TILA Rescission Revived Without Tender

Max Gardner’s Protoge Achieved This result as Reported Max’s Current Newsletter:

Editor’s Note: Most of what we have seen reported indicates that although TILA is clear in is legislative expression that NO TENDER is required for the rescission remedy under TILA, Judges don’t like it. It seems they feel that Big Bad Borrowers are taking advantage of Bambi Banks. Yet here is a case where the Judge DID apply the law as written.

TILA was written with teeth, but Judges are reluctant to apply it. Yet on its face TILA possesses the strongest remedy against predatory loan practices in existence. It allows the borrower to declare a rescission which requires the alleged lender to (a) step forward (which they don’t want to do) (b) file a satisfaction of mortgage and (c) negotiate return of the money, less of course any claims for damages that the borrower has claimed and can prove.

This comes back to the issue of the real creditor, the pretender lender etc. In the current environment, there is nobody around who actually has the authority to satisfy a mortgage. But TILA addresses that too. It says that by operation of law the security instrument is void not voidable. Thus the mortgage or deed of trust no longer applies because it is void even if it was properly recorded. In turn, this means the debt, if any, has been converted from secured to unsecured.

The bargaining power of the borrower cannot be overstated if this provision of TILA is applied. By eliminating the secured aspect of the mortgage, the loan is easily stripped down to fair market value less damages, attorneys fees, interest paid, etc. We can only hope that we see more application of law as written and less hip-shooting from the bench creating uncertainty and complexity where the law could not be more clear.

Defendant U.S. Bank, N.A., as Trustee for the LXS2007-4N Trust (“U.S. Bank”), seeks dismissal under Federal Rule of Civil Procedure 12(b)(6) of a complaint filed by plaintiff
homeowner Henry Botelho. Specifically, U.S. Bank claims that Botelho cannot state a claim for rescission of his mortgage loan under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., unless he alleges a present ability to tender the loan proceeds. As discussed in
further detail in the Order, such an allegation is not necessary for Botelho’s case to survive the pleading stage.
Accordingly, U.S. Bank’s motion is denied.
Hat tip to Boot Camp Grad Carmen Dellutri http://www.ca11.uscourts.gov/opinions/ops/
200814991.pdf

31 Responses

  1. […] TILA Rescission Revived Without Tender […]

  2. Arriaga et al v. Wells Fargo Bank, NA et al

    Case Number: 1:2009cv02115
    Filed: April 6, 2009

    Court: Illinois Northern District Court

    what do you expect from a 10th grader – please, what comes next??

  3. hi living lies guys!
    still fighting my battle, PACER 09c2115 (in Limbo), 88 entries in docket, 7 lawyers against us…can anyone tell me what we need to do next to get this moving? <<>>the last attorney to which we paid a $150 consult said “do a deed in lieu” – clueless!

    Also, found this on a forum, looks like the “lender” may have planned it all out when you made the refi – of course they knew you couldn’t tender if you ever discovered missing/improper NOD:

    http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1389327

  4. Thx. Yes, I asked this attorney about it, he’s not very responsive, so that’s why I am looking for a new one. I am not willing to risk Pro Se follies, this is too important. I VERY MUCH want to do a quiet title, but then, I assume that would bring a predictable response by PennyMac, which would then be similar to a rescission enforcement action.

    I have been told that quiet title action is not for Joe Pro Se.

  5. Social Apocalypse

    You might want to start a quite title action.

  6. Solve this one:
    I rescinded my mortgage which was one of the mortgages included in the big AIG/Office of Thrift Supervision Supervisory agreement, requiring AIG to perform specific remedies for certain loans which were deemed “predatory lending”.

    I rescinded mine, timely, properly, etc. It was with Morequity. Naturally, they didn’t respond. Two months later, PENNYMAC purchased the mortgage.

    I immediately informed them of the rescission action, and they were unimpressed. Because I was unable to find a skilled attorney (and I am in the 9th cir. – Yamamoto applies) I have NOT enforced my rescission. I am able to tender the loan.

    Here’s where it’s kind of different: Pennymac bought a rescinded loan, therefore, they have committed Fair Trade Violations by knowingly demanding payment from me on a mortgage that was void. (Or so I am being told).

    Attorney I am talking with now (though not retained) says we need to NOT enforce rescission, but to wait for them to start foreclosure. He will then add wrongful foreclosure to the stack of Fair Trade violations, which HE says adds a $100,000 fine to the pile, and makes it a better strategy and can be handled at the State level. Enforcement doesn’t net as much damage, and the statutes on most of the violations (RESPA big time) are long expired (Mortgage is three years old).

    Your comments are greatly appreciated. I am currently approaching 180 past-due, and they don’t call me or anything, just send my statement saying my account is past due, like usual. VERY odd. Thx.

    By the way, STILL need an attorney – my case is great. Wish Neil was available!

  7. So, what judges are saying is that we have the right to pay off our mortgage in full? WHAHOO! hey wait a minute…..

  8. To actually believe that the personal right to remedy a wrong done in violation of the Law, which is in no way vague as to necessitate extrajudicial US Const art III § 2 powers, can somehow be equitably conditioned by a court upon the repayment of an unknown amount of sums is in absolute contravention of § 1635, § 226.23 and their self-enforcing nature, not to mention the added subsection § 1635(i) clearly evidencing the purpose of the section was to provide the homeowner/consumer with immediate relief when needed. For courts to hold that these rights to remedial relief be conditioned on repayment according to their discretion be appropriate rulings and decisions according to justice obviates the purposes of both § 1635 and § 226.23 in their entireties. The homeowner/consumer would be in no better position than if the entire principal on the loan had been paid off (which is the case here) and the obligation satisfied. How is that equitable or fair? Is a right to bring a private action in US District Court to enforce the Law, only to be told that the Law will not be enforced unless the payment of sums of an undisclosed amount to a party of uncertain identity even a right at all? Does this money have to be paid to the judge directly? If this money is paid to the trustee, lender, creditor, assignee, servicer or to the judge directly what assurance does the homeowner/consumer have that their house will not be taken away anyway? Do judges have the power to decide what peoples rights are and what they aren’t? Do the Courts’ decisions overrule any Law passed by Congress? Why aren’t there juries involved in many(if not all) of these Court decisions?

  9. A great case for homeowners fighting to keep their homes with a TILA rescission claim. This is a great tool in the fight against foreclosure. Too many lawyers and loan mod companies (and “attorney-backed” companies) are failing to look at the TILA angle, (failing to conduct a TILA audit, etc.) which in my opinion may even amount to malpractice. May the judges keep the good rulings coming, they may be the only savior!

    Steve Vondran, Esq.
    Foreclosure Defense Lawyer
    Arizona / California
    (877) 276-5084

  10. I’ve been told TILA only applies to refinance, not first mortgage. Is that true?

  11. HAT TIP to Boot Camp Grad Carmen Dellutri?
    NAY: NEW CAR to Boot Camp Grad Carmen Dellutri!!!

    This is fantastic, and long overdue.

  12. Confused,
    Canons of statutory construction –
    Lex specialis derogat legi generali

    Look it up, figure it out and argue with that

  13. I’ll get to you in a min. Confused
    another way to look at how they’ve doctored CA Civil code so that the “pre-tender” (hey I never noticed that) Lenders/Servicers actions come into compliance with state law when they haven’t followed proper procedures in regards to assignments, recordings, substitution of trustee’s, notices of rescission and proper exercise of the Expressed Power to Sell which are all contained in our Deeds of Trusts. The State of California has passed Laws in violation of U.S. Const. art. I § 10 “impairing the obligation of contracts”, which makes them unConstitutional and Void ab initio. Especially when we all know, the courts all know, the california legislative counsel knows that the loans were paid off in full within a few month after they were made, and according to most trust deeds that means performance complete and satisfaction of mortgage is due. if they don’t want to do it fine then it’s the courts duty to order someone to, which has the same affect as if the lender had done it. The judges don’t want to apply the law combined with the contractual provisions because thier biased fine then it’s our(the People’s) duty to remove such judicial disabilities for congesting the American flow of fair & impartial Justice in our society and keep them from infecting our courts. The People through Juries are the most important part Court Justice in the United States. why do you think that even the highest Court’s number of Justices does not outnumber a Jury? Judges exercise thier “limited” powers to mediate cases from the Court the court is composed of judge & Jury, without no Jury there is no Court because the Courts Powers derives from the Constitution and the Constitution derives its Powers from the People. Subtract “the People” component from the United States in the several States and now what is the US gov….? A Powerless empty shell with nothing but a Congress who reps no one but themselves, a court with judges that can only hear themselves and a president as bossing them around( wow that’s not too far from the system we have now ). but the People would be free and as United together much more Powerful than them, all we have to do is recognize that we’re all here together and together we have the Power to make things right. We are not Democrats or Republicans (don’t let that mind set fool you) we’re all Americans and we all have to get along, United We Stand Divided We Fall.

  14. DyingTruth,

    My understanding is that TILA is an equitable remedy, therefore, it is not decided by a jury.

    Neil, correct me if I am wrong int his regard.

  15. Neil Garfield: ” although TILA is clear in is legislative expression that NO TENDER is required for the rescission remedy under TILA,JUDGES DON’T LIKE IT.”

    Confused: “Judges these days are not willing to apply to law.”

    These statements are obviously signs that clearly indicate a widespread lack of impartiality in the Judiciary that disposes thier very fundamental function, which cases can now be only decided by Jury.

