Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-00056/USCOURTS-cand-3_08-cv-00056-14/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1640 Truth in Lending

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

RICARDO MARCELOS,

Plaintiff,

 v.

EDWIN MAURICIO PARADA DOMINGUEZ,

GLENDA PARADA, LORENZO PARADA,

VIKI RAAB, COUNTRYWIDE HOME

LOANS, ARGENT MORTGAGE COMPANY,

LLC, PRIMESTAR FINANCIAL SERVICES,

SHOAIB MAHMUD, FINANCIAL TITLE

COMPANY, NEW CENTURY TITLE

COMPANY, RECONTRUST COMPANY,

N.A., and DOES 1 through 100,

Defendants. /

No. C 08-00056 WHA

ORDER GRANTING IN

PART AND DENYING IN

PART DEFENDANTS’

MOTIONS TO DISMISS

INTRODUCTION

This action arises out of the sub-prime lending crisis. Defendants Countrywide Home

Loans, Argent Mortgage Company, New Century Title Company, and Viki Raab move to

dismiss all claims against them. This order holds that certain claims are time-barred and

therefore DISMISSED WITHOUT LEAVE TO AMEND: the claim for statutory damages under the

Truth in Lending Act (“TILA”), the claim under the Real Estate Settlement Procedures Act

(“RESPA”), the claim under the Fair Housing Act, and the claim under the Equal Credit

Opportunity Act. This order holds that certain claims were not pled with sufficient specificity

and are hereby DISMISSED WITH LEAVE TO AMEND: the claim under TILA against Raab,

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the claim under California Civil Code Section 1632 against New Century Title and Raab,

the claim for fraud and deceit, the claim for rescission and restitution, the claims for breach of

fiduciary duty and breach of contract against Viki Raab, the claim under California Business &

Professions Code Section 17200, and the claim for punitive damages. This order holds that all

other claims were sufficiently pled and the motions to dismiss are hereby DENIED. 

STATEMENT

For the purpose of this motion, all well-pled material allegations of the complaint

are taken as true. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 340 (9th Cir. 1996). 

Plaintiff Ricardo Marcelos filed this action on January 4, 2008, to prevent the foreclosure of

his family home on Folsom Street in San Francisco, and to reclaim monies owed to him by

defendants as a result of a home-refinance loan. Plaintiff generally alleges that he was deceived

by mortgage broker Edwin Parada into taking out a loan on his Folsom Street home by

negotiating in Spanish but requiring plaintiff to sign loan documents in English only, thereby

concealing key terms of the loan. Countrywide Home Loans is the current holder of the loan.

Plaintiff purchased the home on Folsom Street on December 15, 1994, as a joint tenant,

and became the sole owner on March 5, 2002. In February 2005, defendant Edwin Parada,

one alleged villain of the piece, contacted plaintiff at his home, and, speaking in Spanish,

introduced himself as a real estate agent and asked plaintiff if he wished to refinance his home. 

Plaintiff said no. Edwin Parada pursued plaintiff with multiple phone calls and unannounced

visits. Plaintiff informed Edwin Parada that he could not afford a bigger mortgage and did not

want to raise his debt. Edwin Parada, however, eventually persuaded plaintiff to open a line of

credit to purchase a second home by showing on his laptop that the Folsom Street home was

valued at $800,000 and by informing plaintiff that a line of credit would not increase his

mortgage payments by more than $100 per month. All conversations were conducted in

Spanish (Compl. ¶¶ 25–30). 

Edwin Parada later brought his brother, defendant Lorenzo Parada, to the Folsom Street

home. Speaking in Spanish, Lorenzo assured plaintiff that a second home was a good idea and

that he would take plaintiff to view potential new homes. Plaintiff gave them documents

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indicating that his monthly income was $4,200 with only $2,000 in savings. Edwin Parada told

plaintiff that his income would not be a problem, and that Edwin would take care of any

problems (id. at 31–32). 

In Spring 2005, Lorenzo Parada met plaintiff to sign the documents at a Starbucks

coffee shop in Hayward, California. Edwin Parada was not present. Lorenzo presented plaintiff

with a set of documents in English and directed him where to sign. Plaintiff signed the

documents and was not given any copies. These documents turned out later to be refinance

papers with defendant Argent Mortgage Company, not documents to open a line of credit. 

Within these documents, the HUD-1 disclosure settlement costs authorized a disbursement of

$200,000 to Edwin Parada (id. at ¶ 32). 

Lorenzo Parada took plaintiff to see numerous homes in Hayward and San Francisco,

and plaintiff was finally persuaded to purchase a home on Girard Street in San Francisco. 

