Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-01159/USCOURTS-caed-2_09-cv-01159-5/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 15:1601 Truth in Lending

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28 This matter is deemed suitable for decision without oral *

argument. E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

CURT GUMBS and KHEA GUMBS, )

)

Plaintiffs, ) 2:09-cv-01159-GEB-GGH

)

v. ) ORDER GRANTING DEFENDANTS’

) MOTIONS TO DISMISS AND DENYING

LITTON LOAN SERVICING; ARGENT ) DEFENDANT’S MOTION TO STRIKE*

MORTGAGE COMPANY, LLC; U.S. BANK ) 

NATIONAL ASSOCIATION, AS TRUSTEE )

FOR THE C-BASS MORTGAGE LOAN )

ASSET-BACKED CERTIFICATES, SERIES )

2006-CB8; QUALITY LOAN SERVICE )

CORP., )

)

 Defendants. )

)

This order addresses three pending motions: Defendants U.S.

Bank National Association as Trustee for the C-BASS Mortgage Loan

Asset-Backed Certificates, Series 2006-CB8 (“U.S. Bank”) and Litton

Loan Servicing’s (“Litton Loan”) motion to dismiss Plaintiffs’ third

amended complaint for failure to state a claim upon which relief can

be granted under Federal Rule of Civil Procedure (“Rule”) 12(b)(6);

Defendant Argent Mortgage Company, LLC’s (“Argent”) Rule 12(b)(6) to

Case 2:09-cv-01159-GEB-GGH Document 69 Filed 08/24/10 Page 1 of 8
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dismiss; and Argent’s motion to strike portions of Plaintiffs’ third

amended complaint under Rule 12(b)(f). Plaintiffs filed an opposition

to the dismissal motions. For the following reasons, Defendants’

motions to dismiss are granted, and Argent’s motion to strike is

denied.

I. FACTUAL ALLEGATIONS AND PLAINTIFFS’ CLAIMS

Argent was the original lender for the residential mortgage

on Plaintiffs’ property located at 1557 Sophie Lane, Escalon in San

Joaquin County, California. (Third Amended Compl. (“TAC”) ¶ 6.) 

Plaintiffs do not allege the date on which the loan was consumated.

Plaintiffs allege the following four claims: (1) violation

of the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. (“TILA”); (2)

violation of the California Rosenthal Act, California Civil Code

sections 1788, et seq.; (3) breach of the implied covenant of good

faith and fair dealing; and (4) an unfair competition in violation of

California Business and Professions Code section 17200.

II. Legal Standard

A. Motion to Dismiss

A Rule 12(b)(6) motion “challenges a complaint’s compliance

with . . . pleading requirements.” Champlaie v. BAC Home Loans

Servicing, LP, 2009 WL 3429622, at *1 (E.D. Cal. 2009). A pleading

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

the pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a)(2). 

The complaint must “give the defendant fair notice of what the

[plaintiff’s] claim is and the grounds upon which relief rests 

. . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 

Further, “[a] pleading that offers labels and conclusions or a

formulaic recitation of the elements of a cause of action will not do. 

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Nor does a complaint suffice if it tenders naked assertions devoid of

further factual enhancement.” Ashcroft v. Iqbal, 129 S. Ct. 1937,

1949 (2009).

To avoid dismissal, a plaintiff must allege “only enough

facts to state a claim to relief that is plausible on its face.” 

Twombly, 550 U.S. at 547. “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct

alleged.” Iqbal, 129 S. Ct. at 1949. Plausibility, however, requires

more than “a sheer possibility that a defendant has acted unlawfully.” 

Id. “Where a complaint pleads facts that are merely consistent with a

defendant’s liability, it stops short of the line between possibility

and plausibility of entitlement to relief.” Id. (quotations and

citations omitted). 

