
    Elmer and Kathy BUICK, Plaintiffs, v. WORLD SAVINGS BANK, Transamerican Financial Corporation, Defendants.
    No. 2:07-CV-01447-MCE-KJM.
    United States District Court, E.D. California.
    June 12, 2008.
    
      Anthony P. Valach, Daniel Harris, The Law Offices of Daniel Harris, Chicago, IL, Marie Noel Appel, Consumer Law Office, San Francisco, CA, for Plaintiffs.
    Gary S. Caplan, Reed, Smith, LLP, Chicago, IL, Keith D. Yandell, Reed, Smith, LLP, Oakland, CA, Brian Deamicis, Law Offices, Sacramento, CA, for Defendants.
   MEMORANDUM AND ORDER

MORRISON C. ENGLAND, JR., District Judge.

Plaintiffs, Elmer and Kathy Buick, filed this action against Defendants, Transamerican Financial Corporation (“Transameriean”) and World Savings Bank (“World”), for claims arising under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and California’s Unfair Business Practices Act (“UCL”), California Business & Professions Code § 17200 et seq., as well as for fraud, negligent misrepresentation, and breach of fiduciary duty. Plaintiffs subsequently dropped their fraud and negligent misrepresentation claims against all parties, but still maintain their TILA, UCL, and breach of fiduciary duty claims against World. Presently before the Court is World’s Motion to Dismiss those claims.

BACKGROUND

In 2004, World marketed its Pick-a-PaymentSM Equity BuilderSM Mortgage. That loan had an initial low interest rate that expired after three months. The loan was structured in such a way that it could potentially result in negative amortization, which occurs when, despite a customer making the required minimum payments, the principal owed on the loan increases, rather than decreases, over the life of the loan. Plaintiffs allege that referring to a loan that can result in negative amortization as an “Equity Builder SM” loan is false and misleading.

Plaintiffs further allege that World knew or should have known that brokers marketing that Equity BuilderSM loan would promote its low initial rate and minimize both its higher eventual interest rates and its potential for negative amortization. Additionally, Plaintiffs allege that World knew that the label Equity Builder SM was misleading, confusing, and conflicted with other disclosures. According to Plaintiffs, World provided customers with documents that referenced only the low initial rate, without explaining that the rate would increase in the future.

World marketed its products through agents. One agent was Dirk Kuivenhoven, also known as Dirk Johnson, also known as Mark Rawlings (“Mr. Kuivenhoven”). Mr. Kuivenhoven, a licensed California mortgage broker, was Transamerican’s branch manager in 2004.

In March of 2004, under the alias Dirk Johnson and on the letterhead of Direct Lenders, a name Plaintiffs believe to be an alias of Transamerican, Mr. Kuivenhoven sent a letter to Plaintiffs offering to reduce their mortgage payments by refinancing their loan at a 3.5% interest rate. Specifically that letter stated:

Here’s what you can expect from me:
1. I handle all of the details from your first call to closing.
2. I keep you up to date and well informed as we walk thru [sic] the process.
3. I make sure you get the best rate and loan possible.
4. I give you honest straight forward information.

When Plaintiffs subsequently met with Mr. Kuivenhoven, he told them he would get them an Equity BuilderSM loan with an initial rate of 1.95% and that the loan balance would decrease as long as Plaintiffs made the required minimum payments. Mr. Kuivenhoven also allegedly assured them that they could convert the loan to a fixed rate loan by contacting World, that the interest rate on the mortgage would never exceed 4.798%, and that the bi-weekly payments would peak at $616 in the eighth year.

When Mr. Kuivenhoven prepared the World loan application, he indicated that the interest rate would be 1.95%, and checked the “Other” box to indicate the loan type, but he did not include any elaboration of the details of the particular type of loan.

Plaintiffs’ loan closed on June 10, 2004. World provided Plaintiffs with a copy of their loan application and Uniform Underwriting and Transmittal Summary, both of which showed a 1.95% interest rate. Additionally, World delivered each borrower copies of the notice of his or her right to rescind (“Notice”), though Plaintiffs allege that Ms. Buick received only one copy, rather than the two copies required under the regulations.

