MARCO A. HERNANDEZ, District Judge.
Plaintiff Pedro Diaz Moreno brings this foreclosure-related action against defendants Bank of America, Mortgage Electronic Registration Systems (MERS), and ReconTrust Company. Defendants move to dismiss for failure to state a claim. I grant the motion.
On March 29, 2007, plaintiff borrowed $220,000 from lender Aegis Wholesale Corporation, executing a promissory note in favor of Aegis.
On June 18, 2010, MERS assigned the DOT to BAC Home Loans Servicing.
On or about June 22, 2010, ReconTrust initiated foreclosure proceedings by filing a Notice of Default and Election to Sell (NODES) in Clackamas County. Ex. 4 to Tranetzki Decl. The June 2010 NODES states that plaintiff had been in default since July 1, 2009, having failed to pay monthly payments of $1,861.77 beginning on that date.
Plaintiff filed this action on August 18, 2011, seeking to invalidate the foreclosure sale. Compl. at ¶ 1.11. Although he filed the Complaint after the August 15, 2011 sale date, there is no dispute that the sale has not yet occurred.
On a motion to dismiss, the court must review the sufficiency of the complaint.
A motion to dismiss under Rule 12(b)(6) will be granted if plaintiff alleges the "grounds" of his "entitlement to relief" with nothing "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action[.]"
To survive a motion to dismiss, the complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[,]" meaning "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Plaintiff brings five claims for relief: (1) a declaratory judgment claim seeking a declaration that the foreclosure is invalid for failing to comply with the Oregon Trust Deed Act, Oregon Revised Statutes §§ (O.R.S.) 86.705 - 86.795 (OTDA), specifically O.R.S. 86.735(1); (2) a declaratory judgment claim seeking a declaration that the NODES failed to properly account for all the payments plaintiff made and thus violates O.R.S. 86.745; (3) a claim under the Truth in Lending Act, 15 U.S.C. §§ 1601-1615 (TILA); (4) a claim under the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2610 (RESPA); and (5) a claim under Oregon's Unfair Trade Practices Act, O.R.S. 646.605 - 646.656 (UTPA).
In support of their motion, defendants argue that (1) plaintiff's claims sounding in equity are barred by plaintiff's failure to plead the ability to tender the amount due on the loan; (2) plaintiff cannot allege a justiciable controversy without curing his loan default; and (3) the claims fail on the merits. Because I agree with defendants that plaintiff's claims lack merit, I decline to address defendants' other arguments.
As in many similar cases in which borrowers challenge the validity of an impending foreclosure, plaintiff here alleges that MERS was a sham beneficiary and lacked the power to assign all beneficial interest under the DOT to BAC Home Loans Servicing, and accordingly, BAC Home Loans Servicing lacked the power to appoint ReconTrust as successor trustee to foreclose on the property. I have previously held that naming MERS as a beneficiary in a DOT does not violate the OTDA.
Although some judges in this District have since reached the opposite conclusion,
Plaintiff also alleges that because there "is a gap of over three years" between the time the DOT was first executed in April 2007 and June 2010 when MERS assigned the DOT to BAC Home Loan Servicing, "the Deed of Trust must have been assigned to a third party at least once as evidenced by the fact that Bank of America, NA and MERS saw the need to execute a Corporate Assignment of Deed of Trust returning the recorded beneficial interest to Bank of America, NA." Compl. at ¶ 2.10.
Plaintiff's allegation is problematic in at least two respects: it is speculative ("must have") and it repeats the misstatement made earlier in the Complaint that Bank of America was the original lender. As noted above, Aegis was the named lender in the DOT and the documents establish that Bank of America received its interest only in June 2010 upon assignment from MERS. Thus, while plaintiff attempts to allege in the Complaint that there are unrecorded assignments of the Deed of Trust in violation of O.R.S. 86.735(1), the allegations are speculative and based on an erroneous assertion of fact. The Complaint does not raise a claim based on an allegation that there were unrecorded assignments of the DOT.
In his opposition to the motion to dismiss, plaintiff attempts to establish an unrecorded assignment to Fannie Mae. Ex. 1 to Mem. in Opp. to Mtn to Dismiss. But, even if I were to consider this unauthenticated, unidentified exhibit tendered in response to a motion to dismiss, it shows only that Fannie Mae was an investor in the
To the extent plaintiff argues that there were unrecorded assignments of the loan, the allegation does not state a claim. At least two judges in this District have rejected the argument that assignments of the underlying note must be recorded before a non-judicial foreclosure may commence.
As with plaintiff's argument that MERS is not a valid DOT beneficiary, the judges in this District have reached contrary conclusions regarding whether assignments of the note, as opposed to assignments of the DOT, violate the OTDA.
