Zavala v. Deutsche Bank Trust Company Americas as Trustee Rali 2006-QS8

Filing 23

Order by Magistrate Judge Laurel Beeler granting 9 Motion to Dismiss.(lblc1, COURT STAFF) (Filed on 7/10/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION
RICARDO ZAVALA,

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For the Northern District of California

UNITED STATES DISTRICT COURT

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No. C 13-1040 LB

Plaintiff,
ORDER GRANTING MOTION TO
DISMISS

v.
DEUTSCHE BANK TRUST COMPANY
AMERICAS AS TRUSTEE RALI 2006-QS8;
organized and existing under laws of the
United States, TRUSTEE CORPS,

[RE: ECF NO. 9]

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Defendants.
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___________________________________/
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INTRODUCTION

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Pro se Plaintiff Ricardo Zavala sued Deutsche Bank Trust Company Americas as Trustee Rali

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2006-QS8 (“Deutsche Bank”) and Trustee Corps for damages and to prevent them from foreclosing

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on his property. See Complaint, ECF No. 1.1 Zavala alleges that Defendants do not have his

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original promissory note or deed of trust on his property and that their attempts at foreclosure are,

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therefore, invalid. Id. He states three claims: (1) quiet title, (2) injunctive relief, and (3) declaratory

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relief. Id. ¶¶ 24-35. Zavala asks the court to (1) declare his mortgage debt unenforceable, (2)

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Citations are to the Electronic Case File (“ECF”) with pin cites to the electronicallygenerated page numbers at the top of the document.

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ORDER

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declare that he has quiet title to the property, (3) enjoin Defendants from foreclosing, and (4) award

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him damages. Id. at 7.

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MTC Financial Inc., doing business as Trustee Corps (“MTC”) appeared and filed the pending

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motion to dismiss for lack of subject matter jurisdiction. For the reasons stated below, the court

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grants MTC’s motion to dismiss.2

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STATEMENT
I. FACTUAL BACKGROUND3
Zavala lives in California and “at all times herein” owned a property at 29844 East Via Casalina
Parkway, Escalon, California. Complaint, ¶¶ 3, 7. Defendant Trustee Corps is an officially

Financial Inc., is a California corporation that was formed on June 30, 1992. RJN Ex. B, ECF No.

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For the Northern District of California

registered fictitious business name for MTC Financial Inc. See RJN Ex. A, ECF No. 10 at 4.4 MTC

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UNITED STATES DISTRICT COURT

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10 at 10. Deutsche Bank is a corporation organized and domiciled in New York and doing business

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in San Joaquin County, California. Id. ¶¶ 1, 9.

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On April 17, 2006, Zavala executed a promissory note secured by a deed of trust in favor of

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Olympia Funding, Inc. Id. ¶¶ 13-14, 16. The deed was recorded on or about April 17, 2006. Id.

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¶ 14. Zavala alleges that Deutsche succeeded to Olympia’s interest in the note and deed. See id.

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¶¶ 13, 15.

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Olympia also “caused [Mortgage Electronic Registration System] to go on title as ‘Nominee

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Beneficiary.’” Id. ¶ 15. In order to do this, the “Note and Deed of Trust were separated . . . which

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caused a complete breach of contract of the Deed of Trust.” Id. ¶ 15. Zavala alleges that MERS

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also acted as through it were the actual beneficiary of the deed, rather than just a nominee, that this

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means the deed was never perfected and is a nullity. Id. Later, MERS “elected Trustee Corps as the

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new trustee.” Id. ¶ 18.

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The court finds this matter suitable for disposition without a hearing under Civil Local
Rule 7-1(b) and vacates the August 1, 2013 hearing.
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The following facts are taken from the allegations in the complaint and the materials
subject to judicial notice.
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C 13-01040
ORDER

As discussed below, the court grants MTC’s unopposed request for judicial notice.

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Zavala made payments under the loan “until he reached a financial hardship.” Id. ¶ 17. The

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lender sent a notice of intent to foreclose, and Defendants want to proceed with a non-judicial

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foreclosure. Id. ¶ 18.

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Zavala “is unsure as to whether the lender still possesses the original Promissory Note and Deed

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of Trust, upon which the lender claims the right to foreclose.” Id. ¶ 20. But he also alleges that

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“MERS has sold the Deed of Trust over and over; and the true beneficiary is unknown and has

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separated the Note and Deed of Trust making the deed of trust null and void.” Id. In addition, MTC

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“has refused to produce the note, when offered fully payment in return for it, therefore, Plaintiff

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must assume that they do not have possession and are NOT holders in due course. Id.