B. Motion to Strike

Under Rule 12(f) a court may strike from a pleading “an

insufficient defense or any redundant, immaterial, impertinent, or

scandalous matter.” Fed. R. Civ. P. 12(f). “Immaterial matter is

that which has no essential or important relationship to the claim for

relief” while “impertinent matter consists of statements that do not

pertain, and are not necessary, to the issues in question.” Boles v.

Merscorp, Inc., 2009 WL 734135, at *2 (C.D. Cal. 2009).

III. Analysis

A. Motions to Dismiss

1. Plaintiffs’ Rosenthal Act Claim

Argent argues Plaintiffs’ Rosenthal Act claim should be

dismissed because “the entire cause of action is vague and conclusory,

and devoid of any factual allegations pertaining to Argent.” (Argent

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Mot. to Dismiss (“Argent Mot.”) 3:16-17.) Litton Loan and U.S. Bank

also seek dismissal of Plaintiffs’ Rosenthal claim, arguing it “fails

to allege each particular defendant’s wrongful conduct. These

defendants argue Plaintiffs’ Complaint lumps all defendants together

without specifying why each is being sued.” (Litton Loan and U.S.

Bank’s Mot. to Dismiss (“Litton and U.S. Bank Mot.”) 7:27-8:1.) 

Plaintiffs counter they “have pled facts sufficient to support this

cause of action.” (Plts.’ Opp’n 3:19.)

The Rosenthal Act serves “to prohibit debt collectors from

engaging in unfair or deceptive acts or practices in the collection of

consumer debts and to require debtors to act fairly in entering into

and honoring such debts.” Arikat v. JPMorgan Chase & Co., 430 F.

Supp. 2d 1013, 1026 (N.D. Cal. 2006) (citing Cal. Civil Code §

1788.1(b)). However, the Act only governs the conduct of a “debt

collector,” which under the statute is defined as “any person who, in

the ordinary course of business, regularly, and on behalf of himself

or herself . . . engages in debt collection.” Cal. Civ. Code §

1788.2.

Plaintiffs allege Defendants “are debt collectors” and that

“Defendants used unfair and unconscionable means in an attempt to

collect the debt.” (TAC ¶¶ 30, 35.) However, Plaintiffs fail to

allege which debt Defendants allegedly attempted to collect, the

amount of the debt, and which Defendant attempted to collect the debt. 

Plaintiffs’ allegations “are too vague to give rise to [a reasonable] 

inference that a specific defendant has violated” the Rosenthal Act. 

Arikat, 430 F. Supp. 2d at 1027 (dismissing as too vague, Rosenthal

Act claim that alleged all violations against all defendants without

specifying each defendant’s individual conduct). Accordingly, each

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Defendant’s motion to dismiss Plaintiffs’ Rosenthal Act claim is

granted. Since this is Plaintiffs’ third attempt to allege a

Rosenthal Act claim, and Plaintiffs have failed to identify in their

opposition how they will cure the deficiencies of this claim in a

fourth amended complaint, granting leave to amend would be futile. 

Therefore, Plaintiffs’ Rosenthal Act claim alleged against U.S. Bank,

Litton Loan, and Argent is dismissed with prejudice.

2. Plaintiffs’ Breach of the Implied Covenant of Good Faith and Fair

Dealing Claim

Defendants argue Plaintiffs’ breach of the implied covenant

of good faith and fair dealing claim should be dismissed since

Plaintiffs have not pleaded the requisite facts to sustain the claim. 

(Litton and U.S. Bank Mot. 9:22-28; Argent Mot. 4:19-27.) Plaintiffs

respond “[w]hile Plaintiff[s] admit[] that this cause of action

probably does not survive in tort, it should survive in its derivative

nature in contract.” (Plts.’ Opp’n 5:10-11.)

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

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

enforcement.” McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th 784,

798 (2008) (internal citations and quotations omitted). 