Finally, plaintiff raises an entirely new claim in his memorandum in opposition to the motion. Although I need not consider it because it is not pleaded in the Complaint, I address it here because it also requires dismissal. Plaintiff states that "there is a question that needs to be raised in discovery regarding the timing of the recording of the executed and notarized [April 7, 2011 NODES] and when the powers of a successor trustee were vested in ReconTrust." Mem. in Opp. to Mtn to Dismiss at pp. 25-26. To the extent the argument is an extension of plaintiff's MERS argument, it is rejected for the reasons above. Otherwise, it is dismissed for failure to state a claim because the documents conclusively show that ReconTrust was appointed a successor trustee on June 18, 2010, and that the appointment of ReconTrust as such was recorded in Clackamas County on June 22, 2010, well before the execution of the April 7, 2011 NODES.
I dismiss plaintiff's first claim for relief with prejudice.
In his second claim, plaintiff alleges that the NODES violates O.R.S. 86.745 because it misstated the amount in default by not properly accounting for all of plaintiff's payments. Compl. at ¶¶ 3.1-3.6. O.R.S. 86.745 requires that the NODES state,
Ex. 6 to Tranetzki Decl. The NODES further states that as a result of the default, the beneficiary declared all sums owing on the obligation to be immediately due and payable.
Plaintiff does not contest that he was in default. He makes no allegations regarding the amount he contends he paid that is not reflected in the NODES or whether the alleged error in the NODES concerns the amount of the monthly payment, the date on which his payments stopped, or the total amount due based on the acceleration of the entire debt by the beneficiary.
Defendants argue that a claim alleging a defective notice of sale must comply with O.R.S. 86.742 which governs claims against a trustee who has failed to give notice to any person entitled to notice under O.R.S. 86.740(1)(c). O.R.S. 86.742(1). Although plaintiff here received notice, his claim is akin to a claim brought by one who has not received notice at all because it is based on an argument that the defective notice is invalid, rendering it ineffective and precluding the trustee from lawfully continuing with the sale.
In a 2007 case, Judge King found that a plaintiff alleging that a notice of sale was defective under O.R.S. 86.735 or O.R.S. 86.745 had to comply with the requirements of O.R.S. 86.742 and O.R.S. 86.759.
Judge King concluded that the "only way plaintiff can challenge [the] failure to comply with statutory obligations [related to notice] . . . is by bringing a suit under ORS 86.742."
In a later decision in the case, Judge King considered the claim a second time in a motion brought by a different defendant. Here, Judge King noted that the plaintiff alleged that the notice did not state the specific default for which the foreclosure was made and failed to state the sum owing on the obligation secured by the trust deed.
Two more recent cases have distinguished
It is also worth noting that plaintiff himself concedes that the requirements of O.R.S. 86.742 apply to claims alleging defective notice. Mem. in Opp. to Mtn to Dismiss at p. 30 ("The judge in Stations West rightly points out that the remedy for failure to provide proper notice is found in ORS 86.742.").
Plaintiff's second claim is dismissed because as in
Plaintiff alleges that Bank of America violated the TILA by failing to make certain disclosures, failing to deliver the "Good Faith Estimate," and by providing inconsistencies between the disclosed rate and the actual rate. Compl. at ¶ 4.3. A TILA claim must be brought within one year of the alleged violation. 15 U.S.C. § 1640(e);
Plaintiff's TILA claim arises out of the origination of his loan which occurred on March 29, 2007, and thus must have been filed by March 29, 2008 to be timely. Because this case was not filed until August 18, 2011, the claim is barred by the one-year statute of limitations.
Moreover, the DOT shows that Aegis, not Bank of America, was the original lender and thus, the TILA claim brought against Bank of America fails to state a claim. Under TILA, a borrower may state a claim for damages only against a "creditor." 15 U.S.C. § 1640(a). A creditor is a person who "regularly extends . . . consumer credit"
In his response to the motion to dismiss, plaintiff makes the following argument for equitable tolling of the one-year TILA limitations period: "Plaintiff is Hispanic and is subject to bring claims against Defendant based discrimination as a result of Plaintiff not understanding the nature of the documents as a result of not understanding said loan documents." Mem. in Opp. to Mtn to Dismiss at p. 34. He further argues that he needs to conduct discovery and take depositions to establish that he did not understand the nature of the loan documents given to him and "could not have understand the merit, extent or nature of TILA . . . violations that were committed against [him]."
There are several problems with plaintiff's argument. First, there are no allegations in the Complaint in support of equitable tolling and thus, on its face, the Complaint fails to state a TILA violation. Second, even if the allegation appeared in the Complaint, an allegation that plaintiff is Hispanic it is insufficient to trigger equitable tolling. Notably, plaintiff does not allege that he does not speak English.
Third, while equitable tolling suspends "the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action," the doctrine is generally limited to situations in which the application of the one-year period would be "unjust" or "frustrate the purpose" of the TILA. King, 784 F.2d at 915. Also, in order to prevent the one-year limitation from becoming meaningless, the plaintiff must allege that the defendant fraudulently concealed information that would have allowed plaintiff to discover his claim, that the defendant engaged in some other action affirmatively preventing plaintiff from discovering a claim, or that some other extraordinary circumstance would have made it reasonable for Plaintiff not to discover his claim within the limitations period.
