Heflebower v. U.S Bank National Association et al

Filing 9

ORDER to DISMISS Action and to DENY 3 Motion for Injunctive Relief; ORDERED JUDGMENT against Plaintiff: John Charles Heflebower and In Favor of Defendants, signed by District Judge Lawrence J. O'Neill on 07/23/2013. CASE CLOSED(Martin-Gill, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JOHN CHARLES HEFLEBOWER,

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CASE NO. CV F 13-1121 LJO MJS

Plaintiff,

ORDER TO DISMISS ACTION AND TO
DENY INJUNCTIVE RELIEF
(Doc. 3.)

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vs.

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U.S. BANK NATIONAL ASSOCIATION,
et al.,
Defendants.
______________________________/
PRELIMINARY STATEMENT TO PARTIES AND COUNSEL

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Judges in the Eastern District of California carry the heaviest caseload in the nation,

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and this Court is unable to devote inordinate time and resources to individual cases and

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matters. This Court cannot address all arguments, evidence and matters raised by parties and

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addresses only the arguments, evidence and matters necessary to reach the decision in this

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order given the shortage of district judges and staff. The parties and counsel are encouraged to

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contact United States Senators Diane Feinstein and Barbara Boxer to address this Court’s

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inability to accommodate the parties and this action.

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INTRODUCTION

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On July 19, 2013, pro se plaintiff John Charles Heflebower ("Mr. Heflebower") filed

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this action to challenge foreclosure of this Fresno property ("property") and to seek to enjoin a
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July 22, 2013 property foreclosure sale. Mr. Heflebower's Verified Complaint ("complaint")

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claims that defendants1 lack "rights to enforce the deed of trust in question by holding any

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valid assignment of it." This Court DISMISSES this action in the absence of viable claims and

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DENIES Mr. Heflebower's requested injunctive relief.

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DISCUSSION

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Sua Sponte Dismissal

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The complaint fails to allege cognizable claims.

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“A trial court may dismiss a claim sua sponte under Fed.R.Civ.P. 12(b)(6). . . . Such

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dismissal may be made without notice where the claimant cannot possibly win relief.” Omar v.

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Sea-Land Service, Inc., 813 F.2d 986, 991 (9th Cir. 1987); see Wong v. Bell, 642 F.2d 359, 361-

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362 (9th Cir. 1981). Sua sponte dismissal may be made before process is served on defendants.

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Neitzke v. Williams, 490 U.S. 319, 324 (1989) (dismissals under 28 U.S.C. § 1915(d) are often

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made sua sponte); Franklin v. Murphy, 745 F.2d 1221, 1226 (9th Cir. 1984) (court may dismiss

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frivolous in forma pauperis action sua sponte prior to service of process on defendants).

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“When a federal court reviews the sufficiency of a complaint, before the reception of

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any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue

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is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer

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evidence to support the claims.” Scheurer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683 (1974);

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Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir. 1997). A F.R.Civ.P.

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12(b)(6) dismissal is proper where there is either a “lack of a cognizable legal theory” or “the

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absence of sufficient facts alleged under a cognizable legal theory.” Balisteri v. Pacifica

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Police Dept., 901 F.2d 696, 699 (9th Cir. 1990); Graehling v. Village of Lombard, Ill., 58 F.3d

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295, 297 (7th Cir. 1995).

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In addressing dismissal, a court must: (1) construe the complaint in the light most

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favorable to the plaintiff; (2) accept all well-pleaded factual allegations as true; and (3)

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determine whether plaintiff can prove any set of facts to support a claim that would merit

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Defendants are U.S. Bank National Association, Western Progressive, LLC, Ocwen Loan
Servicing LLC, and JPMorgan Chase Bank, N.A. and will be referred to collectively as "defendants."

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relief. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-338 (9th Cir. 1996). Nonetheless, a

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court is not required “to accept as true allegations that are merely conclusory, unwarranted

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deductions of fact, or unreasonable inferences.” In re Gilead Sciences Securities Litig., 536

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F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). A court “need not assume the truth of legal

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conclusions cast in the form of factual allegations,” U.S. ex rel. Chunie v. Ringrose, 788 F.2d

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638, 643, n. 2 (9th Cir.1986), and a court must not “assume that the [plaintiff] can prove facts

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that it has not alleged or that the defendants have violated . . . laws in ways that have not been

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alleged.” Associated General Contractors of California, Inc. v. California State Council of

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Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897 (1983). A court need not permit an attempt to

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amend if “it is clear that the complaint could not be saved by an amendment.” Livid Holdings

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Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).

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A “plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires

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more than labels and conclusions, and a formulaic recitation of the elements of a cause of

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action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 554,127 S. Ct. 1955, 1964-65 (2007)

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(internal citations omitted).

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construed in the light most favorable to plaintiff, fails to plead sufficiently all required

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elements of a cause of action.” Student Loan Marketing Ass'n v. Hanes, 181 F.R.D. 629, 634

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(S.D. Cal. 1998). In practice, “a complaint . . . must contain either direct or inferential

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allegations respecting all the material elements necessary to sustain recovery under some

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viable legal theory.” Twombly, 550 U.S. at 562, 127 S.Ct. at 1969 (quoting Car Carriers, Inc.

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v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).

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Moreover, a court “will dismiss any claim that, even when

In Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949 (2009), the U.S. Supreme Court
explained:
. . . a complaint must contain sufficient factual matter, accepted as true, to
“state a claim to relief that is plausible on its face.” . . . 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. . . . The plausibility
standard is not akin to a “probability requirement,” but it asks for more than a sheer
possibility that a defendant has acted unlawfully. (Citations omitted.)

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After discussing Iqbal, the Ninth Circuit Court of Appeals summarized: “In sum, for a

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complaint to survive [dismissal], the non-conclusory ‘factual content,’ and reasonable

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inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to

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relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 989 (9th Cir. 2009) (quoting Iqbal, __ U.S.

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__, 129 S.Ct. at 1949).

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The U.S. Supreme Court applies a “two-prong approach” to address dismissal:

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First, the tenet that a court must accept as true all of the allegations contained in
a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice. . . . Second,
only a complaint that states a plausible claim for relief survives a motion to dismiss. . . .
Determining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense. . . . But where the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged – but it
has not “show[n]”-“that the pleader is entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2).

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In keeping with these principles a court considering a motion to dismiss can
choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.
When there are well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement to relief.

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Iqbal, __ U.S. __, 129 S.Ct. at 1949-1950.

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As discussed below, the complaint is subject to dismissal in the absence of claims

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supported by a cognizable legal theory or sufficient facts alleged under a cognizable legal

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theory.

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Failure To Satisfy F.R.Civ.P. 8

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The complaint is subject to global attack for failure to satisfy F.R.Civ.P. 8, which

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requires a plaintiff to “plead a short and plain statement of the elements of his or her claim,

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identifying the transaction or occurrence giving rise to the claim and the elements of the prima

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facie case.” Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th Cir. 2000).

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F.R.Civ.P. 8(d)(1) requires each allegation to be “simple, concise, and direct.” This

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requirement “applies to good claims as well as bad, and is the basis for dismissal independent
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of Rule 12(b)(6).” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996). “Something labeled

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a complaint but written more as a press release, prolix in evidentiary detail, yet without

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simplicity, conciseness and clarity as to whom plaintiffs are suing for what wrongs, fails to

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perform the essential functions of a complaint.” McHenry, 84 F.3d at 1180. “Prolix, confusing

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complaints . . . impose unfair burdens on litigants and judges.” McHenry, 84 F.3d at 1179.

