Davenport v. Litton Loan Servicing, LP

725 F. Supp. 2d 862 (2010)

Karol DAVENPORT, Plaintiff,
v.
LITTON LOAN SERVICING, LP, et al., Defendants.

No. C 10-0679 RS.

United States District Court, N.D. California, San Francisco Division.

July 16, 2010.

Hermin Adella Dowe, Dowe Law Firm, San Pablo, CA, for Plaintiff.

Erik Wayne Kemp, John B. Sullivan, Regina Jill McClendon, Esq., Severson & Werson, San Francisco, CA, Renee Reyes de Golier, McCarthy and Holthus, San Diego, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

RICHARD SEEBORG, District Judge.

I. INTRODUCTION

This is a case about a home. The parties are before this Court because they fundamentally disagree as to who may claim the legal entitlement to it. Plaintiff advances twenty-six causes of action against her original lender, First Financial & Real Estate Services ("First Financial"), the current servicer of her loan, Litton Loan Servicing, LP ("Litton"), the original trustee, Credit-Based Asset Servicing and Securitization, LLC ("C-BASS"), the company who purchased her home at foreclosure sale, U.S. Bank, North America ("U.S. Bank"), and others. Among her federal claims are alleged violations of the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and the Federal Regulations thereto as well as the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq. She also raises numerous other claims grounded on California statutory and common law. Defendants Litton, C-Bass and U.S. Bank move to dismiss.

II. RELEVANT FACTS

The property in dispute is located at 2836 Canterbury Drive in Richmond, California. Plaintiff Karol Davenport resides there. In 2006, Davenport was sixty-two years old. She was then and has remained unmarried. Davenport explains that she is a medical examiner by trade. Through this work, she grosses roughly $1,000 each month. A Social Security payment of $1,197 augments her monthly income. In September of 2006, she recounts in her First Amended Complaint ("FAC") that her then-lender Citigroup (who, incidentally, is not a party in this case) contacted her by telephone. A representative of that bank apparently warned her that, should she refuse to refinance her existing loan, she would likely lose her home. The representative duly referred Davenport to the services of another lender, First Financial, a named defendant which has not as yet made an appearance in this action.

Davenport dealt largely with a First Financial employee named Kruger. In their first telephone conversation, she suggests Kruger responded to her desire to refinance with great enthusiasm. He gathered personal information, including her age, race, marital status and income. She avers she responded truthfully. Even so, she notes that Kruger overstated her monthly income by $2,200 on a loan application form. Kruger also explained that she would be eligible for a fixed rate loan for three years at 6.125%. While he noted that the rate would eventually adjust, she insists he assured her that it would be possible—indeed, easy—to refinance in the future. Soon after, First Financial sent a packet of information detailing the prospective loan to Davenport by fax. Kruger then explained the meaning of each page to Davenport over the telephone. She contends she emphasized that she would not agree to prepayment penalties or a balloon payment option; according to Davenport, Kruger assured her that such requests would "not be a problem." (Compl. ¶ 24.) Attached to the final loan documents that she ultimately signed is a balloon payment rider.

Three days later, Davenport received by mail a thirty page loan agreement with explicit instructions from First Financial requiring her signature within seventy-two hours. She contends she found the language in the document baffling and overwrought; she says she was, at the very least, unsure if its terms were identical to those she discussed with Kruger. When she tried to contact him, he responded only on the third and last day. At that time, she insists he assured her that the longer document reflected their telephone conversation. When Davenport pointed out that several pages were not filled out, Kruger explained it was customary for the lender to complete the missing information after the borrower signed and returned the paperwork. Davenport did sign the loan (in the presence not of anyone from First Financial—she points out—but an impatient and fidgety notary instead) and returned the paperwork within the seventy-two hour period. A week later, the loan closed. It was secured by a deed of trust on the property and duly recorded in Contra Costa County on December 5, 2010. Upon subsequent consultation with a forensic accountant in 2009, Davenport contends she only then learned that First Financial failed to provide certain disclosures required by TILA and RESPA.^[1]

Plaintiff insists she faithfully satisfied her monthly loan obligations for three years until January of 2009, at which point she was not able to do so. Davenport admits she defaulted. She does explain, however, that she attempted to negotiate a refinance agreement with Litton, the loan servicer. According to Davenport, Litton "in bad faith" refused. On April 9, 2009, Quality Loan Service recorded a notice of default on behalf of C-BASS; it recorded a notice of sale on July 13, 2009. Davenport suggests that, while she did receive copies of these notices by mail, defendants did not fully comply with the requirements of California Civil Code section 2924. Specifically, she points out that the notices were not sent via certified mail. Moreover, Davenport claims that Litton also did not discuss alternatives to foreclosure as required by California Civil Code section 2923.5 and the federal Homeowner Affordable Modification Program ("HAMP") guidelines. Litton counters that it did consider Davenport's options and insists that no law, cited or otherwise, requires a lender to refinance.

The defendants held a trustee's sale on August 13, 2009 and U.S. Bank purchased the property. On September 2, 2009, U.S. Bank served Davenport with a notice to vacate. She commenced this action on December 7, 2009.

III. DISCUSSION

A. Federal Rules of Civil Procedure 8(a)(2) and 12(b)(6)

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court accepts a plaintiff's factual allegations as true and construes the complaint in the light most favorable to the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S. Ct. 1843, 23 L. Ed. 2d 404 (1969). Dismissal is appropriate where a complaint lacks "a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.2008) (citation omitted). In the context of a Rule 12(b)(6) motion, a district court generally may not consider material beyond the pleadings. Fort Vancouver Plywood Co. v. United States, 747 F.2d 547, 552 (9th Cir.1984). The exception is material which is properly submitted as part of the complaint. Amfac Mtg. Corp. v. Arizona Mall of Tempe, 583 F.2d 426, 429-30 (9th Cir.1978). Here, a copy of the deed of trust and a notice of foreclosure were submitted as part of the FAC.

To state a claim for relief, Federal Rule of Civil Procedure 8(a)(2) demands that a pleading include a "short and plain statement of the claim showing that the pleader is entitled to relief." The Supreme Court has instructed that this mandate does not require "detailed factual allegations," but "demands more than an unadorned, the-defendant-harmed-me accusation" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (internal quotation marks omitted). "A pleading that offers `labels and conclusions' or a `formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). The tenet that allegations are construed in a light favorable to the plaintiff does not apply, however, to bare legal conclusions. Twombly, 550 U.S. at 555, 127 S. Ct. 1955 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Even where the plaintiff alleges something more than a bare legal conclusion, Twombly requires a statement of a plausible claim for relief. Id. at 544, 127 S. Ct. 1955. Weighing a claim's plausibility is ordinarily a task well-suited to the district court but, where the well-pleaded facts do not permit the court to infer more than a mere possibility of misconduct, the complaint has not shown the pleader is entitled to relief. Iqbal, 129 S.Ct. at 1950.

