Cuaresma et al v. Deustche Bank National Company et al

Filing 18

ORDER by Judge Whyte granting 6 Motion to Dismiss.(rmwlc1, COURT STAFF) (Filed on 10/7/2011)

1
2
3
4

E-FILED on 10/7/2011

5
6
7
IN THE UNITED STATES DISTRICT COURT

9

FOR THE NORTHERN DISTRICT OF CALIFORNIA

10
United States District Court
For the Northern District of California

8

SAN JOSE DIVISION

11
12

MARVIN CUARESMA, and MERRIAME
CUARESMA,

No. C-11-03829 RMW

13
Plaintiff,
14
v.
15
16
17
18
19
20
21
22

DEUSTCHE BANK NATIONAL CO.,
IMPAC
SECURED ASSETS CORP., BANK OF
AMERICA, N.A. INC., COUNTRYWIDE
HOME LOANS, MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; HSBC
BANK USA, NATIONAL ASSOCIATION
FOR THE BENEFIT OF ACE SECURITIES
CORP. HOME EQUITY LOAN TRUST,
SERIES 2006- NC2 ASSET BACKED
PASS-THROUGH CERTIFICATES SERIES
2006-3 and DOES 1 through 100, inclusive,

ORDER GRANTING DEFENDANTS'
MOTION TO DISMISS

[Re Docket No. 6]

Defendants.

23
24

Defendants Deutsche Bank National Trust Company, Bank of America, N.A., Countrywide

25

Home Loans, Inc., and Mortgage Electronic Registration Systems, Inc. move to dismiss the claims

26

against them. Plaintiffs have not filed an opposition. On October 7, 2011, the court held a hearing

27

to consider defendants' motion. Having considered the papers submitted by the parties and the

28
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS

1

arguments of counsel, and for the reasons set forth below, the court grants the motion to dismiss

2

with leave to amend.

3

I. BACKGROUND

4

Plaintiffs Marvin and Merriame Cuaresma, proceeding pro se, originally filed this action in

5

Santa Clara County Superior Court on July 1, 2011. Defendants removed the action to federal court

6

on August 1, 2011 on the basis of federal claims in the original complaint. On August 9, 2001,

7

defendants moved to dismiss the complaint. Plaintiffs did not file an opposition.

8
9

In February 2004, plaintiffs Marvin Cuaresma and Merriame Cuaresma gained an interest in
the real property commonly known as 1210 Murphy Avenue, San Jose, California (the "subject

United States District Court
For the Northern District of California

10

property") by way of a grant deed recorded in the official records in Santa Clara County. Compl. ¶

11

1. In June 2006, plaintiffs obtained a $497,000 adjustable rate mortgage ("ARM") loan from

12

Express Capital Lending. Defs.' Req. for Judicial Notice ("RJN"), Dkt. No. 7, Ex. A and Ex. B1; see

13

also Compl. ¶¶ 2, 14-17, 19, 22-24. The loan was secured against the subject property by a deed of

14

trust recorded in Santa Clara County on June 8, 2006. RJN, Ex. A & B; see also Compl. ¶ 7. The

15

deed of trust named Commonwealth Land Title as the trustee and Mortgage Electronic Registration

16

Systems, Inc. ("MERS") as beneficiary. RJN, Ex. B.

17

At some point plaintiffs failed to pay their monthly mortgage payment as required by the

18

mortgage loan. RJN, Ex. D; see also Compl. ¶¶ 2, 17. In August 2009, MERS assigned the deed of

19

trust to defendant Deutsche Bank National Trust Co. ("Deutsche Bank"). RJN, Ex. C. In September

20

2009, Deutsche Bank used MTC Financial, Inc. d/b/a Trustee Corps to send plaintiffs a notice of

21

default and election to sell under deed of trust. RJN, Ex. D; see also Compl. ¶¶ 2, 17. Shortly

22

afterward, plaintiffs sent defendants a written notice of dispute "including a demand to give the

23

name, address and phone number of the entity or natural person, who, in due course, was in

24

possession of the original, wet-ink signature, promissory note that was used as the 'Corpus' (body) as

25

an asset in order for the trust to still be valid." Compl. ¶ 7. On April 14, 2011, a notice of trustee's

26

sale was recorded with Santa Clara County, which identified a total amount owed of $557,060.20.