    “It is left… to the juries, if they think the permanent judges are under any bias whatever in any cause, to take on themselves to judge the law as well as the fact. They never exercise this power but when they suspect partiality in the judges; and by the exercise of this power they have been the firmest bulwarks of English liberty.” —
    Thomas Jefferson to Abbe Arnoux, 1789. ME 7:423, Papers 15:283

    “The juries [are] our judges of all fact, and of law when they choose it.”
    –Thomas Jefferson to Samuel Kercheval, 1816. ME 15:35

    And Oh how I DARE someone to challenge the Creator of Our Declaration of Independence even Judges

  16. BALDAIN v. AMERICAN HOME MORTGAGE SERVICING, INC.

    WALTER BALDAIN, JR., MICHAEL BALDAIN, Plaintiffs,
    v.
    AMERICAN HOME MORTGAGE SERVICING, INC., OPTION ONE MORTGAGE CORPORATION, QUALITY LOAN SERVICE CORP., OLYMPIC MORTGAGE & INVESTMENT COMPANY, INC., PHILLIP RUBLE and TIMOTHY ALAN SMITH and DOES 1-20, inclusive, Defendants.

    No. CIV. S-09-0931 LKK/GGH.

    United States District Court, E.D. California.

    January 5, 2010.
    ORDER

    LAWRENCE K. KARLTON, District Judge.

    This case addresses the foreclosure of plaintiffs’ mortgage. His First Amended Complaint (“FAC”) names six defendants and enumerates ten causes of action. Two defendants—American Home Mortgage Servicing, Inc. (“American Home”) and Sand Canyon Corporation, formerly known as Option One Mortgage Corporation. (“Option One”)— move to dismiss all claims against them, or in the alternative, for a more definite statement. For the reasons stated below, the motion to dismiss is granted in part and the motion for a more definite statement is denied.[ 1 ]
    I. BACKGROUND

    American Home and Option One initially filed a motion to dismiss on June 9, 2009. This motion was set to be heard on August 17. On July 31, before plaintiffs’ opposition or statement of non-opposition to this motion was due, plaintiffs filed an amended complaint. The court denied the motion to dismiss without prejudice as moot. Defendants’ renewed motion is before the court. A hearing on this motion was set for September 14, 2009, but plaintiffs’ counsel failed to appear. After defense counsel agreed that oral argument was not necessary, the court took the matter under submission.
    A. Initial Refinancing Loan[ 2 ]

    In October of 2006, defendant Smith told plaintiffs that he was a loan officer for defendant Olympia Mortgage. Smith solicited plaintiffs to refinance their residence, informing them that he could secure the “best deal” and “best interest rates” available on the market. FAC ¶¶ 20, 22. Smith indicated that this loan would be a fixed rate loan. FAC ¶ 23. However, the loan actually offered to and purchased by plaintiffs was an adjustable rate loan. Id. Smith also represented to plaintiffs that if the loan became unaffordable, Smith would refinance the loan. Id. Smith knew or should have known that these representations would induce plaintiffs to accept the loan to their detriment. Id.

    The loan closed on or about December 5, 2006. FAC ¶ 27. Plaintiffs were not given copies of loan documents prior to closing. At closing, plaintiffs were given only a few minutes to sign the various documents, with no explanation as to what they were, and plaintiffs were not allowed to review the documents. At that time, plaintiffs did not receive the various disclosures mandated by the Truth In Lending Act and other statutes, including the notice of right to cancel and statement of when the rescission period would expire. FAC ¶¶ 25, 34.

    The loan was secured by a deed of trust, which effectively mortgaged plaintiffs’ home.[ 3 ] Plaintiffs allege this deed identified defendant Option One as the lender, FAC ¶ 32 and Premier Trust Deed Services, who is not a party in this suit, as the trustee. FAC ¶ 27.

    Option One paid commissions to brokers and loan officers based on the volume of loans they sold to consumers, and such a commission was paid in connection with plaintiffs’ loan. FAC ¶ 29. As a result, borrowers, including plaintiffs, were encouraged to take loans with terms unfavorable to them. Id.
    B. Foreclosure

    At some point, plaintiffs ceased making loan payments. On May 15, 2008, Quality Loan[ 4 ] filed a notice of default on the loan and deed of trust in Yuba County. FAC ¶ 37. Quality Loan sent plaintiffs a notice of trustee sale on August 16, 2008. FAC ¶ 38.

    Plaintiffs contend that through Quality Loan’s actions, defendants are attempting to obtain title to the property without having established that they are entitled to enforce the deed of trust, and that defendants in fact are not the real parties in interest on the deed and do not have the power to enforce it. FAC ¶¶ 28, 30. Defendants argue that these allegations are legal conclusions which the court should disregard.

    Plaintiffs further allege on information and belief that “Defendants misrepresented material facts with the intent of forcing Plaintiffs to either pay large sums of money to the Defendants, to which they were not entitled, or to abandon the Property to a foreclosure sale, resulting in profit for the Defendants.” FAC ¶ 43.
    C. Other Activities

    Plaintiffs additionally allege that Option One, American Home, and Quality Loan threatened to “collect[] on a debt not owed to [defendants], mak[e] false reports to credit reporting agencies, foreclos[e] upon a void security interest, foreclos[e] upon a Note of which they were not in possession not otherwise entitled to payment, falsely stat[e] the amount of a debt, increas[e] the amount of a debt by including amounts that are not permitted by law or contract, and us[e] unfair and unconscionable means in an attempt to collect a debt.” FAC ¶ 63. The FAC provides no indication as to when these activities occurred.
    II. STANDARD
    A. Standard for a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss

    A Fed. R. Civ. P. 12(b)(6) motion challenges a complaint’s compliance with the pleading requirements provided by the Federal Rules. In general, these requirements are provided by Fed. R. Civ. P. 8, although claims that “sound[] in” fraud or mistake must meet the requirements provided by Fed. R. Civ. P. 9(b). Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-04 (9th Cir. 2003).
    1. Dismissal of Claims Governed by Fed. R. Civ. P. 8

    Under Fed. R. Civ. P. 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The complaint must give defendant “fair notice of what the claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (internal quotation and modification omitted).

    To meet this requirement, the complaint must be supported by factual allegations. Iqbal, 129 S. Ct. at 1950. “While legal conclusions can provide the framework of a complaint,” neither legal conclusions nor conclusory statements are themselves sufficient, and such statements are not entitled to a presumption of truth. Id. at 1949-50. Iqbal and Twombly therefore prescribe a two step process for evaluation of motions to dismiss. The court first identifies the non-conclusory factual allegations, and the court then determines whether these allegations, taken as true and construed in the light most favorable to the plaintiff, “plausibly give rise to an entitlement to relief.” Id.; Erickson v. Pardus, 551 U.S. 89 (2007).

    “Plausibility,” as it is used in Twombly and Iqbal, does not refer to the likelihood that a pleader will succeed in proving the allegations. Instead, it refers to whether the non-conclusory factual allegations, when assumed to be true, “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. “The plausibility standard is not akin to a `probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
    2. Dismissal of Claims Governed by Fed. R. Civ. P. 9(b)

    A Rule 12(b)(6) motion to dismiss may also challenge a complaint’s compliance with Fed. R. Civ. P. 9(b). See Vess, 317 F.3d at 1107. This rule provides that “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” These circumstances include the “time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). “In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, `identif[y] the role of [each] defendant[] in the alleged fraudulent scheme.'” Id. at 765 (quoting Moore v. Kayport Package Express, 885 F.2d 531, 541 (9th Cir. 1989)). Claims subject to Rule 9(b) must also satisfy the ordinary requirements of Rule 8.
    B. Standard for a Fed. R. Civ. P. 12(e)

    “If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading.” Fed. R. Civ. P. 12(e). “The situations in which a Rule 12(e) motion is appropriate are very limited.” 5A Wright and Miller, Federal Practice and Procedure § 1377 (1990). Furthermore, absent special circumstances, a Rule 12(e) motion cannot be used to require the pleader to set forth “the statutory or constitutional basis for his claim, only the facts underlying it.” McCalden v. California Library Ass’n, 955 F.2d 1214, 1223 (9th Cir. 1990). However, “even though a complaint is not defective for failure to designate the statute or other provision of law violated, the judge may in his discretion . . . require such detail as may be appropriate in the particular case.” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996).
    III. ANALYSIS

    The present motion concerns ten causes of action. Four claims are brought against both Option One and American Home, for negligence, fraud, and violations of California’s Rosenthal Act and Unfair Competition Law. Five claims are brought solely against Option One, for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, and violations of TILA and RESPA. Finally, plaintiffs’ claim for wrongful foreclosure is brought as to American Home but not Option One.
    A. Claims against Both Option One and American Home
    1. Rosenthal Act

    California’s Rosenthal Fair Debt Collection Practices Act prohibits creditors and debt collectors from making false, deceptive, and misleading representations in an effort to collect a debt. Cal. Civ. Code §§ 1788, et seq. Plaintiffs allege that defendants violated the Rosenthal Act by:

    threaten[ing] to take actions not permitted by law, including but not limited to: collecting on a debt not owed to [them], making false reports to credit reporting agencies, foreclosing upon a void security interest, foreclosing upon a Note of which they were not in possession nor otherwise entitled to payment, falsely stating the amount of a debt, increasing the amount of a debt by including amounts that are not permitted by law or contract, and using unfair and unconscionable means in an attempt to collect a debt.

    FAC ¶ 63.[ 5 ] Defendants argue that these allegations fail to satisfy the applicable pleading requirements, and that this claim is barred by the Rosenthal Act’s one year statute of limitations. Cal. Civ. Code § 1788.30(f).

    Among these allegations, the allegation that defendants “threatened to . . . us[e] unfair and unconscionable means in an attempt to collect a debt,” without any indication as to what those means were, is plainly conclusory.

