Hagan v. Deutsche Bank AG et al
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS COMPLAINT, DOC. NO. 15 - Signed by JUDGE J. MICHAEL SEABRIGHT on 10/23/2015. "Based on the foregoing, the Court GRANTS the moving Defendants' Motion to Dismiss C omplaint with prejudice as to (1) all claims to the extent they challenge generally MERS's authority to assign a mortgage and that securitization of mortgage loans is illegal, and (2) Plaintiff's Securities Act claims, and without prejudi ce as to Plaintiff's RICO, RESPA, TILA, and FDCPA claims. Plaintiff is GRANTED leave to file an Amended Complaint by November 20, 2015. To be clear, Plaintiff is granted leave to amend his RICO, RESPA, TILA, and FDCPA claims, but ma y not add new federal clams. And he may replead his state law claims, but may not add or amend such claims. If Plaintiff does not file an Amended Complaint or fails to state plausible federal claims in an Amended Complaint by November 20, 2015, th e federal claims will be dismissed without leave to amend, the court will decline supplemental jurisdiction over any remaining state law claims, and this entire action will be dismissed with prejudice." (emt, )< center>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
JEFFREY G. HAGAN,
DEUTSCHE BANK; DEUTSCHE
BANK NATIONAL TRUST
COMPANY; INDYMAC MORTGAGE )
LOAN TRUST 2005-AR21;
REGISTRATION SYSTEMS aka
MERS; ONE WEST BANK; IMB
HoldCo LLC; TMLF HAWAII LLLC; )
PETER T. STONE; MANMEET
RANA; JENNY J.N.A. NAKAMOTO; )
and DOES 1-25,
CIVIL NO. 15-00189 JMS-KSC
DEFENDANTS’ MOTION TO
DISMISS COMPLAINT, DOC. NO.
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
COMPLAINT, DOC. NO. 15
On May 20, 2015, Plaintiff Jeffrey G. Hagan (“Plaintiff”) filed this
action asserting numerous federal and state law claims against Defendants
Deutsche Bank, Deutsche Bank National Trust Company, IndyMac Mortgage
Loan Trust 2005-AR21 (collectively, “Deutsche Bank”),1 Mortgage Electronic
Registration Systems aka MERS (“MERS”),2 One West Bank and IMB HoldCo
LLC (collectively, “CIT Bank”),3 (collectively, the “moving Defendants”); and
TMLF Hawaii LLLC; Peter T. Stone, Manmeet Rana, and Jenny J.N.A. Nakamoto
(collectively, the “TMLF Defendants”), arising from his mortgage and Deutsche
Bank’s subsequent mortgage foreclosure action.
Currently before the court is the moving Defendants’ Motion to
Dismiss Complaint for lack of subject matter jurisdiction and failure to state a
claim. As set forth below, the court finds that it has no diversity jurisdiction, and
the Complaint fails to state a plausible federal claim. The court therefore
Although the Complaint lists Deutsche Bank, Deutsche Bank National Trust Company,
and IndyMac Mortgage Loan Trust 2005-AR21 as separate defendants, Deutsche Bank National
Trust Company has made an appearance as Trustee for IndyMac INDX Mortgage Loan Trust
2005-AR21, Mortgage Pass-Through Certificates Series 2005-AR21, see Doc. No. 15, Defs.’
Mot. at 1, and the record shows that Deutsche Bank National Trust Company is a wholly-owned
subsidiary of Deutsche Bank Holdings, Inc., which is a wholly-owned subsidiary of Deutsche
Bank Trust Corporation, which in turn is a wholly-owned subsidiary of Deutsche Bank AG. See
Doc. No. 16, Corporate Disclosure Statement ¶¶ 1-2. Id. For ease of reference, the court simply
refers to these Defendants as “Deutsche Bank.”
MERS asserts that its proper name is Mortgage Electronic Registration Systems, Inc.
See Doc. No. 17, Corporate Disclosure Statement ¶ 1.
Although the Complaint names One West Bank and IMB HoldCo LLC as separate
entities, CIT Bank, N.A. has made an appearance asserting that on August 2, 2015 CIT Group,
Inc. acquired IMB HoldingCo LLC, the parent company of OneWest Bank, N.A., and changed
the name of OneWest Bank, N.A. to CIT Bank, N.A. See Doc. No. 18, Corporate Disclosure
Statement ¶ 1. For ease of reference, the court refers to these Defendants as “CIT Bank.”
DISMISSES the federal claims (some with leave to amend, and one without).
As alleged in the Complaint, on July 27, 2005, Plaintiff purchased
real property at 28-2856 Onomea Place, Pepe’ekeo, Hawaii 96783 (the “subject
property”). Doc. No. 1, Compl. at 11 ¶ 4.4 That same date, Plaintiff entered into a
loan transaction with IndyMac Bank for $259,000 secured by the subject property.
