DeShaw et al v. Mortgage Electronic Registration Systems, Inc. et al

Filing 25

ORDER GRANTING MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION re 14 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 7/10/2014. "For the foregoing reasons, the court grants the motion to dismiss for lack of subject-m atter jurisdiction and Plaintiffs' Complaint is dismissed as against all parties. The Clerk of the Court is directed to enter judgment and to close this case." (emt, )CERTIFICATE OF SERVICEParticip ants 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
DENNIS DUANE DESHAW, et al.,

)
)
Plaintiffs,
)
)
vs.
)
)
MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEMS, INC.,
)
et al.
)
)
Defendants.
)
)
_____________________________ )

CIVIL NO. 14-00055 SOM/KSC
ORDER GRANTING MOTION TO
DISMISS FOR LACK OF SUBJECTMATTER JURISDICTION

ORDER GRANTING MOTION TO DISMISS
FOR LACK OF SUBJECT-MATTER JURISDICTION
I.

INTRODUCTION.
Defendants Mortgage Electronic Registration Systems,

Inc. (“MERS”), Bank of America, N.A. (“BANA”), and The Bank of
New York Mellon (“BNYM”) (collectively, “Defendants”) move to
dismiss the Complaint filed by Plaintiffs Dennis Duane DeShaw and
Susan Kay Broer-DeShaw (“Plaintiffs”) on January 31, 2014, which
seeks a declaration from this court as to “which entities (if
any) have an interest in their home, the Note, or the Mortgage”
on real property located in Waipahu, Hawaii.
2.

ECF No. 1, PageID #

The court grants the motion to dismiss because Plaintiffs do

not have standing to bring this action, and have failed to
establish that the amount in controversy exceeds $75,000.

The

court, therefore, is without subject-matter jurisdiction.1
1

On May 21, 2014, Defendant Bayview Loan Servicing, LLC
(“Bayview”) filed a joinder in the motion to dismiss. See ECF

II.

FACTUAL BACKGROUND.
On July 26, 2006, Plaintiffs executed a promissory note

(the “Note”) in connection with a $418,400.00 loan secured by a
mortgage (the “Mortgage”) on real property on Kaaholo Street in
Waipahu on the island of Oahu (the “Property”).

ECF No. 2,

PageID # 2; ECF No. 1-1; ECF No 1-2; ECF No. 14-1, PageID # 125.
The Mortgage lists First Magnus Financial Corporation as the
Lender and MERS as the nominee for the Lender and the Lender’s
successors and assigns.

ECF No. 1-2, PageID # 22.

Under the terms of the Mortgage, “[t]he 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.”

Id., PageID # 32.

The Mortgage also states that the

Loan Servicer, which “collects Periodic Payments due under the
Note and this Security Instrument and performs other mortgage
loan servicing obligations under the Note, this Security

No. 18. Because the joinder was filed outside of the seven-day
period permissible under Local Rule 7.9 for a “substantive
joinder,” through which a party may seek for itself the same
relief the movant seeks, and because the joinder fails to
“clearly state that it seeks such relief so that it is clear that
the joinder does not simply seek relief for the original movant,”
the court treats the joinder filed by Bayview as a simple
joinder, only requesting relief for the movants. Under Local
Rule 7.9, a simple joinder can be filed at any time. However,
because the court finds that the relief available to the movants
is equally applicable to Bayview, Plaintiffs’ Complaint is also
dismissed as against Bayview.
2

Instrument, and Applicable Law[,]” may change, and that “Borrower
will be given written notice of the change[.]”

Id.

On August 25, 2011, an Assignment of Mortgage (the
“Assignment”) was executed by Christopher Herrera, listed as an
Assistant Secretary for MERS, by which MERS transferred its
interest in the Mortgage to BNYM, as Trustee for the
Certificateholders CWALT, Inc., Alternative Loan Trust 2006-32CB,
Mortgage Pass-Through Certificates, Series 2006-32CB.
4, PageID # 40.

ECF No. 1-

The Assignment was recorded in the State of

Hawaii Bureau of Conveyances on September 2, 2011.

ECF No. 1-4,

PageID # 40.
The parties agree that BANA acted as the servicer and
sent Plaintiffs monthly statements until October 15, 2012, when
servicing rights were transferred to Bayview.

