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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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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TERRY MORELAND,
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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
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Defendants.
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_____________________________
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LBUBS 2004-C6 STOCKDALE
OFFICE LIMITED PARTNERSHIP, a
Delaware limited partnership,
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Counter-Claimant,
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v.
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1:14-cv-01836 JAM JLT
TERRY L. MORELAND, an
individual, and PEGGY J.
MORELAND, an individual,
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Counter-Defendants.
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This matter is before the Court on Defendants U.S. Bank,
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N.A., as trustee for LB-UBS Commercial Mortgage Trust 2004-C6
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Commercial Mortgage Pass-through Certificates Series 2006-C6, LB-
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UBS 2004-C6 Stockdale Office Limited Partnership, LB-UBS
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Stockdale Office GP, LNR Partners California Manager, LLC, and
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LNR Partners, LLC’s (“Defendants”) Motion to Dismiss (Doc. #3)
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Plaintiff Terry Moreland’s (“Plaintiff”) Complaint (Doc. #1), and
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Defendants’ Motion to Expunge Lis Pendens (Doc. #5).
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opposed Defendants’ Motion to Dismiss (Doc. #43) and Defendants’
Plaintiff
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Motion to Expunge (Doc. #44).
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oppositions (Doc. #45; Doc. #47).
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Defendants’ Motion to Dismiss is granted without leave to amend,
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and Defendants’ Motion to Expunge is granted.
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Defendants replied to both
For the following reasons,
Also before the Court are Counter-Defendant Terry Moreland’s
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Motion to Dismiss (Doc. #19) and Counter-Defendant Peggy
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Moreland’s Motion to Dismiss (Doc. #34) Counter-Claimant LBUBS
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2004-C6 Stockdale Office Limited Partnership’s (“Counter-
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Claimant”) Counterclaim (Doc. #9).
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motions to dismiss (Doc. #50; Doc. #52).
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Defendant filed a reply.
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Defendants’ motions to dismiss are denied. 1
Counter-Claimant opposed both
Neither Counter-
For the following reasons, Counter-
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I.
FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
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On August 2, 2004, UBS Real Estate Investments, Inc.
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(“Original Lender”) made a loan to Stockdale Tower I, LLC
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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.
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1
(“Borrower”) in the amount of $24,000,000 (“the Loan”).
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connection to the Loan, Borrower executed a Deed of Trust Note
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and a Deed of Trust (collectively, “Loan Documents”), which
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encumbered the commercial office building located at 5060
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California Avenue, Bakersfield, California (“Stockdale Tower”).
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DRJN, Ex. 1 and 2.
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In
Soon thereafter, the Loan was transferred from Original
8
Lender to a real estate mortgage investment conduit (“REMIC”)
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trust, LaSalle Bank National Association, in its capacity as
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trustee for the registered holders of LB-UBS Commercial Mortgage
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Trust 2004-C6, Commercial Mortgage-Pass Through Certificates,
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Series 2004-C6 (“the Trust”).
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reference, this transfer is hereinafter referred to as “the 2004
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transfer.”
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Compl. Ex. 1.
For ease of
In connection with the 2004 transfer, the Loan was
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securitized pursuant to a pooling and servicing agreement (“the
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PSA”).
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follows: (1) LaSalle Bank National Association, in its capacity
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as trustee; (2) Structured Asset Securities Corporation II, as
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depositor (“Depositor”); (3) Lennar Partners, Inc., as special
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servicer; (4) Wachovia Bank, National Association, as master
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servicer; and (5) ABN Amro Bank, N.V., as fiscal agent.
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Compl. ¶ 1; DRJN, Ex. 3.
The parties to the PSA were as
The PSA purports to create a REMIC trust, consisting, in
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part, of mortgage loans purchased from Original Lender.
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2.01(a) of the PSA provides as follows:
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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
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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.
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Section 2.01(b) of the PSA further provides that:
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“[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.
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Section 1.01 of the PSA defines “Mortgage File” as including,
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among others, the following two documents:
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“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.
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In June 2010, the Trust assigned its rights under the Loan
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to Defendant LBUBS 2004-C6 Stockdale Office Limited Partnership
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(“Defendant Owner”).
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Defendant Owner caused a Notice of Default and Election to Sell
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under Deed of Trust (“Notice of Default”) to be recorded against
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Borrower, due to its failure to make timely payments under the
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Loan.
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completed a non-judicial foreclosure proceeding against Stockdale
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Tower.
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Trustee’s Sale with a credit bid of $20,000,000, leaving an
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Compl., Ex. 3.
Compl., Ex. 2.
On August 3, 2010,
In February 2013, Defendant Owner
Defendant Owner was the successful bidder at the
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unpaid balance owing on the Loan of $11,306,472.73.
DRJN, Ex. 4.
In January 2013, Plaintiff and Borrower filed a lawsuit
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against Defendants in state court, alleging that Defendants had
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interfered with Borrower’s ability to pay off the Loan.