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Moreover, a pleading may not simply allege a wrong has been committed and demand

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relief. The underlying requirement is that a pleading give “fair notice” of the claim being

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asserted and the “grounds upon which it rests.” Yamaguchi v. United States Department of Air

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Force, 109 F.3d 1475, 1481 (9th Cir. 1997). Despite the flexible pleading policy of the Federal

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Rules of Civil Procedure, a complaint must give fair notice and state the elements of the claim

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plainly and succinctly. Jones v. Community Redev. Agency, 733 F.2d 646, 649 (9th Cir. 1984).

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A plaintiff must allege with at least some degree of particularity overt facts which defendant

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engaged in to support plaintiff’s claim. Jones, 733 F.2d at 649. A complaint does not suffice

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“if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, __ U.S. __,

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129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). The U.S. Supreme

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Court has explained:

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While, for most types of cases, the Federal Rules eliminated the cumbersome
requirement that a claimant “set out in detail the facts upon which he bases his claim,”
Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (emphasis added),
Rule 8(a)(2) still 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 requirement of providing not only “fair notice” of the nature of the
claim, but also “grounds” on which the claim rests.
Twombly, 550 U.S. at 556, n. 3, 127 S.Ct. 1955.

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The complaint fails to satisfy F.R.Civ.P. 8. The complaint lacks facts of defendants’

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specific wrongdoing to provide fair notice as to what each defendant is to defend. The

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complaint lacks cognizable claims or legal theories upon which to support defendants' liability

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and rests on overbroad conclusions that defendants lack authority to foreclose on the property.

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The complaint lacks specific, clearly defined allegations of defendant’s alleged wrongs to give

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fair notice of claims plainly and succinctly to warrant dismissal of this action. Moreover, the
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complaint’s claims are subject to defenses and are based on legally deficient theories to further

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warrant dismissal.

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Failure To Tender Indebtedness
Mr. Heflebower’s failure to tender, and inability to tender, the amount owing on his
loan dooms his global claims.

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“A tender is an offer of performance made with the intent to extinguish the obligation.”

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Arnolds Management Corp. v. Eischen, 158 Cal.App.3d 575, 580, 205 Cal.Rptr. 15 (1984)

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(citing Cal. Civ. Code, § 1485; Still v. Plaza Marina Commercial Corp., 21 Cal.App.3d 378,

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385, 98 Cal.Rptr. 414 (1971)). “A tender must be one of full performance . . . and must be

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unconditional to be valid.” Arnolds Management, 158 Cal.App.3d at 580, 205 Cal.Rptr. 15.

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“Nothing short of the full amount due the creditor is sufficient to constitute a valid tender, and

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the debtor must at his peril offer the full amount.” Rauer's Law etc. Co. v. S. Proctor Co., 40

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Cal.App. 524, 525, 181 P. 71 (1919).

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A defaulted borrower is “required to allege tender of the amount of [the lender's]

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secured indebtedness in order to maintain any cause of action for irregularity in the sale

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procedure.” Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109, 51 Cal.Rptr.2d 286

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(1996), cert. denied, 519 U.S. 1081, 117 S.Ct. 746 (1997). “A party may not without payment

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of the debt, enjoin a sale by a trustee under a power conferred by a deed of trust, or have his

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title quieted against the purchaser at such a sale, even though the statute of limitations has run

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against the indebtedness.” Sipe v. McKenna, 88 Cal.App.2d 1001, 1006, 200 P.2d 61 (1948).

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In FPCI RE-HAB 01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018, 1021, 255
Cal.Rptr. 157 (1989), the California Court of Appeal explained:
. . . generally “an action to set aside a trustee's sale for irregularities in sale notice or
procedure should be accompanied by an offer to pay the full amount of the debt for
which the property was security.” . . . . This rule . . . is based upon the equitable maxim
that a court of equity will not order a useless act performed. . . . “A valid and viable
tender of payment of the indebtedness owing is essential to an action to cancel a
voidable sale under a deed of trust.” . . . The rationale behind the rule is that if
plaintiffs could not have redeemed the property had the sale procedures been proper,
any irregularities in the sale did not result in damages to the plaintiffs. (Citations
omitted.)
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An action to set aside a foreclosure sale, unaccompanied by an offer to redeem, does

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not state a cause of action which a court of equity recognizes. Karlsen v. American Sav. &

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Loan Assn., 15 Cal.App.3d 112, 117, 92 Cal.Rptr. 851 (1971). The basic rule is that an offer of

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performance is of no effect if the person making it is not able to perform. Karlsen, 15

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Cal.App.3d at118, 92 Cal.Rptr. 851 (citing Cal. Civ. Code, § 1495). Simply put, if the offeror

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“is without the money necessary to make the offer good and knows it” the tender is without

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legal force or effect. Karlsen, 15 Cal.App.3d at118, 92 Cal.Rptr. 851 (citing several cases). “It

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would be futile to set aside a foreclosure sale on the technical ground that notice was improper,

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if the party making the challenge did not first make full tender and thereby establish his ability

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to purchase the property.” United States Cold Storage v. Great Western Savings & Loan Assn.,

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165 Cal.App.3d 1214, 1224, 212 Cal.Rptr. 232 (1985).

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integrated’ with the irregular sale fails unless the trustor can allege and establish a valid

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tender.” Arnolds Management, 158 Cal.App.3d at 579, 205 Cal.Rptr. 15.

“A cause of action ‘implicitly

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“It is settled in California that a mortgagor cannot quiet his title against the mortgagee

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without paying the debt secured.” Shimpones v. Stickney, 219 Cal. 637, 649, 28 P.2d 673

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(1934); see Mix v. Sodd, 126 Cal.App.3d 386, 390, 178 Cal.Rptr. 736 (1981) (“a mortgagor in

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possession may not maintain an action to quiet title, even though the debt is unenforceable”);

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Aguilar v. Bocci, 39 Cal.App.3d 475, 477, 114 Cal.Rptr. 91 (1974) (trustor is unable to quiet

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title “without discharging his debt”).

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Moreover, to obtain “rescission or cancellation, the rule is that the complainant is

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required to do equity, as a condition to his obtaining relief, by restoring to the defendant

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everything of value which the plaintiff has received in the transaction. . . . The rule applies

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although the plaintiff was induced to enter into the contract by the fraudulent representations of

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the defendant.” Fleming v. Kagan, 189 Cal.App.2d 791, 796, 11 Cal.Rptr. 737 (1961). “A

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valid and viable tender of payment of the indebtedness owing is essential to an action to cancel

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a voidable sale under a deed of trust.” Karlsen, 15 Cal.App.3d at 117, 92 Cal.Rptr. 851.

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Analyzing “trust deed nonjudicial foreclosure sales issues in the context of common law

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contract principles” is “unhelpful” given “the comprehensive statutory scheme regulating
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nonjudicial foreclosure sales.” Residential Capital v. Cal-Western Reconveyance Corp., 108

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Cal.App.4th 807, 820, 821, 134 Cal.Rptr.2d 162 (2003).
“The rules which govern tenders are strict and are strictly applied.”

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Nguyen v.

