Sykes v. Mortgage Electronic Registration Systems, Inc. (MERS) et al

Filing 59

MEMORANDUM DECISION AND ORDER granting 32 Motion to Dismiss; granting 6 Motion to Dismiss; granting 22 Motion to Dismiss. Pioneer Title is DISMISSED as a defendant from this action. Northwest Trustee Services, LLC ishereby DISMISSED as a defendant in this action. Kemal Busuladzic is DISMISSED as a defendant from this action. Signed by Judge B. Lynn Winmill. (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
FOR THE DISTRICT OF IDAHO
RICHARD SYKES,
Case No. 1:11-cv-377-BLW
Plaintiff,
v.
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
PIONEER TITLE OF ADA COUNTY,
AMERICAN BROKERS CONDUIT,
FEDERAL NATIONAL MORTGAGE
ASSOCATION, AMERICAN HOME
MORTGAGE SERVICING, INC.,
NORTHWEST TRUSTEE SERVICES,
INC., KEMAL BUSULADZIC,

MEMORANDUM DECISION
AND ORDER ON MOTIONS TO
DISMISS (Dkt. Nos. 6, 22, 32)

Defendants.

Currently pending before the Court are three motions to dismiss filed under Fed.
R. Civ. P. 12(b)(6) for failure to state a claim for relief. Having reviewed the parties’
briefing and the written record, the Court finds that oral argument will not aid in the
decisional process and issues the following Memorandum Decision and Order granting

MEMORANDUM DECISION AND ORDER - 1

the motions to dismiss.
INTRODUCTION
This action is a foreclosure challenge similar, if not identical,1 to many others filed
in this Court and around the county in the last few years. The gravamen of these
complaints generally is that mortgage lenders, loan servicers and/or trustees have
unlawfully foreclosed upon the plaintiffs’ residential mortgages due to the securitization
of the loans. In most cases, the plaintiffs do not dispute their default, and also attempt to
negotiate a loan modification and their inability to do so also forms a basis for the action.
In this particular case, both of these general complaints are alleged. By way of
background, Plaintiff purchased land in 1996, and built a home which was completed in
2003. In 2006, he refinanced the home with American Brokers Conduit. Plaintiff
executed a promissory note (“the Note”), which was secured by a deed of trust (the “Deed
of Trust”). The Note is not in the record. The Deed of Trust lists American Brokers
Conduit as the Lender, Pioneer Title as the Trustee, and MERS as “a separate corporation
that is acting solely as nominee for Lender and Lender’s successors and assigns” and the
“beneficiary under this Security Instrument.” (Verified Complaint for Declaratory and
Injunctive Relief, and Damages (“Complt.”), Dkt. 1-3, Attachment A-1 (“Deed of Trust”).
After refinancing, Plaintiff listed the house for sale but was unable to sell it. He

1

The complaint in this action contains many identical allegations and claims as
several complaints that have been filed in this court over the last year or so. See e.g.,
Burton et al. v. Countrywide Bank NA, et al., Case No. 10-CV-298-EJL-LMB.
MEMORANDUM DECISION AND ORDER - 2

then fell into financial hardship after becoming temporarily disabled from an accident. In
September 2010, he missed a mortgage payment.
After missing his first payment, the loan servicer, Defendant AHMSI “threatened
to foreclose.” Plaintiff contacted AHMSI and was “offered modification through the
HAMP2, and/or other programs if HAMP would not work.” (Cmplt. ¶ 13). Plaintiff
alleges that he was informed at that time that he would not qualify for a loan modification
unless he missed three mortgage payments.
Plaintiff alleges that he was unable to make his mortgage payment for several more
months, and then contacted AHMSI about negotiating a rate adjustment. He alleges he
was informed then that he could not qualify for a rate adjustment because of the impact
his missed payments had on his credit score. (Cmplt., ¶ 3.16).
Plaintiff then received “the HAMP packet” which he prepared and submitted in
early February 2011. (Cmplt., ¶ 3.17.) On February 23, 2011, MERS executed an
Assignment of Deed of Trust granting all beneficial interest in the Deed of Trust to
AHMSI, “together with the note or notes therein described or referred to, the money due
and to become due theron, with interest, and all right acrred or to accrue under said Deed