Plaintiffs further allege that they trusted, believed and reasonably relied upon Mr. Kuivenhoven’s representations about the Equity BuilderSM loan. Therefore, they did not read the loan papers on signing because they assumed those documents were consistent with Mr. Kuivenhoven’s representations.

Plaintiffs allege that the loan terms were not as promised and that they were victims of a bait and switch. Though the initial loan rate was 1.95%, that rate was only applicable for up to two months after closing and could adjust up to 11.950%. According to Plaintiffs, their current loan terms are far worse than those under their prior mortgage, the deal they were promised, or the loan that they could have gotten in a fair market transaction.

STANDARD

A. Motion to Dismiss Under Rule 12(b)(6)

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996). Rule 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief’ in order to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the “grounds” of his “entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Id. at 1964-65 (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level. Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) (“The pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”)).

A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. A court should “freely give” leave to amend when there is no “undue delay, bad faith[,] dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of ... the amendment, [or] futility of the amendment....” Fed.R.Civ.P. 15(a); Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Generally, leave to amend is denied only when it is clear the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.1992).

B. General Pleading Requirements

“Rule 8(a)(2) ... requires a ‘showing,’ rather than a blanket assertion of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which the claim rests.” Twombly, 127 S.Ct. at 1965 n. 3. (factual allegations necessary to plead “grounds” on which claim rests.)

A pleading must contain “only enough facts to state a claim to relief that is plausible on its face.” Id. at 1974. If the “plaintiffs ... have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id. Nevertheless, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ ” Id. at 1965.

ANALYSIS

A. Plaintiffs Allege Facts Sufficient to State a TILA Claim Against World.

1. Plaintiffs Adequately Plead World’s Failure to Provide the Requisite Number of Notices.

The most straight-forward of Plaintiffs’ TILA claims is that, at closing, they did not receive the proper number of Notices of their right to rescind. Federal regulations state, “In a transaction subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind.” 12 C.F.R. § 226.23(b)(1). Furthermore, “[i]f the required notice ... [is] not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first.” 12 C.F.R. § 226.23(a)(3). Plaintiffs allege that Ms. Buick received only one Notice. If true, they argue, Plaintiffs’ rescission period extended to include the three-year period following consummation of the agreement, and Plaintiffs’ May 7, 2007, request to rescind was timely.

World disagrees and argues that Ms. Buick actually received both Notices. World produced a signed copy of the Notice to support its assertion. Nevertheless, World’s form serves only to create a rebuttable, rather than conclusive, presumption that Ms. Buick received that document. 15 U.S.C. § 1635(c). Plaintiffs are, therefore, entitled to rebut that presumption.

Accordingly, Plaintiffs claim that, though Ms. Buick may have signed World’s copy, that copy was never delivered to her as required by the regulations. Construing all facts in the light most favorable to Plaintiffs, the Court cannot say that they have failed to state a claim. Plaintiffs may be able to provide sufficient evidence to support their assertion that the second copy of the notice was not delivered to Ms. Buick. Hence, World’s defense that both Plaintiffs received all required copies is not sufficient to warrant dismissal.

Alternatively, World argues that, regardless of the above analysis, one Notice is all that TILA requires in this case because Plaintiffs are married co-borrowers. World relies on an unpublished Ohio state case and a Federal Bankruptcy Court case from Kansas to support its position.

