Moreland v. U.S. Bank, N.A., et al

Filing 56

ORDER signed by Judge John A. Mendez on 04/15/15 ORDERING THAT Defendants 3 Motion to Dismiss is GRANTED without leave to amend; Defendants 5 Motion to Expunge Lis Pendens is GRANTED and Counter-Defendants 19 , 34 Motions to Dismiss are DENIED. (Benson, A) Modified on 4/15/2015 (Benson, A).

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 TERRY MORELAND, 11 12 13 14 15 16 17 18 No. Plaintiff, v. U.S. BANK, N.A. AS TRUSTEE FOR LB-UBS COMMERCIAL MORTGAGE TRUST 2004-C6 COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES SERIES 2004-C6; LB-UBS 2004-C6 STOCKDALE OFFICE LIMITED PARTNERSHIP; LB-UBS STOCKDALE OFFICE GP; LNR PARTNERS CALIFORNIA MANAGER, LLC; LNR PARTNERS, LLC, and DOES 1 THROUGH 10, inclusive, ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS, GRANTING DEFENDANTS’ MOTION TO EXPUNGE LIS PENDENS, AND DENYING COUNTER-DEFENDANTS’ MOTIONS TO DISMISS 19 Defendants. 20 _____________________________ 21 22 LBUBS 2004-C6 STOCKDALE OFFICE LIMITED PARTNERSHIP, a Delaware limited partnership, 23 Counter-Claimant, 24 v. 25 26 1:14-cv-01836 JAM JLT TERRY L. MORELAND, an individual, and PEGGY J. MORELAND, an individual, 27 Counter-Defendants. 28 1 1 This matter is before the Court on Defendants U.S. Bank, 2 N.A., as trustee for LB-UBS Commercial Mortgage Trust 2004-C6 3 Commercial Mortgage Pass-through Certificates Series 2006-C6, LB- 4 UBS 2004-C6 Stockdale Office Limited Partnership, LB-UBS 5 Stockdale Office GP, LNR Partners California Manager, LLC, and 6 LNR Partners, LLC’s (“Defendants”) Motion to Dismiss (Doc. #3) 7 Plaintiff Terry Moreland’s (“Plaintiff”) Complaint (Doc. #1), and 8 Defendants’ Motion to Expunge Lis Pendens (Doc. #5). 9 opposed Defendants’ Motion to Dismiss (Doc. #43) and Defendants’ Plaintiff 10 Motion to Expunge (Doc. #44). 11 oppositions (Doc. #45; Doc. #47). 12 Defendants’ Motion to Dismiss is granted without leave to amend, 13 and Defendants’ Motion to Expunge is granted. 14 Defendants replied to both For the following reasons, Also before the Court are Counter-Defendant Terry Moreland’s 15 Motion to Dismiss (Doc. #19) and Counter-Defendant Peggy 16 Moreland’s Motion to Dismiss (Doc. #34) Counter-Claimant LBUBS 17 2004-C6 Stockdale Office Limited Partnership’s (“Counter- 18 Claimant”) Counterclaim (Doc. #9). 19 motions to dismiss (Doc. #50; Doc. #52). 20 Defendant filed a reply. 21 Defendants’ motions to dismiss are denied. 1 Counter-Claimant opposed both Neither Counter- For the following reasons, Counter- 22 23 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 24 On August 2, 2004, UBS Real Estate Investments, Inc. 25 (“Original Lender”) made a loan to Stockdale Tower I, LLC 26 27 28 1 These motions were determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearings were scheduled for March 25, 2015 and April 8, 2015. 2 1 (“Borrower”) in the amount of $24,000,000 (“the Loan”). 2 connection to the Loan, Borrower executed a Deed of Trust Note 3 and a Deed of Trust (collectively, “Loan Documents”), which 4 encumbered the commercial office building located at 5060 5 California Avenue, Bakersfield, California (“Stockdale Tower”). 6 DRJN, Ex. 1 and 2. 7 In Soon thereafter, the Loan was transferred from Original 8 Lender to a real estate mortgage investment conduit (“REMIC”) 9 trust, LaSalle Bank National Association, in its capacity as 10 trustee for the registered holders of LB-UBS Commercial Mortgage 11 Trust 2004-C6, Commercial Mortgage-Pass Through Certificates, 12 Series 2004-C6 (“the Trust”). 13 reference, this transfer is hereinafter referred to as “the 2004 14 transfer.” 15 Compl. Ex. 1. For ease of In connection with the 2004 transfer, the Loan was 16 securitized pursuant to a pooling and servicing agreement (“the 17 PSA”). 18 follows: (1) LaSalle Bank National Association, in its capacity 19 as trustee; (2) Structured Asset Securities Corporation II, as 20 depositor (“Depositor”); (3) Lennar Partners, Inc., as special 21 servicer; (4) Wachovia Bank, National Association, as master 22 servicer; and (5) ABN Amro Bank, N.V., as fiscal agent. 