The apparent purpose of purchasing a second home was to acquire a larger home for his family

to live in and to rent out the smaller Folsom Street home. On May 27, 2005, plaintiff met

Edwin Parada and defendant Viki Raab, a notary public in Alameda County, at Starbucks to

sign the purchase documents for the Girard Street property. Plaintiff signed these documents,

which were in English, in Raab’s presence and at her direction while Edwin Parada was away

from the table. Plaintiff did not receive any copies of the documents, and was told he would

receive copies in the mail (id. at ¶¶ 33–34).

In October 2005, plaintiff received a bill on the Folsom Street home for $3,200 per

month — $1,000 more per month than he had previously been paying. The loan has now since

readjusted upward and the payments are $4,400 per month. Also in October 2005, plaintiff

approached Edwin Parada at his office and questioned him about the increased payments. It is

unclear from plaintiff’s allegations whether and how Edwin explained the increases. At the

meeting, Edwin also informed plaintiff that a sum of $200,000 in funds from the Folsom Street

property transaction, originally intended as a down payment on the Girard Street property, was

instead being held by Edwin. Edwin said plaintiff could have the funds at any time, and the

parties agreed that Edwin would pay plaintiff $3,000 per month in interest until Edwin could

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pay the full amount. Edwin made only two or three such payments and then stopped (id. at

¶¶ 35–36).

A few months later, plaintiff requested the full amount of $200,000 from Edwin Parada. 

Plaintiff was unable to get a hold of him until August 2006, whereupon he wrote plaintiff a bad

check for $10,000. In November 2006, plaintiff and his wife finally met with Edwin in his

office, where he agreed to pay the remainder in three installments over the next twelve months. 

No further payments were made. Edwin Parada made more promises to repay plaintiff in

January 2007 and thereafter, but made no payments. In or around January 2007, plaintiff

received a notice of foreclosure on the Girard Street home. That property was sold at a

foreclosure sale on June 6, 2007. Plaintiff’s family was at that time living in the Girard Street

home while renting out the Folsom Street home. As of September 2007, plaintiff’s family

moved back into the Folsom Street home (id. at ¶¶ 37–42). 

Previously, in December 2006, having never received any loan documents from Edwin

Parada, plaintiff requested such documents from defendant Countrywide and received “some of

the loan documents” for the Folsom Street home, all in English (id. at ¶¶ 27, 39). Countrywide

is purportedly the successor-in-interest to and/or assumed all rights, remedies, and liabilities of

Argent Mortgage Company, the company with which defendant Edwin Parada refinanced

plaintiff’s Folsom Street home (id. at ¶ 15). 

New Century Title Company entered into a contract with Argent and plaintiff to serve as

escrow agent (id. at ¶ 82).

Defendants Countrywide, Argent, New Century Title, and Viki Raab now move to

dismiss the claims against them. 

ANALYSIS

A motion to dismiss under Rule 12(b)(6) tests for the legal sufficiency of the claims

alleged in the complaint. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484

(9th Cir. 1995). All material allegations of the complaint are taken as true and construed in the

light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d at 340. 

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual

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 Unless indicated otherwise, all decisions cited in this order omit internal citations.

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allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] 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.” Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964–65 (2007).1

1. SUFFICIENCY OF THE ALLEGATIONS.

Defendants Countrywide, Argent, New Century Title, and Raab move to dismiss the

entire complaint on the basis that it is so sweeping and generally insufficient in its factual

allegations against defendants. New Century Title and Raab argue specifically that the

complaint fails the pleading requirements of FRCP 8(a). Notwithstanding the specific holdings

for each claim, this order finds that, with respect to the complaint as a whole, the allegations

therein are sufficiently specific to withstand a motion to dismiss.

2. FAILURE TO STATE A CLAIM.

Defendants Countrywide, Argent, New Century Title, and Viki Raab move to dismiss

all claims against them for failure to state a claim.

A. TILA and Regulation Z Violations.

Plaintiff asserts claims under TILA against defendants Countrywide, Argent, and Viki

Raab. These defendants each move to dismiss such claims as barred by the statute of

limitations. Defendant Raab moves to dismiss the claim on the separate ground that she is not a

creditor under TILA. Defendant Countrywide moves to dismiss the claim on the further ground

that plaintiff has failed to state a claim to a right to rescind and also that plaintiff failed to state a

claim against Countrywide as an assignee. 

(1) Defendant Raab: Not A Creditor Under TILA.

