Brink v. Alternative Loan Trust 2006-39CB, et al.

Filing 37

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Dale A. Drozd on 5/7/2014 RECOMMENDING that Defendant's Motion 31 to Dismiss be granted; Plaintiff's 29 Amended Complaint be dismissed without leave to amend; and this action be dismissed; Referred to Judge Lawrence K. Karlton; Objections due within 14 days after being served with these F & R's. (Reader, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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DAVID L. BRINK,

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Plaintiff,

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No. 2:13-cv-0862 LKK DAD PS

v.

FINDINGS AND RECOMMENDATIONS

ALTERNATIVE LOAN TRUST 200639CB; BANK OF NEW YORK MELLON,

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Defendants.

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This matter came before the court on January 24, 2014, for hearing of defendant‟s motion

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to dismiss plaintiff‟s amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil

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Procedure. Plaintiff David Brink, proceeding pro se in this action, appeared telephonically on his

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own behalf. Attorney Rachel Wintterle appeared telephonically on behalf of the defendant The

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Bank of New York Mellon fka Bank of New York as Trustee for the Certificate Holders of the

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CWALT Inc., Alternative Loan Trust 2006-39CB, Mortgage Pass-Through Certificates, Series

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2006-39CB (erroneously sued as Alternative Loan Trust 2006-39CB and Bank of New York

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Mellon).
Upon consideration of the arguments on file and at the hearing, and for the reasons set

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forth below, the undersigned will recommend that defendant‟s motion to dismiss be granted.

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BACKGROUND

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Plaintiff David Brink commenced this action on May 2, 2013, by paying the required

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filing fee and filing a complaint. (Dkt. No. 1.) On November 5, 2013, plaintiff requested leave to

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file an amended complaint, (Dkt. No. 28), along with a proposed amended complaint naming as

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defendants The Bank of New York Mellon, (“BNYM”), and New Penn Financial dba Resurgent

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Mortgage Servicing, Inc.1 (Dkt. No. 29.) On November 13, 2013, plaintiff‟s request for leave to

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file the amended complaint was granted and the amended complaint filed November 5, 2013, was

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deemed the operative complaint. (Dkt. No. 30.)

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On November 25, 2013, defendant BNYM filed the motion to dismiss now pending before

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the court. (Dkt. No. 31.) Plaintiff filed an opposition on December 9, 2013, (Dkt. No. 33), and

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defendant filed a reply on January 8, 2014. (Dkt. No. 34.)

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STANDARDS
I. Legal Standards Applicable to Motions to Dismiss Pursuant to Rule 12(b)(6)

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The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal

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sufficiency of the complaint. N. Star Int‟l v. Ariz. Corp. Comm‟n, 720 F.2d 578, 581 (9th Cir.

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1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep‟t, 901

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F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to

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relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A

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claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

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Iqbal, 556 U.S. 662, 678 (2009).

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In determining whether a complaint states a claim on which relief may be granted, the

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court accepts as true the allegations in the complaint and construes the allegations in the light

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New Penn Financial dba Resurgent Mortgage Servicing (“Resurgent”) has not appeared in this
action and it does not appear from the docket that plaintiff ever served defendant Resurgent with
a copy of his amended complaint. Rule 4 of the Federal Rules of Civil Procedure provides that a
defendant must be served within 120 days after the complaint is filed. In the event these findings
and recommendations are not adopted by the assigned District Judge and this action is not closed,
the undersigned will address this issue in a future order.
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most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v.

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United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less

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stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519,

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520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the

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form of factual allegations. United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th

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Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than

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an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A

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pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the

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elements of a cause of action.” Twombly, 550 U.S. at 555. See also Iqbal, 556 U.S. at 676

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(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

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statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove

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

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not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,

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459 U.S. 519, 526 (1983).

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In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court is permitted

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to consider material which is properly submitted as part of the complaint, documents that are not

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physically attached to the complaint if their authenticity is not contested and the plaintiff‟s

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complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles,

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250 F.3d 668, 688-89 (9th Cir. 2001).

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ANALYSIS
In his amended complaint plaintiff alleges that the “[d]efendants are strangers to a Deed

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of Trust and Note claiming a right or interest to Plaintiff[‟s] home via an ex post facto assignment

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of a Deed of Trust . . . . to a New York Trust years after the Trust‟s closing date . . . .” (Am.

