Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00777/USCOURTS-casd-3_10-cv-00777-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1601 Truth in Lending

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 1 - 10-CV-777-JM (WVG)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

VIOLA FRISON,

Plaintiff,

v.

ACCREDITED HOME LENDERS, INC.;

OCEANFRONT MORTGAGE, INC.;

COUNTRYWIDE HOME LOANS, INC.;

FIDELITY NATIONAL TITLE

COMPANY; THE BANK OF NEW

YORK in trust for registered Holders of

CWABS, Inc. Asset-Backed Certificates,

Series 2006-BC5; all other claimants of

whatsoever kind and character against real

property commonly known as 435

Ringwood Drive, San Diego, CA, APN

583-704-04-00; and DOES 1 through 100,

inclusive,

Defendants.

CASE NO. 10-CV-777-JM (WVG)

ORDER GRANTING DEFENDANT

THE BANK OF NEW YORK

MELLON’S MOTION TO DISMISS

Doc. No. 61

Plaintiff Viola Frison brings the current action based on a loan obtained through a

refinancing of her home and the subsequent foreclosure proceeding initiated against it.

Plaintiff’s Second Amended Complaint (“SAC”) asserts ten causes of action: (1) violation of

the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq.; (2) violation

of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; (3) violation of the Fair Debt

Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq.; (4) violation of the Rosenthal

Fair Debt Collection Practices Act (“Rosenthal Act”), CAL. CIV. CODE §§ 1788 et seq.;

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 1 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 Erroneously sued as “The Bank of New York in Trust for Registered Holders of

CWABS, Inc. Asset-Backed Certificates, Series 2006-BC5.”

2

 An additional defendant, Fidelity National Title Company (“Fidelity”), was

voluntarily dismissed from the case without prejudice by Plaintiff. (Doc. No. 47.) Fidelity’s

role in this case is not clear from the complaint, which merely alleges that Fidelity

“perform[ed] certain tasks related to origination of the LOAN.” (SAC ¶ 41)

- 2 - 10-CV-777-JM (WVG)

(5) violation of California’s unfair competition law, CAL. BUS. & PROF. CODE § 17200

(“§ 17200”); (6) breach of fiduciary duty; (7) negligent misrepresentation; (8) fraud;

(9) quasi-contract; and (10) a determination invalidating the lien. (Doc. No. 43.) Defendant

The Bank of New York Mellon1

 (“BNYM”) now brings a motion to dismiss the claims against

it. (Doc. No. 61.)

Pursuant to CivLR 7.1(d)(1), the court determines this matter is appropriate for

resolution without oral argument. For the reasons set forth below, the court GRANTS

BNYM’s motion to dismiss.

I. BACKGROUND

Plaintiff is an individual and the alleged owner of a parcel of real property located at

435 Ringwood Drive, San Diego, CA. (SAC ¶ 1.) Plaintiff claims that on or around

February 24, 2006, she applied for and obtained a loan secured by her real property “[a]t the

request of” Defendants Accredited Home Lenders, Inc. (“Accredited”), Oceanfront Mortgage,

Inc. (“Oceanfront”), “and others.” (Id. ¶ 16.) Although the SAC does not specify the role that

each defendant played in the transaction, Oceanfront presumably acted as broker in helping

Plaintiff obtain the loan from Accredited. (Id. ¶ 2-3.) Defendants Countrywide Home Loans,

Inc. (“Countrywide”) and BNYM appear to have subsequently acquired interests in the loan

and/or taken over its servicing.2

 (Id. ¶¶ 4 & 34.)

According to the SAC, Oceanfront and Accredited made “certain representations

regarding the LOAN” to Plaintiff that were inaccurate, including statements regarding the

favorability of the loan terms generally, Plaintiff’s ability to subsequently refinance the loan

to reduce monthly payments, the size of the interest rate and required payments on the loan,

the amount of equity in Plaintiff’s property, the amount of money available to Plaintiff, the

adjustability of the interest rate, and the absence of a balloon payment. (Id. ¶¶ 17-18.) As a

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 2 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 - 10-CV-777-JM (WVG)

result of these representations, Plaintiff was “convinced” by Oceanfront and Accredited to

refinance her property. (Id. ¶ 17(d).) According to Plaintiff, the loan documents she was

provided with were “complicated and misleading to the average consumer,” and their material

terms were not explained to her prior to signing. (Id. ¶¶ 24(e) & (h).) Nevertheless, Plaintiff

signed the loan documents because she was “rushed through” the process and not given time

to properly read and review the papers before agreeing to their terms. (Id. ¶ 24(d).)

