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Sluka v. Rushmore Loan Management Services, LLC

United States District Court, D. Hawaii

October 26, 2016





         On June 29, 2016, Plaintiff Margot Maria Sluka (“Plaintiff”) filed a Complaint for Declaratory Relief against Defendant Rushmore Loan Management Services, LLC (“Defendant”), seeking an order declaring that Plaintiff's mortgage loan is rescinded, and requiring Defendant to return all payments made on the mortgage loan, cease further collection actions including foreclosure, remove all reports of Plaintiff's debt obligation on the mortgage from collection agencies, and return the original promissory note.

         Currently before the court are (1) Defendant's Motion to Dismiss With Prejudice Plaintiff's Complaint, or Alternatively, For a More Definite Statement (“Motion to Dismiss”), and (2) Plaintiff's Request for Leave to Amend Complaint. For the reasons discussed below, the court GRANTS the Motion to Dismiss, and GRANTS Plaintiff's Request for Leave to Amend Complaint.


         As alleged in the Complaint, on March 23, 2007, Plaintiff executed a promissory note for $224, 000 in favor of Taylor, Bean & Whitaker Mortgage (“TBWM”), which is secured by a mortgage on her home located at 75-5873 Walua Road #B-218, Kailua-Kona, Hawaii (the “subject property”). ECF No. 1, Compl. at 2. Sometime thereafter, Plaintiff allegedly learned that the “mortgage loan was an undisclosed securities transaction” in which TBWM purchased the note and mortgage for resale into a real estate mortgage backed security trust offered by Federal Home Loan Mortgage Corporation (“Freddie Mac”). Id. Upon learning of this alleged “fraud, ” Plaintiff requested the return of certain documents, “revoked all signatures on the Mortgage document, ” and in December 2009, stopped making payments on the mortgage loan. Id. at 3.

         On June 3, 2016, Plaintiff sent Defendant notice of her intent to rescind the mortgage loan immediately, requested the return of all monies Plaintiff paid on the loan and tendered the subject property, pursuant to 15 U.S.C. § 1635. ECF No. 1-1, Pl.'s Ex. 1. Defendant allegedly failed to “return[] all monies [Plaintiff] paid to [the mortgage loan] account . . . and take[] possession of the property within . . . 20 days from receipt [of the notice of intent to rescind] as required by [15 U.S.C. ] § 1635(b).” ECF No. 1-3, Pl.'s Ex. 3.

         On June 29, 2016, Plaintiff filed her Complaint for Declaratory Relief. ECF No. 1. Defendant filed the instant Motion to Dismiss on September 7, 2016. ECF No. 15. Plaintiff filed a Response on October 3, 2016, [1] ECF No. 20, and on October 11, 2016, Defendant filed a Reply, ECF No. 22. On October 12, 2016, Plaintiff filed a Motion for Continuance to Amend Complaint. ECF No. 23. Defendant filed a response in opposition to a continuance on October 13, 2016, ECF No. 25, and Plaintiff filed a reply to that opposition on October 21, 2016, ECF No. 31. On October 17, 2016, the court denied a continuance, but indicated that it would address Plaintiff's request for leave to file an amended complaint at the hearing on Defendant's Motion to Dismiss. ECF No. 26. These matters were heard on October 24, 2016.


         A. Rule 12(b)(6)

         Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for “failure to state a claim upon which relief can be granted[.]” “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Weber v. Dep't of Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008). This tenet -- that the court must accept as true all of the allegations contained in the complaint -- “is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. Accordingly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (“[A]llegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.”).

         Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). Factual allegations that only permit the court to infer “the mere possibility of misconduct” do not show that the pleader is entitled to relief as required by Rule 8. Iqbal, 556 U.S. at 679.

         B. Pro Se Pleadings

         Because Plaintiff is proceeding pro se, the court liberally construes her Complaint. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (per curiam). The court also recognizes that “[u]nless it is absolutely clear that no amendment can cure the defect . . . a pro se litigant is entitled to notice of the complaint's deficiencies and an opportunity to amend prior to dismissal of the action.” Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995); see also Crowley v. Bannister, 734 F.3d 967, 977-78 (9th Cir. 2013). A court may, however, deny leave to amend where further amendment would be futile. See, e.g., Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) ...

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