Dare v. Aegis Wholesale Corporation

Filing 71

ORDER Granting Defendant Nationstar Mortgage, LLC's 66 Motion to Dismiss. Signed by Judge John A. Houston on 4/1/2019. (ag)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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MICHAEL DARE,

Case No. 15cv2833-JAH (BLM)
Plaintiff,

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v.

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ORDER GRANTING DEFENDANT
NATIONSTAR MORTGAGE LLC’S
MOTION TO DISMISS (Doc. No. 66)

AEGIS WHOLESALE CORPORATION,
et al.,

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Defendants.

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INTRODUCTION

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Pending before the Court is Defendant Nationstar Mortgage LLC’s (“Defendant” or

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“Nationstar”) motion to dismiss (“Motion”) Plaintiff Michael Dare’s (“Plaintiff”) Third

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Amended Complaint (“TAC”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil

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Procedure. See Doc. No. 66. Plaintiff filed a response in opposition. See Doc. No. 68.

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The Motion is fully briefed. After careful review of the pleadings submitted by both

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parties, and for the reasons set forth below, the Court GRANTS Defendant’s motion to

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dismiss (Doc. No. 66).

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DISMISSED with prejudice.

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//

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//

Plaintiff’s Third Amended Complaint (Doc. No. 64) is

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15cv2833-JAH (BLM)

FACTUAL BACKGROUND1

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Plaintiff filed the instant action concerning the property located at 1800 S. Juniper

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Street, Escondido, California (“Property”). See Doc. No. 1. In April of 2006, Plaintiff

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refinanced the Property with a $400,000 loan from Aegis Wholesale Corporation (“Aegis”)

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and secured it by a Deed of Trust on the Property recorded on April 10, 2006. Doc. No.

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66-1 at pg. 6.2 The Deed of Trust named Commonwealth Land Title as Trustee and

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Mortgage Electronic Registration Systems, Inc. (“MERS”) as the initial beneficiary. Id.

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In 2011, MERS assigned the deed of trust to U.S. Bank. Id. at pg. 7. In March of 2014,

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Nationstar, as attorney in fact for U.S. Bank, executed a substitution of trustee naming Sage

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Point Lender Services, LLC (“Sage Point”) as trustee. Id. at pg. 3. Sage Point recorded a

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default against the property stating that Plaintiff owed $145,198.39 as of April 15, 2014.

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Doc. No. 66-1 at pg. 7.
PROCEDURAL BACKGROUND3

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On March 9, 2018, Defendant filed a motion to dismiss Plaintiff’s Second Amended

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Complaint (“SAC”) for failure to state a claim. See Doc. No. 50. On March 12, 2018,

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Defendant Bank of America (“Bank of America”) also filed a motion to dismiss Plaintiff’s

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SAC for failure to state a claim. See Doc. No. 51. On September 5, 2018, the Court issued

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an Order GRANTING both motions to dismiss Plaintiff’s SAC. See Doc. No. 60. In the

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Order, the Court dismissed Plaintiff’s UCL and slander of title claims without prejudice.

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Id. All other claims were dismissed with prejudice. Id. On February 11, 2019, the Court

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received and GRANTED Plaintiff’s motion to reopen the case and file a TAC. See Doc.

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Nos. 62, 65. Plaintiff filed the TAC on February 11, 2019. See Doc. No. 64. On February

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25, 2019, Defendant filed the Motion to dismiss pursuant to Rule 12(b)(6) of the Federal

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The Court addressed the case’s prior factual history in its Order granting Defendants’ motion to
dismiss Plaintiff’s complaint. See Doc. No. 60.
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Defendant Aegis Wholesale Corporation (Aegis was liquidated through chapter 11 bankruptcy). See
In re Aegis Wholesale Corp., No. 07-11120-BLS (Bankr. D. Del.).
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The Court addressed the case’s prior procedural history in its Order granting Defendants’ motion to
dismiss Plaintiff’s complaint. See Doc. No. 60.
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15cv2833-JAH (BLM)

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Rules of Civil Procedure. See Doc. No. 66. Plaintiff filed a response in opposition to

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Defendant’s Motion on March 11, 2019.