See Doc. No. 15-2, Defs.’ Ex. 1, Mortgage dated July 27, 2005, recorded on
August 3, 2005 at the State of Hawaii Bureau of Conveyances at 2;5 see also Doc.
No. 1, Compl. at 11 ¶ 6 (alleging that Plaintiff has made payments to reduce a
principal balance of $259,000); id. at 45, 51 ¶¶ 67, 82 (identifying IndyMac Bank
as the original lender). The mortgage identifies Plaintiff as the borrower, IndyMac
Bank, F.S.B. as the lender, and MERS as the mortgagee in a nominee capacity for
IndyMac Bank and IndyMac Bank’s successors and assigns. Doc. No. 15-2, Ex. 1
at 1-2. On August 29, 2014, MERS, as nominee for IndyMac Bank, executed an
In the Complaint, paragraph numbering starts anew with each section. Therefore, when
citing to the Complaint, the court references both the page and paragraph numbers.
The court takes judicial notice of the mortgage, which is a public document recorded in
the Bureau of Conveyances. See United States v. 14.02 Acres of Land More or Less in Fresno
Cty., 547 F.3d 943, 955 (9th Cir. 2008) (“Although, as a general rule, a district court may not
consider materials not originally included in the pleadings in deciding a Rule 12 motion, Fed. R.
Civ. P. 12(d), it ‘may take judicial notice of matters of public record’ and consider them without
converting a Rule 12 motion into one for summary judgment.” (citing Lee v. City of Los Angeles,
250 F.3d 668, 688 (9th Cir. 2001)); see also Lindsey v. Matayoshi, 2012 WL 1656931, at *4 (D.
Haw. May 9, 2012) (explaining when the court may take judicial notice of public documents).
Assignment of Mortgage to “Deutsche Bank National Trust Company as Trustee
for IndyMac INDX Mortgage Loan Trust 2005-AR21, Mortgage Pass-Through
Certificates Series 2005-AR21,” which was recorded in the State of Hawaii
Bureau of Conveyances on October 10, 2014. Doc. No. 15-3, Defs.’ Ex. 2.6
On March 2, 2015, Deutsche Bank initiated a foreclosure action
against Plaintiff in the Circuit Court of the Third Circuit, State of Hawaii (the
“state action”). See Doc. No. 1-3, Pl.’s Ex. 3. In response to that action, on May
20, 2015, Plaintiff filed the instant action against Defendants asserting both
diversity and federal question subject matter jurisdiction, and alleging eighteen
causes of action.7 Doc. No. 1, Compl. Six of the asserted claims arise under
federal law, and the remaining claims arise under state law. The federal claims
The court takes judicial notice only of the fact that the Assignment of Mortgage was
recorded in the Hawaii Bureau of Conveyances. But of course, judicial notice does not establish
the validity of this assignment. See 14.02 Acres of Land More or Less in Fresno Cty., 547 F.3d
at 955 (“Judicial notice is appropriate for records . . . “of administrative bodies,” and such a
record may be referred to “as background material, without relying on it to resolve any factual
On June 1, 2015, Plaintiff also attempted to remove the state action directly into this
action. That Notice of Removal was stricken from the record, with leave to refile as a separate
action and in accordance with the removal statutes. See Doc. No. 12, Entering Order. On
September 22, 2015, Plaintiff filed a Second Notice of Removal, thereby opening a separate
federal action. See Deutsche Bank Nat’l Trust Co. as Tr. for IndyMac Index Mortg. Loan Tr.
2005-AR21, Mortg. Pass-Through Certificates Series 2005-AR21v. Hagan, Civ. No. 15-00376
JMS-KSC, Doc. No. 1. On October 16, 2015, Deutsche Bank filed a Motion to Remand. Doc.
No. 4. The court will not rule on the Motion to Remand until the matter is fully briefed -Plaintiff’s Opposition is due November 6, 2015, and Deutsche Bank’s optional Reply is due
November 13, 2015.
allege violations of:
Section 17(a)(2) and (3) of the Securities Act of 1933, 15
U.S.C. § 77q(a)(2), (3) (Fourth Cause of Action);
the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961 - 1968 (Seventh Cause of
the Real Estate Settlement Procedures Act (“RESPA”), 12
U.S.C. § 2605 (Thirteenth Cause of Action);
the Truth in Lending Act (“TILA”), 15 U.S.C. § 1640
(Fifteenth Cause of Action); and
the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 (Sixth and Sixteenth Causes of Action).