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Calhoun, 105 Cal.App.4th 428, 439, 129 Cal.Rptr.2d 436 (2003). “The tenderer must do and

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offer everything that is necessary on his part to complete the transaction, and must fairly make

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known his purpose without ambiguity, and the act of tender must be such that it needs only

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acceptance by the one to whom it is made to complete the transaction.” Gaffney v. Downey

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Savings & Loan Assn., 200 Cal.App.3d 1154, 1165, 246 Cal.Rptr. 421 (1988).

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bears “responsibility to make an unambiguous tender of the entire amount due or else suffer the

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consequence that the tender is of no effect.” Gaffney, 200 Cal.App.3d at 1165, 246 Cal.Rptr.

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421.

The debtor

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Turning to the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601, et seq., the “voiding

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of a security interest may be judicially conditioned on debtor’s tender of amount due under the

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loan.” American Mortgage Network, Inc. v. Shelton, 486 F.3d 815, 821 (4th Cir. 2007).

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15 U.S.C. § 1635(b) governs the return of money or property when a borrower has
rescinded effectively:
. . . Within 20 days after receipt of a notice of rescission, the creditor shall return to the
obligor any money or property given as earnest money, downpayment, or otherwise,
and shall take any action necessary or appropriate to reflect the termination of any
security interest created under the transaction. If the creditor has delivered any property
to the obligor, the obligor may retain possession of it. Upon the performance of the
creditor's obligations under this section, the obligor shall tender the property to the
creditor, except that if return of the property in kind would be impracticable or
inequitable, the obligor shall tender its reasonable value. Tender shall be made at the
location of the property or at the residence of the obligor, at the option of the obligor. If
the creditor does not take possession of the property within 20 days after tender by the
obligor, ownership of the property vests in the obligor without obligation on his part to
pay for it. The procedures prescribed by this subsection shall apply except when
otherwise ordered by a court.

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12 C.F.R. § 226.23(d) address rescission effects and provides:

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(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall
return any money or property that has been given to anyone in connection with the
transaction and shall take any action necessary to reflect the termination of the security

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interest.

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(3) If the creditor has delivered any money or property, the consumer may retain
possession until the creditor has met its obligation under paragraph (d)(2) of this
section. When the creditor has complied with that paragraph, the consumer shall
tender the money or property to the creditor or, where the latter would be
impracticable or inequitable, tender its reasonable value. At the consumer's option,
tender of property may be made at the location of the property or at the consumer's
residence. Tender of money must be made at the creditor's designated place of business.
If the creditor does not take possession of the money or property within 20 calendar
days after the consumer's tender, the consumer may keep it without further obligation.
(Bold added.)

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Neither TILA nor its Regulation Z, 12 C.F.R. §§ 226, et seq., “‘establishes that a

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borrower’s mere assertion of the right of rescission has the automatic effect of voiding the

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contract.’” Yamamoto v. Bank of New York, 329 F.3d 1167, 1172 (9th Cir. 2003) (quoting

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Large v. Conseco Financing Servicing Corp., 292 F.3d 49, 54-55 (1st Cir. 2002)). The Ninth

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Circuit, relying on Large, explained:

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Instead, the “natural reading” of the language of § 1635(b) “is that the security interest
becomes void when the obligor exercises a right to rescind that is available in the
particular case, either because the creditor acknowledges that the right of rescission is
available, or because the appropriate decision maker has so determined. . . . Until such
decision is made the [borrowers] have only advanced a claim seeking rescission.”

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Yamamoto, 329 F.3d at 1172 (quoting Large, 292 F.3d at 54-55)).

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A rescission notice is not automatic “without regard to whether the law permits

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[borrower] to rescind on the grounds asserted.” See Yamamoto, 329 F.3d at 1172. Entertaining

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rescission automatically “makes no sense . . . when the lender contests the ground upon which

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the borrower rescinds.” Yamamoto, 329 F.3d at 1172. “In these circumstances, it cannot be

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that the security interest vanishes immediately upon the giving of notice.

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borrower could get out from under a secured loan simply by claiming TILA violations, whether

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or not the lender had actually committed any.” Yamamoto, 329 F.3d at 1172 (italics in

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original).

Otherwise, a

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Moreover, although 15 U.S.C. § 1635(b) “provides for immediate voiding of the

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security interest and return of the money within twenty days of the notice of rescission, we
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believe this assumes that the notice of rescission was proper in the first place.” In re Groat,

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369 B.R. 413, 419 (Bankr. 8th Cir. 2007). A “court may impose conditions on rescission that

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assure that the borrower meets her obligations once the creditor has performed its obligations.”

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Yamamoto, 329 F.3d at 1173. The Ninth Circuit has explained that prior to ordering rescission

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based on a lender’s alleged TILA violations, a court may require borrowers to prove ability to

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repay loan proceeds:

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As rescission under § 1635(b) is an on-going process consisting of a number of
steps, there is no reason why a court that may alter the sequence of procedures after
deciding that rescission is warranted, may not do so before deciding that rescission is
warranted when it finds that, assuming grounds for rescission exist, rescission still
could not be enforced because the borrower cannot comply with the borrower's
rescission obligations no matter what. Such a decision lies within the court's equitable
discretion, taking into consideration all the circumstances including the nature of the
violations and the borrower's ability to repay the proceeds. If, as was the case here, it is
clear from the evidence that the borrower lacks capacity to pay back what she has
received (less interest, finance charges, etc.), the court does not lack discretion to do
before trial what it could do after.

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Yamamoto, 329 F.3d at 1173 (affirming summary judgment for lender in absence of evidence

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that borrowers could refinance or sell property); see American Mortgage, 486 F.3d at 821

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(“Once the trial judge in this case determined that the [plaintiffs] were unable to tender the loan

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proceeds, the remedy of unconditional rescission was inappropriate.”); LaGrone v. Johnson,

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534 F.2d 1360, 1362 (9th Cir. 1974) (under the facts, loan rescission should be conditioned on

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the borrower’s tender of advanced funds given the lender’s non-egregious TILA violations and

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equities heavily favoring the lender).2

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Neither the complaint nor record references Mr. Heflebower’s legitimate tender of

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indebtedness or meaningful ability to do so. The complaint’s references to offers to pay total

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The Fourth Circuit Court of Appeals agrees with the Ninth Circuit that 15 U.S.C. § 1635(b) does
not compel a creditor to remove a mortgage lien in the absence of the debtor’s tender of loan proceeds:

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Congress did not intend to require a lender to relinquish its security interest when it is now known that the
borrowers did not intend and were not prepared to tender restitution of the funds expended by the lender in
discharging the prior obligations of the borrowers.

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Powers v. Sims & Levin, 542 F.2d 1216, 1221 (4th Cir. 1976).

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amount due are unavailing in that the record fails to indicate that Mr. Heflebower followed up

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or acted to attempt to pay off his loan. Moreover, the fact that Mr. Heflebower has filed

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another action to avoid a foreclosure indicates inability to make a legitimate tender. See John

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Charles Heflebower v. JP Morgan Chase Bank, N.A., et al., Case No. CV F 12-1671 AWI

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SMS. Mr. Heflebower’s failure to indicate a legitimate tender of or ability to tender amounts

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outstanding is construed as his concession of inability to do so. Without Mr. Heflebower’s

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meaningful tender, he seeks empty remedies, not capable of being granted. In addition, the

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complaint does not address conditions precedent to permit rescission even under TILA. The

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complaint is not a timely, valid rescission notice. “Clearly it was not the intent of Congress to

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reduce the mortgage company to an unsecured creditor or to simply permit the debtor to

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indefinitely extend the loan without interest.” American Mortgage, 486 F.3d at 820-821.