In a 2011 decision, the Ninth Circuit explained that "[w]e will apply equitable tolling in situations where, despite all due diligence, the party invoking equitable tolling is unable to obtain vital information bearing on the existence of the claim."
The same can be said here. As noted, plaintiff fails to assert any allegations regarding equitable tolling or equitable estoppel in his Complaint. And, the arguments made in his response memorandum, where he raises the issue for the first time, do not support the application of either doctrine.
Finally, I reject plaintiff's suggestion that discovery is needed for plaintiff to support an equitable tolling theory. Because plaintiff's TILA claim is based on alleged defects in the loan origination documents, he possessed all information related to any TILA claim at the time of that loan. As defendants note, the "limitations period does not toll simply because a party is ignorant of her cause of action."
Plaintiff's TILA claim is dismissed.
Plaintiff next alleges that the Bank of America violated the RESPA by failing to make certain disclosures, by failing to inform plaintiff of the intention to transfer servicing of the loan, by failing to inform plaintiff of actual transfers within fifteen days of the transfer, and by charging fees in excess of the reasonable value of goods. Compl. at ¶ 4.4.
Like the TILA claim, this claim is dismissed because it is barred by the applicable RESPA statute of limitations. RESPA claims are subject to statutes of limitations of either one or three years. 12 U.S.C. § 2614. Because plaintiff's RESPA claim arises out of the origination of his loan, the statute of limitations began to run on March 29, 2007. The claim is time-barred.
Plaintiff again makes an equitable tolling argument. As explained above, the equitable tolling allegations are not raised in the Complaint and in any event, are unavailing.
Additionally, plaintiff fails to allege any facts suggesting that the alleged RESPA violations caused him to suffer actual or pecuniary damages. RESPA requires that plaintiffs establish that any RESPA violation resulted in actual damages. 12 U.S.C. § 2605(f)(1) ("[w]hoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts: . . . (A) any actual damages to the borrower as a result of the failure; and (B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000."). While plaintiff states in the prayer of his Complaint that he seeks $42,000 in damages for his Third Claim for Relief (which, given how plaintiff pleaded his claims encompasses the TILA, UTPA, and RESPA claims), there are no allegations establishing that the damages were caused by the alleged RESPA violations.
The RESPA claim is dismissed.
Plaintiff contends that Bank of America violated the UTPA by committing several "predatory lending practices." Compl. at ¶ 4.5. The allegations, like those in support of the TILA and RESPA claims, concern conduct at the origination of the loan.
Defendants move to dismiss the claim because the version of the UTPA applicable to the conduct which allegedly occurred in 2007, does not apply to credit availability. O.R.S. 646.607(1) prohibits the use of any unconscionable tactic in connection with the sale, rental or other disposition of real estate, goods, or services. At the time of the 2007 loan, the statute defined "real estate, goods or services" as follows, excluding extensions of credit:
O.R.S. 646.605(6);
The statute was amended effective March 23, 2010, to include "loans and extensions of credit." O.R.S. 646.605(6) (2010). Because any alleged violations concerning the original loan occurred before the inclusion of this language, they came too early to be covered by Oregon's UTPA.
Additionally, any UTPA claims are time barred. UTPA claims brought by a private party must be commenced "within one year from the discovery of the unlawful method, act or practice." O.R.S. 646.638(6). Plaintiff fails to allege any facts, or make a viable argument, that the discovery of any alleged UTPA violation could not have occurred upon review of the loan documents he executed in 2007. The UTPA claim is dismissed.
Defendants' motion to dismiss [14] is granted. The first claim for relief is dismissed with prejudice. The second claim for relief regarding the allegedly defective NODES is dismissed without prejudice. Plaintiff may amend his Complaint on this claim if he can, consistent with the obligations in Federal Rule of Civil Procedure 11(b), allege compliance with the requirements of O.R.S. 86.742 and O.R.S. 86.759, and if he can plead the alleged defect with specificity.
Plaintiff's TILA claim is dismissed without prejudice. Plaintiff may amend his Complaint on this claim if he can, consistent the obligations in Rule 11, allege the elements of an equitable tolling/estoppel of the statute of limitations, and if he can name the proper defendant. Plaintiff's RESPA claim is dismissed without prejudice. Plaintiff may amend his Complaint on this claim if he can, consistent with the obligations in Rule 11, allege the elements of an equitable tolling/estoppel of the statute of limitation and further allege that the alleged RESPA violations caused him actual damages. The UTPA claim is dismissed with prejudice.
Any amended complaint is due two weeks from the date of this Opinion & Order. Defendants' requests for judicial notice [16, 24] are granted.
IT IS SO ORDERED.
Defendants also request that I take judicial notice of several decisions from other judges in this District as well as from several Oregon circuit court judges. To the extent judicial notice is necessary, I grant the request.
