Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-01586/USCOURTS-caed-2_09-cv-01586-3/pdf.json

Parties Involved:
JPMorgan Chase Bank, N.A
Defendant
National City Bank
Defendant
Enrique Ruiz
Plaintiff

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

ENRIQUE RUIZ, 

 Plaintiff, 

 v. 

NATIONAL CITY BANK; JPMORGAN 

CHASE BANK, N.A. as successor 

by merger to Washington Mutual 

Bank; LENDER DOE 1; and LENDER 

DOE 2, 

 Defendants. 

______________________________/

 

Case No. 2:09-CV-01586-JAM-GGH

ORDER GRANTING DEFENDANT’S 

MOTION TO DISMISS 

This matter comes before the Court on Defendant National 

City Bank’s (“Defendant’s” or “NCB’s”1) Motion to Dismiss 

Plaintiff Enrique Ruiz’s (“Plaintiff’s”) First Amended Complaint 

(“FAC”) for failure to state a claim pursuant to Federal Rule of 

Civil Procedure 12(b)(6). Plaintiff opposes the motion. 

 

1

 Plaintiff sporadically refers to a defendant “NCM” throughout 

his First Amended Complaint. This appears to be a typo, and the 

Court will treat it as such, assuming the Plaintiff intended to 

refer to “NCB” instead of “NCM.” 

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Defendant also brings a Motion to Strike Portions of the FAC 

pursuant to Federal Rule of Civil Procedure 12(f), which 

Plaintiff opposes.2 For the reasons explained below, the Court 

grants Defendant’s Motion to Dismiss. Because Defendant’s motion 

to dismiss is granted, Defendant’s motion to strike is moot. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

According to the FAC, on or around April 12, 2007, 

Plaintiff entered into two loan refinance transactions with 

Golden Empire Mortgage, Inc., not a named defendant in this 

case. The first loan was for $392,000.00, referred to as the 

“First Deed of Trust” in the FAC, and the second loan was for 

$49,000.00, the “Second Deed of Trust.” Plaintiff claims he did 

not receive two copies of the “Notice of Right to Cancel” for 

the First Deed of Trust from Golden Empire Mortgage Company. 

Plaintiff claims that he did receive two copies of the Notice of 

Right to Cancel for the Second Deed of Trust from Golden Empire 

Mortgage Company, but the documents were incomplete and 

defective. 

The First and Second Deeds of Trust are now serviced by 

defendants NCB and JPMorgan Chase. On May 8, 2009, Plaintiff 

notified Golden Mortgage Company, Chase, and NCB, that he was 

2

 Both motions were determined to be suitable for decision 

without oral argument. E.D. Cal. L.R. 230(g). 

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making a Qualified Written Request (“QWR”). In the QWR, 

Plaintiff “pointed out the deficient notice of right to cancel 

under [TILA] . . .,” and stated he was rescinding his loan, but 

Plaintiff did not receive a response from any of the defendants 

within 20 days. A foreclosure sale was conducted in June 2009. 

Plaintiff’s original complaint alleged causes of action for 

violation of the Truth In Lending Act, violation of the 

California Business and Professions Code §17200, violation of 

the Federal Fair Credit Reporting Act, and Breach of the 

Covenant of Good Faith and Fair Dealing. The Court granted 

Plaintiff leave to amend the original complaint. Plaintiff’s FAC 

alleges violations of the Truth In Lending Act (“TILA”), 15 

U.S.C. §1601 et seq., and the Real Estate Settlement Procedures 

Act (“RESPA”), 12 U.S.C. §2605 et seq., unfair business 

practices under California Unfair Competition Law (“UCL”), 

Breach of Implied Covenant of Good Faith and Fair Dealing, and 

Slander [Libel] of Credit. 

II. OPINION 

Defendant’s Motion to Dismiss

A. Legal Standard

 A party may move to dismiss an action for failure to state 

a claim upon which relief can be granted pursuant to Federal 

Rule of Civil Procedure 12(b)(6). In considering a motion to 

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dismiss, the court must accept the allegations in the complaint 

as true and draw all reasonable inferences in favor of the 

plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), 

overruled on other grounds by Davis v. Scherer, 468 U.S. 183 

(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that 

are mere “legal conclusions,” however, are not entitled to the 

assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 

(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 

(2007)). To survive a motion to dismiss, a plaintiff needs to 

plead “enough facts to state a claim to relief that is plausible 

on its face.” Twombly, 550 U.S. at 570. Dismissal is appropriate 

where the plaintiff fails to state a claim supportable by a 

cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 

901 F.2d 696, 699 (9th Cir. 1990). 

 Upon granting a motion to dismiss, a court has discretion 

to allow leave to amend the complaint pursuant to Federal Rule 

of Civil Procedure 15(a). “Absent prejudice, or a strong showing 

of any [other relevant] factor[], there exists a presumption

under Rule 15(a) in favor of granting leave to amend.” Eminence 

Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 

2002). “Dismissal with prejudice and without leave to amend is 

not appropriate unless it is clear . . . that the complaint 

could not be saved by amendment.” Id. Accordingly, a court 

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should grant leave to amend the complaint unless the futility of 

amendment warrants dismissing a claim with prejudice. 