23 Compl. ¶ 1; DRJN, Ex. 3. The parties to the PSA were as The PSA purports to create a REMIC trust, consisting, in 24 part, of mortgage loans purchased from Original Lender. 25 2.01(a) of the PSA provides as follows: 26 27 28 Section “[t]he Depositor, concurrently with the execution and delivery hereof, does hereby assign, sell, transfer, set over and otherwise convey to the Trustee in trust, without recourse, for the benefit of the Certificateholders, all the right, title and interest 3 1 of the Depositor in, to, and under (i) the Trust Mortgage Loans, (ii) the UBS/Depositor Mortgage Loan Purchase Agreement, (iii) the respective Co-Lender Agreements; and (iv) all other assets included or to be included in the Trust Fund.” DRJN, Ex. 3. 2 3 4 Section 2.01(b) of the PSA further provides that: 5 “[i]n connection with the Depositor’s assignment pursuant to Section 2.01(a) above, . . . the UBS Mortgage Loan Seller has (pursuant to the UBS/Depositor Mortgage Loan Purchase Agreement) agreed, in the case of each UBS Trust Mortgage Loan, to deliver to and deposit with, on or before the Closing Date: (i) the Trustee or a Custodian appointed thereby, the Mortgage File for such Trust Mortgage Loan.” DRJN, Ex. 3. 6 7 8 9 10 Section 1.01 of the PSA defines “Mortgage File” as including, 11 among others, the following two documents: 12 18 “the original executed Mortgage Note for such Trust Mortgage Loan, endorsed (without recourse, representation, or warranty, express or implied) to the order of ‘LaSalle Bank National Association, as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2004-C6, Commercial Mortgage PassThrough Certificates, Series 2004-C6’ or in blank . . . [and] an original executed assignment [of the Deed of Trust] in favor of ‘LaSalle Bank National Association, in its capacity as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2004-C6, Commercial Mortgage Pass-Through Certificates, Series 2004-C6.’” DJRN, Ex. 3. 19 In June 2010, the Trust assigned its rights under the Loan 20 to Defendant LBUBS 2004-C6 Stockdale Office Limited Partnership 21 (“Defendant Owner”). 22 Defendant Owner caused a Notice of Default and Election to Sell 23 under Deed of Trust (“Notice of Default”) to be recorded against 24 Borrower, due to its failure to make timely payments under the 25 Loan. 26 completed a non-judicial foreclosure proceeding against Stockdale 27 Tower. 28 Trustee’s Sale with a credit bid of $20,000,000, leaving an 13 14 15 16 17 Compl., Ex. 3. Compl., Ex. 2. On August 3, 2010, In February 2013, Defendant Owner Defendant Owner was the successful bidder at the 4 1 2 unpaid balance owing on the Loan of $11,306,472.73. DRJN, Ex. 4. In January 2013, Plaintiff and Borrower filed a lawsuit 3 against Defendants in state court, alleging that Defendants had 4 interfered with Borrower’s ability to pay off the Loan. 5 Ex. 5. 6 Plaintiff and his wife to collect the unpaid balance owing on the 7 Loan, pursuant to the personal guaranty that Plaintiff and his 8 wife had executed in connection with the Loan. 9 August 2013, Plaintiff and Defendants executed a written DRJN, In February 2013, Defendant Owner filed an action against DRJN, Ex 6. In 10 settlement agreement, which contained a mutual general release as 11 to all known and unknown claims between the parties to the 12 agreement. 13 DRJN, Ex. 7. On October 14, 2014, Plaintiff filed the Complaint in Kern 14 County Superior Court. 15 the matter to this Court. 16 filed the Counter-Claim against Terry Moreland and Peggy 17 Moreland. On November 21, 2014, Defendants removed On December 3, 2014, Defendant Owner 18 19 20 21 22 II. A. OPINION Judicial Notice 1. Legal Standard Generally, the Court may not consider material beyond the 23 pleadings in ruling on a motion to dismiss. However, the Court 24 may take judicial notice of matters of public record, provided 25 that they are not subject to reasonable dispute. 26 Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. 2009) 27 (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 28 2001) and Fed. R. Evid. 201). See, e.g., The Court may also take judicial 5 1 notice of documents whose “authenticity . . . is not contested” 2 and which are referenced in the complaint. 