Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-03738/USCOURTS-cand-4_04-cv-03738-2/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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 The following facts are taken from Plaintiff's SAC. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PATRICIA BARBERA,

Plaintiff,

v.

WMC MORTGAGE CORP., et al.,

Defendants. _______________________________________

No. C 04-3738 SBA

ORDER

[Docket No. 111]

This matter is before the Court on Defendants' WMC Mortgage Corp., WMC Finance Co.,

and WMCDirect (collectively "Defendants") motion to dismiss Plaintiff Patricia Barbera's

("Plaintiff") Second Amended Complaint ("SAC") for failure to state a claim upon which relief can

be granted. Having read and considered the arguments presented by the parties in the papers

submitted to the Court, the Court finds this matter appropriate for resolution without a hearing. The

Court hereby GRANTS Defendants' motion to dismiss. Plaintiff's third, fourth and fifth claims are

DISMISSED WITH PREJUDICE. The case is REMANDED to the Superior Court of the State of

California in and for the County of San Francisco. 

BACKGROUND

A. Factual Background1

1. The Parties

Plaintiff is a 73-year old woman residing at all material times in the County of Marin,

California.

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2

Defendant WMC Mortgage Corp. ("WMC") is an entity formed in part by Defendant Apollo

Management L.P. WMC is in the business of making subprime loans on residential property and

also acts as the administrator for those loans. Defendant WMCDirect, owned and operated by

WMC, is an online nationwide business services website for mortgage brokers. SAC ¶ 3. On June

14, 2004, Defendant GE Consumer Finance Co., the consumer lending unit of the General Electric

Company, purchased Defendant WMC Finance Co., including Defendants WMC and WMCDirect,

from affiliates of Apollo Management L.P. SAC ¶ 4.

2. Allegations

In June of 1997, Plaintiff was in a "desperate financial situation" and obtained a loan from

WMC for $322,500. SAC ¶ 13. On June 12, 1997, Plaintiff executed the loan documents, at which

time "defendants failed to provide to Plaintiff two written notices of Plaintiff's right to rescind within

three days of closing, and defendants failed to prepare and deliver accurate disclosures that were

mandated" under the Truth in Lending Act, 15 U.S.C. section 1601 et seq. SAC ¶ 14.

On May 19, 1998, WMC notified Plaintiff that it had not received proof of her renewal of the

hazard insurance policy on Plaintiff's home. SAC ¶ 15. Despite numerous telephone calls from

Plaintiff to WMC, and verification provided to WMC by Plaintiff's insurance company that a copy

of Plaintiff's insurance policy had been mailed to WMC, WMC "force-place[d] a substitute policy

from another hazard insurance company at Plaintiff's expense." Id. This new policy had a premium

of $2,242, nearly three times the annual premium of Plaintiff's policy. Id.

In January of 1999, Plaintiff received a letter from WMC stating that WMC had received

confirmation of Plaintiff's hazard insurance coverage and that WMC had cancelled both the forceplaced insurance and its charge to Plaintiff for that policy. Id. ¶ 16. However, WMC in fact did not

cancel the $2,242 charge to Plaintiff's account and continued to impose an annual charge on

Plaintiff's account for this hazard insurance. Id. ¶ 17. 

On August 19, 1999, WMC served on Plaintiff a ten-day default notice, listing the amount

alleged due on Plaintiff's mortgage, but, according to Plaintiff, the listed amounts due were false. Id.

¶ 18. On November 5, 1999, using these excessive amounts as a pretext, WMC and its foreclosure

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2

 Millennium is not a party in this action.

3

 12 U.S.C. section 2605(e) of RESPA states a loan servicer shall provide a written response

acknowledging receipt of the "qualified written request" within 20 days, and shall respond to such a

request within 60 days, excluding legal public holidays, Saturdays, and Sundays. See 12 U.S.C. §

2605(e); SAC ¶ 20.