B. Federal Causes of Action

 1. Violations of TILA 

 Plaintiff alleges that the Defendant violated TILA by 

failing to respond to Plaintiff’s “request for the name, address 

and telephone number of the true note holder . . .,” thereby 

holding itself out as the note holder and keeping the identity 

of the true note holder concealed. FAC ¶¶ 87-88. Defendant is 

therefore liable to Plaintiff under TILA because Defendant is 

acting as an agent of the unknown note holder. Id. at ¶ 89-90. 

Plaintiff seeks rescission and damages from Defendant. 

 Plaintiff’s claims against Defendant for TILA violations 

fail because Defendant cannot be held liable for a TILA 

violation under the plain language of the statute. Plaintiff 

characterizes Golden Empire Mortgage as a “creditor pursuant to 

[TILA],” and Defendant as a “servicer” or “servicing agent” of 

his loan. FAC ¶¶ 18, 19, 32. TILA allows civil liability to 

attach to creditors and assignees of creditors. See 15 U.S.C. §§ 

1640(a), 1641(a). Under § 1641(f)(1), loan servicers “shall not 

be treated as an assignee of [a consumer] obligation for 

purposes of [TILA] unless the servicer is or was the owner of 

the obligation.” See also Marks v. Ocwen Loan Servicing, 2008 WL 

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344210, at *2 (N.D. Cal. Feb. 6, 2008) (“Although TILA provides 

that assignees of a loan may be liable for TILA violations, loan 

servicers are not liable under TILA as assignees unless the loan 

servicer owned the loan obligation at some point . . . .”). 

 Plaintiff argues that although Defendant is a loan 

servicer, Defendant is liable under the common law theory of 

agency because Defendant is intentionally withholding the 

identity of an unidentified principal note holder. FAC ¶¶ 89-90; 

see also Pl.’s Opp. to Def.’s Mo. to Dismiss, 7-9. Plaintiff 

admits Defendant is merely a loan servicer, without ownership 

rights over the loan, and “has provided no authority that 

extends the common law doctrine of agency to the servicer of a 

loan under a TILA claim.” Fullmer v. JPMorgan Chase Bank, N.A., 

2010 WL 95206, at *4 (E.D. Cal. Jan. 6, 2010). Plaintiff was 

already given leave to amend the TILA claim once by this Court, 

and has again failed to sufficiently plead this cause of action. 

 A foreclosure sale occurred in July of 2009, before 

Plaintiff filed his complaint. 15 U.S.C. § 1635(f) provides “an 

obligor’s right of rescission shall expire . . . upon the sale 

of the property . . . .” It is impossible for Plaintiff to 

allege he can maintain a claim for rescission under this 

statute. 

 

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 2. RESPA Violation 

 Plaintiff claims that Defendant violated RESPA by failing 

to respond to Plaintiff’s QWR. FAC ¶¶ 132-46. The only detail 

given about the QWR in Plaintiff’s complaint is that it “pointed 

out the deficient notice of right to cancel under the Truth in 

Lending Act and that Plaintiff was rescinding his loans pursuant 

to the Truth in Lending Act.” Id. at ¶ 27. 

 Plaintiff’s allegations do not rise above the level of 

recitations of legal conclusions. See Ashcroft v. Iqbal, 129 

S.Ct. 1937, 1949-50 (2009). While detailed factual allegations 

are not necessary, a Plaintiff must provide enough facts for 

this Court to determine Plaintiff’s claim is “plausible on its 

face,” and the Plaintiff has not done so in this case. See

Twombly, 550 U.S. at 570. 

C. State Law Claims

 1. Violation of California’s Unfair Competition Law, Business 

& Professions Code § 17200, et seq.

 Plaintiff alleges Defendant’s violations of TILA and RESPA 

constitute violations of California Business & Professions Code 

§ 17200. Additionally, Defendant’s “clear financial dominance in 

the marketplace is highly detrimental to California consumers,” 

as Defendant deprives consumers of their rights, and Defendant’s 

failure to respond to many customers’ QWRs constitutes a 

violation of UCL. 

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 UCL proscribes “any unlawful, unfair or fraudulent 

business act or practice.” Cal. Bus. & Prof. Code § 17200. 

“The UCL is broad in scope, embracing anything that can properly 

be called a business practice and that at the same time is 

forbidden by law.” People ex rel. Gallegos v. Pacific Lumber 

Co., 158 Cal. App. 4th 950, 959 (2008) (internal citations 

omitted). Section 17200 “‘borrows’ violations of other laws and 

treats” them as unlawful business practices “independently 

actionable under section 17200.” Farmers Ins. Exch. V. Superior 

court, 2 Cal. 4th 377, 383 (1992). Indeed, “[v]iolation of 

almost any federal, state, or local law may serve as the basis 

for a[n] [unfair competition] claim.” Plascencia v. Lending 1st 

Mortg., 583 F. Supp. 2d 1090, 1098 (9th Cir. 2008) (citing 

Saunders v. Superior Court, 27 Cal. App. 4th 832, 838-39 

(1994)). 