B. Federal Rule of Civil Procedure 9(b)

Federal Rule of Civil Procedure 9(b) provides that "[i]n allegations of fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." To satisfy the rule, a plaintiff must allege the "who, what, where, when, and how" of the charged misconduct. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997). In other words, "the circumstances constituting the alleged fraud must be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong." Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097, 1106 (9th Cir.2003). By contrast, "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. Pro. 9(b). Moreover, "[i]n 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." Swartz v. KPMG, LLP, 476 F.3d 756, 765 (9th Cir. 2007) (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir. 1989)).

IV. DISCUSSION

A. TILA: Fourteenth Claim for Relief

Defendants first move to dismiss Davenport's claim for rescission and statutory damages under TILA as time-barred. Congress enacted TILA to promote the "informed use of credit" by consumers. 15 U.S.C. § 1601(a); Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 235, 124 S. Ct. 1741, 158 L. Ed. 2d 450 (2004). "TILA's disclosure provisions seek to ensure meaningful disclosure of credit terms." Household Credit, 541 U.S. at 235, 124 S. Ct. 1741 (citations and internal quotation marks omitted). To this end, "the Act requires creditors to provide borrowers with clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights." Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S. Ct. 1408, 140 L. Ed. 2d 566 (1998). Federal Regulation Z, 12 C.F.R. 226 et seq., further details the information creditors must disclose as well as the timing therein (where, depending on the transaction, consumers might benefit not merely from initial but also periodic disclosures).

Failure to comply with the Act subjects a lender to criminal penalties for noncompliance, see § 1611, as well as to statutory and actual damages, see § 1640. An action for damages "may be brought" within one year after a violation of the Act. § 1640(e); Ocwen, 523 U.S. at 412, 118 S. Ct. 1408. A TILA violation occurs on "the date of consummation of the transaction," King v. California, 784 F.2d 910, 915 (9th Cir. 1986), and "consummation" means "the time that a consumer becomes contractually obligated on a credit transaction," 12 C.F.R. § 226(a)(13). TILA also authorizes a borrower whose loan is secured with his or her "principal dwelling," to rescind the loan entirely "until midnight of the third business day following the consummation of the transaction . . . ." § 1635(a). Where the creditor fails to make the requisite disclosures, the borrower is not "liable for any finance or other charge, and any security interest given by [him], including any such interest arising by operation of law, becomes void" upon rescission. § 1635(b). The borrower's right of rescission "expire[s] three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first." § 1635(f). Here, Davenport signed the deed of trust and "consummated" the loan on November 22, 2006. Her home was sold at foreclosure in September of 2009 and she filed the instant action in early December of that year.

Davenport seeks statutory damages pursuant to section 1640 and seeks to exercise the right to rescind her loan under section 1635(f). Specifically, Davenport suggests she did not receive the "initial" disclosures required under the Act. Presumably, she refers to disclosures that must accompany certain loan applications. Compare § 1638(b) (discussing disclosures that accompany loan application) with § 1638(b)(2)(B)(iii) (discussing final disclosures that accompany consummation of loan). As to the disclosures she acknowledges she did receive (again, she does not specify at what point or in what context she received them), she contends that they were inconsistent and inadequate. She alleges, for example, that the statements differed in their recitations of the total payment owed by approximately $438,984. (Compl. ¶ 138.) See § 1638(a)(5) ("The sum of the amount financed and the finance charge, which shall be termed the `total of payments' . . . ."). Finally, she insists First Financial misrepresented the finance charge contemplated in section 1638(a)(3).

Defendants insist that, in any event, her TILA claims are time-barred. At least with respect to her attempt to rescind, they are correct. In Beach v. Ocwen Federal Bank, the Court noted that section 1635(f)—which provides that a borrower's right to rescind under the Act "shall expire" after three years or foreclosure sale—represents an unequivocal Congressional mandate limiting exercise of the right to a time inside the statutory period. Accordingly, it is not possible for Davenport to rescind; her claim, to the extent it seeks the remedy of rescission, therefore must be dismissed without leave to amend.

By contrast, the Ninth Circuit has noted that equitable tolling may be appropriate where a plaintiff seeks statutory damages under section 1640. King v. California, 784 F.2d 910, 913 (9th Cir. 1986). A district court may grant a motion to dismiss on statute of limitations grounds "only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled." Morales v. City of Los Angeles, 214 F.3d 1151, 1153 (9th Cir.2000) (quoting TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir.1999)). "Equitable tolling may be applied if, despite all due diligence, a plaintiff is unable to obtain vital information bearing on the existence of his claim." Santa Maria v. Pac. Bell, 202 F.3d 1170, 1178 (9th Cir.2000); Leong v. Potter, 347 F.3d 1117, 1123 (9th Cir.2003) (noting that the doctrine "focuses on a plaintiff's excusable ignorance and lack of prejudice to the defendant"). Moreover, "the applicability of equitable tolling depends on matters outside the pleadings, so it is rarely appropriate to grant a Rule 12(b)(6) motion to dismiss (where review is limited to the complaint) if equitable tolling is at issue." Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997, 1003-04 (9th Cir.2006) (citing Supermail v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995)).

Beyond Davenport's assertion that some disclosures were never made or that the figures that were disclosed were erroneous, she does not actually present any facts to explain why she was unable to discover the discrepancies within the statutory period. Indeed, she notes that she first realized the errors occurred through consultation with a forensic accountant (which is, of course, a clear example of due diligence). She simply fails to offer any explanation for why she did not or was otherwise unable to pursue this course within the one-year statutory framework. Accordingly, her claim for statutory damages under TILA must be dismissed. She may amend her FAC if she can in good faith present a factual basis for equitable tolling.

B. RESPA: Fifteenth Claim for Relief

Defendants also move to dismiss Davenport's RESPA claim. Although she does not specifically cite to a section of RESPA,^[2] it seems likely Davenport means to rely on the sections that contemplate disclosures, such as sections 2603 and 2604. Davenport asserts, first, that First Financial failed to provide her with an initial good faith estimate of all settlement charges (a "GFE") and, second, that the series of GFEs it eventually did provide were "misleading and conflicting." (Compl. ¶ 147.)

