Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00219/USCOURTS-casd-3_17-cv-00219-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RODNEY L. HINRICHSEN and 

DEBORAH A. HINRICHSEN,

Plaintiffs,

Case No. 17-cv-0219 DMS (RBB)

ORDER GRANTING IN PART 

AND DENYING IN PART 

DEFENDANTS’ MOTIONS TO 

DISMISS

v.

BANK OF AMERICA, N.A. ET 

AL.,

Defendants.

Pending before the Court are Defendants Bank of America, N.A. (“BofA”)

and MTC Financial, Inc. dba Trustee Corps (“MTC”)’s motions to dismiss Plaintiffs 

Rodney L. Hinrichsen and Deborah A. Hinrichsen’s Complaint pursuant to Federal 

Rule of Civil Procedure 12(b)(6). Plaintiffs filed an opposition, and Defendants filed 

replies. For the reasons set forth below, Defendants’ motions to dismiss are granted

in part and denied in part.

I.

BACKGROUND

This lawsuit arises out of Defendants’ attempt to foreclose on Plaintiffs’ home

through an allegedly void promissory note and deed of trust. Plaintiffs allege they 

refinanced their home by executing a promissory note in the amount of $310,000, 

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secured by a deed of trust in favor of the original lender, MLD Mortgage, Inc. 

(“MLD”). (Compl. ¶ 8; Request for Judicial Notice (“RJN”), Ex. A.) 

Approximately two years after obtaining the loan, Plaintiffs exercised their right of 

rescission under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1635(a) & (f), and 

sent a letter to MLD purporting to rescind the loan on grounds that MLD failed to 

make material disclosures in the loan transaction. (Compl. ¶¶ 8–9.) Plaintiffs allege

the deed of trust and promissory note became void upon exercising their right of

rescission under TILA, 15 U.S.C. § 1635(b). (Id. ¶ 10.) MLD never contested the 

rescission, and a deed of reconveyance was recorded, fully reconveying the property 

to Plaintiffs. (Compl. ¶ 11; RJN, Ex. B.) 

Thereafter, Defendant BofA acquired the loan, discovered the reconveyance

of the property to Plaintiffs, and recorded a rescission of reconveyance, stating the 

deed of reconveyance had been recorded due to inadvertence and mistake, and “[t]he 

obligation under the Note secured by the Deed of Trust was not and is not satisfied.” 

(RJN, Ex. D.) Later, Defendant MTC substituted in as trustee and recorded a notice 

of default and election to sell under deed of trust. (Id., Ex. F.) The notice of default 

reflects a default amount of $111,288.61. (Id.) A notice of trustee’s sale was 

recorded on January 30, 2017. (Id., Ex. G.) 

In an effort to stop that sale, Plaintiffs filed the instant complaint against BofA 

and MTC, alleging the following five claims: (1) violations of the Fair Debt 

Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e & 1692f(6), (2) violation 

of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), Cal. Civ. Code 

§ 1788.17, (3) violation of California Civil Code § 2924(a)(6), (4) violation of 

California Civil Code § 2924.17(a) & (b), and (5) cancellation of instruments.

MTC requests the Court to take judicial notice of the following documents: 

(1) deed of trust recorded on December 28, 2009 (“Exhibit A”), (2) substitution of 

trustee and reconveyance of property recorded on February 21, 2012 (“Exhibit B”), 

(3) assignment of deed of trust recorded on April 10, 2013 (“Exhibit C”), (4) 

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rescission of reconveyance recorded on June 22, 2015 (“Exhibit D”), (5) substitution 

of trustee recorded on October 25, 2016 (“Exhibit E”), (6) notice of default and 

election to sell under deed of trust recorded on October 25, 2016 (“Exhibit F”), and 

(7) notice of trustee’s sale recorded on January 30, 2017 (“Exhibit G”). Plaintiff 

does not oppose MTC’s request for judicial notice. The Court takes judicial notice 

of the documents pursuant to Federal Rule of Evidence 201(b).1

II.

