Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_09-cv-01660/USCOURTS-cand-5_09-cv-01660-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 15:1601 Truth in Lending

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United States District Court

For the Northern District of California

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1 Although defendant T.D. Service Company purports to join in NCB’s and

E*Trade’s motions, it previously filed an answer to the FAC. (Docket No. 20). 

Accordingly, the purported joinder is untimely. See Fed. R. Civ. P. 12(b) (“A motion [to

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

GERALD ANUDOKEM,

Plaintiff,

 v.

AMERICAN HOME MORTGAGE

SERVICING, INC., E*TRADE BANK,

AMERICAN BROKERS CONDUIT,

NATIONAL CITY MORTGAGE A

DIVISION OF NATIONAL CITY BANK

OF INDIANA, T.D. SERVICE COMPANY,

AHMSI DEFAULT SERVICES,

MORTGAGE ELECTRONIC

RECORDING SYSTEM, INC.,

CALIFORNIA HOME LOANS, TERRY W.,

DAVIS, PETER RUA and DOES 1-20 inclusive,

Defendants.

 /

No. C09-01660 HRL

ORDER (1) GRANTING IN PART AND

DENYING PART DEFENDANTS’

MOTION TO DISMISS WITH LEAVE

TO AMEND; AND (2) GRANTING IN

PART AND DENYING IN PART

DEFENDANTS’ MOTION TO STRIKE

[Re: Docket Nos. 21, 22]

Plaintiff sues for alleged statutory and common law violations in connection with two

loans refinancing his home mortgage. Pursuant to Fed. R. Civ. P. 12(b)(6), defendants E*Trade

Bank (“E*Trade”) and National City Bank (“NCB”) move to dismiss the First Amended

Complaint (“FAC”), or alternatively, for a more definite statement under Fed. R. Civ. P. 12(e). 

They also move under Fed. R. Civ. P. 12(f) to strike plaintiff’s claims for attorney’s fees, as

well as punitive and exemplary damages.1

 Plaintiff opposes the motion. All parties who have

*E-FILED 02-09-2010*

Case 5:09-cv-01660-HRL Document 36 Filed 02/09/10 Page 1 of 9
United States District Court

For the Northern District of California

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dismiss] must be made before pleading if a responsive pleading is allowed.”).

2 Defendants belatedly filed their reply brief. Although it has accepted and

considered the papers, the court does not condone their failure to comply with the Civil

Local Rules and warns defendants against future non-compliance.

2

appeared in this matter have expressly consented that all proceedings in this matter may be

heard and finally adjudicated by the undersigned. See 28 U.S.C. § 636(c); FED. R. CIV. P. 73. 

Upon consideration of the moving and responding papers, as well as the arguments of counsel,

this court issue the following order.2

LEGAL STANDARD

A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) tests

the legal sufficiency of the claims in the complaint. “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). Documents

which properly are the subject of judicial notice may be considered along with the complaint

when deciding a Fed. R. Civ. P. 12(b)(6) motion for failure to state a claim for relief. See

MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).

In such a motion, all material allegations in the complaint must be taken as true and

construed in the light most favorable to the claimant. See Balistreri, 901 F.2d at 699. However,

“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Morever, “the

court is not required to accept legal conclusions cast in the form of factual allegations if those

conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness

Network, 18 F.3d 752, 754-55 (9th Cir. 1994).

Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the

claim showing that the pleader is entitled to relief.” This means that the “[f]actual allegations

must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted); see

also Iqbal, 129 S. Ct. at 1950 (“[O]nly a complaint that states a plausible claim for relief

survives a motion to dismiss.”). However, a complaint attacked by a Rule 12(b)(6) motion to

Case 5:09-cv-01660-HRL Document 36 Filed 02/09/10 Page 2 of 9
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3

dismiss does not need detailed factual allegations and “heightened fact pleading of specifics” is

not required to survive a motion to dismiss. Bell Atlantic Corp., 550 U.S. at 570. Rather, the

complaint need only give “enough facts to state a claim to relief that is plausible on its face.” 

