Trotter v. Bayview Loan Services et al

Filing 27

MEMORANDUM DECISION AND ORDER granting 12 Defendant's Motion to Dismiss; granting 13 Defendant's Motion to Take Judicial Notice. Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

VERMONT TROTTER,
Case No. 2:15-cv-00301- CWD
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
BAYVIEW LOAN SERVICING,
BANK OF NEW YORK MELLON AS
TRUSTEE FOR THE CERTIFICATE
HOLDERS OF CWALT 2005 – 28CB
MORTGAGE PASS THROUGH
CERTIFICATES; PEAK
FORECLOSURE SERVICES; AND
PIONEER TITLE OF ADA COUNTY,
Defendants.

INTRODUCTION
The present case is Plaintiff Vermont Trotter’s third lawsuit attempting to halt
foreclosure proceedings initiated by Defendants against Trotter’s personal residence.
Pending before the Court in this matter are Defendants’ motion for judicial notice (Dkt.
13) and Defendants’ motion to dismiss (Dkt. 12). The motions ask the Court to dismiss
Plaintiff’s complaint with prejudice for failure to state a claim, and the documents
attached to the motion for judicial notice evidence the history of the loan’s origination,
MEMORANDUM DECISION AND ORDER - 1

default, and foreclosure proceedings. Plaintiff filed also a motion for temporary
restraining order and motion for preliminary injunction, asking the Court to preclude
Defendants from conducting the trustee sale of Plaintiff’s real property scheduled for
October 16, 2015, in Coeur d’Alene, Idaho. The Court issued an order on October 16,
2015, denying Plaintiff’s motions. The Court has not been apprised whether the trustee’s
sale occurred.
Nonetheless, the motion to dismiss is now ripe. Having fully reviewed the record,
the Court finds the facts and legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding delay, and because the Court conclusively
finds the decisional process would not be significantly aided by oral argument, this matter
will be decided on the record without oral argument. The Court issues the following
memorandum decision and order dismissing Plaintiff’s complaint with prejudice.
BACKGROUND
Plaintiff Vermont Trotter filed this action seeking injunctive and declaratory relief
under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq., (FDCPA). (Dkt.
1.) The claims allege violations of the FDCPA and challenge the validity of a Promissory
Note issued in relation to a Deed of Trust for Plaintiff’s residence, located at 512 South
14th Street, Coeur d’Alene, Idaho. Alternatively, the Complaint alleges violations of the
Truth in Lending Act, 16 U.S.C. § 1635, (TILA), and other related claims. (Dkt. 1 at 2227.)
Specifically, there are eight claims mentioned in the Complaint, alleging: 1) the
lending/deeding documents fail to comply with the elements of a contract; i.e., the Note
MEMORANDUM DECISION AND ORDER - 2

is invalid or void; 2) there have been no valid assignments and/or transfers of the Note
and, therefore, there is no enforceable security interest; 3) Bayview violated § 1692g(a)
by failing to send Plaintiff satisfactory written notification; 4) PEAK and Bayview
violated § 1692g(b) by failing to disclose the identity of the lender and have continued
foreclosure proceedings; 5) PEAK violated § 1692j by misleading Plaintiff as to its
authority to collect a debt; 6) all Defendants violated § 1692e by using false, deceptive,
and misleading representations to threaten action in connection with the collection of the
debt; 7) all Defendants have willfully and deliberately harassed Plaintiff in violation of §
1692e; and 8) the Deed of Trust is void and Plaintiff is entitled to quiet title. (Dkt. 1.)
Plaintiff raises alternative claims under the TILA based on similar allegations. (Dkt. 1.)
As background, Defendants have provided the Court with the loan documents and
foreclosure notices, as well as prior Idaho state district court decisions involving Plaintiff
and his real property. See Trotter v. Bank of New York Mellon et al, 152 Idaho 842, 275
P.3d 857 (Idaho 2012); Trotter v. Bank of New York, Mellon et. al., Kootenai County
Case No. CV-2012-8893. According to the attached documents, in June of 2005,
Vermont Trotter borrowed $145,000.00 (the Loan) to finance ownership of real property
located at 512 South 14th Street, Coeur d’Alene, Idaho and executed a Deed of Trust
recorded on June 24, 2005, as instrument number 1959776, in the official records of
Kootenai County, Idaho. Plaintiff defaulted on monthly payments, and the appointed
trustee, ReconTrust, initiated nonjudicial foreclosure on the deed of trust and set a trustee
sale for January 11, 2010. Prior to the trustee’s sale, on January 6, 2010, Plaintiff filed a
complaint in the First Judicial District, in and for the County of Kootenai, under case
MEMORANDUM DECISION AND ORDER - 3

