Balderas v. Countrywide Bank

Since a family was able to plead allegations in their complaint that would present a winning case if proven, the district court erred by granting the defendant’s 12(b)(6) motion for dismissal, because such a complaint was not subject to dismissal under 12(b)(6), no matter how unlikely the winning outcome may be perceived by the district court.

The Balderas are an immigrant family who allege that they were “rooked by a bank who signed them up for loans they could not afford.” Among other things, the family experienced: being cold-called by a mortgage broker who represented that he could help the family; an agent of Countrywide Bank (“Countrywide”) showing up unannounced with a filled-out residential loan application in English, which they could not read, and being asked to sign it because it was informal and necessary; and the mortgage broker and notary showing up at their home with English loan documents, demanding their signatures that night. After signing the form, the family tried to rescind the document, but was told that it was too late, although the statutory rescission period extended through the next day. The Balderas family filed a complaint alleging a violation of the Truth in Lending Act (“TILA”). The district court granted Countrywide’s 12(b)(6) motion. The Balderas family appealed to the Ninth Circuit to determine if this motion was granted in error. The Ninth Circuit found that the district court erred in its granting of the motion to dismiss as the Balderas family pleaded that the notice they were given was defective and that their rescission was rejected; it is up to the trier of fact to determine if the evidence is specific enough and believable enough to rebut the statutory presumption. Furthermore, the Ninth Circuit notes that if the documents were signed on September 26th, the rescission period would have extended until September 29th, and the notice given to the family by Countrywide would be invalid under TILA. Finally, the Ninth Circuit notes that a complaint containing allegations that present a winning case if proven is not subject to dismissal under 12(b)(6). REVERSED and REMANDED.