ECF No. 1, PageID

# 7-8, 11; ECF No. 14-1, PageID # 125-26; ECF No. 1-9, PageID
# 60.
On January 31, 2014, Plaintiffs filed a Complaint
purporting to be an action to quiet title.
# 11.

ECF No. 1, PageID

Plaintiffs say they “are willing and able to pay their

mortgage” but “do not know which entities (if any) have an
interest in their home, the Note, or the Mortgage.”
# 2.

Id., PageID

Plaintiffs argue that without a determination by the court

as to which entities have such interests, Plaintiffs “may face
double or triple liability for the Note, and may face wrongful

3

litigation in Court.”

Id., PageID #2-3.

In support of their

request for this determination, Plaintiffs allege that no party
has indicated that it has the Note.

Id., PageID # 12-13.

Plaintiffs also contend that the Assignment is void because it is
“a forged document” that Christopher Herrera lacked authority to
execute, and because the assignee is a closed trust.

Id., PageID

# 14.
Defendants filed their motion to dismiss the Complaint
on May 7, 2014, arguing, inter alia, that the court lacks
subject-matter jurisdiction over this action.

ECF No. 14-1,

PageID # 130-33.
III.

STANDARD.
A.

Rule 12(b)(1).

Under Rule 12(b)(1) of the Federal Rules of Civil
Procedure (“FRCP”), a complaint may be dismissed for lack of
subject-matter jurisdiction.
An attack on subject-matter jurisdiction “may be facial
or factual.”

Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039

(9th Cir. 2004).

A facial attack asserts that “the allegations

contained in a complaint are insufficient on their face to invoke
federal jurisdiction.”

Id.

A factual attack, on the other hand,

“disputes the truth of the allegations that, by themselves, would
otherwise invoke federal jurisdiction.”

4

Id.

If the moving party makes a facial challenge, as is the
case here, the court’s inquiry is “confin[ed] . . . to
allegations in the complaint[.]”

Savage v. Glendale Union High

Sch., Dist. No. 205, Maricopa Cnty., 343 F.3d 1036, 1040 (9th
Cir. 2003).

Such allegations are taken by the court as true.

Courthouse News Serv. v. Planet, 750 F.3d 776 (9th Cir. 2014).
B.

Article III Standing.

Under Article III of the United States Constitution,
the jurisdiction of federal courts is limited to cases and
controversies.
(1992).

Lujan v. Defenders of Wildlife, 504 U.S. 555, 559

One of the means by which a federal court determines

whether a dispute is a justiciable case or controversy is the
doctrine of standing.

Id. at 560.

Standing may be raised

through a motion to dismiss under Rule 12(b)(1) because it bears
on a federal court’s subject-matter jurisdiction.

White v. Lee,

227 F.3d 1214, 1242 (9th Cir. 2000).
To establish standing under Article III, “a plaintiff
must show (1) an injury in fact that is (a) concrete and
particularized and (b) actual or imminent . . . ; (2) that the
injury is fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.”

Covington v. Jefferson Cnty., 358 F.3d 626, 637-38

(9th Cir. 2004) (internal quotation marks and citation omitted).

5

The plaintiff has the burden of establishing standing
based on the complaint.

Raines v. Byrd, 521 U.S. 811, 818

(1997); Lujan, 504 U.S. at 561.

“Since they are not mere

pleading requirements but rather an indispensable part of the
plaintiff’s case, each element [of standing] must be supported in
the same way as any other matter on which the plaintiff bears the
burden of proof, i.e., with the manner and degree of evidence
required at the successive stages of the litigation.”

Lujan, 504

U.S. at 561.
“For purposes of ruling on a motion to dismiss for want
of standing, both the trial and reviewing courts must accept as
true all material allegations of the complaint, and must construe
the complaint in favor of the complaining party.”

Bernhardt v.

Cnty. of Los Angeles, 279 F.3d 862, 867 (9th Cir. 2002).
IV.

