Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02100/USCOURTS-caed-2_08-cv-02100-4/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 28:1441 Petition for Removal- Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

MARCELA VASCONCELOS-FLOREZ,

Plaintiff, No. CIV S-08-2100 GEB DAD PS

vs.

WORLD SAVINGS BANK, et al., FINDINGS & RECOMMENDATIONS

Defendants.

 /

This matter came before the court on June 12, 2009, for hearing of defendants’

motion to dismiss plaintiff’s second amended complaint. Plaintiff Marcela Vasconcelos-Florez,

proceeding pro se, appeared on her own behalf. Plaintiff was accompanied by Edgar Hilbert,

who served as a Spanish interpreter for plaintiff. Christopher A. Carr, Esq. appeared

telephonically for defendants.

Plaintiff was heard with regard to her failure to file written opposition to

defendants’ motion. In the interests of justice, the court granted plaintiff an additional two weeks

to file opposition to the motion. With the filing of plaintiff’s opposition and defendants’ reply,

the matter stood submitted. Upon consideration of defendants’ motion, the parties’ briefs, oral

argument, and the entire file, the undersigned recommends that defendants’ motion be granted

without leave to amend.

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BACKGROUND

On August 7, 2008, plaintiff commenced this action by filing a voluminous pro se

complaint in San Joaquin County Superior Court. (Notice of Removal (Doc. No. 1), Ex. A.) On

September 5, 2008, defendants Wachovia Mortgage, FSB, formerly known as World Savings

Bank, FSB, and Golden West Savings Association Service Co. removed the case to the district

court on the ground that federal jurisdiction arises from plaintiff’s allegation of claims based on

federal laws. (Id. at 2.) Specifically, defendants cited plaintiff’s claims of mail fraud in violation

of 18 U.S.C. § 1341 and loan sharking (RICO) in violation of 18 U.S.C. § 1962. (Id., citing Ex.

A at 6, 8.)

Immediately after removal, defendants filed their first motion to dismiss. After

hearing oral argument on defendants’ motion, the undersigned granted defendants’ motion with

leave to amend. (Order filed Nov. 24, 2008 (Doc. No. 16).) Plaintiff was advised that in an

amended complaint, each claim and the involvement of each defendant must be sufficiently

alleged. See Local Rule 220 (requiring that an amended complaint be complete in itself without

reference to any prior complaint). Plaintiff was directed to include clear and concise but

complete factual allegations describing the conduct and events that underlie her claims. Plaintiff

was informed that important exhibits could be attached to the amended complaint if the exhibits

serve to explain plaintiff’s allegations.

Plaintiff filed her first amended complaint on December 22, 2008 (Doc. No. 21). 

On January 12, 2009, defendants moved to dismiss the first amended complaint (Doc. No. 24). 

After hearing the motion on February 27, 2009, the undersigned granted defendants’ motion,

with leave to file a second amended complaint. (Order filed Mar. 2, 2009 (Doc. No. 27).)

Plaintiff filed her second amended complaint on April 10, 2009 (Doc. No. 28). 

On May 4, 2009, defendants moved to dismiss the new pleading (Doc. No. 29). Plaintiff did not

file written opposition to defendants’ motion but appeared at the hearing on June 12, 2009, and

claimed that she did not receive defendant’s most recent motion, despite the fact that the motion

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was mailed to her address of record and plaintiff was aware of the hearing. In the interests of

justice, the undersigned granted plaintiff leave to file opposition out of time. Opposition was

filed on June 26, 2009, and defendants’ reply was filed on July 1, 2009.

PLAINTIFFS’ CLAIMS

In her second amended complaint, plaintiff alleges in conclusory fashion as

follows. She was a customer of defendant World Savings Bank and took out a $240,000 home

mortgage in 2003. She made mortgage payments for five years. In 2008, she telephoned

defendants to request refinancing due to personal circumstances, but her request was refused. 

Prior to 2008, defendants called plaintiff’s home several times to ask her whether she was

interested in taking out a $50,000 line of credit. The caller represented to plaintiff that a line of

credit is just like a credit card. The caller did not inform plaintiff that the line of credit would

require use of her house as security. Had plaintiff known the line-of-credit offer was basically a

second mortgage, she would not have taken the offer. Plaintiff does not recall signing loan

documents stating that her home was security for her line of credit, and defendants have not

provided her with copies of documents signed by her showing that she agreed to put her house up

as security for the loan. Plaintiff made all payments on her line of credit until her wallet was

stolen. She stopped making payments “for 2-3 months.” When she attempted to pay the balance

owed on the line-of-credit loan, defendants’ representatives notified her that due to her

delinquency her house had been foreclosed. The loss of her home in foreclosure caused plaintiff

extreme emotional distress. She seeks “all damages allowed by law and equity for defendant’s

conduct, including rescission of the contract.” (Second Am. Compl. at 1-2.)