27

RJN, Ex. F.

28
1

As discussed below, the court takes judicial notice of certain documents submitted by defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
2

1

In count 1, plaintiffs allege that defendants engaged in fraudulent misrepresentations by

2

representing that they all had right to payment under the note and failing to inform plaintiffs that

3

they actually lack standing to foreclose. Compl. ¶¶ 14-17. In count 2, plaintiffs allege that

4

defendants fraudulently induced plaintiffs into signing the note without verifying that they could

5

repay the loan. Id. ¶¶ 18-25. In count 3, plaintiffs allege defendants violated the Fair Debt

6

Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, by failing to verify their claim and respond

7

to plaintiffs' qualified written request. Id. ¶¶ 26-27. In count 4, plaintiffs allege defendants engaged

8

in predatory lending practices in violation of the Home Ownership and Equity Protection Act, 15

9

U.S.C. section 1637 ("HOEPA"); the Trust in Lending Act, 15 U.S.C. section 1601 ("TILA");

United States District Court
For the Northern District of California

10

Regulation Z, 12 C.F.R. section 226; and Business and Professions Code section 17200 by failing to

11

verify plaintiffs' ability to repay loans and manufacturing facts and lowering their own underwriting

12

standards in order to induce plaintiffs to enter a loan that would be financially unbearable and

13

burdensome. Id. ¶¶ 28-32. In count 5, plaintiffs allege that defendants breached the trust contract

14

and/or their fiduciary duty by refusing plaintiffs' request to view the original promissory note and by

15

continuing to act as parties to the trust when the note no longer exists. Id. ¶¶ 33-34. In count 6,

16

plaintiffs allege that defendants' conduct constituted a violation of the Racketeer Influenced and

17

Corrupt Organizations Act ("RICO"). Id. ¶¶ 35-39. In count 7, plaintiffs seek to quiet title against

18

claims of defendants. Id. ¶¶ 40-43. In count 8, plaintiffs seek declaratory judgment as to the

19

validity of any loan transactions and defendants' right to proceed with non-judicial foreclosure of the

20

subject property. Id. ¶ 48. In count 9, plaintiffs seek injunctive relief. Id. ¶ 51.

21

II. ANALYSIS

22

A.

General Standards for Motion to Dismiss

23

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

24

pleadings fail to state a claim upon which relief can be granted. The court's "inquiry is limited to the

25

allegations in the complaint, which are accepted as true and construed in the light most favorable to

26

the plaintiff." Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir.2008). Even under the

27

liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiff's obligation to

28

provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
3

1

formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corporation v.

2

Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

3

Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must

4

instead allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570. "A

5

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

6

the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal,

7

129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are insufficient to

8

state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g.,

9

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir.1990); Cook, Perkiss & Liehe, Inc. v. N. Cal.

United States District Court
For the Northern District of California

10

Collection Serv., Inc., 911 F.2d 242, 246–47 (9th Cir.1990).

11

B.

12

Defendants have submitted exhibits documenting the relationship among parties, requesting

Judicial Notice

13

that judicial notice be taken of them. RJN. These documents include: an adjustable rate note (Ex.

14

A), dated June 2, 2006 and signed by plaintiffs; a deed of trust (Ex. B), dated June 2, 2006, signed

15

by plaintiffs and recorded with Santa Clara County on June 8, 2006 as document number 18965955;

16

an assignment of deed of trust (Ex. C), dated August 27, 2009, and recorded with Santa Clara

17

County on May 14, 2010 as document number 20711824; a notice of default and election to sell

18

under deed of trust (Ex. D), dated September 10, 2009, and recorded with Santa Clara County on

19

September 11, 2009 as document number 20429805; a substitution of trustee (Ex. E), dated August

20

27, 2009 and recorded with Santa Clara County on April 14, 2010 as document number 2067707; a

21

notice of trustee's sale (Ex. F), dated April 14, 2010 and recorded with Santa Clara County on April

22

14, 2010 as document number 2067708; and trustee's deed upon sale (Ex. G), dated May 10, 2010

23

and recorded with Santa Clara County on May 14, 2010 as document number 20711825. Also

24

included but not referred to in the complaint or recorded with Santa Clara County are: a secondary

25

note (Ex. H); a secondary deed of trust (Ex. I); and a truth-in-lending disclosure statement (Ex. J) ,

26

all dated June 2, 2006 and signed by plaintiffs. Plaintiffs have not filed an objection.

