Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00928/USCOURTS-casd-3_11-cv-00928-0/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1640 Truth in Lending

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

NANCY TARSHA,

Plaintiff,

CASE NO: 11-CV-928 W (MDD)

 

ORDER (1) GRANTING

DEFENDANTS’ REQUEST FOR

JUDICIAL NOTICE [DOC. 25-2];

AND (2) GRANTING

DEFENDANTS’ MOTION TO

DISMISS PLAINTIFF’S SECOND

AMENDED COMPLAINT [DOC.

25]

v.

BANK OF AMERICA, N.A.;

MORTGAGE ELECTRONIC

SYSTEMS, INC.; LANDSAFE, INC.;

RICARDO RODRIGUEZ, an

individual; and DOES 1-100 inclusive,

Defendants.

Pending before the Court is Defendants Bank of America, N.A., Mortgage

Electronic Systems, Inc. (“MERS”), and Landsafe, Inc.’s motion to dismiss Plaintiff’s

Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). (MTD 1

[Doc. 25].) Defendants also request judicial notice of nine documents attached to their

 Defendant Ricardo Rodriguez joins in the motion. (Rodriguez Joinder [Doc. 26].) 1

- 1 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 1 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

motion. (Defs.’ RJN [Doc. 25-2].) Plaintiff Nancy Tarsha opposes. (Pl.’s Opp’n [Doc.

27].) The Court decides the matter on the papers submitted and without oral argument

pursuant to Civil Local Rule 7.1(d)(1). For the reasons below, the Court GRANTS

Defendants’ request for judicial notice, and GRANTS Defendants’ motion.

I. BACKGROUND

In 2000, Plaintiff Nancy Tarsha leased a parcel of property on Cox Road in San

Marcos, California. (Second Amended Compl. “SAC” [Doc. 24] 5.) The lease gave

Tarsha an option to purchase the property at the end of a three-year term. (Id.) A

horse trainer by trade, Tarsha used the Cox Road property as a personal residence and

a boarding facility for her horses. (Id.) In April 2004, Tarsha obtained a mortgage loan

to purchase the Cox Road property for $1,250,000. (Id.)

In early 2005, Tarsha was approached by Defendant Ricardo Rodriguez, a home

loanconsultant for Countrywide HomeLoans,Inc. (“Countrywide”), aboutrefinancing 2

her mortgage on the Cox Road property. (Id.) Following Rodriguez’s solicitation,

Tarsha subdivided the Cox Road property into two parcels: 390 Cox Road and 424Cox

Road. (Id. at 5-7) Over the next year, Tarsha entered into seven different transactions

with Countrywide, all executed by Rodriguez (collectively, “transactions”):

1. On April 27, 2005, Tarsha refinanced the 424 Cox Road parcel with a

$608,000 adjustable-rate loan from Countrywide. (Id. at 5-6; SAC Exs. 1,

2.)

2. On May 27, 2005, Tarsha obtained a $55,000 line of credit on the 390

Cox Road parcel through Countrywide. (SAC 8.)

3. On May 31, 2005, Tarsha refinanced the 390 Cox Road parcel with a

$825,000 jumbo loan from Countrywide. (SAC 7; SAC Ex. 3.)

 Tarsha sues Bank of America as successor-in-interest to Countrywide. (SAC 18.) 2

- 2 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 2 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4. On August 9, 2005, Tarsha refinanced the 424 Cox Road parcel, this time

with a $610,000 loan from Countrywide. (SAC 9; SAC Ex. 5; Defs.’ RJN

Ex. F.) Countrywide’s interest was secured by a deed of trust on the 424

Cox Road property, recorded August 16, 2005. (Id.)

5. On September 22, 2005, Tarsha obtained a $148,500 line of credit on the

424 Cox Road parcel through Countrywide. (SAC 11; Defs.’ RJN Ex. G.) 

Countrywide’s interest was again secured by a deed of trust on the

property, recorded September 22, 2005. (Id.)

6. On December 22, 2005, Tarsha refinanced the 390 Cox Road parcel with

a $910,000 adjustable-rate loan from Countrywide. (SAC 12; Defs.’ RJN

Ex. A.) Countrywide’s interest was secured by a deed of trust on the

property, recorded December 29, 2005. (Id.)

7. Finally, on January 30, 2006, Tarsha obtained a $188,500 line of credit on

the 390 Cox Road parcel through Countrywide. (SAC 13; Defs.’ RJN Ex.

B.) Countrywide’s interest was again secured by a deed of trust, recorded

February 1, 2006. (Id.)