First, in Contimortgage v. Delawder, the Ohio state court was unable to determine, after a bench trial, how many notices those co-borrowers actually received. 2001 WL 884085 (4th Dist.Ohio 2001). Nevertheless, the trial court stated that, even if the requisite number had not been delivered, “these problems constituted mere technical violations of TILA and did not extend the right or rescission.” Id. at *3. The appellate court noted that the trial court's decision was consistent with precedent holding “TILA does not require perfect notice; rather, it requires a clear and conspicuous notice of rescission rights.” Id. (citing Smith v. Highland Bank, 108 F.3d 1325, 1327 (11th Cir.1997); Veale v. Citibank, F.S.B., 85 F.3d 577, 580 (11th Cir.1996)); (In re Porter, 961 F.2d 1066, 1076 (3d Cir.1992)). However, that statement runs contrary to the reasoning of the Ninth Circuit, which has long held that even technical violations result in liability to the creditor. See Semar v. Platte Valley Fed. Sav. & Loan Ass'n, 791 F.2d 699, 704 (9th Cir.1986). Therefore, World’s first case is inapposite.

World’s reliance on In re Jones is similarly misplaced. 298 B.R. 451 (D.Kan. 2003). In that case, the court specifically stated that both husband and wife were entitled to two copies of the Notice of rescission. Id. at 459-460. Nevertheless, World places great weight on dicta in which the court stated, “If Jones and his wife conceded that each of them received one copy of the ... Notice, the court might be inclined to agree that the rescission period should not be extended because they did not each receive a second copy of the Notice.” Id. at 459. However, that court also went on to point out:

The TILA and Regulation Z might easily have declared that co-borrowers who are spouses are entitled to only one set of the required documents between them, but neither the statute nor the regulation does so. Because the right to rescind under § 1635 exists only when borrowers are giving a mortgage on their home to secure a loan, the most common co-borrowers are likely to be a married couple, so it is inconceivable that Congress and the Federal Reserve Board overlooked this situation when they specified that each borrower with the right to rescind must be given his or her own set of the documents containing all the required information.

Id. at 460.

The Official Staff Commentary to 12 C.F.R. § 226.23(b) confirms that court’s last point:

In a transaction involving joint owners, both of whom are entitled to rescind, both must receive the notice of the right to rescind and disclosures. For example, if both spouses are entitled to rescind a transaction, each must receive two copies of the rescission notice ... and one copy of the disclosures.

12 C.F.R. Pt. 226, Supp. I, Federal Reserve Board Commentary to Paragraph 23(b). The Commentary is, at worst, persuasive evidence that both husband and wife are entitled to receive two copies of the Notices. At best, according to at least one court, the Commentary should be afforded the same deference as the regulations themselves. In re Wright, 133 B.R. 704, 708 (E.D.Pa.1991). Therefore, this Court finds that both Plaintiffs were entitled to receive two copies of the Notice.

Because Plaintiffs have adequately alleged that they received less than the proper number of notices prescribed by TILA, and because they similarly alleged enough facts to show that they could potentially rebut the presumption created by World’s Motion, Plaintiffs have stated a claim against World under TILA and World’s Motion is denied.

2. Plaintiffs Are Not Prohibited from Seeking TILA Damages.

World next asks this Court to strike Plaintiffs’ TILA claim for damages because Plaintiffs admit that they did not read the loan documents and, therefore, cannot prove the reliance necessary to show causation. Federal Rule of Civil Procedure 12(f) provides, “The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” “A motion to strike under Rule 12(f) should be denied unless it can be shown that no evidence in support of the allegation would be admissible, or those issues could have no possible bearing on the issues in the litigation.” Gay-Straight Alliance Network v. Visalia Unified Sch. Dist., 262 F.Supp.2d 1088, 1099 (E.D.Cal.2001).

To support its argument World cites to In re Smith, in which the Ninth Circuit stated, “[I]n order to receive actual damages for a TILA violation ..., a borrower must establish detrimental reliance.” 289 F.3d 1155, 1157 (9th Cir.2002). However, that opinion, and World’s remaining authority, concerned a TILA disclosure violation, not a violation based on a lender’s failure to provide the proper number of Notices to a borrower.

