Deerinck et al v. Heritage Plaza Mortgage, Inc. et al

Filing 23

MEMORANDUM and ORDER signed by Judge Morrison C. England, Jr. on 3/29/2012 GRANTING defendants' 10 Motion to Dismiss with leave to amend. Plaintiffs may file an Amended Complaint no later than 20 days following date of this Order should they choose to do so. (Marciel, M)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

TIM DEERINCK, et al.,

12

Plaintiffs,

13
14

No. 2:11-cv-01735-MCE-EFB

v.

MEMORANDUM AND ORDER

HERITAGE PLAZA MORTGAGE INC.,
et al.

15
Defendants.
16
----oo0oo---17
18

Pending before the Court is Defendants Bank of America, N.A.

19

and Bank of New York Mellon’s Motion to Dismiss Plaintiffs’

20

Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).1

21

(Defs.’ Mot. to Dismiss, ECF No. 10.)

22

below, Defendants’ Motion to Dismiss is granted.2

23

///

24

///

For the reasons discussed

25
1

26
27
28

All further references to “Rule” or “Rules” are to the
Federal Rules of Civil Procedure unless otherwise noted.
2

Because oral argument will not be of material assistance,
the Court ordered this matter submitted on the briefing. See
E.D. Cal. Local Rule 230(g).
1

BACKGROUND

1
2
3

A.

Introduction

4
5

On June 28, 2011, Plaintiffs Tim and Dina Deerinck

6

(“Plaintiffs”) filed the present action against Bank of America,

7

N.A. (“Bank of America”), doing business as BAC Home Loans

8

Servicing, and Bank of New York-Mellon (“Bank of New York”), as

9

trustee for the benefit of the Countrywide Alternate Trust

10

2006-8T1 (“Countrywide Trust”)(collectively, “Defendants”).3

11

Plaintiffs’ Complaint seeks relief under five causes of action:

12

(1) declaratory relief under 28 U.S.C. § 2201-2202;

13

(2) negligence; (3) violation of the Truth in Lending Act,

14

15 U.S.C. § 1641(g); (4) violation of Cal. Bus. & Prof. Code

15

section 17200 et seq.; and (5) quiet title.

16
17

B.

Allegations in Plaintiffs’ Complaint4

18
19

In January of 2006, Plaintiffs executed a promissory note

20

for $585,000.00 (“Promissory Note”) with Heritage Plaza Mortgage,

21

Inc. (“Heritage”), in order to purchase property located in

22

Manteca, California (the “subject property”).

23

///

24
25
26

3
On September 23, 2011, Plaintiffs dismissed all claims
against Heritage Plaza Mortgage Inc., in its capacity as
originating lender. (See ECF No. 19.)
4

27
28

The following facts are taken primarily from Plaintiffs’
Complaint. (Compl., ECF No. 1.) For purposes of this Motion,
the Court accepts these facts as true and makes all inferences in
the light most favorable to Plaintiffs.
2

1

(Compl., ECF No. 1 ¶¶ 16, 58; Defs.’ Request for Judicial Notice

2

(“RJN”), ECF No. 11, Ex. B.)5

3

as the lender, First American Title Company of Stockton as the

4

trustee, and Mortgage Electronic Registrations System, Inc.

5

(“MERS”) as the beneficiary.

6

1-2.)6

7

(Compl. ¶ 95.)

8
9

The Deed of Trust named Heritage

(Compl. ¶ 58; Defs.’ RJN, Ex. A at

Plaintiffs identify Bank of America as the loan servicer.

Plaintiffs’ claims focus on the securitization and sale of
their Deed of Trust and Promissory Note on the secondary mortgage

10

market.

(Id. ¶ 3.)

Specifically, at some point after

11

origination, Heritage attempted to securitize and sell

12

Plaintiffs’ Deed of Trust and Promissory Note to the Countrywide

13

Alternative Trust Series 8T1-2006 (the “Countrywide Trust”).

14

(Id. ¶¶ 4, 9-10.)

15

Countrywide Trust and the Countrywide Trust is governed by a

16

Pooling and Servicing Agreement (“PSA”).

17

the securitization allegedly failed to adhere to the PSA’s

18

requirement that the Deed of Trust and Promissory Note must be

19

properly endorsed, transferred, accepted, and deposited with the

20

Countrywide Trust on or before the date specified in the PSA.

21

///

Bank of New York is the Trustee of the

The parties involved in

22
5

23
24
25
26
27

Defendants request the Court take judicial notice of the
Promissory Note and Deed of Trust executed by Plaintiffs and
Heritage pursuant to Federal Rules of Evidence 201(b)
(authorizing judicial notice of adjudicative facts "capable of
accurate and ready determination by resort to sources whose
accuracy cannot be reasonably questioned"). Defendants’ requests
are unopposed and are the proper subject of judicial notice.
Accordingly, Defendants’ Request for Judicial Notice of the Deed
of Trust (Ex. B) is granted.
6

28

Defendants’ Request for Judicial Notice of the Promissory
Note (Ex. A) is granted. See n.5.
3

1

(Id.)