27

Pursuant to Federal Rule of Evidence 201, the court may take judicial notice of adjudicative

28

facts, which are "either (1) generally known within the territorial jurisdiction of the trial court or (2)
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
4

1

capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably

2

be questioned." In addition, "documents whose contents are alleged in a complaint and whose

3

authenticity no party questions, but which are not physically attached to the pleading, may be

4

considered in ruling on a Rule 12(6) motion to dismiss." Branch v. Tunnell, 14 F.3d 449, 454 (9th

5

Cir.1994). A court may also consider evidence on which the complaint "necessarily relies" if the

6

document is central to the plaintiffs' claim. Id. at 453-54. Accordingly, the court considers exhibits

7

A through G, which were either referenced in the complaint or recorded in the official records of

8

Santa Clara County. Defendants have not provided a basis under which the court may take judicial

9

notice of exhibits H through J, which are not referred to in the complaint or recorded with Santa

United States District Court
For the Northern District of California

10

Clara County.

11

C.

Tender Rule

12

As defendants point out, in order to maintain a claim challenging foreclosure, plaintiffs must

13

allege a credible tender of the amount of the secured debt to maintain any cause of action. See

14

Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109 (Ct.App. 1996). An action to set aside

15

a trustee's sale for irregularities in sale, notice, or procedure should be accompanied by an offer to

16

pay the full amount of the debt for which the property was security. Brittain v. IndyMac Bank, FSB,

17

No. C-09-2953 SC, 2009 WL 2997394, at *1 (N.D.Cal. Sept. 16, 2009) (citing Arnolds Management

18

Corp. v. Eischen, 158 Cal.App.3d 575, 578 (Ct.App.1984)). Further, the tender requirement applies

19

to any claim "implicitly integrated" with the foreclosure sale. Arnolds Mgmt. Corp., 158 Cal.App.3d

20

at 579.

21

Here, plaintiffs have omitted any offer of tender from their pleadings. Plaintiffs make no

22

allegation of the ability to make such tender, or that such tender has been made. Most of plaintiffs'

23

claims are implicitly integrated with the foreclosure sale. See generally Compl. As such, to the

24

extent that they challenge the foreclosure, the court must dismiss plaintiffs' first, third, fifth, seventh,

25

eighth, and ninth claims.

26

D.

First Cause of Action for Fraudulent Misrepresentation

27

Central to plaintiffs' first claims is the allegation that defendants lack standing to lawfully

28

foreclose on the subject property because none of them are the true holder of the promissory note.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
5

1

See Compl. ¶¶ 16, 34, 42, 47. However, this theory, sometimes referred to as the holder of the note

2

theory, does not have a foundation in California law.

3

California does not require possession of the note as a precondition to non-judicial

4

foreclosure under a Deed of Trust. "Under Civil Code section 2924, no party needs to physically

5

possess the promissory note." Sicairos v. NDEX West, LLC, No. 08cv2014-LAB, 2009 WL 385855,

6

at *3 (S.D.Cal. Feb. 13, 2009) (citing Cal. Civ.Code, § 2924(a) (1)). Rather, "[t]he foreclosure

7

process is commenced by the recording of a notice of default and election to sell by the trustee."

8

Moeller v. Lien, 25 Cal.App.4th 822, 830 (1994). An "allegation that the trustee did not have the

9

original note or had not received it is insufficient to render the foreclosure proceeding invalid." Neal

United States District Court
For the Northern District of California

10

v. Juarez, No. 06cv055J, 2007 WL 2140640, at *8 (S.D.Cal.2007).

11

Here, Deutsche Bank was granted, assigned, and transferred as trustee all beneficial interest

12

under the deed of trust as of August 27, 2009. See RJN, Ex. C. This establishes its right to initiate

13

the foreclosure process on its own or through its agent MTC Financial. The judicially noticed

14

evidence firmly establishes that defendant Deutsche Bank has standing to foreclose, and thus

15

foreclosure cannot be unlawful on this particular legal theory. Accordingly, plaintiffs' first claim for

16

fraudulent misrepresentation is dismissed for failure to state a claim upon which relief can be

17

granted.

