Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_09-cv-01422/USCOURTS-caed-1_09-cv-01422-3/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

 EASTERN DISTRICT OF CALIFORNIA

DELIA MAYNEZ and ARTURO

MAYNEZ,

Plaintiffs,

v.

ELIZABETH GARZA, CALEB J. KHAN,

SUMMERFIELD MORTGAGE &

REALTY, AMERICA’S WHOLESALE

LENDER, and JOSE MORENO, and

DOES 1 through 50, inclusive,

Defendants.

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CIV-F-09-1422 AWI SMS

ORDER REMANDING CASE TO

THE SUPERIOR COURT, COUNTY

OF FRESNO

I. History1

 Plaintiffs Delia and Arturo Maynez live at 13401 East Ann Avenue in Parlier, CA. 

Plaintiffs refinanced the mortgage on their house. Defendant Countrywide Home Loans, doing

business as America’s Wholesale Lender (“Countrywide”), was the lender on that transaction. 

Defendant Summerfield Mortgage & Realty (“Summerfield”) was the mortgage broker. 

Summerfield was owned by Defendant Caleb J. Khan. Defendant Elizabeth Garza was the loan

processor. Defendant Jose Moreno was the notary public who notarized the refinancing

The factual history is provided for background only and does not form the basis of the 1

court’s decision; the assertions contained therein are not necessarily taken as adjudged to be true. 

The legally relevant facts relied upon by the court are discussed within the analysis. 

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documents. In discussing the deal, Defendant Garza promised Plaintiffs that they could refinance

at a rate of 6.5%. Plaintiffs signed the refinancing documents on April 20, 2006. Plaintiffs

discovered one year later that their interest rate had increased to 8.2%; they had an adjustable rate

mortgage. Looking through the documents, Plaintiffs found signatures and initials that were

forged. Plaintiffs contacted the Parlier Police Department. Investigation revealed that the

documents were notarized by Defendant Moreno outside of Plaintiffs’ presence. 

Plaintiffs filed suit in Superior Court, County of Fresno on October 17, 2008, alleging

eight causes of action: (1) violation of the Truth in Lending Act (“TILA”), (2) predatory lending,

(3) breach of fiduciary duty, (4) fraud and forgery, (5) violation of Cal. Bus. & Prof. Code

§17200, (6) intentional infliction of emotional distress, (7) negligent infliction of emotional

distress, and (8) conspiracy. Defendants removed the case to federal court based on federal

question jurisdiction over the TILA claim. Countrywide then filed a motion to dismiss to which

Plaintiffs filed no opposition. The matter was taken under submission without oral argument. 

II. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the

plaintiff’s “failure to state a claim upon which relief can be granted.” A dismissal under Rule

12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient

facts alleged under a cognizable legal theory. Navarro v. Block, 250 F.3d 729, 732 (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. Factual allegations must be enough to raise a right to relief above the

speculative level, on the assumption that all the allegations in the complaint are true (even if

doubtful in fact)....a well-pleaded complaint may proceed even if it strikes a savvy judge that

actual proof of those facts is improbable” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56

(2007), citations omitted. “[O]nly a complaint that states a plausible claim for relief survives a

motion to dismiss. Determining whether a complaint states a plausible claim for relief will, as the

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Court of Appeals observed, be a context-specific task that requires the reviewing court to draw

on its judicial experience and common sense. But where the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it

has not shown that the pleader is entitled to relief.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950

(2009), citations omitted. The court is 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). The court must also assume that “general

allegations embrace those specific facts that are necessary to support the claim.” Lujan v. Nat’l

Wildlife Fed’n, 497 U.S. 871, 889 (1990), citing Conley v. Gibson, 355 U.S. 41, 47 (1957),

overruled on other grounds at 127 S. Ct. 1955, 1969. Thus, the determinative question is

whether there is any set of “facts that could be proved consistent with the allegations of the

complaint” that would entitle plaintiff to some relief. Swierkiewicz v. Sorema N.A., 534 U.S.

506, 514 (2002). At the other bound, courts will not assume that plaintiffs “can prove facts

which [they have] not alleged, or that the defendants have violated...laws in ways that have not

been alleged.” Associated General Contractors of California, Inc. v. California State Council of

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

In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited

to reviewing only the complaint. “There are, however, two exceptions....First, a court may

consider material which is properly submitted as part of the complaint on a motion to dismiss...If

the documents are not physically attached to the complaint, they may be considered if the

documents’ authenticity is not contested and the plaintiff’s complaint necessarily relies on them.

Second, under Fed. R. Evid. 201, a court may take judicial notice of matters of public record.”

Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), citations omitted. The Ninth

Circuit later gave a separate definition of “the ‘incorporation by reference’ doctrine, which

permits us to take into account documents whose contents are alleged in a complaint and whose

authenticity no party questions, but which are not physically attached to the plaintiff’s pleading.”

Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005), citations omitted. “[A] court may not

look beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition

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to a defendant’s motion to dismiss. Facts raised for the first time in opposition papers should be

considered by the court in determining whether to grant leave to amend or to dismiss the

complaint with or without prejudice.” Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003),

citations omitted.