Section 2604 contemplates "a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement." 12 U.S.C. § 2604. See also 12 U.S.C. § 2603 (contemplating a good faith estimate of charges at or before settlement). An accompanying regulation, 24 C.F.R. 3500.7(c)(2) ("Regulation X"), further details that the lender must provide mortgage applicants with such a "good faith estimate" of "each charge which . . . the borrower will normally pay or incur at or before settlement based upon common practice in the locality of the mortgaged property." The lender must do so within three days of receipt of a loan application. 24 C.F.R. 3500.7(a)(1). Lenders may revise and resubmit a GFE, but must do so under the explicit time and notice restraints. 24 C.F.R. 3500.7(f). Moreover, a violation under the subsection operates as a violation of section 2604. 24 C.F.R. 3500.7(i).

Defendants argue that Davenport cannot state a claim for relief, as the section of RESPA on which she relies does not contemplate a private right of action. Courts in this district have analyzed RESPA's structure and persuasively reasoned that Congress did not intend to create a private right of action for the sections that contemplate disclosure violations. See, e.g., Bloom v. Martin, 865 F. Supp. 1377, 1384 (N.D.Cal.1994). As the district court in Bloom reasoned, "this intent is evident from Congress' decision to provide private remedies for violations of several sections of RESPA." Specifically, sections 2607 and 2609 provide for treble damages and attorneys' fees. By contrast, RESPA sections 2603 and 2604 do not contain any such provisions. As Bloom recognized: "The inclusion of remedies in certain RESPA provisions and their omission in others is indeed strong evidence that Congress did not intend to provide a private remedy for violations of section 2603." Id. (citing Transam. Mortgage Advisors v. Lewis, 444 U.S. 11, 21, 100 S. Ct. 242, 62 L. Ed. 2d 146 (1979) (holding that omission of private remedies in subsequent version of a securities statute "strongly suggest[ed]" that Congress did not intend to create a private right of action)). See also Gusenkov v. Washington Mut. Bank, No. C 09-04747, 2010 WL 2612349, at *5 (N.D.Cal. June 24, 2010); Lima v. Wachovia Mortg. Corp., No. 09-04798, 2010 WL 1223234, at *7 (N.D.Cal. Mar. 25, 2010) (rejecting RESPA claim where plaintiff alleged only that lender failed to provide good faith estimate on grounds that RESPA does not provide a private right of action for this disclosure violation). Accordingly, Davenport's RESPA claim is dismissed with leave to amend. If she intended to rely on another section of the Act, she must make this clear in any amended complaint.

C. Fair Housing Act & Equal Credit Opportunity Act: Twenty-first and Twenty-Second Claims for Relief

Next, defendants move to dismiss Davenport's claim that one or more of the defendants engaged in a practice of "red-lining," or the intentional targeting of a disadvantaged group with an unfavorable loan package, in violation of the Fair Housing Act ("FHA") and/or the Equal Credit Opportunity Act ("ECOA"). Although she does not cite to any particular section of the FHA or the ECOA, the likeliest sections to which her "reverse-redlining" allegations refer are 42 U.S.C. § 3605 and 15 U.S.C. § 1691. Section 3605 of the FHA deems it unlawful "for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin. . . ." 42 U.S.C. § 3605(a). For its part, section 1691(a)(1) provides that a creditor may not lawfully discriminate against any applicant "on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract)." A plaintiff must bring any civil action under the FHA or the ECOA within two years of the alleged violation. 42 U.S.C. § 3613(a)(1)(A); 15 U.S.C. § 1691e(f).

Davenport's claim hones in on the origination and consummation of her loan, which culminated in November of 2006. As the defendants point out, the statutory filing period has passed. In Havens Realty Corporation v. Coleman, the Supreme Court reasoned that "where a plaintiff, pursuant to the FHA, challenges not just one incident of conduct violative of the Act, but an unlawful practice that continues into the limitations period, the complaint is timely . . . ." 455 U.S. 363, 381-82, 102 S. Ct. 1114, 71 L. Ed. 2d 214 (1982). Numerous other courts have acknowledged that such a "continuing violation" theory applies in the ECOA context as well. See, e.g., Ramirez v. GreenPoint Mortg. Funding, Inc., 633 F. Supp. 2d 922, 929-30 (N.D.Cal.2008). Here, however, Davenport has not advocated for or presented facts to suggest any unlawful conduct extended beyond November of 2006. Accordingly, there is no basis for the adoption of a "continuing violation" approach to her claims and her FHA and ECOA claims are dismissed with leave to amend.

The pleadings are lean notwithstanding the statute of limitations problem. In the interest of efficiency (should Davenport choose to amend her FAC), they are addressed here. The concept of "reverse-redlining" refers to a discriminatory practice whereby a lender unlawfully extends credit to a neighborhood or class of people, typically within a specific geographic area, on terms less favorable than would have been extended to persons outside the particular class at issue. See Hafiz v. Greenpoint Mortg. Funding, 652 F. Supp. 2d 1039, 1045 (N.D.Cal.2009); Hargraves v. Cap. City Mortg. Corp., 140 F. Supp. 2d 7, 20 (D.D.C.2000). Courts have only recently begun to treat reverse-redlining claims as cognizable under the FHA and the Ninth Circuit has not had an opportunity to rule on the matter. Where plaintiffs have raised reverse-redlining claims, courts have applied a four-part test to determine whether the claim is sufficiently pleaded. The plaintiff must allege: (1) that she is a member of a protected class; (2) that she applied and was qualified for a loan; (3) that the loan was given on grossly unfavorable terms; and (4) that the lender either intentionally targeted her for unfair loans or currently makes loans on more favorable terms to others. Hafiz, 652 F.Supp.2d at 1046 (citing Munoz v. Int'l Home Cap. Corp., No. 03-01009, 2004 WL 3086907, at *4 (N.D.Cal. May 4, 2004)).

In her FAC, Davenport advances a somewhat circular reverse-redlining theory: she concludes the very practice of "reverse-redlining" automatically "shows defendants intentionally targeted" her on the basis of "age, race, color and/or sex." (Compl. ¶ 186.) Unfortunately, she provides no further explanation. Viewed as a whole, however, the FAC does allege that Davenport was a member of a protected class, that she applied and was qualified for the 2006 loan,^[3] and that its terms were grossly unfavorable. As to the final element—direct targeting or evidence of loans made to others on more favorable terms—her factual presentation is absent. Elsewhere in the FAC, she does note that Citibank originally contacted her with the strong encouragement that she refinance her mortgage in 2006. According to Davenport it was only then that she sought out First Financial. She claims she did so in response to a referral by Citibank. This is as close to an allegation of direct targeting as appears in the FAC. It says nothing about other lenders. The inference that First Financial somehow choreographed Citibank's direct solicitation for its own benefit is, based on these pleadings, a stretch. She has not, then, pleaded "enough facts to state a claim for relief that is plausible on its face," Twombly, 127 S.Ct. at 1965. Even without the statute of limitations problem, Davenport's claim would not survive a motion to dismiss as pleaded.