MOTION TO DISMISS

BofA moves to dismiss all claims. First, BofA argues the debt collection 

claims fail as a matter of law because it did not engage in “debt collection” within 

the meaning of the statutes. Second, it asserts the claims for violations of California 

Civil Code §§ 2924 and 2924.17 fail because these statutes do not allow a right of 

action prior to foreclosure. Third, BofA contends Plaintiffs have failed to allege 

adequate facts to support their claim for cancellation of instruments. MTC also 

moves to dismiss all claims on many of the same grounds.

To determine whether dismissal under Rule 12(b)(6) of the Federal Rules of 

Civil Procedure is proper, the Court must accept as true Plaintiffs’ nonconclusory 

factual allegations, construe all reasonable inferences in favor of Plaintiffs, and 

consider in that light whether the facts are sufficient to state a claim for relief that is 

plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

A. Debt Collection Claims

1. FDCPA Claim Under § 1692e

The FDCPA prohibits debt collectors from engaging in abusive, deceptive, 

and unfair practices in the collection of consumer debts. 15 U.S.C. § 1692. To state 

 

1 Section 201(b) provides for judicial notice of facts that are “not subject to 

reasonable dispute because it: (1) is generally known within the trial court's 

territorial jurisdiction; or (2) can be accurately and readily determined from sources 

whose accuracy cannot reasonably be questioned.”

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a claim under the FDPCA, a plaintiff must allege the following: “(1) the plaintiff has 

been the object of collection activity arising from a consumer debt, (2) the defendant 

attempting to collect the debt qualifies as a debt collector under the FDCPA, and (3) 

the defendant has engaged in a prohibited act or has failed to perform a requirement 

imposed by the FDCPA.” Miner v. Baker, No. 15-CV-2765-JAH (RBB), 2016 WL 

6804440, at *2 (S.D. Cal. Aug. 26, 2016) (citation omitted). Specifically, under 

§ 1692e, a debt collector “may not use any false, deceptive, or misleading 

representation or means in connection with the collection of any debt.” Here, 

Plaintiffs allege Defendants violated § 1692e by falsely representing the character 

and legal status of the debt and threatening to conduct a trustee’s sale based on a 

void deed of trust. 

Defendants correctly argue they are not engaged in “debt collection” as 

contemplated by § 1692e of the FDCPA. The Ninth Circuit in Ho v. ReconTrust 

Co., 840 F.3d 618, 621 (9th Cir. 2016), held that “actions taken to facilitate a nonjudicial foreclosure, such as sending the notice of default and notice of sale, are not 

attempts to collect ‘debt’ as that term is defined by the FDCPA.” The Court reasoned

that “[t]he object of a nonjudicial foreclosure is to retake and resell the security, not 

to collect money[.]” Id. Thus, “debt collection” under the FDCPA—save for one 

provision in the FDCPA discussed below—refers “only to the collection of a money 

debt.” Dowers v. Nationstar Mortgage, LLC, 852 F.3d 964, 970 (9th Cir. 2017). 

The complaint does not allege Defendants engaged in any debt collectionrelated activity. Rather, the complaint focuses solely on Defendants’ alleged 

wrongful enforcement of a void deed of trust, a security interest. Accordingly, 

Defendants’ motions to dismiss the FDCPA claim under § 1692e are granted.

2. FDCPA Claim Under § 1692f(6)

Unlike § 1692e, the definition of debt collector under § 1692f(6) “include[s]

a person enforcing a security interest.” Dowers, 852 F.3d at 971 (citing 15 U.S.C. 

§ 1692a(6)). Section 1692f(6) regulates more than just the collection of a money 

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debt. It prohibits taking nonjudicial action to recover real property as collateral if 

there is not an enforceable security interest. 15 U.S.C. § 1692f(6). 2 Because 

“Section 1692f(6) regulates nonjudicial foreclosure activity,” Defendants cannot 

escape liability on grounds that non-judicial foreclosure is not debt collection under 

the FDCPA. Dowers, 852 F.3d at 971. Further, a trustee can be a debt collector 

under § 1692f(6). Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 990 (9th Cir. 