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DISCUSSION
I.

Legal Standard
a. Rule 12(b)(6)

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A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint.

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Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted under Rule

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12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter

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Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 U.S. 319,

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326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a

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dispositive issue of law.”). Alternatively, a complaint may be dismissed where it presents

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a cognizable legal theory yet fails to plead essential facts under that theory. Robertson,

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749 F.2d at 534. While a plaintiff need not give “detailed factual allegations,” he must

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plead sufficient facts that, if true, “raise a right to relief above the speculative level.” Bell

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Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007).

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

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

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129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 547). A claim is facially

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plausible when the factual allegations permit “the court to draw the reasonable inference

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that the defendant is liable for the misconduct alleged.”

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nonconclusory ‘factual content,’ and reasonable inferences from that content, must be

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plausibly suggestive of a claim entitling the plaintiff to relief. Moss v. U.S. Secret Service,

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572 F.3d 962, 969 (9th Cir. 2009). “Determining whether a complaint states a plausible

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claim for relief will…be a context-specific task that requires the reviewing court to draw

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on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950.

Id. In other words, “the

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In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the

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truth of all factual allegations and must construe all inferences from them in the light most

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favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002);
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15cv2833-JAH (BLM)

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Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, legal

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conclusions need not be taken as true merely because they are cast in the form of factual

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allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003); Western Mining

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Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). When ruling on a motion to dismiss,

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the Court may consider the facts alleged in the complaint, documents attached to the

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complaint, documents relied upon but not attached to the complaint when authenticity is

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not contested, and matters of which the Court takes judicial notice. Lee v. City of Los

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Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a court determines that a complaint fails

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to state a claim, the court should grant leave to amend unless it determines that the pleading

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could not possibly be cured by the allegation of other facts.

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b. Rule 9(b)

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Under Rule 9(b) of the Federal Rules of Civil Procedure, “[i]n alleging fraud or

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mistake, a party must state with particularity the circumstances constituting fraud or

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mistake.” Under Ninth Circuit case law, Rule 9(b) imposes two distinct requirements on

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complaints alleging fraud. First, the basic notice requirements of Rule 9(b) require

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complaints pleading fraud to “state precisely the time, place, and nature of the misleading

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statements, misrepresentations, and specific acts of fraud.” Kaplan v. Rose, 49 F.3d 1363,

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1370 (9th Cir. 1994); see also Vess v. Ciba-Geigy Corp., U.S.A., 317 F.3d 1097, 1106 (9th

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Cir. 2003) (citation omitted) (stating that a plaintiff must set forth “the who, what, when,

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where and how” of the alleged misconduct). Second, Rule 9(b) requires that the complaint

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“set forth an explanation as to why the statement or omission complained of was false or

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misleading.” Yourish v. California Amplifier, 191 F.3d 983, 993 (9th Cir. 1999) (citation

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and quotation omitted).

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II.

Analysis

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Defendant argues that Plaintiff fails to state a UCL claim; fails to state a claim for

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slander of title; and cannot maintain a claim for declaratory relief. Doc. No. 66-1 at pgs.

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11-18.

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//
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15cv2833-JAH (BLM)

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a. UCL Claim

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Defendant contends that “[t]he only allegations in Plaintiff’s TAC that differ from

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those in the dismissed SAC are immaterial to, and thus cannot rescue, his failed UCL

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claim.” Id. at pg. 11. Defendant argues that Plaintiff cannot identify loss of money or

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property that would give him standing under the California Business and Professions Code

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§ 17200 et seq. (the “UCL”). Id.

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i. Standing

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Specifically, Defendant argues that Plaintiff lacks standing to pursue a UCL claim

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because he cannot “(1) establish a loss or deprivation of money or property sufficient to

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qualify as…economic injury, and (2) show that the economic injury was…caused by [ ]

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the unfair business practice…that is the gravamen of the claim.” Id. at pg. 12 (quoting

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Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 (2011) (emphasis in the original).

