United States District Court, D. Arizona
Douglas L. Rayes United States District Judge
has filed a motion to dismiss for failure to state a claim.
(Doc. 12.) The motion is fully briefed, and neither party
requested oral argument. For the reasons stated below, the
motion is granted.
November 16, 2005, Plaintiffs Allen and Lynell Taylor signed
an Adjustable Rate Balloon Note (Note) to obtain a loan for
$277, 500 in favor of the lender, New Century Mortgage
Company. (Doc. 10, ¶ 5.) The Note was secured by a Deed
of Trust (DOT) on real property located at 2457 E. Ivy
Street, Mesa, AZ 85213. (Id., ¶ 4.) At closing,
Plaintiffs were advised of their right to cancel the
transaction by November 21, 2005, via a “Notice of
Right to Cancel Form, ” which both Plaintiffs Dated:
November 17, 2005. (Doc. 12-1 at 2.)
2008, Plaintiffs stopped making payments on the Note. (Doc.
10-1 at 31.) On August 5, 2008, Defendant recorded a Notice
of Trustee's Sale on the property for November 5, 2008.
(Id. at 45.) On August 13, 2008, Tiffany &
Bosco, as Trustee under the DOT, sent a letter notifying
Plaintiffs that the loan amount was due and that the loan had
been in default since May 1, 2008. (Id. at 41.) The
letter also identified America's Servicing Company (ASC)
as the creditor and loan servicer. (Id.)
September 18, 2008, Allen sent a letter to Tiffany &
Bosco rescinding the loan. (Id. at 28.) On October
28, 2008, Plaintiffs filed for bankruptcy and the
trustee's sale was continued. (Id. at 32-33.) On
November 5, 2008, ASC filed a proof of claim in the
bankruptcy court. (Doc. 10, ¶ 35.) The bankruptcy case
proceeded, but Plaintiffs moved to dismiss their bankruptcy
case after the stay was lifted. On April 25, 2010, Plaintiffs
executed a Loan Modification Agreement with ASC, which
“amends and supplements” the Note and DOT. (Doc.
12-1 at 52-56.) On September 28, 2010, Tiffany & Bosco
recorded a Cancellation of Trustee's Sale. (Id.
10, 2016, Plaintiffs filed suit against Defendant Deutsche
Bank National Trust Company, as Trustee, in Maricopa County
Superior Court. (Doc. 1-1.) Defendant removed the case to
this Court on June 7, 2016. (Doc. 1.) On June 24, 2016,
Plaintiffs filed an amended complaint alleging three counts:
(1) quiet title, (2) false recordings perpetuated on
rescinded loan creating perpetual and unresolved cloud on
title, and (3) violation of the Truth in Lending Act (TILA).
(Doc. 10.) Plaintiffs seek damages, an order cancelling the
Note, an order quieting title in favor of Plaintiffs, and an
order enjoining any foreclosure arising out of the DOT.
(Id. at 35-36.) Defendant moves to dismiss the
amended complaint. (Doc. 12.)
survive dismissal for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6), a complaint must
contain factual allegations sufficient to “raise a
right to relief above the speculative level.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The
task when ruling on a motion to dismiss “is to evaluate
whether the claims alleged [plausibly] can be asserted as a
matter of law.” See Adams v. Johnson, 355 F.3d
1179, 1183 (9th Cir. 2004); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). When analyzing the
sufficiency of a complaint, the well-pled factual allegations
are taken as true and construed in the light most favorable
to the plaintiff. Cousins v. Lockyer, 568 F.3d 1063,
1067 (9th Cir. 2009). However, legal conclusions couched as
factual allegations are not entitled to the assumption of
truth, Iqbal, 556 U.S. at 680, and therefore are
insufficient to defeat a motion to dismiss for failure to
state a claim, In re Cutera Sec. Litig., 610 F.3d
1103, 1108 (9th Cir. 2008).
three of Plaintiffs' claims are grounded on the
allegation that they rescinded the loan in accordance with
TILA. (Doc. 10, ¶¶ 103, 145, 186.) Plaintiffs'
quiet title claim alleges that the rescission rendered the
Note, DOT, and Loan Modification Agreement void, and that
Plaintiffs had no duty to tender the purchase price.
(Id., ¶ 131.) The false recording claim alleges
that Defendant recorded several documents that were void due
to the alleged rescission. (Id., ¶ 155.) The
TILA claim is based on Defendant's alleged failure to
“honor” the rescission by failing to credit
payments and clear their property of any security interest.
(Id., ¶¶ 186-89.)
argues Plaintiffs' claims should be dismiss for several
reasons: (1) Plaintiffs fail to allege the loan was properly
rescinded, (2) the claims are barred by the statute of
limitations, (3) the Loan Modification Agreement extinguishes
Plaintiffs' claims, (4) the quiet title claim fails for
lack of tender, (5) the false recording claim fails because
none of the alleged misstatements were material to
Plaintiffs, and (6) the TILA claim fails because the
allegations are conclusory. The Court agrees with Defendants
that Plaintiffs' theory of rescission fails, that the
claims are barred by the statute of limitations, and that the
Loan Modification Agreement bars Plaintiffs' claims. As
such, the Court need not address Defendant's remaining
provides a framework for rescission of consumer credit
transactions by consumers. 15 U.S.C. § 1635. Generally,
consumers have the right to rescind within “three
business days following the consummation of the
transaction.” § 1635(a). This period is extended
to three years if “the information and forms required
under this section or any other disclosures required under
this part have not been delivered to the obligor.”
§ 1635(f). Once the obligor exercises the right to
rescind, within twenty days, “the creditor shall return
to the obligor any money or property given as earnest money,
downpayment, or otherwise, and shall take any action
necessary or appropriate to reflect the ...