ORDER (1) GRANTING DEFENDANTS’ MOTION TO DISMISS AND (2) DENYING AS MOOT PLAINTIFFS’ MOTION FOR LEAVE TO AMEND THE COMPLAINT
Presently before the Court are Defendants’ motion to dismiss Plaintiffs’ Complaint (Doc. No. 4) and Plaintiffs’ motion for leave to amend the Complaint (Doc. No. 10). In accordance with Civil Local Rule 7.1.d.l, the Court finds these motions suitable for determination on the papers and without oral argument. Accordingly, the motion hearing scheduled for August 17, 2012 is hereby vacated. For the reasons set forth below, Defendants’ motion to dismiss is GRANTED, and Plaintiffs’ motion to amend is DENIED AS MOOT.
BACKGROUND
Plaintiffs Larry and Kathie Kim-ball (collectively “Plaintiffs”) are owners of real property in San Diego. (Compl. ¶ 18.) In January 2008, Plaintiffs refinanced an existing loan with a new loan in the amount of $350,000. (Jd-¶ 19.) The note on the property is secured by a Deed of Trust recorded on January 10, 2008. The Deed of Trust identifies Defendant Flags-tаr Bank, F.S.B. (“Flagstar”) as the lender, Joan H. Anderson as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary. (Req. for Judicial Notice (“RJN”) Ex. A.)
After the value of Plaintiffs’ residence considerably dropped, Plaintiffs “discovered that their loan had numerous violations of the Federal Truth in Lending Act (“TILA”) and Federal Reserve Regulation Z, and determined that many of the disclosures did not comply with California and Federal law[,]” which spurred the instant lawsuit. (Compl. ¶¶ 20, 21.) In support of their TILA violation, Plaintiffs identify a myriad of defects in the loan documents. (See id. at ¶¶ 23(I)-(X).) Although Plaintiffs acknowledge that they received a copy, Plaintiffs allege that they failed to receive the requisite two copies of the Notice of Right to Cancel. They also claim that the Notice of Right to Cancel was defective as to the date the rescission period expired. (Id. at ¶¶ 23(I)-(II).) Plaintiffs further contend that the unsigned Truth in Lending Disclosure Statement incorrectly recites the Amount Financed and Finance Charges. (Id. at ¶¶ 23(IV)-(V).) Finally, Plaintiffs contend that although the Yield Spread Premium is stated in the Final Settlement Statement, Defendants allegedly failed to disclose information on the Estimated Closing Statement. (Id. at ¶ 23(TV); see also RJN Ex. D.)
Plaintiffs filed this action on February 17, 2012, seeking rescission of the loan and statutory damages. The Complaint sets forth ten causes of action: (1) intentional misrepresentation, (2) breach of the covenant of good faith and fair dealing, (3) declaratory relief, (4) quiet title, (5) rescission and damages under TILA, (6) Califоrnia Unfair Business Practices, (7) fraud, (8) violation of the Home Affordable Modification Program (“HAMP”) under the Emergency Economic Stabilization Act of 2008, (9) accounting, and (10) cancellation of instrument.
Defendants filed the instant motion to dismiss on March 16, 2012. Plaintiffs filed an Opposition on April 20, 2012, and Defendants filed a Reply on May 4, 2012.
II.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint upon a finding that the plaintiff has failed to state a claim upon which relief may be granted. See Navarro v. Block,
III.
DISCUSSION
Defendants argue that all of Plaintiffs’ causes of action should be dismissed for failure to state a claim under Rule 12(b)(6). The causes of action are addressed in turn.
A. Intentional Misrepresentation and Fraud
In their first cause of action for intentional misrepresentation, Plaintiffs allege that Defendants concealed or suppressed material facts, including Plaintiffs’ right to cancel, the accuracy of the finance charges, and the Yield Spread Premium charges. (Compl. ¶ 27.) Plaintiffs also allege that Defendants failed to assess Plaintiffs’ ability to repay the loan and put Plaintiffs in a loan where there was a high probability of default. (Id.) Plaintiffs’ seventh cause of action for fraud alleges that Defendants failed to “accurately and honestly disclose the material terms of the loan to the Plaintiffs and to make certain Plaintiffs understood the terms of the loan that they were entering into.” (Id. at ¶ 67.) Plaintiffs claim that they relied upon such representations and omissions and were induced into obtaining the subject loan and modification on the Property. (Id. at ¶ 71.) Defendants move to dismiss Plaintiffs’ fraud-based claims for failure tо satisfy Rule 9(b)’s heightened pleading requirements. Additionally, Defendants assert that Plaintiffs’ fraud-based causes of action are time-barred and therefore must be dismissed.