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agent, Millennium Foreclosure Services, LLC ("Millennium")2, served Plaintiff with a notice of

default in the amount of $42,114.79. Id. On December 4, 1999, Plaintiff sent a detailed letter to

WMC and Millennium, which constituted a "qualified written request" within the meaning of Real

Estate Settlement Procedures Act ("RESPA") 12 U.S.C. section 2605(e), whereby she denied owing

the amount shown in the default notice and renewed her previous oral requests to WMC for an

accurate accounting. Id. ¶ 19. Plaintiff alleges WMC violated RESPA beginning in June of 1999

through March 1, 2002 by failing to respond to Plaintiff's oral requests for an accounting, and failing

to acknowledge or to respond within the statutory time limits to Plaintiff's "qualified written

request."3 Id. ¶ 21. Furthermore, WMC continued to bill Plaintiff for improper charges and began to

carry out a foreclosure sale of Plaintiff's home based upon these improper charges. Id.

On February 11, 2000, Plaintiff received from Millennium a Notice of Trustee's sale,

recorded on February 7, 2000 citing a sale date of March 2, 2000 in the amount of $372,316.39. Id.

¶ 23.

On February 27, 2000, Plaintiff sent via facsimile to WMC a copy of a telegram informing

WMC that it had failed to respond to Plaintiff's previous letters, had failed to provide an accurate

accounting, and had violated various laws and regulations. Id. ¶ 24. On March 1, 2000, WMC

supplied Plaintiff with a statement of history of payments on the loan, but Plaintiff contends the

statement was incomprehensible. Id. ¶ 25.

On March 2, 2000, Plaintiff notified WMC that she had filed a Chapter 13 bankruptcy

petition and verified that the foreclosure had been cancelled. Id. ¶ 26. On April 11, 2000, Plaintiff

asserts that, in violation of the automatic bankruptcy stay, WMC filed a Notice of Trustee's Sale

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4

 Plaintiff alleges additional facts raised for the first time in her opposition to Defendants'

motion. Specifically, Plaintiff alleges: (1) Defendants "postdated receipt of payments, to make it appear

that they were delinquent and late charges are applied in addition to other obtuse designations" (Pl. Opp.

filed Oct. 11, 2005, ¶ 5); (2) Defendants "misapplied the extra which I included with my payments" (Id. ¶ 7); (3) Defendants "had [Plaintiff's] bankruptcy stay lifted by use of false figures" (Id. ¶ 8); (4) "on

adjustable interest rate notices, [Defendants] failed to include: index used, index rate, interest rate,

(current and projected), and margin applied" (Id. ¶ 10); (5) Defendants harassed Plaintiff with automatic

message telephone calls (Id. ¶ 11); (6) Defendants refused to provide Plaintiff with information

concerning the amount due under her loan (Id. ¶ 12); (7) on February 24, 2000, Plaintiff's attorney

"faxed a factual protest and 'let's talk' letter" to Defendants regarding the February 11, 2000 Notice of

Trustee's Sale, to which there was no response (Id. ¶ 19); (8) on March 2, 2000 Plaintiff was informed

by her attorney that her attorney had spoken with a representative of Defendants who stated "the total

arrears is $68,811.61, which includes an advance for homeowners insurance in the amount of $7,411.04

and foreclosures fees of $3,403.29" (Id. ¶ 21); (9) in May 2000 WMC "reported to the Credit Bureaus

that [Plaintiff] was delinquent in the amount of $72,050" (Id. ¶ 26); (10) on December 15, 2000, Plaintiff

sent WMC "a one line notice of rescission taken verbatim from the unexecuted form which [she] had

received, 'I wish to cancel'" (Id. ¶ 29); (11) On January 5, 2001, Plaintiff received a letter dated January

2, 2001, from WMC Senior Vice President & General Counsel, Michael L. Mayer, which included an

executed Notice of Right to Cancel and informed Plaintiff that her cancellation notice was "invalid and

of no legal effect." (Id. ¶ 30).

None of the above facts are alleged in Plaintiff's SAC but are raised for the first time in her

opposition. "It is axiomatic that the complaint may not be amended by briefs in opposition to a motion

to dismiss." Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984). That Plaintiff

is proceeding in pro per does not render the rules of the Court inapplicable. See King v. Atiyeh, 814

F.2d 565, 567 (9th Cir. 1987) (Pro per litigants must follow the same procedural rules as represented

parties.) Consequently, the Court shall limit its review to those facts properly alleged in the SAC, and

not those newly raised in Plaintiff's opposition.