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Zavala filed the complaint on March 7, 2013. See id. In it, he seeks declaratory relief (Claim 1),
injunctive relief (Claim 2), and “Cancellation of Instrument / Foreclosure / Quiet Title” (Claim 3).

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For the Northern District of California

UNITED STATES DISTRICT COURT

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Id. ¶¶ 24-35. Zavala asks for a temporary restraining order5 and preliminary and permanent

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injunctions barring foreclosure of the property. Id. at 6-7. He also seeks “a declaration of rights

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regarding the propriety of the Note and Deed of Trust,” “Quiet Title,” a declaration that the deed of

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trust is void and requiring Defendants “to execute a full reconveyance in favor of the Plaintiff.” Id.

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at 7.

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II. PROCEDURAL HISTORY

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The same day he filed the complaint, Zavala consented to this court’s jurisdiction and moved for

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leave to proceed in forma pauperis. ECF No. 3. The court granted his motion, ECF No. 5, but

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Zavala failed to provide an address for service of summons on Deutsche Bank. See Clerk’s Letter

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requesting address for service of summons, ECF No. 7; see generally Docket.

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On April 25, 2013 Defendant MTC appeared, filed the pending motion to dismiss, and consented

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to this court’s jurisdiction. See Motion, ECF No. 9; MTC Consent, ECF No. 15. Zavala did not file

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an opposition by the May 9, 2013 deadline. See generally Docket.

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The court continued the hearing on MTC’s motion to dismiss until August 1, 2013. See Order,

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The complaint mentions the request for a temporary restraining order only in the prayer for
relief, id. at 7, and Zavala has not moved for a TRO.

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ECF No. 7. The court also gave Zavala an extenstion to directed Zavala to serve Deutsche Bank by

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July 5, 2013 and to file proof of service by July 8, 2013 or risk dismissal without prejudice under

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Federal Rule of Civil Procedure 4(m). Id. Zavala failed to file any proof of service on Deutsche

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Bank. Accordingly, on July 10, 2013, the court dismissed Zavala’s claims against Deutsche Bank

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without prejudice. See Order, ECF No. 22.

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ANALYSIS
MTC, the sole remaining defendant, moves to dismiss the complaint under Federal Rule of Civil

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Procedure 12(b)(1) for lack of subject matter jurisdiction. See Motion, ECF No. 9. Zavala has not

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opposed MTC’s motion. Nonetheless, the court addresses MTC’s arguments.

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I. SUBJECT MATTER JURISDICTION
Dismissal of a claim is appropriate under Federal Rule of Civil Procedure Rule 12(b)(1) when

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For the Northern District of California

UNITED STATES DISTRICT COURT

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the court lacks subject-matter jurisdiction over the claim. Federal subject-matter jurisdiction must

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exist at the time the action is commenced. Morongo Band of Mission Indians v. California Bd. of

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Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988). A Rule 12(b)(1) motion may either attack the

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sufficiency of the complaint to establish federal jurisdiction (a facial challenge) or allege a lack of

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jurisdiction that exists despite the formal sufficiency of the complaint (a factual challenge). See

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White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000); Thornhill Publishing Co., Inc. v. General Tel. &

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Electronics Corp., 594 F.2d 730, 733 (9th Cir. 1979); Roberts v. Corrothers, 812 F.2d 1173, 1177

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(9th Cir. 1987). A facial attack asserts lack of federal jurisdiction based on the complaint alone, and

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the court must accept all allegations of fact in the complaint as true and construe them in the light

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most favorable to the plaintiffs. See Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139

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(9th Cir. 2003). By contrast, with a factual challenge, a court need not assume the truth of factual

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allegations but may hear additional evidence about jurisdiction and resolve factual disputes when

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necessary. See Roberts, 812 F.2d at 1177 (quotation omitted). If a defendant challenges jurisdiction

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by presenting evidence, then the party opposing the motion must present sufficient evidence to

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support the court’s subject-matter jurisdiction. See Savage v. Glendale Union High School, Dist.

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No. 205, Maricopa County, 343 F.3d 1036, 1040 n.2 (9th Cir. 2003). Dismissal of a complaint

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without leave to amend should only be granted where the jurisdictional defect cannot be cured by

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

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III. THE COURT LACKS SUBJECT MATTER JURISDICTION OVER ZAVALA’S

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CLAIMS

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MTC argues that the court should dismiss the complaint for lack of subject matter jurisdiction

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and relies on its evidentiary submissions to counter Zavala’s jurisdictional allegations. Because this

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is a factual challenge, the court first decides what evidence to consider and then addresses the

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arguments.