Tarsha maintains that each transaction above was procured by fraud on

Rodriguez’s part. (See SAC 5-12) For instance, Rodriguez repeatedly inflated Tarsha’s

income on loan and line-of-credit applications in order to secure approval. (Id.; SAC

Exs. 1, 8, 13.) Rodriguez reported Tarsha’s monthly income as $27,000, a figure that

she contends she has never made. (SAC 7.) Tarsha also alleges that Rodriguez

knowingly failed to document her extensive liabilities and inflated the value of her

properties on certain loan applications. (Id.) Finally, Tarsha contends that Rodriguez

consistently failed to provide her with disclosures required by federal law throughout

the various transactions. (Id. at 5-12.)

Ultimately, Tarsha believes that Rodriguez induced her into repeated

transactions for the sole purpose of generating fees for himself and other Countrywide

affiliates, such as Landsafe. (See, e.g., id. at7-8.) Although Rodriguez assured Tarsha

that refinancing would help her stay in her home, each transaction only made her worse

off: she incurred substantial pre-payment penalties with each refinance, she received

no cash payouts as a result of the refinance and line-of-credit transactions, her total

- 3 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 3 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

indebtedness to Countrywide increased with each transaction, and the term of her

indebtedness was only extended further into the future. (Id. at 5-12.) 

In early 2008, Tarsha defaulted on her 424 Cox Road mortgage (transaction four

above). (SAC 22.) Recontrust, the trustee identified on each deed of trust executed

on behalf of Countrywide, recorded a notice of default and election to sell on May 27,

2008. (Defs.’ RJN Ex. H.) On September 3, 2008, Recontrust recorded a notice of

trustee’s sale on the 424 Cox Road property. (Defs.’ RJN Ex. I.) Soon after, Tarsha also

defaulted on her 390 Cox Road mortgage (transaction six above). (Defs.’ RJN Ex. D.) 

On February 20, 2009, Recontrust recorded a notice of default for that property as well. 

(Id.) Tarsha entered into Chapter 13 bankruptcy protection in August 2010, and was

discharged on March 9, 2011. (SAC 15.) Tarsha filed her instant action in this Court

on April 30, 2011. (See Compl. [Doc. 1].)

On February 10, 2012, Tarsha filed her FAC in the instant case. (See FAC.) 

Tarsha asserted ten causes of action: (1) fraud - intentional misrepresentation; (2) fraud

- negligent misrepresentation; (3) breach of fiduciary duty; (4) violation of the Truth

in Lending Act (“TILA”); (5) violation of the Real Estate Settlement Procedures Act

(“RESPA”); (6) violation of the Fair Debt Collection Practices Act (“FDCPA”) and

California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”); (7)

violation of California’s Unfair Competition Law (“UCL”); (8) breach of implied

covenant of good faith and fair dealing; (9) wrongful foreclosure; and (10) quiet title. 

(Id.) Tarsha also sought equitable tolling on the applicable statutes of limitation and

requests arbitration/mediation of hersubstantive claims. (Id. at 33-36, 39.) Defendants

moved to dismiss each of Tarsha’s claims. (See Mot. Dismiss FAC [Doc 18].)

On June 28, 2012, the Court granted in part and denied in part Defendants

motion to dismiss the FAC, and granted Tarsha leave to amend. (See Order[Doc. 23].) 

On August 8, 2012, Tarsha filed her Second Amended Complaint asserting the same

causes of action listed above. (See SAC [Doc. 24].) Defendants again move to dismiss

each of Tarsha’s claims. (See MTD.)

- 4 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 4 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

II. LEGAL STANDARD

Courts must dismiss a cause of action for failure to state a claim upon which relief

can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6)

tests the complaint’s sufficiency. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d

1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for

lack of a cognizable legal theory or for insufficient facts under a cognizable theory. 

Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the

motion, a court must “accept all material allegations of fact as true and construe the

complaint in a light most favorable to the non-moving party.” Vasquez v. L.A. Cnty.,

487 F.3d 1246, 1249 (9th Cir. 2007).

However, the courts are not “required to accept as true allegations that are

merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” 

Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “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. 554, 555 (2007). 

Instead, the allegations in the complaint must “contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). “The plausibility

standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer

possibility that a defendant has acted unlawfully.” Id. 

Generally, courts may not consider material outside the complaint when ruling

on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d

1542, 1555 n.19 (9th Cir. 1990). However, courts may consider documents specifically

identified in the complaint whose authenticity is not questioned by parties. Fecht v.

Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on other

grounds). Moreover, courts may consider the full text of those documents, even when

the complaint quotes only selected portions. Id. Courts may also consider material

- 5 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 5 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

properly subject to judicial notice without converting the motion into one for summary

judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. S. Bay

Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by

Astoria Fed. Sav. and Loan Ass’n v. Solimino, 501 U.S. 104 (1991)).