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scheduled for May 10, 2000. Id.4

B. Procedural History

Plaintiff filed the initial complaint in this case on July 23, 2004 in San Francisco Superior

Court against WMC, WMC Finance Co., Apollo Management L.P., WMCDirect, GE Consumer

Finance, Fairbanks Capital Corp., Fairbanks Capital Holding Corp., and California Land Title

Company of Marin ("Cal Land"). On September 3, 2004, the action was removed to this Court. On

January 7, 2005, after several stipulated extensions of time to respond to the complaint, Cal Land

filed an Answer to the Complaint. 

On January 10, 2005, then defendants Fairbanks Capital Corporation and Fairbanks Capital

Holding Corporation (collectively "Fairbanks") filed a motion for summary judgment, in which they

claimed Plaintiff's suit was barred under the principles of res judicata and release because Plaintiff

was a member of a nationwide class action, which challenged the same conduct, and which was

subsequently settled. Because Plaintiff did not dispute that she was a member of the prior class

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5

 In Defendants' Request for Judicial Notice, Defendants request that the Court take judicial

notice of exhibits: (A) Plaintiff's complaint on file in state court, Barbera v. WMC Mortgage. Corp.,

San Francisco Superior Court Civil Action No. 322066, filed June 11, 2001; (B) this Court's Order dated

March 1, 2005, Granting Fairbanks' Motion for Summary Judgment; (C) this Court's Order dated May

26, 2005, Granting Fairbanks' Motion for Entry of Final Judgment; (D-E) Copies of Assembly Bill No.

292 (1970 Reg. Sess. (Jan. 21, 1970)) and Assembly Bill No. 292 (1970)) (as amended Aug. 7, 1970);

(F) Notice of Entry of Order Granting Defendant WMC's Motions In Limine Nos. 1, 2 & 4, Denying

WMC's Motion In Limine 3, and Denying Plaintiff's Motion for Leave to Amend, entered by Judge

Busch in Plaintiff's action in San Francisco Superior Court; (G) text of Proposition 2; and (H) California

Department of Real Estate website printout.

Federal Rule of Evidence 201 authorizes the court to judicially notice only those "adjudicative

facts" that are either "(1) generally known within the territorial jurisdiction of the trial court or (2)

capable of accurate and ready determination by sources whose accuracy cannot reasonably be

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action against Fairbanks, which involved identical claims and ended in a final judgment on the

merits, by Order dated March 7, 2005, the Court granted Fairbanks' motion for summary judgment,

finding that Plaintiff's claims against Fairbanks were barred by the doctrines of res judicata and

release [docket no. 71.]

On March 15, 2005, Plaintiff filed a First Amended Complaint ("FAC"). The FAC included

additional allegations against Defendant WMC, an additional cause of action for an accounting

against WMC and Fairbanks, named Cal Land in the third cause of action for violations of, inter

alia, the Truth in Lending Act, and added two additional causes of action against Cal Land for

breach of fiduciary duty and negligence. On March 21, 2005, Fairbanks filed a motion for entry of

final judgment pursuant to Federal Rule of Civil Procedure 54. On April 12, 2005, Plaintiff filed an

opposition to Fairbanks' motion, and also filed a motion for leave to amend the FAC. In her request

for leave to amend the FAC, Plaintiff sought to add new allegations against Fairbanks and the other

defendants. On May 26, 2005, the Court denied Plaintiff's Motion for Leave to Amend the FAC,

struck those portions of the FAC that added allegations against Fairbanks and Cal Land, and granted

Fairbanks' motion for entry of final judgment [docket no. 96.] Plaintiff was ordered to file a Second

Amended Complaint that removed the stricken allegations. 

On June 1, 2005, Plaintiff substituted herself as counsel in place of her previously retained

counsel [docket no. 97.] 

Plaintiff filed the SAC on August 10, 2005 [docket no. 108.] On August 25, 2005,

Defendants filed the instant motion to dismiss. Defendants also filed a Request for Judicial Notice.5

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questioned." Fed. R. Evid. 201(b). "Adjudicative facts are usually those facts that are in issue in a

particular case." Korematsu v. United States, 584 F. Supp. 1406, 1414 (N.D. Cal. 1984) (Patel, J.). 

With regard to Exhibit A, Defendants do not make clear to this Court for what purpose they are

requesting this Court take judicial notice of Plaintiff's state court complaint. Defendants simply state

Plaintiff has filed, with and without counsel, several civil actions against WMC and the parties have

conducted considerable discovery since the first action was filed in June of 2001. Defs. Mot. 2:14-20.