Id.

DISCUSSION

A. Defendants’ Motion to Dismiss

1. TILA Rescission

Defendants moved to dismiss plaintiff’s TILA rescission claim on the ground that it is

untimely. However, at the motion hearing, defendants agreed that, by virtue of the filing of the

instant lawsuit on April 15, 2009, plaintiff timely requested rescission within the three-year

statute of limitations. They further agreed that the filing of the instant action is effective notice

of rescission. Accordingly, as to this issue, their motion is denied.

2. TILA Damages

Defendants nonetheless maintain that plaintiff’s damages claim is time-barred. Claims

for damages under TILA are barred by a one-year statute of limitations, which begins to run

“from the date of consummation of the transaction.” See King v. California, 784 F.2d 910, 915

(9th Cir.1986); see also 15 U.S.C. § 1640(e). In the instant case, plaintiff’s TILA claims arose,

at the latest, at the closing of the loan transactions on April 21, 2006. (FAC ¶ 32). He did not

file the instant action until April 15, 2009, nearly two years after the limitations period expired. 

Nevertheless, “equitable tolling may, in the appropriate circumstances, suspend the limitations

period until the borrower discovers or had reasonable opportunity to discover the fraud or

nondisclosures that form the basis of the TILA action.” King, 784 F.2d at 915. A motion to

dismiss on statute of limitations grounds should be granted only when the assertions of the

complaint, read with the required liberality, would not permit the plaintiff to prove that the

limitations period was tolled. See Plascencia v. Lending 1st Mortgage, 583 F. Supp.2d 1090,

1097 (N.D. Cal. 2008). Here, plaintiff essentially alleges his ignorance of the law and

defendants’ failure to make required disclosures. Such allegations, standing alone, have been

held insufficient to plausibly state a basis for tolling. See, e.g., Valdez v. America’s Wholesale

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Lender, No. C09-02778JF, 2009 WL 5114305 *6 (N.D. Cal., Dec. 18, 2009) (“If the Court were

to accept the FAC’s allegations of ignorance of the law until informed by counsel as sufficient

for a pleading of equitable tolling, every plaintiff could assert the same allegation, and TILA’s

statute of limitations provision would have no meaning.”). Nonetheless, based upon the FAC’s

additional allegations that plaintiff (a) “is a native of Africa who’s English language skills are

limited and who has almost no technical understanding of the English language,” (b) had no

translator at any time during the transactions in question, and that (c) discovered the alleged

misconduct within the past year (FAC ¶¶ 25, 50), the court finds that plaintiff should be

permitted an opportunity to prove that the limitations period was tolled. Accordingly, dismissal

of plaintiff’s TILA damages claim as time-barred is inappropriate at this juncture. Defendants’

motion is denied.

3. RESPA

The FAC alleges that defendants violated RESPA “by failing to correctly and accurately

comply with disclosure requirements” at closing. (FAC ¶ 77). It further alleges that defendants

violated RESPA section 2605 by failing and refusing to provide a response to his Qualified

Written Request (“QWR”) sent on April 29, 2009 to defendants American Home Mortgage

Servicing, Inc. and E*Trade. (FAC ¶¶ 34, 78).

The motion to dismiss this claim is granted. The FAC alleges that the loan officer,

defendant Rua, failed to make certain disclosures. But it otherwise does not distinguish

between defendants, or say what disclosures other defendants failed to make. Nor does it

identify which defendants were obliged, but failed, to make them. See Bell Atlantic Corp., 550

U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative

level.”).

As for the alleged violation of RESPA § 2605, that statute sets out the manner in which

a “loan servicer” is obliged to respond to a borrower’s “qualified written request.” See 12

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3 RESPA provides that, in certain situations, the term “servicer” does not

include the following entities: Federal Deposit Insurance Corporation, the Resolution Trust

Corporation, Government National Mortgage Association, Federal National Mortgage

Association, and Federal Home Loan Mortgage Corporation. 12 U.S.C. § 2605(i)(2)(A)-(B).

