Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00006/USCOURTS-casd-3_10-cv-00006-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331 Fed. Question

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1

 Plaintiffs have not opposed this motion. Although the Court could construe this failure to

oppose as consent to the granting of the motion, doing so would not materially advance this litigation.

S.D. Cal. Civ. R. 7.1(f)(3)(c). Therefore, the Court addresses Defendants’ motion on the merits.

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ROEL ESPINOZA, LIDIA ESPINOZA,

Plaintiffs,

CASE NO. 10-CV-6 JLS (AJB)

ORDER: GRANTING

DEFENDANTS MOTION TO

DISMISS

(Doc. No. 10)

vs.

BANK OF AMERICA, N.A.; BAC HOME

LOANS SERVICING, LP; INTEGRITY

CAPITAL, LLC; RECONTRUST

COMPANY, N.A.; et al.,

Defendants.

Presently before the Court is Defendants Bank of America, N.A., BAC Home Loans Servicing,

LP, and Recontrust Company, N.A.’s motion to dismiss. (Doc. No. 10.) After reviewing the papers

and the law, the Court GRANTS Defendants’ motion.1

BACKGROUND

“Plaintiffs Roel and Lidia Espinoza . . . are the owners of a single family residence . . . whose

address is 6959 Terra Cotta Road, San Diego, CA.” (Doc. No. 8 (FAC) ¶ 2.) “On . . . May 11, 2005,

Plaintiffs purchased a house as a primary residence in the amount of $573,000.” (Id. ¶ 6.) The

“financed the Property by signing a note in the amount of $515,100 secured by a first deed of trust

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from Defendant Countrywide.” (Id. ¶ 7.) “After being hired by the Plaintiffs, Defendant Integrity

contacted Defendant Bank of America to serve as a lender to the Plaintiffs.” (Id. ¶ 8.) Eventually,

“Plaintiffs began having difficulty paying their mortgage” and Defendant Recontrust recorded a

Notice of Default. (Id. ¶¶ 22–23.) 

Plaintiffs filed the complaint in this case January 4, 2010. (Doc. No. 1.) On February 24,

2010, Defendants BAC Home Loans Servicing, L.P, Bank of America, N.A., and Recontrust Company

N.A. filed a motion to dismiss. (Doc. No. 6.) On March 12, 2010, Plaintiffs filed a First Amended

Complaint (FAC) rather than oppose this motion. The Court then denied Defendants’ motion because

the filing of the FAC rendered the motion moot. (Doc. No. 9.) Then, on March 29, 2010, Defendants

filed the instant motion. (Doc. No. 10.)

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that

the complaint “fail[s] to state a claim upon which relief can be granted,” generally referred to as a

motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and

sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a “short and plain

statement of the claim showing that the pleader is entitled to relief.” Although Rule 8 “does not

require ‘detailed factual allegations,’ . . . it [does] demand[] more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, – US — , 129 S. Ct. 1937, 1949 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “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.” Twombly,

550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Nor does a complaint suffice

if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 129 S. Ct. at 1949

(citing Twombly, 550 U.S. at 557).

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S. at

570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pled “allow[] the

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,

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129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be

probable, but there must be “more than a sheer possibility that a defendant has acted unlawfully.” Id.

Facts “‘merely consistent with’ a defendant’s liability” fall short of a plausible entitlement to relief.

Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal

conclusions” contained in the complaint. Id. This review requires context-specific analysis involving

the Court’s “judicial experience and common sense.” Id. at 1950 (citation omitted). “[W]here 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 ‘show[n]’—‘that the pleader is entitled to relief.’” Id.

ANALYSIS

I. INTENTIONAL MISREPRESENTATION

The first cause of action in this matter alleges intentional misrepresentation. (FAC ¶¶ 28–42.)

According to the FAC, Defendant Bank of America “failed to disclose numerous federal safeguards

in the application process,” and “failed to include the Initial Good Faith Estimate or an Initial TIL.”

(Id. ¶¶ 32–33.) 