The existence of Plaintiff's state court complaint does not concern any "facts in issue" in this case, nor

is it relevant to the instant motion to dismiss. Consequently, the request is DENIED as to Exhibit A.

As the March 1, 2005 and May 26, 2005 Orders are part of the Court's own docket in this matter,

a formal request for judicial notice is unnecessary. 

Defendants cite to Exhibits D, E and F in support of their argument that Plaintiff's Consumer

Legal Remedies Act ("CLRA") claim must fail because credit transactions do not fall within CLRA's

purview. Defs. Mot 13:5-24. The CLRA is a California statute which was irrelevant to the Court's

analysis and disposition of Plaintiff's federal claims. Therefore, the request for judicial notice is

DENIED as to Exhibits D, E & F.

Finally, Defendant cites to Exhibits G &H in support of their argument that Plaintiff's claim of

usury must fail as California has exempted from the usury laws licensed real estate brokers by the State

of California, and, Defendants argue, WMC was a licensed real estate broker at the time the loan was

made. The usury cause of action is based on state law. Again, given the Court's focus upon Plaintiff's

federal claims, these exhibits are irrelevant. For these reasons, the request for judicial notice is DENIED

as to Exhibits G & H. 

6

 Defendants contend Plaintiff served upon them a different version of her opposition brief than

the one she filed with this Court. Defendants attached the version of the opposition they received as

Exhibit A to the Declaration of Seta Arabian in Support of Defendants' Reply ("Arabian Decl.") In the

version filed with the Court on October 11, 2005, in the "Foreclosure-bankruptcy issues" section,

Plaintiff includes two new paragraphs that are not present in the copy faxed to the Defendants and

attached to the Arabian Decl. These new sections concern Plaintiff's research into WMC's past and

current litigation, and what Plaintiff believes to be the relevant California laws that have been violated

by the conduct of Defendants alleged in the SAC. Additionally, in the opposition filed with the Court

but not in the version faxed to Defendants, Plaintiff attached copies of: 1) an article entitled "Loans Cost

Minorities More" by David Olinger and Jeffrey A. Roberts, Denver Post Staff Writers, Feb. 27, 2001;

2) a transcript of the testimony of Professor Cathy Lesser Mansfield before the Committee on Banking

and Financial Services, United States House of Representatives, May 24, 2000, at the Rayburn House

Office Building; and 3) copies of statements received by Plaintiff from WMC and Select Portfolio

Servicing. Inc.

These additional paragraphs and material were the only differences between the briefs received

by Defendants and filed with the Court and were not germane to the Court's analysis of Defendants'

motion to dismiss as they did not address the substantive issues raised by Defendants' in their motion.

Consequently, for purposes of deciding this motion, the Court restricted its review to the opposition

served upon Defendants.

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Plaintiff filed an opposition with this Court on October 11, 2005.6

LEGAL STANDARD

A. Rule 12(b)(6)

Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss may be granted

if it appears beyond a doubt that the plaintiff "can prove no set of facts in support of his

claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). For

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purposes of such a motion, the complaint is construed in a light most favorable to the

plaintiff and all properly pleaded factual allegations are taken as true. Jenkins v.

McKeithen, 395 U.S. 411, 421 (1969); Everest and Jennings, Inc. v. American Motorists Ins.

Co., 23 F.3d 226, 228 (9th Cir. 1994). All reasonable inferences are to be drawn in favor of

the plaintiff. Jacobson v. Hughes Aircraft, 105 F.3d 1288, 1296 (9th Cir. 1997).

When a complaint is dismissed for failure to state a claim, "leave to amend should be

granted unless the court determines that the allegation of other facts consistent with the

challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v.

Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). The court should consider

factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated

failure to cure deficiencies by previous amendments, undue prejudice to the opposing party

and futility of the proposed amendment." Moore v. Kayport Package Express, 885 F.2d

531, 538 (9th Cir. 1989). Of these factors, prejudice to the opposing party is the most

important. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (citing

Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-31 (1971)). Leave to

amend is properly denied "where the amendment would be futile." DeSoto Yellow Freight

Sys., 957 F.2d 655, 658 (9th Cir. 1992).