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Ex. 5.
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Plaintiff and his wife to collect the unpaid balance owing on the
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Loan, pursuant to the personal guaranty that Plaintiff and his
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wife had executed in connection with the Loan.
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August 2013, Plaintiff and Defendants executed a written
DRJN,
In February 2013, Defendant Owner filed an action against
DRJN, Ex 6.
In
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settlement agreement, which contained a mutual general release as
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to all known and unknown claims between the parties to the
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agreement.
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DRJN, Ex. 7.
On October 14, 2014, Plaintiff filed the Complaint in Kern
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County Superior Court.
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the matter to this Court.
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filed the Counter-Claim against Terry Moreland and Peggy
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Moreland.
On November 21, 2014, Defendants removed
On December 3, 2014, Defendant Owner
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II.
A.
OPINION
Judicial Notice
1.
Legal Standard
Generally, the Court may not consider material beyond the
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pleadings in ruling on a motion to dismiss.
However, the Court
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may take judicial notice of matters of public record, provided
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that they are not subject to reasonable dispute.
26
Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. 2009)
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(citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.
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2001) and Fed. R. Evid. 201).
See, e.g.,
The Court may also take judicial
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notice of documents whose “authenticity . . . is not contested”
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and which are referenced in the complaint.
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Angeles, 250 F.3d 668, 688 (9th Cir. 2001); In re Calpine Corp.
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Sec. Litig., 288 F. Supp. 2d 1054, 1075 (N.D. Cal. 2003).
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2.
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Lee v. City of Los
Defendants’ Request for Judicial Notice
In support of their motion to dismiss, Defendants request
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that the Court take judicial notice of seven documents.
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Defendants’ Request for Judicial Notice (“DRJN”), Doc. #4.
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Specifically, Defendants request judicial notice of: (1) a Deed
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of Trust Note, dated August 2, 2004, executed by Stockdale Tower
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I, LLC; (2) a Deed of Trust, recorded in Kern County, California
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on August 3, 2004; (3) pertinent pages of the Pooling and
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Servicing Agreement, referenced in the Complaint; (4) a Trustee’s
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Deed Upon Sale, recorded in Kern County, California on February
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6, 2013; (5) a complaint filed by Stockdale Tower I, LLC in Kern
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County Superior Court on January 11, 2013; (6) a complaint filed
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by LBUBS 2004-C6 Stockdale Office Limited Partnership in this
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Court on February 26, 2013; and (7) the Settlement Agreement and
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Mutual General Release, referenced in the Complaint.
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Additionally, in support of their motion to expunge the lis
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pendens, Defendants request that the Court take judicial notice
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of three documents.
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support of the Motion to Expunge (“DRJN Mot. to Expunge”), Doc.
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#6.
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pertinent pages of the Pooling and Servicing Agreement,
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referenced in the Complaint; (2) the declaration of Don Kerr,
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filed on May 23, 2012, in the United States Bankruptcy Court for
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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)
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Sale, recorded in Kern County, California on February 6, 2013.
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Plaintiff objects to both of these requests, arguing that
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they relate to matters outside the pleadings, and that judicial
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notice of the facts contained within the documents would be
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improper.
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Opp. to MTD at 3.
All of these documents are proper subjects of judicial
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notice.
The August 2, 2004 Deed of Trust Note, the Pooling and
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Servicing Agreement, and the Settlement Agreement and Mutual
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General Release are all referenced in the complaint.
Compl.
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¶¶ 1, 3, 29.
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having been either filed as public court records or recorded in a
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county recorder’s office.
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judicial notice (Doc. #4; Doc. #6) are GRANTED in their entirety.
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However, as urged by Plaintiff, the Court merely takes notice of
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the existence of these documents, not the truth of any facts
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contained therein.
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3.
The remaining documents are all public records,
Accordingly, Defendants’ requests for
Counter-Defendants’ Request for Judicial Notice
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In support of their motions to dismiss, Counter-Defendants
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request that the Court take judicial notice of eight documents.
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Counter-Defendants’ Request for Judicial Notice (“CDRJN”), Doc.
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#35; Doc. #20.
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notice of the following documents: (1) a “Mortgage Loan Purchase
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Agreement;” (2) the Pooling and Servicing agreement, referenced
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in the Counter-Complaint; (3) an underwriting agreement; (4) a B5
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prospectus; (5) an assignment of deed of trust, recorded in Kern
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County, California on December 13, 2004; (6) an assignment of
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deed of trust, recorded in Kern County, California on June 1,
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2010; (7) the state-court complaint originally filed by Plaintiff
Specifically, Counter-Defendants request judicial
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in this action; and (8) a document identified by Counter-
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Defendants as “Loan Level Files as published by US Bank.”
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at 2.
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CDRJN
With regard to the state court complaint filed by Plaintiff
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in this action, this document is already part of the record in
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this case, and the request for judicial notice is unnecessary and
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DENIED.
