Jackson v. Atlantic Savings of America et al

Filing 40

ORDER by Judge Claudia Wilken GRANTING ( 13 , 23 ) MOTIONS TO DISMISS AND GRANTING LEAVE TO AMEND. (ndr, COURT STAFF) (Filed on 9/26/2014)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 STEPHANI JACKSON, 5 6 7 8 9 United States District Court For the Northern District of California 10 11 12 Plaintiff, v. ATLANTIC SAVINGS OF AMERICA; DEUTSCHE ALT-A SECURITIES MORTGAGE LOAN TRUST SERIES 20071; AMERICA'S SERVICING COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEM; CHICAGO TITLE COMPANY; DB STRUCTURED PRODUCTS, INC.; ACE SECURITIES CORP.; HSBC BANK USA; WELLS FARGO BANK N.A.; and Does 1-10 Inclusive, ORDER GRANTING MOTIONS TO DISMISS (Docket Nos. 13 and 23) AND GRANTING LEAVE TO AMEND Defendants. 13 14 No. C 13-05755 CW ________________________________/ Plaintiff Stephani Jackson1 asserts various mortgage-related 15 claims against Defendants Atlantic Savings of America, Deutsche 16 Alt-A Securities Mortgage Loan Trust Series 2007-1, America's 17 Servicing Company, Mortgage Electronic Registration Systems, Inc. 18 19 1 20 21 22 23 24 25 26 27 28 There is some confusion in Plaintiff's documents as to whether Plaintiff should be referred to as "she" or "he." For example, the complaint reads, "Plaintiff is entitled to an order compelling defendants . . . to remove the cloud they have placed upon his title." Compl. ¶ 66. However, Plaintiff's opposition reads, "The present motion before the Court is not a motion for Summary Judgment . . . and this Plaintiff is not held to proving her claims to a prima facie burden." Pl.'s Opp. 6. On the same page, the opposition reverts to "him": "Plaintiff's complaint is only to be held to the requirement of pleading his claim in a short and generalized manner[.]" In the 2007 Deed of Trust, of which the Court takes judicial notice, Plaintiff is referred to as an "unmarried woman." Defs.' Request For Judicial Notice (RFJN), Ex. A. For consistency's sake, "she" and "her" will be used when referring to Plaintiff. 1 (MERS), Chicago Title Company, DB Structured Products, Inc. (DB), 2 ACE Securities Corp., HSBC Bank USA and Wells Fargo Bank, N.A.2 3 Defendants Wells Fargo (also sued as America's Servicing 4 Company), HSBC (as trustee for Deutsche Alt-A Securities Mortgage 5 Loan Trust Series 2007-1, Mortgage Pass-Through Certificates) and 6 MERS (Wells Defendants) move to dismiss Plaintiff's complaint. 7 Defendant DB filed a separate motion to dismiss.3 8 filed an opposition.4 9 Court took the motions under submission on the papers. Plaintiff has Each set of Defendants filed a reply. Having 10 United States District Court For the Northern District of California The considered the arguments presented by the parties, the Court 11 GRANTS the motions and GRANTS Plaintiff leave to amend. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 There is no indication that Plaintiff has served Defendants Atlantic Savings of America, Chicago Title Company, or ACE Securities Corp. Rule 4(m) requires service on a defendant within 120 days after the complaint is filed. The claims against Atlantic Savings of America, Chicago Title Company, Deutsche Alt-A Securities Mortgage Loan Trust Series 2007-1, and ACE Securities Corp. are dismissed for the same reasons they are dismissed against the other Defendants. See Silverton v. U.S. Dep’t of Treasury, 644 F.2d 1341, 1345 (9th Cir. 1981) ("A District Court may properly on its own motion dismiss an action as to defendants who have not moved to dismiss where such defendants are in a position similar to that of moving defendants or where claims against such defendants are integrally related."). If Plaintiff wants to include these Defendants in any amended complaint, she must move for an extension of time to serve them, stating good cause for not having done so timely. 3 Deutsche Bank Securities, which is not named in the caption, joined DB in its motion to dismiss "out of caution" because Plaintiff served a summons directed at Deutsche Bank Securities Inc. All Deutsche entities will be referred to as DB. 4 In her opposition, Plaintiff does not respond directly to any of Defendants' arguments. Instead, the opposition recites a summary of the complaint and boilerplate regarding the legal standard under Rule 12(b)(6). 2 1 BACKGROUND 2 I. 3 The following summary is taken from the complaint and 4 Facts documents of which the Court takes judicial notice.5 5 In March 2007, Plaintiff obtained two loans funded by 6 Atlantic Savings of America in the principal amount of $556,000. 7 This lawsuit concerns one of the loans, in the principal amount of 8 $444,800. 9 loan was secured by a deed of trust encumbering the real property Defs.' Request for Judicial Notice (RFJN), Ex. A. The United States District Court For the Northern District of California 10 located at 462-464 38th Street, Oakland, California. 11 The beneficiary of the deed of trust was MERS and Chicago Title 12 Company was appointed as the trustee. 13 14 RFJN, Ex. B. Id. In December 2008, NDEx West, LLC, as agent for MERS, recorded a notice of default on Plaintiff's loan. RFJN, Ex. C. 15 In January 2009, MERS recorded an assignment of the deed of 16 trust transferring its beneficial interests to HSBC, trustee for 17 the holders of certificates issued by Deutsche Alt-A Securities 18 Mortgage Loan Trust, Series 2007-1 (Deutsche Certificates). 19 Ex. D. 20 Chicago Title Company as the trustee. 21 trustee sale was recorded in March 2009, signed by "Randy 22 Middleton." RFJN, Also in January 2009, NDEx West was recorded as replacing RFJN, Ex. E. A notice of 23 24 5 25 26 27 28 Defendants ask, and there is no record of Plaintiff opposing, that the Court take judicial notice of various recorded documents associated with Plaintiff’s purchase of the property, the loan secured by a deed of trust, and subsequent appointment of trustees and beneficiaries. RFJN, Exs. A-M. "[A] court may take judicial notice of 'matters of public record.'" Sami v. Wells Fargo Bank, 2012 WL 967051, at *4 (N.D. Cal.) (citation omitted). The Court GRANTS this request. 