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Compl. (Dkt. No. 29) at 2.) 2 Additionally, the amended complaint alleges as follows. On or

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about October 28, 2011, an “Assignment of Deed of Trust . . . was executed in California and

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recorded in Sacramento County Record‟s Office on November 1, 2011 . . . .” (Id. at 12.) The

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Page number citations such as this one are to the page number reflected on the court‟s CM/ECF
system and not to page numbers assigned by the parties.
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assignment was executed by Mortgage Electronic Registrations Systems, Inc., (“MERS”), and

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purported to transfer to the Alternative Loan Trust 2006-39CB, (“Trust”), which was controlled

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by defendant BNYM acting as the trustee, the deed of trust to plaintiff‟s home. (Id.) “[U]nder

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color of this assignment,” defendants are now “threatening an imminent taking of plaintiff‟s

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property.” (Id.)
However, the assignment of plaintiff‟s deed of trust did not “comport with the

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requirements” of the Trust‟s Pooling and Servicing Agreement, (“PSA”), and the law of the state

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of New York, which governed the Trust. (Id. at 13.) Specifically, the Trust‟s closing date was

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November 30, 2006, and thus the October 28, 2011 transfer of plaintiff‟s deed to the Trust came

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“years after the closing date of the trust.” (Id. at 15.) Moreover, “[a]ccording to the PSA only the

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depositor may make assignments to the trust,” (id. at 13), and thus “[u]nder the PSA, MERS as a

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Nominee lacks authority to transfer deed or notes to the trustee of the trust fund.” (Id. at 15.)
In this regard, plaintiff alleges that “[t]he attempt by MERS to assign the deed . . . is . . . a

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strict violation of the PSA,” (id. at 14), the assignment is “fake,” (id. at 15), and “improper under

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the terms required by [the] PSA.” (Id. at 16.) Moreover, the “record was created to forge a

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(false) impression in the public record that defendant [BNYM] would pretend that they had a

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legal right to foreclose on Plaintiff‟s property.” (Id. at 14.)

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Based on these allegations, plaintiff in his amended complaint purports to state causes of

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action for the violation of California Business and Professions Code ' 17200, “cancellation of

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instrument,” declaratory relief, injunctive relief, negligent misrepresentation, “statutorily

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defective foreclosure,” and violation of California‟s Homeowners Bill of Rights.3

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In its motion to dismiss defendant argues, in part, that plaintiff lacks standing to challenge

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the securitization process because plaintiff is not a party to, or a third party beneficiary of the

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PSA. (MTD (Dkt. No. 31-1) at 13.) Plaintiff concedes in his opposition to the pending motion

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that courts have held that a non-party to the PSA lacks standing to challenge the PSA, but he

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The court notes that declaratory relief and injunctive relief are, however, not causes of action
but are instead specific forms of relief.
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argues that he is simply trying to “use the breaches [of the PSA] as evidence that the Defendants

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are not the owner of his note.” (Pl.‟s Opp‟n (Dkt. No. 33 at 8-9.)
“It is well settled that mortgagees who are not parties to a PSA lack standing to allege

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violations of a PSA or to otherwise bring claims on the basis that a PSA was violated.”4 Kramer

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v. Bank of America, N.A., No. 1:13-CV-1499-AWI-MJS, 2014 WL 1577671, at *4 (E.D. Cal.

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Apr. 17, 2014). See, e.g., Gutierrez v. Bank of America, N.A., No. 2:13-cv-1695-TLN-AC, 2014

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WL 1379883, at *6 (E.D. Cal. Apr. 4, 2014) (“The Court adopts the majority view that Plaintiffs

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do not have standing to challenge the PSA.”); Sabherwal v. Bank of N.Y. Mellon, No. 11cv2874

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WQH-BGS, 2013 WL 101407, at *7 (S.D. Cal. Jan. 8, 2013) (“Plaintiffs are not investors of the

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loan trust and lack standing to challenge the validity of the securitization of the loan.”); Dinh v.

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Citibank, N.A., No. SA CV 12-1502-DOC (RNBx), 2013 WL 80150, at *3-4 (C.D. Cal. Jan. 7,

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2013) (finding the argument that defendants failed to comply with PSA “fails, as this Court, as

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well as numerous others, have addressed and rejected similar arguments.”); Armstrong v. Chevy

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Chase Bank, FSB, No. 5:11-cv-5664 EJD, 2012 WL 4747165, at *2 (N.D. Cal. Oct. 3, 2012)

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(“Plaintiffs theory of liability fails to support a plausible claim because Plaintiffs lack standing to

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allege a breach of the PSA. Indeed, they are neither direct parties to nor third-party beneficiaries

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of that agreement.”); Hale v. World Sav. Bank, No. CIV 2:12-cv-1462-GEB-JFM (PS), 2012 WL

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4675561, at *6-7 (E.D. Cal. Oct. 1, 2012) (“Finally, to the extent plaintiffs base their claims on

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the theory that defendants allegedly failed to comply with the terms of the PSA, the court notes

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that they lack standing to do so because they are neither a party to, nor a third party beneficiary

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of, that agreement”).