ANALYSIS

The SAC asserts the following federal claims against WMC: (1) violation of the

Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.,; (2) violation of the Real Estate

Settlement Procedures Act, 12 U.S.C. §§ 2601, et seq.; and (3) violation of the Fair Debt

Collection Practices Act, 15 U.S.C. §§ 1692 et seq. ("FDCA").

A. Plaintiff's First Federal Claim - Violation of the Truth In Lending Act

1. The Statutes

In her third cause of action Plaintiff alleges violation of the Truth in Lending Act

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 The acronym "HOEPA" stands for "Home Ownership and Equity Protection Act" of 1994.

HOEPA, which took effect on October 1, 1995, provides special protections for consumers who obtain

high-rate or high-fee loans secured by their principal dwellings by requiring creditors to provide certain

material information at least three days before the loan is consummated, prohibiting the use of certain

loan terms, and barring specified practices.

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("TILA"), HOEPA, and Regulation Z.7 SAC, ¶ ¶ 41-43. 15 U.S.C. § 1635(a), the provision

of TILA upon which Plaintiff relies, states in full:

Disclosure of obligor's right to rescind. Except as otherwise provided in this

section, in the case of any consumer credit transaction (including opening or

increasing the credit limit for an open end credit plan) in which a security

interest, including any such interest arising by operation of law, is or will be

retained or acquired in any property which is used as the principal dwelling

of the person to whom credit is extended, the obligor shall have the right to

rescind the transaction until midnight of the third business day following

the consummation of the transaction or the delivery of the information and

rescission forms required under this section together with a statement

containing the material disclosures required under this subchapter, [15

U.S.C. §§ 1601 et seq.] whichever is later, by notifying the creditor, in

accordance with regulations of the Board, of his intention to do so. The

creditor shall clearly and conspicuously disclose, in accordance with

regulations of the Board, to any obligor in a transaction subject to this section

the rights of the obligor under this section. The creditor shall also provide, in

accordance with regulations of the Board, appropriate forms for the obligor

to exercise his right to rescind any transaction subject to this section.

15 U.S.C. § 1635(a) (emphasis added). 15 U.S.C. § 1639(a)(1), the provision of HOEPA

upon which Plaintiff relies, states in relevant part: 

Specific disclosures. In addition to other disclosures required under this

subchapter [15 U.S.C. §§ 1601 et seq.], for each mortgage referred to in

section 1602(aa) of this title, the creditor shall provide . . . disclosures in

conspicuous type size . . . 

15 U.S.C. § 1639(a)(1). Finally, Regulation Z requires a “business which offers or extends

credit” to make certain disclosures: 

Purpose. The purpose of this regulation is to promote the informed use of

consumer credit by requiring disclosures about its terms and cost. The

regulation also gives consumers the right to cancel certain credit transactions

that involve a lien on a consumer's principal dwelling, regulates certain credit

card practices, and provides a means for fair and timely resolution of credit

billing disputes.

12 C.F.R. § 226.1(b) & (c). 

2. Analysis

Plaintiff seeks both rescission of her loan and damages. 15 U.S.C. § 1640(e). 

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 In her opposition she states 11 U.S.C. § 108 extends the statute of limitations for commencing

or continuing an action by the debtor. However, as Plaintiff concedes, that statute is available for

trustees suing to protect a bankruptcy estate. Plaintiff does not assert she is a trustee. 

Additionally, Plaintiff argues that the force-placed insurance charge "could constitute a new

transaction which would require new disclosures and a new consummation date." Pl. Opp. Sec. IV ¶

6. Plaintiff does not indicate when that consummation date would have occurred, either the date of the

charge or the date Plaintiff discovered the charge on her account. Construing the facts in the most

favorable light to Plaintiff, the latest date for which she could allege the force-placed insurance charge

constituted a new transaction would be the date she learned of it, March 2, 2000. That was over four

years prior to the filing of the instant complaint in state court. Therefore, even if Plaintiff were able to

argue that imposition of the force-placed insurance charge constitutes a new transaction requiring new

disclosures and a new consummation date, she is nevertheless barred by the statute of limitations. 

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Plaintiff's right of rescission is governed by 15 U.S.C. § 1635(f). This section provides, in

relevant part:

An obligor's right of rescission shall expire three years after the date

of consummation of the transaction or upon the sale of the property,

whichever occurs first, notwithstanding the fact that the information

and forms required under this section or any other disclosures

required under this part have not been delivered to the obligor. 