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Without Mr. Heflebower’s meaningful, legitmate tender, his purported claims are doomed.

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Foreclosure Sale Presumption
Based on the record, foreclosure sale of the property is entitled to a presumption of
validity to doom further Mr. Heflebower’s claims.

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Under California law, a lender may pursue non-judicial foreclosure upon default with a

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deed of trust with a power of sale clause. “Financing or refinancing of real property is

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generally accomplished in California through a deed of trust. The borrower (trustor) executes a

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promissory note and deed of trust, thereby transferring an interest in the property to the lender

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(beneficiary) as security for repayment of the loan.” Bartold v. Glendale Federal Bank, 81

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Cal.App.4th 816, 821, 97 Cal.Rptr.2d 226 (2000). A deed of trust “entitles the lender to reach

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some asset of the debtor if the note is not paid.” Alliance Mortgage Co. v. Rothwell, 10 Cal.4th

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1226, 1235, 44 Cal.Rptr.2d 352 (1995).

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If a borrower defaults on a loan and the deed of trust contains a power of sale clause,

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the lender may non-judicially foreclose. See McDonald v. Smoke Creek Live Stock Co., 209

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Cal. 231, 236-237, 286 P. 693 (1930). The California Court of Appeal has explained non-

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judicial foreclosure under the applicable California Civil Code sections:

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The comprehensive statutory framework established to govern nonjudicial
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foreclosure sales is intended to be exhaustive. . . . It includes a myriad of rules relating
to notice and right to cure. It would be inconsistent with the comprehensive and
exhaustive statutory scheme regulating nonjudicial foreclosures to incorporate another
unrelated cure provision into statutory nonjudicial foreclosure proceedings.

4

Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d 777 (1994); see I.E. Assoc. v. Safeco

5

Title Ins. Co., 39 Cal.3d 281, 285, 216 Cal.Rptr. 438 (1985) (“These provisions cover every

6

aspect of exercise of the power of sale contained in a deed of trust.”)

1
2

7

Under California Civil Code section 2924(a)(1), a “trustee, mortgagee or beneficiary or

8

any of their authorized agents” may conduct the foreclosure process. Under California Civil

9

Code section 2924b(4), a “person authorized to record the notice of default or the notice of

10

sale” includes “an agent for the mortgagee or beneficiary, an agent of the named trustee, any

11

person designated in an executed substitution of trustee, or an agent of that substituted trustee.”

12

“Upon default by the trustor, the beneficiary may declare a default and proceed with a

13

nonjudicial foreclosure sale.” Moeller, 25 Cal.App.4th at 830, 30 Cal.Rptr.2d 777.

14

“A properly conducted nonjudicial foreclosure sale constitutes a final adjudication of

15

the rights of the borrower and lender.” Moeller, 25 Cal.App.4th at 831, 30 Cal.Rptr.2d 777.

16

“As a general rule, a trustee's sale is complete upon acceptance of the final bid.” Nguyen v.

17

Calhoun, 105 Cal.App.4th 428, 440-441, 129 Cal.Rptr.2d 436 (2003).

18

recites that all statutory notice requirements and procedures required by law for the conduct of

19

the foreclosure have been satisfied, a rebuttable presumption arises that the sale has been

20

conducted regularly and properly; this presumption is conclusive as to a bona fide purchaser.”

21

Moeller, 25 Cal.App.4th at 831, 30 Cal.Rptr.2d 777 (citations omitted).

22

foreclosure sale is accompanied by a common law presumption that it ‘was conducted

23

regularly and fairly.’” Melendrez v. D & I Investment, Inc., 127 Cal.App.4th 1238, 1258, 26

24

Cal.Rptr.3d 413 (2005) (quoting Brown v. Busch, 152 Cal.App.2d 200, 204, 313 P.2d 19

25

(1957)).

26

procedural irregularity.” Melendrez, 127 Cal.App.4th at 1258, 26 Cal.Rptr.3d 413.

“If the trustee's deed

“A nonjudicial

“This presumption may only be rebutted by substantial evidence of prejudicial

27

To challenge foreclosure, “it is necessary for the complaint to state a case within the

28

code sections for which reason it is essential to allege the facts affecting the validity and
12

1

invalidity of the instrument which is attacked.” Kroeker v. Hurlbert, 38 Cal.App.2d 261, 266,

2

101 P.2d 101 (1940).

3

A “trustee or mortgagee may be liable to the trustor or mortgagor for damages

4

sustained where there has been an illegal, fraudulent or wilfully oppressive sale of property

5

under a power of sale contained in a mortgage or deed of trust.” Munger v. Moore, 11

6

Cal.App.3d 1, 7, 89 Cal.Rptr. 323 (1970).

7

The complaint lacks meaningful facts of a specific statutory irregularity or misconduct

8

in foreclosure proceedings attributable specifically to defendants.

9

unsupported conclusory claims of absence of authority to foreclose offer nothing to

10

substantiate a discrepancy in the foreclosure process. The complaint lacks allegations to

11

overcome the presumption of foreclosure validity.

12

Standing To Foreclose

13

Mr. Heflebower’s

Securitization

14

To the extent the complaint challenges foreclosure given securitization of the Mr.

15

Heflebower's promissory note, such challenge fails. Mr. Heflebower offers no meaningful

16

support that the handling of his loan's promissory note or deed of trust ("DOT") thwarted the

17

DOT’s power of sale.

18

The “request for declaratory relief is based on the erroneous theory that all defendants

19

lost their power of sale pursuant to the deed of trust when the original promissory note was

20

assigned to a trust pool. This argument is both unsupported and incorrect.”

21

Greenpoint Mortg. Funding, Inc., 652 F.Supp.2d 1039, 1043 (N.D. Cal. 2009). “[C]ourts have

22

uniformly rejected that securitization of a mortgage loan provides the mortgagor a cause of

23

action.” Velez v. The Bank Of New York Mellon, 2011 WL 572523, at *4 (D. Hi. 2011) (“The

24

court also rejects Plaintiff's contention that securitization in general somehow gives rise to a

25

cause of action – Plaintiff points to no law or provision in the mortgage preventing this

26

practice, and otherwise cites to no law supporting that securitization can be the basis of a cause

27

of action.”

28

Hafiz v.

Securitization of Mr. Heflebower’s note does not diminish the underlying power of sale
13

1

upon Mr. Heflebower’s default. Purported securitization claims fail to support a necessary

2

irregularity to challenge foreclosure of the property.
Note Possession

3

In addition, foreclosure is not dependent on possession of Mr. Heflebower’s original

4
5

note.

6

“Under California law, there is no requirement for the production of an original

7

promissory note prior to initiation of a nonjudicial foreclosure. . . . Therefore, the absence of an

8

original promissory note in a nonjudicial foreclosure does not render a foreclosure invalid.”

9

Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1186 (N.D. Cal. 2009).

10

“Pursuant to section 2924(a)(1) of the California Civil Code, the trustee of a Deed of Trust has

11

the right to initiate the foreclosure process. Production of the original note is not required to

12

proceed with a non-judicial foreclosure.” Hafiz, 652 F.Supp.2d at 1043 (citation omitted).

13

“Under Civil Code section 2924, no party needs to physically possess the promissory

14

note.” Sicairos v. NDEX West, LLC, 2009 WL 385855, *3 (S.D. Cal. 2009) (citing Cal. Civ.

