Sitthidet et al v. First Horizon Home Loans et al, No. 2:2012cv00469 - Document 29 (W.D. Wash. 2012)
Court Description: ORDER granting dft First Horizon/First Tennessee's 6 Motion to Dismiss; all pending motions are stricken and the matter is closed by Judge Marsha J. Pechman.(RS) Modified on 6/20/2012/cc pltfs (RS).
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Sitthidet et al v. First Horizon Home Loans et al Doc. 29 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 KHAMSING SITTHIDET AND VIENGXAY SITTHIDET, CASE NO. 12-CV-469-MJP 11 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS Plaintiffs, 12 v. 13 14 FIRST HORIZON / METLIFE HOME LOANS / FIRST TENNESSEE BANK (FTB), et al., 15 Defendants. 16 17 This matter comes before the Court on Defendant First Horizon / First Tennessee (FBT)’s 18 (“First Horizon”) motion to dismiss. (Dkt. No. 6.) Having reviewed the motion, Plaintiff’s 19 response (Dkt. No. 9), Defendant’s reply (Dkt. No. 13), and all the related filings, the Court 20 GRANTS Defendant’s motion to dismiss. 21 Background 22 Plaintiffs, Viengxay and Khamsing Sitthidet, commenced this action against First 23 Horizon and several other parties alleging seven causes of action: (1) violations of the Truth in 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 1 Dockets.Justia.com 1 Lending Act (“TILA”), 15 U.S.C. § 1601; (2) violations of the Real Estate Settlement Procedures 2 Act (“RESPA”), 12 U.S.C. § 2601, et seq.; (3) violations of the Fair Credit Reporting Act 3 (“FCRA”); (4) violations of the Fair Debt Collection Practices Act (“FDCPA”), (5) violations of 4 state law under RCW 19.16., et seq.; (6) violations of the Consumer Protection Act (“CPA”); and 5 (7) fraud. 6 7 A. Factual Allegations Related to Viengxay Sitthidet’s Loan In October 2001, Viengxay Sitthidet (“Viengxay”) obtained a loan from First Horizon in 8 order to refinance his home at 1814 West Henry Street, Pasco, Washington. (Dkt. No. 1 at 7.) 9 (Id.) Viengxay alleges two improprieties with the disclosure of the loan terms. First, Viengxay 10 expected a fixed interest rate of 5% or 5.5%, but the Defendant “never used any interest rate as 11 disclosed to him,” and instead used a rate of 8.1% or higher. (Id.) Second, because of the 12 increased interest rate, Viengxay’s monthly payment was $76.06 greater than the payment 13 estimate provided by First Horizon on the TILA disclosure. (Id. at 8.) 14 By January of 2008, Viengxay states that he “knew something was wrong with his loan” 15 because the principle was decreasing at a slower than expected rate. (Id.) To rid himself of the 16 loan, he paid it off using his 401k. (Id.) In 2009, he “learned that he was ripped off.” (Id.) To 17 gain more information about his loan, in May 2011, Viengxay sent a letter to First Horizon 18 demanding they reproduce his original loan documents. (Dkt. No. 1 at 13.) First Horizon did not 19 respond to this request. Viengxay then commenced this action with his brother, Khamsing, in 20 2012. (Id.) 21 22 B. Factual Allegations Related to Khamsing Sitthidet’s Loan In November 2003, Khamsing Sitthidet (“Khamsing”) acquired a loan from Flagstar 23 Bank for a piece of real property located at 12405 141st Place SE, Renton, Washington. (Dkt. No. 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 2 1 1 at 17.) He alleges there were four defects with the loan disclosures: (1) the documents did not 2 use Khamsing’s legal name; (2) the lender did not pay for the appraisal fee; (3) the loan was 3 understated; and (4) the lender failed to deliver a Notice of a Consumer’s Right to Rescind as 4 required by TILA. (Id.) 5 In 2005, Flagstar transferred the loan to First Horizon. (Dkt. No. 1 at 17) Khamsing 6 alleges servicing problems and fraudulent escrow practices began at this time. (Id.) Due to these 7 concerns, Khamsing notified First Horizon of his intent to rescind his loan in September 2010 8 and then again on October 4, 2010 through service of a Notice of Loan Rescission on First 9 Horizon’s attorney. (Id. at 18.) First Horizon did not rescind his loan, and instead sold the loan to 10 another servicer. (Id.) Khamsing charges that this action further violated TILA. He also contends 11 that First Horizon violated RCW 19.16, et seq., FDCPA, and TILA through the use of threats to 12 enforce a wrongful debt. (Id.) 13 Khamsing has filed two other actions against First Horizon. First, on April 23, 2010, he 14 filed a proceeding in the U.S. District Court for the Western District of Washington. The action 15 was dismissed for a lack of subject matter jurisdiction. Second, on July 9, 2010, Khamsing filed 16 suit in King County Superior Court, which Khamsing voluntarily dismissed. Khamsing and his 17 brother Viengxay then filed this action in April 2012. 18 Analysis 19 A. Standard 20 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 21 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 22 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). This entails 23 “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 3 1 will not do.” Twombly, 550 U.S. at 570. Instead, “a claim has facial plausibility when the 2 plaintiff pleads factual content that allows the court to draw the reasonable inference that the 3 defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. 