3 1 In June 2009, Plaintiff entered into a loan modification 2 agreement with Wells Fargo Bank. 3 notice of default was rescinded by NDEx West. 4 notice of rescission was signed by "Randy Middleton." 5 H. 6 ¶ 8-9. RFJN, Ex. G. In July 2009, the RFJN, Ex. F. RFJN, Ex. Plaintiff alleges "Randy Middleton" is a robo-signer. 7 The Compl. In July 2011, another assignment of the deed of trust was 8 recorded, again documenting that MERS assigned its beneficial 9 interests to HSBC. RFJN, Ex. H. Plaintiff alleges that the United States District Court For the Northern District of California 10 assignment of deed of trust either does not exist or was 11 fabricated. 12 Compl. ¶¶ 14, 46.6 In April 2012, NDEx West, as agent for Wells Fargo Bank, 13 recorded a notice of default on Plaintiff's modified loan. 14 Ex. I. 15 under the deed of trust. 16 November 2013, NDEx West recorded three notices of trustee's sale. 17 RFJN, Exs. K, L & M. 18 sale. 19 20 21 RFJN, Also in April 2012, HSBC substituted NDEx West as trustee RFJN, Ex. J. Between July 2012 and There is no record of an actual foreclosure Plaintiff does not allege any facts regarding DB or Deutsche Bank Securities, nor does she bring any claims against them. Plaintiff's complaint asserts six causes of action against 22 all Defendants: (1) declaratory relief to determine the status of 23 Defendants' claims; (2) a request to set aside the deed of trust; 24 25 26 27 28 6 Plaintiff is not clear as to which assignment of the deed of trust is invalid. Both the 2009 and 2011 assignments were from MERS to HSBC as trustee for the Deutsche Bank certificate holders. RFJN, Exs. D & H. It is not clear from any of the documents why two assignments were recorded conveying the same information two years apart. 4 1 (3) violation of California Business and Professions Codes section 2 17200; (4) a request to void or cancel the trustee's deed upon 3 sale; (5) an accounting; and (6) quiet title.7 4 In addition to the relief she requests for each of her 5 claims, Plaintiff asks for "compensatory, special and general 6 damages in excess of $5,000,000, against each of the Defendants" 7 as well as "punitive and exemplary damages in an amount to be 8 determined by the Courts [sic] against all Defendants," costs of 9 suit and attorney's fees. United States District Court For the Northern District of California 10 11 Compl. 14. LEGAL STANDARD A complaint must contain a "short and plain statement of the 12 claim showing that the pleader is entitled to relief." 13 Civ. P. 8(a). 14 claim to relief that is plausible on its face." 15 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 16 Twombly, 550 U.S. 544, 570 (2007)). 17 "when the plaintiff pleads factual content that allows the court Fed. R. The plaintiff must proffer "enough facts to state a Ashcroft v. A claim is facially plausible 18 7 19 20 21 22 23 24 25 26 27 28 It is worth noting that Plaintiff fails to allege any claims related to the Homeowners Bill of Rights (HBOR) in her complaint. She does, however, invoke the HBOR in her opposition to Defendants' motion to dismiss. The HBOR, codified at California Civil Code section 2924 et seq., provides protections to California homeowners faced with foreclosure. In particular, its two main provisions restrict "dual-track" foreclosures, where a lender pursues a loan modification with a borrower while also pursuing foreclosure, and it guarantees homeowners a single point of contact with their lender. Plaintiff has not alleged that her loan was subject to a dual-track process, nor does she allege that she has been denied a single point of contact with her lender. Plaintiff does allege that her loan documents were signed by a "robo-signer." Compl. ¶ 8-9. However, "the prevailing view [is] that plaintiff homeowners lack standing to challenge the validity of robo-signatures." Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal. App. 4th 1020, 1036 (2014). 5 1 to draw the reasonable inference that the defendant is liable for 2 the misconduct alleged." 3 Id. In considering whether the complaint is sufficient to state a 4 claim, the court will take all material allegations as true and 5 construe them in the light most favorable to the plaintiff. 6 Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 7 (9th Cir. 2008). 8 complaint, materials incorporated into the complaint by reference, 9 and facts of which the court may take judicial notice. The court's review is limited to the face of the Id. at United States District Court For the Northern District of California 10 1061. 11 including "threadbare recitals of the elements of a cause of 12 action, supported by mere conclusory statements." 13 at 678 (citing Twombly, 550 U.S. at 555). 14 However, the court need not accept legal conclusions, Iqbal, 556 U.S. When granting a motion to dismiss, the court is generally 15 required to grant the plaintiff leave to amend, even if no request 16 to amend the pleading was made, unless amendment would be futile. 17 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 18 F.2d 242, 246-47 (9th Cir. 1990). 19 amendment would be futile, the court examines whether the 20 complaint could be amended to cure the defect requiring dismissal 21 "without contradicting any of the allegations of [the] original 22 complaint." 23 Cir. 1990). 24 25 26 In determining whether Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th DISCUSSION Defendants seek to dismiss Plaintiff's complaint in its entirety. 