15

Code, § 2924(a)(1)). Rather, “[t]he foreclosure process is commenced by the recording of a

16

notice of default and election to sell by the trustee.” Moeller, 25 Cal.App.4th at 830, 30

17

Cal.Rptr.2d 777. “The trustee has the power and the duty to initiate foreclosure proceedings on

18

the property upon the trustor's default, resulting in a sale of the property.”

19

F.Supp.2d at 1043 (citation omitted). An “allegation that the trustee did not have the original

20

note or had not received it is insufficient to render the foreclosure proceeding invalid.” Neal v.

21

Juarez, 2007 WL 2140640, *8 (S.D. Cal. 2007).

Hafiz, 652

22

Inclusion of Mr. Heflebower’s note in an investor pool does not preclude foreclosure.

23

Mr. Heflebower’s points as to inability to foreclose are unavailing given the absence of need to

24

produce his original note. The clear authority is that production of original promissory notes is

25

unnecessary to initiate foreclosure.

26

violations are insufficient given that Mr. Heflebower is not a PSA party and lacks grounds to

27

enforce PSA provisions.

28

///

Claims of pooling and service agreement (“PSA”)

14

1

Authority To Assign Loan Documents

2

The complaint's challenges to defendants' authority to assign loan documents are

3

unavailing. The California Court of Appeal has explained that prejudice is required for a

4

wrongful foreclosure claim:
We also note a plaintiff in a suit for wrongful foreclosure has generally been required to
demonstrate the alleged imperfection in the foreclosure process was prejudicial to the
plaintiff's interests. . . . Even if MERS lacked authority to transfer the note, it is difficult
to conceive how plaintiff was prejudiced by MERS's purported assignment, and there is
no allegation to this effect. Because a promissory note is a negotiable instrument, a
borrower must anticipate it can and might be transferred to another creditor. As to
plaintiff, an assignment merely substituted one creditor for another, without changing
her obligations under the note. . . . If MERS indeed lacked authority to make the
assignment, the true victim was not plaintiff but the original lender, which would have
suffered the unauthorized loss of a $1 million promissory note.

5
6
7
8
9
10
11
12

Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272, 129 Cal.Rptr.3d 467 (2011);

13

see Knapp v. Doherty, 123 Cal.App.4th 76, 86, n. 4, 20 Cal.Rptr.3d 1 (2004) (“A nonjudicial

14

foreclosure sale is presumed to have been conducted regularly and fairly; one attacking the sale

15

must overcome this common law presumption ‘by pleading and proving an improper procedure

16

and the resulting prejudice.’”); Angell v. Superior Court, 73 Cal.App.4th 691, 700, 86

17

Cal.Rptr.2d 657 (1999) (failure to comply with procedural requirements must cause prejudice

18

to plaintiff).
Prejudice is not presumed from “mere irregularities” in the process. Meux v. Trezevant,

19
20

132 Cal. 487, 490, 64 P. 848 (1901).

21

Mr. Heflebower’s papers lack allegations of requisite prejudice to Mr. Heflebower in

22

connection with foreclosure, especially given his inability to tender amounts owed on his loans

23

or to cure his default. The record lacks a defect as to defendants to disrupt foreclosure.

24

Quiet Title
The complaint unsuccessfully attempts to quiet the property's title in Mr. Heflebower's

25
26

favor.

27

California Code of Civil Procedure section 760.010 provides for an action “to establish

28

title against adverse claims to real or personal property or any interest therein.” California
15

1

Code of Civil Procedure section 761.020 mandates a “verified” complaint for a quiet title

2

action to include:

3

1.

A legal description and street address of the subject real property;

4

2.

The title of plaintiff as to which determination is sought and the basis of the

3.

The adverse claims to the title of the plaintiff against which a determination is

8

4.

The date as of which the determination is sought; and

9

5.

A prayer for the determination of the title of the plaintiff against the adverse

5

title;

6
7

10

sought;

claims.

11

The quiet title remedy “is cumulative and not exclusive of any other remedy, form or

12

right of action, or proceeding provided by law for establishing or quieting title to property.”

13

Cal. Code Civ. Proc., § 760.030.

14

The complaint lacks facts as to the title of which Mr. Heflebower seeks determination

15

and the basis of Mr. Heflebower’s purported title given his inability to tender amounts due on

16

his loan. A quiet title claim requires an allegation that the plaintiffs “are the rightful owners of

17

the property, i.e., that they have satisfied their obligations under the Deed of Trust.” See Kelley

18

v. Mortgage Electronic Registration Systems, Inc., 642 F.Supp.2d 1048, 1057 (N.D. Cal.

19

2009). The complaint lacks facts that Mr. Heflebower is the property’s rightful owner, has

20

satisfied DOT obligations and thus lacks a properly pled quiet title claim.

21

Moreover, a purported quiet title claim is doomed in the absence of a tender of amounts

22

owed. “It is settled in California that a mortgagor cannot quiet his title against the mortgagee

23

without paying the debt secured.” Shimpones v. Stickney, 219 Cal. 637, 649, 28 P.2d 673

24

(1934). “A party may not without payment of the debt, enjoin a sale by a trustee under a power

25

conferred by a deed of trust, or have his title quieted against the purchaser at such a sale, even

26

though the statute of limitations has run against the indebtedness.” Sipe v. McKenna, 88

27

Cal.App.2d 1001, 1006, 200 P.2d 61 (1948); see Mix v. Sodd, 126 Cal.App.3d 386, 390, 178

28

Cal.Rptr. 736 (1981) (“a mortgagor in possession may not maintain an action to quiet title,
16

1

even though the debt is unenforceable”); Aguilar v. Bocci, 39 Cal.App.3d 475, 477, 114

2

Cal.Rptr. 91 (1974) (trustor is unable to quiet title “without discharging his debt. The cloud

3

upon his title persists until the debt is paid.”).

4

“A valid and viable tender of payment of the indebtedness owing is essential to an

5

action to cancel a voidable sale under a deed of trust.” Karlsen, 15 Cal.App.3d at 117, 92

6

Cal.Rptr. 851. An “action to set aside the sale, unaccompanied by an offer to redeem, would

7

not state a cause of action which a court of equity would recognize.” Copsey v. Sacramento

8

Bank, 133 Cal. 659, 662, 66 P. 7 (1901).

9

Mr. Heflebower is unable to quiet title in his favor without paying or tendering his

10

outstanding indebtedness. With the complaint’s absence of a meaningful ability or willingness

11

to tender the indebtedness, a purported quiet title claim fails. This Court is not in a position to

12

award M. Heflebower a windfall.
Unfair Business Practices

13
14
15

The complaint fails to allege a viable claim under California Unfair Competition Law
("UCL"), Cal. Bus. & Prof. Code, §§ 17200, et seq.

16

“Unfair competition is defined to include 'unlawful, unfair or fraudulent business

17

practice and unfair, deceptive, untrue or misleading advertising.'” Blank v. Kirwan, 39 Cal.3d

18

311, 329, 216 Cal.Rptr. 718 (1985) (quoting Cal. Bus. & Prof. Code, § 17200). The UCL

19

establishes three varieties of unfair competition – “acts or practices which are unlawful, or

20

unfair, or fraudulent.”

21

Cal.Rptr.2d 722 (2000).

