decision One argues Plaintiff’s claim fails because there is no private right of action under

RESPA’s section 4 disclosure provision, 12 U.S.C. § 2603. This assessment is correct. Even if the

court were to construe the claim as falling under section 8, which does provide a private right of

action, Plaintiff’s RESPA claim would be precluded by the applicable one-year statute of limitations

under 12 U.S.C. § 2614. In either case, Plaintiff fails to state a claim against Decision One under

RESPA, and the claim is therefore dismissed.

 D. Negligence and Negligent Infliction of Emotional Distress

“Negligent infliction of emotional distress is not an independent tort; it is the tort of negligence

to which the traditional elements of duty, breach of duty, causation, and damages apply.” Ess v.

Eskaton Properties, Inc., 97 Cal.App.4th 120, 126 (2002)(citing Marlene F. v Affiliated Psychiatric

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Med. Clinic, Inc., 48 Cal.3d 583, 588 (1989)). For both causes of action, then, a plaintiff must allege

a valid legal duty owed by the defendants. Here, Plaintiff argues Defendants owed her a “duty...of

due care,” and in particular, a “duty to exercise reasonable care and skill in performing their duties”

for her benefit. (Compl. at ¶¶ 47, 52.) Generally, barring an assumption of duty or a special

relationship, “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 for the benefit of the borrower, no such

duty is imposed on a lender. UMET Trust v. Santa Monica Med. Inv. Co., 140 Cal.App.3d 864, 872-

73 (1983); Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 476 (1989)(citing Downey v. Humphreys,

102 Cal.App.2d 323, 332 (1951))(“‘A debt is not a trust and there is not a fiduciary relation between

debtor and creditor as such.’ The same principle should apply with even greater clarity to the

relationship between a bank and its loan customers.”). 

Decision One offers that it acted as the lender in this transaction, a characterization unopposed

by Plaintiff. (Mot. at 6.) Plaintiff has not alleged any duty for Decision One that has been imposed

by law, assumed by Decision One, or created by a special relationship with Plaintiff. Thus, Plaintiff’s

claims for negligence and negligent infliction of emotional distress against Decision One are

dismissed.

 E. Quiet Title and Slander of Title

Plaintiff seeks to quiet title in the property as against each defendant, and argues “[t]he

foreclosure of the Subject Property is wrongful and should be voided by virtue of Defendants’

fraudulent conduct...and by reason of the defective Deeds of Trust.” (Compl. at ¶ 91.) In order to

adequately allege a cause of action to quiet title, a plaintiff’s pleadings must include a description of

“[t]he title of the plaintiff as to which a determination...is sought and the basis of the title...” and “[t]he

adverse claims to the title of the plaintiff against which a determination is sought.” Cal. Code Civ.

Proc. § 761.020. A plaintiff is required to name the “specific adverse claims” that form the basis of

the property dispute. See Cal. Code Civ. Proc. § 761.020, cmt. at ¶ 3. None of Plaintiff’s allegations

show any adverse claims; the recorded Notices do not affect Plaintiff’s title, ownership, or possession

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in the Property. As discussed herein, Plaintiff has not adequately alleged any fraudulent conduct

which might serve as a basis for the cause of action. Finally, in California, a quiet title pleading must

be verified through a sworn statement; Plaintiff’s Complaint is unverified. The cause of action to

quiet title against Decision One is therefore dismissed.

In her “slander of title” claim, Plaintiff avers ReconTrust, acting as an agent for MERS and

unnamed in this action, “wrongfully and without privilege” caused recordation of the Notice of

Default, in violation of Cal. Civ. Code § 2924. (Compl. at ¶¶ 95-98.) Slander of title is a “tortious

injury to property resulting from unprivileged, false, malicious publication of disparaging statements

regarding the title to property owned by plaintiff, to plaintiff’s damage.” Southcott v. Pioneer Title

Co., 203 Cal.App.2d 673, 676. A disparaging statement is one intended to cast doubt the existence

or extent of one’s interest in the property. Glass v. Gulf Oil Corp., 12 Cal.App.3d 412, 423.

However, not only does Plaintiff fail to allege any relevant conduct by Decision One, the recorded

Notices are likely privileged and otherwise do not cast any doubt as to the ownership of Plaintiff’s

property. See Kachlon v. Markowitz, 168 Cal.App.4th 316, 333 (2008). Thus, as Plaintiff has failed

to allege any qualifying statements, her slander of title cause of action against Decision One is

dismissed.