4 In his opposition papers, plaintiff says that he does not know whether the

moving defendants violated RESPA by receiving “kickbacks” or referral fees

disproportionate to the work performed. Suffice to say that RESPA section 2605 is the only

statute specified in the FAC. The court declines to address allegations or claims that have

not been pled.

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U.S.C. § 2605(e)(2). With certain exceptions not applicable here,3

 the statute defines a

“servicer” as “the person responsible for servicing of a loan (including the person who makes or

holds a loan if such person also services the loan).” 12 U.S.C. § 2605(i)(2). Here, plaintiff has

not alleged which defendant is a loan servicer subject to the requirements of RESPA section

2605. He only alleges that he does not know which of the defendants are the loan servicers

because defendants failed to advise as to the roles and identities of the various entities that

handled his loans at any given time. (See FAC ¶ 76). The FAC then alleges, in conclusory

fashion, that this claim is made as to all defendants generally because of “the conspiratorial

nature” of the alleged misconduct. However, “neither [defendants] nor the court is required to

guess as to the manner in which [defendants’] conduct allegedly violated RESPA.” Izenberg v.

ETS Services, LLC, 589 F. Supp.2d 1193, 1199-1200 (C.D. Cal. 2008) Without facts alleging

that E*Trade is a servicer for the purposes of RESPA section 2605, this claim must be

dismissed. See, e.g., Lingad v. Indymac Federal Bank, — F.Supp.2d —, 2010 WL 347994 *7

(E.D. Cal., Jan. 29, 2010).4

4. State Law Claims

As for plaintiff’s asserted state law claims:

The motion to dismiss Claim 2 (Violation of the California Rosenthal Fair Debt

Collection Practices Act) is granted. The FAC merely asserts legal conclusions, pleads no

discernable facts to support such a claim, and does not identify which provisions of the statute

that each defendant allegedly violated. Moreover, “foreclosing on a property pursuant to a deed

of trust is not the collection of a debt within the meaning of the RFDCPA.” Rosal v. First

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6

Federal Bank of California, — F. Supp.2d —, 2009 WL 2136777 at *18 (N.D. Cal., July 15,

2009) (citing Izenberg, 589 F. Supp.2d at 1199).

The motion to dismiss Claim 3 (Negligence) and Claim 5 (Breach of Fiduciary Duty) is

granted. These claims essentially allege that defendants breached a duty of care to plaintiff. 

However, “as a general rule, a financial institution owes 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. Savings & Loan Ass’n, 231 Cal.

App.3d 1089, 1095, 283 Cal. Rptr. 53 (1991). The FAC does not allege sufficient facts that

would support the existence of a fiduciary duty by the moving defendants in this case.

The motion to dismiss Claim 6 (Fraud) is granted. A “party must state with particularity

the circumstances constituting fraud or mistake.” FED. R. CIV. P. 9(b). Allegations under Fed.

R. Civ. P. 9(b) must be stated with “specificity including an account of the ‘time, place, and

specific content of the false representations as well as the identities of the parties to the

misrepresentations.’” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting

Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). “‘To comply with Rule

9(b), allegations of fraud must be specific enough to give defendants notice of the particular

misconduct which is alleged to constitute the fraud charged so that they can defend against the

charge and not just deny that they have done anything wrong.’” Id. (quoting Bly-Magee v.

California, 236 F.3d 1014, 1019 (9th Cir. 2001)). The FAC alleges that the loan officer

intentionally misrepresented the terms of the loan and inflated plaintiff’s income on the loan

application. (See FAC ¶¶ 26-29). Then, without distinguishing between defendants, the FAC

goes on to allege in conclusory fashion that all defendants knew or should have known about

the fraud and engaged in deceptive and fraudulent conduct by failing to provide proper

disclosures and to take plaintiff’s ability to repay the loan into account. The court finds that the

elements of fraud are not sufficiently alleged. Bell Atlantic Corp., 550 U.S. at 555 (“Factual

allegations must be enough to raise a right to relief above the speculative level.”); Iqbal, 129 S.