2

Plaintiffs’ contend that the Promissory Note and Deed of Trust

3

are not part of the Countrywide Trust.

4

of New York, as Trustee for the Countrywide Trust, has no

5

authority to collect on the loan.

6

As a result of this failure to comply with the PSA,

(Id. ¶ 10.)

Thus, Bank

(Id. ¶¶ 4, 10-11.)7

Plaintiffs contend they then attempted to determine the

7

identity of the current owner of their Deed of Trust and

8

Promissory Note.

9

Qualified Written Request (“QWR”) letter to Bank of America

On or around April 12, 2010, Plaintiffs sent a

10

requesting specific information about the status of Plaintiffs’

11

loan account.

12

2010 QWR, Bank of America represented that Bank of New York was

13

the owner of Plaintiffs’ Deed of Trust and Promissory Note and

14

that Bank of America is the servicer.

15

Plaintiffs’ April 12, 2010 request, Bank of America enclosed a

16

copy of Plaintiffs’ Promissory Note.

17

Plaintiffs, the Promissory Note was not endorsed by or to Bank of

18

America or Bank of New York.

19

(Id. ¶ 44, Ex. B.)

In response to the April 12,

(Id. ¶ 45, Ex. C.)

(Id.)

Per

According to the

(Id.)

On May 13, 2010, Plaintiff Tim Deerinck e-mailed Alicia

20

Reatz, a relationship manager with the Bank of New York, to

21

obtain more information about the ownership status of their Deed

22

of Trust.

23

of New York is “a Trustee, therefore, we [Bank of New York] do

24

not physically own the loan or the property.”

25

///

(Id. ¶ 46.)

Ms. Reatz informed Plaintiffs that Bank

(Id. ¶ 47.)

26
7

27
28

While Plaintiffs do not dispute that they owe money on the
loan, they dispute the amount of money owed and seek the Court’s
assistance in determining who the holder in due course is of
their Note and Deed of Trust.
4

1

On August 9, 2010, Plaintiffs commissioned a company called

2

Luminaq to conduct a securitization audit on their Deed of Trust

3

and Promissory Note to determine the current owner of their loan.

4

(Id. ¶ 48.)

5

attorney with Luminaq, determined that: (1) Heritage did not

6

effectively dispose of the beneficial interest in Plaintiffs’

7

Deed of Trust and Promissory Note; (2) Heritage failed to

8

transfer Plaintiffs’ Promissory Note and Deed of Trust to Bank of

9

New York and the Countrywide Trust; (3) that Heritage Plaza and

Plaintiffs contend that Neil L. Garfield, Esq., an

10

Bank of New York intentionally and knowingly failed to follow the

11

PSA governing the Countrywide Trust; (4) that Heritage Plaza

12

failed to perfect title by not following the PSA; and (5) “[t]he

13

beneficiaries have no power to enforce the terms of the

14

[Countrywide] Trust.”

15

(Id. ¶¶ 49-50.)

On May 9, 2011, Plaintiffs sent a second QWR letter to Bank

16

of America demanding the name, address, and contact information

17

of the current owner of the Note.

18

2011, Bank of America responded to Plaintiffs’ second QWR by

19

sending a life loan history report of Plaintiff’s loan.

20

¶ 56, Ex. F.)

21

include any additional response.

22

because they cannot identify the true owner of their note, they

23

do not know if they are sending their monthly mortgage payments

24

to the correct party and that multiple banks may seek to enforce

25

Plaintiffs’ debt obligation.8

(Id. ¶ 55, Ex. E.)

On June 7,

(Id.

According to Plaintiffs, Bank of America did not
(Id.)

Plaintiffs allege that

(Id. ¶ 8; emphasis added.)

26
27
28

8

Plaintiffs do not allege that they have defaulted on their
mortgage payments, nor do they allege that any entity has
(continued...)
5

1

In the course of Plaintiffs’ quest to identify the owner of

2

their loan, Defendants allegedly failed to properly credit

3

payments made, incorrectly calculated interest on accounts, and

4

failed to accurately debt fees.

5

result, Plaintiffs contend that they have overpaid in interest,

6

their credit limit has been reduced, and their credit score has

7

been damaged.

8
9

(Id. ¶¶ 71, 74-75, 77.)

As a

(Id. ¶¶ 71, 74-75, 77.)

Based on these allegations, Plaintiffs challenge the
securitization of their loan and seek relief under five causes of

10

action against Defendants.