number CV-2010-95, which asked for declaratory judgment action and sought a
determination that the trustee appointed by the beneficiary of deed of trust and
beneficiary lacked standing to foreclose. (Dkt. 13-1.)
The district court issued a temporary restraining order (TRO) halting the sale and
ordering the Bank of New York Mellon not to reschedule the sale without further court
order. Bank of New York Mellon filed a motion to dismiss, which the district court
granted with prejudice. A final judgment was entered against Plaintiff. (Dkt. 13-2.)
Plaintiff appealed the ruling to the Idaho Supreme Court, which affirmed the district
court’s ruling. (Dkt. 13-3); Trotter, 275 P.3d 857.
On December 7, 2012, Plaintiff filed a second state court matter in the First
Judicial District, in and for the County of Kootenai, under case number CV-12-8893.
This case involved the same loan and real property, and sought to enjoin the trustee’s sale
scheduled by the trustee for December 13, 2012. (Dkt. 13-4.) The complaint sought
declaratory and injunctive relief, and quiet title, as against Recontrust, Bank of New Yok
Mellon, MERS, Countrywide, Bank of America, and other defendants. Plaintiff alleged,
in essence, that the defendants did not have the legal right to initiate foreclosure
proceedings because of alleged defects in the note, deed of trust, and notices issued to
him. In this second lawsuit, Trotter was initially granted an injunction, halting the
foreclosure sale. Later, the defendants in that action, including Bank of New York
Mellon, filed a Motion to Dismiss, which the state court granted. (Dkt. 13-5.)
Servicing of the Deed of Trust was transferred to Bayview and a welcome letter
dated October 26, 2012, was mailed to Plaintiff. (Compl., ¶ 22.) Bayview, on behalf of
MEMORANDUM DECISION AND ORDER - 4

Bank of New York Mellon, appointed Pioneer Title Company of Ada County dba Pioneer
Lender Trustee Services (“Pioneer”) as successor trustee, and foreclosure proceedings
were initiated with the recording of a notice of default on May 12, 2015, as instrument
number 2497531000. (Id. at ¶ 36.) Peak Foreclosure Services is also named as a party to
this suit because it works in conjunction with Pioneer with regard to the non-judicial
foreclosure proceedings. (Id. at ¶ 4). (Dkt. 13-8.)
Pioneer scheduled a trustee’s sale for October 16, 2015. (Compl., ¶ 22.). Plaintiff
then filed the instant action for relief, again asserting the loan is invalid; violations of the
Fair Debt Collection Practices Act (“FDCPA”); and a motion to enjoin the trustee’s sale
date. The Court previously denied Plaintiff’s motion for injunction.
ANALYSIS
1.

Standard for Motion to Dismiss
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement

of the claim showing that the pleader is entitled to relief” 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 a Rule 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
MEMORANDUM DECISION AND ORDER - 5