California Statutory Claims

A. California Civil Code §§ 1572 & 1573: Actual and Constructive Fraud: Seventh & Eighth Claims for Relief

Davenport's seventh and eighth claims focus on the origination of the 2006 loan and argue all defendants' conduct was fraudulent. Among other allegations, she asserts that the First Financial employee, Kruger, significantly overstated her monthly income on a loan application document. As a result, she reasons that she was approved for and ultimately entered into a loan she was unable to afford. Davenport argues the remaining defendants were also somehow involved either in this single incident or in an overarching fraudulent course of conduct. While the behavior of First Financial and its agent Kruger are likely pleaded with sufficient particularity for purposes of Rule 9(b), the allegations against Litton, C-BASS and U.S. Bank are not. Rule 9(b) requires particularized allegations of the circumstances constituting fraud. A plaintiff may not merely lump together multiple defendants. Swartz v. KPMG, LLP, 476 F.3d 756, 765 (9th Cir.2007) (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir.1989)). As currently composed, the pleadings do not inform each defendant separately of its alleged fraudulent conduct. These claims are dismissed as to defendants Litton, C-Bass and U.S. Bank with leave to amend.

B. California Civil Code Sections 2924 & 2923.5: Eleventh Claim for Relief

Defendants also challenge Davenport's claim that the foreclosure process violated two provisions of the California Civil Code with respect to its guidelines for non-judicial foreclosure procedures.^[4] California Civil Code section 2924 requires that a trustee must notify an owner or borrower before a foreclosure sale may proceed. Davenport admits she received a timely notice of default and, later, notice of the trustee's sale but argues that C-BASS failed to send these notices via registered or certified mail. When attacking a non-judicial foreclosure sale, a borrower must overcome a presumption of propriety. Knapp v. Doherty, 123 Cal. App. 4th 76, 86 n. 4, 20 Cal. Rptr. 3d 1 (2004). She may do this by proving an improper procedure occurred and by demonstrating resulting prejudice. Id. Even assuming the failure to certify or register the notice was improper, Davenport has neither shown resulting prejudice nor even alleged it exists.

California Civil Code section 2923.5 provides that a "mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to section 2924 until 30 days after contact is made as required by paragraph two or 30 days after satisfying the due diligence requirements as described in subdivision (g)." Cal. Civ.Code § 2923.5(a)(1). As defendants point out, the section does not actually require that a lender modify a defaulting borrower's loan. Instead, it contemplates contact and some analysis of the borrower's financial situation. Litton (the party who apparently considered and then rejected Davenport's modification request) argues it did contact Davenport and did consider a modification. For her part, Davenport discusses in her FAC how she and her legal counsel discussed modification with Litton. Ultimately, Litton rejected the possibility. Because the facts pleaded actually negate a claim that section 2923.5 was violated, it is dismissed.

Defendants also suggest that Davenport's section 2923.5 claim must be dismissed without leave to amend. For support, they point to a recent opinion from the California Court of Appeals, Mabry v. Superior Court, in which the court extensively reviewed section 2923.5 and persuasively reasoned that the remedy for a violation is postponement of a foreclosure sale. 185 Cal. App. 4th 208, 235, 110 Cal. Rptr. 3d 201 (2010). Where foreclosure sale has already occurred, though, the court noted that a section 2923.5 violation does not affect the title: "There is nothing in section 2923.5 that even hints that noncompliance with the statute would cause any cloud on title after an otherwise properly conducted foreclosure sale." Id. "[U]nder the plain language of section 2923.5, read in conjunction with section 2924g, the only remedy provided is a postponement of the sale before it happens." Id. As the Canterbury property was already sold at foreclosure, it does not appear that any remedy remains under the provision. Accordingly, her section 2923.5 claim is dismissed without leave to amend.

C. California Business & Professions Code section 17200: Tenth Claim for Relief

In her tenth claim for relief, Davenport charges all defendants with violations of the "unfair" prong of California's Unfair Competition Law ("UCL"). Cal. Bus. & Prof.Code § 17200. California's UCL prohibits acts or practices that are: (1) fraudulent; (2) unlawful; or (3) unfair. Id. Each prong of the UCL constitutes a separate and distinct theory of liability. Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir.2009). "A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits." McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457, 49 Cal. Rptr. 3d 227, 240 (2006).^[5]

Davenport focuses solely on loan origination and characterizes that process as "unfair" insofar as defendants: (1) employed "bait and switch tactics"; (2) "ma[de] loans without providing borrowers with sufficient, accurate and understandable information regarding the terms and conditions of the loan"; (3) failed to provide "borrowers with sufficient, accurate and understandable information regarding the nature and extent of the financial risk" involved; and (4) failed to consider Davenport's ability to repay her loan. More narrowly, Davenport highlights the fact that Kruger overstated her income in a loan application form so that she would "qualify" for the loan she received. Assuredly, this practice qualifies as "unfair" (more than this, she has also adequately alleged elsewhere that it is unlawful). As alleged against First Financial, Davenport appears to have adequately pleaded an unfair business practice under the UCL. What she has failed to do, though, is connect the moving defendants to these loan origination practices. Accordingly, her claim must be denied as to the moving parties with leave to amend.

D. The Elder Abuse Act: Twentieth Claim for Relief

Davenport relies on California's Elder Abuse Act for the argument that all defendants committed actionable financial abuse. As a general matter, a plaintiff must demonstrate that a defendant: (1) subjected an elder to statutorily-defined physical abuse, neglect, or financial abuse; and (2) acted with recklessness, malice, oppression, or fraud in the commission of the abuse. See Von Mangolt Hills v. Intensive Air, Inc., No. 06-03300, 2007 WL 521222, at *2 (N.D.Cal. Feb. 15, 2007).

Defendants point out, first, that Davenport was not an "elder" as defined by the statute, at least at the time she consummated her loan. See Cal. Welf. & Inst.Code § 15610.27 (defining elder as a person over the age of sixty-five). While her elder abuse arguments do indeed focus only on loan consummation, it is at least possible that she also references the failed modification attempt or the foreclosure events. By that time, she might have qualified as an elder under the statute. Because Davenport has not alleged these facts, though, she has not stated a "plausible" claim for relief; her elder abuse cause of action is dismissed with leave to amend.