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 Plaintiff’s UCL claim is based on violations of federal 

statutes, namely, TILA and RESPA. Because the Court has 

dismissed those federal claims, Plaintiff cannot sustain his UCL 

claim. To the extent Plaintiff’s UCL claim does not rely on 

federal law, Plaintiff’s FAC has failed to allege facts 

sufficient to state a claim for a violation of UCL. See Iqbal, 

129 S.Ct. 1937, 1949-50 (2009); Twombly, 550 U.S. at 570. 

 

 2. Breach of Implied Covenant of Good Faith and Fair Dealing 

 Plaintiff alleges Does 1 and 2 breached the implied 

covenant of good faith and fair dealing, but Plaintiff has had 

contact with Defendant regarding rescission and “other 

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matter[s].” FAC ¶ 169. Although Plaintiff does not explicitly 

name Defendant National City Bank in the Section “Fifth Cause of 

Action Against DOE 1 and DOE 2 (Breach of Implied Covenant of 

Good Faith and Fair Dealing),” Defendant addresses this cause of 

action in its motion to dismiss, and Plaintiff, in his reply, 

applies this cause of action to the Defendant. With knowledge of 

this discrepancy, the Court will address the arguments from both 

parties regarding an alleged breach of implied covenant of good 

faith and fair dealing. 

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 Under California law, every contract “imposes upon each 

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

and its enforcement.” McClain v. Octagon Plaza, L.L.C., 159 

Cal.App.4th 784, 798, 71 Cal.Rptr.3d 885 (2008). However, “[t]he 

covenant . . . cannot be endowed with an existence independent 

of its contractual underpinnings. It cannot impose substantive 

duties or limits on the contracting parties beyond those 

incorporated in the specific terms of their agreement.” Guz v. 

Bechtel Nat’l Inc., 24 Cal. 4th 317, 349-350, 100 Cal.Rptr.2d 

352 (1992)(citations and quotations omitted). “[T]he implied 

covenant of good faith is read into contracts in order to 

protect the express covenants or promises of the contract, not 

to protect some general public policy interest not directly tied 

to the contract's purpose.” Carma Dev., Inc. v. Marathon Dev. 

Cal., 2 Cal. 4th 342, 373, 6 Cal.Rptr.2d 467 (1992)(citations 

omitted). Additionally, “tort recovery for breach of the 

covenant is available only in limited circumstances, generally 

involving a special relationship between the contracting parties 

. . . .” Bionghi v. Metro. Water Dist. of So. Cal., 70 

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Cal.App.4th 1358, 1370, 83 Cal.Rptr.2d 388 (1999). “California 

courts have rejected parties' arguments that the tort doctrine 

which has been extended only to situations where there are 

unique fiduciary-like relationships between the parties, should 

encompass normal commercial banking transactions.” Connors v. 

Home Loan Corp., 2009 WL 1615989, at *6 (S.D. Cal. Jun. 9, 

2009)(internal brackets and quotations omitted). 

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Plaintiff alleges no facts demonstrating Defendant breached 

any “express covenants or promises of [a] contract.” Carma Dev., 

2 Cal.4th at 373, 6 Cal.Rptr.2d 467. Plaintiff’s passing 

reference to Defendant will not suffice to maintain a claim 

against Defendant for breach of the implied covenant of good 

faith and fair dealing. See Flores v. GMAC Mort., 2010 WL 582115 

(E.D. Cal. Feb. 11, 2010). Moreover, because the transaction 

between Plaintiff and Defendant involves a “normal commercial 

banking transaction,” Plaintiff will be unable to allege facts 

giving rise to an action under the implied covenant of good 

faith and fair dealing. 

 3. Slander of Credit

 Plaintiff alleges that Defendant slandered Plaintiff’s 

credit by reporting false statements “with various credit 

reporting agencies . . . without informing that such claims were 

disputed,” and “negative credit information regarding the 

Plaintiff’s creditworthiness,” impairing Plaintiff’s “credit 

history[,] causing her [sic] to lose the ability to have good 

credit . . . .” FAC ¶¶ 183-85. 

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 Plaintiff’s allegations do not rise above the level of 

recitations of legal conclusions. See Ashcroft v. Iqbal, 129 

S.Ct. 1937, 1949-50 (2009). Noticeably absent are any facts 

identifying what the allegedly damaging or false statements 

were, the parties to whom the statements were made, or what 

damage to Plaintiff’s credit directly resulted from Defendant's 

statements. See, e.g., Lal v. American Home Servicing, 2010 WL 

225524, at *5 (E.D. Cal. Jan. 19, 2010). Thus, Plaintiff’s 

complaint does not state facts sufficient to maintain a claim 

for slander of credit. 

 

III. ORDER 

 For the reasons set forth above, Defendant’s motion to 

dismiss is GRANTED WITH PREJUDICE in its entirety. The Court 

finds that dismissal with prejudice is appropriate given that 

the Plaintiff has been given two chances to try to plead proper 

claims against this Defendant and any further opportunity to 

save the complaint by amendment would be futile. 

IT IS SO ORDERED. 

Dated: March 16, 2010 

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