Malfatti v. Mortgage Electronic Registrations Systems, Inc. et al

Filing 21

ORDER GRANTING IN PART DEFENDANTS' MOTION TO DISMISS AND VACATING HEARING by Judge William Alsup [granting in part and denying in part 7 Motion to Dismiss]. (whasec, COURT STAFF) (Filed on 11/29/2011) (Additional attachment(s) added on 11/29/2011: # 1 Certificate of Service) (dt, COURT STAFF).

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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ANTHONY MALFATTI,

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For the Northern District of California

United States District Court

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Plaintiff,

No. C 11-03142 WHA

v.

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MORTGAGE ELECTRONIC
REGISTRATIONS SYSTEMS, INC. and
BAC HOME LOANS SERVICING, LP,

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Defendants.
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INTRODUCTION
In this action for cancellation of deeds, defendants move to dismiss for failure to state a
claim. For the following reasons, the motion is GRANTED IN PART AND DENIED IN PART.

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ORDER GRANTING
IN PART DEFENDANTS’
MOTION TO DISMISS AND
VACATING HEARING

STATEMENT
Plaintiff Anthony Malfatti signed two deeds of trust for property located in Oakland in

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June 2007. Plaintiff signed a deed of trust for property located in Richmond in March 2008.

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Defendant MERS was listed as a beneficiary and a nominee on all three deeds. Shortly after

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each deed was recorded, defendant BAC Home Loans Servicing “represented to plaintiff that

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it would be the company to whom plaintiff should make his payments on the above mortgage

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loans” (Compl. ¶¶ 7, 19, 21, 25).

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In the spring of 2011, “plaintiff began hearing reports in the media of the serious

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problems of fraud within the mortgage industry, and decided to investigate his own mortgages.”

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In February 2011, plaintiff sent a letter to BAC requesting a summary of his mortgage payments.

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Plaintiff did not receive any information from BAC in response. Plaintiff now alleges that

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“BAC has not been sending any of plaintiff’s payments to any actual creditor/owner of the

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mortgage,” and that BAC wrongfully collected $59,495 in mortgage payments from plaintiff

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(id. at ¶¶ 30–33).

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That same month, “plaintiff sent a notice rescinding any authorization plaintiff may

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have given for MERS to continue acting as any ‘nominee’ on the deed of trust, and requesting

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that MERS cancel the deed of trust containing its name as ‘nominee.’ To date, defendant

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MERS has failed/refused to cancel the document” (id. at ¶¶ 15).
Plaintiff, who proceeds pro se, commenced the present action in June 2011.

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For the Northern District of California

United States District Court

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Plaintiff seeks cancellation of all three deeds of trust. His complaint also alleges unjust

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enrichment and constructive trust against defendant BAC. All defendants now move to

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dismiss for failure to state a claim. Plaintiff filed an opposition to this motion in August 2011

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(Dkt. No. 17). No reply has been filed by defendants.

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ANALYSIS

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To survive a motion to dismiss, a complaint must contain sufficient factual matter,

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accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal,

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556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). A claim is facially plausible when there are

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sufficient factual allegations to draw a reasonable inference that a defendant is liable for the

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misconduct alleged. While a court “must take all of the factual allegations in the complaint

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as true,” it is “not bound to accept as true a legal conclusion couched as a factual allegation.”

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Id. at 1949–50 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a

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motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136,

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1140 (9th Cir. 1996) (citation omitted).
REQUEST FOR JUDICIAL NOTICE.

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1.

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Defendants request that judicial notice be taken of several items. A judicially noticed

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fact must be one not generally subject to reasonable dispute that is either generally known within
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this territorial jurisdiction or is capable of accurate and ready determination by resort to sources

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whose accuracy cannot reasonably be questioned. FRE 201(b).

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Defendants request that judicial notice be taken of: (1) a deed of trust, recorded with the

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Alameda County Recorder’s Office on July 14, 2005 as document number 2005300330; (2) an

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open end deed of trust, recorded with the Alameda County Recorder’s Office on August 26,

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2005 as document number 2005368611; (3) a deed of trust, recorded with the Alameda County

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Recorder’s Office on December 20, 2007 as document number 2007426322; (4) a deed of trust

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and assignment of rents, recorded with the Alameda County Recorder’s Office on December 20,

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2007 as document number 2007426323; and (5) a deed of trust, recorded with the Contra Costa
County Recorder’s Office on April 1, 2008 as document number 2008-0069259-00. The first

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For the Northern District of California

United States District Court

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two deeds are not at issue in the present action. Accordingly, defendants’ request for judicial

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notice as to these two documents is DENIED. The other three deeds are relevant to the present

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action as plaintiff seeks to cancel these documents and defendant MERS is listed as a beneficiary

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and nominee on all three. They are also matters of public record, thus are not subject to

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reasonable dispute and are capable of accurate and ready determination. Defendants’ request

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for judicial notice as to documents three, four, and five is GRANTED.