Plaintiff alleges that he has “no relationship whatsoever with, or
obligation to, Deutsche Bank,” and that Deutsche Bank “is neither the owner of
either the note . . . , nor do[es it] own any right to attempt to file or pursue a
foreclosure” against him. Id. at 12 ¶¶ 9-10. Thus, “the purpose of this lawsuit [is]
determine the real owner of the note and the
mortgage, and thus the real party in interest;
ascertain what (if any) monetary consideration was
exchanged for each transfer of the note and/or
mortgage and thus determine if a legally
cognizable transfer occurred;
devise a judicially supervised reasonable and
equitable resolution and modification of this home
loan to prevent catastrophic financial injury,
emotional harm and disruption to Plaintiff;
examine and evaluate in this court of law what
state and federal laws have been violated by the
parties and their affiliates who have attempted
determine what fiscal re[num]eration for Plaintiff
and remonstration against Defendants is
Id. at 21 ¶ 21.
On September 4, 2015, the moving Defendants filed the instant
Motion. Doc. No. 15. Plaintiff filed his Opposition on September 28, 2015, and
the moving Defendants filed a Reply on October 5, 2015. The matter was heard
on October 19, 2015.
III. STANDARDS OF REVIEW
Federal Rule of Civil Procedure 12(b)(1) authorizes a court to dismiss
claims over which it lacks proper subject matter jurisdiction. The court may
determine jurisdiction on a motion to dismiss for lack of jurisdiction under Rule
12(b)(1) so long as “the jurisdictional issue is [not] inextricable from the merits of
a case.” Kingman Reef Atoll Invs., LLC v. United States, 541 F.3d 1189, 1195 (9th
Cir. 2008). The moving party “should prevail [on a motion to dismiss] only if the
material jurisdictional facts are not in dispute and the moving party is entitled to
prevail as a matter of law.” Casumpang v. Int’l Longshoremen’s &
Warehousemen’s Union, 269 F.3d 1042, 1060-61 (9th Cir. 2001) (citation and
quotation signals omitted); Tosco Corp. v. Cmtys. for a Better Env’t, 236 F.3d 495,
499 (9th Cir. 2001).
“A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe
Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack
such as the case here, the court may dismiss a complaint when its allegations are
insufficient to confer subject matter jursidiction. When the allegations of a
complaint are examined to determine whether they are sufficient to confer subject
matter jurisdiction, all allegations of material fact are taken as true and construed
in the light most favorable to the nonmoving party. Fed’n of African Am.
Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996). In such a
facial attack on jurisdiction, the court limits its analysis to the allegations of and
the documents attached to the complaint. See Savage v. Glendale Union High Sch.
Dist. No. 205, 343 F.3d 1036, 1039 n.2 (9th Cir. 2003).
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[.]” A Rule
12(b)(6) dismissal is proper when there is either a “‘lack of a cognizable legal
theory or the absence of sufficient facts alleged.’” UMG Recordings, Inc. v.
Shelter Capital Partners, LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting
Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)).
Although a plaintiff need not identify the legal theories that are the
basis of a pleading, see Johnson v. City of Shelby, Mississippi, 135 S. Ct. 346, 346
(2014) (per curiam), a plaintiff must nonetheless allege “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
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
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.
Federal Rule of Civil Procedure 9(b) requires that “[i]n all averments
of fraud or mistake, the circumstances constituting fraud or mistake shall be stated
with particularity.” “Rule 9(b) requires particularized allegations of the
circumstances constituting fraud.” In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541,
1547-48 (9th Cir. 1994) (en banc), superseded on other grounds by 15 U.S.C.
§ 78u-4. A complaint must include the time, place, and nature of the alleged
fraud; “mere conclusory allegations of fraud are insufficient” to satisfy this
requirement. Id. at 1548 (citation and quotation signals omitted). However,
“[m]alice, intent, knowledge, and other conditions of a person’s mind may be
alleged generally.” Fed. R. Civ. P. 9(b); see also In re GlenFed, Inc. Sec. Litig, 42
F.3d at 1547 (“We conclude that plaintiffs may aver scienter . . . simply by saying
that scienter existed.”); Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir.
1973) (Rule 9(b) “only requires the identification of the circumstances constituting
fraud so that the defendant can prepare an adequate answer from the allegations”
A motion to dismiss for failure to plead with particularity is the
functional equivalent of a motion to dismiss under Fed. R. Civ. P. 12(b)(6). Vess
v. Ciba Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). In considering a
motion to dismiss, the court is not deciding the issue of “whether a plaintiff will
ultimately prevail but whether the claimant is entitled to offer evidence to support
the claims.” Jackson v. Carey, 353 F.3d 750, 755 (9th Cir. 2003) (quoting
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
Pro Se Pleadings
Because Plaintiff is proceeding pro se, the court liberally construes
his pleadings. See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (“The
Supreme Court has instructed the federal courts to liberally construe the ‘inartful
pleading’ of pro se litigants.”) (citing Boag v. MacDougall, 454 U.S. 364, 365
(1982) (per curiam)). The court also recognizes that “[u]nless it is absolutely clear
that no amendment can cure the defect . . . a pro se litigant is entitled to notice of
the complaint’s deficiencies and an opportunity to amend prior to dismissal of the
action.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995); see also Lopez
v. Smith, 203 F.3d 1122, 1126 (9th Cir. 2000).