    The allegations regarding foreclosure identify conduct that is not prohibited by the Rosenthal Act. Foreclosure on a property is not debt collection activity encompassed by the Rosenthal Act, and as such, the threat of foreclosure is not prohibited. Cal. Civ. Code §§ 1788.13, 2924(b); Champlaie, No. Civ. S-09-1316 at 42, 2009 U.S. Dist. LEXIS 102285 at *55-*56, 2009 WL 3429622 at *18.

    The remaining allegations are that defendants “falsely stat[ed] the amount of a debt,” “increas[ed] the amount of a debt by including amounts that are not permitted by law or contract collecting on a debt not owed to [them],” and “[made] false reports to credit reporting agencies.” These allegations satisfy the minimum pleading requirements imposed by Fed. R. Civ. P. 8. See Champlaie, 2009 U.S. Dist. LEXIS 102285 at *57-58.

    Defendants argue that these allegations should nonetheless be dismissed on statute of limitations grounds, because plaintiffs have not alleged that the conduct occurred within the limitations period. The statute of limitations is an affirmative defense, Fed. R. Civ. P. 8(c), and complaints do not ordinarily need to allege the non-availability of affirmative defenses. United States v. Northern Trust Co., 372 F.3d 886, 888 (7th Cir. 2004). Nonetheless, the statute of limitations may be raised in a motion to dismiss “[w]hen the running of the statute is apparent from the face of the complaint.” Conerly v. Westinghouse Elect. Corp., 623 F.2d 117, 119 (9th Cir. 1980), Suckow Borax Mines Consol., Inc. v. Borax Consol., Ltd., 185 F.2d 196, 204 (9th Cir. 1950); see also Supermail Cargo v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995) (“A motion to dismiss based on the running of the statute of limitations period may be granted only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled.”) (internal quotation omitted).

    Here, plaintiffs have not alleged when these forms of unfair debt collection occurred. Although a complaint must provide some notice as to when the challenged conduct allegedly occurred, the complaint is not required to allege dates with the specificity necessary to determine the applicability of the statute of limitations. Even when a complaint does not specify date of occurrence, complaint suffices where it puts defendant “on notice of the time frame in question.” Dickens v. District of Columbia, 502 F. Supp. 2d 90, 94 (D.D.C. 2007); see also Castillo v. Norton, 219 F.R.D. 155, 162 (D. Ariz. 2003) (“Rule 8(a) does not require [the complaint] to identify the . . . the dates of the alleged discrimination . . . .”), Supreme Wine Co. v. Distributors of New England, Inc., 198 F. Supp. 318, 320 (D. Mass. 1961), Kuenzell v. United States, 20 F.R.D. 96, 99 (N.D. Cal. 1957). Federal Rule of Civil Procedure 9(f), which provides that “[a]n allegation of time or place is material when testing the sufficiency of a pleading,” “does not have the effect of requiring allegations of time and place, but merely operates to make such allegations, if made, material for the purposes of testing the sufficiency of the pleading as against, for example, a motion to dismiss.” Kuenzell, 20 F.R.D. at 99. I have previously explained that the rules do not require a complaint to specify the exact date of alleged misconduct, and that “[t]his is exactly the sort of information which should be obtained through the discovery process.” Famolare, Inc. v. Edison Bros. Stores, Inc., 525 F. Supp. 940, 949 (E.D. Cal. 1981) (Karlton, J.) (denying a Fed. R. Civ. P. 12(e) motion for more definite statement); see also Supreme Wine Co., 198 F. Supp. at 320 (failure to allege specific dates not grounds for dismissal because discovery is appropriate method for “obtain[ing] the full information needed to prepare the[] defense,” including dates of misconduct).[ 6 ]

    In this case, plaintiffs’ allegations provide notice of the general time period at issue, namely, the period after plaintiffs defaulted on the loan. While these allegations do not conclusively demonstrate the applicability or non-applicability of the statute of limitations, they provide sufficient notice to defendants that the statute of limitations may be at issue, and thereby allow defendants to formulate an answer. Pension Ben Guaranty Corp. v. Greene, 87 F.R.D. 483, 484 (W.D. Pa. 1980). In cases such as this, the statute of limitations defense cannot be resolved on a motion to dismiss, and may instead be raised on a motion for summary judgment. Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. N.Y. 1999).

    Accordingly, plaintiffs’ Rosenthal Act claim is dismissed, except insofar as it is predicated upon allegations that defendants “falsely stat[ed] the amount of a debt,” “increas[ed] the amount of a debt by including amounts that are not permitted by law or contract collecting on a debt not owed to [them],” and “[made] false reports to credit reporting agencies.”
    2. Negligence

    Under California law, the elements of a claim for negligence are “(a) a legal duty to use due care; (b) a breach of such legal duty; and (c) the breach as the proximate or legal cause of the resulting injury.” Ladd v. County of San Mateo, 12 Cal. 4th 913, 917 (1996) (internal citations and quotations omitted); see also Cal Civ Code § 1714(a). Plaintiffs argue that American Home and Option One acted negligently when they:

    failed to maintain the original Mortgage Note, failed to properly create original documents,. . failed to make the required disclosures to the Plaintiffs[,] . . . took payments to which they were not entitled, charged fees they were not entitled to charge, and made or otherwise authorized negative reporting of Plaintiffs creditworthiness to various credit bureaus wrongfully.

    FAC ¶¶ 70-71.

    California courts have stated that “as a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal. App. 3d 1089, 1096 (1991). Nymark does not apply when the lender’s activities exceed those of a conventional lender. Id. at 1096-97. Even when a lender acts within the scope of its traditional role, Nymark announced only a “general” rule. Id. at 1098 (applying Biakanja v. Irving 49 Cal. 2d 647, 320 P.2d 16 (1958)). This court recently evaluated Nymark’s application to a fundamentally similar complaint.

    The first type of purportedly negligent activity is Option One’s failure to make the disclosures required by TILA.[ 7 ] The factors provided by Biakanja, 49 Cal. 2d at 650 and Bily v. Arthur Young & Co., 3 Cal. 4th 370, 399-405 (1992) support finding a duty of care as to these disclosures. Champlaie, 2009 U.S. Dist. LEXIS 102285 at *75. Defendants have not argued that TILA’s statute of limitations preempts a negligence claim brought on this ground. Insofar as the statute of limitations and preemption are defenses, the court will not address this issue sua sponte.

    Plaintiffs next argue that defendants were negligent in directing plaintiffs into a loan they did not qualify for. Option One, as a lender, does not owe a duty to a borrower in this regard. Wagner, 101 Cal. App. 3d at 35. Plaintiffs have not alleged that American Home participated in steering plaintiffs to the loan. “Directing” plaintiffs into a loan therefore cannot support a negligence claim.

    As to the allegation that defendants negligently prepared the loan documents, plaintiffs have provided no indication as to any defect other than inadequate disclosure in these documents. Plaintiffs have provided no authority for the proposition that defendants had an obligation sounding in negligence to preserve the original documents, nor have plaintiffs explained how a failure to do so caused harm to plaintiffs.

    Plaintiffs finally allege that defendants generally “took payments to which they were not entitled, charged fees they were not entitled to charge, and made or otherwise authorized negative reporting of Plaintiffs creditworthiness to various credit bureaus wrongfully,” FAC ¶ 71. Plaintiffs contend that defendants were not entitled to receipt of these payments because the loan was itself invalid. Plaintiffs have not provided any authority, however, for the view that the loan was void ab initio.

    Accordingly, plaintiffs have stated a claim for negligence based on Option One’s failure to make disclosures required by TILA. Plaintiffs have not otherwise stated a claim for negligence as to Option One or American Home.
    3. Fraud

    Defendants argue that plaintiffs have failed to adequately allege the substantive elements of a claim for fraud under California law or to meet the pleading standard imposed by Fed. R. Civ. P. 9(b). The elements of a claim for intentional misrepresentation under California law are: (1) misrepresentation (a false representation, concealment or nondisclosure), (2) knowledge of falsity, (3) intent to defraud (to induce reliance), (4) justifiable reliance, and (5) resulting damage. Agosta v. Astor, 120 Cal. App. 4th 596, 603 (2004). The FAC’s allegations supporting the claim for fraud are that:

    Defendants, and each of them, have made several representations to Plaintiffs with regard to material facts. [¶] These representations made by Defendants were false. [¶] Defendants knew that these material representations were false when made, or these material representations were made with reckless disregard for the truth. [¶] Defendants intended that Plaintiffs rely on these material representations. [¶] Plaintiffs reasonably relied on said representations. [¶] As a result of Plaintiffs’ reliance, they were harmed and suffered damages.

    FAC ¶¶ 91-95. These allegations are the paragon of conclusory allegations, and they fail to provide the specificity required by Fed. R. Civ. P. 9(b). They refer to no specific conduct, and give defendants absolutely no indication as to what conduct, if any, underlies the fraud claims.

    Without attempting to defend these general allegations, plaintiffs contend that their claim nonetheless satisfies Rule 9(b) because it incorporates by reference all other allegations in the complaint, and that certain of these incorporated allegations, identified in plaintiffs’ opposition memorandum, satisfy the applicable requirements. Contrary to plaintiffs’ contentions, these incorporated allegations are also inadequate to demonstrate fraud by Option One and American Home. Paragraph 41 alleges that “Defendants fraudulently added costs and charges to the payoff amount of the note,” but fails to identify particular defendants or representations. Paragraph 43 alleges that “Defendants misrepresented material facts,” without identifying particular defendants, particular facts, or particular representations thereof.