18

E.

19

Claims of fraud are limited by a three-year statute of limitations. Cal. Civ. Proc. Code §

Second Cause of Action for Fraudulent Inducement

20

338(d). Here, the factual allegations under the plaintiffs' second cause of action for fraud are based

21

upon the June 5, 2006 origination of the loan. Compl. ¶¶ 1, 2, 14-17, 19. Plaintiffs' complaint was

22

filed on July 1, 2011, over five years after loan origination. Cal. Civ. Proc. Code § 338(d) provides

23

that a cause of action for fraud "is not deemed to have accrued until the discovery, by the aggrieved

24

party, of the facts constituting the fraud or mistake"; however, plaintiffs do not allege facts relating

25

to any subsequent discovery of the fraud. Therefore, to the extent the claim is based on the June 5,

26

2006 origination of the loan, plaintiffs' second cause of action for fraud appears to be time-barred

27

under Cal. Civ. Proc. Code § 338(d). Accordingly, plaintiffs' second claim for fraudulent

28

inducement is dismissed.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
6

1
2

F.

Third Cause of Action for Violation of the FDCPA

3

Plaintiffs contend in their general allegations and their third cause of action that defendants

4

violated the FDCPA, the California Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), and

5

the Real Estate Settlement Procedures Act ("RESPA") by failing to respond to their qualified written

6

request ("QWR") and request for verification of defendants' claim. See Compl. ¶¶ 5-9, 26-27.

7

Plaintiffs do not indicate when or to which defendants they delivered this request. Instead they

8

include an undated, unsigned template letter of objection missing any details specific to their case.

9

See Compl. Ex. B. (Letter of Objection to Trustee in Non-Judicial Sale States).

United States District Court
For the Northern District of California

10

1.

FDCPA

11

The FDCPA was enacted to protect debtors from false, deceptive, or misleading

12

representations or tactics with respect to the collection of debts. See 15 U.S.C. § 1692(e). The

13

statute provides that, within five days of making initial contact with a debtor "in connection with the

14

collection of any debt," a debt collector must send the debtor a written notice containing the amount

15

of the debt; the name of the creditor; the time period in which the validity of the debt may be

16

challenged; and instructions explaining how the debtor may obtain further evidence of the debt and

17

information about the creditor. 15 U.S.C. § 1692g(a). The provisions of the FDCPA, however, are

18

limited to "debt collectors." 15 U.S.C. § 1692a(6). The legislative history of section 1692a(6)

19

indicates the term "debt collector" does not include a mortgage servicing company or an assignee of

20

a debt if the debt was not in default at the time it was assigned. See S.Rep. No. 95-382, 95th Cong.,

21

1st Sess. 3, reprinted in 1977 U.S.Code Cong. & Ad.News 1695, 1698 ("[T]he committee does not

22

intend the definition [of 'debt collector'] to cover . . . the collection of debts, such as mortgages . . . ,

23

by persons who originated such loans; [or] mortgage service companies and others who service

24

outstanding debts for others, so long as the debts were not in default when taken for servicing[.]").

25

This court has already determined that foreclosing on a property pursuant to a deed of trust is not a

26

collection of a debt within the meaning of the FDCPA. See Ladayan v. Washington Mutual Bank,

27

No. C 09-0916 RMW, 2009 WL 3047238, at *3 (N.D.Cal. Sept.18, 2009).

28
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
7

1

Here, plaintiffs do not make any allegations that defendants fit within the definition of "debt

2

collector" for the purposes of the FDCPA. See 15 U.S.C. § 1692a(5). Further, plaintiffs have not

3

alleged that the debt was in default at the time of the assignment of the deed of trust to defendant

4

Deutsche Bank. Since Deutsche Bank was a trustee and beneficiary of the loan, they (and MTC

5

Financial Inc as their agent) were servicing the loan and not a collection agency subject to the

6

provisions of the FDCPA. Therefore, defendants' failure to verify their claim does not give rise to a

7

cause of action under the FDCPA.

8
9

2.