III. DISCUSSION

A. Defendants’ Requests for Judicial Notice

Defendants seek judicial notice of nine documents, including recorded deeds of

trust and notices of default or trustee’s sale associated with the 390 Cox Road and 424

Cox Road properties. (Defs.’ RJN.) Tarsha does not oppose. The Court may take

notice of facts that are “not subject to reasonable dispute in that [they are] . . . capable

of accurate and ready determination by resort to sources whose accuracy cannot be

reasonably questioned.” Fed. R. Evid. 201(b)(2). Because each of Defendants’

documents is a matter of public record, the Court takes notice of each of them. See

Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). 

B. Defendants’ Motion to Dismiss

Defendants have moved to dismiss each claim alleged in Tarsha’s SAC. (See

MTD.) Because Tarsha has again not opposed dismissal of her causes of action for

wrongful foreclosure and quiet title, the Court GRANTS Defendants’ motion to

dismiss with respect to these claims WITH PREJUDICE. Tarsha’s remaining claims

are considered below.

1. Fraud & Negligent Misrepresentation

In her first and second causes of action, Tarsha alleges that Rodriguez and

Countrywide defrauded her by making false statements of material fact in each of the

seven transactions discussed above. (SAC 23-29.) Specifically, Rodriguez falsely

- 6 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 6 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

inflated Tarsha’s income to secure approval of each transaction, mislead Tarsha about

the prepayment penalties and closing costs she suffered with each refinancing, and

assured her that refinancing would keep her in her home. (Id. at 24-25, 27-28.) 

Defendants contend that Tarsha’s fraud and negligence misrepresentation claims are

time-barred and otherwise inadequately pled. (MTD 6-9.) 

The statute of limitations on fraud and negligent misrepresentation claims under

California law is three years. Cal. Code Civ. P. § 338(d); see Wilson v. Century 21

Great W. Realty, 15 Cal. App. 4th 298, 306 (1993) (“Negligent misrepresentation is a

species of fraud.”). Under California Code of Civil Procedure § 338(d), a cause of

action for fraud or negligent misrepresentation does not accrue, however, until the

aggrieved party discovers “the facts constituting the fraud or mistake.” This so-called

discovery rule “postpones accrual of a cause of action until the plaintiff discovers, or has

reason to discover, the cause of action.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th

797, 807 (2005); Sun ‘n Sand, Inc. v. United Cal. Bank, 21 Cal. 3d 671, 350 (1978).

“In order to rely on the discovery rule for delayed accrual of a cause of action,

[a] plaintiff whose complaint shows on its face that his claim would be barred without

the benefit of the discovery rule must specifically plead facts to show (1) the time and

manner of discovery and (2) the inability to have made earlier discovery despite

reasonable diligence.” Fox, 35 Cal. 4th at 808 (emphasis added); Taguinod v. World

Sav. Bank, FSB, 755 F. Supp. 2d 1064, 1071 (C.D. Cal. 2010) (applying Fox to a federal

complaint); see also Cervantes v. City of San Diego, 5 F.3d 1273, 1277 (9th Cir. 1993)

(explaining that equitable tolling may only be applied if plaintiff’s complaint

“adequately alleges facts showing the potential applicability of the equitable tolling

doctrine”). In other words, the plaintiff must plead facts demonstrating that “he was

not negligent in failing to make the discovery sooner.” Sun ‘n Sand, 21 Cal. 3d at 702. 

Although “resolution of the statute of limitations is normally a question of fact,” a

plaintiff’s allegations may also be so deficient as to warrant dismissal at the pleading

- 7 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 7 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

stage. Fox, 35 Cal. 4th at 810; Sun n’ Sand, 21 Cal. 3d at 702 (declining to apply

discovery rule on the pleadings alone). 

Each allegedly fraudulent transaction entered into between Tarsha and

Countrywide occurred in 2005 or 2006, more than three years before she filed her

original complaint in April 2011. (SAC 5-12; Compl.) Tarsha alleges that she did not

discover Defendants’ alleged wrongdoing until she received a Forensic Audit Report

and the letter from Defendant on March 22, 2010 and May 14, 2010, respectively. 

(SAC ¶¶ 30, 67, 74, 83.) At this stage of the proceedings, this is sufficient to establish

the time and manner of discovery, satisfying the first prong of the discovery rule. At

issue here is the second prong of the discovery rule, namely, Tarsha’s alleged inability

to have made this discovery earlier. Defendants argue that Tarsha’s SAC is nearly

identical to her previously dismissed FAC and introduces no new allegations supporting

her exercise of reasonable diligence to make the discovery sooner. (MTD 6.) Tarsha

contests Defendants’ characterization of her SAC, and cites various reasons why her

discovery was delayed. (Opp’n [Doc. 27] 22-25.) 

