Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03225/USCOURTS-caed-2_09-cv-03225-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal

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 Because oral argument will not be of material assistance, 1

the Court deemed this matter suitable for decision without oral

argument. E.D. Cal. Local Rule 230 (g). 

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JAMES DIPINTO, No. 2:09-cv-03225-MCE-KJN

Plaintiff,

v. MEMORANDUM AND ORDER

U.S. BANK NATIONAL ASSOCIATION,

as trustee, et al.,

Defendants.

----oo0oo----

This action arises out of a mortgage loan transaction in

which Plaintiff James DiPinto (“Plaintiff”) refinanced his home

in February 2006. Presently before the Court is a Motion by

Defendant U.S. Bank National Association (“Defendant”) to Dismiss

the claims alleged against it in Plaintiff’s First Amended

Complaint (“FAC”) for failure to state a claim upon which relief

may be granted pursuant to Federal Rule of Civil Procedure

12(b)(6). For the reasons set forth below, Defendant’s Motion 1

to Dismiss is granted with leave to amend. 

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 The factual assertions in this section are based on the 2

allegations in Plaintiff’s FAC unless otherwise specified.

2

BACKGROUND2

This action arises out of activity surrounding a residential

loan transaction for property located at 10137 Bond Road, City of

Elk Grove, California (“Property”).

Plaintiff originally had a first and second mortgage on his

home and paid a combined monthly amount of approximately

$5,495.96. Plaintiff decided to remodel his home and provided

Defendant with his financial and loan application. Defendant’s

agent informed Plaintiff that his loan type would be a “Jumbo”

loan which required two appraisals of the Property. 

In February 2006, after two appraisals, Defendant approved

Plaintiff’s loan. Plaintiff alleges that Defendant promised him

a thirty-year loan with a fixed rate, however Defendant actually

sold Plaintiff an adjustable rate loan. 

To qualify for this loan, Plaintiff alleges that the

appraisers overstated the condition of Plaintiff’s home without

Plaintiff’s knowledge or consent. However, on February 6, 2006,

Plaintiff completed the loan on his Property. The terms of the

loan were memorialized in a Promissory Note, which was secured by

a Deed of Trust on the Property. 

Plaintiff contends that he never had a meaningful

opportunity to exercise his right to cancel the loan because he

did not understand how to do so. Plaintiff states this is due to

the fact that Defendant and Defendant’s agent “never bothered to

make themselves available at the loan signing.” (FAC ¶ 55.) 

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3

Plaintiff planned to begin remodeling in March 2006 but

quickly realized he could not make his monthly payments. He

claims that he attempted to modify his loan “but found it

impossible because of the enormous disparity between the monthly

loan payment and his meager monthly income.” (FAC ¶ 58.) On

November 9, 2009, Plaintiff alleges that he mailed to Defendant a

Qualified Written Request (“QWR”) under the Real Estate

Settlement Procedures Act (“RESPA”). (FAC ¶ 91.) Plaintiff

states that Defendant never properly responded to the QWR. 

STANDARD 

On a motion to dismiss for failure to state a claim under

Rule 12(b)(6), all allegations of material fact must be accepted

as true and construed in the light most favorable to the

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,

337-38 (9th Cir. 1996). 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,” in order to “give the

defendant fair notice of what the...claim is and the grounds upon

which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct.

99, 2 L. Ed. 2d 80 (1957). While a complaint attacked by a Rule

12(b)(6) motion to dismiss does not need detailed factual

allegations, a plaintiff’s obligation to provide the “grounds” of

his “entitlement to relief” requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do. Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007) (internal citations and quotations omitted). 

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4

Factual allegations must be enough to raise a right to relief

above the speculative level. Id. (citing 5 C. Wright & A.

Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d

ed. 2004) (“The pleading must contain something more...than...a

statement of facts that merely creates a suspicion [of] a legally

cognizable right of action”).