RFDCPA

California incorporated the FDCPA into the RFDCPA under Cal. Civ. Code § 1788.17. "The

United States District Court
For the Northern District of California

10

law is clear that foreclosing on a deed of trust does not invoke the statutory protections of the

11

RFDCPA." Collins v. Power Default Servs., Inc., No. 09-4838 SC, 2010 WL 234902, at *3

12

(N.D.Cal. Jan.14, 2010). As with the FDCPA, defendants' failure to verify their claim in response to

13

a request for verification was not unlawful under the RFDCPA.

14
15

3.

RESPA

Under RESPA, a QWR is a "written request from the borrower (or an agent of the borrower)

16

for information relating to the servicing of such loan." 12 U.S.C. § 2605(e)(1)(A). The statute of

17

limitations for section 2605 claims is three years, see 12 U.S.C. § 2614, and thus, a section 2605

18

claim premised on plaintiffs' request for documents from Deutsche Bank is not time-barred. Among

19

other things, a QWR must include a "statement of the reasons for the belief of the borrower, to the

20

extent applicable, that the account is in error or provides sufficient detail to the servicer regarding

21

other information sought by the borrower." 12 U.S.C. § 2605(e)(1)(B)(ii). A loan servicer must

22

respond to a QWR only if the information is related to a loan servicing. Lawther v. Onewest Bank,

23

No. C 10-0054 RS, 2010 WL 4936797, at *6 (N.D.Cal. Nov. 30, 2010). If a loan servicer fails to

24

comply with the provisions of section 2605, a borrower is entitled to any actual damages as a result

25

of the failure. Id. At the pleading stage, the plaintiff must include a demonstration of some actual

26

pecuniary loss and a causal relationship between the alleged damages and the RESPA violation.

27

Padilla v. One West Bank, No. 10-04080 CW, 2010 WL 5300900, at *6 (N.D.Cal. Dec. 20, 2010).

28
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
8

1

Here, plaintiffs have not sufficiently alleged that they make a qualified request for

2

information related to the servicing of their loan or that the failure of the defendants to respond

3

caused them to suffer damages. Plaintiffs, in their general allegations, have included a claim that a

4

QWR was sent to defendants, but do not give sufficient details about the QWR. See Compl. ¶¶ 6-9.

5

Intermingled with the discussion of the QWR is the holder of the note theory which, as discussed

6

above, fails. See id. Further, plaintiffs do not allege or discuss any actual damages nor allege that

7

the failure to respond caused these damages. Therefore, plaintiffs have failed to adequately state a

8

RESPA claim. Accordingly, plaintiffs' third claim is dismissed.

9
United States District Court
For the Northern District of California

10

G.

Fourth Cause of Action for Predatory Lending

Plaintiffs allege that defendants collaborated to engage in predatory lending practices in

11

violation of the Home Ownership and Equity Protection Act, 15 U.S.C. section 1637 ("HOEPA");

12

the Truth in Lending Act, 15 U.S.C. section 1601 ("TILA"); Regulation Z, 12 C.F.R. section 226;

13

and California's Business and Professions Code section 17200. See Compl. ¶ 29. Plaintiffs further

14

contend that defendants failed to verify plaintiffs' ability to repay the loans and manufactured facts

15

to justify the loan. See id. ¶ 30.

16

Plaintiffs' fourth cause of action for predatory lending claims under the Trust in Lending Act,

17

15 U.S.C. section 1601 ("TILA") and the Home Ownership and Equity Protection Act, 15 U.S.C.

18

section 1637 ("HOEPA") is subject to a three-year statute of limitations for claims for rescission and

19

a one-year statute of limitations for claims for damages. See 15 U.S.C. §§ 1635(f), 1640(e); see also

20

Kemezis v. Matthew, No. Civ.A. 07-5086, 2008 WL 2468377, at *3 (E.D. Pa. June 16, 2008).

21

Alleged violations of Regulation Z, 12 C.F.R. § 226, are subject to the same one-year limitation

22

period as TILA claims for damages under 15 U.S.C. § 1640(e). See Chourp v. Ocwen Loan

23

Servicing, LLC, No. 11cv0159-IEG, 2011 WL 1559796, at *3 (N.D.Cal. Apr. 22, 2011). Here, the

24

factual allegations under plaintiffs' fourth cause of action are also based upon the June 5, 2006

25

origination of the loan. See Compl. ¶¶ 29-32. As such, plaintiffs' fourth cause of action for

26

predatory lending is time-barred to the extent it relies on TILA, HOEPA, and Regulation Z.