Tarsha first contends that her delay was reasonable because her loans were too

complex for her to understand without assistance. (SAC ¶ 26 (arguing Tarsha

attempted to “unravelthe maze of loans” she had acquired but soon realized she “lacked

the experience and ability to understand what went on with her loans).) Indeed,

Tarsha argues that she never even considered looking into the validity and legality of

the various transactions until the first notice of default was issued to her by Recontrust

on September 3, 2008. (Id. at ¶ 25.) A reasonable person in Tarsha’s situation would

have inquired into the legitimacy of the transactions far before the issuance of the

notice of default, given the sheer volume of transactions executed in only 10 months

and the high value of the loans and credit lines. (SAC ¶¶ 1, 5-12; Order [Doc. 23] 8.) 

Moreover, a reasonable person would have inspected the loans’ material terms upon

singing, or at minimum, afterreceiving the loan documents. See Rey v. OneWest Bank,

- 8 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 8 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

FSB, 2013 WL 127839, * 5 (E.D. Cal. January 6, 2013)(Citing Tiqui v. First National

Bank of Ariz., 2010 WL 1345381, *6 (S.D.Cal. April 5, 2010). 

Tarsha next insists that her delay was reasonable because Defendants’ actions

delayed her discovery. (SAC at ¶ 26 (insisting that she continued her “discovery

efforts” by calling Countrywide and Bank of America, but was further delayed by these

Defendants giving her the “run-around); Opp’n at 23(citing Tarsha Decl. [Doc. 24-

3])(arguing Tarsha had “no reason to believe that” her loan applications were

inaccurate because she implicitly trusted Mr. Rodriguez and was continually reassured

that Defendants were acting in her best interest).) First, the alleged “run-around” she

received does not account for her delay in verifying the legality of the transactions from

the time she entered into the transactions in 2005 and 2006 to September 3, 2008,

when she received the notice of default. Second, a reasonable person would not be

“compelled” to “implicitly trust” Mr. Rodriguez to “take care of everything.” (SAC at

¶ 53.) This is especially true since a reasonable person would not trust a loan officer

who claimed that he could process loan applications without the applicant’s review or

signature. (Id.)

Finally, Tarsha suggests that she was incapacitated and unable to pursue her

investigation due to her depression. (Id. at ¶ 26; Tarsha Decl. [Doc. 24-3] ¶¶ 13, 14.) 

Because Tarsha alleges thatthis incapacitation occurred in 2009, it does not explain her

delay in discovering the alleged fraud from the time she entered into the transactions

in 2005 and 2006 until 2009. (Id. at ¶ 26.)

When viewed in the context of her SAC as a whole, these allegations do not

support application of the discovery rule. Instead, the SAC demonstrates that Tarsha’s

failure to discover Defendants’ alleged fraud within the three-year statute of limitations

period was attributable to her own negligence. See Sun ‘n Sand, 21 Cal.3d at 702. 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

- 9 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 9 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Court GRANTS Defendants’ motion to dismiss Tarsha’s claims for fraud and

negligent misrepresentation WITH PREJUDICE.

2. Breach of Fiduciary Duty

In her third cause of action, Tarsha alleges that Defendants breached their

fiduciary duty to her by (1) inducing her into the various transactions for the sole

purpose of generating fees, (2) failing to disclose the potential “adverse consequences”

of participating in each loan, and (3) failing to modify her loans in compliance with the

federal Making Home Affordable Refinance program. (SAC 30-31.) Defendants

contend that Tarsha’s third claim is time-barred as to the loan-origination allegations

and fails to establish a fiduciary relationship as to her loan-modification allegations. 

(MTD 9-10.) 

As its name implies, a cause of action for breach of fiduciary duty requires, at the

very least, a fiduciary relationship. Pierce v. Lyman, 1 Cal. App. 4th 1093, 1101 (1991). 

“A fiduciary or confidential relationship can arise when confidence is reposed by

persons in the integrity of others, and if the latter accepts or assumes to accept the

confidence, he or she may not act so as to take advantage of the other’s interest without

that person’s knowledge or consent.” Id. at 1101-02. “As a general rule, a financial

institution owes no duty of care to a borrower when the institution’s involvement in the

loan transaction does not exceed the scope of its conventional role as a mere lender of

money.” Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096

(1991); Oaks Mgmt. Corp. v. Sup. Ct., 145 Cal. App. 4th 453, 466 (1991).

Tarsha has still not demonstrated that her loan-origination claims are timely. 

