Taguinod v. World Savings Bank, FSB
2010 U.S. Dist. LEXIS 127677
| C.D. Cal. | 2010Background
- Plaintiffs obtained a $735,000 loan from World Savings Bank (FSB) in May 2007 secured by their residence; the bank changed its name to Wachovia Mortgage, FSB and then merged into Wells Fargo (defendant) by 2009.
- Plaintiffs defaulted; a Notice of Default was recorded June 2009 and a Notice of Trustee's Sale followed in March 2010.
- Plaintiffs allege fraud regarding use of loan proceeds to pay a Toyota Highlander loan, which allegedly was not paid from the mortgage loan proceeds as promised, leading to repossession.
- Plaintiffs’ complaint asserts twelve causes of action including fraud, breach of contract, breach of implied covenant, rescission, conversion, constructive trust, fiduciary duty, disclosures, § 2923.5, elder abuse, IIED/NIED, and UCL.
- Wells Fargo removed the action to federal court based on diversity; the court considers HOLA preemption and applicable limitations in ruling on the claims.
- The court granted defendant’s motion to dismiss and denied the motion to strike; plaintiffs were allowed a 20-day period to amend to address non-preempted claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| HOLA preemption of state-law claims | Plaintiffs contend some claims are not preempted | HOLA preempts state-law claims related to lending activities | HOLA preempts some claims (disclosures, fees) but not all; fraud claim not preempted |
| Fraud claim sufficiency and tolling | Fraud claim pled with specific facts | Fraud pleading lacks particularity and is time-barred | Fraud claim dismissed for failure to plead with particularity and for not tolling statute of limitations |
| Breach of contract preemption and viability | Contract claim not preempted by HOLA | Some contract-related theories are preempted | Breach of contract not preempted, but basis limited to oral contracts with two-year statute; dismissed as time-barred as to oral contracts |
Key Cases Cited
- Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir. 2008) (preemption scope under § 560.2; fees, disclosures, and related claims)
- In re Ocwen Loan Servicing, LLC Mortg. Servicing Litigation, 491 F.3d 638 (7th Cir. 2007) (agency preemption; broad regulation of lending operations)
- Bank of Am. v. The City and County of San Francisco, 309 F.3d 551 (9th Cir. 2002) (strong presumption against preemption in historic police powers; history of federal presence)
- Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141 (1982) (federal regulations have no less preemptive effect than federal statutes)
- Davis v. Chase Bank U.S.A., N.A., 650 F. Supp. 2d 1073 (C.D. Cal. 2009) (breach of contract not preempted by HOLA; incidental effects on lending)
- McKelvey v. Boeing N. Am., Inc., 74 Cal. App. 4th 151 (Cal. Ct. App. 1999) (burden to plead tolling; discovery rule requirements)