27 28 6 1 I. First Cause of Action: Declaratory Judgment 2 Plaintiff's first cause of action requests that the Court 3 "declare the actual rights and obligations of the Parties and make 4 a determination as to whether Defendant [sic] was the lawful 5 successor in interest to fraudulent lien claim against Plaintiff 6 is enforceable [sic] and whether it is secured by an [sic] right, 7 title, or interest in Plaintiff's Property." 8 Wells Defendants argue that "declaratory relief is not an 9 independent cause of action, but only a remedy." Compl. ¶ 40. The Docket No. 13 United States District Court For the Northern District of California 10 at 6. 11 support declaratory relief." 12 alleges no facts "to show either entity [DB or Deutsche Bank 13 Securities] claims a current lien interest in the property adverse 14 to Plaintiff." 15 Defendants' motions to dismiss this claim. They also argue that there is "no actual controversy to Id. DB argues that Plaintiff Docket No. 23 at 6. The Court GRANTS both 16 Under the Declaratory Judgment Act (DJA), "in a case of 17 actual controversy within its jurisdiction, upon the filing of an 18 appropriate pleading, [any federal court] may declare the rights 19 and other legal relations of any interested party seeking such 20 declaration, whether or not further relief is or could be sought." 21 28 U.S.C. § 2201; see also DeFeo v. Procter & Gamble Co., 831 F. 22 Supp. 776, 777-78 (N.D. Cal. 1993). 23 requirement of the DJA is the same as the "case or controversy" 24 requirement of Article III of the United States Constitution. 25 States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1993). 26 declaratory judgment plaintiff must establish that the "facts 27 alleged under all the circumstances show that there is a 28 substantial controversy between parties having adverse legal 7 The "actual controversy" Am. The 1 interests of sufficient immediacy and reality to warrant the 2 issuance of declaratory judgment." 3 Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008) (citation 4 omitted). 5 Micron Tech., Inc. v. Mosaid Plaintiff's declaratory relief claim is based on the same 6 facts alleged to support her other causes of action. 7 fails for the same reasons the other claims fail, as will be 8 discussed below. 9 motions to dismiss this claim. This claim Accordingly, the Court GRANTS Defendants' Plaintiff is granted leave to United States District Court For the Northern District of California 10 amend to remedy the deficiencies noted in this as well as her 11 other causes of action if she can do so truthfully and without 12 contradicting the allegations in her prior pleadings. 13 II. Second Cause of Action: Set Aside Deed of Trust 14 Plaintiff requests that the Court set aside the deed of trust 15 that secures the property. 16 to the original deed of trust that secures the loan on her home, 17 but to both the 2009 and 2011 assignments of the deed of trust 18 which transfer the beneficial interests in the deed from MERS to 19 HSBC. 20 defendants were willingly and knowingly the successor in interest 21 of a [sic] invalid lien assignment . . . and lack the legal rights 22 to foreclose on the plaintiff's home.") 23 that "neither defendants had or have a secured, unsecured legal, 24 equitable or pecuniary interest in the lien evidenced by the Deed 25 of Trust and that its purported assignment has no value since the 26 Deed of Trust was fraudulent and wholly unsecured." 27 Plaintiff alleges that, if the deed of trust is not set aside, she 28 will be subject to "a cloud on [her] title to the Property in that Plaintiff appears to be referring not See e.g., Compl. ¶ 36 ("The Plaintiff alleges that 8 Plaintiff further alleges Compl. ¶ 34. 1 it restricts [her] right to the use and enjoyment of the Property 2 [and] hinders [her] right to unrestricted alienation of the 3 Property." 4 5 Compl. ¶ 51. For the reasons discussed below, the Court GRANTS Defendants' motions to dismiss this cause of action. 6 A. Tender 7 The Wells Defendants argue that Plaintiff lacks standing to 8 assert this claim because she has failed to tender the undisputed 9 obligation in full. Docket No. 13 at 3. Plaintiff alleges that United States District Court For the Northern District of California 10 she "has offered to and is ready, willing and able to 11 unconditionally tender [her] obligation to whomever it is 12 determined [she] lawfully owes [her] debt to." 13 an alternative, Plaintiff argues that she is exempt from the 14 tender requirement. 15 Compl. ¶ 33. As "As a general rule, a homeowner in default must first tender 16 payment of the obligation in full to achieve standing to challenge 17 nonjudicial foreclosure proceedings." 18 at 1028. 19 who seeks to set aside a trustee's sale is required to do equity 20 before the court will exercise its equitable powers. 21 Consequently, as a condition precedent to an action by the 22 borrower to set aside the trustee's sale on the ground that the 23 sale is voidable because of irregularities in the sale notice or 24 procedure, the borrower must offer to pay the full amount of the 25 debt for which the property was security. 26 the rule is that if [the borrower] could not have redeemed the 27 property had the sale procedures been proper, any irregularities 28 in the sale did not result in damages to the [borrower]." Mendoza, 228 Cal. App. 4th "Because the action is in equity, a defaulted borrower 9 The rationale behind Lona v. 1 Citibank, N.A., 202 Cal. App. 4th 89, 112 (2011)(internal 2 quotations and citations omitted). 3 However, "[r]ecent opinions in this court . . . reflect a 4 split in authority as to whether the tender rule should apply in 5 situations where a sale is pending." 6 FSB, 2012 WL 2343898, at *4 (N.D. Cal.)