Like fraud, the statute of limitations is three years. Hobbs v. Bateman Eichler, Hill

Richards, Inc., 164 Cal. App. 3d 174, 201 (1985). Tarsha contends that her breach-offiduciary-duty claims sound in fraud and are therefore subject to the discovery rule. 

Even if this is true, Tarsha has not alleged sufficient facts to warrant application of that

rule on the pleadings. See Part III.B.1. Nor does the more generous discovery rule

arising out of fiduciary relationships cure her negligence in not discovering Defendants’

- 10 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 10 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

alleged frauds earlier. “Where a fiduciary relationship exists, facts which ordinarily

require investigation may not incite suspicion.” Hobbs, Cal. App. 3d at 201. But even

then, “[a] person in a fiduciary relationship may relax, but not fall asleep.” Alfaro v.

Cmty. Hous. Improvement Sys. & Planning Ass’n, Inc., 171 Cal. App. 4th 1356, 1394-

95 (2009). Tarsha still had a duty to investigate Rodriguez’s misconduct when “she

became aware of facts which would make a reasonably prudent person suspicious.” 

Miller v. Bechtel Corp., 33 Cal. 3d 868, 875 (1983). At the very least, the fact that Mr.

Rodriguez claimed that it was unnecessary for Tarsha to review or sign her applications 

should have warned Tarsha that something was very suspicious about her loans with

Countrywide. (SAC ¶ 53.) Moreover, a reasonable person would have inspected the

material terms of the loans upon signing, or shortly thereafter. See Part III.B.1. 

Tarsha also argues that Defendants breached their fiduciary duty because they

failed to comply with the Making Home Affordable Refinance program (“HAMP”)by

failing to present her with viable options to modify her loans. (SAC ¶ 91.) Defendants

move to dismiss these “failure to modify allegations” because Tarsha cannot and does

not “allege that Defendants owed her a duty, fiduciary or otherwise, to grant her a loan

modification.” (MTD 10 (citing SAC ¶ 91).) The Court agrees with Defendants.

“Under HAMP, individual loan servicers voluntarily enter into contracts with

Fannie Mae, acting as the financial agent of the United States, to perform loan

modification services in exchange for certain financial incentives.” Vasquez v. Wells

Fargo Home Mortg., 2012 WL 985308 * 3 (S.D. Cal. March 22, 2012). “Participating

servicers are required to consider all loans eligible under the program; however, they are

not required to modify mortgages.” Id. (citing Escobedo v. Countrywide Home Loans,

Inc., 2009 WL 4981618, at *1 (S.D. Cal. Dec. 15, 2009). Defendants do not contest

that they entered into the HAMP agreement.

“Numerous district courts within the Ninth Circuit have ruled that there is no

express or implied private right of action to sue lenders or loan servicers for violation

of HAMP.” Cleveland v. Aurora Loan Serv., LLC, et al., 2011 WL 2020565, at *4

(N.D.Cal. May 24, 2011) (collecting cases); see also Carlos v. Bank of Amer. Home

- 11 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 11 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Loans, et al., 2011 WL 166343, at * 1 (C.D.Cal. Jan.13, 2011) (“[I]t is well established

that there is no private cause of action under HAMP”) (quoting Singh v. Wells Fargo

Bank, 2011 WL 66167 at *7 (E.D.Cal.Jan.7, 2011)) (quotation marks omitted)). 

Because Tarsha has no private right of action against defendants under HAMP, her

claim predicated onallegations that Defendants violated HAMP must be dismissed with

prejudice. 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

the Court GRANTS Defendants’ motion to dismiss with respect to Tarsha’s loanorigination claims and her failure-to-modify claims WITH PREJUDICE. 

3. TILA Violations

In her fourth cause of action, Tarsha alleges that Defendants failed to provide

various disclosures required by TILA. (SAC 31-34.) Tarsha seeks monetary damages

based on these claims. (Id. at ¶ 103.) These claims are time-barred.

Actions for TILA damages are subject to a one-year statute of limitations that

begins to run on “the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). 

The limitations period of a TILA damages claim may be tolled until the borrower

discovers or had reasonable opportunity to discover the fraud or nondisclosures that

form the basis of the TILA action. King v. California, 784 F.2d 910, 915 (9th Cir.

1986). 