Shvarts v. Budget Group, Inc., 81 Cal.App.4th 1153, 1157, 97

22

“A plaintiff alleging unfair business practices under these statutes [UCL] must state

23

with reasonable particularity the facts supporting the statutory elements of the violation.”

24

Khoury v. Maly's of California, Inc., 14 Cal.App.4th 612, 619, 17 Cal.Rptr.2d 708 (1993).

25

The complaint lacks facts of reasonable particularity to support a UCL claim. The

26

complaint lacks actionable claims and in turn lacks a viable UCL claim to warrant its

27

dismissal.

28

Moreover, the complaint fails to establish Mr. Heflebower's standing to pursue a UCL
17

1

claim.

2

California Business and Professions Code section 17204 limits standing to bring a UCL

3

claim to specified public officials and a private person "who has suffered injury in fact and has

4

lost money or property as a result of the unfair competition."

5

[plaintiff] to show that she has lost 'money or property' sufficient to constitute an 'injury in fact'

6

under Article III of the Constitution, see Birdsong v. Apple, Inc., 590 F.3d 955, 959-60 (9th

7

Cir.2009), and also requires a 'causal connection' between [defendant's] alleged UCL violation

8

and her injury in fact, Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal.Rptr.3d 466, 471-72

9

(2008)." Rubio v. Capital One Bank, 613 F.3d 1195, 1204-1205 (9th Cir. 2010), cert. denied,

10
11
12
13
14
15

"This provision requires

131 S.Ct. 1817 (2011).
Business and Professions Code section 17203 addresses UCL relief and provides in
pertinent part:
Any person who engages, has engaged, or proposes to engage in unfair
competition may be enjoined in any court of competent jurisdiction. The court may
make such orders or judgments . . . as may be necessary to restore to any person in
interest any money or property, real or personal, which may have been acquired by
means of such unfair competition.

16
17

"In a suit under the UCL, a public prosecutor may collect civil penalties, but a private

18

plaintiff's remedies are 'generally limited to injunctive relief and restitution.'" Kasky v. Nike,

19

Inc., 27 Cal.4th 939, 950, 119 Cal.Rptr.2d 296 (2002) (quoting Cel-Tech Communications, Inc.

20

v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 83 Cal.Rptr.2d 548 (1999)). “The

21

UCL limits the remedies available for UCL violations to restitution and injunctive relief . . .”

22

Madrid v. Perot Systems Corp., 130 Cal.App.4th 440, 452, 30 Cal.Rptr.3d 210 (2005).

23

The complaint lacks facts of Mr. Heflebower's money or property allegedly lost in that

24

he was obligated to pay his loan and faced foreclosure if he failed to meet his obligations. In

25

addition, the complaint lacks facts to support that Mr. Heflebower is entitled to restitution. The

26

“notion of restoring something to a victim of unfair competition includes two separate

27

components. The offending party must have obtained something to which it was not entitled

28

and the victim must have given up something which he or she was entitled to keep.” Day v. AT
18

1

& T Corp., 63 Cal.App.4th 325, 340, 74 Cal.Rptr.2d 55 (1998). Mr. Heflebower’s loan

2

payments fail to satisfy restitution elements in that he was obligated to make such payments.

3

The complaint lacks facts, and Mr. Heflebower points to none, to support a UCL claim and Mr.

4

Heflebower’s standing to seek UCL relief to warrant dismissal of a UCL claim.
Declaratory Relief

5
6
7
8
9
10
11
12

The complaint purports to seek declaratory relief that defendants lack a valid security
interest in the property.
The FAC lacks a viable declaratory relief claim.

The Declaratory Judgment Act

(“DJA”), 28 U.S.C. §§ 2201, 2202, provides in pertinent part:
In a case of actual controversy within its jurisdiction . . . any court of the United
States, upon the filing of an appropriate pleading, may declare the rights and other legal
relations of any interested party seeking such declaration, whether or not further relief
is or could be sought. Any such declaration shall have the force and effect of a final
judgment or decree and shall be reviewable as such.

13
14

28 U.S.C. §2201(a).

15

The DJA’s operation “is procedural only.” Aetna Life Ins. Co. of Hartford, Conn. v.

16

Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 463 (1937). “A declaratory judgment is not a

17

theory of recovery.” Commercial Union Ins. Co. v. Walbrook Ins. Co., Ltd., 41 F.3d 764, 775

18

(1st Cir. 1994). The DJA “merely offers an additional remedy to litigants.” Nat’l Union Fire

19

Ins. Co. v. Karp, 108 F.3d 17, 21 (2nd Cir. 1997) (italics in original). A DJA action requires a

20

district court to “inquire whether there is a case of actual controversy within its jurisdiction.”

21

American States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994).

22

Declaratory relief is appropriate “(1) when the judgment will serve a useful purpose in

23

clarifying and settling the legal relations in issue, and (2) when it will terminate and afford

24

relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” Bilbrey

25

by Bilbrey v. Brown, 738 F.2d 1462, 1470 (9th Cir.1984).

26

As to a controversy to invoke declaratory relief, the question is whether there is a

27

“substantial controversy, between parties having adverse legal rights, or sufficient immediacy

28

and reality to warrant the issuance of a declaratory judgment.” Maryland Cas. Co. v. Pacific
19

1

Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512 (1941). The U.S. Supreme Court has

2

further explained:

3
4
5
6

A justiciable controversy is thus distinguished from a difference or dispute of a
hypothetical or abstract character; from one that is academic or moot. . . . The
controversy must be definite and concrete, touching the legal relations of parties having
adverse legal interests. . . . It must be a real and substantial controversy admitting of
specific relief through a decree of a conclusive character, as distinguished from an
opinion advising what the law would be upon a hypothetical state of facts.

7
8
9
10
11
12
13
14
15
16
17
18

Haworth, 300 U.S. at 240-241, 57 S.Ct. at 464 (citations omitted).
The failure of the complaint’s claims as a whole demonstrates the absence of an actual
controversy subject to declaratory relief. A declaratory relief action “brings to the present a
litigable controversy, which otherwise might only be tried in the future.”

Conditionnement v. Hunter Eng. Co., Inc., 655 F.2d 938, 943 (9th Cir. 1981). As an equitable
remedy, declaratory relief is “dependent upon a substantive basis for liability” and has “no
separate viability” if all other causes of action are barred. Glue-Fold, Inc. v. Slautterback
Corp., 82 Cal.App.4th 1018, 1023, n. 3, 98 Cal.Rptr.2d 661 (2000).
In the absence of a viable claim, the complaint fails to support declaratory relief. The
complaint presents no litigable controversy to be tried in the future. The declaratory relief
claim is subject to dismissal.
Breach Of Contract

19
20
21
22
23
24
25
26
27
28

Societe de

The complaint alleges a breach of contract claim based on a consent order between the
U.S. Department of Treasury and defendant JPMorgan Chase Bank, N.A. A breach of contract
claim fails in the absence of an enforceable contract between Mr. Heflebower and defendants.
“The standard elements of a claim for breach of contract are: (1) the contract, (2)
plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) damage
to plaintiff therefrom.”

Wall Street Network, Ltd. v. New York Times Co., 164 Cal.App.4th

1171, 1178, 80 Cal.Rptr.3d 6 (2008). “To form a contract, an ‘offer must be sufficiently
definite . . . that the performance promised is reasonably certain.’” Alexander v. Codemasters
Group Limited, 104 Cal.App.4th 129, 141. 127 Cal.Rptr.2d 145 (2002).
20

1

Essential elements to contract existence are: (1) “[p]arties capable of contracting;” (2)

2

“[t]heir consent;” (3) a “lawful object;” and (4) a “sufficient cause or consideration.” Cal. Civ.