E. California Civil Code Section 1691 Rescission: Sixteenth Claim for Relief

Defendants also move to dismiss Davenport's sixteenth claim for relief to rescind her loan under state law. Davenport relies on California Civil Code sections 1989(b)(1), (5) and (6) as well as 1691. Section 1989(b), respectively, allows a party to a contract to rescind where: (1) consent was obtained by mistake, through duress, menace, fraud, or undue influence exercised by or with the connivance of the adverse party; (5) where the contract is "unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault"; or (6) where the public interest will be prejudiced by permitting the contract to stand. Section 1691 governs rescission procedure. It requires that a party give notice of his or her intent to rescind and "[r]estore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise." Cal. Civ.Code § 1691. The statute provides that when either notice of rescission has not been provided or restoration made, "the service of a pleading in an action or proceeding that seeks relief based on rescission shall be deemed to be such notice or offer or both." Cal. Civ.Code § 1691.

To support her rescission claim, Davenport contends First Financial's alleged fraud provides a basis for rescission. In the FAC, Davenport states that she is willing to return the subject property but does not otherwise offer to return the outstanding portion of her loan. As an initial matter, it is not clear that Davenport can substitute the property for the "thing of value" contemplated by the contract (when she refinanced her original loan, Davenport received cash). See, e.g., Garavito v. GE Money Bank, No. 08-2215, 2010 WL 744284, at *4 (S.D.Cal. Mar. 2, 2010) (rejecting plaintiff's offer to quitclaim property to lender as a valid tender offer). More importantly, the papers indicate that the property has already been sold at foreclosure sale to U.S. Bank. Accordingly, her "offer" to return the property cannot realistically count as a tender offer (nor is it remotely consistent with her plea for relief: to rescind the loan transaction, undo the foreclosure sale, and remain in her home).

While this Court has repeatedly recognized that a borrower need not allege ability to tender in support of a TILA rescission claim to survive a motion to dismiss, the rationale was tethered to the Ninth Circuit's recognition that district courts have discretion to alter the rescission procedures contemplated in that federal statute. Yamamoto v. Bank of New York, 329 F.3d 1167, 1171 (9th Cir.2003). Accordingly, this Court has held that, while a borrower must ultimately demonstrate ability to tender to prove a claim for TILA rescission on the merits, he or she need not allege this ability at the pleading stage. See, e.g., Botelho v. U.S. Bank, 692 F. Supp. 2d 1174, 1180 (N.D.Cal.2010). It is not at all clear that this same leeway is appropriate in the context of rescission under California Civil Code section 1691. In contrast, courts in California continually treat tender or at least the allegation of ability to do so as a necessary part of a valid claim for rescission of a contract. See, e.g., Periguerra v. Meridas Capital, Inc., No. 09-4748, 2010 WL 395932, at *3 (N.D.Cal. Feb. 1, 2010) ("Plaintiffs must allege that they are willing to tender the loan proceeds to the lender. This is a basic tenet of California contract law."); Ritchie v. Cmty. Lending Corp., No. 09-02484, 2009 WL 2581414, at *3 (C.D.Cal. Aug. 12, 2009) ("[I]t is a `basic rule' that `[a]n offer of performance is of no effect if the person making it is not able and willing to perform according to the offer.'") (quoting Cal. Civ.Code § 1495 (2003)). The rationale proceeds from the language of the statute, which requires that a party "[r]estore to the other party everything of value which he has received from him under the contract or offer to restore the same . . . ." Cal. Civ.Code § 1691 (emphasis added). Accordingly, it seems clear that Davenport must at least allege that she has offered to tender to support a claim for equitable rescission under section 1691. Davenport has not, and she has therefore not adequately pleaded a claim for state law rescission. This claim is dismissed with leave to amend.

California Common Law Claims

A. Declaratory Relief: First Claim for Relief

Although Davenport frames the "declaratory judgment" section of her FAC as a cause of action, it is correctly understood as a form of relief. Her actual claim is based on an ultimately mistaken theory. She contends that the defendants lacked the power to sell the Canterbury property pursuant to the deed of trust because no defendant has physical possession of the promissory note. As courts have repeatedly emphasized, such a theory is "unsupported and incorrect." Hafiz v. Greenpoint Mortg. Funding, 652 F. Supp. 2d 1039, 1043 (N.D.Cal.2009). Davenport's FAC refers to each of the defendants in their capacities as lenders, servicers and trustees. She attaches to her FAC a copy of the refinancing agreement, the deed of trust and related documentation. She does not dispute that the parties are who they claim to be but insists that they must produce a physical copy of the original note before exercising their contractual rights.

"California law does not require possession of the note as a precondition to non-judicial foreclosure under a deed of trust . . . . Pursuant to section 2924(a)(1) of the California Civil Code, the trustee of a Deed of Trust has the right to initiate the foreclosure process. Production of the original note is not required to proceed with a non-judicial foreclosure." Id. (quoting Pagtalunan v. Reunion Mortg. Inc., No. 09-00162, 2009 WL 961995, at *1 (N.D.Cal. Apr. 8, 2009)). Moreover, the trustee has the power and the duty to initiate foreclosure proceedings on the property upon the trustor's default. Lomboy v. SCME Mortg. Bankers, No. 09-1160, 2009 WL 1457738, at *5 (N.D.Cal. May 26, 2009). This is what happened here. C-BASS, as the named trustee in the deed of trust, initiated the foreclosure proceedings. Accordingly, the facts plaintiff alleges to support her declaratory relief theory could not possibly give rise to a cognizable legal claim. Insofar as she bases her twenty-third, twenty-fourth, twenty-fifth and twenty-sixth claims (to set-aside the foreclosure sale, for a cancellation of the deed of trust, for permanent injunctive relief and a request to quiet title) on the same "note holder" theory, these too are dismissed without leave to amend against the defendants.

B. Accounting: Second Claim for Relief

"A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting." Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179, 92 Cal. Rptr. 3d 696 (2009). She bases her argument that defendants owe her an uncertain sum of money on her right to rescind under either TILA or California Civil Code section 1691. As explained above, however, even if Davenport were able to prove that she did not receive the requisite TILA disclosures, the proper time frame under which she might rescind has passed. Moreover, she has not adequately pleaded a claim for rescission under California statutory law. Her accounting claim must therefore be dismissed with leave to amend. Should she choose to amend, she is reminded that the TILA rescission claim was dismissed without leave to amend.