ARGUMENTS OF THE PARTIES

Defendants seek dismissal of plaintiff’s second amended complaint pursuant to

Federal Rule of Civil Procedure 12(b)(6) on the grounds that the pleading fails to state any claim

upon which relief may be granted and that, to the extent the pleading attempts to state a claim for

fraud, it does not satisfy the particularity requirements of Federal Rule of Civil Procedure 9. 

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Defendants note that plaintiff’s original and first amended complaints alleged violations of

federal laws but her second amended complaint does not mention any federal statute and

therefore, since this action was removed from state court on the basis of federal question

jurisdiction, the court must consider whether federal jurisdiction still exists.

In support of their Rule 12(b)(6) motion, defendants observe that the second

amended complaint pleads almost no facts and the few facts alleged are legally insufficient to

state any claim upon which relief may be granted. Defendants contend that, at best, the pleading

appears to be an effort to state a claim for common law misrepresentation, i.e., fraud, although

the pleading falls far short of meeting the Rule 9 standard for pleading such a claim. Defendants

also argue that plaintiff’s allegations concerning the alleged misrepresentation strain credulity

and fail to establish justifiable reliance. Defendants argue further that plaintiff’s claims against

defendant Golden West Savings Association Service Co. should be dismissed because this

defendant’s role as trustee under the foreclosed deed of trust provides no basis for liability on its

part to plaintiff.

In opposition, plaintiff contends that she has clearly stated her legal claim but

wants to revise her prayer for relief to claim actual damages for loss of vehicles, loss of antique

furniture and family heirlooms, as well as “special damages, tort damages, pain-and-suffering

with intentional affliction of psychological distress, and punitive damages.” (Pl.’s Opp’n (Doc.

No. 31), at 2.) Plaintiff seeks millions of dollars in damages and asks that her house returned to

her with “quiet title.” (Id.) Plaintiff contends that her “cause-of-action, legal claim, and/or

claim-for-relief is gross misrepresentation; breach of professional ethics; gross consumer neglect;

gross consumer fraud; gross real estate fraud; intentional harassment and miscarriage-of-justice

by so-called agents and affiliates.” (Id. at 2-3.) Plaintiff asserts that “[n]egligence and

occurrences of fraud” were so continuous that, in her words,

I had to rely on my own instincts to assume “intent”. Being an

unmarried Hispanic woman, I rely on my instincts to assume

racism, “redlining”, and homeowner-targeting, which is defined in

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the law books. I was “targeted”, because I appeared to be alone,

and vulnerable; and I cannot speak, read, or write English fluently.

(Id. at 3.) Plaintiff claims that the President of the United States “recently wrote into Law that

Mortgage contracts given to Spanish-speaking people, all over the United States, must be

translated into Spanish, now” and her “guess” is that the new law is retroactive and now applies

to her. She complains that defendants never presented anything to her in Spanish, and asserts

that the contract she signed is not the same contract that has been sent to her as a copy of the

original equity line-of-credit contract. Plaintiff concludes that these circumstances demonstrate a

violation of the Truth in Lending Act and warrant rescission. (Id.)

Plaintiff alleges that the equity line-of-credit checks she received were “disguised”

as her personal checks and she received them instead of the one check for $50,000 that she

should have received “to secure the HELOC/second mortgage.” (Id. at 4.) Plaintiff also

complains of being manhandled by authorities when she was evicted and of constant harassment,

humiliation, and intimidation, in violation of RICO and laws governing use of the mail and the

internet. In this regard, plaintiff asserts that her “additional legal claim is still ‘Violation of

RICO’, and ‘Consumer Fraud of RICO’.” (Id.)

LEGAL STANDARDS APPLICABLE TO DEFENDANTS’ MOTION

The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal

sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir.

1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of

sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901

F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to

relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus,

a defendant’s Rule 12(b)(6) motion challenges the court’s ability to grant any relief on the

plaintiff’s claims, even if the plaintiff’s allegations are true.

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In determining whether a complaint states a claim on which relief may be granted,

the court accepts as true the allegations in the complaint and construes the allegations in the light

most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v.

United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less

stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519,

520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the

form of factual allegations. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). The

court is permitted to consider material which is properly submitted as part of the complaint,

documents not physically attached to the complaint if their authenticity is not contested and the

plaintiff’s complaint necessarily relies on them, and matters of public record. Lee v. City of Los

Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).