In California, the elements of the tort of intentional misrepresentation are “‘(1)

misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity

(scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting

damage.’” Alliance MortgageCo. v. Rothwell, 900 P.2d 601, 608 & n.4 (Cal. 1995) (quoting Molko

v. Holy Spirit Ass’n, 762 P.2d 46, 53 (Cal. 1988)). If the allegations are based on concealment, then

the plaintiff must show that the party concealing the fact was “bound do disclose it, or . . . [gave]

information of other facts which [were] likely to mislead for want of communication of that fact.”

Cal. Civ. Code § 1710(3). 

Because it is a form of fraud, Federal Rule of Civil Procedure 9(b) sets the relevant pleading

standard. See Cadlo v. Owens-Illinois, Inc., 23 Cal. Rptr. 3d 1, 5 (Cal. Ct. App. 2004); Vess v. CibaGeigy Corp. USA, 317 F.3d 1097, 1102–03 (9th Cir. 2003). Rule 9(b) states that “In alleging fraud

or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”

These allegations must “be ‘specific enough to give defendants notice of the particular misconduct

. . . so that they can defend against the charge and not just deny that they have done anything wrong.’

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Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the

misconduct charged. ‘[A] plaintiff must set forth more than the neutral facts necessary to identify the

transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is

false.’” Vess 317 F.3d at 1106 (citations omitted).

Defendants argue that this claim must be dismissed because “Plaintiffs fail to plead facts which

show how, when, where, to whom, and by what means the representations were tendered.” (Memo.

ISO Motion at 5.) Further, “Plaintiffs fail to allege any misrepresentations made to them by

[Defendant Bank of America].” (Id.) 

The Court finds that the motion should be GRANTED. As Defendants state, Plaintiffs have

not alleged any affirmative misrepresentations by Defendant Bank of America. And, if Plaintiffs’

allegations are based on omissions, the FAC does not demonstrate that Defendant Bank of America

was bound to disclose anything alleged by Plaintiff. 

Moreover, Plaintiffs’ allegations are insufficiently specific to satisfy Rule 9(b). Rather than

explain exactly what “safeguards” Defendant failed to disclose, the FAC simply alleges that

“numerous federal safeguards” were not disclosed. (FAC ¶ 32.) And there is no indication that the

information which would have been provided in the “Initial Good Faith Estimate or Initial TIL” was

not otherwise disclosed by Defendant. Alleging the nondisclosure of documents rather than facts is

inadequate to survive this motion to dismiss.

Although this claim is riddled with flaws, the Court believes that amendment is not necessarily

futile. Therefore, the first cause of action is DISMISSED WITHOUT PREJUDICE.

II. FRAUDULENT CONCEALMENT

The second cause of action alleges fraudulent concealment. (FAC ¶¶ 43–53.) “[T]he elements

of that action are: (1) the defendant must have concealed or suppressed a material fact, (2) the

defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have

intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff

must have been unaware of the fact and would not have acted as he did if he had known of the

concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the

plaintiff must have sustained damage.” Kaldenbach v. Mut. of Omaha Life Ins. Co., 100 Cal. Rptr.

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3d 637, 653 (Cal. Ct. App. 2009) (quoting Roddenberry v. Roddenberry, 51 Cal. Rptr. 2d 907, 926

(Cal. Ct. App. 1996)) (citation and quotation marks omitted). And, as with the intentional

misrepresentation claim, this cause of action is governed by Rule 9(b). See Cadlo, 23 Cal. Rptr. 3d

at 5; Vess, 317 F.3d at 1102–03. 