Additionally, World’s failure to honor Plaintiffs’ rescission request, which they tendered within three years of the allegedly defective Notice, constitutes a distinct and actionable violation. See In re Wright, 133 B.R. 704 (E.D.Pa.1991) (“The failure of a lender to properly act on a rescission is a new violation separate and distinct from the disclosure violation that gave rise to the right to rescind.”) (citing 15 U.S.C. § 1640(g); 15 U.S.C. § 1635(g)). Therefore, Plaintiffs’ prayer for damages is sufficient to the extent it is based on World’s alleged failure to provide the proper number of Notices or to honor Plaintiffs’ request to rescind. See Belini v. Washington Mut. Bank, FA, 412 F.3d 17, 25 (1st Cir.2005) (finding creditor that improperly failed to honor rescission request could be liable for damages under section 1640).

Finally, World further argues that Plaintiffs’ TILA claim is barred by the one-year statute of limitations. See 15 U.S.C. § 1640(e). However, Plaintiffs have raised a viable claim under TILA regarding World’s failure to deliver the proper number of Notices and failure to honor Plaintiffs’ request to rescind. The statute of limitations would have begun to run at the time World failed to honor Plaintiffs’ rescission request based on the prior alleged Notice violation. Plaintiffs filed this action within one-year of their request for rescission. Hence, Plaintiffs’ damages claim is not time-barred for purposes of this motion, and Defendant’s Motion to Strike Plaintiffs’ claim for damages under TILA is denied.

B. Plaintiffs Fail to State a Claim Against World Under California’s Unfair Competition Law Claim, California Business & Professions Code § 17200 et seq.

World claims that, since it is a Federal Savings Bank, Home Owners’ Loan Act of 1933 (“HOLA”), 12 U.S.C. § 1461 et seq., preempts Plaintiffs’ state law claims. World argues that Plaintiffs’ UCL claims are preempted to the extent that they attempt to regulate Worlds’ disclosure and advertising practice.

At the beginning of this year, the Ninth Circuit addressed a case similar to the one at hand. See Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001 (9th Cir.2008). This Court quotes at length from that decision because that analysis is directly applicable here:

We have identified three ways federal law may preempt state law:
First, Congress may preempt state law by so stating in express terms. Second, preemption may be inferred when federal regulation in a particular field is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it. In such eases of field preemption, the mere volume and complexity of federal regulations demonstrate an implicit congressional intent to displace all state law. Third, preemption may be implied when state law actually conflicts with federal law. Such a conflict arises when compliance with both federal and state regulations is a physical impossibility, or when state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress ....

Bank of Am. v. City and County of S.F., 309 F.3d 551, 558 (9th Cir.2002) (internal quotation marks and citations omitted).

Appellants’ arguments against preemption are premised on their assertion that conflict preemption analysis applies to the case at bar. We agree, however, with the district court, and hold that field preemption applies because Appellants’ state law claims provide state remedies for violations of federal law in a field preempted entirely by federal law. The general presumption against preemption is not applicable here, and the relevant regulation is clear-the field of lending regulation of federal savings associations is preempted. See 12 C.F.R. § 560.2 ...

While there is a strong presumption against federal preemption of state law governing historic police powers, the Supreme Court has held that the presumption does not apply “when [a] State regulates in an area where there has been a history of significant federal presence.” United States v. Locke, 529 U.S. 89, 108, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000).

“Congress has legislated in the field of banking from the days of M’Culloch v. Maryland, [17 U.S. (4 “Wheat.) 316, 4 L.Ed. 579 (2000) ], creating an extensive federal statutory and regulatory scheme.” Bank of Am., 309 F.3d at 558 (citation omitted). Specific to this case, Congress enacted the Home Owners’ Loan Act of 1933 (“HOLA”) to charter savings associations under federal law, at a time when record numbers of home loans were in default and a staggering number of state-chartered savings associations were insolvent. Id. at 559. HOLA was designed to restore public confidence by creating a nationwide system of federal savings and loan associations to be centrally regulated according to nationwide “best practices.” Fid. Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 160-161, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). We have described HOLA and its following agency regulations as a “radical and comprehensive response to the inadequacies of the existing state system,” and “so pervasive as to leave no room for state regulatory control.” Conference of Fed. Sav. & Loan Ass’n v. Stein, 604 F.2d 1256,1257 (9th Cir.1979), aff'd, 445 U.S. 921, 100 S.Ct. 1304, 63 L.Ed.2d 754. “[BJecause there has been a history of significant federal presence in national banking, the presumption against preemption of state law is inapplicable.” Bank of Am., 309 F.3d at 559 (internal quotation marks omitted).