1. Particularity Pleading Standard
Under California law, the elements of common law fraud are “misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damages.” Gil v. Bank of Am., Nat’l Ass’n,
Defendants argue that Plaintiffs “do not and cannot identify the individual at Flagstar they spoke with during the loan transaction that is responsible for the alleged misrepresentations.” (Defs.’ Mot.
Furthermore, Defendants assert that Plaintiffs’ allegation that Flagstar concealed or suppressed facts by non-disclosure of provided material documents is “not plausible” and contrary to the signed records.
2. Limitations Period
Defendants additionally argue that Plaintiffs’ fraud-based claims are barred by the three-year statute Of limitation under California Code of Civil Procedure § 338(d), because they arise from an alleged wrongdoing that occurred at the time of the loan’s origination on January 10, 2008. Plaintiffs did not file the Complaint until February 17, 2012, more than four years later.
Plaintiffs attempt to establish that their claims should not be barred by the applicable statute of limitations under the doctrine of equitable tolling. Plaintiffs, however, have failed to establish that equitable tolling should apply in this case. A рarty asserting equitable tolling must demonstrate that: (1) she has been diligent in pursuing her rights, and (2) “ ‘extraordinary circumstances beyond [her] control made it impossible to file the claims on time.’ ” Huynh v. Chase Manhattan Bank,
Plaintiffs allege that they did not discover the fraudulent misrepresentations and TILA violations in their loans “until years after the loan transaction was consummated.” (Pis.’ Opp’n at 9.) However, Plaintiffs fail to allege why they could not have discovered the alleged wrongdoing earlier. There is no suggestion that Defendants prevented Plaintiffs from comparing their loan documents and disclosures with the TILA requirements. See, e.g., Garcia v. Wachovia Mortg. Corp.,
Furthermore, Plaintiffs’ allegations do not supply the requisite specificity to justify equitable tolling. See, e.g., Casualty Ins. Co. v. Rees Inv. Co.,
The Court therefore grants Defendants’ motion to dismiss the first and seventh causes of action, with leave to amend.
B. Breach of the Covenant of Good Faith and Fair Dealing
Plaintiffs’ second cause of action is for breach of the covenant of good faith and fair dealing, which provides that no party to a contract may do anything that would deprive another party of the benefits of the agreement. See Kransco v. Am. Empire Surplus Lines Ins. Co.,
Plaintiffs’ Complaint alleges that “the agreement entered into between Plaintiffs and Defendants] ... contained an implicit covenant of good faith and fair dealing,” and Defendants breached that duty by “failing to disclose material information in the loan application process, [and] manipulation and improper disclosure of the finance charges.... ” (Compl. ¶¶ 36-37.) Plaintiffs claim that overstating the finance charges “inflates a broader board of figures such as the APR, Amount Financed, and Finance Charges as disclosed on the Truth in Lending Disclosure Statement.” (Pls.’ Opp’n at 11.)
Plaintiffs’ claim, however, fails because they do not allege the terms of the contract entered into between the parties or how Defendants’ conduct frustrated any of its specific provisions. Further, the contract underlying the instant claim is the trust deed, and the alleged withholding of disclosures appears to have occurred prior to its execution. Conduct occurring during pre-loan negotiations cannot support a claim for breach of the implied covenant of good faith and fair dealing. Newsom v. Countrywide Home Loans, Inc.,
Therefore, Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing against Defendants is dismissed, with leave to amend.
C. Declaratory Relief
In their Complaint, Plaintiffs seek a declaration of the parties’ rights and duties and a declaration аs to “whether Defendants violated federal and state lending laws, whether Plaintiffs are required to tender proceeds to [ ] Defendants, whether Plaintiffs are obligated under the Deed of Trust and, if so, to whom.” (Compl. ¶ 44.) Defendants argue that the claim for declaratory relief should be dismissed because it is simply a remedy and not a cause of action. Defendants also argue that the claim fails because Plaintiffs have not alleged an ability to tender and it is duplicative of their other claims.
