Mclean v. Aurora Loan Servicing et al

Filing 21

ORDER denying 6 Motion to Remand to State Court and granting in part 5 Motion to Dismiss. The complaint is dismissed without prejudice. No later than 21 calendar days from the date this order is issued, Plaintiff may file an amended complaint joining Mr. Mclean as a party and including only claims that meet the standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Signed by Judge Larry Alan Burns on 2/16/12. (kaj)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ANGELA MCLEAN, CASE NO. 11cv0455-LAB (NLS) Plaintiff, 12 ORDER DENYING MOTION FOR REMAND; AND vs. 13 14 ORDER GRANTING IN PART MOTION TO DISMISS AURORA LOAN SERVICING, et al., 15 Defendants. 16 17 18 This action was removed from state court on March 4, 2011, on the basis of diversity 19 jurisdiction. At the time of removal, Plaintiff Angela Mclean was proceeding pro se, but since 20 that time she has obtained counsel and is now represented by them. The action concerns 21 a dispute with a loan servicer. 22 Motion to Remand 23 Immediately after removal, Ms. Mclean, then proceeding pro se, moved for remand. 24 Her theory is based on an understanding that federal question jurisdiction is lacking over 25 some of the claims. But this motion fails because Defendants removed on the basis of 26 diversity jurisdiction. The notice of removal alleges complete diversity among the parties, and 27 the requisite amount in controversy. The motion for remand (Docket no. 6) is therefore 28 DENIED. -1- 11cv0455 1 Motion to Dismiss 2 Defendants have moved to dismiss based on failure to state a claim, and failure to join 3 a necessary party. Ms. Mclean’s opposition, which was filed by her counsel, concedes that 4 her quiet title claim has not been adequately pleaded. It agrees she has not joined her co- 5 borrower (her husband, Mikel Mclean) as a party and says she could do so if needed, but 6 also argues the co-borrower is not a necessary party. Defendants argue Mr. Mclean is a 7 necessary party because his absence could subject them to multiple or inconsistent 8 obligations. See Fed. R. Civ. P. 19(a)(1)(B)(ii). For example, they point out that should Ms. 9 Mclean be unsuccessful in this action, Mr. Mclean could then sue on the same facts and 10 theories. For her part, Ms. Mclean simply argues Mr. Mclean probably would be bound by 11 the judgment. (Opp’n to Mot. to Dismiss, 13:18–19 (“[A]ny determinations on the merits 12 made by this Court would most likely preclude Mr. Mclean from asserting the same claims 13 brought in the instant action.”)) But the general rule is that absent parties are not bound by 14 judgments in personam in litigation to which they are not parties, even if the issues are the 15 same. See Puyallup Indian Tribe v. Port of Tacoma, 717 F.2d 1251, 1254 (9th Cir. 1983) 16 (explaining that trustee holding legal title would not be bound by judgment to which beneficial 17 owner was a party, unless trustee was formally joined as a party). 18 The Court therefore concludes Mr. Mclean is a necessary party, and because Ms. 19 Mclean concedes he can feasibly be joined, the complaint will be dismissed without 20 prejudice. 21 Although the complaint suggested Ms. Mclean was bringing a “produce the note” 22 action, her opposition to the motion to dismiss clarifies that she isn’t challenging her 23 obligation to make mortgage payments; rather, she is challenging whether Aurora Loan 24 Servicing (rather than some other lender or assignee) has the right to collect her mortgage 25 payments. In fact, the complaint does appear to be a “produce the note” action, seeking to 26 enjoin a foreclosure sale. See, e.g., Compl., ¶¶ 14 (“AURORA LOAN SERVICING has 27 consistently refused to produce the original Note and relevant assignments of the Deed of 28 Trust.”), 24 (“It is fundamental and basic that a party seeking to exercise a right (here, the -2- 11cv0455 1 power of sale) has the contractual right to do so at the time of its exercise.”) In general, such 2 “produce the note” cases fail because, under California law, the loan trustee on a promissory 3 note secured by a deed of trust need not have the original promissory note in its possession 4 in order to proceed with a nonjudicial foreclosure. See Sicairos v. NDEX West, LLC, 2009 5 WL 385855 at *2–3 (S.D.Cal. Feb. 13, 2009). 6 Aurora argues that Ms. Mclean’s claim for declaratory relief is improper because no 7 actual dispute exists between the parties, and that her claim for unfair business practices 8 fails because she has not alleged any unlawful, unfair, or fraudulent business practices. That 9 may be true with regard to the complaint as it now exists, but it does not follow that the 10 complaint cannot be amended to raise these claims. If, as Ms. Mclean believes, Aurora is 11 demanding and collecting mortgage payments even though it is not entitled to do so, that 12 would be an unfair business practice. Supposing that to be true, Aurora would have been 13 collecting money it had no right to, and leaving the Mcleans subject to later demands for 14 payment by the true assignee. It may be that this is the proper subject for declaratory relief, 15 although until the claim is properly pleaded, it is uncertain. 16 The motion to dismiss is GRANTED IN PART. The complaint is DISMISSED 17 WITHOUT PREJUDICE. No later than 21 calendar days from the date this order is issued, 18 Plaintiff may file an amended complaint joining Mr. Mclean as a party and including only 19 claims that meet the standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 20 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Because Ms. Mclean has represented that 21 she is currently making mortgage payments and is not in danger of foreclosure, she must not 22 include claims pertaining to either judicial or nonjudicial foreclosure, unless circumstances 23 have changed and she provides an explanation of this. 24 25 IT IS SO ORDERED. DATED: 2/16/2012 ___________________________________ 26 27 HONORABLE LARRY ALAN BURNS United States District Judge 28 -3- 11cv0455

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