(compare Hague v. Wells 7 Fargo Bank, N.A., 2011 WL 6055759, at *5 (N.D. Cal.) ("[T]ender is 8 not required in this [lending fraud] case, as the foreclosure at 9 issue has not yet occurred . . ."), with Alicea v. GE Money Bank, Ford v. Lehman Bros. Bank, United States District Court For the Northern District of California 10 2009 WL 2136969, at *3 (N.D. Cal.) (applying the tender rule to 11 deny all claims premised on wrongful foreclosure aimed at 12 preventing the foreclosure sale). 13 This Court finds that the tender rule is applicable when a 14 plaintiff seeks to set aside a deed of trust or requests a quiet 15 title. 16 without first paying her obligation in full. 17 finds that Plaintiff's offer must be a "valid and viable tender of 18 payment of the indebtedness owing" in order to support her action 19 to cancel a voidable sale under a deed of trust. 20 v. E&G Investments, Ltd., 207 Cal. App. 3d 1018, 1021 (1989); see 21 also Karlsen v. Am. Sav. & Loan Assn., 15 Cal. App. 3d 112, 118 22 (1971)("Simply put, if the offeror is without the money necessary 23 to make the offer good and knows it the tender is without legal 24 force or effect.") 25 that she "has the money necessary to make the offer good." 26 Therefore, her offer to tender is neither valid nor viable. 27 28 Plaintiff cannot claim exclusive rights to the property Further, the Court FPCI RE-HAB 01 Plaintiff does not allege any facts to support There are exceptions, however, to the tender requirement. Lona, 202 Cal. App. 4th at 112-113. 10 "First, if the borrower's 1 action attacks the validity of the underlying debt, tender is not 2 required since it would constitute an affirmation of the debt." 3 Id. at 113. 4 person who seeks to set aside the trustee's sale has a counter- 5 claim or set-off against the beneficiary. In such cases, it is 6 deemed that the tender and the counter claim offset one another, 7 and if the offset is equal to or greater than the amount due, a 8 tender is not required." 9 required where it would be inequitable to impose such a condition "Second, a tender will not be required when the Id. "Third, a tender may not be United States District Court For the Northern District of California 10 on the party challenging the sale." 11 be required when the trustor is not required to rely on equity to 12 attack the deed because the trustee's deed is void on its face." 13 Id. 14 is void, rather than simply voidable,' as when an incorrect 15 trustee forecloses on a property." 16 N.A., 2013 WL 5913789, at *4 (N.D. Cal.) (citation omitted). 17 Id. "Fourth, no tender will "Courts have found exceptions to the tender rule if 'a sale Subramani v. Wells Fargo Bank As an alternative to tendering her full obligation, Plaintiff 18 seeks exemption from the tender rule under the fourth exception. 19 In Subramani, the plaintiff argued that the defendant failed to 20 assign the deed of trust or endorse the note so that "after 21 Defendant sold the Loan, neither Defendant nor anyone else had any 22 right to or interest in the Loan, so all legal notices associated 23 with the note and [deed of trust] -- including the [substitutions 24 of trustee], [notices of default], and the foreclosure sale itself 25 -- are illegal and void." 26 are different from those in Subramani. 27 that Defendants failed to assign the deed of trust. 28 Plaintiff alleges that the document recording the assignment of Id. at *2. 11 Plaintiff's allegations Plaintiff does not allege Rather, 1 the deed of trust is fraudulent. 2 Plaintiff must allege sufficient facts to support her claim that 3 the assignment of the deed of trust was fraudulent. To qualify for this exemption, 4 "In all averments of fraud or mistake, the circumstances 5 constituting fraud or mistake shall be stated with particularity." 6 Fed. R. Civ. P. 9(b). 7 law, while a district court will rely on state law to ascertain 8 the elements of fraud that a party must plead, it will also follow 9 Rule 9(b) in requiring that the circumstances of the fraud be "Therefore, in an action based on state United States District Court For the Northern District of California 10 pleaded with particularity." 11 Supp. 2d 992, 996 (N.D. Cal. 2009); see also Kearns v. Ford Motor 12 Co., 567 F.3d 1120, 1125 (9th Cir. 2009). 13 'grounded in fraud,' the pleading of that claim as a whole is 14 subject to Rule 9(b)’s particularity requirement." 15 F. Supp. 2d at 997 (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 16 1097, 1104). 17 what, when, where, and how" of the alleged fraudulent conduct. 18 Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). 19 must describe the alleged fraud in specific enough terms "to give 20 defendants notice of the particular misconduct so that they can 21 defend against the charge." 22 Marolda v. Symantec Corp., 672 F. "[W]hen the claim is Marolda, 672 Rule 9(b) requires the plaintiff to allege "the who, A plaintiff Kearns, 567 F.3d at 1124. Plaintiff does not plead with the required particularity that 23 the document recording the assignment of the deed of trust is 24 fraudulent. 25 did what to support her claim. 26 any of the requirements to be exempted from tender, nor does she 27 allege a valid and viable tender of her obligation, in full, to 28 support her claim to set aside the deed of trust. She does not allege any facts stating which Defendant Thus Plaintiff does not satisfy 12 1 Accordingly, the Court GRANTS the Wells Defendants' motion to 2 dismiss this claim. 3 the deficiencies noted above if she can do so truthfully and 4 without contradicting the allegations in her prior pleadings. Plaintiff is granted leave to amend to remedy 5 B. Pre-Suit Notice and Opportunity to Cure 6 Even if Plaintiff's claim to set aside the deed of trust did 7 not fail for lack of tender, the Wells Defendants further argue 8 that Plaintiff is prohibited from bringing this claim because "she 9 failed to comply with the presuit notice and opportunity to cure United States District Court For the Northern District of California 10 provision in the deed of trust." 