11

determination pursuant to 28 U.S.C. §§ 2201-2202 that Defendants

12

do not have any right or interest in Plaintiffs’ Promissory Note,

13

Deed of Trust, or the subject property and similarly, lack the

14

authority to collect Plaintiffs’ mortgage payments or enforce

15

Plaintiffs’ debt obligation.

16

that an actual controversy exists between Plaintiffs, Bank of New

17

York, and Bank of America with regard to Bank of New York’s

18

authority to collect mortgage payments and enforce Plaintiffs’

19

loan and as to the secured or unsecured status of Plaintiffs’

20

loan.

21

to deter Defendants from engaging in similar conduct.

22

¶ 92.)

23

///

24

///

25

///

(Id. ¶¶ 85-88.)

First, Plaintiffs request a judicial

(Id. ¶¶ 89-91.)

Plaintiffs allege

Plaintiffs seek punitive damages in order
(Id.

26
27
28

8

(...continued)
commenced a nonjudicial foreclosure proceeding against the
subject property.
6

1

Second, Plaintiffs allege a negligence claim against

2

Defendants.

3

that Defendants owe a duty to exercise reasonable care to follow

4

California law with respect to the enforcement of debts and to

5

refrain from taking actions against Plaintiffs outside the scope

6

of their legal authority.

7

(Id. ¶¶ 93-97.)

Specifically, Plaintiffs contend

(Id. ¶¶ 95-96.)

Third, Plaintiffs allege that Defendant Bank of New York

8

violated Truth in Lending Act section 1641(g) by failing to

9

provide Plaintiffs with written notice specifying that Bank of

10

New York had been assigned the beneficial interest in Plaintiffs’

11

Deed of Trust within thirty days of the date of the assignment of

12

the Deed of Trust.

(Compl. ¶ 105.)

13

Fourth, Plaintiffs allege that Defendants have violated

14

California Business and Profession Code section 17200 by engaging

15

in “unlawful, fraudulent, and deceptive business practices” with

16

respect to mortgage loan servicing, assignment of Plaintiffs’

17

Note and Deed of Trust, and other related matters.

18

¶ 115.)

19

in unlawful, fraudulent and deceptive business practices by:

20

(1) failing to disclose the principal which documents were being

21

executed and recorded in violation of California Civil Code 1095;

22

(2) failing to record powers of attorney in connection with other

23

recorded documents in violation of California Civil Code 2933;

24

(3) violating the “Security First Rule;” (4) demanding and

25

accepting payment of debts which were non-existent; (5) accepting

26

loan payments as beneficiaries and trustees without legal

27

authority to do so; (6) other deceptive business practices; and

28

///

(Compl.

Additionally, Plaintiffs allege the Defendants engaged

7

1

(7) violation of Truth in Lending Act section 1641(g).

2

(Id. ¶¶

3

115-116.)

Fifth, Plaintiffs request the Court quiet title to the

4

subject property in the Plaintiffs.

5

seek a judicial determination that title to the subject property

6

is solely vested in Plaintiffs and that Defendants should be

7

declared to have no right, title, or interest in the subject

8

property.

9

offered and are ready, willing and able to tender their

(Id. ¶¶ 122-128.)

Plaintiffs allege that they have

10

obligation.

11

are the owners of the subject property, that their interest in

12

title lies in the Deed of Trust from Heritage, that Defendants

13

have no right, title, interest, or estate in the subject

14

property, and that Plaintiffs’ interest is adverse to Defendants’

15

claim to ownership.

16

(Id. ¶ 123.)

Specifically, Plaintiffs

Additionally, Plaintiffs allege they

(Id. ¶¶ 124-126.)

On August 5, 2011, Defendants filed the pending motion to

17

dismiss.

(ECF No. 10.)

18

their Opposition.9

19

///

20

On September 8, 2011, Plaintiffs filed

///

(ECF No. 16.)

21
9

22
23
24
25
26
27
28

Five months after Plaintiffs filed their Opposition to
Defendants’ Motion to Dismiss, Plaintiffs filed a document
requesting the Court take judicial notice of an official report
generated by the City and County of San Francisco’s Office of the
Assessor-Recorder entitled, “Foreclosure in California: A Crisis
of Compliance Report.” (Pls.’ RJN, ECF No. 22, Ex. A.)
Plaintiffs’ RJN is unopposed and is accordingly granted. See
City of Sausalito v. O’Neill, 386 F.3d 1186, 1223 n.2 (9th Cir.
2004)(finding a court may take judicial notice of records and
reports of state administrative bodies, so long as their
authenticity is not in dispute). While the Court grants
Plaintiffs’ RJN, the Court notes Plaintiffs do not specify how
this official report relates to Plaintiffs’ allegations and
claims against Defendants.
8

STANDARD

1
2
3

A.