Ct. at 1950 (“[O]nly a complaint that states a plausible claim for relief survives a motion to

dismiss.”).

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7

The motion to dismiss Claim 8 (Breach of Contract) is granted. The FAC does not

allege sufficient facts establishing the existence of contract, much less plaintiff’s performance

or defendants’ breach.

The motion to dismiss Claim 9 (Breach of Implied Covenant of Good Faith and Fair

Dealing) is granted. This claim is essentially another version of plaintiff’s allegation that

defendants owed him a duty of care. As discussed above, the court does not find that the FAC

alleges any facts that would support the existence of such a duty. Nymark, 231 Cal. App.3d at

1095, 283 Cal. Rptr. 53.

With respect to Claim 10 (Wrongful Foreclosure), plaintiff agrees that this claim should

be dismissed, so long as the dismissal is without prejudice. Accordingly, Claim 10 is dismissed

without prejudice.

With respect to Claim 7 (Violations of Cal. Bus. & Prof. Code § 17200), California’s

Unfair Competition Law (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or

practice and unfair, deceptive, untrue or misleading advertising.” CAL. CIV. CODE § 17200. 

“‘Violation of almost any federal, state, or local law may serve as the basis for a[n] unfair

competition claim.’” Brewer v. Indymac Bank, 609 F. Supp.2d 1104, 1122 (E.D. Cal. 2009)

(quoting Plascencia v. Lending 1st Mortgage, 583 F. Supp.2d 1090, 1098 (N.D. Cal. 2008)). 

“A complaint based on an unfair business practice may be predicated on a single act; the statute

does not require a pattern of unlawful conduct.” Id. However, facts supporting the statutory

elements of the alleged violation must be stated with reasonable particularity. See Silicon

Knights, Inc. v. Crystal Dynamics, Inc., 983 F.Supp. 1303, 1316 (N.D.Cal.1997). Inasmuch as

plaintiffs’ TILA claim has not been dismissed, defendants’ motion to dismiss the § 17200 claim

is denied as to NCB. Brewer, 609 F. Supp.2d at 1122. However, because the underlying

“hooks” as to E*Trade have been dismissed, plaintiffs’ § 17200 claim as to E*Trade is also

dismissed.

B. Defendants’ Motion to Strike

Pursuant to Fed. R. Civ. P. 12(f), defendants move to strike plaintiff’s request for

punitive and exemplary damages and attorney’s fees. The court, on a noticed motion or on its

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own motion, “may strike from a pleading an insufficient defense or any redundant, immaterial,

impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). Under TILA, a prevailing plaintiff

may recover attorney’s fees and costs. 15 U.S.C. § 1640(a). Inasmuch as plaintiff’s TILA

claims have not been dismissed, defendants’ motion to strike plaintiff’s request for fees under

that statute is denied. Given the dismissal of plaintiff’s RESPA and state law claims,

defendants’ motion to strike the requests for punitive damages or attorney’s fees with respect to

those claims is deemed moot.

ORDER

Based on the foregoing, defendants’ motion to dismiss is granted in part and denied in

part. The court does not reach defendants’ alternate motion for a more definite statement under

Fed. R. Civ. P. 12(e). Plaintiff has until February 23, 2010 to file an amended pleading,

consistent with this order and in compliance with Fed. R. Civ. P. 11, to address the deficiencies

described above.

The initial case management conference is re-set for April 20, 2010, 1:30 p.m. An

updated joint case management statement shall be filed no later than April 13, 2010.

SO ORDERED.

Dated:

_________________________________

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

February 9, 2010

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5:09-cv-01660 Notice will be electronically mailed to:

Brian H. Gunn tlbeardsley@wolfewyman.com

Bruce William Dannemeyer bruce@dreyfusslaw.com, roma@dreyfusslaw.com

Jonathan G Stein jonathan@jonathangstein.com

Margaret Mary Broussard pegthelawyer@aol.com

Counsel are responsible for distributing copies of this document to co-counsel who have not

registered for e-filing under the court’s CM/ECF program.

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