3 Angeles, 250 F.3d 668, 688 (9th Cir. 2001); In re Calpine Corp. 4 Sec. Litig., 288 F. Supp. 2d 1054, 1075 (N.D. Cal. 2003). 5 2. 6 Lee v. City of Los Defendants’ Request for Judicial Notice In support of their motion to dismiss, Defendants request 7 that the Court take judicial notice of seven documents. 8 Defendants’ Request for Judicial Notice (“DRJN”), Doc. #4. 9 Specifically, Defendants request judicial notice of: (1) a Deed 10 of Trust Note, dated August 2, 2004, executed by Stockdale Tower 11 I, LLC; (2) a Deed of Trust, recorded in Kern County, California 12 on August 3, 2004; (3) pertinent pages of the Pooling and 13 Servicing Agreement, referenced in the Complaint; (4) a Trustee’s 14 Deed Upon Sale, recorded in Kern County, California on February 15 6, 2013; (5) a complaint filed by Stockdale Tower I, LLC in Kern 16 County Superior Court on January 11, 2013; (6) a complaint filed 17 by LBUBS 2004-C6 Stockdale Office Limited Partnership in this 18 Court on February 26, 2013; and (7) the Settlement Agreement and 19 Mutual General Release, referenced in the Complaint. 20 Additionally, in support of their motion to expunge the lis 21 pendens, Defendants request that the Court take judicial notice 22 of three documents. 23 support of the Motion to Expunge (“DRJN Mot. to Expunge”), Doc. 24 #6. 25 pertinent pages of the Pooling and Servicing Agreement, 26 referenced in the Complaint; (2) the declaration of Don Kerr, 27 filed on May 23, 2012, in the United States Bankruptcy Court for 28 the Eastern District of California; and (3) a Trustee’s Deed Upon Defendants’ Request for Judicial Notice in Specifically, Defendants request judicial notice of: (1) 6 1 Sale, recorded in Kern County, California on February 6, 2013. 2 Plaintiff objects to both of these requests, arguing that 3 they relate to matters outside the pleadings, and that judicial 4 notice of the facts contained within the documents would be 5 improper. 6 Opp. to MTD at 3. All of these documents are proper subjects of judicial 7 notice. The August 2, 2004 Deed of Trust Note, the Pooling and 8 Servicing Agreement, and the Settlement Agreement and Mutual 9 General Release are all referenced in the complaint. Compl. 10 ¶¶ 1, 3, 29. 11 having been either filed as public court records or recorded in a 12 county recorder’s office. 13 judicial notice (Doc. #4; Doc. #6) are GRANTED in their entirety. 14 However, as urged by Plaintiff, the Court merely takes notice of 15 the existence of these documents, not the truth of any facts 16 contained therein. 17 3. The remaining documents are all public records, Accordingly, Defendants’ requests for Counter-Defendants’ Request for Judicial Notice 18 In support of their motions to dismiss, Counter-Defendants 19 request that the Court take judicial notice of eight documents. 20 Counter-Defendants’ Request for Judicial Notice (“CDRJN”), Doc. 21 #35; Doc. #20. 22 notice of the following documents: (1) a “Mortgage Loan Purchase 23 Agreement;” (2) the Pooling and Servicing agreement, referenced 24 in the Counter-Complaint; (3) an underwriting agreement; (4) a B5 25 prospectus; (5) an assignment of deed of trust, recorded in Kern 26 County, California on December 13, 2004; (6) an assignment of 27 deed of trust, recorded in Kern County, California on June 1, 28 2010; (7) the state-court complaint originally filed by Plaintiff Specifically, Counter-Defendants request judicial 7 1 in this action; and (8) a document identified by Counter- 2 Defendants as “Loan Level Files as published by US Bank.” 3 at 2. 4 CDRJN With regard to the state court complaint filed by Plaintiff 5 in this action, this document is already part of the record in 6 this case, and the request for judicial notice is unnecessary and 7 DENIED. 8 document is referenced in Counter-Claimant’s complaint, and 9 Counter-Defendant’s request is GRANTED. With regard to the Pooling and Servicing Agreement, this With regard to the two 10 assignments of deed of trust, these matters are public documents 11 obtained from a county recorder’s office, and the request for 12 judicial notice is GRANTED. 