The court first turns to MTC’s request for judicial notice. Courts may take judicial notice of

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matters of public record. See al-Kidd v. Ashcroft, 580 F.3d 949, 954 (9th Cir. 2009). Where the

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facts in the public records are disputed, the court may not take judicial notice of them. Lee v. City of

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For the Northern District of California

A. Evidentiary Issues

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UNITED STATES DISTRICT COURT

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Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

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Here, MTC asks the court to take judicial notice of two documents. The first is a Fictitious

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Business Name Statement, certified by the Clerk-Recorder for Orange County, California, showing

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that MTC Financial Inc. does business under the name “Trustee Corps.” Request for Judicial Notice

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Ex. A, ECF No. 10 at 4-8. The Fictitious Business Name Statement indicates that MTC is

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incorporated in California and its principal place of business is 30 Corporate Park, Suite 400, Irvine,

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CA 92606. Id. The second document is a Certificate of Status, certified by California Secretary of

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State Debra Bowen that states MTC is a California domestic corporation in good standing. RJN Ex.

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B, ECF No. 10 at 10.

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Both documents are certified public records. Zavala has not objected to MTC’s request.
Accordingly, the court takes judicial notice of both documents and the facts within them.

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B. Both Zavala and MTC Are California Citizens

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MTC first argues that the court does not have diversity jurisdiction over Zavala’s claims.

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Motion at 9. The court agrees.
Under the diversity jurisdiction statute, federal courts have original jurisdiction where the

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opposing parties are citizens of different states and the amount in controversy exceeds $75,000. 28

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U.S.C. § 1332. The basic requirement in diversity cases is that all plaintiffs must be of different

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citizenship from all defendants or there is no federal diversity jurisdiction. See Exxon Mobil Corp.

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v. Allapattah Services, Inc., 545 U.S. 546, 562 (2005).

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A natural person is deemed to be a citizen of the state where he or she is domiciled, which is

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where he or she resides with the intention to remain. See Kantor v. Wellesley Galleries, Ltd., 704

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F.2d 1088, 1090 (9th Cir. 1983); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).

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For diversity purposes, a corporation is “a citizen of every state and foreign state by which it has

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been incorporated and of the State or foreign state where it has its principal place of business.” 28

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U.S.C. § 1332(c)(1).

residence is ‘prima facie’ evidence of domicile. See State Farm Mut. Auto Ins. Co. v. Dyer, 19 F.3d

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514, 520 (10th Cir. 1994). In the absence of evidence to the contrary, Zavala is a California citizen

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For the Northern District of California

Here, the complaint indicates that Zavala resides in California. See Complaint at 1-2. A party’s

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UNITED STATES DISTRICT COURT

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for diversity purposes.

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MTC’s evidence shows that it is incorporated in California and has its principal place of business

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here. See RJN Exs. A-B. It is also a California citizen. Because Zavala and MTC are both

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California citizens, the court lacks diversity jurisdiction.

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C. The Complaint Presents No Federal Question

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MTC next argues that the complaint does not establish federal question jurisdiction. Motion at

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10-11. Under the general federal question jurisdiction statute, “[t]he district courts shall have

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original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United

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States.” 28 U.S.C. § 1331. Whether a case arises under federal law is determined by looking at the

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face of the well-pleaded complaint. See Holmes Group, Inc. v. Vornado Air Circulation Systems,

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Inc., 535 U.S. 826, 830 (2002).

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Here, the complaint states three state law claims and mentions no federal laws. See ECF No. 1 at

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5-7. There is no federal question apparent on the face of the complaint, so the court finds that it

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lacks jurisdiction under 28 U.S.C. § 1331. Because there is no other apparent basis for federal

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jurisdiction, the court GRANTS MTC’s motion to dismiss. In addition, because the jurisdictional

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defects here cannot be cured by amendment, the court dismisses Zavala’s claims against MTC with

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prejudice.

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CONCLUSION

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For the above reasons, MTC’s motion to dismiss is GRANTED. Zavala’s complaint against

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MTC is dismissed for lack of jurisdiction.
IT IS SO ORDERED.
Dated: July 10, 2013
_______________________________
LAUREL BEELER
United States Magistrate Judge

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For the Northern District of California

UNITED STATES DISTRICT COURT

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C 13-01040
ORDER

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