Declaratory relief is not an independent cause of action, but instead a form of equitable relief. Batt v. City & Cnty. of S.F.,
For these reasons, Plaintiffs’ third cause of action fails as a matter of law, and the Court dismisses it with prejudice.
D. Quiet Title
In their fourth cause of action, Plaintiffs allege that they have rescinded the loan agreement and are entitled to quiet title. (Compl. ¶ 49.) An action to quiet title requires a verified complaint that sets forth all of the following elements: (1) a legal description of the property and its street address or common designation; (2) the title of the plaintiff and the basis of the title; (3) the adverse claims to the title of the plaintiff; (4) the date as of which the determination is sought; and (5) a prayer for the determination of the title of the plaintiff against the adverse claims. Cal.Civ.Proc.Code § 761.020. “In order to allege a claim to quiet title, Plaintiff must allege tender or offer of tender of the amounts borrowed.” Ricon v. Recontrust Co.,
Defendants argue that to the extent Plaintiffs’ claim is premised on the fraudulent conduct Plaintiffs have alleged as part of their first and seventh causes of action, their quiet title claim necessarily fails. (Defs.’ Mot. at 12.) As indicated above, the Court finds that Plaintiffs have failed to adequately plead their fraud and misrepresentation claims. Thus, the Court agrees with Defendants that Plaintiffs’ fraud allegations cannot sustain their quiet title claim.
Furthermore, Defendants argue that Plaintiffs’ quiet title claim is subject to dismissal because Plaintiffs are in default. Although Plaintiffs allege that they are “willing and able to tender any and all amounts due to Defendants,” Plaintiffs must at least allege that they are financially capable of tendering the loan proceeds to sustain a claim for quiet title. See Mitchell v. Bank of Am.,
E. Rescission and Damages Under The Truth in Lending Act
In their fifth cause of action, Plaintiffs allege that Defendants violated TILA and the Home Ownership and Equity Protection Act (“HOEPA”), and seek damages and rescission. Defendants move to dismiss Plaintiffs’ claim on the grounds that:
1. Damages Under TILA
An action for damages under TILA must be brought within one year of the violation. 15 U.S.C. § 1640(e). A TILA violation occurs on “the date of consummation of the transaction,” King v. State of Cal.,
Here, Plaintiffs consummated their loan on January 10, 2008, but the Complaint was not filed until February 17, 2012, well over a year after the consummation of the transaction. In their opposition, Plaintiffs allege that they “did not learn of the fraudulent misrepresentations and the TILA violations in their loans until years after the loan transaction was consummated.” (Pls.’ Opp’n at 9.) Beyond conclusory statements that Defendants acted fraudulently, however, neither the Complaint nor the opposition contains any relevant dates or similar information to provide a basis from which to allege equitable tolling. See Ashcroft,
2. Rescission Under TILA
Plaintiffs also bring a TILA rescission claim. Plaintiffs contend that as a result of Defendants’ failure to provide the required disclosures, Plaintiffs have a continuing right to rescind the loan under TILA. Defendants argue that Plaintiffs’ claim for rescission should be dismissed because it is time-barred by the three-year statute of limitations and Plaintiffs do not allege their ability to tender the full amount of the loan.
a. Timeliness of Plaintiffs’ TILA Rescission Claim
Under TILA, “when a loan made in a consumer credit transaction is secured by the borrower’s principal dwelling, the borrower may rescind the loan agreement if the lender fails to deliver certain forms or to disclose important terms accurately.” Beach v. Ocwen Fed. Bank,
*1222 An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor[.]
