Rivera v. BAC Home Loans Servicing, L.P.
756 F. Supp. 2d 1193
N.D. Cal.2010Background
- Plaintiffs Jason and Mikala Rivera allege lender and service defendants engaged in improper loan origination and servicing related to a mortgage and HELOC on their Alamo property.
- The Home Loans were originated/negotiated around August 18, 2006 with Countrywide Bank (successor BoA) and CHL; notes and deeds of trust were assigned to BofA and others, with ReconTrust as initial trustee.
- Plaintiffs allege TILA and RESPA disclosures were defective and that fraudulent misrepresentations were made to obtain unaffordable loans.
- Defendants recorded a notice of default (May 2, 2008) and a notice of sale (August 3, 2008); plaintiffs later sent notices asserting rights to cancel/cure in 2009.
- Plaintiffs filed suit in 2010 asserting seven claims, and the court granted a TRO but denied a preliminary injunction; defendants moved to dismiss.
- The court granted the motion to dismiss without leave to amend, concluding each asserted claim failed as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TILA rescission timing | Riveras seek rescission and damages under TILA. | TILA claims time-barred; residential mortgage rescission not applicable. | TILA claims dismissed for untimeliness; rescission not applicable. |
| RESPA timing and QWRs | RESPA claims timely; letters are QWRs demanding servicing information. | Letters were not QWRs to a servicer and did not relate to servicing. | RESPA damages claims time-barred and QWR claims dismissed. |
| Fraud pleading standards | Saunders forged/inflated income; misrepresentations alleged. | Fails to plead who/what/when/how with particularity under Rule 9(b). | Fraud claim dismissed with prejudice for failure to plead with particularity. |
| UCL claim viability | Defendants engaged in unfair or unlawful business practices under UCL. | No specific factual support tying alleged conduct to UCL prongs. | UCL claim dismissed without leave to amend. |
| Negligence duty between lender and borrower | Lender owed a duty to avoid harm in loan brokerage/offering. | Lending relationship is at arms-length; no fiduciary duty to disclose affordability. | Negligence claim dismissed without leave to amend. |
Key Cases Cited
- Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir. 2002) (TILA 3-year repose; rescission limit)
- Semar v. Platte Valley Fed. Sav. & Loan Assoc., 791 F.2d 699 (9th Cir. 1986) (rescission context guidance)
- King v. State of Cal., 784 F.2d 910 (9th Cir. 1986) (date of consummation and TILA timing)
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) (unfair prong tethered to policy; Cel-Tech framework)
- Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007) (unfairness considerations in Ninth Circuit context)
- Nymark v. Heart Fed. Savings & Loan Ass'n, 231 Cal.App.3d 1089 (Cal. App. 1991) (no fiduciary duty between borrower and lender)
- Wagner v. Benson, 101 Cal.App.3d 27 (Cal. App. 1980) (no duty to disclose affordability in borrower-lender relation)
- Motors, Inc. v. Times Mirror Co., 102 Cal.App.3d 735 (Cal. App. 1980) (unfairness balancing test in UCL historical context)
- Teselle v. McLoughlin, 173 Cal.App.4th 156 (Cal. App. 2009) (accounting and equitable considerations)