Through HOLA, Congress gave the Office of Thrift Supervision (“OTS”) broad authority to issue regulations governing thrifts. 12 U.S.C. § 1464. As the principal regulator for federal savings associations, OTS promulgated a preemption regulation in 12 C.F.R. § 560.2. That the preemption is expressed in OTS’s regulation, instead of HOLA, makes no difference because, “[fjederal regulations have no less preemptive effect than federal statutes.” de la Cuesta, 458 U.S. at 153, 102 S.Ct. 3014. The regulation reads inter alia:

OTS hereby occupies the entire field of lending regulation for federal savings associations. OTS intends to give federal savings associations maximum flexibility to exercise their lending powers in accordance with a uniform federal scheme of regulation. Accordingly, federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) of this section....

12 C.F.R. § 560.2(a) (emphasis added). Section 560.2(b) goes on to provide a list of specific types of state laws that are preempted, two of which, § 560.2(b)(5) and § 560.2(b)(9), are specifically applicable to this case. [T]he types of state laws preempted by paragraph (a) of this section, include, without limitation, state laws purporting to impose requirements regarding:

(5) Loan-related fees, including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and overlimit fees;
(9) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants;

12 C.F.R. § 560.2(b)(5) and (9).

OTS, Final Rule, 61 Fed. Reg. 50951, 50966-67 (Sept. 30,1996).

Silvas at 514 F.3d at 1004-1005 (9th Cir. 2008) (internal headings and footnote omitted). Based on the above authority, World argues that Plaintiffs’ UCL cause of action is preempted by HOLA.

Plaintiffs allege several grounds for relief under the UCL. Cal. Bus. & Prof. Code §§ 17200 et seq. Defendants argue that all of Plaintiffs’ claims fall directly within the ambit of section 560.2’s express preemption of state laws attempting to regulate a federal bank’s advertising and disclosures. Plaintiffs’ allegations are as follows:

As described above, defendants have committed acts of unfair competition, proscribed by Business and Professions Code section 17200, et seq., including, but not limited to, the following:
a. Representing that the loan obtained by plaintiffs, the “Equity Builder,” would build the equity in plaintiffs’ home faster than other loans and, in doing so misled plaintiffs as to the potential for and consequences of negative amortization;
b. Representing that the interest rate on plaintiffs’ mortgage would never exceed 4.798% when such representations were false;
c. Representing that the initial interest rate on plaintiff [sic ] mortgage would be 1.95% and that the interest rate on the loan would never exceed 4.798% and, by doing so, misleading plaintiffs as to the cost of credit;
d. Representing to plaintiffs that they would be able to switch to a fixed rate loan at no cost when in fact the loan provided for a substantial prepayment penalty during the first three years;
e. Representing to plaintiffs that Kuivenhoven and Transamerican were working for plaintiffs and were loyal to their best interests when, in fact, Kuivenhoven and Transamerican were employed by an adverse party;
f. Representing to plaintiffs that they would be given the best possible loan terms and that their mortgage interest rate would start at 1.95% and never exceed 4.798%.
g. By engaging in a bait and switch by baiting plaintiffs into the mortgage transaction by offering a relatively favorable set of terms and then switching to less favorable terms.
h. By violating Business & Professions Code § 17500 et seq. As set forth in paragraphs 11 through 25 herein.

SAC, ¶ 52. With the exception of ¶ 52(e), each of these allegations concerns World’s advertising practices or fees and are expressly preempted by the § 560.2. See Silvas, 514 F.3d at 1006.

Hence, Plaintiffs’ only remaining viable claim falls under ¶ 52(e). Plaintiffs allege that Mr. Kuivenhoven improperly maintained and misrepresented to Plaintiffs his relationship with World. Id. Additionally, Plaintiffs argue that, under an agency theory, World is responsible for Mr. Kuivenhoven’s misrepresentations.