The federal removal statute permits the removal from state court to federal court of cases

that might have been filed in federal court originally. See 28 U.S.C. §1441(a). “The burden of

establishing federal jurisdiction is on the party seeking removal, and the removal statute is

strictly construed against removal jurisdiction.” Prize Frize Inc. v. Matrix Inc., 167 F.3d 1261,

1265 (9th Cir. 1999). “If at any time prior to judgment it appears that the district court lacks

subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. §1447(c). A district court has

“a duty to establish subject matter jurisdiction over the removed action sua sponte, whether the

parties raised the issue or not.” United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d

960, 967 (9th Cir. 2004). “Thus, the court can, in fact must, dismiss a case when it determines

that it lacks subject matter jurisdiction, whether or not a party has a filed a motion.” Page v. City

of Southfield, 45 F.3d 128, 133 (6th Cir. 1995). In other words, a district court may remand a

removed case sua sponte if it determines that it lacks subject matter jurisdiction over the case. 

See Parker v. Ho Sports Co., 2005 U.S. Dist. LEXIS 37289 at *1 (E.D. Cal. 2005); Knutson v.

Allis-Chalmers Corp., 358 F. Supp. 2d 983, 990 (D. Nev. 2005); Tortola Restaurants, L.P. v.

Kimberly-Clark Corp., 987 F. Supp. 1186, 1188 (N.D. Cal. 1997); cf. Kelton Arms Condo.

Homeowners Ass’n v. Homestead Ins. Co., 346 F.3d 1190, 1192-93 (9th Cir. 2003) (holding that

a court may not sua sponte remand for procedural defects in removal but noting a distinction

between procedural and jurisdictional defects and that a “district court must remand if it lacks

jurisdiction”).

III. Discussion

This case was removed to federal court because of the TILA claim. Plaintiffs allege

“DEFENDANTS, and each of them, violated the provisions of the Federal Truth in Lending Act

and Regulation Z under the Act in relation to the above-described transaction by failing to make

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required disclosures, including but not limited to disclosures related to the finance charges,

charging excessive fees, entering into the contract without a good faith belief that Plaintiffs could

make the required payments....Plaintiffs [are] entitled to recover from DEFENDANTS, and each

of them, twice the amount of the finance charges imposed in connection with the abovementioned contracts.” Doc. 2, Ex. A, Complaint, at 7:15-24. Generally, TILA “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. Failure to satisfy the Act

subjects a lender to criminal penalties for noncompliance, as well as to statutory and actual

damages traceable to a lender’s failure to make the requisite disclosures, see §1640.” Beach v.

Ocwen Fed. Bank, 523 U.S. 410, 412 (1998), citations omitted. “Any action under this section

may be brought in any United States district court, or in any other court of competent

jurisdiction, within one year from the date of the occurrence of the violation.” 15 U.S.C.

§1640(e). The one-year limitations period “runs from the date of consummation of the

transaction but...the doctrine of equitable tolling may, in the appropriate circumstances, suspend

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

fraud or non-disclosures that form the basis of the TILA action.” King v. California, 784 F.2d

910, 915 (9th Cir. 1986). For purposes of TILA, “consummation” is defined as “the time that a

consumer becomes contractually obligated on a credit transaction.” 12 C.F.R. § 226.2(a)(13);

Grimes v. New Century Mortg. Corp., 340 F.3d 1007, 1009 (9th Cir. 2003).

Countrywide argues that the TILA claim is time-barred. Defendant Garza does not

appear to have been served in this case. The other Defendants have filed answers to the

complaint. They have all raised statute of limitations as an affirmative defense. See Doc. 13,

Moreno Answer, at 8:15-18; Doc. 18, Khan’s and Summerfield’s Answer, at 9:6-10. 

In this case, Plaintiffs signed the refinancing documents on April 20, 2006. Plaintiffs

claim, “It was not until one year later that PLAINTIFFS realized they had been mislead and

misinformed.” Doc. 2, Ex. A, Complaint, at 4:3-5. That is, it appears that Plaintiffs did not

realize that their mortgage was an adjustable rate mortgage until the interest reset after twelve

months. Accepting those allegations as true, the statute of limitations might be equitably tolled

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for one year. Countrywide argues, “Any potential equitable tolling argument is also barred

because Plaintiffs specifically allege they discovered the alleged wrongdoing around April 2007

(Compl. ¶11), well over a year before the October 2008 lawsuit.” Doc. 12, Countrywide Brief, at

4:1-3. Plaintiffs have not filed any opposition to Countrywide’s brief to disagree with the

assertion that the statute of limitations has run out. Thus, it is clear that Plaintiffs filed their

TILA claim beyond the one-year limitations period. 

Dismissal of the TILA claim against all Defendants is appropriate. As the remaining

claims are all rooted in state law, there is no longer any federal question jurisdiction. “If at any

time before final judgment it appears that the district court lacks subject matter jurisdiction, the

case shall be remanded.” 28 U.S.C. §1447(c). 

IV. Order

Plaintiffs’ TILA claim, the first cause of action, is DISMISSED as to all Defendants. The

case is REMANDED to the Superior Court, County of Fresno. 

IT IS SO ORDERED.

Dated: May 4, 2010 /s/ Anthony W. Ishii 

0m8i78 CHIEF UNITED STATES DISTRICT JUDGE

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