Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02002/USCOURTS-caed-2_09-cv-02002-2/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

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

LANORA MCGILL,

Civ. No. 2:09-cv-2002 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

WACHOVIA MORTGAGE, FSB LOAN;

AMERICAN MORTGAGE NETWORK,

INC., a Delaware Corporation;

QUALITY LOAN SERVICE CORP.;

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.;

CONSOLIDATED CAPITAL MORTGAGE;

CAREY FRED CRONE; and DOES 1-

20,

Defendants.

____________________________/

----oo0oo----

This matter is before the court on the motion of defendants

Wachovia Mortgage, FSB Loan (“Wachovia”) and American Mortgage

Network, Inc. (“AmNet”) (collectively “defendants”) to dismiss

plaintiff Lanora McGill’s (“plaintiff”) first amended complaint

(“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6). 

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1 Because oral argument will not be of material

assistance, the court orders these matters submitted on the

briefs. E.D. Cal. L.R. 230(g).

2

Plaintiff opposes the motions. For the reasons set forth below,1

defendants’ motion is GRANTED. 

BACKGROUND

Plaintiff brings this action against defendants Wachovia,

AmNet, Quality Loan Service Corp. (“Quality”), Mortgage

Electronic Registration Systems, Inc. (“MERS”), Consolidated

Capital Mortgage (“Consolidated”), and Carey Fred Crone

(“Crone”). (Pl.’s First Am. Compl. (“FAC”), filed Sept. 18,

2009, ¶¶ 8-9, 12.) Plaintiff’s claims are all based upon

activities relating to a residential mortgage loan transaction. 

(Id. ¶¶ 6, 17.) 

On July 23, 2007, plaintiff obtained a loan from defendant

AmNet on property located at 465 Arcade Boulevard, Sacramento,

California (the “Property”). (Id. ¶ 31.) The loan was secured

by a deed of trust which named AmNet as the lender and MERS as

the beneficiary. (Id. ¶¶ 31-32.) In August 2007, defendant

Crone approached plaintiff and solicited her to refinance the

Property. (Id. ¶¶ 7, 23.) Plaintiff retained defendants Crone

and Consolidated to act as her agents in negotiating the

refinancing. (Id. ¶¶ 24-28.) Plaintiff eventually defaulted on

the loan, and defendant Quality filed a Notice of Default on

January 13, 2009. (Id. ¶ 43.)

Plaintiff alleges that on April 17, 2009 she mailed a

Qualified Written Request (“QWR”) to Wachovia, in which she

included a demand to rescind the loan pursuant to the provisions

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of the federal Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601

et seq.. (Id. ¶ 33.) Plaintiff further alleges that Wachovia

never responded to her demand. (Id.) 

Plaintiff subsequently filed suit on July 20, 2009, alleging

claims for (1) violation of TILA; (2) violation of the California

Rosenthal Act, California Civil Code §§ 1788 et seq.; (3)

negligence; (4) violation of Real Estate Settlement Procedures

Act (“RESPA”), 12 U.S.C. §§ 2605, et seq.; (5) breach of

fiduciary duty; (6) fraud; (7) violation California Business &

Professions Code § 17200 et seq.; (8) breach of contract; (9)

breach of implied covenant of good faith and fair dealing; (10)

wrongful foreclosure; and (11) violation of California Welfare &

Institutions Code §§ 15600 et seq. (Docket No. 1.) 

Plaintiff bases several of her eleven claims on allegations

that the defendants failed to provide her with requisite copies

of certain loan documents prior to closing. (Id. ¶¶ 29, 40.) 

Additionally, plaintiff alleges that defendants unlawfully

developed a scheme to “infuse capital into the home mortgage

lending system” in order to induce a bankruptcy transaction and

force plaintiff into foreclosure. (Id. ¶¶ 18, 47-48.) 

STANDARDS

Under Federal Rule of Civil Procedure 8(a), a pleading must

contain “a short and plain statement of the claim showing that

the pleader is entitled to relief.” See Ashcroft v. Iqbal, 129

S. Ct. 1937, 1949 (2009). Under notice pleading in federal

court, the complaint must “give the defendant fair notice of what

the claim is and the grounds upon which it rests.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations

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omitted). “This simplified notice pleading standard relies on

liberal discovery rules and summary judgment motions to define

disputed facts and issues and to dispose of unmeritorious

claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the

complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319,

322 (1972). The court is bound to give plaintiff the benefit of

every reasonable inference to be drawn from the “well-pleaded”

allegations of the complaint. Retail Clerks Int’l Ass’n v.

Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not

allege “‘specific facts’ beyond those necessary to state his

claim and the grounds showing entitlement to relief.” Twombly,

550 U.S. at 570. “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Iqbal, 129 S. Ct. at 1949. 

Nevertheless, the court “need not assume the truth of legal

conclusions cast in the form of factual allegations.” United

States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th

Cir. 1986). While Rule 8(a) does not require detailed factual

allegations, “it demands more than an unadorned, the

defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct. at

1949. A pleading is insufficient if it offers mere “labels and

conclusions” or “a formulaic recitation of the elements of a

cause of action.” Id. at 1950 (“Threadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice.”); Twombly, 550 U.S. at 555. 

Moreover, it is inappropriate to assume that the plaintiff “can

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prove facts which it has not alleged or that the defendants have

violated the . . . laws in ways that have not been alleged.” 

