Anderson et al v. Bank of America, N.A. et al

Filing 19

MEMORANDUM DECISION AND ORDER granting in part and denying in part 6 Defendant's Motion to Dismiss; granting 7 Defendant's Motion to Take Judicial Notice. Signed by Judge Ronald E Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

ERIC L. ANDERSON and CHRISTINE T.
ANDERSON, husband and wife, and the following
described real property, to wit:
Lot 54, HILL HOUSE SUBDIVISION NO. 2,
Recorded on February 12, 1973 as Instrument No.
078416, Book 4 of Plats, Page 2, according to the
official plat thereof, records of Valley County,
Idaho
Plaintiffs,

Civil No. 1:11-cv-00231-REB
MEMORANDUM DECISION AND
ORDER RE:
DEFENDANTS’ MOTION TO
DISMISS
(Docket No. 6)
DEFENDANTS’ MOTION FOR
JUDICIAL NOTICE

vs.
(Docket No. 7)
DEUTSCHE BANK TRUST COMPANY
AMERICAS, AS TRUSTEE FOR THE
CERTIFICATE HOLDERS OF DOVER
MORTGAGE CAPITAL 2005-A, Beneficiary,
BANK OF AMERICA, N.A., RECONTRUST
COMPANY, N.A., BAC HOME LOANS
SERVICING, LP, and DOES 1-10 as individuals or
entities with a Purported interest in the real property
hereinabove described,
Defendants.

Now pending before the Court are Defendants’ (1) Motion to Dismiss (Docket No. 6) and
(2) Motion for Judicial Notice (Docket No. 7). Having carefully considered the record,
participated in oral argument, and otherwise being fully advised, the Court enters the following
Memorandum Decision and Order:

MEMORANDUM DECISION AND ORDER - 1

I. BACKGROUND
This case concerns the non-judicial foreclosure sale of real property in Donnelly, Idaho,
formerly owned by Plaintiffs Eric and Christine Anderson (collectively “Plaintiffs”). Plaintiffs
claim that the foreclosure on their property violated Idaho foreclosure statutes. For the purposes
of Defendants’ Motion to Dismiss (the “Motion”),1 “all of the [Plaintiffs’] allegations of material
fact” are accepted as true. Rodriguez v. Panayiotou, 314 F.3d 979, 983 (9th Cir. 2002).
On or around March 12, 2004, Plaintiffs purchased the at-issue property, receiving a loan
in the approximate amount of $85,000 from Defendant Bank of America, N.A. (“BANA”);
Plaintiffs’ loan was memorialized in a promissory note and secured by a Deed of Trust to the
Property. See Verified Compl., p. 3, ¶¶ 1-3 (Docket No. 1). The Deed of Trust was recorded on
March 26, 2004 in Valley County, Idaho (Instrument No. 281264) and names (1) BANA as the
lender and beneficiary, (2) Chicago Title Insurance Company as the Trustee, and (3) Plaintiffs as
the borrowers. See Ex. B to Dina Aff. (Docket No. 7, Att. 3).
Plaintiffs stopped making payments on their loan on or around July 10, 2010. See Ex. E
to Dina Aff. (Docket No. 7, Att. 6). Eventually, Defendants exercised their right to enforce the

1

Defendants also request that the Court take judicial notice of several documents related
to this action. See Mot. for Judicial Not. (Docket No. 7). Generally, with respect to FRCP
12(b)(6) motions, the Court may not consider any evidence contained outside the pleadings
without converting the motion to one for summary judgment under FRCP 56, and allowing the
non-moving party an opportunity to respond. See Fed. R. Civ. P. 12(b); United States v. Ritchie,
342 F.3d 903, 907-08 (9th Cir. 2003). Still, the Court may take judicial notice “of the records of
state agencies and other undisputed matters of public record” without transforming the motions
to dismiss into motions for summary judgment. Disabled Rights Action Comm. v. Las Vegas
Events, Inc., 375 F.3d 861, 866 (9th Cir. 2004). The Court has considered the Affidavit of Amber
N. Dina, and the documents attached thereto in support of Defendants’ Motion for Judicial
Notice. See Dina Aff. (Docket No. 7, Att. 1). There being no opposition to said motion and for
good cause appearing, the Court hereby grants Defendants’ Motion for Judicial Notice.
Therefore, references to “the Motion” in this Memorandum Decision and Order speak to
Defendants’ related Motion to Dismiss.
MEMORANDUM DECISION AND ORDER - 2