2017) (holding, “where an entity is engaged solely in the enforcement of a security 

interest and not in debt collection, like the trustee ..., it is subject only to § 1692f(6) 

rather than the full scope of the FDCPA.”).3

 

Here, Plaintiffs allege Defendants threatened to take non-judicial foreclosure 

action to dispossess Plaintiffs of their property based upon a void note and deed of 

trust. (See Compl. ¶ 26) (Defendants violated § 1692f(6) by “threatening to take ... 

non-judicial action to effect dispossession or disablement of property with no right 

to claim the property as collateral through an enforceable security interest since the 

note and deed of trust are void[.]”)). The question becomes whether Plaintiffs have 

alleged sufficient facts to show that Defendants’ security interest is void and confers 

“no present right to possession of the property[,]” thus rendering Defendants’ 

attempt to foreclose violative of § 1692f(6).

/ / /

 

2

 Section 1692f(6) prohibits a debt collector from using unfair or unconscionable 

means to collect or attempt to collect a debt by “[t]aking or threatening to take any 

nonjudicial action to effect dispossession or disablement of property if ... there is no 

present right to possession of the property claimed as collateral through an 

enforceable security interest.” 15 U.S.C. § 1692f(6)(A). 3

 MTC also argues that because it is a “foreclosure trustee,” California’s litigation 

privilege, Cal. Civ. Code §§ 47 and 2924(d), applies and bars the FDCPA claim. “A 

state litigation privilege, however, does not defeat a federal cause of action.” Selby 

v. Bank of Am., Inc., 2010 WL 4347629, at *2 n.1 (S.D. Cal., October 27, 2010)

(citing Pardi v. Kaiser Found. Hosp., 389 F.3d 840, 851 (9th Cir. 2004); see also

Truong v. Mountain Peaks Fin. Servs., Inc., No. 3:12-CV-01681-WQH, 2013 WL 

485763, at *7 (S.D. Cal. Feb. 5, 2013) (similar).

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Defendants argue the note and deed of trust are not void, therefore they have 

an enforceable security interest and right to possession of Plaintiffs’ property. 

Plaintiffs argue the note and deed of trust are void, as they properly rescinded the 

loan under TILA. Plaintiffs’ position finds support in the plain language of TILA

and the Supreme Court’s decision in Jesinoski v. Countrywide Home Loans, Inc.,

135 S. Ct. 790 (2015). 

Congress enacted TILA to protect borrowers by ensuring full “disclosure of 

credit terms so that the consumer will be able to compare more readily the various 

credit terms available to him and avoid the uninformed use of credit[.]” Hauk v. JP 

Morgan Chase Bank USA, 552 F.3d 1114, 1118 (9th Cir. 2009) (quoting 15 U.S.C. 

§ 1601). Accordingly, TILA provides special rescission rights to borrowers for 

certain loans secured by a borrower’s principal dwelling. 15 U.S.C. § 1635(a). “To 

effectuate TILA’s purpose, a court must construe ‘the Act’s provisions liberally in 

favor of the consumer’ and require absolute compliance by creditors.” Hauk, 552 

F.3d at 1118 (citation omitted). 

TILA’s “buyer’s remorse” provision, Semar v. Platte Valley Fed. Sav. & Loan 

Ass’n, 791 F.2d 699, 701 (9th Cir. 1986), grants buyers the right to rescind within 

three days of either consummation of the loan transaction or delivery of certain 

information and rescission forms, whichever is later. 15 U.S.C. § 1635(a). This is 

an “unconditional” right to rescind for three days. Jesinoski, 135 S. Ct. at 792. After 

three days have passed, borrowers may rescind only if the lender failed to satisfy 

TILA’s disclosure requirements. Id. This right of rescission is “conditional”—

premised on the lenders failure to meet disclosure requirements—and must be 

exercised within “three years after the date of consummation of the transaction or 

upon the sale of the property, whichever comes first.” Id. (citing 15 U.S.C. 

§ 1635(f)). 