3

Code, § 1550.

4

“A written contract may be pleaded either by its terms – set out verbatim in the

5

complaint or a copy of the contract attached to the complaint and incorporated therein by

6

reference – or by its legal effect. In order to plead a contract by its legal effect, plaintiff must

7

allege the substance of its relevant terms.” McKell v. Washington Mutual, Inc., 142

8

Cal.App.4th 1457, 1489, 49 Cal.Rptr.3d 227 (2006) (internal citations omitted).

9
10
11
12
13

The complaint fails to identify an enforceable contract to support a breach of contract
claim to warrant dismissal of the breach of contract claim.
Fair Debt Collection Practices Act
The complaint's claim under the Fair Debt Collection Practices Act ("FDCPA"), 15
U.S.C. §§ 1692, et seq., is legally barred.

14

The FDCPA makes it unlawful for debt collectors to use abusive tactics while

15

collecting debts for others. Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985),

16

mod. on other grounds, 761 F.2d 237 (5th Cir. 1985). The FDCPA defines a debt collector as

17

“any person . . . who regularly collects or attempts to collect . . . debts owed or due or asserted

18

to be owed or due another.” 15 U.S.C. § 1692a(6). A “debt collector” does not include a

19

person who collects or attempts to collect a debt “to the extent such activity . . . concerns a debt

20

which was not in default at the time it was obtained by such person.” 15 U.S.C. 1962a(6)(F).

21

“The legislative history of section 1692a(6) indicates conclusively that a debt collector does

22

not include the consumer's creditors, a mortgage servicing company, or an assignee of a debt,

23

as long as the debt was not in default at the time it was assigned.” Perry, 756 F.2d at 1208.

24

The complaint fails to substantiate defendants' status as a debt collector.

25

Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 106 (6th Cir. 1996); Kloth v. Citibank

26

(South Dakota), N.A., 33 F.Supp.2d 115, 1998 (D. Conn. 1998) (“Generally, the FDCPA does

27

not apply to creditors.”). The complaint lacks a valid FDCPA claim and facts that defendants

28

engaged in conduct prohibited by the FDCPA.
21

See

1
2
3

Real Estate Settlement Procedures Act
The complaint alleges a legally barred claim under the Real Estate Settlement
Procedures Act ("RESPA"), 12 U.S.C. §§ 2601, et seq.
Limitations Defense

4
5

A RESPA claim is susceptible to 12 U.S.C. § 2614's one-year limitations for violations

6

of 12 U.S.C. § 2607.3 “The statute of limitations for private plaintiffs suing under RESPA is

7

one year from the ‘date of the occurrence of the violation.’” Edwards v. First American Corp.,

8

517 F.Supp.2d 1199, 1204 (C.D. Cal. 2007) (quoting 12 U.S.C. § 2614). The “primary ill”

9

which RESPA seeks to remedy is “the potential for ‘unnecessarily high settlement charges’

10

caused by kickbacks, fee-splitting, and other practices that suppress price competition for

11

settlement services. This ill occurs, if at all, when the plaintiff pays for the service, typically at

12

the closing.” Snow v. First American Title Ins. Co., 332 F.3d 356, 359-360 (5th Cir. 2003)

13

(quoting 12 U.S.C. §2601(a)). The record reveals that Mr. Heflebower closed his loan in 2007,

14

well more than a year prior to the complaint’s July 19, 2013 filing to bar RESPA claims in

15

connection with loan origination.
Absence Of Private Right Of Action

16
17
18

A RESPA claim is further subject to dismissal in absence of a private right of action
under RESPA for disclosure violations.

19

RESPA’s purpose is to “curb abusive settlement practices in the real estate industry.

20

Such amorphous goals, however, do not translate into a legislative intent to create a private

21

right of action.” Bloom v. Martin, 865 F.Supp. 1377, 1385 (N.D. Cal. 1994), aff’d, 77 F.3d 318

22

(1996). “The structure of RESPA’s various statutory provisions indicates that Congress did

23

not intend to create a private right of action for disclosure violations under 12 U.S.C. § 2603 . .

24

. Congress did not intend to provide a private remedy . . .” Bloom, 865 F.Supp. at 1384.

25

The absence of a private right of action dooms a purported RESPA claim based on

26

disclosure violations. Moreover, the complaint lacks facts to support a RESPA violation or

27
28

3

12 U.S.C. § 2607(a) prohibits referral payments for real estate settlement services, and 12 U.S.C. §
2607(b) prohibits receipt of "any portion, split or percentage" of a settlement service fee, except for performed
services.

22

1
2

claim.
Attempt At Amendment And Malice

3

Since the complaint’s claims are insufficiently pled and barred as a matter of law, Mr.

4

Heflebower is unable to cure claims by allegation of other facts and thus is not granted an

5

attempt to amend. Mr. Heflebower’s papers raise frivolous points which this Court need not

6

address individually. See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984) (“We

7

perceive no need to refute these arguments with somber reasoning and copious citation of

8

precedent; to do so might suggest that these arguments have some colorable merit.”)

9

Moreover, this Court surmises that Mr. Heflebower brought this action in absence of

10

good faith and seeks to exploit the court system solely for delay or to vex defendants and

11

property foreclosure. The test for maliciousness is a subjective one and requires the court to

12

“determine the . . . good faith of the applicant.” Kinney v. Plymouth Rock Squab Co., 236 U.S.

13

43, 46 (1915); see Wright v. Newsome, 795 F.2d 964, 968, n. 1 (11th Cir. 1986); cf. Glick v.

14

Gutbrod, 782 F.2d 754, 757 (7th Cir. 1986) (court has inherent power to dismiss case

15

demonstrating “clear pattern of abuse of judicial process”). A lack of good faith or malice also

16

can be inferred from a complaint containing untrue material allegations of fact or false

17

statements made with intent to deceive the court. See Horsey v. Asher, 741 F.2d 209, 212 (8th

18

Cir. 1984). An attempt to vex or delay provides further grounds to dismiss this action.

19

Injunctive Relief

20

Mr. Heflebower seeks to enjoin property foreclosure.

21

F.R.Civ.P. 65(b)(1)(A) permits a temporary restraining order (“TRO”) “only if”

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“specific facts in an affidavit or a verified complaint clearly show that immediate and

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irreparable injury, loss, or damage will result to the movant before the adverse party can be

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heard in opposition.” As such, the Court may only grant such relief “upon a clear showing that

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the plaintiff is entitled to such relief.” Winter v. Nat’l Res. Def. Council, Inc., 129 S.Ct. 365,

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375 (2008). To prevail, the moving party must show: (1) a likelihood of success on the merits;

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(2) a likelihood that the moving party will suffer irreparable harm absent preliminary injunctive

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relief; (3) that the balance of equities tips in the moving party’s favor; and (4) that preliminary
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1

injunctive relief is in the public interest. Winter, 129 U.S. at 374. In considering the four

2

factors, the Court “must balance the competing claims of injury and must consider the effect on

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each party of the granting or withholding of the requested relief.” Winter, 129 S.Ct. at 376

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(quoting Amoco Co. v. Vill. of Gambell, Alaska, 480 U.S. 531 542 (1987)); Indep. Living Ctr.