    The FAC includes other allegations that identify other defendants’ representations with somewhat greater specificity. However, plaintiffs have not identified Option One and American Home’s roles, if any, in the alleged fraud by these defendants, as required by Swartz, 476 F.3d at 765. Accordingly, plaintiff’s fraud claim is dismissed as to defendants Option One and American Home.
    4. Unfair Competition

    California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, (“UCL”) proscribes “unlawful, unfair or fraudulent” business acts and practices. Plaintiffs’ sole allegation specifying the conduct underlying the UCL claim alleges that “Plaintiffs are informed and believe that Defendants[‘] acts as alleged herein constitute unlawful, unfair, and/or fraudulent business practices, as defined in the California Business and Professions Code § 17200 et seq.” FAC ¶ 99. Thus, as with the fraud claim, plaintiffs’ UCL claim merely conclusorilly alleges the barest elements of an UCL claim, and directs defendants to scour the remainder of the complaint to determine which, if any, allegations incorporated by reference plaintiffs intend as the basis for this claim.

    The incorporated allegations fail to state a UCL claim based on fraudulent or unfair business practices. As to fraud, Fed. R. Civ. P. 9(b) applies to UCL claims sounding in fraud, and plaintiffs have failed to meet this standard. As to unfair business practices, plaintiffs fail to provide defendants with any notice as to which acts by which defendants, if any, are alleged to have constituted such practices.

    Nonetheless, plaintiffs have adequately alleged unlawful business practices. As explained elsewhere in this order, the court denies defendants’ motion to dismiss as to plaintiffs’ negligence, TILA rescission, unfair debt collection, and wrongful foreclosure claims. These claims provide “unlawful” predicate activity that may support a UCL claim.[ 8 ] Although the court also denies the motion as to plaintiff’s breach of contract and good faith claims, a breach of contract or the implied covenant of good faith is not itself “unlawful” activity for purposes of the UCL. Puentes v. Wells Fargo Home Mortgage, Inc., 160 Cal. App. 4th 638, 645 (2008) (citing Watson Laboratories, Inc. v. Rhone-Poulenc Rorer 178 F. Supp. 2d 1099, 1117 n.12 (C.D. Cal. 2001)). An act that breaches a contract may serve as the predicate for a UCL claim only if it is independently unfair, fraudulent, or unlawful, and no such separate allegation appears here. Id.; see also Smith v. Wells Fargo Bank, N.A., 135 Cal. App. 4th 1463, 1483 (2005).

    Accordingly, the court dismisses the UCL claim as to Option One and American Home except insofar as the claim is predicated upon the unlawful acts of negligence, wrongful foreclosure or violation of TILA found to be adequately alleged by this order.
    B. Claims against Option One
    1. TILA

    Plaintiffs bring TILA claims for damages and for rescission. Option One argues that the claim for damages is barred by the statute of limitations, and that the rescission claim should be dismissed because plaintiffs have not alleged that they may tender the consideration offered for the loan.
    a. Civil Damages: Statute of Limitations

    TILA provides a one-year statute of limitations for claims for civil damages. 15 U.S.C. § 1640(e). Here, plaintiffs’ TILA claim arises solely out of failure to make required disclosures at the time the loan was entered, which was on or around December 5, 2006. FAC ¶ 54. The limitations period began to run at that time, King v. California, 784 F.2d 910, 914 (9th Cir. 1986); see also Lukovsky v. City & County of San Francisco, 535 F.3d 1044, 1051 (9th Cir. 2008) (in the employment context, claim accrues when plaintiff learns of adverse employment action, regardless of whether plaintiff has reason to suspect a “legal wrong” at that time). The limitations normally would have expired in December of 2007.

    This does not end the inquiry, because even though the claim accrued at that time, the running of the limitations period may be equitably tolled, King, 784 F.2d at 915, and subject to equitable estoppel, Ayala v. World Sav. Bank, FSB, 616 F. Supp. 2d 1007 (C.D. Cal. 2009). Plaintiffs argue that one or both doctrines apply here, because plaintiffs did not have “reasonable opportunity to discover” the facts underlying the claim. Under Ninth Circuit authority, a motion to dismiss made on statute of limitations grounds must be denied if the complaint “adequately alleges facts showing the potential applicability of the equitable tolling doctrine.” Cervantes v. City of San Diego, 5 F.3d 1273, 1277 (9th Cir. 1993); Huynh v. Chase Manhattan Bank, 465 F.3d 992, 1003-04 (9th Cir. 2006).

    Here, nothing indicates that plaintiffs were prevented from bringing an earlier TILA claim based upon the complained-of conduct. For example, one basis for plaintiffs’ TILA damages claim is their allegation that they were prevented from reviewing loan documents prior to closing. Nothing indicates that, at the time of closing, plaintiffs were unaware of the fact that they had been prevented from reviewing these documents, or that plaintiffs were somehow unable to bring a claim based on this purported wrongdoing. Similarly, a failure to make disclosures does not itself prevent a borrower from learning that the disclosures should have been made, and plaintiffs have not alleged any further impediment.[ 9 ] Moreover, insofar as plaintiffs rely on equitable estoppel rather than equitable tolling, the Ninth Circuit has repeatedly held that equitable estoppel requires “conduct by the defendant `above and beyond the wrongdoing upon which the plaintiff’s claim is filed,'” and plaintiffs make no such allegation here. Lukovsky, 535 F.3d at 1052 (quoting Guerrero v. Gates, 442 F.3d 697, 706 (9th Cir. 2006) and Santa Maria v. Pacific Bell, 202 F.3d 1170, 1176 (9th Cir. Cal. 2000)) (emphasis omitted). Lukovsky upheld a grant of a motion to dismiss on this basis. Id. For this reason, the court grants defendants’ motion to dismiss plaintiffs’ TILA claim insofar as this claim seeks civil damages.
    b. Rescission: Tender

    While TILA provides a one-year statute of limitations for claims for civil damages, TILA provides a three-year limitations period for claims for rescission. 15 U.S.C. §§ 1635(a) and (f), 15 C.F.R. § 226.23(b)(5). This period has not expired.

    Defendants argue that plaintiffs’ TILA claim for rescission should nonetheless be dismissed because plaintiffs have not alleged that they are able to tender the amount borrowed. No binding authority addresses this issue, and district courts in this circuit are divided as to whether such an allegation is required. See, e.g., Valdez v. America’s Wholesale Lender, No. C 09-02778, 2009 U.S. Dist. LEXIS 118241, *14 (N.D. Cal. Dec. 18, 2009) (collecting cases), Singh v. Wash. Mut. Bank, No. C-09-2771, 2009 U.S. Dist. LEXIS 73315 *9-11 (N.D. Cal. Aug. 19, 2009) (same).

    The effect of rescission is to undo the transaction. TILA provides that when a borrower provides notice of rescission, the creditor must cancel any security interest and return any money or property (such as earnest money) to the borrower. 15 U.S.C. § 1635(b). Once the creditor has done so, the borrower “shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the [borrower] shall tender its reasonable value.” Id. TILA provides the court with discretion to alter these procedures. Id. The borrower is “not liable for any finance or other charge.” Id. See also 12 C.F.R. § 226.23 (implementing 15 U.S.C. § 1635(b)).

    The Ninth Circuit interpreted this provision in Yamamoto v. Bank of N.Y., 329 F. 3d 1167 (9th Cir. 2003). Yamamoto concerned the timing of termination of the security interest, namely, whether the security interest is terminated before or after the borrower’s tender. Under the statute’s default procedure, the security interest terminates prior to tender. Yamamoto held that in most cases the court should exercise its discretion to modify the rescission procedure, making rescission conditional on the borrower’s tender, such that the security interest persists until tender is complete. Id. at 1172. However, it may be that in some cases this modification impedes a borrower’s ability to tender the amount borrowed. For example, termination of the security may facilitate the borrower’s efforts to sell or refinance the property offered as security, and thereby to complete tender. Id. at 1173 (noting, on summary judgment, that plaintiff had offered no evidence that the continuing security interest had such an effect).[ 10 ]

    Yamamoto thus held that the district court had discretion to require the borrower to make a tender prior to rescission, and that the courts should ordinarily impose this requirement. 329 F.3d at 1170, 1172. The Ninth Circuit further held that the district courts may determine whether to modify rescission procedures before determining whether rescission is otherwise warranted. Id. at 1173. Thus, the district court permissibly exercised its discretion in granting summary judgment to the lender when “it [was] clear from the evidence that the borrower lack[ed] capacity to pay back what she ha[d] received (less interest, finance charges, etc.).” Id.

    Yamamoto did not concern a motion to dismiss, and did not discuss whether ability to tender must be alleged in a claim for rescission under TILA. Numerous district courts have held that because rescission “should” normally be conditioned upon tender, a plaintiff must allege either ability to tender or the existence of equitable circumstances that make it inappropriate to condition rescission upon tender. See, e.g., Mangindin v. Wash. Mut. Bank, 637 F. Supp. 2d 700, 706 (N.D. Cal. 2009). “It makes little sense to let the instant rescission claim proceed absent some indication that the claim will not simply be dismissed at the summary judgment stage after needless depletion of the parties’ and the Court’s resources.” Valdez, 2009 U.S. Dist. LEXIS 118241 at *16-17. Other courts have held that no such allegation is required, postponing the exercise of discretion discussed in Yamamoto until a later stage of litigation. See, e.g., ING Bank v. Ahn, No. C 09-995, 2009 U.S. Dist. LEXIS 60004 (N.D. Cal. July 13, 2009). Relatedly, at least one court has held that the court could infer that the borrower would be able to tender by selling or refinancing the property purchased with a loan in the event that rescission was found to be appropriate, such that no specific allegation of ability to tender was required. Burrows v. Orchid Island TRS, LLC, No. 07-CV-1567, 2008 U.S. Dist. LEXIS 21120, *18, 2008 WL 744735, *6 (C.D. Cal. Mar. 18, 2008).