11 Hollowell v. Alliance Bancorp, Inc., 2011 WL 2884801, at *1 (N.D. 12 Cal.), the court dismissed a plaintiff's claim alleging breach of 13 the terms of a mortgage contract until she showed that she "either 14 complied with the contractual provision requiring her to afford 15 defendants the opportunity to cure any asserted breach of the 16 terms of the Deed of Trust prior to filing suit . . . or that she 17 is excused from having to so comply." Docket No. 13 at 14-15. In 18 Section 20 of the deed of trust provides: 19 22 Neither Borrower nor Lender may commence, join, or be joined to any judicial action . . . that arises from the other party's action pursuant to this Security Instrument . . . until such Borrower or Lender has notified the other party . . . and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action. RFJN, Ex. A. 23 Plaintiff does not allege that she has complied with the 20 21 24 provision as it pertains to her cause of action to set aside the 25 deed of trust. 26 allegations of irregularities and fabrication of mortgage 27 documents. 28 complying with the provision. This claim depends specifically on Plaintiff's Nor has Plaintiff alleged that she is excused from Accordingly, for this reason as 13 1 well, the Court GRANTS the Wells Defendants' motion to dismiss 2 Plaintiff's request to set aside the deed of trust. 3 granted leave to amend to remedy this deficiency. 4 wishes to pursue this claim in any amended complaint, she must 5 first give Defendants notice of her claims within seven days of 6 the date of this order. 7 to cure before these claims can be re-filed. Plaintiff is If Plaintiff Defendants will then have twenty-one days 8 C. Failure to State a Claim 9 Plaintiff's request to set aside the deed of trust also fails United States District Court For the Northern District of California 10 to state a "legally cognizable claim and the grounds on which it 11 rests." 12 Plaintiff has not alleged facts sufficient to support this cause 13 of action. Twombly, 550 U.S. at 555. Defendants argue that 14 In general, "California courts have refused to delay the non- 15 judicial foreclosure process by allowing trustor-debtors to pursue 16 preemptive judicial actions to challenge the right, power, and 17 authority of a foreclosing 'beneficiary' or beneficiary's 'agent' 18 to initiate and pursue foreclosure." 19 Bank, N.A., 216 Cal. App. 4th 497, 511-12 (2013). 20 pursue such an action only if there is a "specific factual basis 21 for alleging that the foreclosure was not initiated by the correct 22 party." 23 Jenkins v. JPMorgan Chase A plaintiff can Id. at 512. Plaintiff suggests three theories to support her claim that 24 the foreclosure was not initiated by the correct party, rendering 25 the initiation of foreclosure void. 26 "there is no evidence in the Record to indicate that the Deed of 27 Trust was ever transferred concurrently with the purported legal 28 transfer of the Note, such that the Deed of Trust and Note has 14 First, Plaintiff alleges that 1 been irrevocably separated, thus making a nullity out of the 2 purported security in a property." 3 This theory is unpersuasive. Compl. ¶ 23. "It is well established that 4 when a note secured by a mortgage is transferred, 'transfer of the 5 note carries with it the security, without any formal assignment 6 or delivery, or even mention of the latter.' 7 the note without the mortgage does not cause the mortgage to 8 become null, nor the note to become unsecured; the mortgage 9 automatically follows the note." Thus, transfer of Davidson v. Countrywide Home United States District Court For the Northern District of California 10 Loans, Inc., 2010 WL 962712, at *5 (S.D. Cal.)(citing Carpenter v. 11 Longan, 83 U.S. 271, 275 (1872); see also Cal. Civ. Code § 2936 12 ("The assignment of a debt secured by mortgage carries with it the 13 security."). 14 that the note and the deed of trust have been split and therefore 15 are unenforceable. 16 Accordingly, the Court rejects Plaintiff's claim According to Plaintiff's second theory, the securitization of 17 the note renders the note "no longer a Note." 18 Plaintiff claims that "once a loan has been securitized . . . it 19 forever loses its security component (i.e. the Deed of Trust) and 20 the right to foreclose through the Deed of Trust is lost forever." 21 Compl. ¶ 22. 22 Compl. ¶ 21. Defendants respond that the assertion that securitization 23 renders a note unenforceable is incorrect. 24 parties lose interest in a loan when it is assigned to a trust 25 pool . . . [has] been rejected by numerous district courts." 26 v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1099 (E.D. 27 Cal. 2010). 28 rejected the argument that companies like MERS lose their power of "The argument that Lane "Other courts in this district have summarily 15 1 sale pursuant to the deed of trust when the original promissory 2 note is assigned to a trust pool." 3 2009 WL 2880232, at *3 (N.D. Cal.). Benham v. Aurora Loan Serv., 4 Like Plaintiff here, the plaintiff in Benham "argue[d], in 5 broad terms, that Defendants sold Plaintiff's loan to financial 6 entities who pooled the loans, put them into trusts, and sold 7 securities based on them. 8 Defendants and MERS are no longer entitled to enforce the security 9 interest under the note and the deed of trust." As a result, according to Plaintiff, Id. The Benham United States District Court For the Northern District of California 10 court rejected this claim, explaining that "the Deed of Trust 11 states that the Note or a partial interest in the Note (together 12 with this Security Instrument) can be sold one or more times 13 without prior notice to Borrower." 14 this case, an identical statement appears in the deed of trust 15 between Plaintiff and Wells Fargo. 16 therefore rejects Plaintiff's contention that securitization of 17 her loan makes it unenforceable. 