[T]he implied covenant operates to protect the

express covenants or promises of [a] contract. In

essence, the covenant is implied as a supplement to

the express contractual covenants, to prevent a

contracting party from engaging in conduct which

(while not technically transgressing the express

covenants) frustrates the other party’s rights to

the benefits of the contract.

Id. at 806. However, the implied covenant “cannot impose substantive

duties or limits on the contracting parties beyond those incorporated

in the specific terms of the agreement.” Id. 

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Plaintiffs allege “Plaintiff [sic] and Defendant had a

written contract wherein Defendant would service a mortgage for

Plaintiff’s [sic] property.” (TAC ¶ 39.) Plaintiffs fail to identify

against which Defendant this claim is alleged. Further, Plaintiffs

have not alleged what contract forms the basis of their claim; nor

have they identified any express provision that has been frustrated by 

a Defendant’s conduct. Therefore, Defendants’ motions to dismiss

Plaintiffs’ breach of the implied covenant of good faith and fair

dealing claim are granted. Since this is Plaintiffs’ third attempt to

allege this claim, and Plaintiffs have failed to identify in their

opposition how they will cure the deficiencies of this claim in a

fourth amended complaint, granting leave to amend would be futile. 

Therefore, Plaintiffs’ breach of the implied covenant of good faith

and fair dealing claim alleged against U.S. Bank, Litton Loan, and

Argent is dismissed with prejudice.

3. Plaintiffs’ Unfair Competition Law Claim 

Each Defendant seeks dismissal of Plaintiffs’ Unfair

Competition Law (the “UCL”) claim, arguing it is no longer viable

after the dismissal of the predicate Rosenthal Act and breach of the

implied covenant of good faith and fair dealing claims. (Litton and

U.S. Bank Mot. 13:26-28, 14:1-3; Argent Mot. 5:6-9.) The UCL

“prohibits specific practices which the legislature has determined

constitute unfair trade practices.” Cal-Tech Commc’ns. Inc. v. L.A.

Cellular Tel. Co., 20 Cal. 4th 163, 179 (1999) (quotations and

citations omitted). “[A]n action based on [the UCL] to redress an

unlawful business practice ‘borrows’ violations of other laws and

treats these violations . . . as unlawful practices, independently

actionable under section 17200 et seq. and subject to the distinct

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remedies provided thereunder.” Farmers Ins. Exch. v. Superior Court,

2 Cal. 4th 377, 383 (1992) (quotations and citations omitted). “A

plaintiff alleging unfair business practices under [the UCL] must

state with reasonable particularity the facts supporting the statutory

elements of the violation.” Khoury v. Maly’s of California, Inc., 14

Cal. App. 4th 612, 619 (1993).

Plaintiffs’ UCL claim is entirely premised upon Plaintiffs’

Rosenthal Act and breach of the implied covenant of good faith and

fair dealing claims, which fail to state a claim against U.S. Bank,

Litton Loan, or Argent. Since these claims are no longer viable, by

necessity, the UCL claim must also fail. Therefore, Plaintiffs’ UCL

claim alleged against these Defendants is dismissed with prejudice.

B. Motion to Strike

Argent moves to strike Plaintiffs’ request for damages

alleged under Plaintiffs’ TILA claim, Plaintiffs’ request for

attorneys’ fees, and Plaintiffs’ prayer for punitive damages. 

However, Argent has not shown that these allegations are “redundant,

immaterial, impertinent, or scandalous matter” that should be stricken

under Rule 12(f). Therefore, Argent’s motion to strike is denied.

IV. Conclusion

For the stated reasons, Defendants’ motions to dismiss

(Docket Nos. 56, 57) are granted. Plaintiffs’ Rosenthal Act, breach

of the implied covenant of good faith and fair dealing, and UCL claims

alleged against U.S. Bank, Litton Loan, and Argent are each dismissed

with prejudice and U.S Bank and Litton Loan are no longer parties in 

///

///

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this action. Further, Argent’s motion to strike (Docket No. 55) is

denied.

Dated: August 24, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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