Federal Rule of Civil Procedure 9, titled “Pleading Special Matters,” provides as

follows with regard to claims of “Fraud, Mistake, Condition of the Mind”:

In all averments of fraud or mistake, the circumstances constituting

fraud or mistake shall be stated with particularity. Malice, intent,

knowledge, and other condition of mind of a person may be

averred generally.

Fed. R. Civ. P. 9(b). “Rule 9(b) serves not only to give notice to defendants of the specific

fraudulent conduct against which they must defend, but also ‘to deter the filing of complaints as a

pretext for the discovery of unknown wrongs, to protect [defendants] from the harm that comes

from being subject to fraud charges, and to prohibit plaintiffs from unilaterally imposing upon

the court, the parties and society enormous social and economic costs absent some factual

basis.’” Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001) (quoting In re Stac Elec.

Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996)). Accordingly, pursuant to Rule 9(b), a plaintiff

at a minimum must plead evidentiary facts such as the time, place, persons, statements and

explanations of why allegedly misleading statements are misleading. In re GlenFed, Inc. Sec.

Litig., 42 F. 3d 1541, 1547 n.7 (9th Cir. 1994); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d

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 In addition, “[u]nder California law, the ‘indispensable elements of a fraud claim 1

include a false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and

damages.’” Vess, 317 F.3d at 1105 (quoting Moore v. Brewster, 96 F.3d 1240, 1245 (9th Cir.

1996)).

 In the order dismissing plaintiff’s original complaint with leave to amend, the court

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advised plaintiff that an amended complaint supersedes the previous complaint, each claim must

be alleged in the amended complaint, the amended complaint must be complete in itself without

reference to any prior complaint, and the amended complaint must contain clear and concise but

complete factual allegations describing the conduct and events that underlie the claims. (Order

filed Nov. 24, 2009 (Doc. No. 16) at 1-2.)

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1097, 1106 (9th Cir. 2003); Decker v. Glenfed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994) (“The

plaintiff must set forth what is false or misleading about a statement, and why it is false.”); Fecht

v. Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995). Furthermore, “Rule 9(b) does not allow a 1

complaint to merely lump multiple defendants together but require[s] plaintiffs to differentiate

their allegations when suing more than one defendant . . . an inform each defendant separately of

the allegations surrounding his alleged participation in the fraud.” Swartz v. KPMG LLP, 476

F.3d 756, 765-66 (9th Cir. 2007). 

To state a cognizable claim for intentional infliction of emotional distress under

California law a plaintiff must allege: (1) extreme and outrageous conduct by the defendant with

the intention of causing, or reckless disregard of the probability of causing, emotional distress;

(2) plaintiff’s suffering of severe or extreme emotional distress; (3) and actual and proximate

causation of the emotional distress by the defendant’s outrageous conduct. Christensen v. Super.

Ct., 54 Cal. 3d 868, 903 (1991); Cervantez v. J.C. Penney Co., 24 Cal. 3d 579, 593 (1979).

ANALYSIS

The court finds it difficult to discern legal claims in plaintiff’s brief and vague

second amended complaint, other than one act of alleged misrepresentation, possible fraud, and

infliction of emotional distress.2

In her conclusory opposition to defendants’ motion to dismiss, plaintiff argues

that her legal claims are for gross misrepresentation; breach of professional ethics; gross

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consumer neglect; gross consumer fraud; gross real estate fraud; intentional harassment;

miscarriage-of-justice; negligence; fraud; failure to provide documents translated into Spanish;

failure to provide a copy of plaintiff’s signed equity line-of-credit contract; provision of equity

line-of-credit checks “disguised” as personal checks; and harassment, humiliation, and

intimidation. However, even if this laundry list of claims had been included in the second

amended complaint, the pleading does not contain sufficient factual allegations to support such

claims.

Plaintiff also argues in her opposition that there were violations of the Truth in

Lending Act (TILA), RICO, and unidentified laws that govern use of the mail and the internet. 

Again, even if these statutes had been cited in her second amended complaint, plaintiff has failed

to allege sufficient facts to support the existence of such violations.

To state a cause of action under RICO, 18 U.S.C. § 1962(c), a plaintiff must

allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (5)

causing injury to plaintiff’s business or property. Living Designs, Inc. v. E.I. Dupont de

Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005). In her second amended complaint, plaintiff

has not alleged the existence of a RICO enterprise and has not identified predicate acts allegedly

committed by defendants. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).

To state a claim for rescission under TILA, the plaintiff must allege that she is

able to tender the proceeds of her loan. See Yamamoto v. Bank of New York, 329 F.3d 1167,

1171 (9th Cir. 2003) (holding that rescission under TILA “should be conditioned on repayment

of the amounts advanced by the lender” and explaining that, because rescission is a remedy that

restores the status quo ante, a borrower seeking rescission is required to allege ability to tender

the loan proceeds). There is no such allegation in the second amended complaint.