13 documents – the Mortgage Loan Purchase Agreement, the 14 underwriting agreement, the B5 prospectus, and the document 15 identified as “Loan Level Files as published by US Bank” – 16 Counter-Defendants have not made an adequate showing that they 17 are public records or explained their source, and the request for 18 judicial notice is DENIED. 19 20 21 B. With regard to the remaining Analysis 1. Defendants’ Motion to Dismiss a. Plaintiff’s Challenge to the PSA 22 Plaintiff’s overarching argument, upon which each of his 23 causes of action rests, is that the 2004 transfer was ineffective 24 because Depositor failed to obtain a “beneficial interest in the 25 loan before it was assigned to the trust.” 26 According to Plaintiff, the failure of Original Lender to 27 transfer a recorded assignment of the Loan Documents to Depositor 28 was in violation of “the trust’s own law and the law of the state 8 Opp. to MTD at 9. 1 of New York and the laws of the Internal Revenue Code.” 2 MTD at 9. 3 2004 transfer, Defendant Owner “did not acquire any beneficial 4 interest by the sham assignment [during the 2010 transfer] and 5 thus lacked any authority to execute, or direct to execute, the 6 Notice of Default.” 7 Opp. to Plaintiff argues that, due to this alleged flaw in the Compl. ¶ 11. Plaintiff’s argument is flawed in two ways. First, 8 Plaintiff lacks standing to challenge the validity of the 2004 9 transfer, as he was not a party to the PSA. See, e.g. Jenkins v. 10 JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 515 (2013) 11 (“As an unrelated third party to the alleged securitization . . . 12 Jenkins lacks standing to enforce any agreements, including the 13 investment trust's pooling and servicing agreement, relating to 14 such transactions). 15 indicated that a borrower in Plaintiff’s shoes might have 16 standing to challenge an allegedly invalid transfer to a REMIC 17 trust (Glaski v. Bank of Am., Nat'l Ass'n, 218 Cal.App.4th 1079, 18 1099 (2013)), the Ninth Circuit recently rejected this view. 19 re Davies, 565 F. App'x 630, 633 (9th Cir. 2014). 20 Ninth Circuit noted that “California courts have divided over 21 this issue,” but concluded that “the weight of authority holds 22 that debtors in Davies’ shoes – who are not parties to the 23 pooling and servicing agreements – cannot challenge them.” 24 Davies, 565 F. App’x. at 633. 25 Plaintiff lacks standing to challenge the transfer made pursuant 26 to the PSA, unless he can establish that he was a party to that 27 agreement. 28 Although one California court had previously In In Davies, the Accordingly, under Davies, Plaintiff does not – and cannot – argue that he was a 9 1 signatory to the PSA. 2 alleges that he was a third-party “intended beneficiary” to the 3 PSA. 4 for the benefit of the contracting parties cannot be enforced by 5 a stranger or one who stands to benefit merely incidentally by 6 its performance.” 7 Ass'n, 247 Cal.App.2d 1, 8 (1966). 8 standing to sue as a “contract beneficiary where the contracting 9 parties . . . intended to benefit that individual, an intent Compl. ¶ 4. Opp. to MTD at 7. Rather, Plaintiff Under California law, a “contract made solely Gordon Bldg. Corp. v. Gibraltar Sav. & Loan However, a third party has 10 which must appear in the terms of the agreement.” 11 Life Ins. Co. v. Vars, Pave, McCord & Freedman, 65 Cal.App.4th 12 1469, 1486 (1998). 13 must also consider the “surrounding circumstances” of the PSA, in 14 addition to its express terms, in determining the intent of the 15 contracting parties, the plain language of the PSA makes this 16 dispute academic. 17 B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989)). 18 Section 11.09 of the PSA (“Successors and Assigns; 19 Beneficiaries”) expressly enumerates a number of intended third- 20 party beneficiaries, none of whom are Plaintiff or Borrower. 21 DRJN, Ex. 3. 22 follows: “No other Person, including any Mortgagor, shall be 23 entitled to any benefit or equitable right, remedy or claim under 24 this Agreement.” 