    Mindful of the obligation to construe the allegations and facts in the light most favorable to the plaintiffs at this stage, the court declines to require plaintiffs to allege an ability to tender or the existence of special circumstances. Defendants’ motion to dismiss is denied as to plaintiffs’ TILA claim for rescission. Plaintiffs are cautioned, however, that Yamamoto directs this court to require tender prior to rescission in the majority of cases, and that plaintiffs will need to meet this standard at subsequent stages.
    2. RESPA

    Defendants’ primary challenge to plaintiffs’ RESPA claim is that it does not contain specific factual allegations. Plaintiffs concisely allege that “Defendant Option One violated RESPA at the time of closing on the sale of the Property by failing to correctly and accurately comply with the disclosure requirements provided therein.” FAC ¶ 76; see 12 U.S.C. § 2601. This allegation is conclusory in that it fails to identify what information, if any, CHL failed to disclose or CHL inaccurately disclosed.[ 11 ]

    Although this resolves the motion with respect to the RESPA claim, two other issues warrant discussion. In opposing this motion, plaintiffs argue as though the RESPA claim is brought against both Option One and American Home. However, the FAC alleges that this claim is only brought as to certain defendants, not including American Home. Nor does the FAC allege any conduct by American Home as the basis for the RESPA claim. While plaintiffs’ opposition argues that the American Home violated RESPA by failing to respond to a qualified written request, this allegation does not appear in the FAC’s RESPA claim. Thus, the FAC fails to plead a RESPA claim against American Home. If plaintiffs chose to file an amended complaint, they may allege a RESPA claim as to American Home.

    Similarly, plaintiffs’ opposition argues that “it remains unclear whether Defendants named in this lawsuit, AHMSI and Option One included, received “kickbacks” or referral fees disproportional to the work performed, which is prohibited under 12 U.S.C. § 2607(a).” Opp’n at 22. No such allegation appears in the complaint. Plaintiffs may choose to add such an allegation in an amended complaint, provided that they may do so while complying with Fed. R. Civ. P. 11.
    3. Fiduciary Duty

    Plaintiffs allege that Option One owed them a fiduciary duty, and that Option One breached this duty. “[A]bsent special circumstances . . . a loan transaction is at arm’s length and there is no fiduciary relationship between the borrower and lender.” Oaks Management Corporation v. Superior Court, 145 Cal. App. 4th 453, 466 (2006) (collecting cases); Nymark, 231 Cal. App. 3d at 1093 n.1.

    Plaintiffs concede that lenders do not ordinarily owe fiduciary duties, but argue that in this case, Option One entered into agency relationships with the brokers, and therefore became subject to the broker’s fiduciary duties. While plaintiffs allege that Option One provided incentives to the brokers, plaintiffs have not alleged that Option One exercised control over the brokers’ conduct, or that the brokers had actual or apparent authority to act on Option One’s behalf. Accordingly, plaintiffs have not alleged facts from which the court may plausibly infer either an employment or an agency relationship. See Metropolitan Water Dist. v. Superior Court, 32 Cal. 4th 491, 512 (2004) (following the Restatement Second of Agency (1958), § 220), Cal. Civ. Code §§ 2299, 2300; J.L. v. Children’s Institute, Inc., 177 Cal. App. 4th 388, 403-404 (2009). Absent an indication that Option One owed a fiduciary duty a to plaintiffs, Option One cannot be liable for civil conspiracy to breach that fiduciary duty. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 511, 514 (1994), Champlaie, 2009 U.S. Dist. LEXIS 102285 at *62-65.
    3. Breach of Contract

    Plaintiffs allege that “Plaintiffs entered into an agreement with Defendants Option One, Smith, and Ruble, whereby Defendants promised to provide Plaintiffs with an affordable loan,” FAC ¶ 104, that “Plaintiffs fully performed their duties under the contract with Defendants Smith, Ruble, and Option One,” FAC ¶ 105, and that defendants, including Option One, breached this agreement in a variety of ways, including by failing to secure the promised payment and interest rates, FAC ¶ 106.

    Defendants argue that this claim should be dismissed because “Under long-standing, California law, a Plaintiff pleading breach of contract must either attach a copy of the contract to the complaint or set forth the relevant contract terms verbatim.” Mem. Supp. Mot. Dismiss at 22. Defendants cite Campbell v. Allstate Ins. Cos., No. 95-1171, 1995 WL 376926, at *2 (C.D. Cal. May 17, 1995) for both this rule of California law and for the conclusion that the rule applies in federal court. However, as a court of this district recently explained, California pleading rules do not apply in federal court, and in any event, it is not clear that Campbell accurately stated California law. See Wang & Wang LLP v. Banco Do Brasil, S.A., No. S-06-00761, 2007 WL 915232, *3 (E.D. Cal. March 26, 2007) (citing Constr. Protective Servs., Inc. v. TIG Specialty Ins. Co., 29 Cal. 4th 189, 198-99 (2002)). For the reasons provided in Wang & Wang, the court declines to follow Campbell.

    The pleading here provides less detail than the one found adequate in Wang & Wang, in that it fails to specify plaintiffs’ obligations under the purported contract. The allegations nonetheless satisfy the liberal pleading standard under Fed. R. Civ. P. 8. A plaintiff may plead a contract claim by setting for the contract’s “legal effect.” Fed. R. Civ. P. Official Form 3, 12; see also Federal Rule of Civil Procedure 84 (declaring these forms to be sufficient). Plaintiffs have met this standard.
    4. Breach of the Implied Covenant of Good Faith and Fair Dealing

    Plaintiffs allege that defendants, including Option One, breached the duty of good faith and fair dealing by “failing to pay at least as much regard to Plaintiffs’ interests as to Defendants’ interests,” “Failing to disclose . . . the true nature of the loan that is the subject of this action,” “Failing to give Plaintiffs’ the requisite notice and disclosures,” and “failing to comply with all applicable laws, including notice requirements, before foreclosure.” FAC ¶¶ 112-113.

    Defendants argue that this claim should be dismissed because it is predicated upon the existence of an underlying contract. However, as noted above, the court denies the motion to dismiss the breach of contract claim.

    Nonetheless, plaintiffs have failed to state a claim for tortious breach of the implied covenant of good faith and fair dealing. A good faith claim sounds in tort only when there is a “special relationship” between the contracting parties, such as the relationship between an insurer and an insured in an insurance contract. See, e.g., Jonathan Neil & Assoc. v. Jones, 33 Cal. 4th 917, 932 (2004). Plaintiffs have not alleged any facts which, if true, would demonstrate the existence of such a relationship here. Furthermore, California courts have specifically held that at least as between lenders and commercial borrowers, there is ordinarily not a special relationship giving rise to tortious bad faith liability. Kim v. Sumitomo Bank, 17 Cal. App. 4th 974, 979 (1993) (citing Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 1371, 1399, n.25 (1990)). Because there is no such special relationship, Option One is not required to pay as much regard to plaintiffs’ interests as to its own. Plaintiffs’ good faith and fair dealing claim is dismissed in insofar as it seeks tort damages. The claim may proceed insofar as it sounds in contract.
    C. Claims against AHMSI — Wrongful Foreclosure

    The only claim alleged against defendant American Home but not Option One is for wrongful foreclosure. Defendants argue that this claim suffers three faults: plaintiffs fail to attach the relevant documents, plaintiffs failed to specify whether foreclosure has occurred, and plaintiffs fail to specify American Home’s specific role.

    Just as the federal rules do not require attachment of contracts to a complaint for breach of contract, the rules do not require attachment of documents in a wrongful foreclosure action.

    Defendants argue that the complaint must specify whether foreclosure has already occurred, but provide no authority on this issue (or for any other argument for dismissal of this claim). Here, the claim challenges conduct prior to foreclosure, and foreclosure itself may not be relevant. In at least some circumstances, California courts have allowed wrongful foreclosure claims to proceed even when there was not actual foreclosure. Garretson v. Post, 156 Cal. App. 4th 1508, 1514 (2007).[ 12 ] Absent argument by defendants, the court declines to examine whether the instant case should be distinguished from Garretson.

    Finally, defendants argue that the complaint fails to specify American Home’s specific conduct giving rise to a wrongful foreclosure claim. The complaint contains specific allegations, namely that American Home and Quality Loan together “failed to properly record and give notice of the Notice of Default, which apparently occurred on or about May 15, 2008,” FAC ¶ 121; that American Home failed to reply to a qualified written request sent to American Home by plaintiffs pursuant to RESPA; FAC ¶ 122; and that American Home failed to suspend foreclosure activities during a period in which it was required to do so pursuant to federal guidelines promulgated on March 4, 2009 under the Emergency Economic Stabilization Act of 2008. FAC ¶¶ 124-126. Thus, the complaint identifies specific conduct. Absent further argument by defendants, the court will not engage in a sua sponte evaluation as to whether this alleged conduct supports a wrongful foreclosure action.
    D. Motion for a More Definite Statement

    Defendants have offered no separate argument in support of their motion for a more definite statement, instead merely incorporating by reference their arguments for dismissal. The motion for a more definite statement is denied.
    IV. CONCLUSION

    For the reasons stated above, the court GRANTS IN PART defendants Option One and American Home’s motion to dismiss (Doc. No. 23). Defendants’ incorporated motion for a more definite statement is DENIED.