To exercise the conditional right of rescission under TILA, a borrower need 

only notify the creditor of his intention to rescind (and do so within three years of 

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consummating the loan transaction). Jesinoski, 135 S. Ct at 792. Section 1635(a) 

states unequivocally that a borrower “shall have the right to rescind ... by notifying 

the creditor ... of his intention to do so[.]” This “language leaves no doubt that 

rescission is effected when the borrower notifies the creditor of his intention to 

rescind.” Jesinoski, 135 S. Ct. at 792. The borrower need not take any further action 

to perfect rescission. Id. (holding, “the statute does not also require him to sue within 

three years[,]” or take any other action). Driving home the point, the Supreme Court 

declared:

“The clear import of § 1635(a) is that a borrower need only provide 

written notice to a lender in order to exercise his right to rescind. ...[¶] 

The Jesinoskis mailed [Countrywide] written notice of their intention to 

rescind within three years of their loan’s consummation. ...[T]his is all 

that a borrower must do in order to exercise the right to rescind under the 

Act.”

Jesinoski, 135 S. Ct. at 793.

Once a borrower exercises his or her right of rescission, it is incumbent upon 

the lender to act. “When an obligor exercises his right to rescind ... any security 

interest given by the obligor ... becomes void upon such a rescission.” 15 U.S.C. 

§ 1635(b). Faced with notice of rescission, the lender can unwind the loan by 

returning the borrower’s down payment and taking any other action necessary “to 

reflect the termination of any security interest created under the transaction.” Id.

The borrower then would be required to “tender the property to the creditor[.]” Id. 

Alternatively, the lender can sue and contest the borrower’s right to rescind. See 

Paatalo v. JPMorgan Chase Bank, 146 F. Supp. 3d 1239 (D. Or. 2015) (discussing 

rescission under TILA, Jesinoski, and lender’s options); but see Pauson v. Bayview 

Loan Servicing, LLC, No. C15-5612-RBL, 2016 WL 4528469 (W.D. Wash. Aug. 

30, 2016) (exercise of conditional right of rescission under TILA does not 

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automatically void loan).

4

As noted, a lender may file suit and challenge the borrower’s right to rescind

under TILA on a number of grounds. The loan, for example, may not be of a kind 

contemplated by TILA, as the Act excludes certain loan transactions. See 15 U.S.C. 

§ 1635(e)(1)–(4) (specifying “[e]xempted transactions”). The right of rescission 

does not apply to a residential mortgage to finance the initial acquisition of a home. 

Id. §§ 1635(e)(1) & 1602(x); see Merritt v. Countrywide Fin. Corp., 759 F.3d 1023, 

1029 n.7 (9th Cir. 2014) (“TILA does not apply to residential mortgages used to 

finance the initial acquisition or construction of a dwelling.”) Nor does TILA apply 

to a refinancing “(with no new advances) of the principal balance then due and any 

accrued and unpaid finance charges of an existing extension of credit by the same 

creditor[.]” 15 U.S.C. § 1635(e)(2).5

 The borrower’s conditional right of rescission 

also could be challenged on grounds that all required disclosures were provided by 

the lender or that notice of rescission was not mailed within three years of loan 

consummation. The lender, however, must act to preserve its rights. “[A] timely 

notice of rescission automatically renders the security interest void under section 

1635(b) where the creditor acquiesces in the rescission or ignores it.” U.S. Bank 

N.A. v. Naifeh, 1 Cal. App. 5th 767, 779 (Cal. Ct. App. 2016), review denied (Nov. 

9, 2016) (discussing Jesinoski and rescission under TILA). 

Naifeh pointed out that the lender could contest the notice of rescission and 

ask the court to alter the procedure otherwise dictated by TILA:

“[O]nce the creditor contests the notice of rescission, the court may alter 

the procedure otherwise dictated by the TILA, determine whether there 

were inadequate disclosures that would extend the rescission period to 

three years, and decide whether equity compels a requirement that the 

 

4

 This Court respectfully declines to follow Pauson as it strays from Jesinoski and the 

plain language of TILA. 5

 Regulation Z provides for rescission of a refinance of a residential mortgage by a 

creditor other than the original creditor. See Regulation Z § 226.23(f); Commentary 

to § 226.23(f).

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borrower tender the loan proceeds before the lender returns the amounts 

paid and releases its security interest. ... [¶] [T]he plain language of the 

statute compels the conclusion that a court is empowered to facilitate 

equity in implementing a rescission under the TILA.” 

