Lovretich v. Countrywide Home Loans, Inc. et al

Filing 18

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS COMPLAINT FILED DECEMBER 31, 2012 re 6 . Signed by JUDGE J. MICHAEL SEABRIGHT on 5/29/13. Leave of court is granted until June 17, 2013, to file an Amended Complaint. (gls, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

NICHOLAS J. LOVRETICH,

)
)
Plaintiff,
)
)
vs.
)
)
COUNTRYWIDE HOME LOANS,
)
INC.; MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEMS; CWALT )
INC. MORTGAGE PASS-THROUGH )
CERTIFICATES, SERIES 2005-72;
)
BANK OF AMERICA, N.A.,
)
)
Defendants.
)
________________________________ )

CIVIL NO. 13-00098 JMS/BMK
ORDER GRANTING
DEFENDANTS’ MOTION TO
DISMISS COMPLAINT FILED
DECEMBER 31, 2012

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
COMPLAINT FILED DECEMBER 31, 2012
I. INTRODUCTION
On December 31, 2012, Plaintiff Nicholas J. Lovretich (“Plaintiff”)
filed this action in the First Circuit Court of the State of Hawaii against Defendants
Countrywide Home Loans, Inc. (“CHL”), Mortgage Electronic Registration
Systems (“MERS”), “CWALT, Inc. Mortgage Pass-Through Certificates, Series
2005-72” (“CWALT”),1 and Bank of America, N.A. (“BANA”) (collectively,
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Although the Complaint lists ‘CWALT Inc. Mortgage Pass-Through Certificates,
Series 2005-72” as a Defendant, the Bank of New York Mellon, fka The Bank of New York
(“BONY”) has made an appearance, asserting that it is the trustee for CWALT. For ease of
(continued...)

“Defendants”). Plaintiff asserts that each of the Defendants has asserted
conflicting interests in Plaintiff’s mortgage loan on real property located at 44-600
Kaneohe Bay Drive, Kaneohe, Hawaii 96744 (the “subject property”), and asserts
claims for quiet title and declaratory relief. On March 1, 2013, Defendants
removed the action to this court.
Currently before the court is Defendants’ Motion to Dismiss, in which
they argue that the Complaint fails to state a plausible claim upon which relief can
be granted. Based upon the following, the court GRANTS Defendants’ Motion to
Dismiss, with leave for Plaintiff to file an amended complaint.
II. BACKGROUND
A.

Factual Background
As alleged in the Complaint, on July 11, 2005, Plaintiff entered into a

loan transaction with CHL for $1,500,000 secured by the subject property. Doc.
No. 1-3, Compl. ¶ 1 (Intro.);2 id. Exs. A, B. The mortgage identifies Plaintiff as
the borrower, CHL as the lender, and MERS as the mortgagee in a nominee
capacity for CHL and CHL’s successors and assigns. Id. Ex. B at 2. Specifically,