18 Id. (citation omitted). RFJN, Ex. A. In The Court Plaintiff's third theory is that the 2011 assignment of the 19 deed of trust in favor of HSBC as trustee for the Deutsche 20 Certificates is fabricated. 21 alleges that if that assignment is fabricated, HSBC lacks the 22 legal authority to foreclose on Plaintiff's property. 23 respond that Plaintiff fails to provide any factual allegations as 24 to the particulars of the alleged fabrication of this assignment. 25 Compl. ¶ 10-14, Ex. A. Plaintiff Defendants As stated above, a plaintiff can pursue an action to delay 26 the non-judicial foreclosure process if there is a "specific 27 factual basis for alleging that the foreclosure was not initiated 28 by the correct party." Jenkins, 216 Cal. App. 4th at 512 16 1 (citation omitted). 2 who fabricated the document, nor does she allege any reason to 3 believe that the document was fabricated. 4 fails as well. 5 Plaintiff does not allege with specificity Therefore, this theory Accordingly, the Court GRANTS Defendants' motions to dismiss 6 this cause of action for the additional reason that it fails to 7 state a claim. 8 deficiencies noted above if she can do so truthfully and without 9 contradicting the allegations in her prior pleadings. United States District Court For the Northern District of California 10 11 Plaintiff is granted leave to amend to remedy the III. Third Cause of Action: Violation of California Business and Professions Code section 17200 et seq. Plaintiff alleges that Defendants engaged in "unfair, 12 unlawful, and fraudulent business practices with respect to 13 mortgage loan servicing." Compl. ¶ 58. 14 The California Unfair Competition Law (UCL), California 15 Business and Professions Code section 17200 et seq., prohibits 16 "any unlawful, unfair or fraudulent business act or practice." 17 Because section 17200 is written in the disjunctive, it 18 establishes three types of unfair competition. Davis v. Ford 19 Motor Credit Co., 179 Cal. App. 4th 581, 593 (2009). Therefore, a 20 practice may be prohibited as unfair or deceptive even if it is 21 not unlawful and vice versa. Podolsky v. First Healthcare Corp., 22 50 Cal. App. 4th 632, 647 (1996). 23 A. Unlawful Business Practice 24 An unlawful business practice includes anything that can be 25 called a business practice and that is forbidden by law. Ticconi 26 v. Blue Shield of Cal. Life & Health Ins., 160 Cal. App. 4th 528, 27 539 (2008). Any federal, state or local law can serve as a 28 17 1 predicate for an unlawful business practice action. 2 State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th 700, 718 (2001). 3 Thus, the UCL incorporates violations of other laws and treats 4 them as unlawful practices independently actionable under the UCL. 5 Id.; Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1048 6 (9th Cir. 2000); Cel-Tech Communs., Inc. v. L.A. Cellular Tel. 7 Co., 20 Cal. 4th 163, 180 (1999). 8 Smith v. Plaintiff claims Defendants' actions were unlawful and fraudulent according to California Penal Code section 532(f)(a)(4) 10 United States District Court For the Northern District of California 9 ("A person commits mortgage fraud if, with the intent to defraud, 11 the person does any of the following . . . Files or causes to be 12 filed with the recorder of any county in connection with a 13 mortgage loan transaction any document the person knows to contain 14 a deliberate misstatement, misrepresentation, or omission") and 15 California Civil Code section 1095 ("When an attorney in fact 16 executes an instrument transferring an estate in real property, he 17 must subscribe the name of his principal to it, and his own name 18 as attorney in fact."). 19 As discussed above, Plaintiff has failed to allege, against 20 any Defendant, facts sufficient to support any claim of a 21 violation of a predicate law. 22 Plaintiff has failed to plead, with particularity, her fraud 23 allegations as required by Rule 9(b). 24 to allege sufficient facts to support an unlawful business 25 practices claim. Furthermore, as discussed above, Plaintiff, therefore, fails 26 B. Unfair Business Practice 27 Plaintiff alleges that Defendants' misconduct "gave 28 Defendants an unfair competitive advantage over their 18 1 competitors." 2 and proximate result of the actions of Defendants . . . [she] has 3 been injured in that a cloud has been placed upon title to [her] 4 Property and Defendants, [sic] have failed to remove this cloud 5 from [her] title." 6 Plaintiff fails to plead any facts in particular as required by 7 Rule 9(b), and also does not plead any facts that support the 8 claim that Defendants' unfair actions caused her injuries. 9 Compl. ¶ 62. She also alleges that "as a direct Id. at ¶ 65. Defendants respond that The California Supreme Court has not established a definitive United States District Court For the Northern District of California 10 test to determine whether a business practice is unfair under the 11 UCL. 12 Cal. 4th 163, 187 n.12 (1999) (stating that the test for 13 unfairness in cases involving business competitors is "limited to 14 that context" and does not "relate[ ] to actions by consumers."); 15 Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 1170 (9th Cir. 16 2012)("The California courts have not yet determined how to define 17 'unfair' in the consumer action context after Cel–Tech."). 18 California courts of appeal have applied three different tests to 19 evaluate claims by consumers under the UCL's unfair business 20 practices prong. 21 App. 4th 247, 256 (2010). See Cel–Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20 Drum v. San Fernando Valley Bar Ass'n, 182 Cal. 22 Under one test, a consumer must allege a "violation or 23 incipient violation of any statutory or regulatory provision, or 24 any significant harm to competition." 