Megino v. Financial
| Decision Date | 06 January 2011 |
| Docket Number | Case No. 2:09-CV-00370-KJD-GWF |
| Parties | PAUL MEGINO, et al., Plaintiffs, v. LINEAR FINANCIAL, DBA PARDEE HOMELOANS, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
Presently before the Court is Defendant Linear Financial L.P.'s ("Linear") (incorrectly named as Linear Financial) and Well Fargo Bank, N.A.'s (incorrectly named as Wells Fargo Home Mortgage) ("Wells Fargo" and together with Linear, the "Defendants") Motion to Dismiss (#6) and Motion to Release Lis Pendens (#10). The Court has also considered Defendants Request for Judicial Notice (#7). Though the time for doing so has passed, Plaintiffs have failed to file a response in opposition to Defendants' Motion to Dismiss. Therefore, in accordance with Local Rule 7-2(d) and good cause being found, the Court grants the motion to dismiss.
On October 27, 2008, Plaintiffs filed a complaint (the "Complaint") in Nevada state court on October 27, 2008 and recorded a "Lis Pendens/Notice of Pendency of Action" (the "Lis Pendens") onthe same day. After being served, Defendants removed to federal court based upon federal question jurisdiction (#1). Defendants subsequently filed a Suggestion of Bankruptcy upon discovery that Plaintiffs had filed a chapter 7 bankruptcy petition with the United States Bankruptcy Court, District of Nevada (the "Bankruptcy Court") (#4). On February 2, 2009, the Bankruptcy Court entered an order granting Defendants stay relief to pursue the pending foreclosure of the Plaintiffs' property (#9). On May 20, 2010, the Bankruptcy Court granted Wells Fargo additional stay relief, clarifying that Wells Fargo could proceed to defend the instant litigation. Therefore, having considered Defendants' Motion and for good cause appearing pursuant to FRCP 12(b)(6), this Court hereby enters the following Order granting Defendants' Motion to Dismiss with findings of fact and conclusions of law and extinguishing the Lis Pendens.
In September 2006, Plaintiffs obtained an adjustable rate mortgage from Linear in the amount of $384,000.00 to finance the purchase of 8513 Brackenfield Avenue, Las Vegas, Nevada, 89178, APN 176-28-210-012 (the "Property"), as reflected in a deed of trust recorded on September 11, 2006 ("Linear Deed of Trust"). Concurrently with the recordation of the Linear Deed of Trust, Linear assigned the Linear Deed of Trust, together with the note, to Wells Fargo, as reflected in the assignment of deed of trust recorded on September 11, 2006 ("Wells Fargo Assignment") as permitted by paragraph 20 of the Linear Deed of Trust ("[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice").
The Linear Deed of Trust specifically provided, in bold text, that upon default Linear possessed the right of acceleration and sale at a public trustee's sale in accordance with the terms of the deed of trust and applicable law and further provided for a change in the loan servicer. See id. After Plaintiffs' default on the loan obligations, Defendant National Default Servicing Corporation ("NDSC") recorded the notice of default and election to sell on April 4, 2008. Plaintiffs filed the Complaint in an apparent preemptive attempt to prevent a foreclosure sale of the Property.
The Complaint sets forth the following claims for relief: (1) Truth in Lending Act (15 U.S.C. § 1601, et seq.) ("TLA"); (2) Real Estate Settlement Procedures Act (12 U.S.C. § 2601, et seq.) ("RESPA"); (3) Home Ownership and Equity Protection Act of 1994 ("HOEPA"); (4) Fair Debt Collection Practices Act ("FDCPA") under 15 U.S.C. § 1692; (5) Fiduciary Duty; (6) Covenant of Good Faith and Fair Dealing; (7), (8) Injunctive Relief; (9) Declaratory Relief; (10) Fraud; (11) Negligence (Suitability of Loan); (12) Negligence Per Se; (13) Negligent Misrepresentation; and (14) Intentional Misrepresentation.
Nevada LR-7-2 provides in pertinent part that "[t]he failure of an opposing party to file points and authorities in response to any motion shall constitute a consent to the granting of the motion." However, failure to file an opposition to a motion to dismiss is not cause for automatic dismissal. See Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995). Before dismissing the action, the district court is required to weigh (1) the public's interest in expeditious resolution; (2) the court's need to manage its docket; (3) the risk of prejudice; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. Id.. (quoting Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986)). In this case, these factors weigh toward dismissal. The public's interest in expeditious resolution of litigation, the court's need to manage its docket, and the lack of prejudice weigh in favor of granting the Motion to Dismiss.
Additionally, the motion itself has merit. Rule 12(b) of the Federal Rules of Civil Procedure ("FRCP") provides in relevant part:
Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion:... (6) failure to state a claim upon which relief can be granted....
To survive a 12(b)(6) motion, a complaint must be pled in such a fashion as to demonstrate the plaintiff's entitlement to relief. This requires that a complaint provide, "a short and plainstatement of the claim showing that the pleader is entitled to relief." FRCP 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Although FRCP 8 does not require detailed factual allegations, it demands more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a Rule 12(b)(6) motion, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1949 (internal citation omitted).
In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering such motions. First, the Court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949. Second, the Court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged--but not shown--that the pleader is entitled to relief." Id. (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, plaintiff's complaint must be dismissed. Twombly, 550 U.S. at 570. This "requires more than labels and conclusions, and formulaic recitation of [a cause of action's elements] will not do." Bell Atl. Corp. v. Twombly, 550 US. 544, 555 (2007).
Plaintiffs' TILA, RESPA and HOEPA claims lack merit. In support of the TILA claim, Plaintiffs allege that Defendants (i) refused to make a full accounting and required disclosures, (ii) improperly retained unspecified funds belonging to Plaintiffs, and (iii) failed to disclose the ownership of the loans. These vague, conclusory allegations do not state a plausible claim for relief. Plaintiffs have not identified any actions in violation of TILA or otherwise identified specific disclosures that were not provided to them or that Plaintiffs, at any time, communicated a request for an accounting to Defendants. Even if such allegations were sufficient to state a plausible claim, relief is unavailable for Plaintiffs' TILA claim.
TILA provides a one-year statute of limitations period for claims for civil damages. See 15 U.S.C. § 1640(e); 1635(a). The statute of limitations begins to run from the date of closing on the transaction. See King v. California, 784 F.2d 910, 915 (9th Cir. 1986). However, under King, equitable tolling is available to stay the statute of limitations if Plaintiffs have been prevented from discovering any potential claims for fraud against Defendants. See id.
Here, Plaintiffs' loan transaction closed on or about September 6, 2006. Thus, a claim for damages should have been made no later than September 6, 2007. Plaintiffs filed this action on October 11, 2008, well after the applicable statute of limitations. Equitable tolling would not stay the statute of limitations here because Plaintiffs have not adequately alleged facts showing that they were prevented from discovering this claim earlier. Accordingly, the Court dismisses Plaintiffs' claim for violation of TILA.
In support of the RESPA claim, Plaintiffs assert that Defendants (i) placed Plaintiffs into loans for the purpose of unlawfully increasing or obtaining yield spread fees and (ii) servicing contract or duties thereunder were transferred without the required notice. Plaintiffs' "shotgun" pleading against all Defendants in support of this claim, which pleading reads as if Plaintiffs located selected portions of RESPA and pasted them into the Complaint as factual allegations, do not cross the line into creating a plausible claim for relief. RESPA, moreover, provides a one-year statute of limitations period for claims arising under 12 U.S.C....
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