To the extent plaintiff has attempted to allege a claim for intentional infliction of

emotional distress under California law, plaintiff has failed to state a cognizable claim because

her second amended complaint does not allege facts suggesting that any conduct engaged in by

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 See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (on a motion to 3

dismiss, court may consider matters of public record); MGIC Indem. Corp. v. Weisman, 803 F.2d

500, 504 (9th Cir. 1986) (on a motion to dismiss, the court may take judicial notice of matters of

public record outside the pleadings).

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defendants was extreme or outrageous. Nor does the complaint allege specific facts showing that

defendants acted with the requisite intent or that plaintiff suffered severe or extreme emotional

distress as a result of defendants’ specific conduct. Instead, in her prayer for relief plaintiff

merely states that she is seeking “all damages allowed by law and equity for defendant’s conduct,

including rescission of the contract.” (Second Amended Compl. (Doc. No. 28 at 2.) 

Plaintiff’s second amended complaint may be seen as attempting to state a claim

of fraud against the defendants. However, plaintiff has alleged merely that “the Defendants

called [her] home several times inquiring about [her] interest to take out a $50,000 credit line”

and that “[t]he male caller represented to [her] that the line of credit was just like a credit card”

and “made no attempt to inform [her] that the credit line used my house as security.” (Id.) 

Plaintiff appears to be suggesting that she agreed to take out a $50,000 line of credit from the

bank in reliance on several phone conversations with a stranger, did not review the papers that

were sent to her for signature, and wrote checks on the line of credit with the belief that

defendants had provided her with a credit card funded by an unsecured $50,000 loan. This is

simply not a plausible claim.

Plaintiff has also alleged that she has no recollection of signing loan documents

agreeing that her home would be the security for her equity line of credit and that defendants

have not provided her with copies of the signed documents in which she entered into such an

agreement. The court takes judicial notice of exhibits attached to plaintiff’s first amended

complaint. (Doc. No. 21.) Exhibit C-1 to the amended complaint is an unsigned copy of a deed 3

of trust prepared for plaintiff’s signature and providing plaintiff’s home as “security for an equity

line of credit agreement” entered into by plaintiff on February 14, 2006. The document clearly

provides that plaintiff’s home will serve as the security for her equity line of credit.

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Finally, plaintiff’s conclusory suggestions of fraud are insufficient under Federal

Rule of Civil Procedure 9(b). As noted above, Rule 9(b) requires a party to “state with

particularity the circumstances constituting fraud.” This, plaintiff has failed to do. The court

may dismiss a fraud claim when its allegations fail to meet the required pleading standard. Vess,

317 F.3d at 1107; see also Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (“fraud

allegations must be accompanied by ‘the who, what, when, where, and how’ of the misconduct

alleged”). Here, plaintiff’s second amended complaint not only fails to meet the Rule 9(b)

standards governing complaints alleging fraud, it is so incomplete that the pleading fails to state

any claim for relief.

The undersigned has carefully considered whether plaintiff may amend her

complaint to state any claim upon which relief can be granted. “Valid reasons for denying leave

to amend include undue delay, bad faith, prejudice, and futility.” California Architectural Bldg.

Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1988). See also Klamath-Lake

Pharm. Ass’n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983) (holding that,

while leave to amend shall be freely given, the court does not have to allow futile amendments).

Plaintiff has already amended her complaint twice, and it appears that further amendment would

be futile. At the core of plaintiff’s pleading is her contention that defendants engaged in

misrepresentation and fraud that resulted in plaintiff’s loss of her home. The undersigned finds it

unlikely that plaintiff can draft a further amended complaint with sufficient factual allegations to

state a cognizable claim. Rather, the consistently vague nature of plaintiff’s fraud claims

suggests that plaintiff is unable to plead her claims with greater particularity.

CONCLUSION 

Accordingly, IT IS RECOMMENDED that:

1. Defendants’ May 4, 2009 motion to dismiss (Doc. No. 29) be granted; and

2. Plaintiff’s second amended complaint be dismissed without leave to amend

and this case be closed. 

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These findings and recommendations will be submitted to the United States

District Judge assigned to this case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within

seven days after being served with these findings and recommendations, any party may file and

serve written objections with the court. A document containing objections should be titled

“Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to objections

shall be filed and served within seven days after the objections are served. The parties are

advised that failure to file objections within the specified time may, under certain circumstances,

waive the right to appeal the District Court’s order. See Martinez v. Ylst, 951 F.2d 1153 (9th

Cir. 1991).

DATED: March 9, 2010.

DAD:kw

Ddad1\orders.prose\vasconcelosflorez2100.f&r.mtd3

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