Plaintiff claims that the loan proceeds she received afterwards were less than the

amount she was promised (id. ¶ 17(l)) and that her payments on the mortgage were higher than

Oceanfront and Accredited had told her they would be (id. ¶ 18(b)). Plaintiff also claims that

Oceanfront and Accredited failed to disclose key information to her prior to or at the close of

the transaction (id. ¶ 19) and did not provide her with copies of the loan documents she signed

(id. ¶ 24(f)). In addition, Plaintiff alleges that her initials and signature on the loan application

were forged. (Id. ¶ 17(f)-(k).)

After Plaintiff obtained the financing, the loan “subsequently became unaffordable” and

foreclosure proceedings were initiated against her. (Id. ¶¶ 18(g), 27(b).) Plaintiff received a

Notice to Quit the property on January 23, 2009; however that foreclosure was subsequently

halted. (Id. ¶¶ 27(b), 78(d).) According to Plaintiff, following this attempted foreclosure, she

submitted a written request for information regarding her loan to Countrywide on or around

April 3, 2009. (Id. ¶ 46.) Plaintiff did not receive a response to her request. (Id. ¶ 51.)

Plaintiff filed her original complaint in state court on March 2, 2010. (Doc. No. 1.)

Defendant Countrywide subsequently removed the action to federal court, citing federal

question jurisdiction. (Id.) Following several rounds of motions to dismiss by Defendants

Countrywide and Oceanfront, Plaintiff filed her SAC on November 12, 2010, adding BNYM

as a defendant for the first time. (Doc. Nos. 8-9, 18, 24-25 & 33; SAC.) Countrywide and

Oceanfront again filed motions to dismiss the SAC. (Doc. Nos. 44 & 46.) The court granted

Oceanfront’s motion, and granted in part and denied in part Countrywide’s motion. (Doc.

No. 56.) Although leave to amend was granted, no additional amended complaint was filed.

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 3 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

 To the extent that Plaintiff may also be attempting to hold BNYM accountable under

the respondeat superior, agency, and/or conspiracy theories of liability set forth in the SAC

(SAC ¶¶ 11 & 38-39), those theories were deemed inadequately pled in this court’s previous

order. (See Doc. No. 56 p.6.)

- 4 - 10-CV-777-JM (WVG)

BNYM now brings a motion to dismiss the claims against it as set forth in the SAC, which

Plaintiff opposes. (Doc. Nos. 61 & 64.)

II. LEGAL STANDARD

A motion to dismiss under FED. R. CIV. P. 12(b)(6) challenges the legal sufficiency of

the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the

motion, the court must construe the pleadings in the light most favorable to the non-moving

party, accepting as true all material allegations in the complaint and any reasonable inferences

drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). While

Rule 12(b)(6) dismissal is proper only in “extraordinary” cases, United States v. Redwood

City, 640 F.2d 963, 966 (9th Cir. 1981), the complaint’s “[f]actual allegations must be enough

to raise a right to relief above the speculative level,” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007). The court should grant 12(b)(6) relief only if the complaint lacks either a

“cognizable legal theory” or facts sufficient to support a cognizable legal theory. Balistreri v.

Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

III. DISCUSSION

Plaintiff’s SAC states four causes of action against BNYM, including violation of the

Truth in Lending Act, unfair competition, quasi-contract, and determination of the validity of

the lien.

A. TILA Violation

The TILA cause of action in the SAC appears to be premised upon Plaintiff’s

allegations regarding Accredited and Oceanfront’s failure to provide certain required

disclosures at or before the time Plaintiff entered into the loan agreement. (See SAC ¶¶ 58-60.)

Plaintiff’s claim against BNYM is based on the theory that BNYM knew of these TILA

violations when it acquired an interest in Plaintiff’s loan, and is therefore liable under TILA

as Accredited’s assignee.3

 (Id. ¶ 61.)