15 U.S.C. § 1635(f). Civil penalties under TILA and HOEPA are subject to a one-year

statute of limitations. Plaintiff's loan closed in June of 1997. Plaintiff filed suit in state

court on July 23, 2004, which was removed to this Court in September of 2004, over seven

years later. Consequently, both Plaintiff's claim for damages, as well as her right to rescind,

are time-barred by these sections. 

Plaintiff's SAC conclusorily asserts "[a]ny statute of limitations applicable to these

violations has been tolled under the doctrine of what is called equitable tolling." SAC ¶ 42.8

Plaintiff's defense to the statute of limitations is unpersuasive. "The equitable tolling

doctrine has been applied by the Supreme Court in certain circumstances, [ ] but it has been

applied sparingly." Scholar v. Pacific Bell, 963 F.2d 264, 268 (9th Cir.1992) (citing Irwin v.

Veterans Admin., 498 U.S. 89, 111 S.Ct. 453, 457-58, 112 L.Ed.2d 435 (1990)). "Courts

have been generally unforgiving, however, when a late filing is due to claimant's failure 'to

exercise due diligence in preserving his legal rights.' " Id. (citing Irwin, 111 S.Ct. at 458).

"Equitable tolling focuses primarily on the plaintiff's excusable ignorance of the limitations

period." Lehman v. United States, 154 F.3d 1010, 1016 (9th Cir. 1998).

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Here, Plaintiff’s SAC fails to plead such facts. As a preliminary matter, the factual

predicate for her claim that WMC failed to provide her with certain documents should have

been known to her in 1997, well before July 2004. In her opposition, Plaintiff states that she

signed the "Notice of Right to Cancel" on June 12, 1997 and acknowledged, by her

signature, receipt of two copies of the this notice. Pl. Opp. ¶ 1. This acknowledgment is

evidence that Plaintiff received two copies of this notice, or, at a minimum, was aware that

she was entitled to two copies of this notice at the time of the loan closing. Plaintiff alleges

that she was not given any documents on June 12, 1997, contrary to her signed

acknowledgment, but concedes that when she did receive her copy of her loan documents on

June 19, 1997, she "put it away without inspecting it," and years passed before she inspected

what those documents contained. Id. Plaintiff's failure to inspect the documents, especially

in light of her signed acknowledgment, does not constitute "excusable ignorance of the

limitations period" justifying imposition of equitable tolling. Thus, this claim is barred by

the statute of limitations and is DISMISSED with prejudice.

B. Plaintiff's Second Federal Claim - Violation of the Real Estate Settlement

Procedures Act

In her fourth cause of action, Plaintiff alleges the following acts by WMC violated

the Real Estate Settlement Procedures Act ("RESPA"): "kickbacks, referral fees,

unnecessary escrow accounts for taxes and hazard insurance, improper or inaccurate

reporting to credit bureaus, failure to disclose the transfer of the servicing of Plaintiff's loan

account, failure to respond to acknowledge 'payments from a borrower' and to acknowledge

'making the payments of principal and interest as may be required pursuant to the terms of

the loan,' and other home mortgage lending practices that tend to cause excessive borrowing

costs for home loan borrowers." SAC ¶ 47. Plaintiff additionally alleges that WMC

violated RESPA "[b]eginning June 1999, through March 1, 2002" by failing to respond to

Plaintiff's oral requests and failing to acknowledge or respond to Plaintiff's qualified written

requests." SAC ¶ 21. Defendants respond that this claim is time barred. 

The applicable statutes of limitations for claims brought pursuant to RESPA are

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 This provision states: "No person shall give and no person shall accept any fee, kickback, or

thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to

or a part of a real estate settlement service involving a federally related mortgage loan shall be referred

to any person." 12 U.S.C. § 2607(a).

10 The other statute referenced in section 2614, section 2608, is inapplicable to this case. Section

2608 states: "No seller of property that will be purchased with the assistance of a federally related

mortgage loan shall require directly or indirectly, as a condition to selling the property, that title

insurance covering the property be purchased by the buyer from any particular title company."