C. Civil Conspiracy: Third Claim for Relief

A conspiracy is not an independent cause of action, but is instead "a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510-11, 28 Cal. Rptr. 2d 475, 869 P.2d 454 (1994). Liability for civil conspiracy generally requires three elements: (1) formation of a conspiracy (an agreement to commit wrongful acts); (2) operation of a conspiracy (commission of the wrongful acts); and (3) damage resulting from operation of a conspiracy. Id. at 511, 28 Cal. Rptr. 2d 475, 869 P.2d 454. A civil conspiracy is therefore activated by the commission of an underlying wrongful act. Id.

Davenport theorizes that all defendants "knowingly and willfully conspired" to conceal the fact that her loan would be securitized and, more broadly, to provide plaintiff with a loan she could not afford. She does not provide sufficient facts to satisfy even the first element of civil conspiracy. She concludes the defendants agreed to hoodwink her with an unconscionable loan and, for support, points out that Litton collected payments each month, C-BASS mailed a notice of default, and U.S. Bank purchased her home at the foreclosure sale. As pleaded, it is simply not clear how any of these actions are unlawful, even if they may appear somewhat coordinated. The observation of "parallel conduct," the Supreme Court has instructed, combined with "the bare assertion of conspiracy" will not suffice. Twombly, 550 U.S. at 556-57, 127 S. Ct. 1955. "Without more, parallel conduct does not suggest conspiracy, and a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality." Id. Davenport has not presented a claim for relief and the civil conspiracy cause of action is dismissed with leave to amend.

D. Aiding and Abetting: Fourth Claim for Relief

As against all defendants save First Financial, Davenport imputes liability for the original lender's alleged "fraudulent business practices" including, for example, Kruger's overstatement of Davenport's monthly income on her loan application. (Compl. ¶ 72.) To hold them secondarily liable, she argues the remaining defendants "aided and abetted" First Financial. In California, a party "aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." Berryman v. Merit Property Mgmt., Inc., 152 Cal. App. 4th 1544, 1559, 62 Cal. Rptr. 3d 177 (2009). By contrast, "[m]ere knowledge that a tort is being committed and the failure to prevent it does not constitute aiding and abetting." Austin B. v. Escondido Union School Dist., 149 Cal. App. 4th 860, 879, 57 Cal. Rptr. 3d 454 (2007).

Davenport has not presented any facts to support her theory that, even assuming defendants could have known about Kruger's acts, they substantially assisted or encouraged Kruger. Again, she merely posits a legal conclusion. This claim, too, is dismissed with leave to amend.

E. Theories of Agency, Vicarious Liability, Negligent Supervision: Fifth & Sixth Claims for Relief

In her fifth and sixth claim for relief (respectively dubbed "negligent supervision" and "agency"), Davenport essentially argues that Litton, U.S. Bank and C-BASS should be held vicariously liable for First Financial's alleged torts or at least liable for "negligent" hiring and supervision of that entity. As to the argument that First Financial was an agent of the other defendants, Davenport concludes but does not explain exactly how or why this Court should find that First Financial was not its own, independent entity. In California, "[t]he law indulges no presumption that an agency exists but instead presumes that a person is acting for himself and not as agent for another." Walsh v. Am. Trust, 7 Cal. App. 2d 654, 659, 47 P.2d 323 (1935).

"An agency is either actual or ostensible." Cal. Civ.Code § 2298. Agency is actual where the "agent is really employed by the principal." Cal. Civ.Code § 2299. The Ninth Circuit has instructed that the key factor to consider in analyzing whether an entity is an employer is "the right to control and direct the activities of the person rendering service, or the manner and method in which the work is performed." Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 682-83 (9th Cir.2009) (quoting Serv. Employees Int'l Union v. County of L.A., 225 Cal. App. 3d 761, 786, 275 Cal. Rptr. 508 (1990)). "A finding of the right to control employment requires . . . a comprehensive and immediate level of `day-to-day' authority over employment decisions." Id. (quoting Vernon v. State, 116 Cal. App. 4th 114, 131, 10 Cal. Rptr. 3d 121 (2004)). Davenport concludes that the other defendants (presumably, all of them) employed First Financial but presents no facts or evidence in support.

Where a "principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess" authority, the agency relationship is said to be "ostensible." Cal. Civ. Code § 2299. Davenport's agency theory is tethered to the notion that the defendants' interests in consummating the loan were aligned and the parties benefitted financially from the contract. This is not an argument that can impute an agency relationship. As to her negligent supervision claim, the legal theory arises where an employer negligently "hir[es] or retain[s] an employee who is incompetent or unfit." Phillips v. TLC Plumbing, Inc., 172 Cal. App. 4th 1133, 1139, 91 Cal. Rptr. 3d 864 (1997). Again, without any facts to support the notion that First Financial was an employee of one or all defendants, this claim cannot survive a motion to dismiss. The fifth and sixth claims for relief are, accordingly, dismissed with leave to amend.

F. Breach of Fiduciary Duty: Ninth Claim for Relief

Davenport asserts that First Financial breached a fiduciary duty it owed her; she further contends that the remaining defendants may be held vicariously liable for this breach. Defendants correctly point out that no fiduciary duty ever arose. "[A]s 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. Sav. & Loan Ass'n, 231 Cal. App. 3d 1089, 1098, 283 Cal. Rptr. 53 (1991). "A commercial lender is entitled to pursue its own economic interests in a loan transaction. This right is inconsistent with the obligations of a fiduciary which require that the fiduciary knowingly agree to subordinate its interests to act on behalf or for the benefit of another." Id. at 1093 n. 1, 283 Cal. Rptr. 53. Davenport has not shown the existence of a fiduciary relationship or presented facts to suggest that First Financial acted outside the ordinary scope of a commercial lender. Accordingly, she cannot possibly impute vicarious liability to the moving defendants and this claim is dismissed with leave to amend.

G. Due Process: Twelfth Claim for Relief

In her twelfth claim for relief, Davenport argues that defendants failed to serve her properly with notice of a trustee's sale and of foreclosure by registered or certified mail. As discussed in the California Civil Code sections 2924 and 2923.5 segment, Davenport does admit that she received both notices in the mail and in a timely fashion. It is not clear how a private bank's failure to certify its mail denies her due process of law in any reasonable sense of the concept.