Associated Gen. Contractors of Cal., Inc. v. Cal. State Council

of Carpenters, 459 U.S. 519, 526 (1983). 

Ultimately, the court may not dismiss a complaint in which

the plaintiff has alleged “enough facts to state a claim to

relief that is plausible on its face.” Iqbal, 129 S. Ct. at 1949

(citing Bell Atl. Corp., 550 U.S. at 570). Only where a

plaintiff has failed to “nudge [his or her] claims across the

line from conceivable to plausible,” is the complaint properly

dismissed. Id. at 1952. While the plausibility requirement is

not akin to a probability requirement, it demands more than “a

sheer possibility that a defendant has acted unlawfully.” Id. at

1949. This plausibility inquiry is “a context-specific task that

requires the reviewing court to draw on its judicial experience

and common sense.” Id. at 1950.

ANALYSIS

A. Defendants’ Exhibits

In ruling upon a motion to dismiss, the court may consider

matters which may be judicially noticed pursuant to Federal Rule

of Evidence 201. Mir, 844 F.2d at 649; Isuzu Motors Ltd. v.

Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1042

(C.D. Cal. 1998). Rule 201 permits a court to take judicial

notice of an adjudicative fact “not subject to reasonable

dispute” because the fact is either “(1) generally known within

the territorial jurisdiction of the trial court or (2) capable of

accurate and ready determination by resort to sources whose

accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). 

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The court can take judicial notice of matters of public record,

such as pleadings in another action and records and reports of

administrative bodies. See Emrich v. Touche Ross & Co., 846 F.2d

1190, 1198 (9th Cir. 1988). 

“Even if a document is not attached to a complaint, it may

be incorporated by reference into a complaint if the plaintiff

refers extensively to the document or the document forms the

basis of the plaintiff’s claim.” United States v. Ritchie, 342

F.3d 903, 908 (9th Cir. 2003). “The defendant may offer such a

document, and the district court may treat such a document as

part of the complaint, and thus may assume that its contents are

true for purposes of a motion to dismiss under Rule 12(b)(6).” 

Id. The policy concern underlying the rule is to prevent

plaintiffs “from surviving a Rule 12(b)(6) motion by deliberately

omitting references to documents upon which their claims are

based.” Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998). 

Several of plaintiff’s claims for relief are dependent upon

Wachovia’s status as a federal savings bank and AmNet’s status as

financial institution. Exhibits 1 and 3 contained in defendants’

Request for Judicial Notice (“RFJN”) address Wachovia’s and

AmNet’s status, respectively. Accordingly, the court will treat

the exhibits as part of the complaint and assume that their

contents are true for purposes of the motions to dismiss. 

Ritchie, 342 F.3d at 908.

B. TILA

Plaintiff’s first claim for relief alleges, inter alia, that

defendant AmNet violated TILA by (1) failing to provide the

required disclosures to plaintiff at the time of closing, and (2)

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failing to respond to plaintiff’s letter of “rescission.” (FAC

¶¶ 33, 58-60.) AmNet moves to dismiss the claim, arguing that

(1) plaintiff’s claim for rescission must fail because she has

not pled the ability to tender payment, and (2) plaintiff’s

damages claim is time barred. (Def.’s Mot. to Dismiss (“MTD”),

filed Oct. 22, 2009, 3:17-21.)

TILA “has the broad purpose of promoting ‘the informed use

of credit’ by assuring ‘meaningful disclosure of credit terms’ to

consumers.” Ford Motor Credit Co. v. Milhollin, 444 U.S. 555,

560 (1980) (quoting 15 U.S.C. § 1601). The statute “requires

creditors to provide borrowers with clear and accurate

disclosures of terms dealing with things like finance charges,

annual percentage rates of interest, and the borrower’s rights.”

Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998). A loan

disclosure violation under TILA triggers two potential remedies

for a borrower: rescission, 15 U.S.C. § 1635, and damages, 15

U.S.C. § 1640. Plaintiff seeks to rescind the loan and obtain

damages pursuant to § 1640(a)(2).

1. Rescission Under TILA

In the present action, plaintiff alleges that defendant

AmNet did not provide her with the required notice of her right

to rescind in violation of 15 U.S.C. § 1635(a). (FAC ¶¶ 59-60.) 

AmNet moves to dismiss, arguing that plaintiff failed to plead

the ability to tender payment. In response, plaintiff asserts

that she need not plead the ability to tender “where it would be

inequitable to do so.” (Pl.’s Opp’n to MTD (“Pl.’s Opp’n”),

filed Jan. 26, 2010, 6:14-15.)

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In a consumer credit transaction where the creditor acquires

a security interest in the borrower’s principal dwelling, TILA

provides the borrower with “a three-day cooling-off period within

which [he or she] may, for any reason or for no reason, rescind”

the transaction. McKenna v. First Horizon Home Loan Corp., 475

F.3d 418, 421 (1st Cir. 2007) (citing 15 U.S.C. § 1635). A

creditor must “clearly and conspicuously disclose” this right to

the borrower along with “appropriate forms for the [borrower] to

exercise his right to rescind.” 15 U.S.C. 1635(a). If a

creditor fails to provide the borrower with the required notice

of the right to rescind, the borrower has three years from the

date of consummation to rescind the transaction. Id. § 1635(f);

12 C.F.R. § 226.23(a)(3) (“If the required notice or material

disclosures are not delivered, the right to rescind shall expire

3 years after consummation.”). 