2

HAMP is the federal government’s Home Affordable Modification Program
administered by the U.S. Treasury Deparement. “The program requires that all mortgage
loans owned or guaranteed by Fannie Mae or the Federal Home Loan Mortgage
Corporation [Freddie Mac]. . . . that meet certain requirements be evaluated by the loan
services for loan modifications.” In re Cruz, 446 B.R. 1, 3 (Bankr. D. Mass. 2011). Some
loan servicers not owned by Fannie Mae or Freddie Mac also entered into Servicer
Participation Agreements with Fannie Mae, as agent for the Treasury Department, by
which they agreed to review and modify the loans on similar terms. Id.
MEMORANDUM DECISION AND ORDER - 3

of Trust.” On March 1, 2011, AHMSI executed an Appointment of Successor Trustee
appointing NWTS as the Trustee succeeding Pioneer Title. (Cmplt., Attch. A-2, Dkt. 1-3,
p. 48). On March 7, 2011, NWTS executed a Notice of Default indicating AHMSI’s
intent to sell the property to satisfy the obligation. (Cmpt., Attch. A-2, Dkt. 1-3, p. 49).
The three documents were recorded together on March 9, 2011, in Idaho City, Boise
County, Idaho. (Cmplt., Attch. A-2, Dkt. 1-3, p. 47 - 49).
Plaintiff alleges that in March, he received the Notice of Default and Notice of
Trustee’s Sale, dated March 22, 2011, indicating the sale would take place July 21, 2011.
(Cmplt., ¶ 3.19; Attch. A-1, Dkt. 1-3, pp. 39-45.) In April, he inquired about his HAMP
application, and claims that he was told that “the correct documents were never received,”
despite that he had sent them. (Id., ¶ 3.20.) He submitted the HAMP appilcation again on
April 16, 2011. (Id., ¶ 3.21.) He also submitted written requests to “the original lender,
title company, trustee, and all the new alleged holders of Plaintiff’s note and deed (all the
defendants herein),” to view the original documents. (Id., ¶ 3.23.)
Plaintiff alleges that the Defendants refused to provide access to the original
documents, or to acknowledge “the qualified written requests (QWR).” (Id., ¶ 3.24.)
Plaintiff alleges that he then sent several requests to AHMSI and the other defendants for
“verification of their interest and/or standing to be the servicer of Plaintiff’s Note and
Deed of Trust.” (Id., ¶ 3.26.) AHMSI refused to answer “all pertinent questions about
insterest and standing.”(Id., ¶ 3.27.)
Plaintiff was informed on May 5, 2011, that he did not qualify for the HAMP
MEMORANDUM DECISION AND ORDER - 4

program, or any other loan modification programs. (Id., ¶3.28.) He asked for an
explanation of what criteria he did not meet for these programs, to which AHMSI replied
on June 17, 2011. (Id., ¶3.29.) Plaintiff requested an Alternative HAMP, and
resubmitted a hardship letter and financial analysis, and asked that the trustee sale be
postponed. (Id., ¶3.29; Attch. B-1, B-2.)
On July 8, 20122, AHMSI sent Plaintiff another HAMP application, indicating
Plaintiff has until August 7, 2011 to respond. (Id., ¶3.30.) Plaintiff re-submitted all of the
requested documents before July 19, 2011. (Id., ¶3.30; Attch. C-1. )
AHMSI continued to pursue the auction, however, on July 21, 2011. (Id., ¶ 3.32.)
Plaintiff alleges that he continued to research the history of his Note and Deed of
Trust and learned that the Note had been sold and securitized, and therefore removed
from the state of Idaho, and that none of the Defendants possessed the actual “wet ink”
Note or Deed of Trust. (Id., ¶3.37.) He also alleges that he was never informed that the
Note had been sold or transferred to any defendant in any manner. (Id., ¶3.34.)
Based on these factual allegations, Plaintiff brings this action against Mortgage
Electronic Registration Systems, Inc. (MERS), Pioneer Title of Ada County, American
Brokers Conduit, Federal National Mortgage Association (“Fannie Mae”), American
Home Mortgage Servicing, Inc. (AHMS) and Northwest Trustee Services, Inc. (NWTS)
alleging ten (10) different causes of action.
MERS and AHMSI removed this action from state court on August 15, 2011. (Dkt.
1). Defendants Fannie Mae, AHMSI and MERS filed answers to the Complaint. (See
MEMORANDUM DECISION AND ORDER - 5

Dkts. 17 &31). Defendant American Brokers Conduit has neither been served nor
appeared. Defendants Pioneer Title of Ada County, the original trustee, and NWTS, the
successor trustee (together “trustee defendants”) moved to dismiss the complaint as
against them for failure to state a claim for relief. Fed. R. Civ. P. 12(b)(6). (Dkts. 6, 22 &
32).3
STANDARD OF REVIEW FOR MOTION TO DISMISS
A Rule 12(b)(6) motion to dismiss tests the sufficiency of a party’s claim for relief.
When considering such a motion, the Court’s inquiry is whether the allegations in a
pleading are sufficient under applicable pleading standards. Rule 8(a) of the Federal
Rules of Civil Procedure sets forth the minimum pleading requirement, which is that the
plaintiff provide only a “short and plain statement of the claim showing that the pleader is
entitled to relief,” and “giv[ing] 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, 127
S.Ct. 1955 (2007).
When reviewing a motion to dismiss, a district court must accept as true all