If the court grants a motion to dismiss a complaint, it must

then decide whether to grant leave to amend. The court should

“freely give[]” leave to amend when there is no “undue delay, bad

faith[,] dilatory motive on the part of the movant,...undue

prejudice to the opposing party by virtue of...the amendment,

[or] futility of the amendment....” Fed. R. Civ. P. 15(a); Foman

v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is

only denied when it is clear that the deficiencies of the

complaint cannot be cured by amendment. DeSoto v. Yellow Freight

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

ANALYSIS 

A. Plaintiff’s Suit Against Defendant Does Not Offset the

Required Tender. 

Plaintiff has failed to allege tender of the amount secured,

which Defendant argues is necessary to maintain the present

action. A defaulted borrower is “required to allege tender of

the amount of secured indebtedness in order to maintain any cause

of action for irregularity in the sale procedure.” Abdallah v.

United Savings Bank, 43 Cal. App. 4th 1101, 1109 (1996). 

///

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5

Therefore, an action to set aside a foreclosure sale,

unaccompanied by an offer to tender, does not state a cause of

action which a court of equity recognizes. Karlsen v. American

Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 117 (1981). 

Plaintiff asserts that “the tender requirement can be

equitably setoff by a party’s action against the mortgage company.” 

Plaintiff argues that under Hauger v. Gates, Plaintiff need not

tender the amount due on his Promissory Note because Plaintiff’s

lawsuit against Defendant offsets the tender requirements. Hauger

v. Gates, 42 Cal. 2d 752 (1954). As Plaintiff admits, however,

Hauger is distinguishable, in that it dealt with an affirmative

cross claim. Id. at 755. Here, Plaintiff brought the present

action requesting that the Court prevent wrongful foreclosure, but

he fails to allege the necessary tender. 

For these reasons, Plaintiff’s lawsuit does not offset the

tender requirement. Plaintiff, as a defaulted borrower, must

allege tender to maintain an action seeking to set aside a

foreclosure sale. 

B. Plaintiff’s TILA Cause of Action is Time-Barred.

Plaintiff seeks to rescind his loan pursuant to the Truth in

Lending Act (“TILA”), 15 U.S.C. § 1600 et. seq., and alleges that

Defendant failed to provide material disclosures regarding his

loan as required under TILA. Defendant argues that Plaintiff’s

claim for TILA violations is time-barred because civil damages

are subject to a one-year statute of limitations and claims for

rescission have a three-year statute of limitations. 

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6

With respect to civil damages for Defendant’s failure to

provide disclosures mandated by TILA, the statute of limitations

allows Plaintiff to file suit within one year from the “date of

occurrence” of the alleged violation. 15 U.S.C. § 1640(e). The

“date of occurrence” is the date the transaction is consummated,

which in a mortgage loan case is when the Plaintiff closed on the

loan. See Walker v. Washington Mutual Bank FA, 63 F. App’x. 316,

317 (9th Cir. 2003). Plaintiff’s loan closed on February 6,

2006, triggering a statute of limitations for damages that

expired February 6, 2007. Plaintiff, however, did not file suit

until September 8, 2009, over two and a half years after the

prescribed period. 

Regarding Plaintiff’s claim for rescission, pursuant to TILA

provisions codified at 15 U.S.C. § 1635(a), a consumer may elect

to cancel their residential mortgage loan within three days of

either the consummation of the transaction or delivery of

required disclosures and rescission forms. If the required

disclosures are not provided, then the right to cancel extends

three years after the date of the loan. Plaintiff’s loan closed

on February 6, 2006, therefore his right to rescind expired on

February 6, 2009. Once again, Plaintiff’s claim is time-barred. 

However, to save his claims Plaintiff argues that equitable

tolling should apply to suspend the statutes of limitations. The

Ninth Circuit has held that “the doctrine of equitable tolling

may, in 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.” 

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7

King v. State of California, 784 F.2d 910, 915 (9th Cir. 1986). 

In determining justifiable application of the equitable tolling

doctrine, a court “focuses on excusable delay by the plaintiff.” 