Defendant Raab moves to dismiss any TILA claims against her because she is not a

“creditor” within the meaning of TILA. 15 U.S.C. 1602(f). Plaintiff does not address this

argument in his opposition and plaintiff’s counsel conceded at the hearing that defendant Raab

should be dismissed with respect to this claim. This order thus dismisses claims under TILA

against defendant Raab.

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(2) The Claim for Rescission of the Loan Transaction.

Plaintiff asserts a claim for rescission of the loan transaction and defendants’ security

interest in his home on the basis of TILA violations.

(a) The Rescission Claim Is Not Time-Barred.

Plaintiff alleges he did not receive material disclosures in violation of TILA, including

notice of his three-day right to rescind the loan transaction (Compl. ¶ 46–47). The statute of

limitations for rescission claims under TILA is three years. 15 U.S.C. 1635(f). The statute of

limitations typically runs from the date of the consummation of the loan. The loan was

consummated on or about March 29, 2005 (Opp. 4) and was rescinded on December 31, 2007

(Compl. ¶ 49). This action was filed on January 4, 2008, within the three-year statute of

limitations. Plaintiff’s claim for rescission under TILA is thus not time-barred.

(b) Right to Rescind.

Defendant Countrywide argues that plaintiff has failed to state a claim for a right to

rescind under 15 U.S.C. 1635 because he has not alleged that he tendered the loan proceeds to

Countrywide. Plaintiff has alleged grounds for rescission based on defendants’ alleged TILA

violations, and sent a letter of notification of rescission to Countrywide on December 31, 2007

(Compl. ¶¶ 3, 39). Contrary to Countrywide’s assertions, plaintiff nowhere contends that such

notice automatically and unilaterally rescinded the loan and voided Countrywide’s security

interest in it. This order finds that plaintiff has stated sufficient facts to claim rescission of the

loan on this motion to dismiss. However, as the Court has stated, rescission means plaintiff

must eventually give the loan proceeds back, but we can address the specific form of rescission

at a later time.

(3) The Claim for Statutory Damages Is Time-Barred.

In addition to his claim for rescission of the loan contract, plaintiff also asserts a claim

for statutory damages under TILA. Plaintiff concedes that the statute of limitations for statutory

damages under TILA is one year pursuant to 15 U.S.C. 1640(e), but nonetheless argues that the

statute of limitations should be equitably tolled. Plaintiff argues that, because defendants

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withheld documents and failed to provide translations thereof, he was unable to seek timely

redress. 

The statute of limitations under TILA for statutory damages may be equitably tolled. 

King v. California, 784 F.2d 910, 915 (9th Cir. 1986). Equitable tolling is appropriate where,

despite due diligence, a plaintiff does not have reasonable opportunity to discover the existence

of possible claims within the limitations period. Santa Maria v. Pacific Bell, 202 F.3d 1170,

1178 (9th Cir. 2000). Contrary to defendant Countrywide’s arguments that a showing of

defendants’ active concealment is required, equitable tolling does not depend on the wrongful

conduct of the defendant, but rather whether the plaintiff’s delay was excusable. 

Countrywide confuses equitable tolling with equitable estoppel, which requires a showing of

wrongful conduct on the part of the defendant. Ibid. 

Plaintiff alleges in the complaint that in October 2005, he received a bill on the Folsom

Street property for “$1,000.00 more per month than he had previously been paying . . . even

though he had been told by defendant Edwin Parada that his mortgage payments on the Folsom

Street property would not increase by more than $100.00” (Compl. ¶ 35). Also in October

2005, plaintiff alleges he approached Edwin Parada at his office and questioned him about the

increased payments, thus indicating that he understood the contents of the bill and realized that

his mortgage payments were increased more than originally agreed to (id. at ¶ 36). At the same

meeting, Edwin informed plaintiff that a sum of $200,000 in funds from the Folsom Street

property transaction was being held by Edwin (ibid.). As shown by the allegations in the

complaint, plaintiff was put on notice in October 2005 that (i) his Folsom Street home mortgage

payments had been increased more than originally negotiated, and (ii) Edwin Parada was in

possession of $200,000 from the Folsom Street transaction. Thus, the statute of limitations

started running in October 2005 at the latest for any claim for which either of these facts would

put a reasonable person on notice of potential claims.

The alleged TILA violations include failing to include certain charges in finance charge

disclosure, improperly calculating the annual percentage rate (“APR”), including a prohibited

prepayment penalty, and extending credit without considering plaintiff’s ability to repay the

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loan. Higher than expected mortgage bills, together with an amount of $200,000 taken from the

loan transaction, would put a reasonable person on notice of claims relating to the amount and

terms of the loan agreement, including the finance charge, the APR, and other charges. 