25 policy which is a predicate to a consumer unfair competition 26 action under the 'unfair prong' of the UCL must be tethered to 27 specific constitutional, statutory, or regulatory provisions." 28 Id. 19 Id. at 256. The "public 1 Under the second test, the "unfair prong" requires a consumer 2 to plead that (1) a defendant's conduct "is immoral, unethical, 3 oppressive, unscrupulous or substantially injurious to consumers" 4 and (2) "the utility of the defendant's conduct" is outweighed by 5 "the gravity of the harm to the alleged victim." 6 (citing Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th 7 700, 718-719 (2001)) ("The test of whether a business practice is 8 unfair involves an examination of [that practice's] impact on its 9 alleged victim, balanced against the reasons, justifications and Id. at 257 United States District Court For the Northern District of California 10 motives of the alleged wrongdoer. 11 the utility of the defendant's conduct against the gravity of the 12 harm to the alleged victim.") (citation omitted). In brief, the court must weigh 13 The third test, which is based on the Federal Trade 14 Commission's definition of unfair business practices, requires 15 that, as a result of unfair conduct, "(1) the consumer injury must 16 be substantial; (2) the injury must not be outweighed by any 17 countervailing benefits to consumers or competition; and (3) it 18 must be an injury that consumers themselves could not reasonably 19 have avoided." 20 Cal. App. 4th 1394, 1402-1405 (2006)). 21 Id. (citing Camacho v. Auto. Club of S. Cal., 142 In Lozano v. AT&T Wireless Serv., Inc., 504 F.3d 718, 736 22 (9th Cir. 2007), the Ninth Circuit endorsed the tethering test or 23 the balancing test and declined "to apply the FTC standard in the 24 absence of a clear holding from the California Supreme Court." 25 See Ferrington v. McAfee, Inc., 2010 WL 3910169, at *12 (N.D. 26 Cal.) ("Pending resolution of this issue by the California Supreme 27 Court, the Ninth Circuit has approved the use of either the 28 balancing or the tethering tests in consumer actions, but has 20 1 rejected the FTC test.") (citation omitted); I.B. ex rel. Fife v. 2 Facebook, Inc., 905 F. Supp. 2d 989, 1010-11 (N.D. Cal. 2012). 3 Plaintiff's claim of an unfair business practice fails because she 4 does not allege that Defendants' conduct violates an existing 5 statute, nor does she allege facts sufficient to support her claim 6 that Defendants' actions were "immoral, unethical, oppressive, 7 unscrupulous or substantially injurious to consumers." 8 Plaintiff, therefore, fails to allege facts sufficient to support 9 an unfair business practices claim. United States District Court For the Northern District of California 10 C. Fraudulent Business Practice 11 "A fraudulent business practice is one in which members of 12 the public are likely to be deceived." 13 Servs., Inc., 177 Cal. App. 4th 1235, 1254 (2009). 14 Morgan v. AT&T Wireless Plaintiff's claims based on fraudulent business practices 15 lack the particularity required by Rule 9(b). 16 Plaintiff makes broad assertions unsupported by factual 17 allegations. 18 that the assignment of the deed of trust was fabricated and she 19 does not specify what role, if any, each Defendant played in the 20 alleged fabrication and fraud. 21 satisfy the requirements of Rule 9(b). 22 As discussed above, She does not allege any facts to support her claim Therefore, Plaintiff fails to Because Plaintiff's claims under all three prongs fail, the 23 Court GRANTS Defendants' motions to dismiss the UCL causes of 24 action. 25 deficiencies noted above if she can do so truthfully and without 26 contradicting the allegations in her prior pleadings. Plaintiff is granted leave to amend to remedy the 27 28 21 1 IV. Fourth Cause of Action: Void or Cancel Trustee's Deed Upon Sale 2 Plaintiff's fourth cause of action asks the Court to void or 3 cancel the trustee's deed upon sale. 4 motions to dismiss this claim. 5 The Court GRANTS Defendants' In order for the Court to void or cancel a trustee's deed 6 upon sale, there must have been a foreclosure sale. 7 v. Lien, 25 Cal. App. 4th 822, 831 (1994). 8 apparent belief to the contrary, there is no trustee's deed upon 9 sale to void given that there is no indication that a foreclosure See Moeller Despite Plaintiff's United States District Court For the Northern District of California 10 sale has occurred. 11 the claim to set aside the deed of trust, if there had been a 12 foreclosure sale, Plaintiff would have to allege a valid and 13 viable tender in full to void the deed upon sale. 14 discussed above, she would have to provide notice and opportunity 15 to cure. 16 Furthermore, as discussed above with regard to Also, as Accordingly, the Court GRANTS Defendants' motions to dismiss 17 this cause of action. 18 remedy this deficiency if she can do so truthfully and without 19 contradicting the allegations in her prior pleadings. Plaintiff is granted leave to amend to 20 V. Fifth Cause of Action: Accounting 21 Plaintiff requests an accounting for the payments she made to 22 Defendants, alleging that, due to fraud, none of the money she 23 paid was actually owed to Defendants. 24 that "accounting is only a valid claim where the defendant owes 25 the plaintiff money -- not the other way around." 26 at 13. 27 that she paid DB any money. The Wells Defendants argue Docket No. 13 DB argues that Plaintiff does not allege any facts to show 28 22 1 "A cause of action seeking an accounting may be maintained 2 when (1) a relationship exists between a plaintiff and defendant 3 that requires an accounting, and (2) some balance is due to the 4 plaintiff that can only be ascertained by an accounting." 5 Shkolnikov v. JPMorgan Chase Bank, 2012 WL 6553988, at *23 (N.D. 6 Cal.). 