3

The individual served with the summons as the Fannie Mae agent, Kemal
Busuladzic, also filed a motion to dismiss for failure to state a claim for relief against
him. (Dkt. 33). Busaladzic is not a named defendant in this lawsuit, and there are no
allegations plead against him in the complaint. This Court does not believe he is or was
ever intended to be a party to this complaint. Plaintiff argues otherwise in his
Consolidated Reply to Pioneer Title Company and Kemal Busuladzic’s Response to
Plaintiff’s Reply re: Motion to Dismiss, Dkt. 47, p. 5. The Complaint clearly fails to state
a claim upon which relief could be granted against this individual, and his motion to
dismiss will be granted without further discussion.
MEMORANDUM DECISION AND ORDER - 6

non-conclusory, factual (not legal) allegations made in the complaint. Ashcroft v. Iqbal,
129 S.Ct. 1937, 1950 (2009); Erickson v. Pardus, 551 U.S. 89 (2007). Based upon these
allegations, the court examining a complaint for sufficiency of information must draw all
reasonable inferences in favor of the plaintiff. See Mohamed v. Jeppesen Dataplan, Inc.,
579 F.3d 943, 949 (9th Cir. 2009). However, “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129
S.Ct. at 1949.
After any conclusory statements have been removed, the court must then analyze
the remaining factual allegations in the complaint “to determine if they plausibly suggest
an entitlement to relief.” Delta Mech., Inc., 345 Fed. Appx. at 234. “While a complaint
attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 555). In addition,
“[f]actual allegations must be enough to raise a right to relief above the speculative level,
on the assumption that all the allegations in the complaint are true (even if doubtful in
fact).” Twombly, 550 U.S. at 555. In sum, a party must allege “enough facts to state a
claim to relief that is plausible on its face.” Id. at 570; Iqbal, 129 S. Ct. at 1949.
In discussing this standard, a recent Tenth Circuit Court of Appeals opinion stated
that “the mere metaphysical possibility that some plaintiff could prove some set of facts
in support of the pleaded claims is insufficient; the complaint must give the court reason
MEMORANDUM DECISION AND ORDER - 7

to believe that this plaintiff has a reasonable likelihood of mustering factual support for
these claims.” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008). In this way,
while “[s]pecific facts are not necessary,” a plaintiff must allege enough facts to “give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.”
Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam ) (internal citation omitted).
Generally, with respect to Rule 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 Fed. R. Civ. P. 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,
907-908 (9th Cir. 2003). “A court may, however, consider certain materials– documents
attached to the complaint, documents incorporated by reference in the complaint, or
matters of judicial notice– without converting the motion to dismiss into a motion for
summary judgment.” Id. at 908 (citing Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir.
2002); Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994); 2 James Wm. Moore et al.,
Moore's Federal Practice § 12.34[2] (3d ed.1999)); Mullis v. United States Bank, 828 F.2d
1385, 1388 (9th Cir. 1987)).
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).
DISCUSSION
MEMORANDUM DECISION AND ORDER - 8

A.

Breach of Fiduciary Duty Claims
Plaintiffs’ First and Second causes of action allege claims for breach of fiduciary

duty against all defendants. “In order to establish a claim for breach of fiduciary duty, a
plaintiff must establish that defendants owed plaintiff a fiduciary duty and that the
fiduciary duty was breached.” Bushi v. Sage Health Care, PLLC, 203 P.3d 694, 699
(2009) (citation and marks omitted); see also Giles v. Gen. Motors Acceptance Corp., 494
F.3d 865, 880–881 (9th Cir. 2007) (applying Nevada law).
The trustee defendants move to dismiss Plaintiff’s claims for breach of fiduciary
duty on the basis that no fiduciary relationship exists between Plaintiff and either moving
Defendant. The Court agrees.
Fiduciary relationships are rarely recognized in Idaho. Davis v. Keybank Nat’l
Assoc., 2005 WL 2847239, *2 (D. Idaho October 26, 2005). “The facts and
circumstances must indicate that the one reposing the trust has foundation for his belief
that the one giving advice or presenting arguments is acting not in his own behalf, but in
the interests of the other party.” Id. (Citing Idaho First National Bank v. Bliss Valley
Foods, Inc., 824 P.2d 841, 853 (1991) (quotation omitted)).4