The Court GRANTS the motion to dismiss as to this cause of action. Plaintiffs’ allegations

do not satisfy the requirements of Rule 9(b). Although Plaintiffs claim that Defendants “fraudulently

concealed the true cost of the loan by failing to provide several of the required disclosures,” they do

not state which particular disclosures were not provided nor exactly how the failure to provide those

disclosures concealed the loan’s cost. (FAC ¶ 44.) Moreover, Plaintiffs’ allegations regarding

Defendant Bank of America’s duty to disclose are woefully inadequate. They simply state that

Defendant “had a legal duty under federal and state law.” (Id. ¶ 46.) Generally, “a financial

institution owe[s] no duty of care to a borrower,” so without further specification it is not plausible

that Defendant owed Plaintiffs a duty of disclosure. Nymark v. Heart Fed. Sav. & Loan Ass’n, 231

Cal. App. 3d 1089, 1096 (1991). Nonetheless, the Court finds that amendment would not necessarily

be futile and that this claim should be DISMISSED WITHOUT PREJUDICE.

III. BREACH OF FIDUCIARY DUTY

The third claim for relief in the FAC is for breach of fiduciary duty. (FAC ¶¶ 54–66.) As

relevant to the Moving Defendants, they allege that “Defendant Bank of America assisted in the act

of Defendant Integrity’s breach of its fiduciary duties.” (Id. ¶ 61.) A claim for breach of fiduciary

duty requires Plaintiffs to “show ‘the existence of a fiduciary relationship, its breach, and damage

proximately caused by that breach.’” Roberts v. Lomanto, 112 Cal. App. 4th 1553, 1562 (2003)

(quoting Pierce v. Lyman, 1 Cal. App. 4th 1093, 1101 (1991)). The statute of limitations for a breach

of fiduciary duty claim is four years. Cal. Code Civ. Proc. § 343.

In this case, Plaintiffs’ claim fails on all counts. First, they have not alleged that Defendant

Bank of America had a fiduciary duty to Plaintiffs. Nor is it credible that Defendant Bank of America

would owe a fiduciary duty to Plaintiffs since “[t]he relationship between a lending and its borrower

client is not fiduciary in nature.” Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089,

1093 n.1 (1991) (citing Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 476–78 (1989)). Second,

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Plaintiffs may not pursue Defendant Bank of America for conspiracy to breach fiduciary duty. “A

non-fiduciary cannot conspire to breach a duty owed only by a fiduciary.” Kidron v. Movie

Acquisition Corp., 47 Cal. Rptr. 2d 752, 768 (Ca. Ct. App. 1995); see also Everest Investors 8 v. White

Hall Real Estate Ltd. P’ship XI, 123 Cal. Rptr. 2d 297, 302–03 (Cal. Ct. App. 2002). Finally,

Defendant correctly notes that the statute of limitations on this claim has run, since this matter was

filed approximately four years and seven months after the loan was consummated.

Therefore, Defendants’ motion to dismiss is GRANTED. And, since there is no way that

amendment could cure the defects identified herein, this claim for relief is DISMISSED WITH

PREJUDICE.

IV. ACCOUNTING & RESPA VIOLATION (12 U.S.C. § 2605(E))

Plaintiffs’ fifth cause of action makes claims for (1) accounting and (2) violation of 12 U.S.C.

§ 2605(e). (FAC ¶¶ 75–80.) 12 U.S.C. § 2605 is a provision of the Real Estate Settlement Procedures

Act (RESPA). Section 2605(e)(1)(A) provides:

If any servicer of a federally related mortgage loan receives a qualified written request

from the borrower . . . for information relating to the servicing of such loan, the

servicer shall provide a written response acknowledging receipt of the correspondence

within 20 days . . . unless the action requested is taken within such period. 

A qualified written request must “enable[] the servicer to identify[] the name and account of the

borrower,” and “include[] a statement of the reasons for the belief of the borrower . . . that the account

is in error.” 12 U.S.C. § 2605(e)(1)(B). A plaintiff suing for violation of this section may recover

actual damages, up to $1,000 in statutory damages where there is “a pattern or practice of

noncompliance,” and reasonable costs and attorney’s fees. 12 U.S.C. § 2605(f).