The Ninth Circuit has held that rescission under TILA

“should be conditioned on repayment of the amounts advanced by

the lender.” Yamamoto v. Bank of N.Y., 329 F.3d 1167, 1170 (9th

Cir. 2003). District courts in this circuit have dismissed

rescission claims under TILA at the pleading stage based upon the

plaintiff’s failure to allege an ability to tender loan proceeds. 

See, e.g., Ibarra v. Plaza Home Mortgage, No. 08-CV-01707-H, 2009

U.S. Dist. LEXIS 80581, at *22 (S.D. Cal. Sept. 4, 2009); Pesayco

v. World Sav., Inc., 2009 U.S. Dist. LEXIS 73299, at *4 (C.D.

Cal. July 29, 2009); Carnero v. Weaver, No. 08-CV-01707-H, 2009

U.S. Dist. LEXIS 62665, at *8 (N.D. Cal. July 20, 2009); Ing Bank

v. Korn, No. C09-124Z, 2009 U.S. Dist. LEXIS 73329, at *7 (W.D.

Wash. May 22, 2009); Garza v. Am. Home Mortgage, No. CVF 08-1477,

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2009 U.S. Dist. LEXIS 7448, at *15 (E.D. Cal. Jan. 27, 2009)

(stating that “rescission is an empty remedy without [the

borrower’s] ability to pay back what she has received”).

Here, plaintiff’s failure to plead the ability to tender

payment is fatal to her rescission claim. See Boles, 2009 WL

650631, at *1 (determining that, in absence of demonstrated

ability to tender, plaintiff did not demonstrate likelihood of

success on merits of TILA claim); Garza, 2009 U.S. Dist. LEXIS

7448, at *15. Plaintiff did not plead any facts supporting the

ability or willingness to tender payment in her FAC, and her

subsequent filings are devoid of any assertions that would allow

the court to make a reasonable inference that she once had or

currently has the ability to tender. Moreover, plaintiff has

failed to plead any facts or cite any authority to support her

assertion that conditioning rescission upon repayment would be

inequitable. 

Accordingly, AmNet’s motion to dismiss plaintiff’s first

claim for rescission under TILA is GRANTED.

2. Damages Under TILA

Plaintiff also seeks damages under TILA for AmNet’s alleged

failure to make the initial disclosures required by TILA. (FAC ¶

63.) AmNet contends that the one year statute of limitations set

forth in 15 U.S.C. § 1640(e) bars plaintiff’s claim for damages. 

In response, plaintiff argues that her claim is not time barred

because the doctrine of equitable tolling suspended the statute

of limitations. (Pl.’s Opp’n 7:19-21, 8:23-24.)

A party alleging damages under TILA must bring a claim

“within one year from the date of the occurrence of the

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violation.” 15 U.S.C. § 1640(e). As a general rule, the

statutory period “starts at the consummation of the [loan]

transaction.” King v. California, 784 F.2d 910, 915 (9th Cir.

1986). The Ninth Circuit, however, has held that equitable

tolling of the TILA limitations period is authorized in

appropriate circumstances. King, 784 F.2d at 914-15. Such

circumstances exist where “a reasonable plaintiff would not have

known of the existence of a possible claim within the limitations

period.” Santa Maria v. Pac. Bell, 202 F.3d 1170, 1178 (9th Cir.

2000). In such a case, the limitations period may be extended

“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. Generally, a litigant

seeking equitable tolling of a limitations period bears the

burden of establishing entitlement to equitable tolling. See

Pace v. DiGuglielmo, 544 U.S. 408 (2005).

Here, because plaintiff alleges to have consummated the loan

on July 23, 2007, and filed the instant lawsuit on July 20, 2009,

her TILA damages claim is facially time-barred. Although

plaintiff’s claim is subject to equitable tolling, she has failed

to allege any facts to establish her entitlement to such tolling. 

The basis for plaintiff’s damages claim involves defendant’s

failure to provide the required disclosures at the consummation

of the loan. (FAC ¶ 40.) However, courts have held that such an

allegation, standing alone, is insufficient to plausibly state a

basis for tolling. See, e.g., Garcia v. Wachovia Mortgage Corp.,

No. 2:09-cv-03925-FMC, 2009 WL 3837621, at *7-8 (C.D. Cal. Oct.

14, 2009) (finding that plaintiff did not “state facts plausibly

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indicating any basis for tolling the statute of limitations”

because “the mere allegation of TILA disclosure violations does

itself not toll the statute”).

Furthermore, plaintiff’s bare contention that AmNet

“purposefully hid[]” facts surrounding the loan transaction,

without more, is also insufficient proof of a basis for tolling. 

The complaint is devoid of any allegations as to how defendants

hid this information, or when plaintiff discovered the alleged

TILA violations. See Lingad v. IndyMac Fed. Bank, 2:09-cv-02347,

2010 U.S. Dist. LEXIS 7350, at *7-8 (E.D. Cal. Jan. 29, 2010)

(“[W]hen a plaintiff fails to allege facts demonstrating that the

TILA violations alleged could not have been discovered by due

diligence during the one-year statutory period, equitable tolling

should not be applied and dismissal at the pleading stage is

appropriate.”). 