4

In Davis, this Court allowed a breach of fiduciary claim against the trustee to a
deed of trust to survive a motion to dismiss. However, the motion to dismiss in Davis
was decided before the United States Supreme Court decisions Iqbal (2007) and Twombly
(2009). In Davis, this Court expressed skepticism that the Plaintiff could present a factual
record that would actually support a fiduciary duty under Idaho law, but allowed the
claim to proceed based on the “threadbare recital of the elements” of a fiduciary duty
claim, which is contrary to the heightened pleading standards set forth under Iqbal and
Twombly. See Davis, 2005 WL 2847239, *2 (Noting that the “limited case law suggests
MEMORANDUM DECISION AND ORDER - 9

Under Idaho law, the duties of a trustee on a deed of trust have only been
recognized as those specified under either in the Idaho Trust Deeds Act or in the deed of
trust document itself. See Davis v. Keybank Nat’l Assoc., 2005 WL 2847239, **2 -3 & n.
5 (D. Idaho October 26, 2005) (Construing deed of trust trustee’s duty under the Deeds
Trust Act, and noting that Idaho courts had not determined duty to be fiduciary in
nature.); Diamond v. Sandpoint Title Ins., Inc., 968 P.2d 240, 246 (Idaho 1998) (Noting
that the Idaho courts have not recognized that the duties of a trustee under a deed of trust
are fiduciary in nature.)
Other jurisdictions that have specifically addressed the issue expressly limit the
duties to those defined in the applicable statute or deed of trust language. See e.g., Gaitan
v. Mrtg. Electronic Reg. Sys., 2009 WL 3244729, at *12 (C.D. Cal. Oct. 5, 2009) (Finding
that “[a] foreclosure trustee has no fiduciary duty to the borrower, since “a trustee in a
non-judicial foreclosure is ‘not a true trustee with fiduciary duties, but rather a common
agent for the trustor and beneficiary.’”)(Internal citations omitted.) Plaintiff provides no
authority to the contrary.
In his first cause of action, Plaintiff alleges that the defendants “solicited and
intentionally induced the trust, confidence and reliance of the Plaintiff,” “had superior

that the circumstance in which a trustee would owe a fiduciary duty to a grantor is rare.”)
Moreover, the defendants in Davis were attorneys, and an attorney/non-client relationship
had been recognized to be fiduciary under certain circumstances, unlike the trustor/trustee
relationship present in this case. This court’s finding in Davis, therefore, does not impact
its review of Plaintiff’s fiduciary duty claim.
MEMORANDUM DECISION AND ORDER - 10

knowledge regarding the consequences of the failure to procure the original loan, as well
as the loan modification and delay of the sale,” and occupied a position of trust,
confidence and reliance as Plaintiff’s mortgage holder which created fiduciary or quasifiduciary duties. (Cmplt., ¶ 4.3.) Plaintiff alleges that Defendants breached this fiduciary
duty by “constructively refusing to cooperate with Plaintiff’s efforts at a resolution to this
matter and acted in willful bad faith during Plaintiff’s attempts to resolve this matter in
violation of federal and state statutes. (Id., ¶ 44.)
In Plaintiff’s second cause of action, he adds that the Defendants had a fiduciary
duty to ensure that the Note does not get “split” from the Deed of Trust and pooled and
securitized outside the State of Idaho, and breached their fiduciary duty by “continuing
the sale when Plaintiff was still in the modification process,” and failing to provide
meaningful contact information regarding who actually had the promissory note and deed
of trust to prevent the trustee’s sale. Id., ¶¶ 5.1 - 5.3.
Plaintiff’s fiduciary duty theories are not recognized under Idaho law. There is no
duty under the Idaho Trust Deeds Act or the Deed of Trust for the trustee to stop a
foreclosure upon request of a borrower who is attempting to obtain a loan modification,
or to ensure that a note is not “split” from the deed of trust.5
Moreover, as to both Pioneer and NWTS, this Court finds that Plaintiff has failed

5

Any duty to preserve the validity of a right to payment, or a right to foreclose –
the rights preserved by the legal instruments Plaintiff now claims are void – would run if
at all to the beneficiary of these instruments.
MEMORANDUM DECISION AND ORDER - 11

to plead facts supporting such a rare circumstance that a trustee under a deed of trust –
current or successor– would owe a fiduciary duty to the grantor. Plaintiff fails to allege
any facts supporting a foundation to believe that Pioneer or NWTS was acting in his
interest, and not on its own behalf or that of the beneficiary to the Deed of Trust, in any
action it took as the trustee. As such, Plaintiff fails to allege facts supporting the
existence of a fiduciary duty and Defendants’ motions to dismiss these claims shall be
granted.
B.