27
28

Plaintiffs' fourth claim also alleges a violation of California Business and Professions Code
section 17200 for predatory lending practices. Claims under section 17200 are subject to a four-year
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
9

1

statute of limitations. Cal. Bus. & Prof. Code § 17208. Here, the factual allegations under plaintiffs'

2

fourth cause of action are also based upon the June 5, 2006 origination of the loan. As such,

3

plaintiffs' fourth cause of action for predatory lending is time-barred to the extent it relies on Cal.

4

Bus. & Prof. Code section 17200. Accordingly, plaintiffs' fourth claim is dismissed.
H.

6

Plaintiffs' fifth cause of action asserts that defendants "breached the trust contract and/or their

7

fiduciary duty" by refusing plaintiffs right to view the original promissory note and by continuing to

8

act as parties to the trust when the original note no longer exists. Compl. ¶ 34. To state a claim for

9

breach of trust or breach of fiduciary duty, plaintiffs must state facts establishing the existence of a

10
United States District Court
For the Northern District of California

5

Fifth Cause of Action for Breach of Contract

fiduciary duty between plaintiffs and defendants. See David Huong Que, Inc. v. Luu, 150 Cal. App.

11

4th 400, 410 (2007). Here, plaintiffs have not pled facts establishing the existence of such a

12

fiduciary duty. Further, to the extent that this claim is based on the holder of the note theory, as

13

discussed above under the first cause of action, it must fail. See id. Accordingly, plaintiffs' fifth

14

claim is dismissed.

15

I.

16

Plaintiffs' sixth cause of action alleges a violation of the Racketeer Influenced and Corrupt

17

Organizations Act. Plaintiffs allege that "[d]efendants, and each of them by their association with

18

one another, used the United States mail in perpetrating the felonious conduct as set forth above, and

19

each of them conspired and infiltrated legitimate business institutions for the purpose of perpetrating

20

felony conduct on the public in more than one incident." Compl. ¶ 36. They further allege that

21

"[d]efendants, and each of them as being associated with one another, are engaged in a pattern and

22

practice to obtain title of property without compliance and in violation of common and statutory law

23

. . . and in doing so, have attempted and are attempting to circumvent the mandates of applicable

24

law. . . ." Id. ¶ 38. Plaintiffs fail to plead an adequate RICO claim.

Sixth Cause of Action for RICO

25

The RICO statute makes it illegal for "any person employed by or associated with any

26

enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or

27

participate, directly or indirectly, in the conduct of [an] enterprise's affairs through a pattern of

28

racketeering activity" or to conspire to do so. 18 U.S.C. §§ 1692(c), (d). Thus, to state a claim for a
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
10

1

violation of this section, a plaintiff must plead: "(1) conduct (2) of an enterprise (3) through a

2

pattern (4) of racketeering activity (known as 'predicate acts') (5) causing injury to the plaintiff's

3

business or property." Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361

4

(9th Cir. 2005).

5

First, plaintiffs fail to sufficiently allege the existence of a RICO enterprise. "An enterprise
is a 'group of persons associated together for a common purpose of engaging in a course of conduct,'

7

and is proved by evidence of 'an ongoing organization, formal or informal, and by evidence that the

8

various associates function as a continuing unit.'" Vertkin v. Wells Fargo Home Mortg., No.

9

C10–0775 RS, 2011 WL 175518, at *4 (N.D.Cal. Jan.18, 2011) (quoting United States v. Turkette,

10
United States District Court
For the Northern District of California

6

452 U.S. 576, 583 (1981)). The enterprise element requires the organization, formal or informal, to

11

be an entity separate and apart from the pattern of racketeering activity in which it engages. Chang

12

v. Chen, 80 F.3d 1293, 1298 (9th Cir.1996). "A RICO plaintiff must allege a structure for the

13

making of decisions separate and apart from the alleged racketeering activities, because the

14

existence of an enterprise at all times remains a separate element which must be proved." Wagh v.

15

Metris Direct, Inc., 348 F.3d 1102, 1112 (9th Cir.2003). While plaintiffs contend that defendants

16

acted in association with each other, this is not sufficient to show evidence of a RICO enterprise.