A reasonably diligent person would have read the loans’ material terms upon

signing, or, at a minimum, after receiving the loan documents. See Rey, * 5. Thus, it

was not reasonable for Tarsha to wait until September 3, 2008 when she received the

notice of default before first examining the loan papers and material loan terms. Id.;

See Hubbard v. Fid.Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996). Therefore, Tarsha

cannot claim thatshe was reasonably diligent in discovering the alleged TILA violations

if she discovered them in 2010, five years after executing the transactions. (Id. at ¶

103.) Moreover, to the extent that Tarsha attempts to toll the statute by way of her

- 12 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 12 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

repeated delayed discovery allegations, they fail as set forth above. See Part III.B.1. 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

the Court GRANTS Defendants’ motion to dismiss Tarsha’s TILA claims WITH

PREJUDICE.

4. RESPA Violations

In her fifth cause of action, Tarsha alleges that Defendants violated RESPA by

(1) not providing her with a loan servicing statement (12 U.S.C. § 2605(a)), (2)

overcharging her for “appraisal, closing costs, and other hidden fees” (12 U.S.C. §

2607), (3) and failing to properly respond to her Qualified Written Requests (“QWR”)

(12 U.S.C. § 2605(e)). (SAC 36-37.) Again, Defendants move to dismiss Tarsha’s

claim as untimely and inadequately pled. (MTD 13-15.)

Tarsha’s RESPA claims under § 2605 are subject to a three-year statute of

limitations that begins to run on “the date of the occurrence of the violation.” 12

U.S.C. § 2614. Tarsha’s § 2607 claim for “unearned fees” is subject to a one-year

statute of limitations. 12 U.S.C. § 2614. Like TILA damages claims, RESPA claims

may be equitable tolled. Blaylock v. First Am. Title Inc. Co., 504 F. Supp. 2d 1091,

1106-08 (W.D. Wash. 2007). Tarsha’s claims for failure to provide a servicing

statement and overcharging arise from the completion of her transactions with

Countrywide, more than four years before she filed her original complaint. (SAC 36-

37.) Tarsha essentially argues that the statute of limitations should be tolled because

Defendants concealed these violations by withholding required disclosures. (SAC ¶

107.) But the violation itself cannot serve to toll the statute of limitations; otherwise,

the statute of limitations is meaningless. See Garcia v. Wachovia Mortg. Corp., 676 F.

Supp. 2d 895, 906 (C.D. Cal. 2009) (finding the same in the TILA context). This

Court already explained that Tarsha must allege some “fraudulent conduct beyond the

nondisclosure itself” to justify equitable tolling. Id. However, Tarsha has essentially

realleged her concelament theory here. (SAC ¶ 107.) To the extent that she argues

- 13 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 13 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

that her delay was caused by her depression and not concealment, this Court finds her

equitable tolling argument unpersuasive as detailed above. See Part III.B.1. Because

general allegations of fraudulent concealment do not satisfy this pleading requirement,

Tarsha’s servicing-statement and overcharging claims are time-barred as pled. 

Tarsha’s QWR claim alleges that Defendants did not properly respond to her

purported QWR by failing to provide the requested information, failing to make

corrections to the borrower’s account, and failing to provide written notification of

correction. (SAC ¶ 111.) Defendants argue that this claim must be dismissed because

Plaintiff’s purported QWRis not compliantwith statutory requirements. (MTD 13-14.)

Defendants also move to dismiss this claim on the basis that their response to the

purported QWR met statutory requirements. (Id. at 14.) The Court agrees with

Defendants.

In order for correspondence to constitute a QWR, it must include “a statement

of the reasons for the belief . . . that the account is in error.” 12 U.S.C.

§2605(e)(1)(B)(ii). Tarsha’s purported QWR does not meet this threshold

requirement. Instead, the letter simply informs defendants that she disputes the

amount owed in her monthly billing statement without providing any detail as to the

reasons she believes the account is in error. (Purported QWR [Doc. 24-2] Ex. P15 p. 1.) 

Thus, Defendants were not required to respond to the purported correspondence,

effectively insulating them from liability for the claimed violation of the statute. 

Moreover, Defendants argue that they provided a detailed, timely response that

complied with the statute and expressly contradicted her allegations of non-compliance. 

(See MTD 14; Response to Purported QWR [Doc. 24-2] Ex. P19.) Tarsha does not refute

that her QWR was improper or that the Defendants response was improper anywhere

in her Opposition. (See Opp’n 36-39.) 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In addition, Tarsha has

failed to refute Defendants’ claims regarding the validity of her purported QWR. In

- 14 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 14 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

light of the foregoing, the Court GRANTS Defendants’ motion to dismiss Tarsha’s

RESPA claims WITH PREJUDICE. 

5. FDCPA & Rosenthal Act Violations

In her sixth cause of action, Tarsha alleges that Defendants engaged in unlawful

debt collection activities in violation of the FDCPA and Rosenthal Act. (SAC 38-41). 