Plaintiff's complaint does not involve the sale of her home or allegations that she was required to

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found in 12 U.S.C. section 2614. "Any action pursuant to the provisions of section 2605,

2607, or 2608 of this title may be brought in the United States district court within 3 years

in the case of a violation of section 2605 of this title and 1 year in the case of a violation of

section 2607 or 2608 of this title from the date of the occurrence of the violation." See 12

U.S.C. §2614.

1. Section 2607

Plaintiff's allegations of kickbacks and referral fees are covered under section

2607(a).9 By its terms, section 2607(a) prohibits the giving or receipt of fees or kickbacks

"incident to or part of a real estate settlement service involving a federally related mortgage

loan." See 12 U.S.C. § 2607(a). "Settlement services" is defined as any "service provided

in connection with a real estate settlement." See 12 U.S.C. § 2602(3). No where in

Plaintiff's SAC does she allege where, when, how or from whom WMC received kickbacks

or referral fees. Rather it is a bald assertion unsupported by facts. The facts alleged by

Plaintiff fail to demonstrate the inapplicability of the statute of limitations. Plaintiff

received her mortgage loan in June of 1997. Section 2614 required her to bring her claim

alleging kickbacks or referral fees within one year, by June of 1998. This claim is time

barred and is therefore DISMISSED with prejudice.

2. Section 2605

The remaining RESPA allegations are subject to the 3-year statute of limitations as

the conduct she alleges by WMC concerns "servicing of mortgage loans and administration

of escrow accounts." See 12 U.S.C. § 2605.10

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purchase title insurance from a particular company.

11 12 U.S.C. 2605(e)(1)(B) states in relevant part: "For purposes of this subsection, a qualified

written request shall be a written correspondence, other than notice on a payment coupon or other

payment medium supplied by the servicer, that (i) includes, or otherwise enables the servicer to identify,

the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the

borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer

regarding other information sought by the borrower."

12

Plaintiff's allegations are inconsistent and insufficient to overcome the time bar for

several reasons. First, the latest date for which Plaintiff alleges violative conduct on the part

of WMC is April 11, 2000, over four years prior to the filing the instant complaint. Thus,

her claims are time-barred. Second, Plaintiff's loan was transferred to another entity for

servicing in July of 2000; Plaintiff does not explain, in her SAC or opposition, how WMC

violated RESPA through March 1, 2002, after the loan had been transferred. Third, RESPA

imposes obligations upon a party upon written requests, not oral. See 12 U.S.C. §

2605(e)(1)(B). The only qualified written request11 Plaintiff asserts in her SAC occurred on

December 4, 1999, more than three years prior to the filing of the instant complaint. Fourth,

even assuming Plaintiff's delayed discovery of the transfer of her loan in September, 2003

was reasonable such that the doctrine of equitable tolling applied, Plaintiff learned of the

transfer ten months prior to the filing of this suit. See Santa Maria v. Pac. Bell, 202 F.3d

1170, 1178 (9th Cir. 2000) ("[E]quitable tolling will serve to extend the statute of limitations

for filing suit until the plaintiff can gather what information he needs.") Plaintiff does not

provide any justification for the delay between her discovery of the transfer, and the filing

of the instant complaint. Therefore, she has not proven she is entitled to invoke the doctrine

of equitable tolling.

For all these reasons, this claim is DISMISSED with prejudice.

C. Plaintiff's Third Federal Claim - Violation of the Fair Debt Collection Practices

Act

In her fifth cause of action, Plaintiff alleges WMC's acts and conduct violated the

Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. SAC ¶ 51. 

Plaintiff generally alleges all of the acts and conduct by WMC violate the FDCPA,

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12 Plaintiff references 12 U.S.C. § 2605(3)(d) with respect to her allegation of "improper or

inaccurate reports to credit borrowers." SAC ¶ 51. There is no 12 U.S.C. § 2605(3)(d). In this same

paragraph of the SAC, Plaintiff asserts a "loan servicer may not provide information regarding any

overdue payment to any consumer reporting agency." Id. The SAC does not allege when, to whom, nor

what information WMC provided to any consumer reporting agency regarding any overdue payments.

Thus the SAC is completely devoid of facts to support these allegations. 

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including "the improper or inaccurate reports to credit borrowers" by WMC.12 Id. Here,

again, WMC responds that Plaintiff's claim is time-barred. Additionally, even if the claim

were not time-barred, WMC argues it is misplaced since the FDCPA only prohibits certain

activities of debt collectors, not creditors such as WMC.