Johnson v. Henderson, 314 F.3d 409, 414 (9th Cir. 2002). To

establish excusable delay, the plaintiff must show “fraudulent

conduct by the defendant resulting in concealment of the

operative facts, failure of the plaintiff to discover the

operative facts that are the basis of his cause of action within

the limitations period, and due diligence by the plaintiff until

discovery of those facts.” Federal Election Com’n v. Williams,

104 F.3d 237, 240-41 (9th Cir. 1996).

Here, Plaintiff has failed to exhibit requisite due

diligence. The explanation Plaintiff provides to invoke this

equitable protection is that the TILA violation “did not reveal

itself until within the past year.” (FAC ¶ 20.) Plaintiff

further states that he was confused by the documents provided by

Defendant. (FAC ¶ 36.) This explanation is hardly an excusable

delay sufficient to invoke this Court’s application of equitable

tolling. Entertaining such justification would open the

floodgates, allowing endless TILA suits to be filed under the

guise that the alleged TILA violation did not reveal itself

sooner.

Plaintiff has failed to show any concealment of facts by the

Defendant, except for his bare allegations, nor has he shown even

a scintilla of due diligence on his own part. The excuses

provided are not grounds upon which the Court can equitably

rescue Plaintiff’s claim from late filing. 

///

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 Although the language of the statute does not directly 3

address whether the payment of a YSP to a mortgage broker is a

violation of RESPA, the Ninth Circuit has treated such claims as

falling under 12 U.S.C. § 2607. See Geraci v. Homestreet Bank,

347 F.3d 749, 751 (9th Cir. 2003) (relying on HUD’s Statements of

Policy, Lender Payments to Mortgage Brokers, 64 Fed. Reg. 10080

(Dep’t of Housing & Urban Dev., March 1, 1999)). 

8

Equitable tolling will not be applied, and thus the statute

of limitations period has run. Defendant’s Motion to Dismiss

Plaintiff’s TILA claim is GRANTED.

B. Plaintiff’s RESPA Cause of Action is Time-Barred and

Does Not Meet the Requisite Pleading Standard.

1. Yield Spread Premiums 

Plaintiff contends that Defendant violated the Real Estate

Settlement Procedures Act (“RESPA”) by failing to disclose yield

spread premiums (“YSP”) as required by RESPA guidelines codified

at 12 U.S.C. § 2607. Specifically, Plaintiff alleges that 3

Defendant violated RESPA because “the payments to the mortgage

broker and to the lender in regard to the principal balance and

the interest adjustment were misleading and designed to create a

windfall, in that Defendants were paid a ‘yield spread premium,’

i.e. a rebate.” (FAC ¶ 91.) 

Defendant argues, however, that the statute of limitations

has run on this RESPA claim as well. Because RESPA mandates a

one-year statute of limitations on claims arising under § 2607,

see 12 U.S.C. § 2614, Plaintiff’s RESPA claim should have been

filed by February 6, 2007, a year after his loan closed. 

///

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Plaintiff did not file until September 8, 2009. Again, Plaintiff

calls for an application of equitable tolling to save his claim.

For RESPA claims, the Ninth Circuit has not yet addressed

whether equitable tolling will apply, however several district

courts have found the doctrine to be available in appropriate

circumstances. See Ferrari v. U.S. Bank, N.A., 2009 WL 3353028,

at *2 (N.D. Cal. Oct. 16, 2009); Brewer v. Indymac Bank, 609 F.

Supp. 2d 1104, 1118 (E.D. Cal. 2009); Marcelos v. Dominguez, 2008

WL 1820683, at *6 (N.D. Cal. Apr. 21, 2008). 

The most common factor in determining applicability seems to

be whether the plaintiff has plead some level of due diligence in

investigating his or her RESPA claim. See Bassett v. Ruggles,

2009 WL 2982895, at *12 (E.D. Cal. Sept. 14, 2009) (Equitable

tolling applied where Plaintiff contacted the company to which

they paid the loans and asked if there was a yield spread

premium, yet the company refused to confirm.); Yulaeva v.