Accordingly, defendants’ motion to dismiss plaintiff’s

damages claim based on a failure to disclose required documents

under TILA is GRANTED.

C. California’s Rosenthal Act

Plaintiff’s second claim for relief alleges that defendant

Wachovia violated California’s Rosenthal Fair Debt Collection

Practices Act (“RFDCPA”), Cal. Civ. Code §§ 1788 et seq., by

using “unfair and unconscionable” means to attempt to collect

payment from plaintiff. (FAC ¶ 69.) Wachovia contends that

plaintiff failed to plead any facts that could plausibly support

a claim for relief. 

The purpose of the RFDCPA is “to prohibit debt collectors

from engaging in unfair or deceptive acts or practices in the

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collection of consumer debts and to require debtors to act fairly

in entering into and honoring such debts.” Cal. Civ. Code §

1788.1(b). A debt collector violates the act when it engages in

harassment, threats, the use of profane language, false

simulation of the judicial process, or when it cloaks its true

nature as a licensed collection agency in an effort to collect a

debt. See id. §§ 1788.10-88.18; see also Hernandez v. Cal.

Reconveyance Co., 2009 U.S. Dist. LEXIS 13936, at *13 (E.D. Cal.

Feb. 23, 2009) (holding that RFDCPA claim failed because

complaint lacked allegations of harassment or abuse, false or

misleading representations of debt collector’s identity, or

unfair practices during process of collecting debt). However,

the mere allegation that defendants foreclosed on a deed of trust

does not implicate the RFDCPA. See, e.g., Benham v. Aurora Loan

Servs., 2009 U.S. Dist. LEXIS 78384, at *6 (N.D. Cal. Sept. 1,

2009); Ricon v. Recontrust Co., 2009 U.S. Dist. LEXIS 67807, at

*9 (S.D. Cal. Aug. 4, 2009); Hepler v. Wash. Mut. Bank, FA, 2009

U.S. Dist. LEXIS 33883, at *11 (C.D. Cal. Apr. 17, 2009). 

In the present case, plaintiff claims that Wachovia sent her

deceptive letters, made phone calls to plaintiff demanding

payment, and made false reports about plaintiff’s credit to

credit reporting agencies. (FAC ¶¶ 69-70.) However, these bare

allegations fail to adequately put Wachovia on notice of the

basis for the alleged RFDCPA violation. For example, plaintiff’s

FAC does not allege how or why Wachovia’s letters and credit

reports were misleading. Plaintiff also does not allege threats,

harassment, or profane language that occurred after the loan was

made. In short, plaintiff’s FAC fails to state facts that give

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rise to a fair inference that Wachovia violated the RFDCPA. See

Larkin v. Select Portfolio Servicing, 2009 U.S. Dist. LEXIS

97656, at *8 (E.D. Cal. Oct. 21, 2009) (holding that allegations

that defendant used “unfair or unconscionable means to collect a

debt” are merely conclusions of law when the plaintiff did not

allege any facts concerning frequency, timing, or methods of debt

collection practices). 

Accordingly, defendants’ motion to dismiss plaintiff’s

RFDCPA claim is GRANTED.

D. Negligence

Plaintiff’s third claim seeks relief on the basis that

defendants AmNet and Wachovia breached various duties owed

plaintiff in connection with her loan transaction. (FAC ¶¶

78-79.) Defendants argue, inter alia, that they owe no tort duty

of care to plaintiff as a matter of law. (MTD 4:25-26.)

Under California law, the elements of a claim for negligence

are “(a) a legal duty to use due care; (b) a breach of such legal

duty; and (c) the breach as the proximate or legal cause of the

resulting injury.” Ladd v. County of San Mateo, 12 Cal. 4th 913,

917 (1996) (internal citations omitted); see also Cal Civ Code §

1714(a). “[A]s 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. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089, 1095 (Ct.

App. 1991).

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2 In her third cause of action, plaintiff does not

specifically identify which “required disclosures” she is

referring to. However, plaintiff does allege in her general

allegations that AmNet failed to provide her with disclosures as

required under TILA, and the court assumes plaintiff is referring

to these documents in her third cause of action.

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1. Defendant AmNet

With regard to defendant AmNet, plaintiff first contends

that AmNet ordered and authorized defendants Crone and

Consolidated to direct plaintiff into a loan she could not

afford. (FAC ¶¶ 77-78.) Specifically, plaintiff alleges that

AmNet, acting as lender, “directly ordered, authorized and

participated in” the alleged misconduct of Crone and

Consolidated. (Id. ¶ 78.) Although a lender may be liable for

actively participating in the negotiation of a loan through a

broker-agent, Plata, 2005 WL 3417375, at *7-8, plaintiff has not

alleged facts that would suggest AmNet’s actions exceeded its

conventional role as a mere lender of money. Plaintiff’s

allegations, without more, do not give rise to negligence

liability.

Next, plaintiff argues that AmNet was negligent in failing

to make the “required disclosures” to plaintiff under TILA.2

(FAC ¶ 78.) Because making such disclosures are within “the

scope of [AmNet’s] conventional role as a mere lender of money,”

Nymark, 231 Cal. App. 3d at 1095, the court rejects plaintiff’s

argument that AmNet owes plaintiff a duty of care. Moreover,

courts in the Ninth Circuit have held that, to the extent a

negligence claim “seeks to impose the requirements of TILA,” such

claims are preempted. Reyes v. Premier Home Funding, Inc., 640

F. Supp. 2d 1147, 1156 (N.D. Cal. June 17, 2009). 

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3 Wachovia requested judicial notice of various documents

that prove it is a federal savings bank in good standing. (RFJN

¶ 2.)