Additionally, the amount of the mortgage bill would put a reasonable person on notice that the

lender may not have taken into account one’s income and other factors relating to ability to

repay the loan. 

For the above-stated reasons, this order finds that, even if equitable tolling is appropriate

in this case, plaintiff was put on notice of potential TILA violations in October 2005. 

The statute of limitations thus started running at this time at the latest, and the one-year statute

of limitations for statutory damages claims ran in October 2006. This action being filed on

January 4, 2008, plaintiff’s claims for statutory damages under TILA are hereby dismissed as

time-barred without leave to amend.

(4) Defendant Countrywide: Assignee Liability.

Defendant Countrywide argues that an assignee is only liable if violations of TILA are

apparent on the face of the disclosure statement pursuant to 15 U.S.C. 1641(a), and that plaintiff

has failed to state particulars as to how Countrywide violated the TILA. Plaintiff has, however,

alleged that Countrywide was a successor-in-interest to the Argent loan (Compl. ¶ 15), and

noted that the loan documents indicated a broker disbursement of $200,000, a “highly unusual

circumstance” (Opp. 5). The right to rescind is available against “any assignee.” 15 U.S.C.

1641(c). The decision as to whether a violation was apparent on the face of the disclosure

statement is a question of fact to be determined at a later time. Because plaintiff has alleged

that the loan documents indicated violations and that Countrywide was a successor-in-interest to

the loan, this order finds that plaintiff has pled sufficient facts to assert a right to rescind against

defendant Countrywide as assignee.

B. RESPA Violations.

Defendant argue that plaintiff’s second claim under RESPA should be dismissed

because any such claim is barred by the one-year statute of limitations, and further that plaintiff

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2 See Kay v. Wells Fargo & Co. N.A., 2007 U.S. Dist. LEXIS 55519 (N.D. Cal. July 24, 2007)

(Alsup, J.); Blaylock v. First Am. Title Ins. Co., 504 F. Supp. 2d 1091, 1106 (W.D. Wash. 2007) (Robart, J.);

Bloom v. Martin, 865 F. Supp. 1377, 1386–87 (N.D. Cal. 1994) (Armstrong, J.).

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has failed to state a claim under Section 5 of RESPA because it does not provide for private

actions.

(1) Statute of Limitations for Section 8 Claims.

Defendants Countrywide, Argent, New Century Title, and Viki Raab move to dismiss

the second claim for violations of Section 8 of the Real Estate Sales Protection Act (RESPA)

because the claim is time-barred by the one-year statute of limitations pursuant to 12 U.S.C.

2614. Plaintiff concedes that the statute of limitations is one year, but again argues that the

statute of limitations should be equitably tolled.

(a) Availability of Equitable Tolling Under RESPA.

 The Ninth Circuit has not addressed the question of whether equitable tolling is

available under RESPA. Of the three courts in this district to address this question, two held

that equitable tolling was available and the third declined to reach the question.2

Absent a clear indication to the contrary, equitable tolling should be read into every

federal statute. See Holmberg v. Armbrecht, 327 U.S. 392, 396–97 (1946). Two appellate

decisions have addressed whether the statute of limitations in RESPA is subject to equitable

tolling with two different results. The D.C. Circuit in Hardin v. City Title & Escrow Company,

797 F.2d 1037, 1040–41 (D.C. Cir. 1986), held that the statute of limitations was not subject to

equitable tolling. The statute of limitations was in the same section, 12 U.S.C. 2614, that

established jurisdiction for RESPA claims, evincing Congress’ intent that the statute of

limitations was jurisdictional. The decision also pointed out that 12 U.S.C. 2614 was “identical

in all material respects” to 15 U.S.C. 1640(e), the statute of limitations under TILA. Id. at

1039. The statute of limitations under TILA had been held to be jurisdictional by some circuits. 

By analogy, so too was the statute of limitations for RESPA. 

The Seventh Circuit disagreed in Lawyers Title Insurance Corporation v. Dearborn

Title Corporation, 118 F.3d 1157, 1166–67 (7th Cir. 1997), and held otherwise. That decision

first noted that the majority of statutes of limitations are not considered jurisdictional. Id. at

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3 See, e.g., Mullinax v. Radian Guar., Inc., 199 F. Supp. 2d 311, 328 (M.D. N.C. 2002) (Beaty, J.);

Kerby v. Mortgage Funding Corp., 992 F. Supp. 787, 793–96 (D. Md. 1998) (Blake, J.); Moll v. U.S. Life Title

Ins. Co. of N.Y., 700 F. Supp. 1284, 1286–89 (S.D. N.Y. 1998) (Leisure, J.); contra Zaremski v. Keystone Title

Assocs., Inc., 884 F.2d 1391, slip op. at *2 (4th Cir. 1989). 