security instrument and recorded a Notice of Default on December 28, 2010 in Valley County,
Idaho (Instrument No. 357422). See id. The Notice of Default identified Defendant BAC Home
Loans Servicing, LP (“BACHLS”) as the beneficiary under the Deed of Trust.2
Around that same time, Plaintiffs received correspondence in the form of a December 24,
2010 “Important Legal Notice” from ReconTrust, indicating that the loan was in default and that
BACHLS was the “name of the creditor to whom the debt is owed.” See Ex. A to Verified
Compl., pp. 3-4, ¶ 4 (Docket No. 1).
On December 28, 2010, Plaintiffs received a Notice of Default. See Ex. B to Verified
Compl, p. 4, ¶ 5 (Docket No. 1). Although purporting to be “a true copy of the document that
was recorded on 12/28/10 Instrument No. 357422 in Valley [C]ounty,” the Notice of Default
received by Plaintiffs on December 28, 2010 now identified Defendant Deutsche Bank Trust
Company Americas, as Trustee for the Certificateholders of Dover Mortgage Capital 2005-A
Corporation, Grantor Trust Certificate, Series 2005-A (“Deutsche Bank”) as the beneficiary
under the Deed of Trust. See Ex. B to Verified Compl, p. 4, ¶ 5 (Docket No. 1).
On or around January 13, 2011, ReconTrust, as successor Trustee, issued a Notice of
Trustee’s Sale. See Ex. C to Verified Compl., p. 4, ¶ 6 (Docket No. 1). The foreclosure sale
took place on October 14, 2011, with the subject property being sold to Deutsche Bank. See
Defs.’ Mem. in Supp. of Mot. to Dismiss, p. 2 (Docket No. 6, Att. 1).
Plaintiffs originally asserted a multitude of claims against Defendants, premised upon
various theories of recovery/relief, but later conceded during oral argument that their claims for
(1) unjust enrichment, (2) Fair Debt Collection Practices Act violations, and (3) negligence no

2

According to Defendants, on December 24, 2010, (1) the beneficial interest in the
promissory note and Deed of Trust was assigned to BACHLS, and (2) Defendant ReconTrust
Company, N.A. (“ReconTrust”) was appointed successor Trustee. See Defs.’ Mem. in Supp. of
Mot. to Dismiss, pp. 1-2 (Docket No. 6, Att. 1).
MEMORANDUM DECISION AND ORDER - 3

longer applied. In these respects, therefore, Defendants’ Motion to Dismiss is granted without
further discussion. Still, arguing that Defendants nonetheless failed to comply with Idaho’s
foreclosure statutes by virtue of the inconsistent Notices of Default (recorded vs. mailed),
Plaintiffs continue to pursue claims for (1) quiet title, (2) declaratory relief, and (3) injunctive
relief. Defendants move to dismiss these three remaining claims.
II. DISCUSSION
A.

Legal Standard
FRCP 8(a)(2) requires only “a short and plain statement of the claim showing that the

pleader is entitled to relief,” in order to “give the defendant fair notice of what the . . . claim is
and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
While a complaint attacked by an FRCP 12(b)(6) motion to dismiss “does not need detailed
factual allegations,” it must set forth “more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id. at 555. 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.” Id. at 570. 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. Id. at 556. The plausibility standard is not akin to a
“probability requirement,” but it asks for more than a sheer possibility that a defendant has acted
unlawfully. Id. Where a complaint pleads facts that are “merely consistent with” a defendant’s
liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’”
Id. at 557.
In a more recent case, the Supreme Court identified two “working principles” that
underlie the decision in Twombly. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the