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(...continued)
reference, the court simply refers to this Defendant as CWALT.
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The Complaint includes numbered paragraphs 1-2 in the “Introduction,” and numbered
paragraphs 1-28 for the remainder of the Complaint. Due to this redundancy, the court specifies
when citing to the paragraphs in the Introduction.
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the mortgage describes that MERS “is a separate corporation that is acting solely
as a nominee for [CHL] and [CHL’s] successors and assigns. MERS is the
mortgagee under this Security Instrument.” Id. Ex. B at 2.
The mortgage further provides that payments may be collected by a
Loan Servicer:
The Note or a partial interest in the Note (together with
this Security Instrument) can be sold one or more times
without prior notice to Borrower. A sale might result in a
change in the entity (known as the “Loan Servicer”) that
collects Periodic Payments due under the Note and this
Security Instrument and performs other mortgage loan
servicing obligations under the Note, this Security
Instrument, and Applicable Law. There also might be
one or more changes of the Loan Servicer unrelated to a
sale of the Note.
Id. at 12.
The Complaint asserts that on November 1, 2005, CHL sold the
mortgage loan to CWALT, which “effectively transferred [CHL’s] interests in the
Note and under the Mortgage. Id. Compl. ¶¶ 5-6. According to the Complaint,
since this transfer, BANA “has held itself out as owner of the Note and the
Mortgage.” Id. ¶ 7. Plaintiff is aware of “no recorded or other evidence” that the
Note or the Mortgage was transferred “to any other entity, including but not
limited to [CHL or BANA].” Id. Compl. ¶ 8. The Complaint further alleges that
“MERS could not have conveyed title to [BANA]” because MERS cannot be both
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the nominee and mortgagee at the same time. Id. ¶ 9; see also id. ¶ 13.
Although the Complaint itself does not elaborate as to how BANA has
held itself out as owner of the Note and Mortgage, it attaches a mortgage bill sent
from BANA to Plaintiff. Id. Ex. C. The Complaint asserts that BANA’s
“continuing demands for payments constitute false statements and
misrepresentations regarding [its] interests,” are “proof of its efforts to defraud
Plaintiff.”3 Id. Compl. ¶ 11.
B.

Procedural Background
On December 31, 2012, Plaintiff filed his Complaint in the First

Circuit Court of the State of Hawaii alleging claims for quiet title pursuant to
Hawaii Revised Statutes (“HRS”) § 669-1(a) (Count I), and declaratory relief
(Count II). On March 1, 2013, Defendants removed the action to this court.
On March 14, 2013, Defendants filed their Motion to Dismiss. Doc.
No. 6. Plaintiff filed an Opposition on May 13, 2013, Doc. No. 14, and Defendants
filed a Reply on May 20, 2013. Doc. No. 16. Pursuant to Local Rule 7.2(d), the
court determines the Motion to Dismiss without a hearing.

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The Complaint also includes allegations regarding alleged misdeeds committed by
Defendants in the mortgage industry generally and/or not involving Plaintiff directly. See Doc.
No. 1-3, Compl. ¶¶ 10-15. The court disregards allegations that are not directed to Plaintiff.
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III. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
a claim for “failure to state a claim upon which relief can be granted[.]”
“To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see also Weber v. Dep’t of Veterans Affairs,
521 F.3d 1061, 1065 (9th Cir. 2008). This tenet -- that the court must accept as
true all of the allegations contained in the complaint -- “is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. Accordingly, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 555); see also Starr v. Baca, 652 F.3d
1202, 1216 (9th Cir. 2011) (“[A]llegations in a complaint or counterclaim may not
simply recite the elements of a cause of action, but must contain sufficient
allegations of underlying facts to give fair notice and to enable the opposing party
to defend itself effectively.”).
Rather, “[a] claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing

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Twombly, 550 U.S. at 556). In other words, “the factual allegations that are taken
as true must plausibly suggest an entitlement to relief, such that it is not unfair to
require the opposing party to be subjected to the expense of discovery and
continued litigation.” Starr, 652 F.3d at 1216. Factual allegations that only permit
the court to infer “the mere possibility of misconduct” do not show that the pleader
is entitled to relief as required by Rule 8. Iqbal, 556 U.S. at 679.
IV. DISCUSSION
The basis of both Plaintiff’s quiet title and declaratory relief claims is
that all four Defendants have asserted an interest in the mortgage loan such that
Plaintiff does not know which, if any, Defendant is entitled to his mortgage
payments. Defendants argue that Plaintiff’s theory of liability -- whether phrased
as a claim for quiet title or declaratory relief -- lacks both a legal and factual basis.
For several reasons, the court agrees.
As an initial matter, the Complaint fails to assert a plausible factual
basis to support that each Defendant has actually asserted a conflicting interest in
the mortgage loan. Rather, based on the allegations in the Complaint, each
Defendant has a different role in the mortgage loan: (1) CHL is the original lender
and sold the mortgage loan to CWALT, Doc. No. 1-3, Compl. ¶¶ 5-6; (2) MERS is
CHL’s nominee and mortgagee, id. Ex. B at 2; (3) CWALT was sold the mortgage