She also argues that, "Defendants unlawfully foreclosed on the Subject Property, in violation of Plaintiff's Right to Due Process and that of the HAMP program." (Compl. ¶ 127.) "HAMP" refers to a federal Homeowner Affordable Modification Program. Apparently, the voluntary program establishes guidelines that lenders should consider when reviewing a modification request. It seems that her argument works something like this: because Litton apparently received federal money for its agreement to participate in HAMP, it was required to follow the program's guidelines on loan modifications. Again, however, her reliance on the due process clause of the Fourteenth Amendment is misplaced. Even assuming Litton stepped outside of these federal guidelines, her right to due process is not implicated. This claim is dismissed without leave to amend.

H. Intentional or Negligent Infliction of Emotional Distress: Eighteenth & Nineteenth Claims for Relief

To present a claim for intentional infliction of emotional distress, a plaintiff must plead: (1) defendant's extreme and outrageous conduct; (2) that defendant intended to cause, or recklessly disregarded the probability of causing, emotional distress; (3) that plaintiff suffered severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by defendant's outrageous conduct. Potter v. Firestone Tire & Rubber Co., 6 Cal. 4th 965, 1001, 25 Cal. Rptr. 2d 550, 863 P.2d 795 (1993). Outrageous conduct must be "so extreme as to exceed all bounds of that usually tolerated in a civilized community." Id. at 1001, 25 Cal. Rptr. 2d 550, 863 P.2d 795. To succeed on her claim for negligent infliction of emotional distress, Davenport must show serious emotional distress actually and proximately caused by wrongful conduct on the part of a defendant who should have foreseen that the conduct would cause such distress. Cole v. Fair Oaks Fire Protection Dist., 43 Cal. 3d 148, 155, 233 Cal. Rptr. 308, 729 P.2d 743 (1987).

Common sense dictates that home foreclosure is a terrible event and likely to be fraught with unique emotions and angst. Where a lending party in good faith asserts its right to foreclose according to contract, however, its conduct falls shy of "outrageous," however wrenching the effects on the borrower. Here, Davenport concludes but does not adequately present evidence of Litton, C-BASS or U.S. Bank's bad faith in the foreclosure process. The alleged certified mail failure and the refusal, after meeting with her and her legal representative, to modify her loan also do not, by themselves, qualify as outrageous or even indicative of bad faith. Even under the auspices of her negligence theory, she has not connected the mail failures to her distress or, for that matter, suggested that any reasonable lender would foresee such harm. Both claims are therefore denied with leave to amend.

I. Breach of the Implied Covenant of Good Faith and Fair Dealing: Thirteenth Claim for Relief

Davenport grounds her breach of the implied covenant of good faith and fair dealing claim in contract, not in tort law. Section 205 of the Restatement of Contracts states that, "[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." Restatement (Second) of Contracts § 205 (2009). "[T]he implied covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose." Carma Dev., Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 342, 373, 6 Cal. Rptr. 2d 467, 826 P.2d 710 (1992).

With regard to the defendants whose involvement centers on the loan foreclosure—Litton, C-Bass and U.S. Bank—the loan agreements outlined the possibility of foreclosure should Davenport fail to meet her agreed-upon payment obligations. She does not deny she defaulted and does not present any facts to demonstrate exactly how these defendants sought to obtain more from her than that to which they were contractually entitled. As a general matter, a court should not "conclude that a foreclosure conducted in accordance with the terms of a deed of trust constitutes a breach of the implied covenant of good faith and fair dealing." Id. at 374-76, 6 Cal. Rptr. 2d 467, 826 P.2d 710. The covenant does not "impose any affirmative duty of moderation in the enforcement of legal rights." Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 479-80, 261 Cal. Rptr. 735 (1989). The mere fact that the remaining defendants foreclosed on the Canterbury property does not without more constitute a breach of the covenant of good faith and fair dealing. This claim is dismissed as alleged against the moving defendants with leave to amend.

J. Unjust Enrichment: Seventeenth Claim for Relief

Davenport's seventeenth claim is one for "unjust enrichment." Courts in this state and district diverge on whether unjust enrichment functions as an independent claim or is instead an effect that must be tethered to a distinct legal theory to warrant relief. Some courts have read a plaintiff's "claim" for unjust enrichment as a claim for relief. See, e.g., Ghirardo v. Antonioli, 14 Cal. 4th 39, 50, 57 Cal. Rptr. 2d 687, 924 P.2d 996 (1996) (recognizing that a plaintiff may advance a stand-alone claim for unjust enrichment, particularly where he or she seeks restitution and other remedies are inadequate). These courts focus on whether the facts demonstrate a defendant's unjust receipt of some benefit. Other courts cast unjust enrichment as an effect: it is simply the thing that needs remedying. See McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457, 1489, 49 Cal. Rptr. 3d 227 (2006); Melchior v. New Line Prod., Inc., 106 Cal. App. 4th 779, 793, 131 Cal. Rptr. 2d 347 (2003) ("The phrase `unjust enrichment' does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.").

Under both views, the effect of unjust enrichment is remedied with some form of restitution. See, e.g., Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 684 (9th Cir.2009) ("Unjust enrichment is commonly understood as a theory upon which the remedy of restitution may be granted."); Restatement of Restitution § 1 (1936) ("A person who has been unjustly enriched at the expense of another is required to make restitution to the other."). A plaintiff advances a basis for obtaining restitution if he or she demonstrates defendant's receipt and unjust retention of a benefit. See Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726, 91 Cal. Rptr. 2d 881 (2000); First Nationwide Savings v. Perry, 11 Cal. App. 4th 1657, 1662-63, 15 Cal. Rptr. 2d 173 (1992). "The fact that one person benefits another is not, by itself, sufficient to require restitution." McBride v. Boughton, 123 Cal. App. 4th 379, 389, 20 Cal. Rptr. 3d 115 (2004) (quoting First Nationwide Savings v. Perry, 11 Cal. App. 4th 1657, 1662, 15 Cal. Rptr. 2d 173 (1992)). Instead, "[t]he person receiving the benefit is required to make restitution only if the circumstances are such that, as between the two individuals, it is unjust for the person to retain it." Id. (internal quotation marks and citations omitted).