25 parties to the PSA did not intend for Borrower (or Plaintiff, as 26 a member of Borrower) to be a third-party beneficiary of the 27 agreement. Principal Mut. Although Plaintiff contends that the Court Opp. to MTD at 17 (citing Septembertide Pub., The last sentence of Section 11.09 reads as DRJN, Ex. 3. It is clear that the contracting Accordingly, Plaintiff lacks standing to challenge 28 10 1 the validity of any assignments made pursuant to the PSA. 2 2 Moreover, Plaintiff’s central argument – that the assignment 3 to the Trust was invalid – fails on the merits. As quoted above, 4 Section 2.01(a) of the PSA provides that Depositor “does hereby 5 assign, sell, transfer, set over and otherwise convey to the 6 Trustee in trust . . . all the right, title and interest of the 7 Depositor in, to, and under . . . the Trust Mortgage Loans[.]” 8 DRJN, Ex. 3. 9 provides that “the UBS Mortgage Loan Seller has (pursuant to the Immediately thereafter, Section 2.01(b) of the PSA 10 UBS/Depositor Mortgage Loan Purchase Agreement) agreed, in the 11 case of each UBS Trust Mortgage Loan, to deliver to and deposit 12 with, on or before the Closing Date: (i) the Trustee or a 13 Custodian appointed thereby, the Mortgage File for such Trust 14 Mortgage Loan.” 15 Original Lender reached a separate agreement – referred to in the 16 PSA as the “UBS/Depositor Mortgage Loan Purchase Agreement” – in 17 which Original Lender agreed to deliver the “Mortgage File” for 18 Plaintiff’s Loan. 19 the PSA, the “Mortgage File” includes (1) the original executed 20 Mortgage Note on Plaintiff’s Loan, endorsed to the Trust, and 21 (2) an original executed assignment of the Deed of Trust on DRJN, Ex. 3. DRJN, Ex. 3. In other words, Depositor and As defined in Section 1.01 of 22 23 24 25 26 27 2 Briefly, the Court makes note of Plaintiff’s empty assurances that “there are volumes of case law that support Plaintiff’s allegation that he is [a third-party intended beneficiary] to the PSA.” Opp. to MTD at 8. This statement is especially unhelpful given Plaintiff’s failure to cite any specific legal authority in support of this proposition, instead pointing generally to “[c]ontrolling legal authority establishing that mortgagors are third-party beneficiaries of PSA’s are found in the Restatement Contracts (Second), as well as New York and Federal case law.” Opp. to Mot. at 8. 28 11 1 2 Stockdale Tower, also endorsed to the Trust. Thus, although Original Lender did not make an assignment of 3 Plaintiff’s Loan Documents to Depositor, the PSA – read as a 4 whole and in conjunction with the UBS/Depositor Mortgage Loan 5 Purchase Agreement - provided for Original Lender to make this 6 assignment directly to the Trust, in effect cutting out Depositor 7 as a middle-man. 8 was improper, and violated “the trust’s own law and the law of 9 the state of New York and the laws of the Internal Revenue Code.” Plaintiff’s contention appears to be that this 10 Opp. to MTD at 9. 11 trust’s own law,” but the transfer of Plaintiff’s Loan Documents 12 complied with the procedure set forth in the PSA. 13 Ex. 1 (Assignment of Deed of Trust from Original Lender to the 14 Trust). 15 16 b. It is unclear what Plaintiff refers to as “the See Compl., Plaintiff’s Claims In light of foregoing analysis, the Court turns to each of 17 Plaintiff’s four causes of action. 18 action is a claim for breach of contract. 19 Plaintiff alleges that Defendants have breached the contract 20 consisting of “Plaintiff’s deed of trust, and the note it 21 supports.” 22 Complaint, it appears that Plaintiff’s breach of contract cause 23 of action is grounded in two distinct claims. 24 alleges that Defendants “materially breached the contract’s 25 conditions precedent as codified at C.F.R. § 203.606(a) by: 26 lacking contractual authority to declare . . . a breach and 27 falsely declaring a breach where none existed.” 28 (citing Code of Fed. Reg. § 203.606). Compl. ¶ 29. Plaintiff’s first cause of Specifically, Although not entirely clear from the 12 First, Plaintiff Compl. ¶ 33 Section 203.606(a) of the 1 Code of Federal Regulations (“C.F.R.”), cited by Plaintiff, 2 provides for certain procedural safeguards which must be followed 3 by a lender, prior to foreclosing on a property. 4 Section 203.606(b) provides that those safeguards need not be met 5 “if the property is owned by a corporation or a partnership.” 6 C.F.R. § 203.660(b)(4). 7 company, and not a private individual, the procedural safeguards 8 set forth in C.F.R. § 203.660(a) do not apply. 