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 4 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 - 10-CV-777-JM (WVG)

As BNYM correctly points out, the violations alleged to have occurred at the time the

loan was executed are all time-barred under TILA’s one-year statute of limitations. See 15

U.S.C. § 1640(e). Furthermore, this court has already found that, under the facts as pled in the

SAC, neither equitable estoppel nor equitable tolling is applicable to extend the limitations

period. (Doc. No. 56 pp.5-7.) Therefore, the TILA cause of action against BNYM should be

dismissed.

Plaintiff argues that, once BNYM acquired rights to the loan, it was under an ongoing

obligation to provide Plaintiff with updated information correcting the TILA disclosure errors

committed by Accredited and Oceanfront. (Doc. No. 64 p.4.) However, this argument is

insufficient to overcome BNYM’s motion to dismiss for two reasons. First, this theory of

liability does not appear in the SAC itself; rather, it appears to have been raised in Plaintiff’s

opposition for the first time. However, a Rule 12(b)(6) motion to dismiss tests the legal

sufficiency of the complaint itself, and allegations made outside of the complaint may not be

considered. See Lee v. City of L.A., 250 F.3d 1273, 1274 (9th Cir. 1993). Second, the TILA

regulation cited by Plaintiff is inapplicable to the facts as pled in the SAC. In her opposition

to BNYM’s motion, Plaintiff quotes 12 C.F.R. § 226.19(a)(2)(ii), which states: “If the annual

percentage rate disclosed under paragraph (a)(1)(i) of this section [requiring certain disclosures

by the creditor at the time of the loan application] becomes inaccurate . . . the creditor shall

provide corrected disclosures with all changed terms.” (Emphasis added.) Plaintiff interprets

this provision as imposing a duty on BNYM to retroactively correct unmade or inaccurate

disclosures by the originating lender. However, the plain language of the regulation indicates

that this obligation to disclose only arises when changes in the annual percentage rate (“APR”)

occur. Here, there is no indication from either the SAC or Plaintiff’s opposition that the APR

changed during the period of repayment. Indeed, the SAC makes clear that Plaintiff’s TILA

claim is based on misrepresentations regarding the actual level of the original APR. (See, e.g.,

SAC ¶¶ 19(k)-(m).) Thus, the statute of limitations began to run as soon as Plaintiff knew or

should have known of Accredited and Oceanfront’s alleged failure to disclose the true APR,

which would have occurred immediately after the loan was executed at the time she began

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 5 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

 In her opposition, Plaintiff also argues for the first time that BNYM is liable under

§ 17200 for its “fail[ure] to properly supervise [Countrywide’s] actions” as servicer of the loan.

As discussed above, a theory of liability that is not part of the complaint itself cannot be taken

into consideration when deciding a motion to dismiss.

- 6 - 10-CV-777-JM (WVG)

making payments. To restart the statute of limitations every time the interest in a loan changes

hands would render that limitations period meaningless.

Plaintiff’s objections are therefore unavailing, and the TILA cause of action is

dismissed against Defendant BNYM.

B. Unfair Competition

Like the TILA claim, Plaintiff’s unfair competition claim against BNYM is based on

the allegation that BNYM purchased its interest in the loan despite knowing of the legal

irregularities involved in its origination.4

 (SAC ¶¶ 77(h)-(i).) 

As a threshold matter, BNYM challenges Plaintiff’s standing to bring a cause of action

against it under California’s unfair competition law (“UCL”), CAL. BUS. & PROF. CODE §

17200 et seq. (Doc. No. 61-1 pp. 5-6.) As BNYM correctly states, a UCL claim may only be

brought by a private citizen “who has suffered injury in fact and has lost money or property

as a result of the unfair competition.” CAL. BUS. & PROF. CODE § 17204. BNYM now claims

that Plaintiff has failed to allege either a loss of money or property or a causal connection

between BNYM’s alleged conduct and the harm she suffered sufficient to support a § 17200

cause of action. (Doc. No. 61-1 p.6.) 

The fundamental wrong that is the basis of Plaintiff’s UCL claim relates to certain

alleged misrepresentations and failures to disclose material information on the part of

Accredited and Oceanfront at the time the loan agreement was entered into. Plaintiff has

alleged that, as a result of Accredited and Oceanfront’s acts, she was forced, inter alia, to

make higher payments on the loan than she otherwise would have and to pay excessive fees.