Therefore, as a threshold matter, this Court must analyze the sufficiency of Plaintiffs’ agency allegations. “One of the chief characteristics of an agency relationship is the authority to act for and in the place of the principal for the purposes of bringing him or her into legal relations with third parties.” DSU Aviation, LLC v. PCMT Aviation, LLC, 2007 WL 3456564, *5 (N.D.Cal.2007). “The other important aspect in determining the existence of an agency relationship is the degree of control exercised by the principal over the activities of the agent.” Id. “If the principal has the right to control the agent’s day-to-day operations, then an agency relationship exists. If, however, the principal has no control over the day-to-day operations and only has [the] right to dictate the end result of the agent’s activities, then an ‘independent contractor’ relationship exists.” Figi Graphics, Inc. v. Dollar Gen. Corp., 33 F.Supp.2d 1263, 1266 (S.D.Cal.1998) (citing In re Coupon Clearing Service, 113 F.3d 1091, 1099-1100 (9th Cir.1997)).

Plaintiffs fail to allege sufficient facts to show that Mr. Kuivenhoven had the authority to act on behalf of World. Plaintiffs generally allege that Mr. Kuivenhoven is an agent and co-conspirator of World. Compl., ¶7. Plaintiffs also specifically allege that “World paid Mr. Kuivenhoven to market its loans pursuant to a contract which gave World the right to control who he could market to and what Mr. Kuivenhoven could say about the World loan products he sold. The agreement between World and Mr. Kuivenhoven also prohibited Mr. Kuivenhoven from disclosing to customers his affiliation and agency relationship with World. Compl., ¶ 18. Finally, Plaintiffs allege that Mr. Kuivenhoven and Transamerican “were employed by an adverse party.” Compl. 52(e).

Plaintiffs’ only allegations supporting its agency theory stem from the letter from World to Mr. Kuivenhoven in which World stated that Mr. Kuivenhoven was prohibited from representing himself as an agent of Plaintiff. That letter indicates only that World hired Mr. Kuivenhoven to market its products. Neither that letter, nor Plaintiffs’ conclusory allegations suffice to show that Mr. Kuivenhoven had the ability to act on behalf of World.

Alternatively, Plaintiffs attempt to premise World’s liability on a conspiracy allegation. “The elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act or acts done in furtherance of the common design.” Doctors’ Co. v. Super. Ct., 49 Cal.3d 39, 44, 260 Cal.Rptr. 183, 775 P.2d 508 (1989), superseded on other grounds as stated in Pavicich v. Santucci, 85 Cal. App.4th 382, 102 Cal.Rptr.2d 125 (6th Dist. 2000) (quoting Mox Inc. v. Woods, 202 Cal. 675, 677-678, 262 P. 302 (1927)).

Plaintiffs allege no facts, other than those related to the above discussed letter, to support the formation of such a conspiracy or any subsequent acts done in furtherance of a conspiracy. As above, that letter provides no support for Plaintiffs’ conspiracy allegations because it purports merely to prohibit Mr. Kuivenhoven from representing himself as an agent of World. Nothing about the letter indicates that World conspired with Mr. Kuivenhoven to conceal their relationship altogether or to engage in any other unfair practice. Therefore, Plaintiffs’ allegations are insufficient to state a claim against World and World’s Motion to Dismiss Plaintiffs’ Second Cause of Action is granted with leave to amend.

C. Plaintiffs Fail to State a Claim for Breach of Fiduciary Duty Against World

Plaintiffs argue that, by participating in and inducing Mr. Kuivenhoven to act against Plaintiffs’ interests and on behalf of World, World aided and abetted Mr. Kuivenhoven in breaching the fiduciary duties he owed Plaintiffs. World argues that Plaintiffs’ breach of fiduciary-duty cause of action fails to state a claim and that it is preempted by HOLA.