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document is referenced in Counter-Claimant’s complaint, and
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Counter-Defendant’s request is GRANTED.
With regard to the Pooling and Servicing Agreement, this
With regard to the two
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assignments of deed of trust, these matters are public documents
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obtained from a county recorder’s office, and the request for
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judicial notice is GRANTED.
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documents – the Mortgage Loan Purchase Agreement, the
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underwriting agreement, the B5 prospectus, and the document
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identified as “Loan Level Files as published by US Bank” –
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Counter-Defendants have not made an adequate showing that they
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are public records or explained their source, and the request for
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judicial notice is DENIED.
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B.
With regard to the remaining
Analysis
1.
Defendants’ Motion to Dismiss
a.
Plaintiff’s Challenge to the PSA
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Plaintiff’s overarching argument, upon which each of his
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causes of action rests, is that the 2004 transfer was ineffective
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because Depositor failed to obtain a “beneficial interest in the
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loan before it was assigned to the trust.”
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According to Plaintiff, the failure of Original Lender to
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transfer a recorded assignment of the Loan Documents to Depositor
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was in violation of “the trust’s own law and the law of the state
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Opp. to MTD at 9.
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of New York and the laws of the Internal Revenue Code.”
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MTD at 9.
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2004 transfer, Defendant Owner “did not acquire any beneficial
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interest by the sham assignment [during the 2010 transfer] and
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thus lacked any authority to execute, or direct to execute, the
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Notice of Default.”
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Opp. to
Plaintiff argues that, due to this alleged flaw in the
Compl. ¶ 11.
Plaintiff’s argument is flawed in two ways.
First,
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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.
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JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 515 (2013)
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(“As an unrelated third party to the alleged securitization . . .
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Jenkins lacks standing to enforce any agreements, including the
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investment trust's pooling and servicing agreement, relating to
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such transactions).
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indicated that a borrower in Plaintiff’s shoes might have
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standing to challenge an allegedly invalid transfer to a REMIC
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trust (Glaski v. Bank of Am., Nat'l Ass'n, 218 Cal.App.4th 1079,
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1099 (2013)), the Ninth Circuit recently rejected this view.
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re Davies, 565 F. App'x 630, 633 (9th Cir. 2014).
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Ninth Circuit noted that “California courts have divided over
21
this issue,” but concluded that “the weight of authority holds
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that debtors in Davies’ shoes – who are not parties to the
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pooling and servicing agreements – cannot challenge them.”
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Davies, 565 F. App’x. at 633.
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Plaintiff lacks standing to challenge the transfer made pursuant
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to the PSA, unless he can establish that he was a party to that
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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
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signatory to the PSA.
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alleges that he was a third-party “intended beneficiary” to the
3
PSA.
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for the benefit of the contracting parties cannot be enforced by
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a stranger or one who stands to benefit merely incidentally by
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its performance.”
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Ass'n, 247 Cal.App.2d 1, 8 (1966).
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standing to sue as a “contract beneficiary where the contracting
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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.”
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Life Ins. Co. v. Vars, Pave, McCord & Freedman, 65 Cal.App.4th
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1469, 1486 (1998).
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must also consider the “surrounding circumstances” of the PSA, in
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addition to its express terms, in determining the intent of the
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contracting parties, the plain language of the PSA makes this
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dispute academic.
17
B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989)).
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Section 11.09 of the PSA (“Successors and Assigns;
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Beneficiaries”) expressly enumerates a number of intended third-
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party beneficiaries, none of whom are Plaintiff or Borrower.
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DRJN, Ex. 3.
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follows: “No other Person, including any Mortgagor, shall be
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entitled to any benefit or equitable right, remedy or claim under
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this Agreement.”
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parties to the PSA did not intend for Borrower (or Plaintiff, as
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a member of Borrower) to be a third-party beneficiary of the
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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
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10
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the validity of any assignments made pursuant to the PSA. 2
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Moreover, Plaintiff’s central argument – that the assignment
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to the Trust was invalid – fails on the merits.
As quoted above,
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Section 2.01(a) of the PSA provides that Depositor “does hereby
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assign, sell, transfer, set over and otherwise convey to the
6
Trustee in trust . . . all the right, title and interest of the
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Depositor in, to, and under . . . the Trust Mortgage Loans[.]”
8
DRJN, Ex. 3.
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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.”
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Original Lender reached a separate agreement – referred to in the
16
PSA as the “UBS/Depositor Mortgage Loan Purchase Agreement” – in
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which Original Lender agreed to deliver the “Mortgage File” for
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Plaintiff’s Loan.
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the PSA, the “Mortgage File” includes (1) the original executed
20
Mortgage Note on Plaintiff’s Loan, endorsed to the Trust, and
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(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
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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.
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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
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assignment directly to the Trust, in effect cutting out Depositor
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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
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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.
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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
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