9 for Plaintiff’s breach of contract claim is without merit. 10 However, As Borrower was a limited liability The first basis As a second basis for his breach of contract claim, 11 Plaintiff alleges that “Defendants materially breached the 12 contract by failing to acquire a valid beneficial interest in 13 Plaintiff’s loan prior to executing a settlement agreement with 14 Plaintiff.” 15 the PSA foreclose any argument that the Trust – or Defendant 16 Owner, as its eventual successor-in-interest – “fail[ed] to 17 acquire a valid beneficial interest in Plaintiff’s loan.” 18 ¶ 36. 19 contract claim relates to an alleged breach of the PSA, Plaintiff 20 lacks standing to make this claim. 21 of these reasons, Plaintiff has failed to state a claim for 22 breach of contract, and Defendants’ motion to dismiss Plaintiff’s 23 first cause of action is GRANTED WITHOUT LEAVE TO AMEND. 24 Sayegh v. John Enright, Inc., 473 F. App'x 605 (9th Cir. 2012) 25 (denial of leave to amend proper if amendment would be futile). 26 Compl. ¶ 36. As discussed above, the plain terms of Compl. Moreover, to the extent that Plaintiff’s breach of See supra at 9-10. For all See Plaintiff’s second cause of action alleges a violation of 27 the Equal Credit Opportunity Act (“ECOA”), codified at 15 U.S.C. 28 § 1691; Compl. ¶ 42. The ECOA protects those applying for credit 13 1 from discrimination, by prohibiting creditors from taking 2 “adverse actions” for discriminatory reasons. 3 failed to allege that Defendants acted with a discriminatory 4 motive, nor does he explain how he was subjected to an adverse 5 action, other than a barebones allegation that Defendants 6 “substantially and materially violated Plaintiff’s rights under 7 the ECOA by revoking and changing the terms of an existing credit 8 arrangement without cause.” 9 explanatory allegation that “Plaintiff points to the Exhibits Compl. ¶ 45. Plaintiff has Plaintiff’s 10 submitted to this court (Plaintiff’s Ex’s. 1-3) as proffered 11 evidence of these material violations” is not helpful. 12 45. 13 notice of default) do not, on their face, suggest any 14 discriminatory conduct nor do they explain how Defendants’ action 15 constituted a violation of the ECOA. 16 propose any additional allegations that would save this claim, 17 Defendants’ motion to dismiss Plaintiff’s second cause of action 18 is GRANTED WITHOUT LEAVE TO AMEND. 19 Compl. ¶ These exhibits (two assignments of a deed of trust, and As Plaintiff does not Plaintiff’s third cause of action alleges a violation of the 20 Fair Credit Reporting Act (“FCRA”), codified at 15 U.S.C. 1681. 21 Compl. ¶ 50. 22 duties under the FCRA to “conduct a reasonable investigation of 23 information on a consumer’s credit contract when put on notice by 24 the consumer that false information was being used in recorded 25 instruments.” 26 rely on the presence of false information in his Loan Documents 27 or the Notice of Default. 28 specifically allege what he believes this “false information” to Plaintiff alleges that Defendants breached their Compl. ¶ 52. Plaintiff’s allegations necessarily Although Plaintiff does not 14 1 be, it is reasonable to infer from the remainder of Plaintiff’s 2 allegations that he believes any representation that Defendant 3 Owner has a beneficial interest in the Loan is false. 4 as discussed at length above, Plaintiff’s challenge to the 2004 5 transfer is meritless. 6 Defendant Owner has a beneficial interest in the Loan is not 7 false, and Plaintiff has failed to state a claim for violation of 8 the FCRA. 9 of action is GRANTED WITHOUT LEAVE TO AMEND. However, Accordingly, any representation that Defendants’ motion to dismiss Plaintiff’s third cause See Sayegh v. John 10 Enright, Inc., 473 F. App'x 605 (9th Cir. 2012) (denial of leave 11 to amend proper if amendment would be futile). 12 Plaintiff’s fourth cause of action alleges that Defendants 13 engaged in fraud by “publish[ing] purported facts contained as 14 recitals within the false instruments (NOD and assignment of 15 deed) . . . that are false.” 