15

Accordingly, defendant AmNet’s motion to dismiss plaintiff’s

negligence claim is GRANTED.

2. Defendant Wachovia

With regard to defendant Wachovia, plaintiff alleges that

Wachovia breached its duty of care by (1) charging fees and

taking payments from plaintiff to which it was not entitled, and

(2) authorizing the “negative reporting of plaintiff’s

creditworthiness to various credit bureaus.” (FAC ¶ 79.) As

noted above, banks do not owe a fiduciary duty to their

borrowers. Nymark, 231 Cal. App. 3d at 1095. Plaintiff has

failed to plead any facts demonstrating that Wachovia exceeded

the scope of its conventional role as a bank.3

 See id.; Kim v.

Sumitomo Bank, 17 Cal. App. 4th 974, 979-81 (Ct. App. 1993);

Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 476 (Ct. App.

1989). Because plaintiff has not alleged that Wachovia had a

duty independent of the mortgagor-mortgagee relationship, she has

failed to state facts sufficient for a claim of negligence. See

Gaitan v. Mortgage Electronic Registration Systems, No. 09-1009,

2009 WL 3244729, at *8 (C.D. Cal. Oct. 5, 2009) (citation

omitted) (“[P]arties to a contractual relationship, such as a

mortgagor and mortgagee, cannot bring a tort claim [for

negligence] unless a legal duty independent of the contract

itself has been violated.”). 

Accordingly, defendant Wachovia’s motion to dismiss

plaintiff’s negligence claim is GRANTED. 

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E. RESPA

Plaintiff’s fourth cause of action is for violation of the

Real Estate Settlement Procedures Act (“RESPA”) against both

defendants. 12 U.S.C. 2601 et seq. Section 2605 of RESPA

requires a loan servicer to provide disclosures relating to the

assignment, sale, or transfer of loan servicing to a potential or

actual borrower: (1) at the time of the loan application, and (2)

at the time of transfer. 12 U.S.C. § 2605. The loan servicer

also has a duty to respond to a borrower’s inquiry or “qualified

written request.” Id. § 2605(e).

1. Defendant Wachovia 

Defendant Wachovia moves to dismiss this claim on the basis

that plaintiff has failed to plead actual damages. A claim for a

RESPA violation cannot survive a motion to dismiss when the

plaintiff does not plead facts showing how the plaintiff suffered

actual harm due to the defendant’s failure to respond to a QWR. 

See Benham v. Aurora Loan Servs., No. C-09-2059 SC, 2009 U.S.

Dist. LEXIS 91287, at *10-11 (N.D. Cal. Oct. 1, 2009); Singh v.

Wash. Mut. Bank, No. C-09-2771 MMC, 2009 U.S. Dist. LEXIS 73315,

at *16 (N.D. Cal. Aug. 19, 2009). While courts interpret this

requirement liberally, the plaintiff must at least allege what

the plaintiff lost or how the plaintiff suffered actual harm. 

See Yulaeva v. Greenpoint Mortgage Funding, Inc., No. CIV.

S-09-1504 LKK, 2009 U.S. Dist. LEXIS 79094, at *44 (E.D. Cal.

Sept. 3, 2009) (holding that plaintiff’s claim was sufficient to

survive motion to dismiss because plaintiff alleged that she was

made to pay referral fee that RESPA prohibited); Hutchinson v.

Del. Sav. Bank, FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006)

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(holding that plaintiffs adequately pled actual damages when they

alleged that they suffered “negative credit ratings on their

credit reports [and] the inability to obtain and borrow another

mortgage loan and other financing”). 

Plaintiff’s FAC does nothing more than claim that she

“suffered and continues to suffer damages” as a result of

Wachovia’s failure to acknowledge plaintiff’s alleged QWR. (FAC

¶ 90.) This allegation, alone, is insufficient to demonstrate

that plaintiff suffered actual damages as a result of Wachovia’s

failure to respond to the alleged QWR.

Accordingly, defendant Wachovia’s motion to dismiss 

plaintiff’s fourth claim for relief for violations of RESPA is

GRANTED.

2. Defendant AmNet 

Defendant AmNet moves to dismiss this claim on the basis

that plaintiff’s claim is barred by the statute of limitations. 

An action brought pursuant to 12 U.S.C. § 2607(a), the

anti-kickback and unearned fees provision of RESPA, is subject to

a one-year statute of limitations, which starts to run on the

date a loan closes. 12 U.S.C. § 2614; see also Kotok v.

Homecomings Fin., No. C09-662RSM, 2009 WL 2057046, at *3 (W.D.

Wash. July 14, 2009). In this case, plaintiff alleges that AmNet

received kickbacks and referral fees disproportionate to the work

it performed. (FAC ¶ 89.) Plaintiff filed the instant action on

July 20, 2009, almost two years after plaintiff’s loan closed on

July 23, 2007. (Docket No. 1; FAC ¶ 31.) Because plaintiff has

not alleged sufficient facts to support equitable tolling, her

RESPA anti-kickback claim is time-barred. 