15 U.S.C. § 1635(f).
Here, Plaintiffs contend that Defendants did not provide them with a completed copy of the Notice of Right to Cancel because “it did not provide the proper date in which Plaintiffs could cancel.” (Compl. ¶23(1).) Plaintiffs further allege that, even if Defendants had a signed copy that was complete, “it was ineffective because it was not properly delivered to the Plaintiffs.” (Pis.’ Opp’n at 14.) Specifically, Plaintiffs allege that Defendants failed to provide them with two copies of the Notice of Right to Cancel. (Compl. ¶ 23(H).) Plaintiffs’ claim is therefore governed by the three-year limitations period in Section 1635(f). Defendants contend that because Plaintiffs commenced this lawsuit more than three years after the consummation of the loan, their TILA rescission claim is time-barred. Although Plaintiffs allege that “the Beach decision never characterized the three-year rescission period as a statute of repose” (Pis.’ Opp’n at 15), this Court has explicitly ruled that Section 1635(f) “is a statute of repose that completely extinguishes the right of rescission after three years.” Gutierrez v. PNC Mortg.,
b. Failure to Allege Present Ability to Tender
Defendants also urge the Court to dismiss Plaintiffs’ TILA claim because they failed to adequately allege facts demonstrating that they are able to tender the loan proceeds. Section 1635(b) sets forth the protocol for return of money and prоperty when a borrower exercises his right to rescind. Pursuant to Section 1635(b), the creditor must return all money and property paid to the borrower and terminate the security interest in the property within 20 days of receiving notice of rescission. 15 U.S.C. § 1635. Once the creditor completes its obligation, the borrower must tender the property he received from the creditor. See id. The implementing regulation for 1635(b) establishes a similar protocol for the borrower and creditor upon rescission. See 12 C.F.R. § 226.23. The Ninth Circuit has held that district courts have the discretion to modify the sequence of rescission of events, including conditioning rescission on tender by the borrower of the property he received from the lender. See Yamamoto v. Bank of N.Y.,
Here, Plaintiffs have alleged that they “are willing and able to tender any and all amounts due to Defendants upon the condition that Defendants do likewise, as said amounts are determined in a judgment by this Court.” (Compl. ¶ 49.) De
Accordingly, the Court dismisses Plaintiffs’ TILA claim with leave to amend to plead allegations regarding Plaintiffs’ ability to tender.
3. Plaintiffs ’ HOEPA Claim
Plaintiffs also seek damages and rescission of their loan under HOEPA. HOEPA requires additional disclosures that for “a special class of regulated loans that are made at higher interest rates or with excessive costs and fees.” See Lynch v. RKS Mortg., Inc.,
F. California Unfair Business Practices
Plaintiffs’ sixth cause of action alleges that Defendants engaged in unlawful, unfair, and fraudulent business practices in violation of California Business and Professions Code § 17200. Section 17200 defines unfair competition as “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. Because the statute is written in the disjunctive, it prohibits three separate types of unfair competition: (1) unlawful acts or practices, (2) unfair acts or practices, and (3) fraudulent acts or practices. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
In the instant case, Defendants move to dismiss Plaintiffs’ claim, arguing that because Plaintiffs’ Complaint fails to state a claim for any underlying violation,
Accordingly, Plaintiffs’ sixth cause of action is dismissed, with leave to amend.
G. Violation of HAMP Under The Emergency Economic Stabilization Act of 2008
Plaintiffs’ eighth cause of action is for violation of HAMP under the Emergency Economic Stabilization Act of 2008 (“EESA”). Plaintiffs allege that Defendants еntered into a Servicer Participation Agreement (“SPA”) with the Federal National Mortgage Association (“Fannie Mae”), in which they “agreed to act in good faith and conduct all due diligence to perform certain loan modification and foreclosure prevention services for eligible loans,” including Plaintiffs’ loan. (Compl. ¶ 77.) Plaintiffs allege that Defendants did not act in good faith or conduct due diligence regarding HAMP as it applies to their loan, and thus Plaintiffs were denied the right to modify the loan. (Id. at ¶ 80.)
Defendants contend that Plaintiffs do not have any cause of action for violation of HAMP. (Defs.’ Mot. at 18.) In their opposition, Plaintiffs rely on the Seventh Circuit’s holding in Wigod v. Wells Fargo Bank, N.A.,
Accordingly, Plaintiffs’ eighth cause of action is dismissed, with prejudice.
H. Accounting
Plaintiffs’ ninth cause of action is for accounting. An accounting cause of action is equitable and may be sought where the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable. Civic W. Corp. v.
Plaintiffs here allege that Defendants manipulation of the finance charges of the subject loan “inflate[d] a broader board of figures such as the APR, Amount Financed, and Finance Charges as disclosed on the Truth in Lending Disclosure Statement.” (Compl. ¶ 23.) However, Plaintiffs fail to provide authority to support their contention that their “allegations relate directly to the complicated accounts” between the parties. (See id.) Thus, Plaintiffs have not alleged the account is so complicated that a judicial accounting is necessary.