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1166. While discussing Hardin, it noted “[o]f particular relevance are the decisions which hold

that the statute of limitations in the Truth in Lending Act is not jurisdictional even though the

limitations period is found in the same section as the provision conferring jurisdiction on the

federal courts to enforce the Act.” Ibid (emphasis added). Those included a decision from the

Ninth Circuit, King v. California, 784 F.2d at 914–15, which held that TILA claims are subject

to equitable tolling. Particularly since Lawyers Title rested its holding on Ninth Circuit

precedent, this order finds the Seventh Circuit’s logic more apt. Furthermore, a number of

district courts have held that RESPA’s statute of limitations is subject to equitable tolling.3

Accordingly, equitable tolling is available for RESPA claims. 

(b) Adequacy of Plaintiff’s Allegations for 

Application of Equitable Tolling.

Plaintiff alleges defendants violated Section 8 of RESPA by “failing to make and

provide the required disclosure, by taking kickbacks and unearned fees, and by making and

collecting prohibited charges” (Compl. ¶ 54). As discussed for plaintiff’s TILA claims above,

if either the increases in the Folsom Street mortgage payments or Edwin Parada’s possession of

$200,000 from the transaction would put a reasonable person on notice of potential claims, the

statute of limitations started running at the latest in October 2005, the time plaintiff learned of

these facts. Upon finding out that one’s broker was in possession of $200,000 from a loan

transaction, originally intended for a down payment on another property, a reasonable person

would be put on notice that there were possibly kickbacks or unearned fees taken, or other

prohibited charges made during the loan transaction. A reasonable person would have inquired. 

As a further matter, plaintiff also fails to allege what other kickbacks, unearned fees, or other

prohibited charges defendants allegedly took or made. This order thus finds that plaintiff has

failed to allege facts sufficient to toll the statute of limitations beyond October 2005. 

The statute of limitations for plaintiff’s RESPA Section 8 claim thus ran in October 2006 at the

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latest. This action was filed on January 4, 2008. Plaintiff’s RESPA Section 8 claim is thus

time-barred and dismissed without leave to amend.

(2) Claim Pursuant to RESPA Section 5.

Defendants argue that plaintiff attempts to make a claim under Section 5 of RESPA by

alleging defendants “fail[ed] to make and provide the required disclosure” (Compl. ¶ 54),

and that such claim should be dismissed because Section 5 does not provide for private actions. 

Plaintiff does not specifically assert a claim under 12 U.S.C. 2604 in his complaint, nor does he

counter defendants’ arguments in his pleadings. This order finds that, to the extent that any

claim has been asserted under Section 5 of RESPA, it is hereby dismissed without leave to

amend.

C. Violations of the Fair Housing Act.

This order finds that plaintiff’s claim for violations of the Fair Housing Act, 42 U.S.C.

3605, is barred by the two-year statute of limitations pursuant to 42 U.S.C. 3613(a)(1). 

Plaintiff signed the loan documents on or about March 29, 2005, and this action was filed on

January 4, 2008, over two and a half years later (Opp. 4). Plaintiff does not argue otherwise in

his opposition. This order thus dismisses plaintiff’s third claim for violations of the Fair

Housing Act without leave to amend.

D. Violations of the Equal Credit Opportunity Act.

This order finds that plaintiff’s claim for violations of the Equal Credit Opportunity Act,

42 U.S.C. 1691, is barred by the two-year statute of limitations pursuant to 42 U.S.C. 1691e(f). 

Plaintiff does not argue otherwise in his opposition, but rather requests leave to amend the claim

(Opp. 9). Dismissal without leave to amend is not appropriate where, as here, amendment

would be futile. Schmier v. United States Court of Appeals, 279 F.3d 817, 824 (9th Cir. 2002). 

No amendment could change the fact that the statute of limitations has run. This order thus

dismisses plaintiff’s fourth claim for violations of the Equal Credit Opportunity Act without

leave to amend.

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28 4 See also Ruiz v. Decision One Mortgage Co., LLC, 2006 U.S. Dist. LEXIS 54571 (N.D. Cal. July 25,

2006); Munoz v. Int’l Home Capital Corp., 2004 U.S. Dist. LEXIS 26362 (N.D. Cal. May 4, 2004).