Truth In Lending Act Claim
Plaintiff’s third cause of action alleges violations of the Truth In Lending Act

(TILA), which requires a “creditor” to make certain disclosures to a borrower in a
consumer credit transaction where the lender received a security interst in the borrower’s
residence. See 15 U.S.C. § 1631-1635.
Plaintiff’s TILA claims fail to state a claim against the trustee defendants for
several reasons. First, Plaintiff’s allegations are generally insufficient to support a
violation of TILA. See Marks v. Chicoine, 2007 WL 160992, at *7 (N.D. Cal. Jan. 18,
2007) (dismissing TILA claims for failure to allege how defendants violated the statute);
Tasaranta v. Homecomings Fin. LLC, 2009 WL 3055227, at *3 (S.D. Cal. 2009) (same).
Plaintiff fails to allege how TILA was violated, and what documents or disclosures he
was not provided, and how he relied upon these alleged inadequate documents or
disclosures.
Second, Plaintiff does not allege that the trustees are “creditors,” as defined by the
MEMORANDUM DECISION AND ORDER - 12

statute, for which the act imposes liability. See 15 U.S.C. 1604(a).
Finally, to the extent Plaintiff could make a claim under TILA, it is time barred.
The statute of limitations for a TILA claim is “one year from the date of the occurrence of
the violation.” 15 U.S.C. § 1640(e); Shaw v. Lehman Bros. Bank, FSB, 2009 WL 790166,
at *4 (D. Idaho 2009). The statute begins to run when the plaintiff enters into the loan
agreement. See King v. Cal., 784 F.2d 910, 915 (9th Cir. 1986); Shaw, 2009 WL 790166,
at *4. Plaintiff obtained the loan in February of 2006. (Cmplt., Exh. A-1, Dkt. 1-3, p.
22.) He filed the original complaint in state court on July 20, 2011 (Dkt. 1-3), several
years past the statute of limitations deadline.
Plaintiff alleges that the TILA violations “are defensive in nature” and therefore no
statute of limitations applies. He provides no authority for this allegation and the Court is
aware of none. Moreover, Plaintiff’s complaint is devoid of any allegations from which
the Court could glean that Plaintiff might be entitled to equitable tolling of these claims.
See Hubbard v. Fidelity Fed. Bank, 91 F.3d 75, 79 (9th Cir.1996) (concluding that
plaintiff was not entitled to tolling where “nothing prevented [her] from comparing the
loan contract, [defendant's] initial disclosures, and TILA's statutory and regulatory
requirements” (citing King, 784 F.2d at 915)).
For the foregoing reasons, Plaintiff’s TILA claim fails to state a claim for relief,
and Defendants’ motions to dismiss shall be granted.
C.

Idaho Trust Deeds Act
Plaintiff’s fourth cause of action alleges violations of the Idaho Trust Deeds Act,

MEMORANDUM DECISION AND ORDER - 13

I.C. §§ 45-1501 et seq. arguably against MERS, NWTS and AHMSI. (See Cmplt., ¶¶ 7.1
- 7.4.) Plaintiff alleges that none of these defendants have the right to foreclose on the
Property because “they” have not proven they have “standing” to do so. Plaintiff does not
dispute that his loan was in default. His complaint and attachments also show that all
necessary assignments, appointments and notices were duly recorded and/or served upon
him as required under the Deed Trust Act in order to effect a non-judicial foreclosure.
Plaintiff’s contention, however, is that MERS’s assignment of the Deed of Trust to
AHMSI, and AHMSI appointment of NWTS as the successor trustee, and NWTS’s
notices of default and trustee’s sale are all invalid due to the “unlawful splitting of
Plaintiff’s wet ink note and deed of trust, and removal from the State of Idaho.”
Plaintiff’s argument is what is referred to as the “show me the Note” theory, and
has been squarely rejected by the Supreme Court of Idaho as a tactic to avoid an
otherwise legal non-judicial foreclosure in Idaho. Trotter v. Bank of N.Y. Mellon et al.,
__P.3d__, 2012 WL 206004 (Idaho 2012); see also Meyer v. Bank of America, N.A., 2011
WL 458762, *3 (D. Idaho 2011). In Trotter, the Supreme Court of Idaho explained:
While it is true that a party must have standing before it may invoke the
jurisdiction of a court, the foreclosure process in the [Idaho Trust Deeds] Act
is not a judicial proceeding. . . . Instead, ‘the procedures to foreclose on trust
deeds outside of the judicial process provide the express-lane alternative to
foreclosure in the judicial system and strip borrowers of protections embedded
in the judicial foreclosure.’. . . Thus, as an ‘alternative’ that is ‘outside the
judicial process,’ the [Idaho Trust Deeds] Act sets forth all of the requirements
to foreclose on a deed of trust.
Id. at *3 (citing and quoting Fed. Home Loan Mortg. Corp. v. Appel, 137 P.3d 429, 433