1 Cal. App. 5th at 781 (quoting 15 U.S.C. § 1635(b) (“The procedures prescribed by 

this subsection shall apply except when otherwise ordered by a court.”)). 

Here, BofA does not contend TILA’s right of rescission does not apply to 

Plaintiffs’ refinance loan. BofA also does not contend MLD took any action to 

defend its interests after receiving Plaintiffs’ notice of rescission. Rather, BofA’s 

principal argument is that Plaintiffs cannot state a claim under TILA, as any such 

claim would be time barred. But Plaintiffs are not alleging a TILA claim against 

MLD (or BofA), nor do they need to. Rather, Plaintiffs are arguing BofA’s security 

interest in the property was void as of the date of the notice of rescission, which 

means MLD had no interest in the property to transfer to BofA. Stated differently, 

Plaintiffs contend they properly rescinded the loan with MLD under TILA’s 

rescission provisions, and having done so, the promissory note and deed of trust 

assigned to BofA by MLD are void and unenforceable. Thus, any argument that a 

TILA claim would be time barred is irrelevant. 

Plaintiffs have alleged they gave notice of rescission within three years of 

consummation of the loan transaction with MLD. (Compl. ¶¶ 8–9). They have 

alleged MLD failed to make disclosures required by law. (Id. ¶ 9) (“On 01/17/12 

plaintiffs rescinded their loan transaction by sending their notice in writing by U.S. 

mail addressed to MLD ... under TILA 15 U.S.C. § 1635(f) because material 

disclosures including the Regulation Z—Truth in Lending Statement and required 

notices of right to cancel were not delivered as mandated by law.”) They have also 

alleged MLD neither took steps to unwind the loan under § 1635(b), nor filed suit to 

challenge the rescission. (Compl. ¶ 11.) Plaintiffs have therefore stated a claim 

under § 1692f(6), as they have adequately alleged that the underlying deed of trust 

is void and Defendants took nonjudicial action to recover real property as collateral 

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without an enforceable security interest. Defendants’ motionsto dismiss the FDCPA 

claim under § 1692f(6) are therefore denied.6

3. RFDCPA Claim

Similar to the FDCPA, the RFDCPA was enacted to “prohibit debt collectors 

from engaging in unfair or deceptive acts or practices in the collection of consumer 

debts.” Cal. Civ. Code § 1788.1. The RFDCPA “mimics or incorporates by 

reference the FDCPA’s requirements ... and makes available the FDCPA’s remedies 

for violations.” Riggs v. Prober & Raphael, 681 F.3d 1097, 1100 (9th Cir. 2012). 

The RFDCPA provides that “every debt collector collecting or attempting to collect 

a consumer debt shall comply with the provisions of Sections 1692b to 1692j.” Cal. 

Civ. Code § 1788.17. Therefore, the RFDCPA requires compliance with the 

FDCPA, and a debt collector that violates the FDCPA also violates the RFDCPA. 

See Cal. Civ. Code § 1788.17; Crockett v. Rash Curtis & Assocs., 929 F. Supp. 2d 

1030, 1033 (N.D. Cal. 2013) (“a claim for violation of Rosenthal Act Section 

1788.17 simply requires showing that a defendant violated any of several provisions 

of the FDCPA.”). Plaintiffs’ RFDCPA claims are based on the same allegations as 

the FDCPA claims. Because Plaintiffs have failed to state a claim under § 1692e of

the FDCPA, their claim under the RFDCPA also fails. See Bourgeois v. Ocwen 

Loan Servicing, LLC, No. 15CV1655-GPC (BLM), 2016 WL 245526, at *12 (S.D. 

Cal. Jan. 21, 2016) (dismissing RFDCPA claim because the plaintiff failed to 

properly plead a FDCPA claim). 

However, because Plaintiffs have stated a claim under § 1692f(6) of the 

FDCPA, that aspect of their claim under the RFDCPA would survive, but only if 

 6

 The Court’s ruling only provides that Plaintiffs have stated a claim sufficient to 

defeat a motion to dismiss. The Court does not address at this stage of the 

proceedings the merits of Plaintiffs’ claims, or any defenses or counterclaims that 

Defendants might pursue with respect to the security interest or underlying debt. 