Motion to Dismiss Pursuant to 12(b)(6)

4
5

On a motion to dismiss for failure to state a claim under

6

Federal Rule of Civil Procedure Rule 12(b)(6), all allegations of

7

material fact must be accepted as true and construed in the light

8

most favorable to the nonmoving party.

9

Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

Cahill v. Liberty Mut.
Rule 8(a)(2)

10

requires only “a short and plain statement of the claim showing

11

that the pleader is entitled to relief” in order to “give the

12

defendant fair notice of what the . . . claim is and the grounds

13

upon which it rests.”

14

555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

15

complaint attacked by a Rule 12(b)(6) motion to dismiss does not

16

require detailed factual allegations.

17

obligation to provide the grounds of his entitlement to relief

18

requires more than labels and conclusions, and a formulaic

19

recitation of the elements of a cause of action will not do.”

20

Id. (internal citations and quotations omitted).

21

required to accept as true a “legal conclusion couched as a

22

factual allegation.”

23

(2009) (quoting Twombly, 550 U.S. at 555).

24

must be enough to raise a right to relief above the speculative

25

level.”

26

///

27

///

28

///

Bell Atl. Corp. v. Twombly, 550 U.S. 544,

However, “a plaintiff’s

A

A court is not

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950

9

“Factual allegations

1

Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur

2

R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004)

3

(stating that the pleading must contain something more than “a

4

statement of facts that merely creates a suspicion [of] a legally

5

cognizable right of action.”)).

6

Furthermore, “Rule 8(a)(2) . . . requires a showing, rather

7

than a blanket assertion, of entitlement to relief.”

Twombly,

8

550 U.S. at 556 n.3 (internal citations and quotations omitted).

9

Thus, “[w]ithout some factual allegation in the complaint, it is

10

hard to see how a claimant could satisfy the requirements of

11

providing not only ‘fair notice’ of the nature of the claim, but

12

also ‘grounds’ on which the claim rests.”

13

Alan Wright & Arthur R. Miller, supra, at § 1202).

14

must contain “only enough facts to state a claim to relief that

15

is plausible on its face.”

16

have not nudged their claims across the line from conceivable to

17

plausible, their complaint must be dismissed.”

18

“[a] well-pleaded complaint may proceed even if it strikes a

19

savvy judge that actual proof of those facts is improbable, and

20

‘that a recovery is very remote and unlikely.’”

21

(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

22

Id. at 570.

Id. (citing 5 Charles
A pleading

If the “plaintiffs . . .

Id.

However,

Id. at 556

A court granting a motion to dismiss a complaint must then

23

decide whether to grant leave to amend.

24

“freely given” where there is no “undue delay, bad faith or

25

dilatory motive on the part of the movant . . . undue prejudice

26

to the opposing party by virtue of allowance of the amendment,

27

[or] futility of the amendment . . . .”

28

///
10

Leave to amend should be

1

Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital,

2

LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing

3

the Foman factors as those to be considered when deciding whether

4

to grant leave to amend).

5

weight.

6

party . . . carries the greatest weight.”

7

omitted).

8

is clear that “the complaint could not be saved by any

9

amendment.”

Not all of these factors merit equal

Rather, “the consideration of prejudice to the opposing
Id. (citations

Dismissal without leave to amend is proper only if it

Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d

10

1048, 1056 (9th Cir. 2007) (citations omitted); Ascon Props.,

11

Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989)

12

(“Leave need not be granted where the amendment of the complaint

13

. . . constitutes an exercise in futility . . . .”).

14
ANALYSIS

15
16
17

A.

Declaratory Relief

18
19

Defendants move to dismiss Plaintiffs’ declaratory relief

20

claim on the basis that Plaintiffs have failed to plead an actual

21

controversy exists.

22

(ECF No. 10 at 12-13.)

Plaintiffs’ first cause of action for declaratory relief is

23

based on the theory that Defendant Bank of New York has no

24

authority to collect on Plaintiffs’ loan and has no interest or

25

title in the subject property.

26

42, 54.)

27

///

28

///

(See Compl. ¶¶ 3,4, 9-12, 34-35,

11

1

Plaintiffs base their theory on the allegation that the parties

2

involved in the securitization of Plaintiffs’ Deed of Trust and

3

Promissory Note did not comply with the securitization procedures

4

set forth in the PSA governing the Countrywide Trust, thus,

5

Plaintiffs’ Deed of Trust and Promissory Note are not part of the

6

Countrywide Trust.

7

(See id. ¶¶ 4, 9, 10.)

Plaintiffs’ theory does not give rise to a legally

8

cognizable claim.

Plaintiffs’ claim is based on a alleged breach

9

of the PSA——the securitization agreement——which governs the

10

Countrywide Trust.