7 action for accounting is not available where the plaintiff alleges 8 the right to recover a sum certain or a sum that can be made 9 certain by calculation.'" United States District Court For the Northern District of California 10 11 The relationship need not be fiduciary. Id. "But '[a]n Id. (citing Penney v. Wells Fargo Bank, 2012 WL 2071705, at *13 (C.D. Cal.)). Plaintiff has not alleged any facts that would warrant an 12 accounting because there is no indication that there is a balance 13 due to Plaintiff. 14 ready, willing, and able to unconditionally tender his [sic] 15 obligation to whomever it is determined he [sic] lawfully owes his 16 [sic] debt to." 17 owes under the deed of trust; rather she purports to question to 18 whom it is owed. 19 Instead, Plaintiff "has offered to and is Compl. ¶ 32. Plaintiff does not dispute what she Accordingly, the Court GRANTS Defendants' motions to dismiss 20 this cause of action. 21 remedy these deficiencies if she can do so truthfully and without 22 contradicting the allegations in her prior pleadings. Plaintiff is granted leave to amend to 23 VI. Sixth Cause of Action: Quiet Title 24 Plaintiff requests that the Court make a "judicial 25 declaration that title to the . . . Property is vested solely in 26 Plaintiff[.]" 27 cause of action to quiet title fails for the same reasons her Compl. ¶ 83. Defendants argue that Plaintiff's 28 23 1 causes of action to set aside the deed of trust and void or cancel 2 the deed of trust fail. 3 "The purpose of a quiet title action is to finally settle 4 and determine, as between the parties, all conflicting claims to 5 the property in controversy, and to decree to each such interest 6 or estate therein as he may be entitled to." 7 JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 974 (N.D. Cal. 8 2010) (internal quotation marks and citations omitted). 9 title action must include: "(1) a description of the property in Rosenfeld v. A quiet United States District Court For the Northern District of California 10 question; (2) the basis for plaintiff’s title; and (3) the adverse 11 claims to plaintiff’s title." 12 2012 U.S. Dist. LEXIS 132489, at *9-10 (N.D. Cal.); Cal. Civ. 13 Proc. Code § 760.020. 14 requirement, plaintiff must allege that he has discharged his 15 debt, regardless to whom it is owed." 16 Mortg. Elec. Registration Sys., Inc., 642 F. Supp. 2d 1048, 1057 17 (N.D. Cal. 2009)); see also Miller v. Provost, 26 Cal. App. 4th 18 1703, 1707 (1994) ("This rule was based on the equitable principle 19 that a mortgagor of real property cannot, without paying his debt, 20 quiet his title against the mortgagee."). 21 Ananiev v. Aurora Loan Servs., LLC, "In order to satisfy the second Id. (citing Kelley v. Plaintiff seeks to remove all clouds from her title and 22 requests a determination that she holds title to the property, 23 free from all claims of Defendants, apparently including the 24 original promissory note and deed of trust. 25 discussed above with respect to the claim to set aside and the 26 claim to void the sale, Plaintiff must tender her obligation in 27 full to show that she has satisfied her debt, and she must provide 28 24 Compl. ¶ 66. As 1 pre-suit notice and opportunity to cure. 2 providing notice, Plaintiff has not stated a claim to quiet title. 3 Without tender and Accordingly, the Court GRANTS Defendants' motions to dismiss 4 this cause of action. 5 remedy this deficiency if she can do so truthfully and without 6 contradicting the allegations in her prior pleadings. 7 8 9 Plaintiff is granted leave to amend to CONCLUSION For the reasons set forth above, the Court GRANTS Defendants' motions to dismiss (Dockets No. 13 and 23) and GRANTS Plaintiff United States District Court For the Northern District of California 10 leave to amend. 11 within each cause of action, which Defendant she accuses and the 12 alleged actions of that Defendant. 13 foreclosure sale, renew her claim to void or cancel the trustee's 14 deed upon sale. 15 notice and opportunity to cure. 16 include in an amended complaint her claims to set aside the deed 17 of trust and quiet title without satisfying the requirements of 18 pre-suit notice and opportunity to cure. 19 pursue these claims in any amended complaint, she must first give 20 Defendants notice of her claims within seven days of the date of 21 this order. 22 before these claims can be re-filed. 23 Plaintiff may, within seven days thereafter, file an amended 24 complaint alleging notice and failure to cure and remedying the 25 other deficiencies identified above. 26 claims or allegations not authorized by this order. 27 Plaintiff must file any amended complaint within five weeks of the 28 date of this order. In her amended complaint Plaintiff must state, Plaintiff may not, absent a She must also satisfy the requirement of pre-suit Likewise, Plaintiff may not If Plaintiff wishes to Defendants will then have twenty-one days to cure 25 If Defendants do not cure, She may not add further In any event, 1 If Plaintiff files an amended complaint, Defendants shall 2 respond to it within fourteen days after it is filed. 3 Defendants file a motion to dismiss, Plaintiff shall respond to 4 the motion within fourteen days after it is filed. 5 file a brief that responds only to the arguments raised in 6 Defendants' motion. 7 inapplicable to this case or does not respond to Defendants' 8 arguments, the Court will consider the motion to be unopposed and 9 will grant it. Plaintiff must If Plaintiff files an opposition that is Defendants' reply, if necessary, shall be due 10 United States District Court For the Northern District of California If seven days thereafter. 11 the papers. Any motion to dismiss will be decided on 12 13 IT IS SO ORDERED. 14 15 16 Dated: September 26, 2014 CLAUDIA WILKEN United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 26

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