    The court DISMISSES WITHOUT PREJUDICE the following claims as to defendants Option One and American Home:

    1. Plaintiffs’ first claim, under TILA, insofar as it seeks civil damages.

    2. Plaintiffs’ fourth claim, under RESPA.

    3. Plaintiffs’ fifth claim, for breach of fiduciary duty

    4. Plaintiffs’ sixth claim, for fraud.

    The court DENIES defendants’ motion as to the following claims, which may proceed to the extent consistent with the order above.

    1. Plaintiffs’ first claim, insofar as it seeks rescission under TILA.

    2. Plaintiffs’ second claim, under California’s Rosenthal Act.

    3. Plaintiffs’ third claim, for negligence.

    4. Plaintiffs’ seventh claim, for violation of California Bus. & Prof. Code § 17200.

    5. Plaintiffs’ eighth claim, for breach of contract.

    6. Plaintiffs’ ninth claim, for breach of the implied covenant of good faith and fair dealing.

    7. Plaintiffs’ tenth claim, for wrongful foreclosure.

    Plaintiffs are granted twenty days from the date of this order in which to file an amended complaint.

    IT IS SO ORDERED.

  17. DyingTruth,

    RECAP is cool!! Thank you for that, worth the price of admission!! 🙂

  18. DyingTruth and Jan van Eck,

    You both have it partially correct. Rescission under TILA is different than the legal theory of rescission under contract law (this is the one that places the parties ante status quo). In a contractual rescission, the rescinding party tenders the goods or monies in order for rescission to be valid.

    Under TILA, the concept of rescission is quite different. Congress enacted TILA as a consumer protection statute. In this regard, in order to “punish” predatory lending, they added Section 1635 (rescission). Under TILA’s rescission, the obligor (borrower) does not have to return anything until the creditor returns the obligor’s monies. Judges have a really hard time with this concept because they are very familiar with the contractual concept of rescission. What judges miss is the fact that a TILA rescission is supposed to work as a deterrent to bad behavior.

    The judge in Sosa v. Fite, 498 F. 2d 114 – Court of Appeals, 5th Circuit 1974 is one that really got it right when he stated: Congress’ intended operation of the statute, as evidenced by the 1635(b) creditor-forfeiture provision, therefore clearly calls for a debtor windfall if the creditor does not set about to rectify his earlier nondisclosures in the manner envisaged by the statute. In fact, the Act flatly provides that if his creditor continues in his untoward ways, the debtor incurs no obligation to pay for property which he is at the same time entitled to keep. That this result was intended is clear beyond peradventure, for one of the measure’s principal sponsors in the House stated: “[I]f the seller does not come back to pick up [his property] after a 10-day period [following the notice of rescission], the buyer can keep this 120 item and he does not even have to pay for it. . . .” Cong.Rec. 14398 (1968) (remarks of Congresswoman Sullivan). … The creditors, of course, failed to carry out any of their statutory duties, and thus their lament of any inequity being visited upon them is utterly unpersuasive, for the power was completely theirs to prevent this parade of creditor horribles from ever occurring.

    The problem that I am seeing is that judges are discarding the explicit language of TILA in order to allow banks and lenders get away with their bad behavior. Another provision of TILA which judges are misinterpreting is the expiration date on the Notice of Right to Cancel. In several recent decisions, judges have ruled that the failure to list the expiration date is not a violation of TILA. They have reasoned that since the notice contains a date of closing, that borrowers can easily add three days and know when the rescission period expires.

    TILA was meant to be hypertechnical. Judges these days are not willing to apply to law. As the judge in Sosa v. Fite wrote, The creditors, of course, failed to carry out any of their statutory duties, and thus their lament of any inequity being visited upon them is utterly unpersuasive, for the power was completely theirs to prevent this parade of creditor horribles from ever occurring.

    This is the true spirit of TILA rescission.

  19. to Jan van Eck
    incorrect, purpose of TILA Rescission:

    Rudisell v Fifth Third Bank, 622 F.2d 243, 40(6th Cir. 1980) “the appellants still have a right to rescind the transaction. Congress intended therescission to absolutely void the transaction and return the debtor to the status quo existing before he started the transaction, even against third party purchasers”. See 114 Cong. Rec. 14388 (1968)(statement of Rep. Sullivan).
    DyingTruth’s Gift to all who have been denied your “due process” by the courts in your pursuit of rescission. Not even courts can argue Congressional Statements like this

  20. I Rescinded, sued in Central CA District court for Rescission the defendants didn’t even raise the issue of tender (oh but the judge Cormac J. Carney did), so I sent another Rescission Tendering the property which is WORTH 2X THE AMOUNT OF THE LOAN and made my attorney file that I had done so in his declaration before he was fired and removed, but when he filed and asked for leave to withdraw as counsel the judge rejected (or at least attempted to) the filing and made him file a motion of non-opposition to Litton Loan’s motion to dismiss under 12(b)(6) with prejudice which it appears from the Docket was also filed at the direction from an order of judge Cormac J. Carney. My case is in 9th Circuit I’ve filed my opening brief and the applellees have not filed back.

  21. to dny:

    The concept of “recission” is that the parties go back to where they were before the Contract was signed. So the “lender” ( or whoever now has the Note by proper Indorsement) receives the face value of the loan (the money he put up) and you receive the property you pledged as security for the loan, with encumbrance removed, and your Note back stamped “paid” or “Recised” or equivalent terminology.

    I do not see how “recission” allows you to simply tender the property mortgaged to the lender.

    Am I missing something here? I welcome further comments.

  22. Note to people using PACER download the Firefox Plugin called RECAP, once you download any documents while you have the plugin it uploads the document to the RECAP server making it FREE for anyone else with RECAP to download

  23. my email address is teresa.moore@me.com

    Any other documents would be helpful!

    Thanks

  24. I sent rescission letters notarized & return receipt. They ignored (of course) but along the way the FRAUD I keep discovering gets bigger and bigger. Is this like a + positive or – negative type of accounting where tender =’s the amount of the asset (current or re-appraised) and then i am able to subtract damages from that number?

    I guess it all comes down to showing your cards, they of course have fought me all this time in hiding the true identity of the creditor so I won’t hold my breath that I’ll be receiving full disclosure of that info any time soon!

  25. Even if tender were required for a TILA rescission, if the subject property were tendered, would it be tendered at the origination appraisal value ($$$$) or current appraised value($). Seems like it should be the former, subject to other credits to “borrower.” Anybody have any thoughts?

  26. Teresa Moore
    reply with your email and can forward you a copy, plus other pleading in this case or you can go to PACER and download it yourself

  27. can you provide the correct cite? I have a motion to dismiss hearing on Tuesday 3/22/10 with the creditors “National City Mortgage/PNC Bank” taking the same position.

  28. The following Petition will be filed Thursday Morning in CA Supreme Court

    TO THE HONORABLE RONALD M. GEORGE, CHIEF JUSTICE OF THE SUPREME COURT OF CALIFORNIA, AND TO THE HONORABLE ASSOCIATE JUSTICES OF THE SUPREME COURT OF CALIFORNIA:

    INTRODUCTION

    Plaintiff Catherine Bryan respectfully comes before State of California Supreme Court of Appeals, to bring the Courts attention a matter of the gravest political and social importance to the general public welfare of citizens of the State of California.

    A Review of the substantial questions raised by this Petition is essential, (emphasis added) In order to prevent further impairment of the constitutional rights of California Homeowners who have been victims of flagrant commercial lending and financial fraud, to guarantee and protect California homeowners rights to a fair and unbiased hearings, in accordance with their right to, Due Process of Law, as guaranteed by the fifth and fourteenth amendment to the United States Constitution.

    The petitioner seeks a review of the judicial bias plainly demonstrated in the following matter which must be understood as classifying or discrimination by California Superior Court Judges against homeowners, specifically against those economically depressed, In Pro Per homeowners who must request a waiver of court costs and fees.
    A characteristic that we conclude represents — like gender, race, and religion —a constitutionally suspect basis upon which to impose differential treatment, and (2) the differential treatment.
    The petitioner would like this Court to consider that Due Process of law may be denied… in certain circumstances when a meaningful hearing is denied, to a homeowner who is a victim of predatory mortgage lending abuse and wrongful and illegal practices deceptive lending in violation of the Truth In Lending Act,
    who lacks the financial wherewithal to retain counsel to protect their home or property and therefore is deprived of due process and their rightful legal remedies, as guaranteed by the American Constitution.
    How can any American Homeowner, as a constitutional right bearer, of whatever race, gender, religion, sexual preference, age, and economic condition can be denied access to justice, or the mandated legal protection that should be provided to every American Citizen, by virtue of their financial reversals, circumstances or economic status?
    A fundamental Constitutional Right; is the right of every American Person, being “created equal” and therefore endowed with certain inalienable constitutional rights.” What could be clearer and more fundamental than that?
    Similarly, where there is a “right,” there must also be a “remedy of due process,” regardless of uncertain economic circumstances, providing relief for all defrauded American homeowners. This is the purpose and legitimate power of State Superior Court System, with its mandate to protect its citizens, which is the keystone of our American Heritage.

    catherine Bryan

    760 637 9328

    Any Ca. Homeowners who would like to add their name to our list to be included in our exhibits; please email Catherine at koldesigns@yahoo.com
    Include
    name, case number , property address and contact information