MEMORANDUM DECISION AND ORDER - 4

tenet that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Id. “Rule 8 marks a notable and generous departure from the
hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of
discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79. Second,
only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. at 679.
“Determining whether a complaint states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its judicial experience and common
sense.” Id.
Providing too much in the complaint may also be fatal to a plaintiff. Dismissal may be
appropriate when the plaintiff has included sufficient allegations disclosing some absolute
defense or bar to recovery. See Weisbuch v. County of Los Angeles, 119 F.3d 778, 783, n.1 (9th
Cir. 1997) (stating that “[i]f the pleadings establish facts compelling a decision one way, that is
as good as if depositions and other . . . evidence on summary judgment establishes the identical
facts.”).
A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Harris v. Amgen, Inc., 573 F.3d 728, 737
(9th Cir. 2009) (issued two months after Iqbal).3 The Ninth Circuit has held that “in dismissals

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The Court has some concern about the continued vitality of the liberal amendment
policy adopted in Harris v. Amgen, based as it is on language in Conley v. Gibson, 355 U.S. 41,
45-46 (1957), suggesting, in part, that “a complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his
claim . . . .” Given Twombly and Iqbal’s rejection of the liberal pleading standards adopted by
Conley, a question arises whether the liberal amendment policy of Harris v. Amgen still exists.
Nevertheless, the Circuit has continued to apply the liberal amendment policy even after
dismissing claims for violating Iqbal and Twombly. See, e.g., Market Trading, Inc. v. AT&T
Mobility, LLC, 2010 WL 2836092 (9th Cir. July 20, 2010) (not for publication). Accordingly, the
Court will continue to employ the liberal amendment policy.
MEMORANDUM DECISION AND ORDER - 5

for failure to state a claim, a district court should grant leave to amend even if no request to
amend the pleading was made, unless it determines that the pleading could not possibly be cured
by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v. Northern California Collection
Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether the plaintiff will prevail
but whether he “is entitled to offer evidence to support the claims.” Diaz v. Int’l Longshore and
Warehouse Union, Local 13, 474 F.3d 1202, 1205 (9th Cir. 2008) (citations omitted).
B.

Defendants Failed to Comply with Idaho Law
The particular non-judicial foreclosure that Plaintiffs complain of here is governed by

Chapter 15 of Title 45 of the Idaho Code. That chapter “provides a comprehensive regulatory
scheme for non-judicial foreclosure of deeds of trust . . . .” Spencer v. Jameson, 211 P.3d 106,
115 (Idaho 2009); In re Thorian, 387 B.R. 50, 62 (Bankr. D. Idaho 2008) (“Title 45, Chapter 15
of the Idaho Code governs foreclosure of trust deeds.”). Among the requirements that must be
met before a trustee may initiate foreclosure sale proceedings is compliance with proper notice
of default protocol. According to Idaho Code section 45-1505(3):
The trustee or beneficiary shall have (a) filed for record in the office of the recorder
in each county wherein the trust property . . . is situated, a notice of default
identifying the deed of trust . . . and containing a statement that a breach of the
obligation for which the transfer in trust is security has occurred, and setting forth
the nature of such breach and his election to sell or cause to be sold such property to
satisfy such obligation; and (b) mailed a copy of such notice by registered or certified
mail, return receipt requested, to any such person requesting such notice of record
as provided in section 45-1511, Idaho Code.
I.C. § 45-1505(3). Therefore, compliance with Idaho law requires the trustee to not only record
the notice of default, but also to mail that same recorded notice of default to individuals with an
interest in the property at issue.