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E. Violations of California Civil Code Section 1632.

Defendants Countrywide, Argent, New Century Title, and Viki Raab move to dismiss

the claim under California Civil Code Section 1632 because it does not apply to the loan at

issue and/or sufficient facts have not been alleged against them.

(1) Section 1632 Applies to the Loan at Issue.

While Section 1632(a)(1) generally excludes loans secured by real property,

Section 1632(b)(4) identifies transactions specifically covered by the statute: “a loan or

extension of credit for use primarily for personal, family or household purposes where the loan

or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240)

of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code. . . .” Cal. Civ. Code

1632. Section 10240 of the California Business and Professions code in turn applies to certain

loans secured by real property that are negotiated by a real estate broker. Cal. Bus. & Prof.

Code 10240. Section 1632 thus applies to the loan at issue.4

(2) Sufficient Allegations.

Defendants Countrywide, Argent, New Century Title, and Viki Raab contend that

plaintiff has not alleged sufficient facts for a claim under Section 1632. 

(a) Defendants New Century Title and Viki Raab.

Defendants New Century Title and Viki Raab argue that plaintiff fails to allege that,

as the escrow company and officer, they were brokers within the definition of Section 1632. 

Plaintiff does not argue otherwise in his opposition, and fails to cite any law extending the

broker’s duty under Section 1632 to the escrow holder. Claims for violations of Section 1632

against New Century Title and Viki Raab are hereby dismissed with leave to amend.

(b) Defendants Countrywide and Argent.

Countrywide argues that plaintiff fails to allege that it negotiated the loan at all, much

less in Spanish, and therefore Section 1632 does not apply to it. Argent argues for the first time

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in its reply brief that plaintiff has not alleged that it is was a loan broker for this transaction,

and therefore Section 1632 likewise does not apply to it.

Plaintiff has alleged that the Paradas negotiated with plaintiff primarily in Spanish and

subsequently failed to provide a copy of the loan agreement in Spanish (Compl. ¶¶ 25–43). 

Plaintiff further alleges agency relationships between all defendants (id. at ¶¶ 22–23). 

Plaintiff’s specific allegations of violation of Section 1632 by the Paradas, together with

allegations of agency relationships between the Paradas, Countrywide, and Argent,

are sufficient to withstand defendants’ motions to dismiss. See Munoz v. Int’l Home Capital

Corp., 2004 U.S. Dist. LEXIS 26362 at *27 (holding that a “boilerplate allegation of agency”

was sufficient to maintain a claim against a mortgage lender on a motion to dismiss). 

Plaintiff alleges Argent was the mortgage company for the transaction, while Countrywide was

the successor-in-interest to Argent’s rights under the loan. This order finds that extending the

duties of the broker under Section 1632 to Argent and Countrywide is appropriate, at least for

purposes of a motion to dismiss.

At the hearing, counsel for both sides indicated that the deposition of defendant Shoaib

Mahmud revealed that Mahmud, and not Edwin Parada, was in fact the loan broker for this

transaction. Plaintiff’s counsel are thus reminded of their duties under Rule 11 to have support

for any factual allegations upon filing any amended complaint. This order thus finds that claims

for violations of California Civil Code Section 1632 against Countrywide and Argent are not

dismissed at this time.

F. Fraud and Deceit.

Defendants Countrywide, Argent, Viki Raab, and New Century Title contend that

plaintiff has not stated a claim for fraud with sufficient particularity as required by FRCP 9(b). 

Rule 9(b) requires that, “[i]n all averments of fraud or mistake, the circumstances constituting

fraud or mistake shall be stated with particularity.” What this means is that allegations of fraud

must be “specific enough to give defendants notice of the particular misconduct which is

alleged to constitute the fraud charged so that they can defend against the charge and not just

deny that they have done anything wrong.” Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir.

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1993). “A pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting

fraud so that the defendant can prepare an adequate answer from the allegations. The complaint

must specify such facts as the times, dates, places, benefits received, and other details of the

alleged fraudulent activity.” Id. at 671–72. For fraud claims involving multiple defendants,

the plaintiff must, at a minimum, “identify the role of each defendant in the alleged fraudulent

scheme.” Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007) (internal brackets omitted).

Plaintiff alleges that the Paradas made false representations (Compl. ¶¶ 25–43). 

With respect to defendant Viki Raab, it is alleged that plaintiff signed documents for the Girard

Street property in English “in her presence and at her direction” on May 27, 2005 (id. at ¶ 34). 