However, Plaintiffs lack standing to

11

challenge the process in which their mortgage was securitized

12

because they are not a party to the PSA.

13

investors of the Countrywide Trust, nor are they third-party

14

beneficiaries of the PSA, thus, they do not have standing to

15

challenge an alleged breach of that agreement.

16

Bascos v. Federal Home Loan Mortg. Corp, 2011 WL 3157063, at *6

17

(C.D. Cal. July 22, 2011) (“To the extent Plaintiff challenges

18

the securitization of his loan because Freddie Mac failed to

19

comply with the terms of the securitization agreement, Plaintiff

20

has no standing to challenge the validity of the securitization

21

of the loan as he is not an investor of the loan trust.”).10

Plaintiffs were not

See e.g.,

22
23
24
25
26
27
28

10

Other district courts have also held that borrowers do
not have standing to challenge breach of securitization
agreements. See Armeni v. America’s Wholesale Lender, 2012 WL
253967 at *2 (C.D. Cal. Jan. 25, 2012)(same); Junger v. Bank of
Am., N.A., 2012 WL 603262 (C.D. Cal. Feb. 24, 2012)(same); In re
Correia, 452 B.R. 319, 324 (1st Cir. B.A.P. 2011)(Where debtors
asked the court to declare mortgage assignment invalid based on
breach of Pooling Services Agreement, a contract to which debtors
were not a party nor third-party beneficiaries, the court found
that debtors lacked standing to object to breaches of the terms
(continued...)
12

1

Here, the Plaintiffs lack standing for the same reason;

2

namely, they are not a party to the PSA.

Plaintiffs’ claim for

3

declaratory relief is based on their theory of improper

4

securitization.

5

an alleged breach of the PSA, Plaintiffs’ declaratory relief

6

claim must fail.11

7

Plaintiffs’ claim for declaratory relief is granted.

Thus, because Plaintiffs lack standing to raise

Accordingly, Defendants’ Motion to Dismiss

8
9

B.

Negligence

10
11

Defendants move to dismiss Plaintiffs’ negligence claim on

12

the basis that Plaintiffs have failed to explain what legal

13

authority imposes a duty of care on Bank of New York and Bank of

14

America, and Plaintiffs have not provided any facts that suggest

15

that any alleged duty was breached.

16

///

17

///

(ECF No. 10 at 14.)

18
19
10

20
21
22
23

(...continued)
of the PSA); Rodenhurst v. Bank of Am., 773 F. Supp. 2d 886, 899
(D. Haw. 2011) (“The overwhelming authority does not support a
[claim] based upon improper securitization.”); Greene v. Home
Loan Servs. Inc., 2010 WL 3749243, *4 (D. Minn. Sept. 21, 2010)
(“Plaintiffs do not have standing to bring their challenge
regarding the securitization of the mortgage” because they were
“not a party to the Pooling and Servicing Agreement.”).

24
11

25
26
27
28

Plaintiffs have not sufficiently pled their claims
against Defendants for negligence, violation of the Truth in
Lending Act § 1641(g) and California Bus. & Prof. Code section
17200, to withstand Defendants’ Motion to Dismiss. Accordingly,
to the extent that Plaintiffs’ declaratory relief claim is based
on any of those claims, Plaintiffs’ declaratory relief claim must
be dismissed.
13

1

In order to state a cause of action for negligence, a

2

plaintiff must allege: (1) the defendant has a legal duty to use

3

due care; (2) the defendant breached such legal duty; (3) the

4

defendant’s breach was the proximate or legal cause of the

5

resulting injury; and (4) damage to the plaintiff.

6

County of San Mateo, 12 Cal. 4th 913, 917 (1996).

7

of a legal duty on the part of the defendant is a question of law

8

to be determined by the court.

9

California, Inc. v. Superior Court, 14 Cal. 4th 814, 819 (1997).

Ladd v.
The existence

Kentucky Fried Chicken of

10

When not provided by statute, the existence of such a duty

11

depends upon the foreseeability of the risk and a weighing of

12

policy considerations for and against the imposition of

13

liability.

14

9 Cal. App. 4th 88, 105 (1992).

Jacoves v. United Merchandising Corp.,

15

“[A]s a general rule, a financial institution owes no duty

16

of care to a borrower when the institution’s involvement in the

17

loan transaction does not exceed the scope of its conventional

18

role as a mere lender of money.”

19

Loan Ass’n, 231 Cal. App. 3d 1089, 1095-96 (affirming summary

20

judgment in favor of defendant lending institution because

21

defendant owed no duty to plaintiff in conducting its loan

22

processing procedures); see Wagner v. Benson, 101 Cal. App. 3d

23

27, 35 (1980) (finding liability to a borrower for negligence

24

arises only when the lender actively participates in the financed

25

enterprise beyond the domain of the usual money lender)(internal

26

quotations and citations omitted).