The Complaint alleges that the court’s subject matter jurisdiction is
based on both diversity of citizenship and federal question jurisdiction. Doc. No.
1, Compl. at 5-6 ¶¶ 1, 4-7. The court first addresses diversity jurisdiction, and
then addresses whether the Complaint states a plausible federal claim.
The diversity statute, 28 U.S.C. § 1332(a), provides, in relevant part,
that “[t]he district courts shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between . . . citizens of different States.” For a case to
qualify for federal jurisdiction under section 1332, there must be complete
diversity of citizenship between the opposing parties -- in other words, all of the
plaintiffs must be citizens of different states than all of the defendants. Exxon
Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) (“[Section] 1332
. . . requir[es] complete diversity: In a case with multiple plaintiffs and multiple
defendants, the presence in the action of a single plaintiff from the same [s]tate as
a single defendant deprives the district court of original diversity jurisdiction over
the entire action.”).
The Complaint alleges that Plaintiff “resides in the State of Hawaii.”
Doc. No. 1, Compl. at 5 ¶ 1. And the Complaint also alleges that the TMLF
Defendants are citizens of Hawaii. Id. at 7, 9 (alleging that TMLF is a Hawaii law
firm, that Stone, Rana, and Nakamoto are individual attorneys employed by TMLF
and whose practices involve Hawaii mortgage foreclosure actions, and listing a
Hawaii business address for TMLF). In short, the Complaint, on its face, alleges
that Plaintiff and the TMLF Defendants share the same citizenship. Thus, the
Complaint fails to establish diversity jurisdiction. See Hagan v. United States
Nat’l Bank, 2014 WL 5465321, at *3 (D. Haw. Oct. 27, 2014) (“Hagan I”)
(finding no diversity jurisdiction because “Hagan, a citizen of Hawaii” and at least
one defendant “share the same citizenship”).
Federal Law Claims
The federal question statute, 28 U.S.C. § 1331, provides that “[t]he
district courts shall have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.” And although Plaintiff alleges
six discrete federal law violations, he appears to broadly claim that MERS lacked
authority to assign Plaintiff’s mortgage and that securitization of mortgage loans
generally is illegal. See, e.g., Doc. No. 1, Compl. at 9, 12-21, 30, 39 ¶¶ 10-20, 36,
54-57. The court first discusses MERS and the mortgage assignment, and then
turns to the specific federal claims.
This court has rejected claims attacking MERS’s role in mortgage
transactions, where, as here, 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. 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,8 as
well as claims based on securitization of the mortgage loan.9 Thus, to the extent
Plaintiff’s individual federal claims rely on these arguments, they fail to state a
See, e.g., Lovretich v. Countrywide Home Loans, Inc., 2013 WL 2389491, at *3; see
also id. at 3 n.5 (citing Fed. Nat’l Mortg. Ass’n v. Kamakau, 2012 WL 622169, at *4; see also id.
at *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 v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir.
2011).]” (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).
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).
viable claim and are dismissed with prejudice.
As to the individual federal claims, the court notes that Plaintiff
asserted the exact same claims in an earlier action, based on foreclosure
proceedings on a different property. See Hagan I, 2014 WL 5465321. Hagan I
determined that Plaintiff failed to state plausible federal claims. Here, the court
finds that the federal claims asserted in the instant Complaint suffer from many of
the same deficiencies discussed in Hagan I.
Fourth Cause of Action -- Violation of the Securities Act of 1933
The Fourth Cause of Action generally alleges that various Defendants
committed securities fraud based on the sale and securitization of Plaintiff’s
mortgage loan. See Doc. No. 1, Compl. at 29-32 ¶¶ 34-38. Section 17(a)(2) & (3)
of the Securities Act of 1933 provides:
It shall be unlawful for any person in the offer or sale of
any securities . . . (2) to obtain money or property by
means of any untrue statement of a material fact or any
omission to state a material fact necessary in order to
make the statements made in light of the circumstances
under which they were made, not misleading; or (3) to
engage in any transaction, practice, or course of business
which operates or would operate as a fraud or deceit
upon the purchaser.
15 U.S.C. § 77q(a)(2) & (3). However, as Hagan I explained, “no private right of
action lies under section 17(a) [15 U.S.C. § 77q(a))].” 2014 WL 5465321, at *3
(quoting In re Washington Pub. Power Supply Sys. Sec. Litig., 823 F.2d 1349,
1358 (9th Cir. 1987)); see also In re Sherman, 491 F.3d 948, 960 (9th Cir. 2006)
(“[T]here is no express private cause of action . . . and no implied cause of action
under section 17(a) of the 1933 Act.”).