(See SAC ¶ 18(b) & 19(n).) These losses are sufficient to constitute “loss of money” for the

purpose of establishing standing under § 17200. 

However, the alleged perpetrators of these wrongful acts were Accredited and

Oceanfront, not BNYM. As BNYM points out, liability under the UCL “must be predicated

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 6 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 - 10-CV-777-JM (WVG)

on [the defendant’s] personal participation in the unlawful practices,” and not some form of

vicarious liability. People v. Toomey, 157 Cal. App. 3d 1, 14 (Cal. Ct. App. 1984) (emphasis

added). A defendant may “participate” in the unlawful competition “either directly or by aiding

and abetting the principal.” Id. at 15. Here, Plaintiff has failed to allege any facts that would

support a theory that BNYM was involved, either directly or indirectly, in Accredited and

Oceanfront’s acts at the time the loan agreement was executed. Thus, there is no apparent

causal connection between BNYM’s allegedly unlawful act of purchasing the loan, and the

harm suffered by Plaintiff in being bound by the terms of the agreement she made with

Accredited and Oceanfront. See also Daro v. Superior Court, 151 Cal. App. 4th 1079, 1099

(Cal. Ct. App. 2007) (“[T]here must be a causal connection between the harm suffered and the

unlawful business activity. That causal connection is broken when a complaining party would

suffer the same harm whether or not a defendant complied with the law.”).

Therefore, Plaintiff has failed to allege facts demonstrating her standing to bring a UCL

claim against BNYM, and this claim is also dismissed.

C. Quasi-Contract

Plaintiff’s quasi-contract cause of action against BNYM is once again based upon

BNYM’s purchase of the loan despite knowing of the legal violations committed by

Accredited and Oceanfront during the origination process. (SAC ¶ 116.) 

This court previously found that Plaintiff’s claim for quasi-contract “is essentially one

for unjust enrichment.” (Doc. No. 33 p.16 (citing Supervalu, Inc. v. Wexford Underwriting

Managers, Inc., 175 Cal. App. 4th 64, 78 (Cal. Ct. App. 2009).) “Unjust enrichment is not a

cause of action, just a restitution claim.” Hill v. Roll Int’l Corp., No. A128698, 2011 WL

2041574 at *7 (Cal. Ct. App. May 26, 2011). However, there is no basis for relief on this type

of claim where there is “no underlying actionable wrong.” Id.

Here, Plaintiff has failed to state a valid claim of wrongful conduct by BNYM that has

resulted in BNYM’s unjust enrichment. (See supra Parts III.A & B; infra Part III.D.) Because

all other claims against BNYM are dismissed, Plaintiff’s claim for unjust enrichment is also

dismissed as to Defendant BNYM.

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 7 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 - 10-CV-777-JM (WVG)

D. Determination of Validity of Lien

Finally, Plaintiff seeks a declaration from the court that the lien on her home is void ab

initio based on the alleged defects in the loan origination process. (SAC ¶¶ 126-127.) However,

as discussed above, Plaintiff has failed to allege any wrongdoing on the part of BNYM, nor

can the allegedly wrongful acts undertaken by Accredited and Oceanfront be attributed to

BNYM under any of the theories raised in the SAC. Therefore, no declaration against BNYM

can be entered, and this claim is also dismissed.

IV. CONCLUSION

For the reasons set forth above, the court hereby GRANTS BNYM’s motion and

dismisses all four claims against it with leave to amend. If she wishes to do so, Plaintiff must

file an amended complaint by July 25, 2011. However, because Plaintiff has already foregone

the opportunity to amend the SAC following the partially successful motions to dismiss by

Defendants Oceanfront and Countrywide, any changes made in a subsequently filed amended

complaint must be strictly limited to BNYM-specific allegations only. Alterations to any of

Plaintiff’s allegations against any other defendants will be stricken from the amended

complaint.

IT IS SO ORDERED.

DATED: July 13, 2011

 Hon. Jeffrey T. Miller

 United States District Judge

Case 3:10-cv-00777-JM-BGS Document 68 Filed 07/13/11 Page 8 of 8