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Accordingly, defendant AmNet’s motion to dismiss plaintiff’s

fourth claim for relief for violations of RESPA is GRANTED.

F. Breach of Fiduciary Duty

Plaintiff’s fifth claim for relief alleges that AmNet 

breached its fiduciary duty to plaintiff by (1) directly

authorizing and participating in the tortious conduct of

defendants Crone and Consolidated, and (2) by failing to comply

with the requirements of TILA and RESPA. (FAC ¶¶ 93-94, 99.) 

AmNet moves to dismiss the claim on the basis that a lending

institution does not owe a fiduciary duty to a borrower. (MTD

7:10-13.) 

In order to sustain a claim for breach of a fiduciary duty,

“a plaintiff must demonstrate the existence of a fiduciary

relationship, breach of that duty and damages.” Serrano v. Sec.

Nat'l Mortgage Co., No. 09-CV-1416 H (CAB), 2009 U.S. Dist. LEXIS

71725, at *12-13 (S.D. Cal. Aug. 14, 2009) (citing Shopoff &

Cavallo LLP v. Hyon, 167 Cal. App. 4th 1489 (Ct. App. 2008). 

“Absent special circumstances, a loan transaction is at

arms-length and there is no fiduciary relationship between the

borrower and lender.” Rangel v. DHI Mortgage Co., No. CV F

09-1035 LJO GSA, 2009 U.S. Dist. LEXIS 65674, at *8 (E.D. Cal.

July 20, 2009); see also Tasaranta v. Homecomings Fin., No.

09-CV-01722-H (WMC), 2009 U.S. Dist. LEXIS 87372, at *15 (S.D.

Cal. Sept. 21, 2009); Brittain v. IndyMac Bank, FSB, No.

C-09-2953 SC, 2009 U.S. Dist. LEXIS 84863, at *14 (N.D. Cal.

Sept. 16, 2009); Dinsmore-Thomas v. Ameriprise Fin., Inc., No.

SACV 08-587 DOC (PLAx), 2009 U.S. Dist. LEXIS 68882, at *29 (C.D.

Cal. Aug. 3, 2009); Fox & Carskadon Financial Corp. v. San

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Francisco Fed. Sav. & Loan Ass’n, 52 Cal. App. 3d 484, 488, 489

(Ct. App. 1975); Bradler v. Craig, 274 Cal. App. 2d 466, 473, 476

(Ct. App. 1969).

Plaintiff’s claim for breach of fiduciary duty must fail

because plaintiff has not alleged any facts creating a special

circumstance where AmNet, as lender, owed a fiduciary duty to

plaintiff. Plaintiff only alleges that AmNet owed a fiduciary

duty to plaintiff “through their interjection into the brokerage

of the loan . . . .” (FAC ¶ 97.) Under California law, this is

not the type of transaction which creates a fiduciary duty. See,

e.g., Rangel, 2009 U.S. Dist. LEXIS 65674, at *8. Moreover, for

the reasons set forth above, AmNet’s alleged failure to comply

with TILA and RESPA requirements falls squarely within “the scope

of [AmNet’s] conventional role as a mere lender of money” and 

does not give rise to a cause of action for breach of duty. 

Nymark, 231 Cal. App. 3d at 1095.

Accordingly, AmNet’s motion to dismiss plaintiff’s fifth

claim for relief for breach of fiduciary duty is GRANTED.

F. Fraud

Plaintiff’s sixth cause of action alleges fraud against all

defendants. Specifically, plaintiff alleges that AmNet “trained,

directed, authorized, and participated” in the implementation of

a fraudulent scheme to guide borrowers into toxic loans. (FAC ¶

105.) Plaintiff further alleges that Wachovia misrepresented

that it had the right to collect monies from plaintiff. (Id. ¶

106.) AmNet and Wachovia move to dismiss, arguing that

plaintiff’s claim should fail because it does not allege any

specific fraudulent conduct. (MTD 7:25-8:3.)

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A court may dismiss a claim grounded in fraud when its

allegations fail to satisfy Rule 9(b)’s heightened pleading

requirements. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107

(9th Cir. 2003). As a result, plaintiff “must state with

particularity the circumstances constituting fraud.” Fed. R.

Civ. P. 9(b). In other words, the plaintiff must include “the

who, what, when, where, and how” of the fraud. Id. at 1106

(citations omitted). Further, “The plaintiff must set forth what

is false or misleading about a statement, and why it is false.” 

Decker v. Glenfed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994). The

purpose of Rule 9(b) is to ensure that defendants accused of the

conduct specified have adequate notice of what they are alleged

to have done, so that they may defend against the accusations. 

Concha v. London, 62 F.3d 1493, 1502 (9th Cir. 1995). 

Furthermore, “Rule 9(b) does not allow a complaint to merely

lump multiple defendants together but require[s] plaintiffs to

differentiate their allegations when suing more than one

defendant . . . and 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). When

asserting a fraud claim against a corporation, “the plaintiff’s

burden . . . is even greater. . . . The plaintiff must ‘allege

the names of the persons who made the allegedly fraudulent

representations, their authority to speak, to whom they spoke,

what they said or wrote, and when it was said or written.’” 