Moreover, even if a private right of action existed under section
17(a), Plaintiff would lack standing to assert such claim. See Hagan I, 2014 WL
5465321, at *3 (citing Maixner v. BAC Home Loans Servicing, LP, 2011 WL
7153929, at *8 (D. Or. Oct. 26, 2011) (“[A] mortgagee does not qualify . . . as a
purchaser, seller, or offeree of a security.”)); see also Bello v. Chase Home Fin.,
2011 WL 133351 at *1 (S.D. Cal. Jan. 12, 2011) (rejecting mortgagee-plaintiff’s
claim that securitization and sale of his mortgage made him a holder of a
mortgage-backed security) (collecting cases). In short, the Complaint fails to state
a cognizable claim for securities fraud in violation of 15 U.S.C. § 77q(a)(2) & (3).
And because the lack of a private cause of action under section 17(a) cannot be
cured by amending the factual allegations, the claim is DISMISSED with
Seventh Cause of Action -- RICO Violation
The Seventh Cause of Action alleges that Defendants violated the
civil RICO statutes, 18 U.S.C. §§ 1961, et seq, which make it “unlawful for any
person employed by or associated with any enterprise engaged in, or the activities
of which affect, interstate or foreign commerce, to conduct or participate, directly
or indirectly, in the conduct of such enterprise’s affairs through a pattern of
racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). To
state a civil RICO claim, Plaintiff must allege facts showing: “(1) conduct (2) of
an enterprise (3) through a pattern (4) of racketeering activity (known as predicate
acts) (5) causing injury to [P]laintiff’s business or property.” Living Designs, Inc.
v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005) (internal
quotation marks and citation omitted).
Here, the Complaint alleges that Defendants “contrived, conspired
and colluded to create . . . an illegal scheme of recordation, commonplace
utilization of falsified documents and intentionally obstructed justice in hiding
documents as would evidence either ownership or divulging financial accounting
disclosure of profiteer activities.” Doc. No. 1, Compl. at 35 ¶ 46. The Complaint
further alleges that the “frequency and persistence of [Defendants’] behaviors . . .
is so widespread, repeated and continuous that it cannot be characterized other
than a profligate, insidious, and pervasive[.]” Id. at 34 ¶ 44. Such allegations are
insufficient to state a viable RICO claim.
The particularity requirements of Rule 9(b) apply to civil RICO fraud
claims. Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065-66 (9th Cir. 2004);
Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 541 (9th Cir. 1989). And
“Rule 9(b) . . . ‘requires that [Plaintiff] state the time, place, and specific content
of the false representations as well as the identities of the parties to the
misrepresentation[s].’” Hagan I, 2014 WL 5465321, at *4 (quoting Moore, 885
F.2d at 541). The Complaint’s allegations fall well short of complying with Rule
9(b). And in his Opposition, Plaintiff states that he “cannot yet . . . discern the
exact dates and which parties were respectively responsible in the chain of events
. . . relevant to the instant matter. This will be rectified [with] specificity in the
due course of discovery.” Doc. No. 28, Pl.’s Opp’n at 9. Thus, Plaintiff concedes
that he lacks the necessary information to satisfy the heightened Rule 9 pleading
Moreover, at a minimum, the Complaint fails to allege any specific
facts showing (1) alleged racketeering activities distinct from the alleged
enterprise, see Alexander v. Wells Fargo Bank, N.A., 2015 WL 5123922, at *6
(W.D. Wash. Sept. 1, 2015) (citing Odom v. Microsoft Corp., 486 F.3d 541, 552
(9th Cir. 2007)), and (2) financial injury to Plaintiff’s business or property. See
Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783, 785 (9th Cir. 1992) (“To
demonstrate injury for RICO purposes, plaintiffs must show proof of concrete
financial loss, and not mere injury to a valuable intangible property interest. . . .
Personal injuries are not compensable under RICO.”).
Based on the foregoing, Plaintiff’s RICO claim is DISMISSED.
However, because Plaintiff could possibly amend his Complaint to state the
necessary factual information to support a RICO claim, as set forth above and in
accordance with Rule 9(b), such claim is DISMISSED with leave to amend.10
Thirteenth Cause of Action -- RESPA Violation
The Complaint alleges that Defendants violated RESPA, 12 U.S.C.
§ 2605(e)(2)(c)(i),11 by (1) IndyMac Bank’s failure to produce various loan
documents despite Plaintiff’s submission of two qualified written requests, and
Of course, to the extent Plaintiff’s RICO claim is premised on MERS’s assignment of
the mortgage, or the securitization of the loan, the claim fails to state a claim for the reasons set
Section 2605(e)(2)(C) provides that “[n]ot later than 30 days . . . after the receipt from
any borrower of any qualified written request . . . the servicer shall . . . after conducting an
investigation, provide the borrower with a written explanation or clarification that includes -(i) information requested by the borrower or an explanation of why the information requested is
unavailable or cannot be obtained by the servicer; and (ii) the name and telephone number of an
individual employed by, or the office or department of, the servicer who can provide assistance to
(2) all Defendants’ “steadfast and persistent refus[al] to supply any documents
which would connect them to any present day claim of ownership [of the Note and
Mortgage].” Doc. No. 1, Compl. at 44 ¶ 62.