Defendants move to dismiss Tarsha’s claim as inadequately pled because Defendants

are not“debt collectors” and because Tarsha failsto allege any improper debt collection

activity. (MTD 15-17.) The Court agrees with Defendants that they are not “debt

collectors” under the Rosenthal Act and the FDCPA. 

The FDCPA does not govern efforts by creditors collecting their own debts. 15

U.S.C. § 1692a(6). Moreover, creditors, mortgagors and mortgage servicing companies

are not “debt collectors” and are exempt from liability under the Act. Caballero v.

Ocwen Loan Servicing, 2009 WL 1528128, at *1 (N.D. Cal. May 29, 2009). Because

Defendants are a “loan servicer,” no claim can be stated against them under the

FDCPA.

Like the FDCPA, the RFDCPA applies only to debt collectors. Izenberg v. ETS

Services, LLC, 589 F.Supp.2d 1193, 1199 (C.D. Cal. December 8, 2008). However, 

the definition of “debt collector” found in the state statute is broader than the FDCPA’s

definition. Id. The RFDCPA defines a “debt collector” as “any person who, in the

ordinary course of business, regularly, on behalf of himself or herself or others, engages

in debt collection.” See Cal. Civ. Code. § 1788.2(c). However, “[t]he law is clear that

foreclosing on a deed of trust does not invoke the statutory protections of the

[Rosenthal Act].” Sipe v. Countrywide Bank, 690 F.Supp.2d 1141, 1151 (E.D. Cal.

2010)(citations omitted); Izenberg, 589 F.Supp. 2d at 1199 (“foreclosure does not

constitute debt collection under the Rosenthal Act”). Thus, no claim can be stated

against Defendants under the Rosenthal Act.

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

- 15 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 15 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Court GRANTS Defendants’ motion to dismiss Tarsha’s FDCPA and Rosenthal

Act claims WITH PREJUDICE. 

6. California UCL Violations

In her seventh cause of action, Tarsha alleges that Defendants violated

California’s unfair competition law by engaging in the wrongful acts otherwise pled in

her previously discussed causes of action. (SAC 41-43.) California’s UCL broadly

prohibits “any unlawful, unfair or fraudulent business act or practice and unfair,

deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. Because

§ 17200 is written in the disjunctive, it establishes three varieties of unfair competition:

acts or practices that are (1) unlawful, (2) unfair, or (3) fraudulent. Cel-Tech

Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). “Violation of

almost any federal, state, or local law may serve as the basis for a [UCL] claim.”

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

Saunders v. Sup. Ct., 27 Cal. App. 4th 832, 838-39 (1994)). Defendants contend that

Tarsha’s UCL claim is time-barred, inadequately pled, and fails to demonstrate an

“injury in fact.” (MTD 17-19.) The Court agrees that the claim is time-barred and

inadequately plead.

An action for unfair competition under Business and Professions Code § 17200

shall be commenced within four years after the cause of action accrued. Bus. & Prof.

Code, § 17208. There is disagreement whether the “discovery rule” applies to unfair

competition actions. Compare Snapp & Associates Ins. Services, Inc. V. Malcome

Bruce Burlingame Robertson, 96 Cal. App. 4 884, 891 (2002)(holding that the

th

discovery rule does not apply to unfair competition actions), with Aryeh v. Canon

Business Solutions, Inc., 55 Cal. 4th 1185, 1194-95 (Cal. 2013)(finding that the

discovery rule applies to UCL claims to the same extent it applies to any other statutory

claim and explaining that the application of the rule depends not on the cause of action

but the nature of the right sued upon). 

- 16 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 16 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

If the discovery rule does apply, Tarsha’s attempts to toll the statute of limitations

fail as set forth above. See Part III.B.1. If the discovery rule does not apply, then “the

statute begins to run ... irrespective of whether plaintiff knew of its accrual, unless

plaintiff can successfully invoke the equitable tolling doctrine.” Stutz Motor Car of

America v. Reebok Intern., Ltd., 909 F.Supp. 1353, 1363 (C.D.Cal. 1995). As

explained below, Tarsha cannot invoke the equitable tolling doctrine. See Part III.B.8. 

In either case, Tarsha’s claims that are otherwise time-barred are time-barred under the

UCL. Tarsha’s claims which are not time-barred but are otherwise improper– alleged

HAMP violations, RESPA claims in connection with the purported QWR, FDCPA

claims, Rosenthal Act Claims–cannot serve as a basis for a UCL claim because they do 

not adequately allege any “unlawful,” “unfair,” or “fraudulent” business practices. 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

the Court GRANTS Defendants’ motion to dismiss Tarsha’s UCL claim WITH

PREJUDICE.

