Dick v. American Home Mortgage Servicing Inc., et al

Filing 130

ORDER signed by Senior Judge William B. Shubb on 09/28/17 GRANTING 124 Motion for Judgment without leave to amend. CASE CLOSED (Benson, A.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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GABRIEL DICK and JILL DICK,

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Plaintiffs,
v.

CIV. NO. 2:13-00201 WBS CKD
MEMORANDUM AND ORDER RE: MOTION
FOR JUDGMENT ON THE PLEADINGS

AMERICAN HOME MORTGAGE
SERVICING INC., et al.,
Defendants.

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----oo0oo---Plaintiffs Gabriel Dick and Jill Dick (collectively

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“plaintiffs”) brought this action against Deutsche Bank National

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Trust, as Trustee for Ameriquest Mortgage Securities, Inc.;

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Homeward Residential, Inc. (formerly known as American Home

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Mortgage Servicing, Inc.); and Power Default Services, Inc.

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(collectively “defendants”) alleging wrongful foreclosure of

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their home, fraud,1 and cancellation of instruments.2

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before the court is defendants’ Motion for judgment on the

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pleadings pursuant to Federal Rule of Civil Procedure 12(c)

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(“Rule 12(c)”).

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I.

Presently

Factual and Procedural Background

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In January 2003, plaintiffs obtained a $270,000 loan

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from Ameriquest Mortgage Company (“Ameriquest”) secured by a Note

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and Deed of Trust on property located in Grass Valley, California

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(“the property”).

(Second Am. Compl. (“SAC”) ¶¶ 2-3, 12-13

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(Docket No. 41); Defs.’ Req. for Judicial Notice in Supp. of

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Ameriquest’s Mot. to Dismiss (“Ameriquest RJN”) Ex. A (Docket No.

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58-1).)

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Plaintiffs allege that the loan was to be transferred

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into a securitized trust that had a closing date--the date by

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which all Notes and Deeds of Trust must be transferred into the

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trust--of July 1, 2003.

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years after the trust had closed, Ameriquest assigned all

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beneficial interest in the Note and Deed of Trust to Deutsche

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Bank National Trust Company (“Deutsche Bank”) by way of a

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Corporate Assignment and Deed of Trust.

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Plaintiffs allege that, because the Deed of Trust was not

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transferred to the securitized trust by the closing date, this

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2014.

On February 20, 2009, five and a half

(SAC ¶ 18; Ex. 1.)

Plaintiffs’ fraud claim was dismissed on January 14,
(Docket No. 72).

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Plaintiffs originally brought this action against three
additional defendants--Town and Country Title Services;
Ameriquest Mortgage Co.; and American Home Mortgage Servicing,
Inc. They were dismissed with prejudice on February 13, 2017.
(Docket No. 120.)
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assignment is invalid.

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(Id. ¶ 35.)

A Notice of Default and Election to Sell Under Deed of

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Trust was recorded on October 12, 2010.

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Trustee’s Sale was executed and recorded on February 24, 2011.

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(Id. ¶ 24, Ex. 3.)

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public auction and Deutsche Bank became the owner.

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RJN ¶ 8, Ex. H.)

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recorded, declaring that the property had been sold to Deutsche

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Bank.

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A Notice of

On April 29, 2011, the property was sold at
(Ameriquest

On May 6, 2011, a Trustee’s Deed Upon Sale was

(SAC ¶ 25, Ex. 4.)

actually occurred.

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(Id. ¶ 21.)

Plaintiffs allege this sale never

(Id.)

In October 2011, plaintiffs filed a Chapter 7

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bankruptcy petition.

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Ex. I.)

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Ameriquest and other named defendants to commence a bankruptcy

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adversary proceeding.

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filed the amended Complaint in that proceeding on February 9,

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2012.

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(Bankr. No. 11-45476; Ameriquest RJN ¶ 9,

On January 5, 2012, plaintiffs filed a Complaint against

(Bankr. Adv. No. 12-02007.)

Plaintiffs

Plaintiffs obtained a discharge in bankruptcy on

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February 13, 2012, (Ameriquest RJN Ex. J), and this court granted

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plaintiffs’ Motion to withdraw the reference of the adversary

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complaint to bankruptcy court on July 16, 2013.

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On August 26, 2013, defendants filed a Motion to dismiss

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plaintiffs’ First Amended Complaint, which was granted on

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September 18, 2013.

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on October 8, 2013, re-alleging claims of wrongful foreclosure,

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fraud, and cancellation of instruments.

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Defendants then moved to dismiss the SAC for failure to state a

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claim pursuant to Rule 12(b)(6).

(Docket No. 40.)

(Docket No. 32.)

Plaintiffs filed the SAC

(Docket No. 41.)

On January 14, 2014, the court
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dismissed plaintiffs’ claims without leave to amend.

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72.)

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(Docket No.

On January 31, 2014, plaintiffs filed a notice of

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appeal.

(Docket No. 74).

On February 22, 2016, the Ninth

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Circuit remanded the case for reconsideration in light of the

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California Supreme Court’s decision in Yvanova v. New Century

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Mortgage Corp., 62 Cal. 4th 919 (2016).

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Subsequently, on May 26, 2016, this court vacated its dismissal

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of plaintiffs’ wrongful foreclosure and cancellation of

(Docket No. 79.)

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instruments claims, but did not amend or vacate its dismissal of

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plaintiffs’ fraud claim.

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(Docket No. 106.)

On August 15, 2017, defendants filed the pending motion

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for judgment on the pleadings.

Plaintiffs did not file an

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opposition or a statement of non-opposition as required by Local

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Rule 230(c).

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Rule 230(c) from being heard at oral argument, the court took the

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motion under submission without oral argument on either side.