In order to state a claim under RESPA, however, Plaintiff must allege
facts showing that a specific defendant violated a RESPA provision and that
Plaintiff suffered “actual damages . . . as a result” of that defendant’s failure to
comply with that provision. 12 U.S.C. § 2605(f); see Obeng Amponsah v. Chase
Home Fin., LLC, 2015 WL 4940462, at *1 (9th Cir. Aug. 20, 2015) (affirming
dismissal of RESPA claim where the plaintiff’s “allegations do not connect the
alleged failure to respond to his qualified written requests with any actual
damages”); see also Petrovich v. Ocwen Loan Servicing, LLC, 2015 WL 3561821,
at * 2 (N.D. Cal. June 8, 2015) (“To state a claim under RESPA, a plaintiff must
allege that (1) a defendant violated RESPA; and (2) that defendant’s violation
caused the plaintiff monetary damages.”); Menashe v. Bank of New York, 850 F.
Supp. 2d 1120, 1134 (D. Haw. 2012) (“Because damages are a necessary element
of a RESPA claim, failure to plead damages is fatal to a RESPA claim.”).
Here, the Complaint fails to allege any actual, monetary damages
resulting from an alleged RESPA violation. Throughout the Complaint, Plaintiff’s
allegations of harm are limited to the possible risk of losing the subject property
and with it, his “savings, down-payment monies, . . . capital improvements made
to the subject property, and [being] eject[ed] . . . from his property.” Doc. No. 1,
Compl. at 53 ¶ 87; see also id. at 45 ¶ 65 (“Plaintiff is at risk of suffering . . . the
loss of [his] savings and down payment funds exceeding $150,000.00, capital
improvements . . . , and tens of thousands of dollars in interest payments made.”).
These allegations do not allege actual harm suffered. At best, they identify
potential future harm.
And Plaintiff’s general allegations that Defendants precluded Plaintiff
from communicating with the loan owner to “converse about loan modifications,”
id. at 45-46 ¶ 67; see also id. at 54 ¶ 90 (“Defendants . . . prevented any attempts
by the Plaintiff to reasonably modify the loans.”), are not sufficient to allege actual
harm. See Rymal v. Bank of Am., 2011 WL 6100979, at * 5 (D. Haw. Dec. 6,
2011) (dismissing RESPA claim because “Plaintiff’s assertion that she had
difficulty locating the real party in interest to mitigate losses or discuss ‘work out
options’ d[id] not adequately constitute actual damages”).
Based on the foregoing, this claim is DISMISSED with leave to
amend. To state a plausible RESPA claim, Plaintiff must allege specific factual
allegations of harm suffered as a result of a particular Defendant’s failure to
respond to a qualified written request.
Fifteenth Cause of Action -- TILA Violation
Plaintiff’s TILA claim for damages is based on IndyMac Bank’s
alleged failure to explain that his loan would likely be securitized and sold. Doc.
No. 1, Compl. at 45, 57 ¶¶ 67, G.
TILA damage claims generally must be brought “within one year
from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e); see King v.
California, 784 F.2d 910, 915 (9th Cir. 1986) (“[W]e hold that the limitations
period in Section 1640(e) runs from the date of consummation of the
transaction[.]”). The one-year period “applies to both actual and statutory
damages.” Hagan I, 2014 WL 5465321, at *4 (citing Vietor v. Commonwealth
Land Title, 2010 WL 545856, at *3 (N.D. Cal. Feb. 11, 2010) (additional citation
omitted)). “[E]quitable tolling may, in the appropriate circumstances, suspend the
limitations period until the borrower discovers or had reasonable opportunity to
discover the fraud or nondisclosures that form the basis of the TILA action.”
King, 784 F.2d at 915. However, a “plaintiff cannot simply rely on the same
factual allegations to both show a [TILA] violation . . . and to toll the limitations
period.” Vargas v. JP Morgan Chase Bank, N.A., 2014 WL 3435628, at *3 (C.D.
Cal. July 11, 2014) (citation and quotation marks omitted).
Here, Plaintiff’s mortgage is dated July 27, 2005, but he did not file
this action until May 20, 2015, nearly nine years after the statute of limitations for
his TILA damages claim had run. Plaintiff alleges no specific facts showing that
he engaged in due diligence to discover or investigate a TILA claim. “Equitable
tolling is the exception, not the general rule” -- “[t]o allow tolling whenever a
plaintiff alleges improper disclosure would render the TILA limitations period
completely meaningless.” Id. at *4. Thus, Plaintiff’s TILA claim is time-barred,
and DISMISSED with leave to amend.