Plaintiff further alleges agency relationships between all defendants (id. at ¶¶ 22–23).

It is not enough for plaintiff to allege that Countrywide, Argent, Viki Raab, and New

Century Title are responsible for the Paradas’ acts without identifying their specific roles in the

fraudulent scheme so that they may defend against the charge. See Maganallez v. Hilltop

Lending Corp., 505 F. Supp. 2d 594, 606 (N.D. Cal. 2007); Swartz v. KPMG LLP, 476 F.3d at

765. With respect to defendant Viki Raab, it is insufficient to merely allege that she was

present at the closing for a different property without any allegations of particular misconduct

on her part. This order thus finds that plaintiff has not pled fraud against Countrywide, Argent,

Viki Raab, or New Century Title with sufficient particularity pursuant to Rule 9(b). 

Accordingly, the claim for fraud and deceit is dismissed with leave to amend with respect to

defendants Countrywide, Argent, Viki Raab, and New Century Title. 

G. Breach of Fiduciary Duty and Breach of Contract.

Defendants New Century Title and Viki Raab move to dismiss the claims for breach of

fiduciary duty and breach of contract on the ground that they had no duty to plaintiff to deliver

the loan documents to him, and also that they in fact delivered such documents to plaintiff. 

Plaintiff alleges that New Century Title entered into a contract with Argent and plaintiff

to perform the duties of escrow agent for closing the subject loan, and breached that contract by

failing to comply with the escrow instructions requiring delivery of two copies of the rescission

notice to plaintiff (Compl. ¶ 82). Plaintiff’s only allegations with respect to Raab are that she

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was a notary public in the County of Alameda, was involved in the transactions, and was

present at the Girard Street property closing (id. at ¶¶ 14, 34). At the hearing, plaintiff’s

counsel asserted the following new facts: New Century Title and its employee Viki Raab

entered into a contract to perform duties as escrow company and officer for the Folsom Street

property but never conducted a face to face meeting to close escrow. Defense counsel for New

Century Title and Viki Raab stated that such allegations were factually incorrect and that Raab

recalls meeting plaintiff in her office. 

Although generally the scope of review on a motion to dismiss is limited to the

allegations in the complaint, evidence on which the complaint “necessarily relies” may be

considered if: “(1) the complaint refers to the document; (2) the document is central to the

plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6)

motion.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). Plaintiff’s allegations as to

New Century Title refer to the escrow instructions, the alleged breach of which is central to

plaintiff’s claim. Plaintiff did not attach the escrow instructions to the complaint, and so

New Century Title has provided a copy (Grossman Decl. Exh. A). Plaintiff does not question

the authenticity of the document in his opposition. The escrow instructions provided by

New Century Title do in fact require that each borrower and person having an ownership

interest in the collateral property receive two copies of the rescission notice, albeit in slightly

different language than alleged in the complaint (id. at 1). Defendants argue, however, that

because the escrow instructions were from “Argent Mortgage Company,” and not from plaintiff,

New Century Title and Viki Raab as escrow company and officer owed no duty to plaintiff to

fulfill these instructions. None of the cases cited by defendants supports the proposition that the

escrow company owes a duty only to the provider of the instructions to follow such

instructions. The cases cited merely support the proposition that the duties of the escrow holder

are “limited to the obligation of the escrow holder to carry out the instructions of each of the

parties to the escrow” and that if “the escrow holder fails to carry out an instruction it has

contracted to perform, the injured party has a cause of action for breach of contract.” 

Summit Fin. Holdings v. Cont’l Lawyers Title Co., 27 Cal. 4th 705, 711 (2002). Plaintiff has

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thus sufficiently pled claims for breach of fiduciary duty and breach of contract against

New Century Title with the following allegations: (i) New Century Title was the escrow

holder; (ii) the escrow instructions required that two copies of the rescission notice be sent to

plaintiff; and (iii) plaintiff never received such documents. 

Defendants also argue that plaintiff’s signature on the rescission notice negates

plaintiff’s claim that he did not receive the documents (Grossman Decl. Exh. B). Such evidence

does not defeat plaintiff’s claim on a motion to dismiss, especially in light of plaintiff’s

allegations that his primary language is Spanish and thus the crux of this case rests on his

inability to understand the documents he signed. Such evidentiary arguments should be made at

a later time.

This order finds that plaintiff has sufficiently pled claims for breach of fiduciary duty

and breach of contract against New Century Title. There are no allegations in the complaint

that Viki Raab was the escrow officer, or that she entered into a contract with plaintiff. 