Lazar v. Superior Court, 12 Cal. 4th 631, 645 (1996) (quoting

Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153,

157 (Ct. App. 1991)); see also Mohammad Akhavein v. Argent

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Mortgage Co., No. 5:09-cv-00634 RMW (RS), 2009 U.S. Dist. LEXIS

61796, at *10 (N.D. Cal. July 17, 2009); Edejer v. DHI Mortgage

Co., No. C 09-1302 PJH, 2009 U.S. Dist. LEXIS 52900, at *36 (N.D.

Cal. June 12, 2009) (dismissing fraud claim where plaintiff did

not allege any misrepresentation or false statements made by

defendants and failed to allege names of individuals who made

fraudulent representations).

Here, plaintiff’s FAC has failed to meet the heightened

pleading requirement of Rule 9(b). Specifically, plaintiff has

alleged fraud against two corporations, AmNet and Wachovia, but

has failed to allege who actually made the supposedly false

representations or their ability to speak for the corporation. 

See Lazar, 12 Cal. 4th at 645; Tarmann, 2 Cal. App. 4th at 157. 

Without such information, plaintiff’s fraud claim as to both

defendants must fail as a matter of law.

Accordingly, defendants’ motion to dismiss plaintiff’s claim

for fraud is GRANTED.

G. Breach of Contract

Plaintiff’s seventh cause of action asserts a claim for

breach of contract against defendants Crone and AmNet. 

Specifically, plaintiff alleges that she “entered into an

agreement with [AmNet], whereby [AmNet] promised to provide

Plaintiff with an affordable loan.” (FAC ¶ 126.) Plaintiff

further alleges that AmNet breached this agreement in various

ways. (Id. ¶ 127.) AmNet moves to dismiss, arguing that

plaintiff failed to identify a contract entered into by both

parties. 

/////

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To state a claim for breach of contract under California

law, plaintiff must allege: (1) the existence of a contract; (2)

his performance or excuse for non-performance of the contract;

(3) defendant’s breach of the contract; and (4) resulting damage. 

Harris v. Rudin, Richman & Appel, 74 Cal. App. 4th 299, 307 (Ct.

App. 1999).

In the present case, plaintiff’s breach of contract claim

fails because plaintiff’s FAC lacks any facts that plausibly

suggest a contract to provide an affordable loan existed between

AmNet and plaintiff. Plaintiff’s FAC alleges that she entered

into a loan agreement with AmNet and that the “terms of the loan

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

Deed of Trust on [plaintiff’s] property.” (FAC ¶ 31.) Plaintiff

did not allege, however, that the terms memorialized in the

promissory note included a written provision to provide plaintiff

with an “affordable loan.” 

Further, plaintiff alleges that defendant Crone approached

her, told her he was a loan officer for defendant Consolidated,

and advised her that he could “get her the ‘best deal’ and the

‘best interest rates’ available on the market.” (FAC ¶¶ 23-24.) 

Even if the court were to accept plaintiff’s allegation that

defendant Crone made such statements, the FAC contains no

additional facts to suggest that Crone was an employee of AmNet,

nor does it suggest that AmNet was aware of and subsequently

agreed to those statements. Therefore, the FAC lacks sufficient

facts to plausibly suggest that AmNet ever entered into a

contract, oral or written, to provide plaintiff with an

affordable loan. See Logan v. Resmae Mortgage Corp., No.

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2:09-cv-016132-MCE-GGH, 2009 WL 5206716, at *4 (E.D. Cal. Dec.

24, 2009) (dismissing breach of contract claim based on same

allegations).

Accordingly, AmNet’s motion to dismiss plaintiff’s seventh

claim for relief for breach of contract is GRANTED.

H. Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiff’s eighth claim for relief asserts that AmNet

breached the implied covenant of good faith and fair dealing. 

Specifically, plaintiff alleges that AmNet breached the implied

covenant of good faith by failing to comply with the duties

“implied by law into the contract at issue in this action at its

inception.” (FAC ¶ 134.) AmNet argues that plaintiff’s claim

should be dismissed because she has failed to identify which

contract AmNet has breached. (MTD 12:5-6.) 

“Generally, every contract . . . imposes upon each party a

duty of good faith and fair dealing in its performance and its

enforcement.” McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th

784, 799 (Ct. App. 2008) (quotations and citations omitted). 

“[T]he implied covenant operates to protect the express covenants

or promises of [a] contract. In essence, the covenant is implied

as a supplement to the express contractual covenants, to prevent

a contracting party from engaging in conduct which (while not

technically transgressing the express covenants) frustrates the

other party’s rights to the benefits of the contract.” Id. at

806 (quotations and citations omitted) (emphasis in original). 

Accordingly, the implied covenant “cannot impose substantive

duties or limits on the contracting parties beyond those 

/////

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incorporated in the specific terms of [the parties] agreement.”

Id.

Here, plaintiff’s FAC fails to allege what contract between

plaintiff and AmNet forms the basis for her claim. Plaintiff’s

FAC alleges that “[a] duty of good faith and fair dealing was

implied by law into the contract at issue in this action,” but

never identifies the “contract at issue.” (FAC ¶ 134.) In the

absence of an identifiable, underlying contract, plaintiff has no

basis for her claim. Moreover, plaintiff’s FAC fails to allege

specific acts that would constitute a breach of the implied

covenant of good faith. Even if the court were to assume that

plaintiff’s vague reference to a contract was meant to indicate

the loan agreement memorialized in the promissory note, plaintiff

has pled no facts that suggest AmNet breached their duty.

