Williams v. Bank of American, N A.

• Decision Date: 11 June 2012
• Docket Number: CASE NO. 11-CV-2800 BEN (NLS)
• Parties: PAMELA L. WILLIAMS, Plaintiff, v. BANK OF AMERICA, N.A., et al., Defendants.
• Court: U.S. District Court — Southern District of California

PAMELA L. WILLIAMS, Plaintiff,

v.BANK OF AMERICA, N.A., et al., Defendants.

CASE NO. 11-CV-2800 BEN (NLS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

Dated: June 11, 2012

ORDER GRANTING

MOTION TO DISMISS

[Docket No. 4]

Presently before the Court is a Motion to Dismiss by Defendants Bank of America, N A., and Mortgage Electronic Registration Systems, Inc. (improperly sued as "MERS"). For the reasons stated below, the Motion is GRANTED.

BACKGROUND

On January 11, 2006, Plaintiff Pamela L. Williams executed an "Adjustable Rate Note" ("Note") promising to repay approximately $250,000 to Defendants. (Compl. ¶ 6.) This Note was secured by a Deed of Trust ("Deed") on her real property, located at 554 S Radio Drive, San Diego, California 92114. (Id. ¶¶ 1, 11.) Plaintiff appears to allege that the Note is invalid. (Id. ¶ 20.)¹ Plaintiff also challenges the foreclosure process, contending that the Note of Default sent to her on February 9, 2010 was improper. (Id.)

Plaintiff originally filed this action in San Diego County Superior Court on October 28, 2011.The complaint alleged ten causes of action: (1) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. 1611 et seq.; (2) violation of the Real Estate Settlement Procedure Act ("RESPA"), 26 U.S.C. § § 2605 et seq.; (3) violation of the Home Ownership and Equity Protection Act of 1994 ("HOEPA"), 15 U.S.C. §§ 1602 et seq.; (4) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq.; (5) breach of fiduciary duty; (6) breach of the covenant of good faith and fair dealing; (7) injunctive relief; (8) declaratory relief; (9) fraud; and (10) violation of California Civil Code Section 2923.6.

Presently before the Court is a Motion to Dismiss by Defendants Bank of America, N.A., and Mortgage Electronic Registration Systems, Inc. (improperly sued as "MERS").

DISCUSSION

Under Federal Rule of Civil Procedure 12(b)(6), dismissal is appropriate if, taking all factual allegations as true, the complaint fails to state a plausible claim for relief on its face. FED. R. CIV. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57 (2007); see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (requiring plaintiff to plead factual content that provides "more than a sheer possibility that a defendant has acted unlawfully"). Under this standard, dismissal is appropriate if the complaint fails to state enough facts to raise a reasonable expectation that discovery will reveal evidence of the matter complained of, or if the complaint lacks a cognizable legal theory under which relief may be granted. Twombly, 550 U.S. at 556.

Defendants move to dismiss all ten claims. Each claim will be addressed in turn.

I. FIRST CLAIM: VIOLATION OF TILA

In the first claim, Plaintiff alleges that Defendants violated the requirements of TILA by: (1) "refus[ing] and continu[ing] to refuse to validate or otherwise make a full accounting and the required disclosures as to the true finance charges and fees;" (2) "improperly retain[ing] funds belonging to Plaintiff in amounts to be determined;" and (3) "disclos[ing] the status of the ownership of the loans." (Compl. ¶ 23.) Plaintiff seeks rescission and cancellation of the loan under TILA. (Id. ¶ 24.)

A TILA rescission claim is subject to a three-year statute of limitations. See 15 U.S.C. § 1635(f). The statute of limitations runs from "the date of consummation of the transaction." King v. California, 784 F.2d 910, 915 (1986). "Consummation means the time that a consumer becomescontractually obligated on a credit transaction." 12 C.F.R. § 226.2(a)(13). Section 1635(f) is an "absolute limitation on rescission actions" which bars any claim filed more than three years after the consummation of the transaction. King, 784 F.2d at 913; see also Miguel v. Country Funding Corp., 309 F.3d 1161, 1164-65 (9th Cir. 2002). The loan at issue here closed on January 11, 2006 (Compl. ¶ 6), and Plaintiff did not file the present action until October 28, 2011, over five years later. Accordingly, Plaintiff's first claim is barred by the applicable statute of limitations and is DISMISSED WITH PREJUDICE.

II. SECOND CLAIM: VIOLATION OF RESPA

In the second claim, Plaintiff alleges that Defendants violated RESPA by "plac[ing] loans for the purpose of unlawfully increasing or otherwise obtaining yield spread fees and sums in excess of what would have been lawfully earned." (Compl. ¶ 30.) In addition, Plaintiff alleges that Defendants "violated the requirements of 26 U.S.C. § 2605(B) in that the servicing contract or duties thereunder were transferred or hypothecated without the required notice." (Id. ¶ 31.)