1. Statute of Limitations

"An action to enforce any liability created by this subchapter may be brought in any

appropriate United States district court without regard to the amount in controversy, or in

any other court of competent jurisdiction, within one year from the date on which the

violation occurs." 15 U.S.C. § 1692k(d). As with her other allegations, Plaintiff merely

asserts that the violations giving rise to the claim "continue through the present time." SAC

¶ 51. She does not offer any evidence of the nature of the acts of WMC which form the

basis of the assertion, nor when they occurred. Moreover, given WMC's transfer of the

servicing of Plaintiff's loan to another party in 2000, the Court is unaware of any facts

Plaintiff could allege that would fall within the year prior to her filing the instant complaint.

2. FDCPA Applies Only to "Debt Collectors"

Alternatively, WMC argues that even were this cause of action not time barred by

the statute of limitations, Plaintiff's claim still fails as the FDCPA is inapplicable to parties

collecting their own debt.

The FDCPA regulates debt collectors rather than creditors. Thomas v. Law Firm of

Simpson & Cyback, 392 F.3d 914, 916-17 (7th Cir. 2004). The term "debt collector" means

any person who "regularly collects or attempts to collect, directly or indirectly, debts owed

or due or asserted to be owed or due to another." 15 U.S.C. § 1692a(6) (emphasis added). 

The term "creditor" means "any person who offers or extends credit creating a debt or to

whom a debt is owed . . . ." 15 U.S.C. 1692a(4). Furthermore, the FDCPA exempts from its

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definition of debt collectors, "any officer or employee of a creditor while, in the name of the

creditor, collecting debts for such creditor." 15 U.S.C. § 1692a(6)(A) (emphasis added). 

Because Plaintiff alleges activities by WMC regarding collection of payments owed to it

under the loan, i.e., it was WMC's debt it sought to recover from Plaintiff, WMC was not a

"debt collector" for purposes of the FDCPA. Thus, Plaintiff has no cognizable claim against

WMC on this ground.

For these reasons, this claim is DISMISSED with prejudice. 

D. Supplemental State Causes of Action

When a case is properly removed on the basis of federal question jurisdiction, but

the federal claims are subsequently eliminated from the case, the district court retains the

discretion to remand the action to state court. See Carnegie-Mellon Univ. v. Cahill, 484

U.S. 343, 348 (9th Cir. 1991). In each case, and at every stage of the litigation, the federal

court must consider and weigh the values of judicial economy, convenience, fairness, and

comity in order to decide whether to exercise jurisdiction over a case involving pendent

state-law claims. Id. at 349. When the balance of the relevant factors indicates that a case

properly belongs in state court, such as when the federal claims have been resolved in the

early stages of the litigation, the district court may decline the exercise of jurisdiction and

remand the action to state court. Id. As the United States Supreme Court recognized in

United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966), the district court's jurisdiction

over state law claims "need not be exercised in every case in which it is found to exist . . . .

Needless decisions of state law should be avoided as a matter of comity[.]" Id.

Plaintiff's third, fourth and fifth claims are the only claims alleged over which the

Court has original jurisdiction. Those claims have been dismissed with prejudice. 

Moreover, since this litigation is in its initial stage, the concerns of "economy, convenience,

fairness and comity" weigh in favor of declining to retain jurisdiction. See Imagineering,

Inc. v. Kiewit Pacific Co., 976 F.2d 1303, 1309 (9th Cir. 1992), cert. denied, 507 U.S. 1004

(1993). Therefore, the Court exercises its discretion and declines to assert supplemental

jurisdiction over the remaining state law claims.

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CONCLUSION

For the reasons stated above,

IT IS HEREBY ORDERED THAT Defendants' motion to dismiss is GRANTED. 

Plaintiff's third, fourth and fifth claims are DISMISSED WITH PREJUDICE. 

IT IS FURTHER ORDERED THAT the case is REMANDED to the Superior Court

of the State of California in and for the County of San Francisco. The clerk is directed to

terminate any pending matters and to close the file.

IT IS SO ORDERED

IT IS SO ORDERED.

Dated: 1/19/06 SAUNDRA BROWN ARMSTRONG

United States District Judge

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