17

Second, plaintiffs fail to allege a pattern of racketeering activity. Racketeering activity is

18

defined by finite number of acts listed in 18 U.S.C. § 1961(1). Plaintiffs allege that defendants use

19

the United State mail in perpetration of felonious conduct, indicating mail fraud generally as the

20

predicate act, which is a predicate act as defined by section 1961(1) of RICO. However, a RICO

21

claim requires at least two acts of racketeering, see 18 U.S.C. § 1961(5), and plaintiffs have not

22

provided details of even one. Plaintiffs only make vague allegations of "felony conduct" and

23

violation of unspecified "common and statutory law." Further, Federal Rules of Civil Procedure

24

9(b) requires that fraud be pled with particularity. The 9th Circuit has held that "Rule 9(b) requires

25

the identification of the circumstances constituting fraud so that the defendant can prepare an

26

adequate answer from the allegations." Schreiber Distrib. Co. v. Serv–Well Furniture Co., 806 F.2d

27

1393, 1400 (9th Cir.1986) (internal quotation marks omitted). "[T]he pleader must state the time,

28

place, and specific content of the false representations as well as the identities of the parties to the
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
11

1

misrepresentation." Id. at 1401. Plaintiffs' general allegation of mail fraud is insufficient to claim a

2

pattern of racketeering activity.

3
4

Plaintiffs' RICO allegations are vague and conclusory and cannot "support a claim to relief
that is plausible on its face." See Twombly at 570. Accordingly, plaintiffs' sixth claim is dismissed.

5

J.

Seventh Cause of Action for Quiet Title

6

California courts apply the same tender rule to quiet title that applies in a wrongful

7

foreclosure action. Roque v. Suntrust Mortg., Inc., No. C-09-00040 RMW, 2010 WL 546896, at *6

8

(N.D.Cal. Feb. 10, 2010). "A valid and viable tender of payment of the indebtedness owing is

9

essential to an action to cancel a voidable sale under a deed of trust." Karlsen v. Am. Sav. & Loan

United States District Court
For the Northern District of California

10

Ass'n, 15 Cal.App.3d 112, 117 (Cal.Ct.Capp. 1971).

11

Here, plaintiffs have not tendered payment nor alleged an offer of tender of the full amount

12

of the obligation owed on the mortgage. Moreover, plaintiffs have not alleged facts indicating that

13

equitable circumstances exist such that tender should not be required. See Humboldt Sav. Bank v.

14

McCleverty, 161 Cal. 285, 291 (1911). Furthermore, plaintiffs have not alleged facts that, if true,

15

would show that defendants do not have the right to foreclose on their property. Accordingly,

16

plaintiffs' seventh claim for quiet title is dismissed.

17

K.

18

The Declaratory Judgment Act gives district courts discretion to exercise its jurisdiction over

Eighth Cause of Action for Declaratory Relief

19

a claim for declaratory relief. See 28 U.S.C. § 2201. A declaratory relief claim requires a present

20

and actual controversy between the parties. Cal. Ins. Guar. Ass'n v. Superior Court, 231 Cal. App.

21

3d 1617, 1623 (1991). Here, plaintiffs' declaratory relief claim is dependant upon the prior claims

22

and the holder of the note theory, which is invalid as discussed above. Compl. ¶¶ 44-49. Since the

23

plaintiff has not adequately alleged the prior claims, declaratory relief is not appropriate at this time.

24

As such, plaintiffs' eighth claim for declaratory relief is dismissed.

25

L.

Ninth Cause of Action for Injunctive Relief

26

Injunctive relief is a remedy, not a cause of action. See Marlin v. AIMCO Venezia, LLC, 154

27

Cal. App. 4th 154, 162 (2007). As such, the cause of action must be dismissed. Furthermore, this

28

claim depends upon the prior claims. Compl. ¶¶ 50-51. As each of those claims is legally defective,
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
12

1

there are no facts establishing any basis upon which the court could provide the remedy of injunctive

2

relief. Accordingly, plaintiffs' ninth claim is dismissed.

3

III. ORDER

4

For the foregoing reasons, the court grants defendants' motion to dismiss.

5

Plaintiffs have thirty (30) days from the date of this order to file an amended complaint.

6
7
8
9

DATED:

10/7/2011
RONALD M. WHYTE
United States District Judge

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS—No. C-11-03829 RMW
GS
13