MEMORANDUM DECISION AND ORDER - 6

Here, there is no dispute that the recorded Notice of Default is not the same Notice of
Default sent to Plaintiffs – the recorded Notice of Default identified BACHLS as the beneficiary
whereas the mailed Notice of Default identified Deutsche Bank as the beneficiary. See supra at
pp. 2-3. While Defendants argue that such a circumstance represents “a distinction without a
difference” (see Defs.’ Reply in Supp. of Mot. to Dismiss, p. 5 (Docket No. 15)),4 it fails to
acknowledge that strict compliance with Idaho’s foreclosure statutes is required. See In re
Thorian, 387 B.R. at 63 (“Idaho case law makes it clear that ‘the terms of the trust deed
foreclosure statutes must be strictly complied with in order to satisfy the due process
requirements of notice and opportunity to be heard.’” (quoting Sec. Pac. Fin. Corp. v. Bishop,
704 P.2d 357, 359 (1985)).
It may be true, as Defendants argue, that, despite its technical deviation from Idaho Code
section 45-1505(3), the Notice of Default mailed to Plaintiffs still provided Plaintiffs with notice
of their loan payment deficiency. See Defs.’ Reply in Supp. of Mot. to Dismiss, p. 5 (Docket
No. 15) (“Both documents show that as of December 24, 2010, the amount of the default is
$4,947.28. Plaintiffs concede receipt of this Notice yet refused to cure their default for ten
months before the foreclosure sale took place in October 2011. As a result, there is absolutely

4

In this respect, Defendants explain the discrepancy as follows:

[W]hen the Notice of Default was recorded as Instrument No. 357422 in Valley
County public records, BACHLS was named as the Beneficiary on the Deed of Trust
in keeping with the recorded Assignment of Deed of Trust to BACHLS. However,
as explained above, BACHLS, the loan servicer, acts as the agent of the note Holder,
Deutsche Bank, as Trustee for the investment trust, so the legal effect of designating
either BACHLS or Deutsche Bank as the Beneficiary of the Deed of Trust is the
same.
See Defs.’ Mem. in Supp. of Mot. to Dismiss, p. 10 (Docket No. 6, Att. 1) (internal citations
omitted).
MEMORANDUM DECISION AND ORDER - 7

no reason to invalidate the foreclosure sale.” (internal citations omitted)). Defendants’ argument
is logical, compelling, and perhaps, if common law controlled the issue, persuasive toward
dismissing Plaintiffs’ claims. However, because statutory law mandates that the recorded Notice
of Default correspond to the mailed Notice of Default (and Idaho case law interprets these
statutes strictly), such an argument loses its potency, saying nothing of the alleged prejudice
suffered by Plaintiffs as a result of the discrepancy in the Notices of Default. The undersigned
will not venture down the slippery slope of determining which technical violations of Idaho’s
non-judicial foreclosure law operate to unwind a foreclosure sale and which ones do not.
Instead, the Court follows the clear direction provided within Idaho Code section 45-1505(3).
With all this in mind, and being provided no legal authority holding otherwise, it cannot
be said that Defendants complied with Idaho non-judicial foreclosure law. As a result,
Defendants’ Motion to Dismiss is denied in these respects.5
III. ORDER
Based on the foregoing, IT IS HEREBY ORDERED that:
1.

Defendants’ Motion to Dismiss (Docket No. 6) is GRANTED, in part, and

DENIED, in part, as follows:
a.

Plaintiffs’ claims for (1) unjust enrichment, (2) Fair Debt Collection

Practices Act violations, and (3) negligence are dismissed, without prejudice.

5

With respect to their quiet title claim generally, Plaintiffs are reminded of their
obligation to allege that they did or can tender payment of amounts due and owing. See, e.g.,
Gilbert v. Bank of America, N.A., 2011 WL 4345004, *2 (D. Idaho 2011) (“Without evidence or
evan an assertion that Plaintiffs can or are willing to tender payment on their loan, they cannot
succeed on their quiet title action, as a matter of law.”). However, because the underlying Notice
of Default is faulty by virtue of Defendants’ non-compliance with Idaho law, such a requirement
may be premature at this juncture of the litigation. Even so, to ultimately prevail on their quiet
title claim, Plaintiffs are advised of such requirement.
MEMORANDUM DECISION AND ORDER - 8

b.

Plaintiffs’ claims for (1) quiet title, (2) declaratory relief, and (3)

injunctive relief are not dismissed.
2.

Defendants’ Motion for Judicial Notice (Docket No. 7) is GRANTED.
DATED: May 14, 2012

Honorable Ronald E. Bush
U. S. Magistrate Judge

MEMORANDUM DECISION AND ORDER - 9