MEMORANDUM DECISION AND ORDER - 14

n.1 (Idaho 2006)).
Thus, to the extent Plaintiff’s claims are generally premised on the argument that
the Trustee must produce the original “wet-ink” Note and Deed of Trust to undertake a
non-judicial foreclosure on the Property, this claim must fail.
As for MERS’s assignment, the Deed of Trust clearly intends that MERS act as the
agent of the Lender, or its assigns, in administering the deed of trust, that it holds “legal
title,” and therefore has the authority to do so. See Cervantes v. Countrywide Home
Loans, 656 F.3d 1034, 1044 (9th Cir. 2011); Washburn v. Bank of America, NA, et al,
Case No. 1:11-cv-193-EJL-CWD, Report and Recommendation (Dkt. 28) and Order
Adopting Report and Recommendation, (Dkt.32).
Further, the allegation that MERS is not registered to do business in Idaho does not
appear to state any claim for relief upon which relief may be granted for a violation of the
Idaho Trust Deeds Act.
Finally, this Court agrees with the numerous decisions rendered which hold that
the securitization of the loan did not extinguish the security interest in the real property.
See, e.g., West v. Bank of America, 2011 WL 2491295 at *2 (D. Nev. June 22, 2011);
Beyer v. Bank of America, 800 F.Supp.2d 1157, 1159 (D. Or. Aug.2, 2011); Chavez v.
California Reconveyance Co., 2010 WL 2545006 at *2 (D. Nev. June 18, 2010).
Accordingly, this Court finds that Plaintiff’s complaint fails to state a claim for

MEMORANDUM DECISION AND ORDER - 15

which relief may be granted against NWTS for violation of the Idaho Trust Deeds Act. 6
D.

Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605 et seq.
Plaintiff’s fifth cause of action alleges violations of RESPA against Defendants

Fannie Mae, AHMSI, NWTS and MERS. (See Cmplt., ¶¶ 8.1 - 8.4). To the extent it
provides a private cause of action, RESPA requires “loan servicers” to respond to
borrower inquiries, including a “qualified written request.” 12 U.S.C. § 2605(e).
As to NWTS, Plaintiff alleges only that its and other alleged defendants’ “failures
warrant injunctive relief against the foreclosure sale.” (Id., ¶ 8.5.) These are clearly
insufficient to state any claim upon which relief may be granted under RESPA since it
gives NWTS no notice as to what “failures” it committed that would allegedly violate
RESPA. Fed. R. Civ. P. 8. Moreover, Plaintiff has failed to plead that NWTS is a “loan
servicer” required to respond to Plaintiff’s requests, assuming they constitute Qualified
Written Requests under the statute.
For the foregoing reasons, Plaintiff’s complaint for violations of RESPA also fails
to state a claim upon which relief may be granted against NWTS.
E.

Idaho Consumer Protection Act
Plaintiff’s sixth cause of action alleges violation of the Idaho Consumer Protection

Act (ICPA), I.C. § 48-601 et seq., against all defendants. It does not specify which
provision of the ICPA the defendants violated but generally states that their “acts

6

As noted above, this claim is not brought against Pioneer Title.

MEMORANDUM DECISION AND ORDER - 16

constitute unfair and deceptive practices that occur in their trade or commerce, which
amounts to unlawful Usury and unjust enrichment.” (Cmplt., ¶ 9.4.)
Irrespective of the insufficiency of Plaintiff’s allegations in general, Plaintiff has
not stated a claim upon which relief may be granted against the defendant trustees. First,
to have standing under the ICPA, “the aggrieved party must have been in a contractual
relationship with the party alleged to have acted unfair or deceptively.” Taylor v.
McNichols, 243 P.3d 642, 661 (Idaho 2010) (citing Haskin v. Glass, 640 P.2d 1186, 1189
(Idaho Ct. App. 1982)); I.C. § 48-608(1) (“Any person who purchases or leases good or
services and therefy suffers. . . .”). Plaintiff has not alleged that he was in a contractual
relationship with either trustee of the Deed of Trust.
Moreover, though not clear, Plaintiff’s allegations for violation of the ICPA appear
to relate to defendants not having the authority to foreclose on the Deed of Trust. As
discussed above, Pioneer Title was not involved in the foreclosure, and as successor
trustee, NWTS did have the authority to initiate and conduct the foreclosure proceedings
under the terms of the Deed of Trust, and the Idaho Trust Deed Act.
For the foregoing reasons, Plaintiff’s complaint fails to state a claim upon which
relief may be granted against either trustee defendant.
F.