Accordingly, the claims for breach of fiduciary duty and breach of contract against Viki Raab

are hereby dismissed with leave to amend. Plaintiff’s counsel are reminded, however, of their

duty to comply with the requirements of Rule 11 that all factual allegations must have support.

H. Rescission and Restitution. 

Defendants Countrywide, Argent, New Century Title, and Raab move to dismiss the

claim for rescission and restitution on the ground that it is not a claim for relief, but rather a

remedy. Defendants are correct, and plaintiff does not contend otherwise in his opposition. 

Accordingly, the claim for rescission and restitution is dismissed with leave to amend with

respect to defendants Countrywide, Argent, New Century Title, and Raab. 

I. Violations of Section 17200.

Defendants Countrywide, Argent, New Century Title, and Raab move to dismiss the

claim for violations of Section 17200. Under Section 17200, the plaintiff must assert an

“unlawful, unfair or fraudulent business act or practice.” Thus, Section 17200 establishes three

alternative theories for finding illegal conduct: (1) unlawful, (2) unfair and deceptive, or

(3) fraudulent. Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th

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163, 180 (1999). Since Section 17200 is written in the disjunctive, the plaintiff need allege only

one of the three theories to properly plead a claim. Here, plaintiff alleges that defendants’

practices violated all three prongs of the statute (Compl. ¶¶ 102–110). Plaintiff presents

arguments for only the unlawful and fraudulent prongs. 

(1) Fraudulent.

Section 17200 claims that are grounded in fraud must satisfy the particularity

requirements of Rule 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003)

(applying Rule 9(b)’s pleading requirements for claims based in fraud to a Section 17200

claim). Accordingly, plaintiffs must identify with particularity the statements or omissions that

were made. For the reasons stated above with respect to plaintiff’s fraud and deceit claim,

plaintiff has not met the particularity requirements of Rule 9(b), and thus plaintiff has failed to

meet the pleading requirements for the fraudulent prong under Section 17200.

(2) Unlawful.

Plaintiff fails to allege the predicate for the unlawful prong of Section 17200 in his

complaint, except for a catchall “in violation of federal and state law.” Plaintiff must allege the

specific laws violated by defendants. 

This order hereby dismisses plaintiff’s Section 17200 claim with leave to amend.

3. PUNITIVE DAMAGES.

Defendants Countrywide, Argent, New Century Title, and Raab move to dismiss

plaintiff’s claim for punitive damages. For an award of punitive damages, plaintiff must prove

oppression, fraud, or malice on the part of defendants. Cal. Civ. Code 3294. Plaintiff has not

pled with sufficient particularity any allegations of oppression, fraud or malice, and does not

argue otherwise in his opposition. Accordingly, plaintiff’s claim for punitive damages is

dismissed with leave to amend with respect to defendants Countrywide, Argent, New Century

Title, and Raab. 

4. MORE DEFINITE STATEMENT.

Defendant also moves for a more definite statement. Under Rule 12(e), “[i]f a pleading

to which a responsive pleading is permitted is so vague or ambiguous that a party cannot

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reasonably be required to frame a responsive pleading, the party may move for a more definite

statement before interposing a responsive pleading.” For the reasons discussed above, this

order finds that the sustained portions of the complaint are not so vague or ambiguous that

defendants cannot reasonably frame a response, and accordingly holds that plaintiff is not

required to file a more definite complaint. 

CONCLUSION

For all of the above-stated reasons, defendants’ motions to dismiss are GRANTED IN

PART AND DENIED IN PART. This order holds that certain claims are time-barred and therefore

DISMISSED WITHOUT LEAVE TO AMEND: the claim for statutory damages under TILA, the

claim under RESPA, the claim under the Fair Housing Act, and the claim under the Equal

Credit Opportunity Act. This order holds that certain claims were not pled with sufficient

specificity and are hereby DISMISSED WITH LEAVE TO AMEND: the claim under TILA against

Raab, the claim under California Civil Code Section 1632 against New Century Title and Raab,

the claim for fraud and deceit, the claim for rescission and restitution, the claims for breach of

fiduciary duty and breach of contract against Viki Raab, the claim under California Business &

Professions Code Section 17200, and the claim for punitive damages. This order holds that all

other claims were sufficiently pled and the motions to dismiss are hereby DENIED. 

Any amended complaint must be filed by MAY 12, 2008, AT NOON. Plaintiff should plead his

best case inasmuch as further leave to amend is unlikely. Defendants must respond to any

amended complaint by MAY 22, 2008.

IT IS SO ORDERED.

Dated: April 21, 2008. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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