Sixth and Sixteenth Causes of Action -- FDCPA Violations
The Complaint asserts two counts alleging violations of the FDCPA,
which prohibits the use of “false, deceptive, or misleading representation or means
in connection with the collection of any debt.” 15 U.S.C. § 1692e. Specifically,
Plaintiff alleges that the moving Defendants engaged in “unconscionable means of
collections against Plaintiff,” Doc. No. 1, Compl. at 33 ¶ 43, including furnishing
“deceptive forms” knowing that such forms “would create a false belief that a
person other than the creditor . . . is participating in the attempt to collect a debt.”
Id. at 46 ¶ 68-69.
To the extent these claims sound in fraud, they are subject to the
heightened pleading requirements of Rule 9. Kearns v. Ford Motor Co., 567 F.3d
1120, 1124 (9th Cir. 2009) (“Averments of fraud must be accompanied by ‘the
who, what, when, where, and how’ of the misconduct charged.”) (internal
quotation marks and citation omitted). The Complaint’s allegations do not specify
which Defendant(s) made specific allegedly false representations and/or provided
specific allegedly deceptive forms, when and where such representations were
made and/or such forms were provided, and how these representations and/or
forms were used to deceptively collect a debt from Plaintiff.
Moreover, the moving Defendants are not debt collectors under the
FDCPA based on their attempts to foreclose on the subject property. See Hagan I,
2014 WL 5465321, at *5 (citing Hanaway v. JP Morgan Chase Bank, 2011 WL
672559, at *4 (C.D. Cal. Feb. 15, 2011) (“Since a transfer in interest is the aim of
a foreclosure, and not a collection of debt, the foreclosure proceeding is not a debt
collection action under the FDCPA. As such, ‘[a]ny actions taken by [JP Morgan]
in pursuit of the actual foreclosure may not be challenged as FDCPA violations.’”
[quoting Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or.
2002)])). Plaintiff argues that because Deutsche Bank explicitly stated in its
foreclosure complaint that such action “IS AN ATTEMPT TO COLLECT A
DEBT,” Doc. No. 1-3, it invokes the FDCPA. See Doc. No. 22, Pl.’s Opp’n at 10.
Plaintiff is mistaken.
As defined by the FDCPA, a “debt collector” includes “(1) ‘any
person who uses any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of any debts,’ and (2) any
person ‘who regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.’” Schlegel v. Wells Fargo
Bank, N.A., 720 F.3d 1204, 1208 (9th Cir. 2013) (quoting 15 U.S.C. § 1692(a)(6)).
“The term does not include any person who collects any debt owed or due to the
extent such activity concerns a debt which was originated by such person or was
not in default at the time it was obtained by such person.” Au v. Republic State
Mortg. Co., 2012 WL 3113147, at *12 (D. Haw. July 31, 2012) (citing 15 U.S.C.
§§ 1692a(6)(F)(ii) & (iii)). Thus, a “debt collector” under the FDCPA generally
does not include “original lenders, creditors, mortgage servicing companies, and
mortgage brokers.” DeShaw v. Bank of Am., N.A., 2015 WL 5598321, at *8 (D.
Haw. Sept. 22, 2015); see also Schlegel, 720 F.3d at 1209 (dismissing FDCPA
claims brought by mortgagors against mortgagee Wells Fargo because the
complaint “establishe[d] only that debt collection is some part of Wells Fargo’s
business” and did not allege that Wells Fargo “collects debts owed to someone
other than Wells Fargo”) (emphasis added). “Also excluded from the FDCPA’s
definition of a “debt collector” are assignees of the mortgage debt, if the debt was
not in default at the time the debt was obtained.” DeShaw, 2015 WL 5598321, at
*8 (citing Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)); 15
U.S.C. § 1692a(6)(F)(iii).
Here, the Complaint contains no allegations establishing that the
principle purpose of any Defendant is the collection of debts, or that any
Defendant regularly collect debts, owed to another. And although Plaintiff argues
that “the ‘assignment’ upon which [Deutsche Bank is] attempting to rely occurred
after the date they claim the loan was in default,” Doc. No. 22, Pl.’s Opp’n at 11,
neither the Complaint nor the Opposition allege when Deutsche Bank asserted that
Plaintiff defaulted on his mortgage loan. In short, the Complaint fails to allege
facts sufficient to allege a cognizable FDCPA claim.12 Accordingly, these claims
are DISMISSED with leave to amend.
Leave to Amend
Plaintiff is granted leave to file an Amended Complaint that attempts
to re-plead viable RICO, RESPA, TILA, and FDCPA claims. Leave is not
granted, however, to assert claims challenging generally MERS’s authority to
assign a mortgage and that securitization of mortgage loans is illegal, and for
Again, to the extent Plaintiff’s FDCPA claim is premised on the argument that
MERS’s assignment of the mortgage or the securitization of the loan is invalid, the claim fails.
violations of section 17(a) of the Securities Act.
An Amended Complaint will supersede the prior pleadings and must
be complete in itself without reference to prior superseded pleadings. E.g., King v.
Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987), overruled in part by Lacey v. Maricopa
Cty., 693 F.3d 896 (9th Cir. 2012) (en banc)). If Plaintiff chooses to file an
Amended Complaint, he must write short, plain statements asserting basic factual
allegations in sufficient detail to state a “plausible” claim, and then clearly set
forth separate counts for each cause of action. That is, addressing the deficiencies
set forth above, an Amended Complaint must:
state clearly how each of the Defendants has violated a particular
statute or common law, and how each Defendant injured Plaintiff
and/or Plaintiff’s business or property, or how the court can provide
relief against each Defendant. In other words, Plaintiff should
explain, in clear and concise allegations, what each Defendant did (or
failed to do) and how those specific facts create a plausible claim for
relief in reference to a specific statute or common-law cause of
state clearly the relief sought and how there is basis for a claim in
federal court. In other words, Plaintiff must explain the basis of this
Plaintiff must clearly designate on the face of the document that it is
an “Amended Complaint.” And the Amended Complaint may not incorporate any
part of the original Complaint by reference, but rather, any specific allegations
must be retyped or rewritten in their entirety. Plaintiff may include only one claim
per count. Any cause of action not already dismissed with prejudice that is not
raised in the Amended Complaint is waived.13 King, 814 F.2d at 567. Failure to
file an amended complaint by November 20, 2015 will result in automatic
dismissal of this action.
State Law Claims
Having dismissed all federal claims, there are no federal claims
remaining over which the court has original jurisdiction. See Peralta v. Hispanic
Bus., Inc., 419 F.3d 1064, 1068 (9th Cir. 2005) (explaining that a federal court has
subject matter jurisdiction under diversity of citizenship (28 U.S.C. § 1332) or
through “federal question jurisdiction” (28 U.S.C. § 1331)). Rather, the only
remaining claims are state law claims over which this court has only supplemental
jurisdiction. See 28 U.S.C. § 1367(c)(3).
Claims that were dismissed without leave to amend need not be pleaded again in an
amended complaint to preserve them for appeal. See Lacey, 693 F.3d at 928. However, “claims
that have been dismissed with leave to amend and are not repled in the amended complaint will
be considered waived.” Id.
Under 28 U.S.C. § 1367(c)(3), “district courts may decline to exercise
supplemental jurisdiction . . . if . . . the district court has dismissed all claims over
which it has original jurisdiction[.]” “[W]hen deciding whether to exercise
supplemental jurisdiction, ‘a federal court should consider and weigh in each case,
and at every stage of the litigation, the values of judicial economy, convenience,
fairness, and comity.’” City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156,
173 (1997) (quoting Carnegie Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988))).
“[I]n the usual case in which all federal-law claims are eliminated before trial, the
balance of factors will point towards declining to exercise jurisdiction over the
remaining state-law claims.” Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 (9th
Cir. 1997) (en banc).
Because the dismissed federal law claims provide the only basis for
federal jurisdiction, the court does not address Plaintiff’s state law claims. If
Plaintiff does not file an amended complaint, the court will decline jurisdiction
over the state law claims pursuant to section 1367(c) and dismiss them without
prejudice.14 If Plaintiff chooses to file an Amended Complaint that states a
28 U.S.C. § 1367(d) provides that “[t]he period of limitations for any claim asserted
under subsection (a), and for any other claim in the same action that is voluntarily dismissed at
the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the
claim is pending and for a period of 30 days after it is dismissed unless State law provides for a
longer tolling period.”
cognizable federal claim against Defendants, however, the court will retain
jurisdiction over related state law claims included in the Amended Complaint and
address them if challenged at that time.
Based on the foregoing, the Court GRANTS the moving Defendants’
Motion to Dismiss Complaint with prejudice as to (1) all claims to the extent they
challenge generally MERS’s authority to assign a mortgage and that securitization
of mortgage loans is illegal, and (2) Plaintiff’s Securities Act claims, and without
prejudice as to Plaintiff’s RICO, RESPA, TILA, and FDCPA claims. Plaintiff is
GRANTED leave to file an Amended Complaint by November 20, 2015. To be
clear, Plaintiff is granted leave to amend his RICO, RESPA, TILA, and FDCPA
claims, but may not add new federal clams. And he may replead his state law
claims, but may not add or amend such claims. If Plaintiff does not file an
Amended Complaint or fails to state plausible federal claims in an Amended
Complaint by November 20, 2015, the federal claims will be dismissed without
leave to amend, the court will decline supplemental jurisdiction over any
remaining state law claims, and this entire action will be dismissed with prejudice.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, October 23, 2015.
/s/ J. Michael Seabright
J. Michael Seabright
United States District Judge
Hagan v. Deutsche Bank, et al., Civ. No. 15-00189 JMS-KSC, Order Granting Defendants’
Motion to Dismiss Complaint, Doc. No. 15
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?