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.
The United States Supreme Court identified two “working principles” that
underlie Twombly in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the Court need
not accept as true, legal conclusions that are couched as factual allegations. Id. Rule 8
does not “unlock the doors of discovery for a plaintiff armed with nothing more than
conclusions.” Id. at 678–79. Second, to survive a motion to dismiss, a complaint must
state a plausible claim for relief. Id. at 679. “Determining whether a complaint states a
plausible claim for relief will ... be a context-specific task that requires the reviewing
court to draw on its judicial experience and common sense.” Id.
Under Rule 12(b)(6), the Court may consider matters that are subject to judicial
notice. 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,
n.1 (9th Cir. 2004). The Court may also examine documents referred to in the complaint,
although not attached thereto, without transforming the motion to dismiss into a motion
for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.2005). The
Court may therefore consider the underlying loan documents, as the loan documents are
MEMORANDUM DECISION AND ORDER - 6

incorporated by reference in the complaint, as well as the recorded documents that are of
public record and attached to Defendants’ request for judicial notice. Id. In addition, the
Court may take judicial notice of pleadings and orders filed in the related state court
cases. See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir.
2006) (“We may take judicial notice of court filings and other matters of public record”).
On the record before it, the Court will grant Defendants’ request for judicial notice
and will not convert the pending motion to dismiss into a motion for summary judgment.
2.

Issue and Claim Preclusion Bar Trotter’s Claims
Res judicata, which is comprised of claim preclusion and issue preclusion, bars (1)

relitigation of an action, claim, or issue previously adjudicated, and (2) relitigation of any
claims that might have been made. Robi v. Five Platters, Inc., 838 F.2d 318, 321 (9th Cir.
1988). Claim preclusion prevents litigation of “all grounds for, or defenses to, recovery
that were previously available to the parties, regardless of whether they were asserted or
determined in the prior proceeding.” Robi, 838 F.2d at 322 (quoting Brown v. Felsen, 442
U.S. 127, 131 (1979)). Issue preclusion prevents relitigation of all “issues of fact or law
that were actually litigated and necessarily decided” in a prior proceeding. Id. (quoting
Segal v. American Tel. & Tel. Co., 606 F.2d 842, 845 (9th Cir. 1979)).
Claim preclusion applies to bar later litigation “whenever there is (1) an identity of
claims, (2) a final judgment on the merits, and (3) identity or privity between parties.”
Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (internal
quotations omitted). The doctrine of res judicata “bars a party from bringing a claim if a
court of competent jurisdiction has rendered a final judgment on the merits of the claim
MEMORANDUM DECISION AND ORDER - 7

in a previous action involving the same parties or their privies.” In re Int'l Nutronics, Inc.,
28 F.3d 965, 969 (9th Cir. 1994). If the claims arise out of the “same transactional
nucleus of fact” as litigated in the prior matter res judicata precludes re-litigating those
claims. Int'l Union v. Karr, 994 F.2d 1426, 1430 (9th Cir. 1993).
Pursuing new legal theories does not create a new cause of action sufficient to
avoid res judicata. Boateng v. Interamerican Univ., Inc.,210 F.3d 56, 62 (1st Cir. 2000).
Res judicata “has the dual purpose of protecting litigants from the burden of relitigating
an identical issue with the same party or his privy and of promoting judicial economy by
preventing needless litigation.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979).
Because “[r]es judicata prevents litigation of all grounds for, or defenses to, recovery that
were previously available to the parties, regardless of whether they were asserted or
determined in the prior proceeding[, it] thus encourages reliance on judicial decisions,
bars vexatious litigation, and frees the courts to resolve other disputes.” Brown v. Felsen,
442 U.S. 127, 131 (1979).
Here, the Court previously examined the state court proceedings, and found that
Plaintiff challenges here the same foreclosure proceedings as were brought in the state
courts of Idaho. (Dkt. 7, Ex. A-E.) In the first state court case, Plaintiff sought declaratory
and injunctive relief arguing the defendants had “no legal standing to institute or maintain
a foreclosure of the Property....” (Dkt. 7, Ex. A.) The state district court granted the
defendants’ Rule 12(b)(6) motion to dismiss, concluding the defendants did not violate
Idaho’s Deed of Trust Act, Idaho Code § 45-1502 et seq., and that the defendants had
complied with the statutory requirements for carrying out the non-judicial foreclosure.
MEMORANDUM DECISION AND ORDER - 8

(Dkt. 7, Ex. B.) The Idaho Supreme Court affirmed. Trotter v. Bank of New York Mellon,
275 P.3d 857, 862 (Idaho 2012). In the second state court action, Plaintiff again sought
declaratory and injunctive relief seeking to halt the foreclosure sale and the state district
court again granted the state defendants’ motion to dismiss. (Dkt. 7, Ex. D, E.)
A.