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Defendants are “debt collectors” under the RFDCPA. Unlike the definition of debt 

collector under the FDCPA, the RFDCPA’s definition does not include a person 

enforcing a security interest. See Pflueger v. Auto Fin. Grp., Inc., No. CV-97-9499 

CAS(CTX), 1999 WL 33740813, at *6 (C.D. Cal. Apr. 26, 1999) (“Although the 

definition of ‘debt’ in the California FDCPA differs slightly from the definition in 

the federal FDCPA, the enforcement of security interests does not fall within the 

scope of ‘debt collection’ as defined in the Act.”); Cal. Civ. Code § 1788.2(c) 

(defining debt collector). As noted, nothing in the complaint suggests Defendants 

are engaged in the business of collecting money debt. 

In addition, Plaintiffs cannot state a claim against MTC because “California 

expressly exempts trustees of deeds of trust from liability under the Rosenthal Act.” 

Ho, 840 F.3d at 623 n.8 (citing Cal. Civ. Code § 2924(b). “The California legislature 

clearly views such trustees as materially different from debt collectors.” Id. 

Defendants’ motions to dismiss the RFDCPA claim are therefore granted. 

B. California Civil Code § 2924(a)(6)

Defendants move to dismiss the § 2924(a)(6) claim on the ground that there 

is no private right of action before foreclosure. 7 California’s non-judicial 

foreclosure statutes, Cal. Civ. Code §§ 2924–2924k, “provide a comprehensive 

framework for the regulation of a nonjudicial foreclosure sale pursuant to a power 

of sale contained in a deed of trust.” Gomes v. Countrywide Home Loans, Inc., 192 

Cal. App. 4th 1149, 1154 (Cal. Ct. App. 2011) (citation omitted). The California 

legislature authorized a private right of action to enjoin a non-judicial trustee’s sale 

where a lender violates any one of nine specified statutory provisions. Cal. Civ. 

Code §§ 2924.12(a)(1) & 2924.19(a)(1). The legislature, however, “did not provide 

 7 MTC also argues the §§ 2924 and 2924.17 claims should be dismissed because 

they are barred by the litigation privilege under California Civil Code §§ 47 & 

2924(b) &(d). Because these claims are dismissed for reasons stated in this Order, 

the Court declines to address this argument.

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for injunctive relief for a violation of section 2924(a)(6)[.]” Lucioni v. Bank of Am., 

N.A., 3 Cal. App. 5th 150, 158 (Cal. Ct. App. 2016) (“under the text of the [statutes], 

a foreclosure may be enjoined due to a material violation of the statutory provisions 

that the Legislature has chosen to list, but not due to a violation of unlisted 

provisions.”). Section 2924 is not one of the nine sections identified in 

§§ 2924.12(a)(1) and 2924.19(a)(1). Because the legislature deliberately chose to 

authorize injunctive relief only for particular violations it identified, but not for a 

violation of § 2924(a)(6), there is no private right of action for injunctive relief or 

any other relief under § 2924(a)(6). In re Bryce C., 12 Cal. 4th 226, 231 (Cal. 1995) 

(“Generally, the expression of some things in a statute implies the exclusion of others 

not expressed.”) (citation omitted). Defendants’ motion to dismiss the § 2924(a)(6) 

claim are granted. 

C. California Civil Code § 2924.17(a) & (b)

Defendants move to dismiss the § 2924.17 claim for the same reasons they

assert against the § 2924 claim. While the California legislature has provided a right 

of action under § 2924.17, the only pre-foreclosure relief provided under the statute 

is for injunctive relief. Cal. Civ. Code § 2924.12(a)(1) & (2). A borrower may 

recover “actual economic damages” resulting from a material violation of § 2924.17 

only “[a]fter a trustee’s deed upon sale has been recorded[.]” Id. § 2924.12(b). 

Plaintiffs do not seek injunctive relief for violation of § 2924.17. Rather, 

Plaintiffs seek only statutory damages pursuant to § 2924.12(b). Plaintiffs, however, 

have not alleged a trustee’s deed upon sale has been recorded or that a foreclosure 

sale has taken place. Because Plaintiffs are pursuing the § 2924.17 claim before 

foreclosure, only injunctive relief is available. See Rae v. Bank of Am., N.A., No. 