7. Breach of Good Faith

In her eighth cause of action, Tarsha alleges that Defendants have breached the

implied covenant of good faith and fair dealing by (1) failing to provide her with proper

disclosures and misrepresenting her financial position in connection with the

transactions, (2) self dealing to unjustly enrich themselves, (3) initiating foreclosure

proceedings on her property and (4) failing to provide proper notices of that foreclosure. 

(SAC 44-45.) Defendants argue that Tarsha’s eighth cause of action should be

dismissed because it is time-barred and fails to allege a breach of contract. (MTD 19.)

“There is implied in every contract a covenant by each party not to do anything

which will deprive the other parties thereto of the benefits of the contract. This

covenant not only imposes upon each contracting party the duty to refrain from doing

anything which would render performance of the contract impossible by any act of his

own, but also the duty to do everything that the contract presupposes that he will do

- 17 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 17 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

to accomplish its purpose.” 1 WITKIN, SUMMARY 10TH CONTRACTS , § 798, p. 892

(2005). A breach of good faith claim sounds in contract, and thus has a four-year

statute of limitations. Frazier v. Metroplitan Life Ins. Co., 169 Cal. App. 3d 90, 102

(1985).

The alleged breaches of good faith surrounding the origination of the loans

occurred more than four years before Tarsha filed her claim. Because these claims fall

outside of the statute of limitations, and because Tarsha is not entitled to the discovery

rule, these claims are time barred. See Part III.B.1. 

The alleged breaches of good faith regarding foreclosure fall within the statute

of limitations, because they allegedly occurred in 2008. However, Tarsha fails to plead

any wrongdoing on Defendants’ part in connection with these claims. Tarsha does not

dispute that she defaulted on her loan obligations, thereby empowering Defendants to

foreclose. (See FAC ¶140.) Therefore, Tarsha has not adequately plead that the

foreclosure was wrongful. 

Tarsha’a allegations that Defendants failed to provide her with proper notice are

insufficient because actual receipt by the trustor of a notice of default is not required. 

(SAC ¶140; Knapp v. Doherty, 123 Cal. App. 4th 76, 88 (2004)(“The trustor need not

receive actual notice of the trustee’s sale so long as notice is provided to the trustor that

is in compliance with the statute.”).) The judicially noticeable documents in this

matter show that Recontrust, the trustee identified on each of Tarsha’s deeds of trust,

recorded notices mandated byCalifornia’s non-judicial foreclosure system. Tarsha does

not explain why these are defective or provide any additional factual allegations to

support her claim. (See SAC 32-33) (incorporating allegations in her first seven claims,

but not from her wrongful foreclosure or quiet title causes of action.) 

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

the Court GRANTS Defendants’ motion to dismiss Tarsha’s breach of good faith claim

WITH PREJUDICE. 

- 18 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 18 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8. Equitable Tolling

Tarsha’s ninth cause of action again seeks equitable tolling of “all causes of action

alleged in [her] Second Amended Complaint.” (SAC ¶ 142.) Defendant argues that

Tarsha provides no justification for equitable tolling of her claims. (MTD 20.) The

Court agrees.

“Equitable tolling is generally applied in situations ‘where the claimant has

actively pursued his judicial remedies by filing a defective pleading during the statutory

period, or where the complainant has been induced or tricked by his adversary’s

misconduct into allowing the filing deadline to pass.’” O'Donnell v. Vencor Inc., 466

F.3d 1104, 1112 (9th Cir. 2006)(citing Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89,

96 (1990)).

First, Tarsha makes no allegations that she actively pursued her judicial remedies

by filing a defective pleading during the relevant statutory period. (See SAC 142-148.) 

Second, Tarsha fails to allege that she had been induced into allowing the filing

deadline to pass. (See id.) Third, to the extent that Tarsha contends that she was

unable to detect Defendants’ wrongdoing due to Defendants’ “fraudulent concealment,”

the Court is unpersuaded. See Part III.B.1. Accordingly, the equitable tolling doctrine

does not apply to save any of Tarsha’s otherwise time-barred causes of action.

Given the fact that Tarsha had a chance to cure the deficient pleadings here and

was unable to do so, it appears leave to amend would be futile. In light of the foregoing,

the Court GRANTS Defendants’ motion to dismiss Tarsha’s equitable tolling claims

WITH PREJUDICE. 

//

//

//

//

//

//

- 19 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 19 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IV. CONCLUSION

For these reasons, the Court GRANTS Defendants’ motion to dismiss. 

IT IS SO ORDERED.

DATED: March 29, 2013

Hon. Thomas J. Whelan

United States District Judge

- 20 - 11-CV-928 W

Case 3:11-cv-00928-W-MDD Document 29 Filed 03/29/13 Page 20 of 20