Identity of Claims

Defendant Bank of New York argues this federal action seeks the same remedy
based on the same activity and the same loan as was litigated in the two state court
actions. (Dkt. 6 at 7.) In Plaintiff’s prior action filed on January 6, 2010, he brought two
causes of action for declaratory and injunctive relief related to the foreclosure of his
property, against MERS, ReconTrust, and Bank of New York. Bank of New York argues
that the causes of action previously litigated and raised again here against it are (1) claim
one, the alleged failure to have a contract, or invalidity of the Note (Comp. ¶41); (2)
claim two, the lack of proper transfer or assignment of the Note (Id. ¶44); (3) splitting of
the Note and Deed of Trust (Id ¶46); (4) the lack of proper assignment of Deed of Trust
(Id ¶47); and the existence of the Deed of Trust (Id ¶68); and (5) claim eight, for quiet
title. Plaintiff argues that only the issue of standing was litigated in the prior action and
that the legal issues are not the same.
Regarding the first element, claim preclusion bars claims actually made as well as
“every matter which might and should have been litigated in the first suit.” Magic Valley
Radiology, P.A. v. Kolouch, 849 P.2d 107, 110 (Idaho 1993) (internal quotations and
citations omitted). Essentially, a valid, final judgment in another proceeding
“extinguishes all claims arising out of the same transaction or series of transactions out of
MEMORANDUM DECISION AND ORDER - 9

which the cause of action arose.” Id. (quoting Diamond v. Farmers Group, Inc., 804 P.2d
319, 323 (Idaho 1990)). Whether the claims asserted in the subsequent actions arose out
of the same transaction or series of transactions that gave rise to the first action is “to be
determined pragmatically, giving weight to such considerations as whether the facts are
related in time, space, origin, or motivation, whether they form a convenient trial unit,
and whether their treatment as a unit conforms to the parties' expectations or business
understanding or usage.” Id. (quoting Aldape v. Atkins, 668 P.2d 130, 135 (Idaho Ct.
App. 1983)).
This Court previously found that the non-FDCPA and non-TILA claims, raised in
the first, second, and eighth claims, arise out of the same transaction or series of
transactions out of which the state court causes of action arose. 1 The claims challenge the
validity and enforceability of the same lending/deeding documents at issue in this case.
Such claims should have been raised and litigated in the prior state court cases. Magic
Valley, 849 P.2d at 110. These claims are precluded by claim preclusion.
With regard to the FDCPA and TILA claims asserted against Bayview and PEAK
in claims three, four, five, six, and seven, those also are based on the same transaction or
series of transactions out of which the state court causes of action arose. While they raise
claims couched in terms of violations of those federal statutes, the factual underpinnings
of the claims are the same arguments Plaintiff raised in the state court cases. Although
Plaintiff argues these claims were not ripe at the time of the state court cases, the record

1

See Order, October 16, 2015. (Dkt. 23.)

MEMORANDUM DECISION AND ORDER - 10

shows that at least some of the conduct complained of in this case, including that on the
part of Bayview, occurred prior to, during, and after the state court cases.
The identity of parties element is satisfied as to claims one through eight.
B.

Final Judgment on the Merits

The state court cases were decided finally on their merits. (Dkt. 7, Exs. B, E.)
C.

Privity of the Parties

“Privity is defined as a mutual or successive relationship to the same property
rights, or such an identification in interest of one person with another as to represent the
same legal rights.” Sun Valley Land & Minerals, Inc. v. Burt, 853 P.2d 607, 614 (Idaho
Ct. App. 1993). “Even when the parties are not identical, privity may exist if there is
substantial identity between parties, that is, when there is sufficient commonality of
interest.” Tahoe Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,
322 F.3d 1064, 1081–82 (9th Cir. Cir. 2003) (citations omitted).
Privity is a flexible concept dependent on the particular relationship between the
parties in each individual set of cases. Federal courts have deemed several relationships
“sufficiently close” to justify a finding of “privity” and, therefore, preclusion under the
doctrine of res judicata: “First, a non-party who has succeeded to a party's interest in
property is bound by any prior judgment against the party. Second, a nonparty who
controlled the original suit will be bound by the resulting judgment. Third, federal courts
will bind a non-party whose interests were represented adequately by a party in the
original suit.” In addition, “privity” has been found where there is a “substantial identity”
between the party and nonparty, where the nonparty “had a significant interest and
MEMORANDUM DECISION AND ORDER - 11