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II.

Accordingly, because plaintiffs are precluded under

Legal Standard

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“After the pleadings are closed—but early enough not to

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delay trial—a party may move for judgment on the pleadings.”

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Fed. R. Civ. P. 12(c).

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court takes all factual allegations of the non-moving party as

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true and construes them in the light most favorable to that

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party.

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(citing Turner v. Cook, 362 F. 3d 1219, 1225 (9th Cir. 2004)).

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“Judgment on the pleadings is properly granted when there is no

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issue of material fact in dispute, and the moving party is

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entitled to judgment as a matter of law.”

For the purposes of such a motion, the

Fleming v. Pickard, 581 F. 3d 922, 925 (9th Cir. 2009)

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Id.

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III. Discussion
A. Wrongful Foreclosure

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The Complaint alleges that defendants cannot foreclose

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on the property or demand mortgage payments from plaintiffs

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because the Deed of Trust and Note were not transferred into the

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trust by its closing date, thereby violating the Pooling Service

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Agreement (“PSA”).

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not claim to be, a party to any of the assignments of their loan,

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Deed of Trust, or Note.

(SAC ¶ 34-36.)

Plaintiffs were not, and do

Defendants argue that plaintiffs

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therefore lack standing to challenge any allegedly untimely

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assignment to the trust.

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(Docket No. 124).)

(Defs.’ Mot for J. on Pleadings 3

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Pursuant to the Ninth Circuit’s remand, this court has

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now carefully considered the California Supreme Court’s decision

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in Yvanova.

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determination to dismiss plaintiffs’ claims without leave to

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amend.

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assignment of a note and deed of trust on the basis of defects

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that render the assignment void, but does not have standing to

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challenge a voidable assignment.

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“When an assignment is merely voidable, the power to ratify or

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avoid the transaction lies solely with the parties to the

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assignment.”

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one cannot be ratified or validated by the parties to it even if

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they so desire.”

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2017).

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That case actually strengthens this court’s original

Under Yvanova, a borrower has standing to challenge an

Id. at 936.

62 Cal. 4th at 942-43 (2016).

“Unlike a voidable transaction, a void

In re Turner, 859 F. 3d 1145, 1149, (9th Cir.

The Turner court found that an act in violation of a
trust agreement renders the assignment voidable, not void.
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Id.

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(affirming dismissal of wrongful foreclosure claim challenging

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assignment of deed of trust because any failure to comply with

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pooling agreement’s deadline rendered transfer voidable but not

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void.)

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Appeal that have held that “such an assignment is merely

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voidable.”

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4th 808, 815 (2016); see also Mendoza v. JP Morgan Chase Bank,

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N.A., 6 Cal. App. 5th 802 (2016); Yhudai v. Impac Funding Corp.,

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1 Cal. App. 5th 1252 (2016).

Id.

This holding follows the three California Courts of

Saterbak v. JP Morgan Chase Bank, N.A., 245 Cal. App.

Therefore, a borrower does not have

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standing to challenge a purported untimely assignment of a deed

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of trust.

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Here, plaintiffs allege that the assignment of the Deed

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of Trust and Note into the trust violated the trust agreement

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because it was submitted after the trust’s closing date.

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45.)

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the Deed of Trust to the trust pool at most rendered the

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assignment voidable, not void.

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parties to the assignment, have no standing to challenge the

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assignment.

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wrongful foreclosure claim fails as a matter of law.

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(SAC ¶

However, any deficiencies in the assignment or recording of

Thereby, plaintiffs, who were not

Accordingly, the court finds that plaintiffs’

B. Cancellation of Instruments

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A borrower seeking to cancel an assignment under

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California Civil Code § 3412 must allege that the assignment

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could cause that borrower serious injury.3

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As explained by

California Civil Code § 3412 states that “[a] written
instrument, in respect to which there is a reasonable
apprehension that if left outstanding it may cause serious injury
to a person against whom it is void or voidable, may, upon his
application, be so adjudged, and ordered to be delivered up or
canceled.”
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Saterbak, an assignment causes no serious injury if a borrower’s

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obligations remained unchanged after the assignment, even if the

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borrower faces the possibility of losing her home or harm to her

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credit based on a subsequent foreclosure, because that harm is

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caused by her default, not the assignment.

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818-20.

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245 Cal. App. 4th at

Here, plaintiffs have not and cannot allege serious

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injury under § 3412 because their obligations remained the same

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after the assignment, meaning the harm they allege is the harm

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caused by their default, not by the assignment.

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plaintiffs have not properly alleged the requisite injury,

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plaintiffs’ cancellation of instruments claim fails.

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Thus, because

Defendants request that the court dismiss each of

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plaintiffs’ claims with prejudice and without leave to amend.

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Generally, a court should “freely give leave [to amend] when

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justice so requires.”

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district court need not grant leave to amend where the amendment:

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(1) prejudices the opposing party; (2) is sought in bad faith;

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(3) produces an undue delay in litigation; or (4) is futile.”

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AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F. 3d 946, 951

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(9th Cir. 2006).

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when they lack standing to challenge the assignment of their Deed

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of Trust would be futile because plaintiffs cannot allege more

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facts that would render the assignment void instead of voidable.

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See Palmer, 2017 WL 2311680, at *6; Walker, 2015 WL 12746201, at

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*7.

Fed. R. Civ. P. 15(a)(2).

However, “a

Granting plaintiffs leave to amend their claims

Thus, the court will not grant leave to amend.

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IT IS THEREFORE ORDERED that defendants’ Motion for

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Judgment on the Pleadings be, and the same hereby is, GRANTED,

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without leave to amend.

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Dated:

September 28, 2017

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