Again, as a threshold matter, this Court will determine if World can be held liable for Mr. Kuivenhoven’s conduct. As discussed above, Plaintiffs’ agency and conspiracy allegations are insufficient to impart liability. Plaintiffs’ only alternative theory of liability is based on aiding and abetting. “[U]nder California law, a defendant may be found liable for aiding and abetting a breach of fiduciary duty even though the defendant owes no independent duty to the plaintiff, so long as the aider and abettor knows of, and substantially assists, the primary violator’s breach of duty.” Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1137 (C.D.Cal. 2003)

In this case, Plaintiffs allege that World “knowingly participated in and induced Kuivenhoven’s and Transamerican’s breach of fiduciary duty.” Compl., ¶ 71. Plaintiffs again rely on their conclusory allegation that World prohibited Mr. Kuivenhoven from disclosing to Plaintiffs’ his relationship with World. Compl., ¶ 18. However, Plaintiffs’ Complaint is completely lacking in any factual allegations to support its theory. Plaintiffs’ only allegations against World stem from the same letter discussed above. That letter does not indicate that World knew or assisted in any actions by Mr. Kuivenhoven which may have resulted in a breach of his duties to Plaintiffs. Additionally, since Plaintiffs have not alleged any independent facts to support their assertion that World knowingly induced, or provided substantial assistance to, Mr. Kuivenhoven, Plaintiffs’ claim must fail. World’s Motion to Dismiss Plaintiffs’ Fifth Cause of Action is granted with leave to amend.

D. Plaintiffs Cannot Pursue Punitive Damages Under Their Remaining Claims

World asks this Court to strike Plaintiffs’ claim for punitive damages. Plaintiffs do not contest World’s Motion. Moreover, since Plaintiffs’ only remaining cause of action arises under TILA, which prescribes its own remedies under 15 U.S.C. § 1640 and does not provide for the recovery of punitive damages, Plaintiffs’ prayer for punitive damages cannot stand. Therefore, World’s Motion to Strike is granted.

CONCLUSION

Plaintiffs have stated TILA, UCL, and breach of fiduciary duty claims against World. Since Plaintiffs’ TILA allegations are sufficient to state a claim, World’s Motion to Dismiss Plaintiffs’ First Cause of Action is DENIED.

However, since Plaintiffs failed to allege sufficient facts to support the remainder of their claims, World’s Motion to Dismiss Plaintiffs’ Second and Fifth Causes of Action is GRANTED with leave to amend. Plaintiffs shall have twenty (20)days from the date of this Memorandum and Order to file an amended complaint.

Finally, because Plaintiffs have not stated a cause of action to support a claim for punitive damages, World’s Motion to Strike Plaintiffs’ prayer for such damages is GRANTED with leave to amend. Plaintiffs shall have twenty (20)days from the date of this Memorandum and Order to file an amended complaint.

IT IS SO ORDERED. 
      
      . Because oral argument will not be of material assistance, the Court ordered this matter submitted on the briefing. E.D. Cal. Local Rule 78-230(h).
     
      
      . The following facts are taken primarily from Plaintiffs’ Complaint. For the purposes of this Motion, the Court accepts these facts as true and makes all inferences in the light most favorable to Plaintiffs.
     
      
      . Plaintiffs do not dispute World's assertion that it is a federally chartered association.
     
      
      . Notably, in light of the inadequacy of Plaintiffs’ agency allegations, which, for purposes of this Motion render moot Plaintiffs’ argument that Mr. Kuivenhoven was acting as World's agent, the letter simply proscribes Mr. Kuivenhoven from misrepresenting himself as the agent of World.
     
      
      . Section 1640 provides in pertinent part:
      Except as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part
      (1) any actual damage sustained by such person as a result of the failure;
      (2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under part E of this sub-chapter, 25 per centum of the total amount of monthly payments under the lease, except that the liability under this subparagraph shall not be less than $100 nor greater than $1,000, or (iii) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $200 or greater than $2,000 ...
      15 U.S.C. § 1640(a)(1), (2)(A).
     