participated in the prior action,” and where the interests of the nonparty and party are “so
closely aligned as to be virtually representative.” Finally, a relationship of privity can be
found to exist when there is an “express or implied legal relationship by which parties to
the first suit are accountable to non-parties who file a subsequent suit with identical
issues.” In re Schimmels, 127 F.3d 875, 881 (9th Cir. 1997) (citations omitted).
Here, Trotter was the plaintiff in each of the state court cases and is the Plaintiff
here. The Bank of New York is the only defendant named in both state cases as well as in
this case. 2 There is privity as to Trotter and Bank of New York. The Court finds that the
named Defendants here, Bayview, PEAK Foreclosure Services and Pioneer Title of Ada
County, possess a commonality of interest with the state court defendants sufficient to
find privity exists. The new Defendants in this action are the successor trustee, a
foreclosure service, and the servicing agent for the same loan which was the subject of
both state court proceedings and is the subject matter of this action. Privity exists as the
Defendants in this case are the successors in interest to the previously named state court
defendants and their interests are the same as those of the defendants in the prior actions.
Based on the foregoing, the Court finds Plaintiff’s claims are barred by res
judicata. Particularly, the non-federal claims could have and should have been raised in
the state court cases. Despite so finding, the Court will nonetheless address the merits of
the claims before it.

2

The defendants in the first state court case were Bank of New York, MERS, and ReconTrust Company. (Dkt. 7,
Ex. A.) In the second state court case, the defendants were ReconTrust Company, Bank of New York, Mortgage
Electronic Registration Systems (MERS), Countrywide Home Loans, Inc., Bank of America, N.A., Title West
Mortgage, Inc., BNC Mortgage, Inc, First American Title Company, Inc., Fidelity National Title Insurance
Company, R&R Reconveyance, Bank One, N.A., and VMP Mortgages Forms, Inc. (Dkt. 7, Ex. D.)

MEMORANDUM DECISION AND ORDER - 12

3.

FDCPA Claims
Here, Defendants argue the FDCPA claims are foreclosed by Idaho law. See

Cherian v. Countrywide, 2012 WL 2869579, *5 (2012) (the “activity of foreclosing on
[a] property pursuant to a deed of trust is not the collection of a debt within the meaning
of the FDCPA.”). Trotter asserts Bayview and PEAK, as mortgage servicers, are debt
collectors subject to the FDCPA. However, Trotter confuses the proceedings here, where
the end result is foreclosure, with the act of collecting a debt, or demanding money to
satisfy a debt. The act of nonjudicial foreclosure is not equivalent to the collection of a
debt within the meaning of the FDCPA.
The purpose of the FDCPA is “to eliminate abusive debt collection practices by
debt collectors, to insure that those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged, and to promote consistent State
action to protect consumers against debt collection abuses.” 15 U.S.C.A. § 1692. “To
state a claim under the FDCPA, Plaintiffs must allege facts sufficient to show that (1) the
defendant was collecting a debt as a debt collector, and (2) its debt collection actions
violated a federal statute.” Greer v. Green Tree Servicing, LLC, No. 3:14-cv-05594-RJB,
2015 WL 4077432, at *2 (W.D. Wash. July 6, 2015) (citing Jerman v. Carlisle, 559 U.S.
573 (2010)). The FDCPA’s definition of “debt collector” consists of a general definition
followed by a number of exceptions. 15 U.S.C. § 1692a(6). The general definition states
as follows:
The term "debt collector" means 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, or who
MEMORANDUM DECISION AND ORDER - 13