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In this regard, plaintiff‟s argument that he is simply trying to establish that the defendant

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cannot foreclose on his home because it is not the owner of the note is premised on the argument

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Here, plaintiff does not allege that he is a party to the PSA or a third party beneficiaries of the
PSA. Moreover, each of the causes of action found in plaintiff‟s amended complaint is based on
his argument that the transfer of his deed to the Trust violated the Trust‟s PSA. Indeed, plaintiff
states in his opposition to the pending motion that his argument that “Defendants‟ noncompliance
with the Pooling and Service Agreements is a violation of New York [law] . . . is at the center of
Plaintiff‟s claims.” (Pl.‟s Opp‟n (Dkt. No. 33) at 11.)
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that the transfer of his note to the Trust violated the PSA.5 As another judge of this court has

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observed in response to a similar argument:
Plaintiff attempts to sidestep case law by arguing „failure to
securitize his Note makes it impossible‟ for Defendants to „enforce
in any manner whatsoever.‟ Plaintiff‟s failure-to-securitize
argument rests on a PSA violation. The Court rejects this argument
because Plaintiff does not have standing to bring a claim based on a
PSA violation.

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Kramer, 2014 WL 1577671 at *4.
Plaintiff also acknowledges in his opposition that, “[a] number of cases have held that

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defects in the securitization process cannot be raised by a mortgagee.” (Pl.‟s Opp‟n (Dkt. No. 33)

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at 8.) Plaintiff, however, encourages this court to follow the holdings of Glaski v. Bank of

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America, N.A., and a subsequent decision which relied upon Glaski in part, Wells Fargo Bank,

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N.A. v Erobobo.

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In Glaski v. Bank of America, N.A., 218 Cal. App.4th 1079 (2013), the California Court
of Appeal for the Fifth Appellate District found that a borrower

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may challenge the securitized trust‟s chain of ownership by alleging
the attempts to transfer the deed of trust to the securitized trust
(which was formed under New York law) occurred after the trust‟s
closing date. Transfers that violate the terms of the trust instrument
are void under New York law, and borrowers have standing to
challenge void assignments of their loans . . . .

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Id. at 1083.

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This holding by the state appellate court in Glaski, however, has been rejected by the

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California Court of Appeal for the Fourth Appellate District, which concluded that

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[a]s an unrelated third party to the alleged securitization, and any
other subsequent transfers of the beneficial interest under the

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Even if the court were to ignore plaintiff‟s lack of standing and accept his assertion that his
deed was transferred into the Trust after the Trust‟s closing date, that fact alone would not prevent
the foreclosure upon plaintiff‟s home. See Frazier v. Aegis Wholesale Corp., No. C-11-4850
EMC, 2011 WL 6303391, at *5 (N.D. Cal. Dec. 16, 2011) (“Even if Plaintiffs were right that
their loan was not timely transferred to the trust, that does not mean that the owner of the note and
deed of trust could not therefore foreclose. That would simply mean that the loan was not put
into the trust (i.e., the investment vehicle). It does not necessarily affect the trustee‟s authority set
forth in the deed and assignment documents to initiate foreclosure.”)
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promissory note, [plaintiff] lacks standing to enforce any
agreements, including the investment trust‟s pooling and servicing
agreement, relating to such transactions.
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 515 (2013).

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“District courts in the Ninth Circuit have generally rejected Glaski, and sided with

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Jenkins, noting Glaski is a minority view.” Lanini v. JPMorgan Chase Bank, No. 2:13-CV-0027

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KJM EFB, 2014 WL 1347365, at *5 (E.D. Cal. Apr. 4, 2014). See, e.g., Flores v. EMC Mortg.

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Co., No. CV F 14-0047 LJO GSA, 2014 WL 641097, at *6 (E.D. Cal. Feb. 18, 2014) (“Of key

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importance, numerous courts disagree with and refuse to follow Glaski, including this Court.”);

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Snell v. Deutsche Bank Nat. Trust Co., No. 2:13-cv-2178-MCE-DAD, 2014 WL 325147, at *4

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(E.D. Cal. Jan. 29, 2014) (“Numerous courts have subsequently expressed their disagreement

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with Glaski and have continued to follow the Jenkins approach.”); Haddad v. Bank of America,

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N.A., No. 12cv3010 WQH JMA, 2014 WL 67646, at *4 (S.D. Cal. Jan. 8, 2014) (“This Court

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finds the reasoning in the above-cited caselaw to be more persuasive than the reasoning in

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Glaski.”); Rivac v. Ndex West LLC, No. C 13-1417 PJH, 2013 WL 6662762, at *4 (N.D. Cal.