27

///

28

///
14

Nymark v. Heart Fed. Sav. &

1

“Under California law, a lender does not owe a borrower or third

2

party any duties beyond those expressed in the loan agreement,

3

except those imposed due to special circumstance.”

4

Trust Corp. v. BVS Dev., 42 F.3d 1206, 1214 (9th Cir. 1994)

5

(citing Nymark, 231 Cal. App. 3d at 1096); see also Castaneda v.

6

Saxon Mortg. Services, Inc., 687 F. Supp. 2d 1191, 1197-98 (E.D.

7

Cal. 2009)(concluding that a loan servicer owed no duty of care

8

to the plaintiff).

9

not a true trustee, and owes no fiduciary obligations; [it]

Resolution

Further, a trustee under a deed of trust “is

10

merely acts as a common agent for the trustor and beneficiary of

11

the deed of trust. [The trustee's] only duties are: (1) upon

12

default to undertake the steps necessary to foreclose the deed of

13

trust; or (2) upon satisfaction of the secured debt to reconvey

14

the deed of trust.” Wong v. Am. Servicing Co., Inc., 2009 WL

15

5113516, at *6 (E.D. Cal. Dec. 18, 2009) (alterations in

16

original) (internal quotation marks omitted).

17

Here, Plaintiffs fail to allege facts that show special

18

circumstances that would suggest either Bank of New York or Bank

19

of America owed Plaintiffs a duty of care.

20

Plaintiff has not alleged that Bank of New York, as trustee of

21

the Countrywide Trust, actively participated in Plaintiffs’ loan

22

transaction such that Bank of New York now owes Plaintiffs a duty

23

of care.

24

beneficiaries of or parties to the Countrywide Trust.

25

Plaintiffs fail to allege Bank of America, as loan servicer,

26

actively participated in the financed enterprise “beyond the

27

usual practices associated with the lending business,” Wong,

28

2009 WL 5113516 at *6.

For example,

Moreover, as previously noted, Plaintiffs are not

15

Similarly,

1

Plaintiffs have not alleged that either of these Defendants

2

assumed a duty or entered into a special relationship besides

3

what one would expect from an arm’s length mortgage transaction.

4

Plaintiffs do not allege that their relationship with Bank of

5

New York and Bank of America went beyond that of borrower,

6

beneficiary, and loan servicer.

7

common law or statutory authority that gives rise to a duty of

8

care.

9

of America owed a unique duty to not take actions against

Plaintiffs do not cite to any

Instead, Plaintiffs allege that Bank of New York and Bank

10

Plaintiffs which Bank of New York and Bank of America did not

11

have legal authority to take.

12

added).)

13

participation required to establish a duty of care under Nymark.

14

231 Cal. App. 3d at 1097.

15

(Compl. ¶¶ 95-96 (emphasis

This bare allegation fails to amount to the active

Plaintiffs have failed to establish that Bank of New York

16

and Bank of America owed Plaintiffs a duty of care.

Accordingly,

17

Defendants’ Motion to Dismiss Plaintiffs’ negligence claim is

18

granted.

19
20

C.

Truth In Lending Act § 1641(g)

21
22

Defendants move to dismiss that Plaintiffs’ Truth in Lending

23

Act (“TILA”), 15 U.S.C. 1640 et seq., claim on the basis that

24

Plaintiffs do not allege sufficient facts to trigger the

25

protection of TILA and fail to allege detrimental reliance.

26

(ECF No. 10 at 16.)

27

///

28

///
16

1

The purpose of the TILA is to ensure that users of consumer

2

credit are informed as to the terms on which credit is offered

3

them.

Jones v. E*Trade Mortg. Corp., 397 F.3d 810, 812 (9th Cir.

4

2005).

TILA “requires creditors to provide borrowers with clear

5

and accurate disclosures of terms dealing with things like

6

finance charges, annual percentage rates of interest, and the

7

borrower’s rights.”

8

(1998).

9

that when an entity purchases or is assigned the beneficial

Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412

TILA § 1641, titled “Liability of Assignees,” requires

10

interest in a loan on a property, it must notify the borrower in

11

writing within 30 days of when the loan was transferred.

12

15 U.S.C. § 1641(g).

13

particular information that the assignee’s notice must contain.

14

This subsection only applies to the “new owner or assignee of the

15

debt.”

16

See

Subsection (g) of § 1641 lists the

See id.

Here, Plaintiffs allege that TILA § 1641(g) applies to Bank

17

of New York, that Bank of New York did not provide written notice

18

to Plaintiffs within 30 days of the date of assignment, that

19

Plaintiffs did not receive notice of how to reach a Bank of New

20

York agent or where their Deed of Trust was recorded, and did not

21

receive any other relevant information about Bank of New York.