Intentional Infliction of Emotional Distress
Plaintiff’s seventh cause of action alleges intentional infliction of emotional

distress against NWTS, and the other non-trustee defendants for “poor treatment of them
[sic] during this difficult time.” (Cmplt., ¶ 10.2.) Plaintiff alleges that “[t]his distress was
MEMORANDUM DECISION AND ORDER - 17

manifested by depression, sadness, frustration, and anger.” (Id.)
“To prevail on a claim for intentional infliction of emotional distress: (1) the
conduct must be intentional or reckless; (2) the conduct must be extreme and outrageous;
(3) there must be a causal connection between the wrongful conduct and the emotional
distress; and (4) the emotional distress must be severe.” Mortensen v. Stewart Title Guar.
Co., 235 P.3d 387, 396 (Idaho 2010) (internal citations omitted). “To be actionable, the
conduct must be so extreme as to ‘arouse an average member of the community to
resentment against the defendant,’ and ‘must be more than unreasonable, unkind, or
unfair.’” Id. at 397 (citing 86 CJ.S. Torts § 74 (2009) (citations omitted)).
This claim fails as against NWTS for several reasons. First, Plaintiff’s complaint
fails to state how NWTS treated Plaintiff poorly. The Court assumes that Plaintiff’s
allegation refers to the failure to stop the trustee sale while Plaintiff was attempting to
negotiate a loan modification. However, the Complaint contains no allegations of NWTS
having been in contact with Plaintiff or undertaken any action other than the foreclosure
proceedings discussed above which were authorized by the Deed of Trust and the Idaho
Trust Deeds Act.
Moreover, presuming NWTS had knowledge of Plaintiff’s attempts to obtain a
loan modification, its continuation of the foreclosure proceeding does not amount to the
type of ‘outrageous’ conduct necessary to state a claim for intentional infliction of
emotional distress.
For all of the foregoing reasons, Plaintiff’s complaint fails to state a claim upon
MEMORANDUM DECISION AND ORDER - 18

which relief may be granted against NWTS for intentional infliction of emotional distress.
G.

Negligent Infliction of Emotional Distress
Plaintiff’s eighth cause of action is for negligent infliction of emotional distress

alleged as an alternative to Plaintiff’s claim for intentional infliction of emotional distress
discussed immediately above.
To state a claim for negligent infliction of emotional distress, Plaintiffs must allege
facts supporting “(1) a duty recognized by law requiring the defendant to conform to a
certain standard of conduct; (2) a breach of that duty; (3) a causal connection between the
conduct and the plaintiff's injury; and (4) actual loss or damage.” Johnson v. McPhee, 210
P.3d 563 (Idaho Ct. App. 2009) (citing Brooks v. Logan, 903 P.2d 73, 78 (Idaho 1995);
Black Canyon Racquetball Club, Inc. v. Idaho First Nat’l Bank, 804 P.2d 900, 904-05
(Idaho 1991); Nation v. State Dept. of Correction, 158 P.3d 953, 965 (Idaho 2007)).
Plaintiffs must also allege “some physical manifestation of the [their] emotional injury.”
Id. (citations omitted).
NWTS moves to dismiss this claim on the basis that Plaintiff cannot satisfy any of
the elements for negligent infliction of emotional distress. First, NWTS reiterates that
there is no dispute that the loan was in default, and NWTS had no duty to postpone the
foreclosure sale. The Court agrees.
To the extent that Plaintiff’s claim is based on some other action by NWTS, the
factual allegations are too vague to state such a claim for relief as well. For the foregoing
reasons, NWTS motion to dismiss Plaintiff’s negligence claim shall be granted.
MEMORANDUM DECISION AND ORDER - 19

H.