4 Plaintiffs contend in their reply that the standard is “no set of facts.” (Dkt. No. 9 at 10.) 5 This law, however, is no longer valid. Iqbal, 556 U.S. at 670. 6 7 B. TILA Plaintiffs’ claims for rescission and damages under TILA were filed too late and must be 8 dismissed. 9 When a borrower alleges improper notice of a right to rescission under TILA, the right to 10 rescission expires three years after the start of the loan transaction or the sale of the property, 11 whichever occurs first. 15 U.S.C. § 1635(f). In Beach v. Ocwen Federal Bank, the Supreme 12 Court found that “section 1635(f) completely extinguishes the right of rescission at the end of the 13 3 year period.” 523 U.S. 410, 412 (1998). Thus, a party has no ability to seek an exception to 14 the time limit to extend that period. See Miguel v. Country Funding Corp., 309 F.3d 1161, 116415 65 (9th Cir. 2002). 16 A claim for monetary damages under TILA may be brought within one year of the 17 occurrence of the violation. 15 U.S.C. §1640(e). Generally, the statute of limitations begins 18 accruing at the start of the transaction. King v. California, 748 F.2d 910, 915 (9th Cir. 1986). 19 Yet, in appropriate circumstances, the doctrine of equitable tolling may “suspend the limitations 20 period until the borrower discovers or had reasonable opportunity to discover the fraud or 21 nondisclosures that form the basis of the TILA action.” Id. at 914–15. 22 Plaintiffs’ claims for rescission under TILA were filed too late. Viengxay obtained his 23 loan in 2001 and did not file suit until eleven years later in 2012. (Dkt. No. 1 at 7). Khamsing 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 4 1 obtained his loan in 2003 and did not file suit until nine years later. (Dkt. No. 1 at 18.) Both 2 claims were filed after the three year statutory period, ending the right to rescission. 3 In addition, Plaintiffs’ claims for damages under TILA were filed too late. Viengxay 4 asserts he knew something was wrong with his loan by January 2008. (Dkt. No. 1 at 8.) A year 5 later, in 2009, he was fully aware of the problems associated with his loan. (Id.) He did not file 6 suit until at least three years later. Similarly, Khamsing was aware of a problem with his loan at 7 least two years before this action as evidenced by his initial suit against First Horizon in 2010. 8 (Dkt. No. 6 at 6.) Even if the court considers equitable tolling applies, both claims were still filed 9 more than one year after Plaintiffs discovered the loan improprieties making Plaintiffs’ claims 10 time-barred. 11 The Court GRANTS Defendant’s motion and DISMISSES Plaintiffs’ TILA claims in full 12 with prejudice. 13 C. RESPA 14 Plaintiffs’ also filed their claims under RESPA too late. 15 A RESPA claim stemming from improper disclosure of loan terms under section 2605(a) 16 must be brought within three years of the start of the loan. 12 U.S.C. § 2614. All other claims, 17 which are laid out in sections 2605, 2607, 2608, are subject to a one-year statute of limitations. 18 Id. Similar to TILA, in certain circumstances, the one-year limitation may be subject to equitable 19 tolling. Guketlov v. Homekey Mortg., LLC, C09-1265JLR, 2009 WL 3785575, at *3 (W.D. 20 Wash. Nov. 9, 2009). 21 Vienxgay’s claims under RESPA were filed too late. Viengxay obtained his loan in 2001 22 and did not file suit until 2012. (Dkt. No. 1 at 7.) His claim under § 2605(a) is not subject to 23 equitable tolling and was not brought within three years of the consummation of his loan as 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 5 1 required by RESPA. In addition, he was aware of a problem with his loan by January 2008, four 2 years before this suit. (Dkt. No. 1 at 8.) Even if equitable tolling applies, he was aware of the 3 problem more than one year before filing suit. 4 Khamsing’s claims under RESPA were also filed too late. Khamsing obtained his loan in 5 November 2003 and did not file suit until nine years later in 2012. (Dkt. No. 1 at 18.) His claim 6 for improper disclosure under § 2605(e) was not brought within 3 years of the consummation of 7 his loan as required by RESPA. All other claims Khamsing could bring under RESPA are 8 outside of their one-year limitations period, and his prior suit shows that he was aware of the 9 improprieties associated with his loan by 2010, more than one year before he filed this suit. 10 The Court GRANTS Defendant’s motion and DISMISSES Plaintiffs’ RESPA claims 11 with prejudice. 12 13 D. FCRA Plaintiffs fail to adequately claim that the actions of First Horizon or any defendant 14 violated the FCRA. (Dkt. No. 1 at 21.) 