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loan, id. ¶¶ 5-6; and (4) BANA has demanded payments on the mortgage loan.
Id. ¶¶ 9-11. These allegations establish no conflict -- the Complaint does not assert
that any two Defendants have sought payment on the mortgage loan at the same
time, or provide a factual basis that would support that any Defendant is
wrongfully asserting a right to Plaintiff’s mortgage payments.
Indeed, the only Defendant the Complaint identifies as asserting a
right to Plaintiff’s mortgage payments is BANA, yet the Complaint includes no
allegations establishing a plausible basis that BANA has no right to these
payments. Rather, the Complaint asserts in wholly conclusory fashion that
(1) BANA “has held itself out as owner of the Note and the Mortgage,” id. ¶ 7;
(2) Plaintiff is aware of “no recorded or other evidence” that the Note or the
Mortgage was transferred BANA, id. ¶ 8; and (3) BANA’s “continuing demands
for payments constitute false statements and misrepresentations regarding [its]
interests” and are “proof of its efforts to defraud Plaintiff.” Id. ¶ 11. Notably
absent from the Complaint are any allegations explaining (1) how BANA has held
itself out as owner of the Note and Mortgage (as opposed to, for instance, the Loan
Servicer); (2) what statements and representations BANA has made regarding its
interest in the mortgage loan; and (3) why such statements made by BANA are
false. The Complaint’s threadbare recitals as to BANA, supported by mere

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conclusory statements, do not establish a plausible claim.4 See Iqbal, 556 U.S. at
678.
The court further rejects that Plaintiff can base a claim on MERS’s
dual role as nominee for CHL and mortgagee. Specifically, although the
allegations of the Complaint are vague, it appears that Plaintiff may be basing his
claims, at least in part, on the faulty assertion that MERS “cannot be the nominee
and the mortgagee at the same time.” Doc. No. 1-3, Compl. ¶ 9. The Complaint
does not explain how this legal conclusion ties into Plaintiff’s claims for quiet title
and declaratory relief, and this failure appears to be for good reason -- MERS’s
involvement in the transaction injects no ambiguity into the issue of who is entitled
to Plaintiff’s mortgage payments. Rather, the mortgage explicitly identifies that
MERS is the nominee for CHL and its assigns, and is the mortgagee. Compl. Ex.
B. As a result, this court has rejected claims attacking MERS’s role in mortgage
transactions, given that the mortgage expressly notifies the mortgagor of such role.
See, e.g., Pascual v. Aurora Loan Servs., LLC, 2012 WL 2355531, at *4 (D. Haw.

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And to the extent that Plaintiff bases his claim against BANA on the assertion that
BANA made fraudulent misrepresentations, such allegations fail to meet the heightened pleading
requirements of Rule 9(b) -- the Complaint includes no allegations explaining “the who, what,
when, where, and how of the [fraudulent] misconduct charged.” Kearns v. Ford Motor Co., 567
F.3d 1120, 1124 (9th Cir. 2009). Plaintiff must still meet the requirements of Rule 9(b) even
though he does not assert a stand-alone fraud claim -- in cases in which fraud is not an essential
element of the claim, Rule 9(b) nonetheless applies to the particular averments of fraud. See
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003).
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June 19, 2012) (citing Cervantes v. Countrywide Home Loans, 656 F.3d 1034 (9th
Cir. 2011)). This court has also rejected numerous borrowers’ claims challenging
MERS’s authority to assign, on behalf of a lender, the mortgage,5 as well as claims
based on securitization of the mortgage loan.6 Thus, Plaintiff cannot base a claim
on MERS’s role as nominee for CHL and mortgagee, and the Complaint’s
allegations as to MERS fail to assist Plaintiff in asserting a claim against any
Defendant.
Finally, the court rejects that Plaintiff can assert a quiet title claim
based on the contention that he does not know to whom his debt is owed. See
Klohs v. Wells Fargo Bank, N.A., 901 F. Supp. 2d 1253, 1261 n.4 (D. Haw. 2012)
(citing Homeyer v. Bank of Am., 2012 WL 4105132, at *6 (D. Idaho Aug. 27,
2012) (rejecting quiet title claim where plaintiffs asserted that they did not know to
whom their debt is owed, reasoning that “even assuming some yet unknown entity