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of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644, 651 (9th Cir. 2009). Preliminary injunctive

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relief “is an extraordinary and drastic remedy, one that should not be granted unless the

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movant, by a clear showing, carries the burden of persuasion.” Mazurek v. Armstrong, 520

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U.S. 968, 972, 117 S.Ct. 1865 (1997) (citation omitted).
Mr. Heflebower’s papers lack necessary facts to show clearly the need for injunctive

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relief.
Likelihood Of Success On Merits

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Pursuant to Winter, plaintiffs must make a “clear showing” that they are “likely to

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succeed on the merits.” Winter, 129 S.Ct. at 375-376; Stormans, 571 F.3d at 978. With

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dismissal of his claims, Mr. Heflebower is unable to show success on the merits.
California Civil Code Section 2923.5

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16

In his papers to request a temporary restraining order, Mr. Heflebower appears to claim

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that defendants did not comply with California Civil Code section 2923.5 ("section 2923.5").

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However, Mr. Heflebower alleges no section 2923.5 claim in his complaint.

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Section 2923.5(a)(1) prohibits a mortgage servicer, mortgagee, trustee, beneficiary or

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authorized agent to “record a notice of default pursuant to Section 2924" until either "30 days

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after initial contact is made as required by paragraph (2) or 30 days after satisfying the due

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diligence requirements as described in subdivision (g).”

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“mortgage servicer” to “contact the borrower in person or by telephone in order to assess the

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borrower’s financial situation and explore options for the borrower to avoid foreclosure.”

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Section 2923.5(b) requires a default notice to include a declaration “that the mortgage servicer

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has contacted the borrower" or "has tried with due diligence to contact the borrower as required

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by this section.”

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Section 2923.5(a)(2) requires a

However, section 2923.5 offers no post-foreclosure relief. The California Court of
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1

Appeal has explained:
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.
We would merely note that under 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.

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4
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6

Mabry v. Superior Court, 185 Cal.App.4th 208, 235, 110 Cal.Rptr.3d 201 (2010); see also

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Knapp v. Doherty, 123 Cal.App.4th 76, 94, 20 Cal.Rptr.3d 1 (2004): (“slight procedural

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irregularity in the service of the Sale Notice did not cause any injury to Borrowers. They had

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notice of the original sale date; the trustee's sale did not go forward until almost one year after

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the date noticed. There was no prejudicial procedural irregularity.”)

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Section 2923.5 supports no post-foreclosure claim or relief. If the foreclosure sale has
occurred, section 2923.5 provides Mr. Heflebower no remedy.

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Moreover, Mr. Heflebower fails to substantial application of section 2923.5. Section

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2923.5 applies “only to first lien mortgages or deeds of trust that are secured by owner-

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occupied residential real property containing no more than four dwelling units. For these

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purposes, ‘owner-occupied’ means that the property is the principal residence of the borrower

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and is security for a loan made for personal, family, or household purposes.” Cal. Civ. Code, §

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2924.15(a).

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Mr. Heflebower is silent that the property is owner occupied. This Court construes

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such silence as Mr. Heflebower’s concession that he did not satisfy the owner-occupied

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requirement. Public records indicate that Mr. Heflebower holds title to several properties to

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further support that the property at issue here is not owner occupied.

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Heflebower offers nothing meaningful to challenge failure to satisfy section 2923.5 in that

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section 2923.5 “requires only contacts or attempted contacts in a good faith effort to prevent

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foreclosure.” Ortiz v. Accredited Home Lenders, Inc., 639 F.Supp.2d 1159, 1166 (S.D. Cal.

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2009).

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28

In addition, Mr.

Irreparable Injury Absent Injunctive Relief
“Preliminary injunctive relief is available only if plaintiffs ‘demonstrate that irreparable
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1

injury is likely in the absence of an injunction.’” Johnson v. Couturier, 572 F.3d 1067, 1081

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(9th Cir. 2009) (quoting Winter, 129 S.Ct. at 375) (noting that the Supreme Court in Winter

3

rejected the Ninth Circuit’s “possibility of irreparable harm” test). “Typically, monetary harm

4

does not constitute irreparable harm.” Cal Pharmacists Ass’n v. Maxwell-Jolly, 563 F.3d 847,

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851 (9th Cir. 2009). “Economic damages are not traditionally considered irreparable because

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the injury can later be remedied by a damage award.” Cal Pharmacists, 563 F.3d at 852

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(italics in original). However, “intangible injuries, such as damage to . . . goodwill qualify as

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irreparable harm.” Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc., 944

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F.2d 597, 603 (9th Cir. 1001).

10

Mr. Heflebower fails to establish that he is entitled to prevent property foreclosure,

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especially with no record of his ability to tender outstanding amounts owed. Under the

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circumstances, loss of the property is not irreparable injury. Delaying foreclosure could cause

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irreparable harm to defendants’ interests.
Balance Of Equities

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15

The purpose of preliminary injunctive relief is to preserve the status quo if the balance

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of equities so heavily favors the moving party that justice requires the court to intervene to

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secure the positions until the merits of the action are ultimately determined. University of

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Texas v. Camenisch, 451 U.S. 390, 395 (1981).

19

Mr. Heflebower fails to demonstrate that the balance of equities merits his requested

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injunctive relief. In fact, the balance of equities weighs in defendant’s favor as the record

21

suggests that Mr. Heflebower may have unauthorized access to the property without payment

22

of outstanding amounts owed.

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Heflebower's delay to seek injunctive relief by filing his papers during the late afternoon of

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Friday, July 19, 2013 with a foreclosure sale set for the morning of Monday, July 22, 2013.

25

The equities further tip in defendants' favor given Mr.

Public Interest

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“In exercising their sound discretion, courts of equity should pay particular regard for

27

the public consequences in employing the extraordinary remedy of injunction.” Winter, 129 S.

28

Ct. at 376-77 (quoting Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982)). “The public
26

1

interest analysis for the issuance of a preliminary injunction requires [the Court] to consider

2

whether there exists some critical public interest that would be injured by the grant of

3

preliminary relief.” Indep. Living Ctr., So. Cal. v. Maxwell-Jolly, 572 F.3d 644, 659 (2009).

4

No meaningful public interest supports injunctive relief. Granting injunctive relief

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would be a disservice to public interest by allowing Mr. Heflebower to preclude foreclosure

6

after his default and without legitimate tender of outstanding amounts owed.
CONCLUSION AND ORDER

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8

This Court is familiar with Mr. Heflebower’s purported claims which many prior

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defaulted borrowers have pursued unsuccessfully. Neither Mr. Heflebower nor the record

10

suggest a fair chance of success on the merits or irreparable harm given Mr. Heflebower’s

11

default, inability to tender and dismissal of claims. This Court considers Mr. Heflebower’s

12

injunctive relief request as a further tactic to attempt to delay foreclosure proceedings.

13

Dismissal of this action removes doubt as to probable success of Mr. Heflebower’s claims or

14

irreparable harm to him.

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For the reasons discussed above, this Court:

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1.

DISMISSES without prejudice this action;

17

2.

DENIES Mr. Heflebower requested injunctive relief; and

18

3.

DIRECTS the clerk to enter judgment against plaintiff John Charles Heflebower

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and in favor of defendants and to close this action.

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23

IT IS SO ORDERED.

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Dated:

/s/ Lawrence J. O’Neill

July 23, 2013

UNITED STATES DISTRICT JUDGE
DEAC_Signature-END:

66h44d

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