15 The FCRA strives to ensure accuracy and fairness in credit reporting, and imposes two 16 sets of duties on providers of information under 15 U.S.C. §§ 1681s-2(a) and (b). Only 15 U.S.C. 17 § 1681s-2(b) provides a private right of action for violations of its duties. See Krieg v. Allstate 18 Fin. Servs., 250 F. App’x 830 (9th Cir. 2007) (unpublished). Before a plaintiff can state a claim 19 under section 1681s-2(b), he must allege that he provided proper notice to a credit reporting 20 agency that he disputed the information provided by First Horizon. Id. 21 Plaintiffs’ claim under the FCRA fails to meet the prerequisite requirement of properly 22 notifying a credit reporting agency that they disputed information provided by First Horizon. The 23 complaint does not allege that the Plaintiffs provided any notice to a credit reporting agency. In 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 6 1 fact, their reply indicates that they do not believe they should have to. (Dkt. No. 9 at 15.) 2 Because Plaintiffs failed to fulfill the prerequisite requirements under the FCRA, the Court 3 GRANTS Defendant’s motion and DISMISSES Plaintiffs’ FCRA claims with prejudice. 4 5 E. FDCPA Plaintiffs’ FDCPA claim was filed too late and is time-barred. An action to enforce 6 liability may be brought within one year of the date in which the violation occurs. 12 U.S.C. § 7 1692k(d). The one year period starts when “the plaintiff knows or has reason to know of the 8 injury which is the basis of the action.” Mangum v. Action Collection Serv., Inc., 575 F.3d 935, 9 940 (9th Cir. 2009) (internal quotations omitted). Here, Viengxay was aware that he possessed a 10 potential claim by 2008. Furthermore, Khamsing had brought suit by 2010. Both claims were 11 filed after the one-year statutory period. 12 The Court GRANTS Defendant’s motion and DISMISSES Plaintiffs’ FDCPA claims 13 with prejudice. 14 15 F. CPA Only Vienxgay directly asserts a CPA claim, which was filed too late and is time-barred. 16 All CPA claims must be filed within four years of the event giving rise to the claim. RCW 17 19.86.120. His claim stems from events occurring at the origination of the loan, such as the lack 18 of disclosure of the interest rate. Vienxgay’s loan is outside the statutory period as its origination 19 was in 2001. Thus, Court GRANTS Defendant’s motion and DISMISSES Plaintiffs’ CPA 20 claims with prejudice. 21 22 G. Fraud Both Plaintiffs’ claims for fraud are subject to dismissal. Viengxay’s claims for fraud 23 were also filed too late. An action for fraud must be filed within three years of its discovery. 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 7 1 RCW 4.16.080. Viengxay developed awareness of the fraudulent activity by 2008, and thus, his 2 claim is one year outside the statutory period and it is time-barred. Khamsing does not state in 3 the complaint when he became aware of the fraud. Instead it is only known that he filed suit for 4 the first time in April 2010. While his claim may not be barred by time, he did not plead facts 5 with enough particularity to satisfy the heightened pleading standard of 9(b). The Court 6 DISMISSES Vienxgay’s claim with prejudice because it was filed too late, and DISMISSES 7 Khamsing’s claim without prejudice because he did not plead fraud with particularity. 8 H. State Law Claims 9 The Defendant also contends it is not a “collection agency” under state law. See RCW 10 19.16 et. seq. Since property disputes are more properly addressed in state court, the Court 11 declines to reach this issue. In addition, the Court only had jurisdiction over Plaintiffs’ state law 12 claims because they alleged federal law claims which could satisfy original jurisdiction under 28 13 U.S.C. § 1331. All the federal claims were filed too late and are dismissed. Thus, the Court does 14 not have original jurisdiction under 28 U.S.C. § 1331 and Plaintiffs’ did not allege diversity 15 jurisdiction under 28 U.S.C. § 1332. The Court could only have supplemental jurisdiction over 16 these claims under 28 U.S.C. § 1367. Under 28 U.S.C. § 1367(c) a court may decline jurisdiction 17 over remaining state law claims “when it has dismissed all claims over which it has original 18 jurisdiction.” 19 The court exercises its discretion and DECLINES supplemental jurisdiction over the 20 remaining state law claims under RCW 19.16 et. seq. The Court DISMISSES them without 21 prejudice, but without leave to amend, as it does not have jurisdiction over such claims. 22 \\ 23 \\ 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 8 1 Conclusion 2 Plaintiffs’ have failed to plead viable federal law claims. Plaintiffs’ TILA, RESPA, 3 FDCPA, and CPA claims are time-barred, as is Vienxgay’s fraud claim. Plaintiffs have not met 4 the prerequisites for the FCRA claim and the Court declines supplemental jurisdiction over the 5 remaining state law claims. The Court GRANTS Defendant’s motion and DISMISSES the case 6 in full. All pending motions are STRICKEN and the matter shall be closed. 7 The clerk is ordered to provide copies of this order to Plaintiffs and all counsel. 8 Dated this 19th day of June, 2012. 9 11 A 12 Marsha J. Pechman United States District Judge 10 13 14 15 16 17 18 19 20 21 22 23 24 ORDER GRANTING FIRST HORIZON / FIRST TENNESSEE BANK (FTB)’S MOTION TO DISMISS- 9
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