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See, e.g., Fed. Nat’l Mortg. Ass’n v. Kamakau, 2012 WL 622169, at *4 & *5 n.5 (D.
Haw. Feb. 23, 2012) (explaining that a borrower cannot challenge an assignment that he was not
a party to, and that plaintiff may not assert claims based on the argument that MERS lacked
authority to assign its right to foreclose); Lindsey v. Meridias Cap., Inc., 2012 WL 488282, at *3
n.6 (D. Haw. Feb. 14, 2012) (“[A]ny argument that MERS lacked the authority to assign its right
to foreclose and sell the property based on its status as ‘nominee’ cannot stand in light of
[Cervantes.]” (quoting Velasco v. Sec. Nat’l Mortg. Co., 2011 WL 4899935, at *11 (D. Haw.
Oct. 14, 2011)); Teaupa v. U.S. Nat’l Bank N.A., 836 F. Supp. 2d 1083, 1104 (D. Haw. 2011)
(dismissing without leave to amend claim asserting that MERS lacks standing to foreclose).
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See, e.g., Rodenhurst v. Bank of Am., 773 F. Supp. 2d 886, 898 (D. Haw. 2011) (citing
numerous cases); Kamakau, 2012 WL 622169, at *4 (same).
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is the true Note Holder entitled to receive payments, the fact that the entity is
unknown is not a cloud on the title”) (Findings and Recommendation adopted Sept.
17, 2012)). Homeyer explained that “[u]nless and until the Note Holder fails to
produce clear title and a warranty deed upon tender, Plaintiffs may not fail to
comply on their part with the provisions of the Note requiring payment.” Id. “As
the Ninth Circuit Bankruptcy Appellate Panel recently observed, the borrower (the
maker of the note) ‘should be indifferent as to who owns or has an interest in the
note so long as it does not affect the maker’s ability to make payments on the
note.’” Id. at *7 (quoting Veal v. Am. Home Mortg. Serv., 450 B.R. 897, 912 (9th
Cir. B.A.P. 2011)).
The court therefore GRANTS Defendants’ Motion to Dismiss.
V. CONCLUSION
Based on the above, the court GRANTS Defendants’ Motion to
Dismiss. In light of the allegations of the Complaint and the vague and/or
conclusory theory(ies) of liability presented, it remains unclear to the court how
Plaintiff could amend his claims to state a claim upon which relief can be granted.
Keeping in mind Plaintiff’s Rule 11(b) obligations, however, the court grants
Plaintiff leave to file an amended complaint consistent with this Order by June 17,
2013. Plaintiff is notified that an amended complaint will supersede the

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Complaint. Ferdik v. Bonzelet, 963 F.2d 1258 (9th Cir. 1992); Hal Roach Studios
v. Richard Feiner & Co., 896 F.2d 1542, 1546 (9th Cir. 1990). After amendment,
the court will treat the Complaint as nonexistent. Ferdik, 963 F.2d at 1262. If
Plaintiff fails to file an amended complaint by June 17, 2013, this action will be
dismissed.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, May 29, 2013.

/s/ J. Michael Seabright
J. Michael Seabright
United States District Judge

Lovretich v. Countrywide Home Loans, Inc. et al., Civ. No. 13-00098 JMS/BMK, Order Granting
Defendants’ Motion to Dismiss Complaint Filed December 31, 2012

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