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A federal court’s judicial power is limited to “cases” or “controversies.” U.S. Const.,

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Art. III § 2. A necessary element of Article III’s “case” or “controversy” requirement is

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that a litigant must have “‘standing’ to challenge the action sought to be adjudicated in the

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lawsuit.” Valley Forge College v. Americans United for Separation of Church and State,

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Inc., 454 U.S. 464, 471 (1982); LSO, Ltd. V. Stroh, 205 F.3d 1146, 1152 (9th Cir. 2000).

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To satisfy the standing requirement, both the UCL and the CLRA require a plaintiff to

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allege they have suffered economic injury and that the economic injury was caused by the

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unfair business practice of false advertising that is the mainstay of the claim. See Kwikset

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Corp. v. Superior Court, 51 Cal. 4th 310, 321 (2011); Stearns v. Ticketmaster Corp., 655

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F.3d 1013 (9th Cir. 2011).

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The “irreducible constitutional minimum” of Article III standing has three elements.

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LSO, 205 F.3d at 1152 (internal quotations omitted). First, plaintiff must have suffered

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“an injury in fact – an invasion of a legally protected interest which is (a) concrete and

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particularized, and (b) actual and imminent, not conjectural or hypothetical.” Lujan v.

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Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal citations and quotations omitted).

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Second, plaintiff must show a causal connection between the injury and the conduct
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15cv2833-JAH (BLM)

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complained of; i.e., “the injury has to be fairly…trace[able] to the challenged action of the

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defendant, and not…the[e] result [of] the independent action of some third party not before

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the court.” Id. (quoting Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26,

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41-42 (1976)) (alterations in original).

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“speculative,” that the plaintiff’s injury will be redressed by a favorable decision. Id. at

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561. If the Court finds plaintiff lacks Article III standing, it must dismiss plaintiff’s claim.

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Nichols v. Brown, 859 F. Supp. 2d 1118, 1127 (C.D. Cal. 2012).

Third, it must be “likely,” and not merely

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Here, Defendant asserts that Plaintiff does not plead actionable unfair, unlawful, or

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fraudulent wrongdoing committed by Defendant. Doc. No. 66-1 at pg. 11. Defendant

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contends that Plaintiff fails to “claim that the Property has actually been sold in foreclosure,

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that he paid any fees to Defendant related to his default or pre-foreclosure activities, or that

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he otherwise lost money due to any of the alleged acts of Defendant.” Id. Defendant

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asserts that any money Plaintiff did in fact pay Defendant “resulted from his voluntary

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Loan obligations and do not constitute actionable damages under the UCL.” Id. (citing

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Auerbach v. Great W. Bank, 74 Cal. App. 4th 1172, 1185 (1999)). Defendant argues that

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“Plaintiff in essence objects to accounting practices concerning the Loan based on

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allegations that Defendant unfairly demanded payment of the Loan and, when he did not

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timely pay, charged fees relating to his default and the ensuing foreclosure.” Id. at pg. 14.

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In response, Plaintiff contends that his UCL claim is pled sufficiently. Doc. No. 68

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at pg. 6. Plaintiff contends that Defendant’s “acts and practices are likely to deceive,

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constitute a fraudulent business act or practice.” Id. Plaintiff asserts that Defendant

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“continues to run the Plaintiff in circles.” Id. at pg. 7. Plaintiff contends that Defendant

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refused to “allow Plaintiff to submit a loan modification package unless Plaintiff could

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prequalify for payments based on the suspect accounting from Bank of America, which

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further denied Plaintiff any hope of resolution without forcing Plaintiff into expensive

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litigation.” Id.

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The Court finds that Plaintiff lacks standing to assert a claim in the instant matter.

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While the standard for reviewing standing at the pleading stage is lenient, the Court
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15cv2833-JAH (BLM)

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reiterates that a plaintiff cannot rely solely on conclusory allegations of injury or ask the

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court to draw unwarranted inferences in order to find standing. See Schmeir v. U.S. Ct. of

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Appeals for the Ninth Cir., 279 F.3d 817, 820 (9th Cir. 2001). Plaintiff fails to demonstrate

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economic injury. Plaintiff also fails to demonstrate such economic injury was the result of

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Defendant’s unfair business practice. Plaintiff’s does not explain why he has standing to

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assert a UCL claim against Defendant. See Doc. No. 68 at pgs. 6-8. Plaintiff paid

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Defendant money for his Loan obligations and did not incur damages. Doc. No. 66-1 at

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pg. 11. Plaintiff has not sufficiently plead anything that suggests otherwise.

