Briosos v. Wells Fargo Bank

• Decision Date: 25 August 2010
• Docket Number: No. C 10-02834 LB,C 10-02834 LB
• Parties: Fernando BRIOSOS, Plaintiff, v. WELLS FARGO BANK, Defendant.
• Court: U.S. District Court — Northern District of California

737 F.Supp.2d 1018

Fernando BRIOSOS, Plaintiff,

v.WELLS FARGO BANK, Defendant.

No. C 10-02834 LB.

United States District Court,

N.D. California,

Oakland Division.

Aug. 25, 2010.

Michael Patrick Rooney, Michael Rooney Law Office, San Francisco, CA, for Plaintiff.

Jon David Ives, Donald John Querio, Severson & Werson, San Francisco, CA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [ECF No. 5] AND GRANTING PLAINTIFF LEAVE TO AMEND

LAUREL BEELER, United States Magistrate Judge.

I. INTRODUCTION

On March 8, 2010, Plaintiff Fernando Briosos filed this action in California state court against Defendant Wells Fargo Bank, alleging violations of California law and the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., in connection with his refinance of two mortgage loans through Defendant. Complaint, Exh. A to Notice of Removal, ECF No. 1 at 5-11. Plaintiff alleges that Defendant made fraudulent statements and concealed information about his ability to afford the loans in order to induce Plaintiff to go through with the refinance. Additionally, Plaintiff alleges that at the closing of one of the loans, Defendant failed to provide him with completed disclosures of his notice and right to rescission, as requiredunder TILA, and later refused his request to rescind one of the loans. In his Complaint, Plaintiff asserts claims for: (1) fraud; (2) rescission under TILA; (3) violation of California's Unfair Competition Law, California Business & Professions Code § 17200; and (4) quiet title. After removing the lawsuit to this Court pursuant to 28 U.S.C. §§ 1441, and 1446 based on federal question jurisdiction, Wells Fargo now moves to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6).

With respect to Plaintiff's TILA rescission claim, the Court finds that Plaintiff timely exercised his right to rescission, but has failed to sufficiently allege facts supporting his ability to tender the proceeds of the loan as part of the rescission process.

As to Plaintiff's fraud claim, the Court finds that Plaintiff has failed to plead the elements of fraud with particularity, as required under Federal Rule of Civil Procedure 9(b).

With respect to Plaintiff's quiet title claim, the Court finds that Plaintiff has failed to comply with the statutory requirement that he assert such claim in a verified complaint.

Finally, because Plaintiff's TILA and fraud claims are deficient as alleged, Plaintiff has failed to allege an predicate violation necessary to sustain his unfair competition law claim under California Business & Professions Code § 17200.

The Court dismisses each of Plaintiff's claims without prejudice, and because it is possible that Plaintiff may cure the deficiencies in his claims, grants Plaintiff leave to amend. Further, because the Court finds that this matter is suitable for decision without oral argument, the Court vacates the hearing set for September 2, 2010. See Civil L.R. 7-1(b).

II. FACTUAL AND PROCEDURAL BACKGROUND

The relevant facts, taken from Plaintiff's Complaint and from Defendant's Request for Judicial Notice ¹ as are follows.

Plaintiff, along with his partner, Steven Christensen, owned two properties in San Francisco: a condominium on Lombard Street, which is Plaintiff's primary residence, and a condominium on Delancey Street. Complaint ¶ 1, ECF No. 1 at 5. In October 2006, Mr. Christensen died. Complaint ¶ 9, ECF No. 1 at 7. As a result, Plaintiff contacted Defendant regarding removing Mr. Christensen's name from the mortgage loans on the properties.² Complaint ¶ 11, ECF No. 1 at 7.According to Plaintiff, Defendant incorrectly informed him that he would have to refinance the loans in his name. Id. Plaintiff alleges that Defendant's preferred account manager, Dennis Mahoney, advised him to take a five-year interest—only loan, despite Plaintiff's concern that he could not keep both properties on his income and the fact that Mr. Mahoney knew Plaintiff would not be able to afford the loan payments and faced a high probability of foreclosure on the properties. Complaint ¶¶ 15, 16, 19, 29.