Greenpoint Mortg. Funding, Inc., 2009 WL 2880393, at *15 (E.D.

Cal. Sept. 3, 2009) (Court held equitable tolling could not apply

where plaintiff did not plead any facts regarding her reasonable

diligence to discover the information); Rosal v. First Federal

Bank of California, 2009 WL 2136777, at *6-8 (N.D. Cal. July 15,

2009) (Court held that plaintiff failed to show excusable delay

because the plaintiff could have compared his loan documents with

TILA and RESPA statutory requirements. Therefore equitable

tolling was not warranted.)

///

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Here, in support of his request for equitable tolling,

Plaintiff states that he only recently discovered Defendant’s

failure to disclose the “self-serving, deceptive, and fraudulent

aspects of the loan.” (Pl.’s Opp’n to Def.’s Mot. to Dismiss

16:7) However, Plaintiff fails to allege any due diligence on

his part to inquire about his loan. Even when read with

“required liberality,” for the reasons set forth above this is

not sufficient to justify tolling of statute of limitations. 

The RESPA claim under § 2607 is therefore time-barred. 

Defendant’s Motion to Dismiss Plaintiff’s RESPA claim under

§ 2607 is granted. 

2. Qualified Written Request 

Plaintiff also contends that he sent Defendant a Qualified

Written Request (“QWR”) on November 9, 2009 and Defendant

violated 12 U.S.C. § 2605(e)(2) of RESPA by failing to properly

respond to Plaintiff’s alleged QWR. 

RESPA requires mortgage loan servicers who receive a QWR for

information relating to the servicing of their loan to provide a

written response within 20 days acknowledging receipt of the

correspondence. 12 U.S.C. § 2605(e)(1)(A). For the purposes of

the Act, a QWR is defined as “a written correspondence [] that...

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 U.S.C. § 2605(e)(1)(B).

///

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A loan servicer has the duty to act when it receives a QWR “for

information relating to the servicing of the loan.” 12 U.S.C.

§ 2605(e)(1)(A). “Servicing means receiving any scheduled

periodic payments from the borrower...and making the payments of

principal and interest and such other payments with respect to

the amounts received from the borrower.” Id. § 2605(i)(3). 

Although Plaintiff describes his letter as a QWR, he fails

to allege any facts which qualify it as such. Plaintiff has not

alleged that he was seeking information about servicing of the

loan nor does he assert that he gave a statement of the reasons

for his belief that the account is in error. 

The letter sent by Plaintiff simply relates to the

origination of the loan, not any servicing errors, and therefore

does not qualify as a QWR. See Consumer Solutions REO, LLC v.

Hillery, 2009 WL 2711264 *9 (N.D.Cal. Aug. 26, 2009) (finding

borrower’s letter to mortgage loan servicer did not qualify as a

QWR, where letter simply disputed loan’s validity, and not its

servicing). 

Thus, Plaintiff’s RESPA claim for violation of § 2605 fails

to meet the requisite pleading standard. Defendant’s Motion to

Dismiss Plaintiff’s RESPA claim under § 2605 is granted. 

///

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C. Plaintiff’s Remaining Causes of Action 

With only Plaintiff’s state law claims remaining, this Court

ceases to have subject matter jurisdiction over the suit. The

Court declines to exercise its supplemental jurisdiction over the

remaining state causes of action and they are dismissed without

prejudice. The Court need not address the merits of Defendant’s

Motion to Dismiss with respect to the remaining state law causes

of action as those issues are now moot. 

CONCLUSION 

For the reasons stated above, Defendant’s Motion to Dismiss

(Docket No. 21) is GRANTED with leave to amend. 

Plaintiff may file an amended complaint not later than

twenty (20) days after the date this Memorandum and Order is

filed electronically. If no amended complaint is filed within

said twenty (20)-day period, without further notice, Plaintiff’s

claims will be dismissed without leave to amend.

IT IS SO ORDERED.

Dated: May 11, 2010

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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