ANALYSIS.
Plaintiffs’ counsel, Robert L. Stone of Property Rights

Law of Hawai’i, Inc., has, on behalf of other plaintiffs, made
nearly identical allegations and claims in many previous actions
rejected by this court.2

See Dimitrion v. Morgan Stanley Credit

2

In Property Rights Law Group, P.C. v. Lynch, No. 13-00273
SOM/RLP, 2014 WL 2452803 (D. Haw. May 30, 2014), this court noted
significant evidence that Robert L. Stone has made false
representations to his clients by stating that his firm has
“never lost a case,” despite adverse outcomes for his clients in
numerous cases. Id. at *2. Stone stated his belief that such a
representation, which he acknowledged making, is accurate because
none of his clients at the time had yet been evicted from their
homes. Id. This court noted, however, that at least one of the
6

Corp., No. 13-00125 DKW/BMK, 2014 WL 2439631 (D. Haw. May 29,
2014); Broyles v. Bank of Am., N.A., No. 13-00540 LEK/KSC, 2014
WL 1745097 (D. Haw. Apr. 30, 2014); Moore v. Deutsche Bank Nat.
Trust Co., No. 13-00506 DKW/RLP, 2014 WL 1745076 (D. Haw. Apr.
30, 2014); Wegesend v. Envision Lending Grp., Inc., No. 13-00493
DKW/KSC, 2014 WL 1745340 (D. Haw. Apr. 30, 2014); Dicion v. Mann
Mortgage, LLC, No. 13-00533 JMS/KSC, 2014 WL 1366151 (D. Haw.
Apr. 4, 2014); Pascua v. Option One Mortgage Corp., No. 13-00406
SOM/KSC, 2014 WL 806226 (D. Haw. Feb. 28, 2014).

This action,

like the others before it, is dismissed for lack of subjectmatter jurisdiction.
A.

Plaintiffs Lack Standing.

In their Complaint, Plaintiffs allege that they are
“willing and able to pay their mortgage” but “do not know which
entities (if any) have an interest in their home, the Note, or
the Mortgage.”

ECF No. 1, PageID # 2.

Plaintiffs say that,

absent a determination by the court on these issues, they “may
face double or triple liability for the Note, and may face
wrongful litigation in Court.”

Id., PageID # 2-3.

These allegations fail to establish standing.

The

potential for “double or triple liability” or “wrongful

firm’s former clients claimed to have been evicted while
represented by the firm, and that Stone’s representation that his
firm has “never lost a case” would not likely suggest to the
ordinary consumer that Stone was not referring to the outcome of
litigation, as is the obvious conclusion. Id. at *1.
7

litigation” due to uncertainty as to the various interests of the
Defendants does not suffice as an injury-in-fact for Article III
standing.

Plaintiffs have nowhere alleged in their Complaint

that more than one party has demanded payment from them.

To the

contrary, the Complaint states that only BANA demanded payment
from them in June of 2012.

ECF No. 1, PageID # 10.

Without an

allegation of multiple demands, or even an allegation that
litigation has been commenced against them, the double or triple
liability and wrongful litigation of which Plaintiffs complain
cannot reasonably be characterized as “imminent,” as required for
the court to find an injury-in-fact.3

See Schmier v. U.S. Court

of Appeals for Ninth Circuit, 279 F.3d 817, 821 (9th Cir. 2002)
(“[The] injury must have actually occurred or must occur
imminently; hypothetical, speculative or other ‘possible future’
injuries do not count in the standings calculus.”).
As this court noted in Pascua, a plaintiff “cannot
manufacture standing merely by inflicting harm on [himself] based
on [his] fears of hypothetical future harm that is not certainly
impending.”

Pasuca, 2014 WL 806226, at *4 (quoting Clapper v.

Amnesty Int’l USA, 133 S. Ct. 1138 (2013)).

3

In this case, double

At the hearing on the present motion, Plaintiffs’ counsel
confirmed that no two parties have simultaneously attempted to
collect payment from Plaintiffs. Although BANA demanded payment
from Plaintiffs in June of 2012, servicing rights were
transferred to Bayview in October of 2012, and BANA and Bayview
never simultaneously demanded payment from Plaintiffs.
8

or triple payment or wrongful litigation is not “certainly
impending,” and thus cannot constitute an injury-in-fact for
standing purposes.
At their core, Plaintiffs’ allegations suggest that
Plaintiffs are capable of paying their mortgage, but have decided
not to out of fear that the wrong party will receive payment.
See id.

Plaintiffs’ injury is, at best, their confusion and

uncertainty as to which party can properly demand payment and,
correspondingly, which party they should pay.

