Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01572/USCOURTS-casd-3_09-cv-01572-1/pdf.json

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

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 Since the parties are fully aware of the facts, they are not repeated here.

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

REYNALDO CAMACHO,

Plaintiff,

CASE NO. 09-CV-1572 JLS (WMc)

ORDER: GRANTING MOTION

TO DISMISS

(Doc. No. 35)

vs.

WACHOVIA MORTGAGE, FSB; et al.,

Defendants.

Presently before the Court is Defendants’ motion to dismiss the Third Amended

Complaints (TAC). (Doc. No. 35.) Plaintiff opposes this motion and Defendants have replied. 

(Doc. Nos. 37 & 38.) Having fully considered this motion, the Court GRANTS the motion.1

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 demands 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

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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). Rule 8 “does not unlock the doors of discovery for a

plaintiff armed with nothing more than conclusions.” Id. at 1950.

“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.” Id. (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. TRUTH IN LENDING ACT DAMAGES CLAIM

Plaintiff’s first cause of action is for damages under the Truth in Lending Act (TILA). 

(TAC PP 9--34.) In this Court’s Prior Order it stated: “because Plaintiff filed this action beyond

the statute of limitations and has not pled facts that would entitle him to equitable tolling, his claim

for damages under TILA is DISMISSED WITH PREJUDICE.” (Doc. No. 31 at 4.) Given this

holding, Plaintiff was not free to include this claim in the TAC and the first cause of action must

again be DISMISSED.

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 Defendants also argue that the rescission claim is time barred. (Memo. ISO Motion at 3–4.)

The Court elects not to address this concern for two reasons. First, it is unnecessary since Plaintiff

still has failed to show that he is willing to properly tender. Second, Defendants’ arguments require

this Court to delve into the merits of a conflict between Plaintiff’s allegations and Defendants’

proffered evidence. The Court believes that this is a conflict better resolved on a motion for summary

judgment than on a motion to dismiss.

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II. TRUTH IN LENDING ACT RESCISSION CLAIM

The second cause of action is also based on TILA, but seeks a rescission of the loans in

question. (TAC ¶¶ 35–38.) He claims that Defendant Wachovia violated TILA in four ways: (1)

it did not disclose the interest rate in a sufficiently clear and conspicuous manner, (2) its disclosure

regarding the interest rate is neither clear nor conspicuous, (3) the disclosures are intentionally

deceptive, and (4) it did not disclose the interest rate in several documents. (Id. ¶ 19.) 

In this Court’s Prior Order, it exercised its discretion and required Plaintiff to “plead his

ability to tender in order to maintain his claim for rescission.” (Doc. No. 31 at 4–5.) The reason

for this was that “[i]t would be a waste of the time and resources of the parties and the Court to

proceed to the point of rescission only to have Plaintiff be unable to tender.” (Id. at 5.)

Defendants argue that this matter should be dismissed because Plaintiff has not alleged his

ability and willingness to tender the amount of his loan.2

 (Memo. ISO Motion at 3.) Defendants

are correct. Plaintiff added the following allegation to the TAC: 

Plaintiff is prepared to rescind the real estate agreement with the Defendant

WACHOVIA on the following basis: A. That all derogatory credit information

caused by the Defendant be expunged from Plaintiff’s credit profile; B. That all

payments and other credits and debits for the entire tenancy have been accounted

for; C. Plaintiff shall thereupon make a rescission payment to the extent of the

amount borrowed, but not to exceed the fair market value of the realty arrived at

either by stipulation of all the parties or by finding of the Court.

(TAC PP 37.)

This is inadequate. Plaintiff conditions his willingness to repay on restitution to which he

may or may not be entitled at the end of this matter. Such conditions place the cart before the

horse. In order to proceed, Plaintiff must be prepared to rescind even in the event that he is not

entitled to the other requests he makes.

He also only expresses a willingness to repay up to “the fair market value of the realty.” 

This condition is contrary to the most basic principles of rescission and therefore unacceptable. 

Rescission places the parties to a contract in the same position they were before the contract was

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entered. In this case, that means Plaintiff must be willing and able to repay the full principal of his

loans, regardless of the current market value of the real estate. 

Plaintiff argues that “it would be absurd to require [him] to repay more than the home’s

value simply to enrich the bank beyond its expectations at the time of the subject transaction.” 

(Opp. at 2.) This misses the entire point of rescission. The bank made these loans expecting to

recoup the principal along with interest. As such, rescission does not “enrich the bank beyond its

expectations at the time of the subject transaction.” (Id.) It simply puts the bank back where it

started. 

Moreover, this argument effectively requires the Defendants should bear the risk of market

volatility. However rescission does not require them to shoulder such a burden. Instead, it simply

requires both parties to return the other to its starting position. This places the burden of a

negative market swing on the borrower, not the lender. For this reason alone, the TAC must be

DISMISSED.

CONCLUSION

For the reasons stated, Defendants’ motion to dismiss is GRANTED and this matter is

DISMISSED.

IT IS SO ORDERED.

DATED: August 24, 2010

Honorable Janis L. Sammartino

United States District Judge

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