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2.

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Plaintiff seeks cancellation of the three deeds of trust — two deeds for the Oakland

CANCELLATION OF INSTRUMENTS.

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property and one deed for the Richmond property. On each of these deeds, MERS is listed as a

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beneficiary and a nominee for the lender (RJN Exh. C–E). Plaintiff argues that after he secured

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the mortgages the lender assigned them to another party, but that “there was no recording of any

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assignment of the mortgage to anyone else.” He further alleges that “MERS is an organization

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which purports to act solely and exclusively as a ‘nominee’ for lenders, and successors/assigns

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of lenders, who are members of MERS.” Plaintiff alleges that the “current assignee/transferee

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of the mortgage is not a member of MERS” (Compl. ¶¶ 9, 11-12).

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Plaintiff argues that he has been injured because the “the continuing inclusion of

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[MERS’s] name on the deed of trust is a false statement in the county record” that “is clouding

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title to the property, impairing its market value.” Further, plaintiff argues that he “has no remedy
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at law for addressing this situation, and therefore seeks cancellation of the document” (id. at

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¶¶ 17–18).

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Plaintiff fails to show the necessity of cancelling the deeds. “A written instrument, in

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respect to which there is a reasonable apprehension that if left outstanding it may cause serious

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injury to a person against whom it is void or voidable, may, upon his application, be so

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adjudged, and ordered to be delivered up or cancelled.” Cal. Civ. Code § 3412. Plaintiff fails to

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explain how he will be caused serious injury if the deeds are not cancelled, or how having MERS

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listed on his deeds damaged his property value. Plaintiff thus fails to state a plausible claim for

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cancellation of the deeds, and accordingly defendants’ motion to dismiss plaintiff’s first three
claims is GRANTED.
CONSTRUCTIVE TRUST AND UNJUST ENRICHMENT.

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For the Northern District of California

United States District Court

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3.

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Plaintiff also alleges constructive trust and unjust enrichment against defendant BAC.

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Each claim is considered in turn.

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A.

Constructive Trust.

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Plaintiff’s fourth claim for relief is partially for constructive trust. “A constructive trust

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is an involuntary equitable trust created by operation of law as a remedy to compel the transfer

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of property from the person wrongfully holding it to the rightful owner.” It is an equitable

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remedy to prevent unjust enrichment. Burlesci v. Peterson, 68 Cal. App. 4th 1062, 1069 (1998).

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As a constructive trust is a remedy, it is not a claim for relief in itself. Accordingly, defendants’

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motion to dismiss the claim for constructive trust is GRANTED.

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B.

Unjust Enrichment.

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Plaintiff argues that BAC was unjustly enriched by wrongly accepting his mortgage

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payments. Unjust enrichment is the “receipt of a benefit and unjust retention of the benefit

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at the expense of another.” Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000).

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Defendant argues that BAC “is a subsidiary of Bank of America and is servicing the subject

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loans” (Br. 9) (emphasis in original).

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Plaintiff, however, alleges that he made $59,495 in mortgage payments to BAC.
Plaintiff now alleges that BAC was never authorized to receive his payments and unjustly
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retained this benefit. Plaintiff has pled sufficient facts to state a plausible claim for unjust

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enrichment. As such, defendants’ motion to dismiss this claim is DENIED.

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CONCLUSION

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For the foregoing reasons, defendants’ motion to dismiss is GRANTED IN PART AND

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DENIED IN PART. Defendants’ motion to dismiss all three of plaintiff’s cancellation of

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instrument claims and the constructive trust claim is GRANTED. Defendants’ motion to dismiss

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the unjust enrichment claim is DENIED. Plaintiff may seek leave to amend the complaint and

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will have TWENTY-ONE CALENDAR DAYS from the date of this order to file a motion, noticed

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on the normal 35-day track, for leave to file an amended complaint. Plaintiff must append to
his motion a proposed amended complaint that clearly explains how the amendments cure

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For the Northern District of California

United States District Court

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the defects identified herein. Defendants’ request for judicial notice is GRANTED IN PART.

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The hearing scheduled for December 8, 2011 is VACATED.

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IT IS SO ORDERED.

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Dated: November 29, 2011.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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