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b. Slander of Title
i. Rule 9(b) Standard

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Defendant asserts that a “plaintiff claiming slander of title must allege: “(1)

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publication; (2) falsity; (3) absence of privilege; and (4) disparagement of another’s land

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which is relied upon by a third party and which results in pecuniary loss.” Doc. No. 66-1

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at pg. 15 (citing Flores v. EMC Mortg. Co., 997 F.Supp. 2d 1088, 1122 (E.D. Cal. 2014)).

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Defendant contends that Plaintiff’s claim for slander of title is based on a Notice of Default,

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was privileged, did not disparage Plaintiff, and did not result in pecuniary loss. Doc. No.

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66-1 at pgs. 15-16.

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In response, Plaintiff asserts that Defendant relied on “fraudulent assignment” in

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substituting in as Trustee to Plaintiff’s Deed of Trust. Doc. No. 68 at pg. 4. Plaintiff

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contends that the “fraudulent assignment” is what gives “authorization” to Defendant. Id.

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Specifically, Plaintiff argues that “Defendants have filed publications which misrepresent

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their authority to assign substitute Trustees, filed fraudulent documents and concealed their

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relationship.” Id. at pg. 5. Plaintiff also argues that “Defendants intended to defraud

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Plaintiff by attempting to wrongfully foreclose on his property by fraudulently filing

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documents to try and achieve this goal.” Id. at pgs. 5-6. Plaintiff asserts that these actions

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will cause pecuniary loss “if Defendants are afforded the ability to defraud the Plaintiff in

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the actions aforementioned.” Id. at pg. 6. Plaintiff contends that Defendants’ “slanderous

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action have made it impossible for Plaintiff to sell or rent his property. Id.
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The Court finds that Plaintiff fails to sufficiently allege the “who, what, where, how,

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and why” of Defendant’s misconduct. The pleadings do not allege with specificity how

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Defendant made misrepresentations to Plaintiff. In addition, the pleadings do not provide

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specific examples demonstrating Defendant’s alleged misrepresentations.

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Plaintiff claims that Defendant’s fraudulent and subsequently “slanderous actions have

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made it impossible for Plaintiff to sell or rent his property, resulting in a loss of income.

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The Court finds these allegations to be speculative and are insufficiently plead. Doc. No.

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68 at pg. 6. Accordingly, the Court finds that Plaintiff has not pled with particularity

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sufficient to meet the 9(b) heightened standard.

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Instead,

c. Declaratory Relief

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Plaintiff seeks declaratory relief based on his UCL claim and slander of title claim.

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Doc. No. 66-1 at pg. 17. Because the Court finds that Plaintiff has not sufficiently pled the

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UCL claim and claim for slander of title, Plaintiff’s claim for declaratory is dismissed as

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well.

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CONCLUSION

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Based on the foregoing reasons, IT IS HEREBY ORDERED Defendant

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Nationstar’s motion to dismiss (Doc. No. 66) is GRANTED. If a court determines that a

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complaint fails to state a claim, the court should grant leave to amend unless it determines

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that the pleading could not possibly be cured by the allegation of other facts. United States

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ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001). The Court

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previously dismissed Plaintiff’s UCL and slander of title claims without prejudice on

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September 5, 2018 (Doc. No. 60) and at this time finds that Plaintiff’s pleading cannot be

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possibly cured by the allegation of other facts.

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//

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//

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//

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15cv2833-JAH (BLM)

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Thus, Plaintiff Michael Dare’s Third Amended Complaint (Doc. No. 64) is

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DISMISSED with prejudice.

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IT IS SO ORDERED.

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DATED: April 1, 2019

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_________________________________
JOHN A. HOUSTON
United States District Judge

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