16 claim of falsity relies on his position that “Defendant did not 17 acquire beneficial interest in Plaintiff’s loan as a result of 18 the sham assignment of deed of trust.” 19 Plaintiff’s challenge to the 2004 transfer is without merit, he 20 has failed to establish that Defendants made a “false 21 representation, concealment or nondisclosure,” an essential 22 element of fraud. 23 (1996). 24 fraud, and Defendants’ motion to dismiss Plaintiff’s fourth cause 25 of action is GRANTED WITHOUT LEAVE TO AMEND. 26 Enright, Inc., 473 F. App'x 605 (9th Cir. 2012) (denial of leave 27 to amend proper if amendment would be futile). 28 Compl. ¶ 58. Again, Plaintiff’s Compl. ¶ 58. As Lazar v. Superior Court, 12 Cal.4th 631, 638 Accordingly, Plaintiff has failed to state a claim for c. See Sayegh v. John Plaintiff’s Remaining Arguments 15 1 In opposing Defendants’ motion to dismiss, Plaintiff appears 2 to challenge the Court’s jurisdiction over the parties. Opp. to 3 MTD at 2. 4 to this court’s subject matter jurisdiction over all Defendant 5 Parties [and that] Defendants are invoking the power of the court 6 through a motion and all Parties lack standing to move this 7 court.” 8 challenging the Court’s jurisdiction, such an argument is 9 improperly before the Court, and is more appropriately made in a Specifically, Plaintiff notes that he “hereby objects Opp. to MTD at 2. To the extent that Plaintiff is 10 motion to dismiss or a motion to remand. 11 argument is without merit. 12 Removal, the Court has both diversity and federal question 13 jurisdiction over Plaintiff’s claims. Regardless, Plaintiff’s As discussed in Defendants’ Notice of Notice of Removal ¶¶ 9-25. 14 Returning to the merits, Plaintiff also argues that the 2004 15 transfer was invalid because “Defendants have offered no proof of 16 valuable consideration in either of the purported assignments of 17 the deed[.]” 18 both assignments of the Deed of Trust provide that consideration 19 has passed from the Assignee to the Assignor. 20 (Assignment of Deed of Trust from Original Lender to Trust, 21 providing that the assignment is made “for good and valuable 22 consideration”); Compl., Ex. 2 (Assignment of Deed of Trust from 23 Trust to Defendant Owner, providing that the assignment is made 24 “for value received”). 25 to challenge the PSA, Plaintiff lacks standing to challenge 26 either Assignment of Deed of Trust. 27 a third-party intended beneficiary to either assignment, 28 Plaintiff cannot enforce the “consideration” requirement Opp. to MTD at 15. As Plaintiff correctly notes, Compl., Ex. 1 However, just as Plaintiff lacks standing 16 As he is neither a party nor 1 contained therein. 2 Finally, Plaintiff extensively cites provisions of the 3 Uniform Commercial Code (“UCC”) and New York Estate, Powers and 4 Trusts Law (“New York EPTL”). 5 UCC); Opp. to MTD at 13 (citing N.Y. Est. Powers & Trusts Law § 6 7-2.4). 7 these codes. 8 interpretation of the PSA that the Court has rejected: The UCC 9 and the New York EPTL are only violated if the PSA itself is Opp. to MTD at 11-12 (citing the Plaintiff argues that the 2004 transfer violated both of However, this argument ultimately depends on an 10 violated. 11 Article 3 and 9” provisions in the UCC. 12 Similarly, the New York EPTL merely provides that the act of a 13 trustee is void if it is taken “in contravention of the trust.” 14 N.Y. Est. Powers & Trusts Law § 7-2.4. 15 fail for a familiar reason: the express terms of the PSA 16 contradict Plaintiff’s position that the assignment from Original 17 Lender to the Trust was invalid. 18 reliance on the UCC and the New York EPTL is misplaced. 19 As Plaintiff notes, the “PSA terms trump the normal 2. 20 Opp. to MTD at 12. Thus, these arguments Accordingly, Plaintiff’s Defendants’ Motion to Expunge Lis Pendens Defendants move the Court to expunge the lis pendens on 21 Stockdale Tower. Mot. to Expunge at 1. In brief, Defendants 22 argue that the lis pendens must be expunged because Plaintiff has 23 failed to establish the “probable validity” of the real property 24 claim upon which the lis pendens is based. 25 10. 26 motion, which contains the same arguments, verbatim, made in 27 opposition to Defendants’ motion to dismiss, and does not 28 separately address Defendants’ motion to expunge. Mot. to Expunge at Plaintiff filed a pro forma opposition to Defendants’ 17 See generally 1 Opp. to Expunge. 