The benefit of the narrower view is that it effectively delineates precisely what unjust enrichment means and how it works. There are several factual scenarios where a theory of unjust enrichment has historically supported restitution as a remedy. A plaintiff may, for example, advance a claim as an alternative to breach of contract when the parties have a contract that was procured by fraud or is for some reason unenforceable. See McBride v. Boughton, 123 Cal. App. 4th 379, 388, 20 Cal. Rptr. 3d 115 (2004). Or, where the plaintiff cannot assert title or right to possession of particular property, but nevertheless can show just grounds for recovering money to pay for some benefit the defendant received from him, "the plaintiff has a right to restitution at law through an action derived from the common-law writ of assumpsit" (this method implies a contract at law, or a quasi-contract). See Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213, 122 S. Ct. 708, 151 L. Ed. 2d 635 (2002) ("Such claims were [historically] viewed essentially as actions at law for breach of contract (whether the contract was actual or implied)."). Finally, a plaintiff may seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property "identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession." Id.

Davenport's "unjust enrichment" theory does not fit into any of these categories. She argues that because she had a valid right to rescind her loan under either TILA or California Civil Code section 1691 (in light or the alleged TILA violations and fraudulent income statement), all defendants improperly collected her monthly mortgage payments from the loan's inception. These mortgage payments, she insists, "unjustly enriched" defendants. Her theory might work if she validly exercised her rescission right under either statute and defendants failed to honor it and continued to collect payments from her. This did not happen here, though, and she has not alleged that any the mortgage payments constituted an unjust benefit. This claim must therefore be dismissed with leave to amend.

V. CONCLUSION

The defendants' motion to dismiss is resolved accordingly:

1. The plaintiff's first, twenty-third, twenty-fourth, twenty-fifth and twenty-sixth claims for relief (declaratory judgment, set-aside sale, cancel trustee's deed, injunctive relief, and quiet title) are each based on an incorrect legal theory. A trustee need not demonstrate physical possession of a promissory note to exercise its contractual right to foreclose on property. These claims are dismissed without leave to amend.

2. The fourteenth claim for relief (TILA) is time-barred. Her claim for rescission is dismissed without leave to amend and her claim for statutory damages is dismissed with leave to amend. Should she choose to amend, she must at a minimum allege facts in support of equitable tolling.

3. The fifteenth claim for relief (RESPA) is dismissed with leave to amend in the event that Davenport grounds her claim on sections of the statute which trigger a private right of action.

4. Claims twenty through twenty-two (Elder Abuse, Fair Housing Act, and Equal Credit Opportunity Act) are dismissed with leave to amend.

5. Claim eleven (Cal. Civ.Code § 2923.5) is dismissed with leave to amend.

6. The tenth claim for relief (UCL) is dismissed with leave to amend.

7. The thirteenth claim for relief (contractual breach of the implied covenant of good faith and fair dealing) is dismissed with leave to amend.

8. Claims seven and eight (fraud and constructive fraud) are dismissed with leave to amend.

9. Claim sixteen (rescission pursuant to Cal. Civ.Code § 1691) is dismissed with leave to amend.

10. The second claim (accounting) is dismissed with leave to amend.

11. Plaintiff's common law claims for civil conspiracy (third claim), aiding and abetting (fourth claim), negligent supervision (fifth claim), agency (sixth claim), unjust enrichment (seventeenth claim), intentional infliction of emotional distress (eighteenth claim), negligent infliction of emotional distress (nineteenth claim), and lack of due process (twelfth claim) are dismissed with leave to amend.

If Davenport wishes to amend the FAC, she must do so on or before September 2, 2010. A Case Management Conference shall be held on October 14, 2010 at 10:00 a.m. The parties shall submit a Joint Case Management Statement one week prior to the Conference.

IT IS SO ORDERED.

NOTES

[1] Defendants point out that Davenport seems to contradict herself with regard to the required disclosures. In paragraph thirty-six of the FAC, for example, she writes, "First Financial provided Plaintiff a different TILA statement than what was originally provided to Plaintiff and overstated the finance charge by $313.04. Moreover, First Financial failed to provide Plaintiff the TILA required Right to Cancel, and final Hud-1 Statement." Defendants suggest she has therefore both claimed to have received TILA disclosures (albeit, inaccurate or imperfect ones) and entirely denied having received them. This is a belabored and too-exacting reading of the FAC. A fair reading suggests she means to assert that she did not receive all required disclosures and, as to the ones she did receive, she suspects they were not adequate.

[2] RESPA requires mortgage lenders to disclose the costs associated with real estate closings. 12 U.S.C. § 2601 (1994). The statute aims to ensure that prospective home owners are informed and able to sidestep "unnecessarily high settlement charges caused by certain abusive practices . . . ." Id.

[3] Technically, one underlying theme of Davenport's FAC is that she was not actually qualified to take out the subject loan. This inconsistency with the pleading requirement of a FHA claim, however, is not dispositive. She seems to argue that members of a protected class were intentionally targeted and hoodwinked into agreeing to loans they could not afford. Such an allegation falls within the spirit of the reverse-redlining concept.

[4] Davenport grounds her eleventh claim for relief under section 2923.5. Elsewhere in the FAC, she discusses an alleged 2924 violation. Even though she does not include the provision anywhere in the caption, the Order assumes that she wished to raise the issue and so discusses it here.

[5] Historically, California courts subjected a plaintiff's UCL unfairness claims to a balancing test. Under that test, determining whether a business practice is unfair "involves an examination of [that practice's] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, a court weighs the utility of the defendant's conduct against the gravity of the harm to the alleged victim." McKell, 49 Cal.Rptr.3d at 240 (alterations in original and citations omitted). In Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Company, the California Supreme Court rejected that test and instead held that in a claim brought by a competitor, "any finding of unfairness . . . [must] be tethered to some legislatively declared policy." 20 Cal. 4th 163, 185, 83 Cal. Rptr. 2d 548, 973 P.2d 527 (1999). Yet, because Cel-Tech expressly limited its holding to competitor lawsuits, the appropriate test to determine whether a practice is "unfair" in a consumer case under California law remains uncertain. See Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 735 (9th Cir.2007) ("California's unfair competition law, as it applies to consumer suits, is currently in flux . . . ."). Compare Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal. App. 4th 700, 720, 113 Cal. Rptr. 2d 399 n. 23 (2001) ("[W]e are not to read Cel-Tech as suggesting that such a restrictive definition of `unfair' should be applied in the case of an alleged consumer injury. . . .") with Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 940, 134 Cal. Rptr. 2d 101 (2003) (requiring, under Cel-Tech, that any UCL claim must be tethered to a legislatively declared policy). The Ninth Circuit has observed that these two options—to apply Cel-Tech directly to consumer cases and require that the unfairness be tied to a "legislatively declared" policy as in Scripps Clinic, or to adhere to the former balancing test as stated in cases such as Motors, Inc.—are not mutually exclusive. Lozano, 504 F.3d at 736.