First, "26 U.S.C. § 2605(B)" does not exist. Second, to the extent that Plaintiff intended to allege a violation of 12 U.S.C. 2605(b), her claim is time-barred. Claims brought under 12 U.S.C. § 2605 are subject to a three-year statute of limitations. Harwood-Bolton v. Bank of Am., N.A., No. CV-10-204, 2011 U.S. Dist. LEXIS 35595, at *9(E.D. Wash. Mar. 18, 2011). To the extent that Plaintiff bases her claim on alleged actions of Defendants at the point of origination of the loan, Plaintiff signed the loan documents on January 11, 2006, but did not file suit until five years later. To the extent that Plaintiff bases her claim on the way the "servicing contract or duties thereunder were transferred or hypothecated without the required notice" (Compl. ¶ 31), Plaintiff does not allege that the "servicing contract or duties" were "transferred or hypothecated" within three years of the filing of the complaint. Accordingly, Plaintiff's second cause of action is barred by the applicable statute of limitations and is DISMISSED WITHOUT PREJUDICE.

III. THIRD CLAIM: VIOLATION OF HOEPA

In the third claim, Plaintiff alleges that "the loan was placed in violation of the HOEPA act, as it was placed and administered and otherwise utilized without regard to Plaintiff's income or cash flow and with the intention of inducing a default." (Id. ¶ 37.) Plaintiff seeks damages based on thisalleged violation. (Id. ¶ 39.)

Plaintiff's claims under HOEPA are time-barred by the applicable statute of limitations. "HOEPA is an amendment of TILA, and therefore is governed by the same remedial scheme and statutes of limitations as TILA." Hamilton v. Bank of Blue Valley, 746 F. Supp. 2d 1160, 1179 (E.D. Cal. 2010) (internal quotation marks omitted). The statute of limitations for a TILA damages claim is "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e); Monaco v. Bear Stearns Residential Mortg. Corp., 554F. Supp. 2d 1034,1039 (CD. Cal. 2008). As explained above, the date of consummation of the transaction is the date on which the loan is signed. See 12 C.F.R. § 226.2(a)(13). Plaintiff signed the loan documents on January 11, 2006, but did not file suit until five years later. Accordingly, Plaintiff's third claim is barred by the applicable statute of limitations and is DISMISSED WITH PREJUDICE.

IV. FOURTH CLAIM: VIOLATION OF THE FDCPA

In the fourth claim, Plaintiff alleges that Defendants violated the FDCPA. (Compl. ¶¶ 42-43.) She alleges that she requested validation of the "debt" under 15 U.S.C. § 1692, and Defendants failed to respond to her demands in such a way that met the requirements of the FDCPA. (Id.)

The FDCPA "imposes civil liability on 'debt collectors' for certain prohibited debt collection practices." Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 130 S. Ct. 1605,1606 (2010) (internal alteration omitted). In the context of the FDCPA, a debt collector is "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6).

Here, Plaintiff fails to demonstrate that Defendants are debt collectors. The FDCPA does not govern efforts by creditors to collect their own debts. Id. In addition, "creditors, mortgagors and mortgage servicing companies are not 'debt collectors' and are exempt from liability under the [FDCPA]." Caballero v. Ocwen Loan Servicing, No. C-09-01021, 2009 WL 1528128, at*1 (N.D. Cal. May 29, 2009). Accordingly, the FDCPA does not apply and the fourth cause of action is DISMISSED WITH PREJUDICE.

V. FIFTH CLAIM: BREACH OF FIDUCIARY DUTY

In the fifth claim, Plaintiff alleges that "Defendants created, accepted and acted in a fiduciary relationship of great trust and acted for and were the processors of property for the benefit of Plaintiff[].... Defendants breached [the] fiduciary duties owed to Plaintiff[] as they have acted and continue to act for [their] own benefit and to the detriment of Plaintiff[]." (Compl. ¶¶ 46,48.)

Plaintiff's claims fail as a matter of law because "[g]enerally, the lender-borrower relationship is not a fiduciary relationship." Okura & Co. (Am.), Inc. v. Careau Grp., 783 F. Supp. 482,494 (CD. Cal. 1991); see also Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal. App. 3d 1089, 1093 n. 1 (3d Dist. 1991) ("The relationship between a lending institution and its borrower-client is not fiduciary in nature."). Plaintiff alleges no facts that indicate any special circumstances that could serve as the basis for a finding that a fiduciary duty existed between the parties. Accordingly, the fifth cause of action is DISMISSED WITH PREJUDICE.

VI. SIXTH CLAIM: BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING

In the sixth claim, Plaintiff alleges that "there existed an implied covenant of good faith and fair dealing requiring Defendants, and each of them, to safeguard, protect, or otherwise care for the assets and rights of Plaintiff[]. . . .[T]he commencement of foreclosure proceedings upon the property lawfully belonging to Plaintiff without the production of documents demonstrating the lawful rights for the foreclosure constitutes a breach of...