The Court GRANTS Defendants’ motion to dismiss. Plaintiffs allege that they “sent a

Qualified Written Request (‘QWR’) . . . to Defendant Bank of America.” (FAC ¶ 77.) The qualified

written request “sought information on whether or not the loan was in lawful compliance with all

federal and state laws regarding disclosure” along with other information. (Id.) This assumes but does

not demonstrate that the document sent to Defendant was a QWR. For example, Plaintiffs have not

shown that their alleged QWR “include[d], or otherwise enable[d] the servicer to identify, the name

and account of the borrower.” 12 U.S.C. § 2605(e)(1)(B)(i). Nor have they claimed that the QWR

“included a statement of reasons for the belief of the borrower . . . that the account is in error.” Id. §

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2605(e)(1)(B)(ii). Without these allegations the Court cannot find that Plaintiffs’ recovery is

plausible. See Lincoln v. GMAC Mortgage, LLC, 2009 WL 5184413, at *2 (C.D. Cal. 2009).

Plaintiffs also request an accounting. Accounting, however, is not one of the available

remedies under RESPA. See Gaitan v. Mortgage Elec. Registration Sys., 2009 WL 3244729, at *13

(C.D. Cal. 2009). Thus, the Court evaluates whether Plaintiffs have an independent basis on which

this Court could order an accounting.

“An action for an accounting . . . is a proceeding in equity for the purpose of obtaining a

judicial settlement of the accounts of the parties in which proceeding the court will adjudicate the

amount due, administer full relief and render complete justice.” Verdier v. Superior Court, 88 Cal.

App. 2d 527, 530 (1948). “An accounting cause of action is equitable in nature, and may be sought

‘where . . . the accounts are so complicated that an ordinary legal action demanding a fixed sum is

impracticable.’” Civic W. Corp. v. Zilla Indus. Inc., 135 Cal. Rptr. 915, 923 (Cal. Ct. App. 1977). The

party seeking an accounting must be a “wronged fiduciary.” See Glue-Fold, Inc. v. Slautterback

Corp., 98 Cal Rptr. 2d 611, 663 n.3 (Cal. Ct. App. 2000). “‘A suit for an accounting will not lie where

it appears from the complaint that none is necessary or that there is an adequate remedy at law. An

accounting will not be accorded with respect to a sum that a plaintiff seeks to recover and alleges in

his complaint to be a sum certain.’” Id. (citation omitted).

There is no basis for an accounting in this case. Plaintiffs have not pled facts showing that

Defendant Bank of America owes them any sort of fiduciary duty. See Nymark, 231 Cal. App. 3d at

1096. Nor is there any indication that this case involves complex accounts or any other reason that

would justify an accounting. Civic W., 135 Cal. Rptr. at 923. 

Although the Court is skeptical that there are facts in this case to support a claim for relief on

this cause of action, the possibility remains. Therefore, the fifth cause of action is DISMISSED

WITHOUT PREJUDICE.

//

//

//

//

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VII. QUIET TITLE

Next, Plaintiffs bring an action for quiet title. (FAC ¶¶ 81–86.) They claim that they “are the

owners in fee of title to property commonly known as 6959 Terra Cotta Road, San Diego CA 92114”

and that “Defendants claim and assert interests in the above-described real property which are adverse

to Plaintiffs.” (Id. ¶¶ 82–83.) They argue that “[t]he First Deed of Trust is invalid and void as to

Plaintiffs because Plaintiffs now rescind the Loan, the promissory note in connection with the Loan,

and the Deed of Trust and so notified Defendants with the filing of this Original Complaint.” (Id. ¶

84.) 

An action to quiet title in California arises under Code of Civil Procedure section 760.010, et

seq. A plaintiff may bring such an action “to establish title against adverse claims to real or personal

property or any interest therein.” Cal. Code. Civ. P. § 760.020(a). The Code defines a “‘Claim’ [as]

includ[ing] a legal or equitable right, title, estate, lien, or interest in property or cloud upon title.” Cal.

Code. Civ. P. § 760.010(a). Further, a complaint seeking to quiet title must be verified. Id. § 761.020.