Misrepresentation by Trustee
Plaintiff’s ninth cause of action is for “misrepresentation by trustee” which states

in part:
12.2. Plaintiff claims that by not informing Plaintiff, of the sale, that only
NORTHWEST TRUSTEES, FANNIE MAE AND AMERICAN HOME
MORTGAGE had the authority to postpone the foreclosure sale, these Defendants
failed to allow Plaintiff the chance to get the remaining alleged missing paperwork
in to the Defendants.
12.3. Plaintiff claims that the information provided by these defendants was
material because reliance on such facts would result in the wrongful foreclosure
sale of the Plaintiff’s house.
12.4. Plaintiff claims that Plaintiff relied on the information and they [sic]were
justified in their[sic] reliance because of the fiduciary relationship between
themselves and the alleged defendants.
(Cmplt., ¶¶ 12.2 - 12.4).
A claim for intentional misrepresentation, or fraud, requires: (1) a statement or a
representation of fact; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its
falsity; (5) the speaker's intent that there be reliance; (6) the hearer's ignorance of the
falsity of the statement; (7) reliance by the hearer; (8) justifiable reliance; and (9)
resultant injury. Lettunich v. Key Bank Nat. Ass’n, 109 P.3d 1104, 1110 (Idaho 2005)
(citing Lindberg v. Roseth, 46 P.3d 518, 522 (Idaho 2002) (citations omitted)).
The factual circumstances of each element of fraud must be plead with
particularity. Fed. R. Civ. P. 9(b). Plaintiff’s complaint fails to plead the elements in the
general sense, much less with particularity.
Further, to the extent the Court can glean a basis for the fraud allegation, it relates
MEMORANDUM DECISION AND ORDER - 20

to Plaintiff not having been told about the trustee’s sale, which is clearly contradicted by
the allegations of and attachments to the Complaint. (See Cmplt., ¶ 3.19; Exh. A-1.)
Plaintiff alleges that he submitted the HAMP loan application in February 2011, and
received the notice of the trustee’s sale (to take place in July 2011) in early March. (Id.)
As such, Plaintiff’s claim for misrepresentation against NWTS is dismissed.
I.

Void Note and Deed of Trust
The nature of this claim is unclear. The bulk of the allegations regarding the

“unlawful splitting” of the note and deed of trust are addressed above in the Court’s Trust
Deeds Act discussion. In addition, Plaintiff includes an allegation of a violation of RICO
by all Defendants with the “illegal intention of committing a fraud upon Plaintiff” and
depriving “Plaintiff of his due process rights as defined under Art. I, Section 13 of the
Idaho Constitution and Amendment 14 of the United States Constitution.” (Cmplt.,
¶ 13.9.)
The Complaint also fails to state a viable RICO claim. “A civil RICO claim
requires allegations of the conduct of an enterprise through a pattern of racketeering
activity that proximately caused injury to the plaintiff.” Swartz v. KPMG LLP, 476 F.3d
756, 761 (9th Cir. 2007) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)).
Plaintiff fails to allege any pattern of racketeering activity that would support this claim.
For the foregoing reasons, Plaintiff’s tenth unspecified cause of action7 also fails to

7

Plaintiff’s complaint contains a final paragraph number XIV. It does not state a
claim, and reiterates the previous allegations regarding the defendants not having standing
MEMORANDUM DECISION AND ORDER - 21

state a claim upon which relief may be granted against the trustee defendants.
J.

Leave to Amend
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 2 months after Iqbal).8 The Ninth Circuit has held that “in
dismissals 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 Service, Inc., 911 F.2d 242, 247 (9th Cir. 1990). The
issue is not whether 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. 2007)(citations omitted).

to foreclose on the property. To the extent plaintiff intended this section to set forth
another claim or cause of action, the Court finds that it does not, and the allegations set
forth therein have been sufficiently addressed herein.
8

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 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 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 - 22

The Court concludes that the deficiencies of the complaint against the trustee
defendants discussed above may not be cured by amendment, and therefore the claims
against them shall be dismissed with prejudice.
ORDER
Consistent with the foregoing Memorandum Decision,
IT IS HEREBY ORDERED:
1.

That Defendant Pioneer Title of Ada County’s Motion to Dismiss (Dkt. 7)
is GRANTED; Pioneer Title is DISMISSED as a defendant from this
action;

2.

That Defendant Northwest Trustee Services, LLC’s Motion to Dismiss and
Joinder in Defendant Pioneer Title Company of Ada County’s Motion to
Dismiss (Dkt. 22) is GRANTED; Northwest Trustee Services, LLC is
hereby DISMISSED as a defendant in this action.

3.

That Motion to Dismiss by Kemal Busuladzic (Dkt. 32) is GRANTED;
Kemal Busuladzic is DISMISSED as a defendant from this action.
DATED: March 15, 2012

B. LYNN WINMILL
Chief U.S. District Court Judge

MEMORANDUM DECISION AND ORDER - 23