  29. Admittedly, U.S. Bank correctly argues that district courts are far from united in their
    reading of Yamamoto. In fact, courts in this district and elsewhere have produced a variety of
    responses to the question posed by this case. Compare, e.g., Avina v. BNC Mortgage, No. C 09-
    04710 JF, 2009 WL 5215751, at *2-3 (N.D. Cal. Dec. 29, 2009) (collecting cases and concluding
    that the court could exercise its discretion to require the homeowner plaintiff to allege “either the
    present ability to tender the loan proceeds or the expectation that she will be able to tender within a
    reasonable time”), and Mangindin v. Wash. Mut. Bank, No. C 09-01268 JW, 2009 WL 1766601, at
    *3 (N.D. Cal. June 18, 2009) (dismissing claim for rescission where plaintiffs failed to allege “that
    they attempted to tender, or are capable of tendering, the value of the property” or “that such
    equitable circumstances exist that conditioning rescission on any tender would be inappropriate”),
    with, e.g., Singh v. Wash. Mut. Bank, No. C 09-02771 MMC, 2009 WL 25888885, at *3 (N.D. Cal.
    Aug. 19, 2009) (collecting cases and noting that Yamamoto did “not hold that a claim for rescission
    must, in all instances, be conditioned on a tender offer by the plaintiff”), and ING Bank v. Ahn, No.
    C 09-00995 TEH, 2009 WL 2083965, at *2 (N.D. Cal. July 13, 2009) (noting “Yamamoto did not
    hold that a district court must, as a matter of law, dismiss a case if the ability to tender is not
    pleaded”).
    Since no consensus has yet emerged from this milieu, a careful interpretation of Yamamoto
    is in order. As explained above, Yamamoto’s procedural posture and concluding language strongly
    suggest that district courts lack the discretion, at the pleading stage, to require TILA plaintiffs to
    allege the present ability to tender. 329 F.3d at 1173 (implying that district courts should base their
    decision as to when a plaintiff must show ability to tender on the particular “circumstances” and
    “evidence” of each case). This reading of Yamamoto is also consistent with the liberal pleading
    standards of Federal Rule of Civil Procedure 8, which require only that the averments of the
    complaint sufficiently establish a basis for judgment against the defendant. AlliedSignal, Inc. v. City
    of Phoenix, 182 F.3d 692, 696 (9th Cir. 1999). Finally, and most fundamentally, this is the most
    workable practice. It is hard to see how a judge could decide on the bare pleadings whether to
    require a given plaintiff to allege an extra element of a claim in order to proceed any further with or her suit. The enumerated elements of any given claim are among the most fixed of legal
    principles; a particular fact either must be pleaded every time in order to state a claim, or it need not
    be pleaded at all. The list of elements cannot be altered on a case-by-case basis.
    In light of these considerations, Botelho’s complaint is not deficient for failure to plead
    ability to tender loan proceeds.3 As U.S. Bank points to no other weakness in his complaint besides
    his failure to include the tender allegation, Botelho’s case survives the 12(b)(6) challenge. U.S.
    Bank’s motion to dismiss is denied.
    IT IS SO ORDERED.
    Dated: 02/16/2010
    RICHARD SEEBORG
    UNITED STATES DISTRICT JUDGE