Relying on Defendant's representation, on February 27, 2007,³ Plaintiff executed a $650,000 mortgage loan from Defendant. Complaint ¶ 4, ECF No. 1 at 6; see Deed of Trust, Exh. A to Request for Judicial Notice, ECF No. 6-1. The loan was secured by a Deed of Trust on the Lombard property, and was recorded with the San Francisco County Record's Office on March 6, 2007. Id. Plaintiff subsequently defaulted on the loan. As a result, a Notice of Default and Election to Sell Under Deed of Trust was recorded on March 23, 2010, Exh. B to Request for Judicial Notice, ECF No., ECF No. 6-2. The Notice of Default indicates that Plaintiff was $18,855.25 in arrears on March 22, 2010. Id.

Additionally, Plaintiff refinanced the loan on the Delancey Street property. On April 5, 2007, Plaintiff, in his individual capacity, executed a loan for $531,000 from Defendant. See Deed of Trust, Exh. C to Request for Judicial Notice, ECF No. 6-3. The loan was secured with a Deed of Trust on the Delancey Street property, which was recorded with the San Francisco County Recorder's Office on April 13, 2007. Id.

In March 2010, Plaintiff filed this lawsuit in San Francisco Superior Court, seeking to rescind the loans, obtain quiet title to the properties, and obtain damages for fraud and violation of California's unfair competition law. On June 28, 2010, Defendant removed the action to this Court, asserting that the Court has jurisdiction over the matter under 28 U.S.C. § 1331 based on Plaintiff's federal TILA claim. Notice of Removal, ECF No. 1 at 1. On July 6, 2010, Defendant filed the instant motion, seeking dismissal of each of Plaintiff's claims pursuant to Rule 12(b)(6), or, alternatively, a more definite statement pursuant to Federal Rule of Civil Procedure 12(e). Defendant's Motion, ECF No. 5. Because Plaintiff's claims as plead are not so vague or ambiguous to inhibit Defendant from preparing a response, the Court denies Defendant's motion for a more definite statement and addresses Defendant's motion pursuant to Rule 12(b)(6). See Fed. R. Civ. Pro. 12(e); Ingram v. Grant Union High School Dist., No. CIV S-08-2490, 2010 WL 3245169, at *9 (E.D.Cal. Aug. 16, 2010) (denying Rule 12(e) motion when allegations in support of claim not impermissibly vague or ambiguous).

III. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may move to dismiss a claim for "failure to state a claimupon which relief can be granted." A motion to dismiss under Rule 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). In order to survive a motion to dismiss, a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Ashcroft v. Iqbal, ---U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955.) In considering a motion to dismiss, a court must accept all of the plaintiff's allegations as true. Id. at 550, 127 S.Ct. 1955; Erickson v. Pardus, 551 U.S. 89, 93-94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). The plaintiff's complaint need not contain detailed factual allegations, but it must contain more than a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S.Ct. at 1949. In reviewing a motion to dismiss, courts may also consider documents attached to the complaint. Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995) (citation omitted). Additionally, courts may consider a matter that is properly the subject of judicial notice, such as matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001). If the court dismisses the complaint, it "should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000).

IV. DISCUSSION

In its Motion, Defendant challenges each of Plaintiff's four claims. It argues that Plaintiff's TILA rescission claim is time-barred and that Plaintiff has failed to adequately plead the ability to tender the loan proceeds, which is a mandatory step in the rescission process under 15 U.S.C. § 1635(c). Defendant's Motion, ECF No. 5 at 14-17. Defendant challenges Plaintiff's fraud claim on the ground that Plaintiff has failed to plead the essential allegations of fraud with particularity, as required by Federal Rule of Civil Procedure 9(b), and because the allegations do not amount to an actionable fraud claim. Defendant's Motion, ECF No. 5 at 11-13. As to Plaintiff's quiet title claim, Defendant asserts that because Plaintiff has not tendered repayment of the outstanding amounts of the loans, he cannot seek to quiet title to the properties in his name. Id., ECF No. 5 at 13-14. Finally, Defendant contends that, having failed to plead a viable claim, Plaintiff lacks any underlying violation to sustain his unfair competition law claim under California Business & Professions Code § 17200. Id., ECF No. 5 at 17-19.

Because the Court's jurisdiction over this case hinges on the existence of a viable federal claim, the Court turns to Plaintiff's TILA claim first.

A. Truth In Lending Act Claim

In his third cause of action, Plaintiff asserts a...