CV 16-8932 PA (SSX), 2017 WL 447306, at *4 (C.D. Cal. Feb. 1, 2017) (“Only 

when a trustee’s deed upon sale has been recorded may a borrower seek economic 

damages for a violation of Civil Code section 2924.17.”). Accordingly, Defendants’ 

motions to dismiss the § 2924.17 claim are granted.

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D. Cancellation of Instruments 

Finally, Defendants move to dismiss the claim for cancellation of instruments, 

arguing it is based on a conclusory assertion that the loan is void, and Plaintiffs have 

failed to plead tender, a necessary prerequisite to cancellation. California Civil Code 

§ 3412 provides for the cancellation of a written instrument when there is 

“reasonable apprehension that if left outstanding it may cause serious injury to a 

person against whom it is void or voidable.” Pursuant to this statute, a court “can 

order cancellation of an invalid written instrument that is void or voidable.” Sato v. 

U.S. Bank Trust N.A. for Volt NPL IX Asset Holdings Trust, No. 

CV1308469MMMMRWX, 2014 WL 12589665, at *15 (C.D. Cal. July 14, 2014) 

(citing Compass Bank v. Petersen, 886 F. Supp. 2d 1186, 1194 (C.D. Cal. 2012)). 

To state a claim for cancellation of instrument, “‘plaintiff[s] must show that 

[they] will be injured or prejudiced if the instrument is not cancelled, and that such 

instrument is void or voidable.’” D’Oleire v. Select Portfolio Serv., Inc, No. 

316CV02520GPCNLS, 2016 WL 7188289, at *9 (S.D. Cal. Dec. 12, 2016) (quoting 

Zendejas v. GMAC Wholesale Mortg. Corp., No. 10cv184 OWW, GSA, 2010 WL 

2629899, at *7 (E.D. Cal. June 29, 2010)). A plaintiff must provide facts, “not mere 

conclusions, showing the apparent invalidity of the instrument designated, and point 

out the reason for asserting that it is actually invalid.” Ephraim v. Metro. Trust Co. 

of Cal., 28 Cal. 2d 824, 833 (Cal. Ct. App. 1946). For the reasons discussed above, 

Plaintiffs have stated a plausible claim for cancellation of instruments. Having 

alleged timely rescission of the underlying note and deed of trust with MLD under 

TILA’s statutory scheme, they have stated sufficient facts to show BofA’s assigned 

note and deed of trust are void and that they will be prejudiced if such instruments 

are not cancelled. Further, Plaintiffs need not tender the loan proceeds to BofA to 

effect rescission or preserve such a right. Jesinoski, 135 S. Ct. at 793 (TILA 

“disclaims the common-law condition precedent to rescission at law that the 

borrower tender the proceeds received under the transaction.”) (citing 15 U.S.C. 

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§ 1635(b)).

8

III.

CONCLUSION

Defendants’ motions to dismiss are granted in part and denied in part. 9

 

Specifically, Defendants’ motions to dismiss the first cause of action under FDCPA 

§ 1692(e), second cause of action under the RFDCPA, and third cause of action 

under California Civil Code § 2924(a)(6) are granted without leave to amend. 

Defendants’ motions to dismiss the first cause of action under FDCPA § 1692f(6),

and fifth cause of action for cancellation of instruments are denied. Defendants’ 

motions to dismiss the fourth cause of action under California Civil Code § 2924.17 

are granted with leave to amend. If Plaintiffs elect to file a First Amended 

Complaint, they must do so by May 23, 2017.

IT IS SO ORDERED.

Dated: May 9, 2017

 

8 Section 1635(b) provides: “Upon the performance of the creditor’s obligations 

under this section, the obligor shall tender the property to the creditor.” In other 

words, the borrower need not tender until the creditor first performs. 15 U.S.C. 

§ 1635(b).

9 Plaintiffs’ Request for Notice of Lis Pendens is denied. See California Code of 

Civ. Proc. §§ 405.21 & 405.4 (authorizing lis pendens for real property claims not 

present here). 

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