22

(Compl. ¶¶ 101-112.)

23

supporting factual allegations.

24

to provide any factual allegation regarding when the purported

25

transfer occurred, or why Bank of New York is subject to TILA’s

26

notice requirements.

27

that they did not receive notice required by TILA § 1641(g) from

28

Bank of New York.

However, Plaintiffs do not offer any
Significantly, Plaintiffs fail

Plaintiffs make only conclusory allegations

17

1

Plaintiffs’ cursory recitation of the requirements of TILA §

2

1641(g) is insufficient to support a TILA violation claim and to

3

survive Defendants’ Motion to Dismiss.

4

1950.

5

TILA claim is granted.

Iqbal, 129 S. Ct. at

Accordingly, Defendants’ Motion to Dismiss Plaintiffs’

6
7

D.

California Bus. & Prof. Code section 17200

8
9

Defendants move to dismiss Plaintiffs’ claim for violations

10

of California Bus. & Prof. Code section 17200 on the basis that

11

Plaintiffs’ claims are not supported by their factual

12

allegations.

13

(ECF No. 10 at 17-19.)

California’s Business and Professions Code §§ 17200 et seq.

14

(more commonly known as California’s Unfair Competition Law

15

(“UCL”)) defines unfair competition as “any unlawful, unfair or

16

fraudulent business act or practice.”

17

practices “forbidden by law, be it civil or criminal, federal,

18

state, or municipal, statutory, regulation, or court-made.”

19

Saunders v. Superior Court, 27 Cal. App. 4th 832, 838-39 (1994)

20

(citing People v. McKale, 25 Cal. 3d 626, 632(1979)).

21

cause of action based on an “unlawful” business act or practice

22

under the UCL, a plaintiff must allege facts sufficient to show a

23

violation of some underlying law.

24

“Unlawful” practices are

To state a

McKale, 25 Cal.3d at 635.

A business act or practice is “unfair” when the conduct

25

“threatens an incipient violation of an antitrust law, or

26

violates the policy or spirit of one of those laws because its

27

effects are comparable to a violation of the law, or that

28

otherwise significantly threatens or harms competition.”
18

1

Cel-Tech Communications, Inc. v. L.A. Cellular Tel. Co.,

2

20 Cal.4th 163, 187 (1999).

3

based on an “unfair” business act or practice, a plaintiff must

4

allege facts showing the “unfair” nature of the conduct and that

5

the harm caused by the conduct outweighs any benefits that the

6

conduct may have.

7

App. 3d 735, 740 (1980).

8
9

To sufficiently plead an action

Motors, Inc. v. Times Mirror Co., 102 Cal.

A “fraudulent” business act or practice is one in which
members of the public are likely to be deceived.

Hall v. Time,

10

Inc., 158 Cal. App. 4th 847, 849 (2008); Olsen v. Breeze, Inc.,

11

48 Cal. App. 4th 608, 618 (1996)(“does not refer to the common

12

law tort of fraud but only requires a showing members of the

13

public ‘are likely to be deceived’”).

14

cause of action based on a “fraudulent” business act or practice,

15

the plaintiff must allege that consumers are likely to be

16

deceived by the defendant’s conduct.

17

Television, Inc. v. General Foods Corp., 35 Cal. 3d 197, 212

18

(1983).

19

practices under § 17200 “must state with reasonable particularity

20

the facts supporting the statutory elements of the violation.

21

Khoury v. Maly’s of California, Inc., 14 Cal. App. 4th 612, 619

22

(1993).

23

Thus, in order to state a

Committee on Children’s

Furthermore, a plaintiff alleging unfair business

In this case, Plaintiffs fail to plead a UCL claim under any

24

available theory.

First, the "unlawful" prong of the UCL

25

requires an underlying violation of a state or federal statute or

26

common law.

27

Defendants’ Motion as to Plaintiffs’ negligence and TILA claims.

28

///

As discussed above, the Court has granted

19

1

As a result, these claims cannot form the basis of Plaintiffs’

2

UCL claim.

3

Plaintiffs do here, without more, is not sufficient to maintain a

4

plausible claim.

5

Plaintiffs’ conclusory statements suggesting that Defendants are

6

in violation of certain statutes are not sufficient to withstand

7

a motion to dismiss.

8
9

In addition, merely listing Civil Code violations, as

Iqbal, 129 S. Ct. at 1949.

Ultimately,

Next, Plaintiffs do not adequately plead an independent UCL
claim for unfair or fraudulent business practices because

10

Plaintiffs fail to allege facts to support any identifiable

11

wrongdoing by specific Defendants.

12

conclusory recitation of the elements of these claims do not give

13

proper notice to the respective Defendants as to the alleged

14

misconduct.

15

Defendants’ Motion to Dismiss.