See id.

Plaintiffs fail to demonstrate that this injury is sufficiently
concrete or particularized to support an injury-in-fact.

See

Dicion, 2014 WL 1366151, at *4 (“Plaintiff’s injury is no more
than his own uncertainty regarding which Defendant is entitled to
his mortgage payments. Such a subjective uncertainty is neither
sufficiently concrete nor particularized to constitute an
injury-in-fact.”); see also City of Los Angeles v. Lyons, 461
U.S. 95, 107 n.8 (1983) (“It is the reality of the threat of
[objective] injury that is relevant to the standing inquiry, not
the plaintiff’s subjective apprehensions.”).

Further, even

assuming that Plaintiffs’ uncertainty as to the interests of
Defendants, or as to which party is entitled to payment,
constituted an injury-in-fact, Plaintiffs’ alleged injury does
not appear fairly traceable to Defendants’ conduct.

9

Instead,

Plaintiffs appear to be uncertain because of their own alleged
inability to discern the nature of their obligations.
In their opposition to Defendants’ motion to dismiss,
Plaintiffs appear to articulate, for the first time, their belief
that no Defendant has any right to the Property, and that
Plaintiffs “will suffer an imminent injury-in-fact in that they
stand to lose possession of the Subject Property wrongfully” by
foreclosure.

ECF No. 20, PageID # 172-73.

Even if such a

purported injury had been alleged within the Complaint, it could
not constitute an injury-in-fact for standing purposes
considering the absence of any allegation that any Defendant has
commenced foreclosure proceedings against Plaintiffs.4

Under

these circumstances, Plaintiffs’ concern that they will be
injured through wrongful loss of possession of the Property by
foreclosure does not concern anything “imminent.”

Plaintiffs’

alleged injury is entirely speculative and hypothetical.

See

Krottner v. Starbucks Corp., 628 F.3d 1139, 1143 (9th Cir. 2010)
(“If a plaintiff faces a credible threat of harm, and that harm
is both real and immediate, not conjectural or hypothetical, the
plaintiff has met the injury-in-fact requirement for standing
under Article III.”); Schmier, 279 F.3d at 821 (“[The] injury
must have actually occurred or must occur imminently;
4

At the hearing on the present motion, Plaintiffs’ counsel
confirmed that no foreclosure proceedings have been commenced by
any Defendant against Plaintiffs.
10

hypothetical, speculative or other ‘possible future’ injuries do
not count in the standings calculus.”).
Plaintiffs also allege for the first time in their
opposition to the motion to dismiss that they “have suffered an
actual injury in fact in that the title to the Subject Property
is clouded.”

ECF No. 20, PageID # 173.

Even if the Complaint

itself contained this allegation, this purported injury is
nothing but an unsupported legal conclusion insufficient to
establish an injury-in-fact.
1060, 1068 (9th Cir. 2011).

See Maya v. Centex Corp., 658 F.3d
Uncertainty as to the identity of a

note holder does not create a cloud on title.

See Klohs v. Wells

Fargo Bank, N.A., 901 F. Supp. 2d 1253, 1261 (D. Haw. 2012)
(“[E]ven assuming some yet unknown entity is the true Note Holder
entitled to receive payments, the fact that the entity is unknown
is not a cloud on the title[.]” (quoting Homeyer v. Bank of Am.,
2012 WL 4105132, at *6 (D. Idaho Aug. 27, 2012) (omitting
internal quotation marks)).

Further, although Plaintiffs allege

in their opposition that title to the Property was clouded by
Defendants’ transfer of the Mortgage into a closed trust, such an
allegation is merely a back-door way of challenging the
Assignment.

Plaintiffs, not having been a party to the

Assignment from one lender to another, lack standing to raise
such a challenge.

See Deutsche Bank Trust Co. v. Beesley, No.

12-00067 SOM/KSC, 2012 WL 5383555, at *5 (D. Haw. Oct. 30, 2012).

11

Plaintiffs’ allegations concerning a cloud on title do not
establish standing.
Because Plaintiffs fail to demonstrate that they have
standing to pursue their claims, the case is dismissed for lack
of subject-matter jurisdiction.
B.