2 California Code of Civil Procedure § 405.32 provides that 3 the Court “shall order that the [lis pendens] be expunged if the 4 court finds that the claimant has not established by a 5 preponderance of the evidence the probable validity of the real 6 property claim.” 7 evaluating Defendants’ motion to expunge, the Court must look to 8 the merits of Plaintiff’s claims. 9 each of Plaintiff’s claims without leave to amend, it follows 10 that Plaintiff “has not established by a preponderance of the 11 evidence the probable validity” of his real property claim. 12 Accordingly, Defendants’ motion to expunge is GRANTED. Cal Code Civ. Proc. § 405.32. Thus, in As the Court has dismissed 13 14 15 16 3. Counter-Defendants’ Motions to Dismiss Counter-Defendants 3 (Terry Moreland and Peggy Moreland) move 17 18 to dismiss Counter-Claimant’s complaint against them. Doc. #19; 19 Doc. #34. 20 re-stating the same arguments made in opposition to Defendants’ 21 motion to dismiss and motion to expunge. 22 arguments based on a flawed interpretation of the PSA and 23 relevant case law, they are also misplaced in a motion to 24 dismiss. 25 “disputed facts cannot be used as a set of facts that would allow The bulk of Counter-Defendants’ motion is devoted to Not only are these To the extent that Counter-Defendants argue that 26 27 28 3 Terry Moreland and Peggy Moreland bring separate motions to dismiss. As these motions are identical in substance and nearly identical in form, they will be addressed collectively. 18 1 this court to base a right upon which relief may be granted to 2 [Counter-Claimant],” this argument is improper in a motion to 3 dismiss, where the Court must take the non-moving party’s 4 allegations as true. 5 (1974); Ctr-Ds.’ MTD at 10. 6 argument that “the Settlement Agreement may, in fact, be judged 7 void” does not warrant dismissal of the Counter-Complaint. 8 Accordingly, the vast majority of Counter-Defendants’ memorandum 9 of law, which rehashes their position on why the 2004 transfer 10 11 Scheuer v. Rhodes, 416 U.S. 232, 236 As such, Counter-Defendants’ was ineffective, does not support their motion. On the last two pages of their briefs, Counter-Defendants 12 briefly address each of Counter-Claimant’s causes of action. 13 However, their argument is limited to the cursory statement – 14 repeated with regard to each of Counter-Claimant’s claims – that 15 the “claim is subject to determination of validity and legality 16 of Settlement Agreement and may be deemed void” by the Court. 17 Ctr.-Ds.’ MTD at 12-13. 18 foreclosed by the Court’s foregoing analysis – does not address 19 the elements of each individual cause of action, or otherwise 20 explain why Counter-Claimant has failed to state a claim for 21 relief. 22 their burden on a motion to dismiss. 23 This argument – in addition to being Accordingly, Counter-Defendants have failed to satisfy Finally, to the extent that Counter-Defendants challenge the 24 Court’s subject matter jurisdiction over the Counter-Complaint, 25 this argument is not adequately developed. 26 Counter-Claimant’s alleged failure to offer “proof of valuable 27 consideration in either of the purported assignments of the deed 28 . . . confirms a complete lack of constitutional or prudential 19 It is unclear how 1 standing to bring” its complaint. 2 Counter-Claimant has adequately alleged subject matter 3 jurisdiction for its state law claims under 28 U.S.C. § 1332, as 4 complete diversity exists among the parties, and the amount in 5 controversy exceeds $75,000. 6 of the above reasons, Counter-Defendants’ motion to dismiss is 7 DENIED. Opp. to MTD at 9. Regardless, Counter-Complaint ¶¶ 1-6. For all 8 9 10 III. ORDER For the reasons set forth above, the Court GRANTS WITHOUT 11 LEAVE TO AMEND Defendants’ Motion to Dismiss, GRANTS Defendants’ 12 Motion to Expunge Lis Pendens, and DENIES Counter-Defendants’ 13 Motions to Dismiss. 14 15 IT IS SO ORDERED. Dated: April 15, 2015 16 17 18 19 20 21 22 23 24 25 26 27 28 20

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