Furthermore, as discussed above, Plaintiffs have not sufficiently stated a claim for breach of fiduciary duty or fraud. See Union Bank v. Superior Ct.,
Accordingly, Plaintiffs’ ninth cause of action is dismissed, with leave to amend.
I. Cancellation of Instrument
Plaintiffs’ tenth cause of action is for cancellation of instrument. In an action for rescission or cancellation of instruments, a complainant is required to do equity “by restoring to the defendant any value the plaintiff received from the transaction. The rule applies although the plaintiff was induced to enter into the contract by the fraudulent representations of the defendant.” Fleming v. Kagan,
Moreover, “a nonjudicial foreclosure sale is accompanied by a common law presumption that it ‘was conducted regularly and fairly.’ This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity,” which Plaintiffs have not presented. Melendrez v. D & I Inv., Inc.,
Defendants assert that as the nominee and beneficiary under the Deed of Trust, MERS had authority to assign its beneficial interest to another party. See Cal.Civ.Code § 2924 (providing that “[t]he trustee, mortgagee, or beneficiary, or any of their authorized agents” may commence foreclosure). Defendants further argue that the plain language of the Deed of Trust grants MERS the authority to initiate any foreclosure proceedings. See, e.g., Gomes v. Countrywide Home Loans, Inc.,
Accordingly, Plaintiffs’ tenth cause of action is dismissed, with leave to amend.
IV.
PLAINTIFFS’ MOTION FOR LEAVE TO AMEND THE COMPLAINT
On June 20, 2012 (more than three months after Defendants filed the instant motion to dismiss), Plaintiffs filed a motion for leave to amend the Complaint. Plaintiffs claim they seek only to add Federal National Mortgage Association (“Fannie Mae”) as a Defendant to the lawsuit. (Doc. No. 14.)
As explained above, in granting the motion to dismiss, the Court is allowing Plaintiffs leave to amend the claims that do not fail as a matter of law. Because Plaintiffs already have leave to amend, their motion to amend is denied as moot. Nonethеless, if Plaintiffs choose to file an amended Complaint, they may add Fannie Mae as a Defendant to their surviving claims.
V.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants’ motion to dismiss and DENIES AS MOOT Plaintiffs’ motion for leave to amend the Complaint. The Court dismisses with leave to amend Plaintiffs’ claims for intentional misrepresentation, breach of covenant of good faith and fair dealing, quiet title, rescission and damages under TILA, California Unfair Business Practices, fraud, accounting, and cancellation of instrument. The Court dismisses with prejudice Plaintiffs’ claims for declaratory relief and violation of HAMP under the EESA. With regard to the causes of action dismissed with leave to amend, Plaintiffs have thirty (30) days to submit an amended Complaint correcting the deficiеncies noted herein. Failure to
IT IS SO ORDERED.
Notes
. Defendants request that the Court take judicial notice of a number of documents relating to Plaintiffs’ loan. (Doc. 4-1.) Pursuant to Rule 201, a court may take judicial notice of adjudicative facts "not subject to reasonable dispute.” Fed.R.Evid. 201(b). Moreover, a district court may consider matters subject to judicial notice in ruling on a motion to dismiss. Swartz v. KPMG LLP,
. Although the parties dispute whether the Notice of Right to Cancel was signed or not by Plaintiffs, the Court finds it to be irrelevant because Plaintiffs’ allegations of fraud and intentional misrepresentation are insufficient and therefore dismissed on other grounds.
. To the extent that Plaintiffs argue they are entitled to recoupment under TILA and that such a "defense is never barred by the statute of limitations so long as the foreclosure is taking place,” Plaintiffs' argument fails. (See Pls.' Opp’n at 10.) In Beach v. Ocwen Fed. Bank, the U.S. Supreme Court addressed whether a borrower may assert his right to rescind as an affirmative defense in a collection action brought by the lender more than three years after the consummation of the transaction. Beach v. Ocwen Fed. Bank,
. Defendants contend that even if a claim for bad faith sounding in contract is pleaded, the claim is time-barred. (Defs.' Reply at 5.) A claim for the covenant of good faith and fair dealing has a two-year statute of limitations when it sounds in tort, and four years if it sounds in contract. See Love v. Fire Insurance Exchange,