The Court finds that this claim must be DISMISSED WITHOUT PREJUDICE. First,

Plaintiffs’ complaint is not verified. More importantly, Plaintiffs have not sufficiently pled that the

Deed of Trust is void. Although Plaintiffs claim that they have rescinded the loan, there is no basis

for this alleged right in the FAC. Plaintiffs cite California Civil Code sections 1691 and 1692. (FAC

¶ 84.) These sections do not provide a substantive right to rescind, but rather “[t]he mechanics of

contract rescission.” Ortiz v. Accredited Home Lenders, Inc., 639 F. Supp. 2d 1159, 1167 (S.D. Cal.

2009). Since there is no other basis for rescission in the FAC at this time, the quiet title claim fails

both procedurally and substantively. Therefore, the motion is GRANTED as to this cause of action.

VII. TRUTH IN LENDING ACT VIOLATIONS

Plaintiffs’ seventh cause of action alleges violations of the federal Truth In Lending Act

(TILA), 15 U.S.C. §§ 1601–1666j. (FAC ¶¶ 87–98.) TILA applies a one year statute of limitations

to damages claims and a three year limitations period for the right to rescind. 15 U.S.C. §§ 1635(f),

1640(e). The limitations period begins to run from the date the loan transaction is consummated.

King v. California, 784 F.2d 910, 915 (9th Cir. 1986). In certain circumstances, however, equitable

tolling may be available. Id. Specifically, the limitations period may be suspended “until the

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2

 Plaintiffs’ allegation that they “discovered [the violation] within one year past after a

forensic review of the Plaintiff’s (sic) loan documents was reviewed by his attorney, which occurred

in or around May 2009” is irrelevant because this statute of limitations runs from “the date of the

occurrence of the violation,” not its discovery. (FAC ¶ 109.) 

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

the basis of the TILA action.” Id. This should only be applied, however, “if the general rule would

be unjust or frustrate the purpose of the Act.” Id. 

Plaintiffs filed this action well outside of the limitations periods for both damages and

rescission. Further their allegations do not evidence “fraudulent concealment which by [its] very

nature, if true, serve[s] to make compliance with the limitation period imposed by Congress an

impossibility." Id. (quoting Jones v. TransOhio Sav. Ass’n, 747 F.2d 1037, 1041 (6th Cir. 1984)).

Rather, they merely claim that they first discovered the violations within the last year. (FAC ¶ 98.)

Plaintiffs had the opportunity to discover the alleged violations at the loan’s closing. The fact that

they did not make this discovery until later does not justify tolling. It is nonetheless possible that facts

justifying tolling exist and therefore the Court DISMISSES this claim WITHOUT PREJUDICE.

IV. VIOLATION OF RESPA (12 U.S.C. § 2607)

The eighth cause of action alleges a violation of RESPA, specifically 12 U.S.C. § 2607. (FAC

¶¶ 99–109.) Plaintiffs claim that “Defendant Bank of America payed a very sizeable, unlawful Yield

Spread Premium . . . of $10,302 to Defendant Integrity.” (Id. ¶ 104.)

Claims for RESPA violations under section 2607 must be brought within one year “from the

date of the occurrence of the violation.” 12 U.S.C. § 2614. And, as noted earlier, Plaintiffs filed this

action substantially more than four years after their loan was executed. Therefore, this claim is timebarred.2

 However, since Plaintiffs might be able to justify equitable tolling with the pleading of

further facts, this claim is DISMISSED WITHOUT PREJUDICE.

//

//

//

//

//

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CONCLUSION

For the reasons stated, Defendants’ motion to dismiss is GRANTED. Plaintiffs’ third claim

is DISMISSED WITH PREJUDICE and the remainder of the FAC is DISMISSED WITHOUT

PREJUDICE. Plaintiffs MAY FILE a second amended complaint within twenty-one days of the

date this Order is electronically docketed.

IT IS SO ORDERED.

DATED: May 17, 2010

Honorable Janis L. Sammartino

United States District Judge

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