  30. NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    *E-Filed 02/16/2010*
    IN THE UNITED STATES DISTRICT COURT
    FOR THE NORTHERN DISTRICT OF CALIFORNIA
    SAN JOSE DIVISION
    HENRY BOTELHO,
    Plaintiff,
    v.
    U.S. BANK, N.A., as Trustee for the LXS
    2007-4N Trust,
    Defendant.
    ____________________________________/
    No. C 08-04316 RS
    ORDER DENYING DEFENDANT’S
    MOTION TO DISMISS
    Defendant U.S. Bank, N.A., as Trustee for the LXS 2007-4N Trust (“U.S. Bank”), seeks dismissal under Federal Rule of Civil Procedure 12(b)(6) of a complaint filed by plaintiff homeowner Henry Botelho. Specifically, U.S. Bank claims that Botelho cannot state a claim for rescission of his mortgage loan under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., unless he alleges a present ability to tender the loan proceeds. As discussed in further detail below, such an allegation is not necessary for Botelho’s case to survive the pleading stage. Accordingly, U.S. Bank’s motion is denied.
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page1 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    I. FACTUAL AND PROCEDURAL HISTORY
    According to the averments of the Second Amended Complaint (“SAC”),1 Botelho
    purchased a home in 2006 located at 1710 Stanton Avenue, San Pablo, California. To finance the purchase, he entered into a residential loan transaction with MortgageIT, Inc. (“MortgageIT”). At escrow on October 11, 2006, Botelho claims to have received pre-printed, unsigned copies of documents associated with his loan. Among these, he alleges, were two copies of a form entitled
    “Notice of Right to Cancel,” both dated September 28, 2006. According to Botelho, the forms explained that he had the right to rescind the loan but did not state that this right had an expiration date.
    The SAC is somewhat unclear as to the chain of ownership of Botelho’s note, but it implies that ownership passed from MortgageIT to IndyMac Bank, F.S.B. (“IndyMac”), then to the Federal Deposit Insurance Corporation (“FDIC”), and finally to U.S. Bank. The note is currently owned by the LXS 2007-4N Trust, with U.S. Bank serving as trustee. Botelho decided to rescind his loan in November 2007, more than a year after escrow took place. Accordingly, he gave notice of rescission to MortgageIT and IndyMac, both of whom refused to comply. Botelho therefore filed a complaint against MortgageIT and IndyMac, alleging
    violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”) and 12 C.F.R. § 226 (“Regulation Z”). Specifically, he claims that he was entitled to rescission because MortgageIT and IndyMac failed to deliver two copies of a “Notice of Right to Cancel” form that clearly and conspicuously disclosed the date of the transaction and the date the rescission period expired.
    Botelho later dropped MortgageIT and IndyMac from the lawsuit and added the FDIC, IndyMac’s successor. Finally, after the FDIC determined it had no interest in Botelho’s note, he dropped the 1 Federal Rule of Civil Procedure 15(a) provides that pleadings, including complaints, may be amended once as a matter of course under certain conditions. Fed. R. Civ. P. 15(a)(1). After the first amendment as of right, however, parties may only make further amendments with the court’s
    leave. Fed. R. Civ. P. 15(a)(2). Such leave is to be “freely give[n] when justice so requires.” Id. Here, Botelho has neither asked for, nor received, leave to file the SAC. Nonetheless, in light of Rule 15’s permissive standard for amendments, the Court will deem it properly filed.
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page2 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    FDIC and added U.S. Bank. U.S. Bank now moves to dismiss. The motion was heard in this Court
    on February 3, 2010.
    II. ANALYSIS
    A. Judicial Notice
    In conjunction with its motion to dismiss, U.S. Bank filed two requests for judicial notice.
    Facts subject to judicial notice may be considered in deciding a motion to dismiss. Mullis v. U.S. Bankr. Court, 828 F.2d 1385, 1388 (9th Cir. 1987). Under Federal Rule of Evidence 201, “[a] judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready
    determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). In other words, “‘the fact must be one that only an unreasonable person would insist on disputing.’” Walker v. Woodford, 454 F. Supp. 2d 1007, 1022 (S.D. Cal. 2006) (quoting United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994)).
    The first document U.S. Bank asks the Court to notice is a fully-filled out form bearing the title “Notice of Right to Cancel,” setting a three day rescission deadline, and purporting to bear Botelho’s signature. Exh. 1, Request for Judicial Notice, filed December 15, 2009. In support of its request, U.S. Bank points to a series of cases in this Circuit where district courts have taken judicial
    notice of loan documents. Lynch v. RKS Mortgage, Inc., 588 F. Supp. 2d 1254, 1256 n.2 (E.D. Cal. 2008) (granting defendant banks’ request for judicial notice of loan documents when plaintiff homeowner had not challenged the documents’ authenticity and had referred to them throughout his complaint); Seagren v. Aurora Loan Servs., Inc., No. CV 09-5050 ODW (AGRx), 2009 WL 3534171, at *2 (C.D. Cal. Oct. 28, 2009) (granting defendant bank’s request for judicial notice of
    signed “Notice of Right to Cancel” form after plaintiff homeowner failed to oppose request); Pineda v. GMAC Mortgage LLC, No. CV 08-5341 AHM (PJWx), 2008 WL 5432281, at *5-6 (C.D. Cal. Dec. 29, 2008) (granting defendant bank’s request for judicial notice of loan documents after plaintiff homeowner failed to oppose the request, even though the complaint itself claimed that the
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page3 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    documents contained forged signatures); Johnson v. First Fed. Bank of Calif., No. C 08-00264 PVT, 2008 WL 682497, at *2 n.5 (N.D. Cal. March 10, 2008) (taking judicial notice of loan documents after noting that they were already a matter of public record because they were attached to a motion the defendant bank had filed in plaintiff’s bankruptcy case). Unlike the plaintiffs in these cases, Botelho actively opposes the bank’s request for judicial notice—an indication that the document’s authenticity is not so clear “that only an unreasonable person would insist on disputing” it. Walker, 454 F. Supp. 2d at 1022; see also Lopez v. Wachovia Mortgage, 2:09-CV-01510-JAM-DAD, 2009 WL 4505919, at *2 (E.D. Cal. Nov. 20, 2009) (taking judicial notice of those loan documents which the parties agreed were authentic, but declining to do so for the one loan document whose authenticity plaintiff disputed); Anderson v. Countrywide Fin.,
    No. 2:08-cv-01220-GEB-GGH, 2009 WL 3368444, at *2-3 (declining to take judicial notice of signed “Notice of Right to Cancel” forms, when plaintiff objected to the judicial notice and attached a competing “Notice of Right to Cancel” to her own complaint). Fundamentally, the heart of Botelho’s entire complaint is contained in his allegation that he did not see or receive copies of this
    very document which U.S. Bank now contends bears his signature. Therefore, it is apparent from the face of the complaint that the authenticity of the signed “Notice of Right to Cancel” form is not “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably
    be questioned.” Fed. R. Evid. 201(b)(2). Judicial notice of the document is thus inappropriate.
    U.S. Bank’s second judicial notice request pertains to various court papers documenting Botelho’s bankruptcy proceedings. See Exh. 2-6, Supplemental Request for Judicial Notice, filed January 20, 2010. Judicially noticed facts often consist of matters of public record, such as prior court proceedings, see, e.g., Emrich v. Touche Ross & Co., 846 F.2d 1190, 1198 (9th Cir. 1988);
    administrative materials, see, e.g., Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994); or other court documents, see, e.g., Rothman v. Gregor, 220 F.3d 81, 92 (2d Cir. 2000) (taking judicial notice of a filed complaint as a public record). The Ninth Circuit has traditionally interpreted Rule 201 as allowing courts to “take notice of proceedings in other courts, both within and without the
    federal judicial system, if those proceedings have a direct relation to matters at issue.” United States Case5:08-cv-04316-RS Document67 Filed02/16/10 Page4 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992); see also Kasey v. Molybdenum Corp. of Am., 336 F.2d 560, 563 (9th Cir. 1964) (ruling that the U.S. District Court for the Eastern District of California was correct to take judicial notice of court records from a related case in the U.S. District Court for the Southern District of California). Here, U.S. Bank asks the Court to take notice of (1) the docket report in Botelho’s bankruptcy case in the Northern District of California (Exh. 2); (2) Botelho’s Voluntary Chapter 13 bankruptcy petition, filed May 19, 2009 (Exh. 3); (3) his Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Exh. 4); (4) his Chapter 13 plan (Exh. 5); and (5) a Confirmation Order entered by the Court following a creditors’ meeting
    (Exh. 6). The guidance noted above from the Ninth Circuit and several district courts suggests there is some precedent for the judicial notice of these five documents, in the right circumstances.
    Nonetheless, an examination of the documents and their content indicates that they have little or no bearing on the determination of the instant motion. For this reason, the propriety of judicially noticing them need not be resolved in conjunction with this request for dismissal, and the request for judicial notice as to these documents will therefore be denied.
    B. Motion to Dismiss
    A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal under Rule 12(b)(6) may be based either on the “lack of a cognizable legal theory” or on “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). Hence, the issue on a motion to dismiss for failure to state
    a claim is not whether the claimant will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). When evaluating such a motion, the court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Cahill v.
    Liberty Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996). “[C]onclusory allegations of law and
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page5 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    unwarranted inferences,” however, “are insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996). U.S. Bank presents two arguments as to why the instant complaint should be dismissed under Rule 12(b)(6). First, it argues that Botelho is spuriously contending that he did not receive two copies of the “Notice of Right to Cancel” that clearly and conspicuously disclosed the date of the transaction and the date the rescission period expired. According to U.S. Bank, Botelho himself has acknowledged in writing his receipt of two such copies. Therefore, it is argued, his complaint should be dismissed.
    This argument relies entirely upon U.S. Bank’s success on its request for judicial notice of the alleged signed receipt—a result which, as noted above, has not transpired. The standard of review for a Rule 12(b)(6) motion dictates that all material allegations in the complaint must be taken as true, including, in this instance, Botelho’s allegation that he did not receive the requisite notice. U.S. Bank’s only available avenue to overcome Botelho’s averment at the pleading stage is its ill-fated request for judicial notice, and therefore this argument does not warrant dismissal of the action.
    U.S. Bank next contends that Botelho fails to state a claim for rescission under TILA and Regulation Z because he has not alleged that he has the present ability to tender the loan proceeds.
    Botelho does not take the position that he has alleged such an ability, but rather argues that he should be allowed to proceed on his rescission claim without such an express allegation in the complaint. The procedure governing rescission of a loan transaction under TILA is set forth in 15 U.S.C. § 1635(b), which provides, in relevant part:
    Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, down payment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value.
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page6 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    In Yamamoto v. Bank of New York, the Ninth Circuit explained that a district court may alter the rescission procedures described in TILA and retains “discretion to condition rescission on tender by the borrower of the property he had received from the lender.” 329 F.3d 1167, 1171 (9th Cir. 2003) (internal quotation marks and citation omitted). Whether rescission should be so conditioned “depends upon the equities present in a particular case, as well as consideration of the legislative policy of full disclosure that underlies the Truth in Lending Act and the remedial-penal nature of the private enforcement provisions of the Act.” Id. (internal quotation marks and citation omitted).
    U.S. Bank reads Yamamoto to stand for the proposition that district courts may, in their discretion, require any plaintiff trying to state a claim for rescission under TILA to represent an ability to tender loan proceeds in the complaint. In effect, this would confer upon the district court the discretionary power to add, in particular cases and based on uncertain criteria, an item to the list of elements required to state a rescission claim. Yamamoto does not authorize such an unorthodox procedure. It was decided in the procedural context of summary judgment, when the district court was in a position to consider a full range of evidence in deciding whether to condition rescission on tender. Id. at 1173 (explaining that the court’s discretion should be governed by “all the
    circumstances including the nature of the violations and . . . . [whether] the evidence [shows] that the borrower lacks capacity to pay back what she has received” (emphasis added)).
    The instant case stands in an entirely different procedural posture. The litigation here has progressed only as far as the pleading stage. The Court cannot consider any evidence to show that the borrower lacks capacity to pay back what he has received, because there is no evidence of any kind before the Court. There are only the averments of the complaint.2 Yamamoto cannot be read to vest in the district courts discretion to require some plaintiffs to plead an extra element in their TILA complaints, but not to require it of others.
    2 Indeed, Rule 12(d) effectively bars the introduction of any outside evidence in the 12(b)(6) context, by providing that any motion under Rule 12(b)(6) which presents matters outside the pleadings “must be treated as [a motion] for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d) (emphasis added).
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page7 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    Admittedly, U.S. Bank correctly argues that district courts are far from united in their reading of Yamamoto. In fact, courts in this district and elsewhere have produced a variety of responses to the question posed by this case. Compare, e.g., Avina v. BNC Mortgage, No. C 09- 04710 JF, 2009 WL 5215751, at *2-3 (N.D. Cal. Dec. 29, 2009) (collecting cases and concluding that the court could exercise its discretion to require the homeowner plaintiff to allege “either the
    present ability to tender the loan proceeds or the expectation that she will be able to tender within a reasonable time”), and Mangindin v. Wash. Mut. Bank, No. C 09-01268 JW, 2009 WL 1766601, at *3 (N.D. Cal. June 18, 2009) (dismissing claim for rescission where plaintiffs failed to allege “that they attempted to tender, or are capable of tendering, the value of the property” or “that such
    equitable circumstances exist that conditioning rescission on any tender would be inappropriate”), with, e.g., Singh v. Wash. Mut. Bank, No. C 09-02771 MMC, 2009 WL 25888885, at *3 (N.D. Cal. Aug. 19, 2009) (collecting cases and noting that Yamamoto did “not hold that a claim for rescission must, in all instances, be conditioned on a tender offer by the plaintiff”), and ING Bank v. Ahn, No.
    C 09-00995 TEH, 2009 WL 2083965, at *2 (N.D. Cal. July 13, 2009) (noting “Yamamoto did not hold that a district court must, as a matter of law, dismiss a case if the ability to tender is not pleaded”).
    Since no consensus has yet emerged from this milieu, a careful interpretation of Yamamoto is in order. As explained above, Yamamoto’s procedural posture and concluding language strongly suggest that district courts lack the discretion, at the pleading stage, to require TILA plaintiffs to allege the present ability to tender. 329 F.3d at 1173 (implying that district courts should base their
    decision as to when a plaintiff must show ability to tender on the particular “circumstances” and “evidence” of each case). This reading of Yamamoto is also consistent with the liberal pleading standards of Federal Rule of Civil Procedure 8, which require only that the averments of the complaint sufficiently establish a basis for judgment against the defendant. AlliedSignal, Inc. v. City of Phoenix, 182 F.3d 692, 696 (9th Cir. 1999). Finally, and most fundamentally, this is the most workable practice. It is hard to see how a judge could decide on the bare pleadings whether to require a given plaintiff to allege an extra element of a claim in order to proceed any further with his
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page8 of 9
    NO. C 08-04316 RS
    ORDER
    United States District Court
    For the Northern District of California
    or her suit. The enumerated elements of any given claim are among the most fixed of legal principles; a particular fact either must be pleaded every time in order to state a claim, or it need not be pleaded at all. The list of elements cannot be altered on a case-by-case basis.
    In light of these considerations, Botelho’s complaint is not deficient for failure to plead ability to tender loan proceeds.3 As U.S. Bank points to no other weakness in his complaint besides his failure to include the tender allegation, Botelho’s case survives the 12(b)(6) challenge. U.S. Bank’s motion to dismiss is denied.
    IT IS SO ORDERED.
    Dated: 02/16/2010
    RICHARD SEEBORG
    UNITED STATES DISTRICT JUDGE
    3 Although Yamamoto does not sanction dismissal, at the pleading stage, for failure to allege ability to tender, these considerations certainly come into play in the summary judgment context. See Yamamoto, 329 F.3d at 1173 (concluding that district courts do “not lack discretion to modify the sequence of rescission events [under TILA] to assure that [the borrower can] repay the loan
    proceeds before going through the empty (and expensive) exercise of a trial on the merits”).
    Case5:08-cv-04316-RS Document67 Filed02/16/10 Page9 of 9

  31. When you cut and paste this opinion into the browser it comes up with Brenda Robinson v. Tyson Foods.
    Hello?

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