Accordingly, AmNet’s motion to dismiss plaintiff’s eighth

claim for relief for breach of the implied covenant of good faith

and fair dealing is GRANTED.

I. Wrongful Foreclosure

Plaintiff’s ninth claim for relief is a claim for wrongful

foreclosure against defendants Wachovia, Quality, and MERS. 

Specifically, plaintiff alleges that defendants are not in

possession of the promissory note, and are therefore not entitled

to exercise a non-judicial foreclosure under California Civil

Code § 2924 through 29241. (FAC ¶¶ 142-43.) Defendants move to

dismiss this claim on the ground that plaintiff cannot assert a

claim for wrongful foreclosure when no foreclosure has taken

place. (MTD 12:28-13:1.)

///// 

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Because defendants have not yet initiated a non-judicial

foreclosure sale, plaintiff’s claim is not ripe for review. Am.

States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994). A

claim must be ripe for review in order to be justiciable under

Article III of the Constitution. Id. Because plaintiff’s claim

is not justiciable under Article III of the Constitution, the

court lacks subject matter jurisdiction to resolve this claim.

See West Linn Corporate Park LLC v. City of West Linn, 534 F.3d

1091, 1099 (9th Cir. 2008); Vega v. JPMorgan Chase Bank, N.A.,

654 F. Supp. 2d 1104, 1113 (E.D. Cal. Aug. 26, 2009) (reaching

same result based on absence of foreclosure sale).

Accordingly, defendants’ motion to dismiss plaintiff’s ninth

claim for relief for wrongful foreclosure is GRANTED.

J. Elder Abuse

Plaintiff’s tenth claim for relief alleges that all

defendants engaged in elder financial abuse by taking advantage

of plaintiff’s age and financial circumstances to “defraud

plaintiff of money and property.” (FAC ¶ 152.) Wachovia and

AmNet move to dismiss, arguing that plaintiff’s claim is

improperly pled. 

Elder financial abuse occurs when a person or entity

“[t]akes, secretes, appropriates, obtains, or retains real or

personal property of an elder or dependent adult for a wrongful

use or with intent to defraud, or both.” Cal. Wel. & Inst. Code

§ 15610.30(a)(1). Elder financial abuse also occurs when a

person or entity assists another in such conduct. Id. §

15610.30(a)(2). A violation of the statute occurs if, inter

alia, the person or entity (1) “takes, secretes, appropriates,

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obtains, or retains the property,” and that person or entity (2)

“knew or should have known that this conduct is likely to be

harmful to the elder or dependent adult.” Id. § 15610.30(b). 

Here, plaintiff fails to allege which particular defendant

engaged in fraud, when the alleged fraud occurred, and how such

conduct was fraudulent. See Nevis v. Wells Fargo Bank, No. C

07-2568 MHP, 2007 WL 2601213, at *4 (N.D. Cal. Sept. 6, 2007)

(finding that plaintiff’s bare allegations that defendant acted

in bad faith and intended to defraud plaintiff by inducing her

into unmanageable loan were not specific enough to allege claim

of elder abuse); Delaney v. Baker, 20 Cal. 4th 23, 32 (1999). 

Therefore, the facts contained in plaintiff’s FAC, without more,

fail to allege a claim for elder abuse. 

Accordingly, defendants’ motion to dismiss plaintiff’s tenth

claim for relief for elder abuse is GRANTED.

K. Unfair Business Practices

Plaintiff’s eleventh claim for relief asserts that all

defendants violated Section 17200 of the California Business &

Professions Code by engaging in unlawful, unfair, and fraudulent

business practices. (FAC ¶ 118.) Specifically, plaintiff’s

claim against Wachovia is based on its alleged violations of

California’s Rosenthal Act and RESPA, negligence, fraud, and

illegal foreclosure activities. (FAC ¶ 118.) Similarly,

plaintiff’s claim against AmNet is based on alleged violation of

TILA and RESPA, negligence, breach of fiduciary duty, fraud,

breach of contract, and breach of the implied covenant of good

faith and fair dealing. (Id. ¶ 119.) Defendants move to 

/////

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dismiss, arguing that plaintiff’s FAC fails to state a cognizable

claim. 

The Unfair Competition Law (“UCL”), California Business and

Professions Code §§ 17200 et seq., forbids acts of unfair

competition, which includes “any unlawful, unfair or fraudulent

business act or practice.” Cal. Bus. & Prof. Code § 17200. “The

UCL is broad in scope, embracing anything that can properly be

called a business practice and that at the same time is forbidden

by law.” People ex rel. Gallegos v. Pac. Lumber Co., 158 Cal.

App. 4th 950, 959 (Ct. App. 2008) (internal citations omitted). 

Because plaintiff’s UCL claim is predicated upon defendants’

alleged violations of claims already dismissed above, plaintiff’s

allegations regarding her UCL claim similarly fail to state a

basis for relief. 

Accordingly, defendants’ motion to dismiss plaintiff’s

eleventh claim for relief for violation of the UCL is GRANTED.

CONCLUSION

For the foregoing reasons, defendants’ motion to dismiss is

GRANTED with leave to amend. Plaintiff is granted fifteen (15)

days from the date of this order to file a second amended

complaint in accordance with this order. Defendants are granted 

thirty (30) days from the date of service of plaintiff’s second

amended complaint to file a response thereto.

IT IS SO ORDERED. 

DATED: March 3rd, 2010.

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