16

to Dismiss Plaintiffs’ UCL claim is granted.

Likewise, Plaintiffs’ mere

Accordingly, Plaintiffs’ UCL claim cannot survive
Accordingly, Defendants’ Motion

17
18

E.

Quiet Title

19
20

Defendants move to dismiss Plaintiffs’ quiet title claim on

21

the basis that Plaintiffs do not and cannot allege that they have

22

made an offer to tender or tendered the amount due on the loan.

23

(ECF No. 12 at 20.)

24

title action, Plaintiffs must pay the outstanding debt owed on

25

the subject property.

Defendants argue that to maintain a quiet

26

California Code of Civil Procedure § 760.010 provides for a

27

quiet title action “to establish title against adverse claims to

28

real or personal property or any interest therein.”
20

1

To state a cause of action for quiet title, a plaintiff must

2

plead: (1) a legal description of the property that is the

3

subject of the action; (2) the title of the plaintiff and the

4

basis upon which such title is asserted; (3) the adverse claims

5

to the title of the plaintiff against which a determination is

6

sought; (4) the date as of which the determination is sought; and

7

(5) a prayer for the determination of the title of the plaintiff

8

against the adverse claims.

9

The complaint in an action to quiet title must be verified,

See Cal. Civ. Proc. Code § 760.020.

10

unless plaintiff is a public entity.

11

action to quiet title, the plaintiff must stand on the strength

12

of his or her own title and not the weaknesses of the defendant’s

13

title.

14

Id.

Additionally, in an

Millard v. Faus, 268 Cal. App. 2d 76, 82 (1968).

Further, under California law, “it is well-settled that ‘a

15

mortgagor cannot quiet his title against the mortgagee without

16

paying the debt secured.’”

17

737 F. Supp. 2d 1018, 1032 (N.D. Cal. 2010) (quoting Shimpones v.

18

Stickney, 219 Cal. 637, 649 (1934)).

19

quiet title claim, a plaintiff ‘is required to allege tender of

20

the proceeds of the loan at the pleading stage.’”

21

Velasquez v. Chase Home Fin., LLC, 2010 WL 3211905, at *4 (N.D.

22

Cal. Aug. 12, 2010)); see also Hensley v. Bank of New York

23

Mellon, 2010 WL 5418862, at *3 (E.D. Cal. Dec. 23, 2010)

24

(dismissing a quiet title claim where the plaintiff did “not

25

allege that she has tendered, or is able to tender”).

26

Briosos v. Wells Fargo Bank,

Therefore, “to maintain a

Id. (quoting

Contrary to Defendants’ argument, Plaintiffs have adequately

27

alleged their ability to tender and that Plaintiffs have offered

28

to tender their obligation.

(See Compl. ¶ 123.)
21

1

Specifically, the allege they have offered and are ready, willing

2

and able to tender their obligation in full.

3

Plaintiff has sufficiently alleged all the requisite elements

4

under California Code of Civil Procedure section 760.20 to

5

support a cause of action for quiet title.

(Id.)

Further,

(See id. ¶¶ 124-128.)

6

However, Plaintiffs base their quiet title action on the

7

alleged weakness of Defendants’ interest in title, instead of the

8

strength of their own title.

9

claim for declaratory relief, Plaintiffs’ quiet title claim is

Specifically, similar to their

10

based on the allegation that Heritage failed to properly transfer

11

Plaintiffs’ Deed of Trust and Promissory Note into the

12

Countrywide Trust in violation of the Countrywide Trust PSA, and

13

thus, Bank of New York, as Trustee of the Countrywide Trust, has

14

no interest in Plaintiffs’ Deed of Trust or Promissory Note and

15

no authority to enforce Plaintiffs’ loan.

16

title action relies on the assumption that Plaintiffs’ Deed of

17

Trust and Promissory Note are not part of the Countrywide Trust

18

res, and thus, Defendants do not have any interest in the subject

19

property or authority to enforce Plaintiffs’ loan.

20

discussed, Plaintiffs have failed to establish that they have

21

standing to challenge such a breach of the securitization

22

agreement governing the Countrywide Trust.

23

Plaintiffs’ quiet title claim must be dismissed.

24

Defendants’ Motion to Dismiss Plaintiffs’ quiet title claim is

25

granted.

26

///

27

///

28

///
22

Plaintiffs’ quiet

As previously

Therefore,
Accordingly,

CONCLUSION

1
2
3

For the reasons stated above, Defendants’ Motion to Dismiss

4

(ECF No. 10) is granted with leave to amend.

5

an amended complaint not later than twenty (20) days following

6

the date of this Memorandum and Order should they choose to do

7

so.

8
9

Plaintiffs may file

IT IS SO ORDERED.
Dated: March 29, 2012

10
11
12

_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
23