Plaintiffs Fail to Establish That the Amount in
Controversy is Sufficient to Invoke Diversity
Jurisdiction.

Even assuming Plaintiffs have standing, Plaintiffs have
not demonstrated that the amount in controversy exceeds $75,000.
Plaintiffs assert that the amount in controversy in this action
is the value of the Property or the amount of the Mortgage, but
neither assertion is viable.
It is well established that the amount in controversy
in actions seeking declaratory or injunctive relief “is measured
by the value of the object of the litigation.”

Hunt v.

Washington State Apple Adver. Comm’n, 432 U.S. 333, 347 (1977).
The object of the litigation is “the particular and limited thing
sought to be accomplished by the action.”

Ridder Bros., Inc. v.

Blethen, 142 F.2d 395, 399 (9th Cir. 1944); see also Jackson v.
Am. Bar Ass’n, 538 F.2d 829, 831 (9th Cir. 1976) (“Where the
complaint seeks injunctive or declaratory relief and not monetary
damages, the amount in controversy is not what might have been
recovered in money, but rather the value of the right to be
protected or the extent of the injury to be prevented.”).
12

In this case, what Plaintiffs seek to accomplish does
not implicate the amount of the Mortgage or the value of the
Property.

Although Plaintiffs fashion their claim as one to

“quiet title,” Plaintiffs are not alleging that they owe no debt
with respect to the Property.5
a foreclosure.

Nor do Plaintiffs seek to enjoin

In either of those circumstances, the debt or the

property itself would be the object of the litigation.

Instead,

Plaintiffs seek a declaration to eliminate their uncertainty as
to which Defendant is the right party to pay.

The object of the

litigation, then, is Plaintiffs’ relief from that uncertainty,
and the amount in controversy is the value of such relief.
However, as noted in Pascua, “[c]ourts are often
disinclined to speculate as to the monetary value of something so
vague and amorphous as a feeling of uncertainty.”

Pascua, 2014

WL 806226, at *5; see also Jackson, 538 F.2d at 831 (noting the
difficulty in determining the monetary value of rights that
“appear to be intangible [and] speculative”).

As the party

asserting the existence of diversity jurisdiction, Plaintiffs
have the burden of establishing by a preponderance of the
evidence that the amount in controversy exceeds $75,000.

See In

re Ford Motor Co./Citibank (S. Dakota), N.A., 264 F.3d 952, 957
(9th Cir. 2001).

Plaintiffs have failed to meet this burden.

5

At the hearing on the present motion, Plaintiffs’ counsel
confirmed that Plaintiffs are not alleging that they owe nothing.
13

The value of the object of this litigation is uncertain and
highly speculative, and Plaintiffs have not put forward any
reason for the court to conclude that over $75,000 is at issue.
Therefore, even assuming Plaintiffs have standing, Plaintiffs
have failed to establish the existence of the requisite amount in
controversy.
C.

The Court Dismisses Without Leave to Amend.

When a complaint is dismissed, “[l]eave to amend may be
denied if a court determines that allegation of other facts
consistent with the challenged pleading could not possibly cure
the deficiency.”

Abagninin v. AMVAC Chemical Corp., 545 F.3d

733, 742 (9th Cir. 2008) (internal quotation marks and citation
omitted).

The allegation of additional facts consistent with the

Complaint in this matter could not possibly establish subjectmatter jurisdiction in this court.

The injuries Plaintiffs

allegedly suffered cannot serve as the basis for Article III
standing, and Plaintiffs cannot plausibly allege an injury
sufficient to pursue the declaratory relief they seek.

Further,

Plaintiffs cannot establish that the amount in controversy is in
excess of $75,000 while remaining consistent with their
Complaint.

Therefore, the court dismisses the Complaint without

leave to amend.

14

V.

CONCLUSION.
For the foregoing reasons, the court grants the motion

to dismiss for lack of subject-matter jurisdiction and
Plaintiffs’ Complaint is dismissed as against all parties.

The

Clerk of the Court is directed to enter judgment and to close
this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 10, 2014.
/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

DeShaw, et al. v. Mortgage Electronic Registration Systems, Inc., et al., Civ.
No. 14-00055 SOM/KSC; ORDER GRANTING MOTION TO DISMISS FOR LACK OF SUBJECTMATTER JURISDICTION

15