 F. Cancellation of Deed of Trust Based on Fraud and Impossibility 

Plaintiff offers that, because Defendants “fabricated and submitted falsified loan documents”

and because Plaintiff “lacked ability to perform the loan,” the loan contracts and Promissory Notes

are null and void. (Compl. at ¶ 88.) Consequently, Plaintiff asks the court to cancel the Deeds of

Trust. While fraudulent loan documents might provide grounds for loan cancellation, as stated above,

Plaintiff’s Complaint fails to meet the fraud pleading standards of Rule 9(b). Further, Plaintiff’s

inability to perform the obligations to which she agreed, without more, does not provide a basis for

cancellation of the loan. Plaintiff’s claim for cancellation against Decision One is dismissed.

 G. Injunctive Relief

Finally, Plaintiff seeks injunctive relief to forestall any foreclosure sale but does not offer any

particular supporting cause of action. A request for injunctive relief by itself does not state a cause

of action and is properly brought before the court as a separate motion. Shamsian v. Atl. Richfield

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Co., 107 Cal.App.4th 967, 984-85 (2003). As the discussion above outlines, Plaintiff has failed to

demonstrate a likelihood of success on any asserted claims and is therefore not entitled to injunctive

relief based on her pleadings.

III. Plaintiff’s Request to File an Amended Complaint

Rather than opposing Decision One’s motion, Plaintiff merely argues that the “technical

complexities” of the underlying loan transaction warrant giving her additional time to “formulate,

revise, and file a first amended complaint.” (Opp. at 2, 3.) Decision One opposes Plaintiff’s request.

(Reply at 1.) As Decision One accurately observes, Plaintiff has missed her opportunity to amend

without leave of court, since several defendants have filed responsive pleadings. Therefore, the

request is considered under Rule 15(a)(2).

The Federal Rules of Civil Procedure (“FRCP”) allow amendment of a pleading once as a

matter of right “at any time before a responsive pleading is served . . . . Otherwise a party may amend

the party’s pleading only by leave of court or by written consent of the adverse party; and leave shall

be freely given when justice so requires.” Fed. R. Civ. P. 15(a). In determining whether to grant leave

to amend, the court generally considers: “(1) undue delay; (2) bad faith; (3) futility of amendment;

and (4) prejudice to the opposing party.” Hurn v. Retirement Fund Trust, 648 F.2d 1252, 1254 (9th

Cir. 1981) (citing Howey v. U.S., 481 F.2d 1187, 1190 (9th Cir. 1973)). Although the court’s ruling

on Decision One’s motion, discussed above, could render Plaintiff’s request moot, the court is

obligated to consider the request on its merits. See Forman v. Davis, 371 U.S. 178, 182 (1962)

(“refusal to grant the leave without any justifying reason appearing for the denial is...an abuse

of...discretion....”); Pure Country, Inc. v. Sigma Chi Fraternity, 312 F.3d 952, 956 (8th Cir. 2002)

(court’s denial of plaintiff’s motion to amend as moot after granting defendant’s motion to dismiss was

an abuse of discretion).

 On review of the record in this case, the court finds Plaintiff has unduly delayed the

prosecution of this matter. Plaintiff’s case has been pending in this court for six months and she has

generally failed to oppose any motion or otherwise diligently pursue her claims. In particular, the

court gave Plaintiff a clear opportunity to amend when it granted the motion to dismiss by

Countrywide and MERS, yet Plaintiff did not file a First Amended Complaint at that time. Plaintiff’s

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Decision One asks that any Rule 15 amendment be conditioned on an award of costs. (Reply

at 5.) Since the court denies the Rule 15 request, it declines to address Decision One’s request for

costs.

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eleventh hour request hints of a bad faith attempt to further delay foreclosure proceedings on her

property. In addition, the court finds granting leave would be futile because the RICO and fraud

claims Plaintiff anticipates amending fail to allege the most basic elements. Based on the pleadings

and Plaintiff’s comments in support of her request, the court sees no reason to believe Plaintiff could

correct those deficiencies. Plaintiff’s request for leave to file an amended complaint is therefore

DENIED.

1

CONCLUSION

For the reasons set forth above, the motion for judgment on the pleadings is GRANTED.

(Doc. No. 25.) All claims against Decision One are DISMISSED. Plaintiff’s request for leave to file

an amended complaint is DENIED. (Doc. No. 32.) The court instructs the Clerk of Court to enter

judgment in favor of Decision One.

IT IS SO ORDERED.

DATED: June 11, 2009

 Hon. Jeffrey T. Miller

 United States District Judge

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