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Dec. 17, 2013) (“This court is persuaded by the majority position of courts within this district,

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which is that Glaski is unpersuasive, and that plaintiffs lack standing to challenge noncompliance

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with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the

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PSA.”); Apostol v. CitiMortgage, Inc., Case No. 13-cv-1983, 2013 WL 6328256, at *7 (N.D. Cal.

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Nov. 21, 2013) (“Moreover, courts in this District have expressly rejected Glaski and adhered to

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the majority view that individuals who are not parties to a PSA cannot base wrongful foreclosure

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claims on alleged deficiencies in the PSA/securitization process.”); Newman v. Bank of New

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York Mellon, No. 1:12-CV-1629 AWI GSA, 2013 WL 5603316, at *3 (E.D. Cal. Oct. 11, 2013)

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(“However, no courts have yet followed Glaski and Glaski is in a clear minority on the issue.

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Until either the California Supreme Court, the Ninth Circuit, or other appellate courts follow

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Glaski, this Court will continue to follow the majority rule.”).

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In Erobobo, 972 N.Y.S. 2d 147, 2013 WL 1831799 (Sup. Ct. Apr. 29, 2013), a New York

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state trial court held that because the mortgage at issue was transferred into the trust after the

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trust‟s closing date the assignment was in contravention of the PSA and was void, and not simply
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voidable, resulting in a question of fact as to who owned the mortgage. 2013 WL 1831799 at *9.

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However, as is true with the decision in Glaski, this holding in Erobobo has also been the subject

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of criticism. See, e.g., Anh Nguyet Tran v. Bank of New York, No. 13 Civ. 580 (RPP), 2014 WL

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1225575, at *5 (S.D. N.Y. Mar. 24, 2014) (finding Glaski and Erobobo “run counter to better-

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reasoned cases, which apply the rule that a beneficiary can ratify a trustee‟s ultra vires act”);

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Felder v. Countrywide Home Loans, Civil Action No. H-13-0282, 2013 WL 6805843, at *19

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(S.D. Tex. Dec. 20, 2013) (“The court finds Erobobo‟ s reasoning unpersuasive.”); Halacy v.

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Wells Fargo Bank, N.A., Civil Action No. 12-11447-TSH, 2013 WL 6152351, at *3 (D. Mass.

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Nov. 21, 2013) (“Erobobo has been criticized and multiple federal courts, including in this

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District, have held that under New York law, an assignment of a mortgage into a trust in violation

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of the terms of the PSA is voidable, not void.”).

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Therefore, based upon the weight of authority the undersigned concludes that unless or

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until the California Supreme Court or the Ninth Circuit embraces the holdings of Glaski and

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Erobobo, this court should continue to follow the majority rule. Application of that majority rule

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compels the finding that a plaintiff lacks standing to challenge the alleged noncompliance with a

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Trust‟s PSA unless the plaintiff is a party to the PSA or a third party beneficiaries of the PSA.

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Accordingly, for the reasons stated above, the undersigned finds that plaintiff lacks

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standing to bring his alleged causes of action because those causes of action are premised on an

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alleged violation of the Trust‟s PSA to which plaintiff was neither a party nor a third party

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beneficiary.

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LEAVE TO AMEND
For the reasons explained above, defendant‟s motions to dismiss should be granted. The

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undersigned has carefully considered whether plaintiff may further amend his complaint to state a

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claim upon which relief can be granted. “Valid reasons for denying leave to amend include

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undue delay, bad faith, prejudice, and futility.” California Architectural Bldg. Prod. v. Franciscan

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Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1988). See also Klamath-Lake Pharm. Ass‟n v. Klamath

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Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983) (holding that while leave to amend shall

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be freely given, the court does not have to allow futile amendments).
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Here, given plaintiff‟s lack of standing granting further leave to amend would be futile.

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CONCLUSION
Accordingly, IT IS HEREBY RECOMMENDED that:

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1. Defendant‟s November 25, 2013 Motion to Dismiss (Dkt. No. 31) be granted;

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2. Plaintiff‟s November 5, 2013 amended complaint (Dkt. No. 29) be dismissed

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without leave to amend; and
3. This action be closed.

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These findings and recommendations are submitted to the United States District Judge

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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days

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after being served with these findings and recommendations, any party may file written

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objections with the court and serve a copy on all parties. Such a document should be captioned

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“Objections to Magistrate Judge‟s Findings and Recommendations.” Any reply to the objections

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shall be served and filed within seven days after service of the objections. The parties are advised

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that failure to file objections within the specified time may waive the right to appeal the District

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Court‟s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

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Dated: May 7, 2014

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DAD:6
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