regularly collects ... debts owed ... or due another. Notwithstanding
the exclusion provided by clause (F) of the last sentence of this
paragraph, the term includes any creditor who, in the process of
collecting his own debts, uses any name other than his own which
would indicate that a third person is collecting or attempting to
collect such debts.
Id. (quoting 15 U.S.C. § 1692a(6)).
Plaintiff’s FDCPA claims in this case are primarily alleged against the loan
servicing Defendants, Bayview and PEAK, although two of the FDCPA claims are
alleged against all Defendants. (Dkt. 1.) Plaintiff argues the mortgage servicers are debt
collectors and, therefore, subject to the provisions of the FDCPA. (Dkt. 11 at 8.) In
support of his position, Plaintiff cites decisions from the Fourth, Eleventh, and Sixth
Circuits. Additionally, Plaintiff points to Vien-Phuong Ho v. ReconTrust Co., a case
where the Ninth Circuit recently heard oral argument and considered an Amicus Brief on
this question. Plaintiff argues the “nationwide consensus” appears to be that mortgage
service companies are debt collection agencies. (Dkt. 11 at 10.) Defendants maintain that
nonjudicial foreclosure is not debt collection within the meaning of the FDCPA. (Dkt. 6
at 8.)
Although the Ninth Circuit has not yet addressed the question, “other trial courts
have found that nonjudicial foreclosure actions do not constitute ‘debt collection’ under
the FDCPA, unless alleged as a violation of 15 U.S.C. § 1692f.” Greer, 2015 WL
4077432, at *2 (citing cases). This Court also has held that, when a mortgage holder or
lender institutes foreclosure proceedings, such activity does not fall within the provisions
of the FDCPA. Whalen v. Bank of America, N.A., No. 2:12-cv-00291-EJL-CWD, 2013
MEMORANDUM DECISION AND ORDER - 14

WL 3149477, at *8 (D. Idaho June 19, 2013) (citing Cherian v. Countrywide Home
Loans, Inc., No. 1:12-cv- 00110-BLW, 2012 WL 5879281, at *4 (D. Idaho Nov. 20,
2012)); see also Mussell v. Mortgage Electronic Registration Systems, Inc., No. 1:13-cv00188-BLW, 2014 WL 4793919, at *2 (D. Idaho Sept. 25, 2014); Goldberg v. Northwest
Trustee Servs., Inc., No. 1:15-cv-00216-CWD, 2015 WL 3948467, at *3-4 (D. Idaho June
29, 2015) (citing cases). 3 This is because the “activity of foreclosing on [a] property
pursuant to a deed of trust is not the collection of a debt within the meaning of the”
FDCPA. Cherian, 2012 WL 5879281, at *4 (quoting Hulse v. Ocwen Fed. Bank, FSB,
195 F.Supp.2d 1188, 1204 (D.Or. 2002)). Further, lenders and mortgage companies are
not “debt collectors” within the meaning of the FDCPA. Ines v. Countrywide Home
Loans, Inc., Case No. 08-cv-l267- WQH (NLS), 2008 WL 2795875, at *3 (S.D. Cal. July
18, 2008) (citing Williams v. Countrywide, 504 F.Supp.2d 176, 190 (S.D. Tex. 2007)
(“Mortgage companies collecting debts are not ‘debt collectors.’”); see also Fitzgerald v.
PNCBank, No. 1:10-cv-452-BLW, 2011 WL 1542138, at *3 (D. Idaho April 21, 2011)
(mortgagee and its assignee, including mortgage servicing companies, are not debt
collectors under the FDCPA when the debt is not in default at the time the mortgageholder acquires the debt).
Claims three, four, five, six, and seven of the Complaint purport to state claims
under the FDCPA, which are not cognizable claims here. According to the documents of

3

“Although the Ninth Circuit has not addressed whether foreclosure proceedings constitute debt collection within
the ambit of the FDCPA, courts in this Circuit have regularly held that nonjudicial foreclosure is not debt
collection.” Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1136 (N.D. Cal. 2013) (citation omitted).
“For purposes of the [FDCPA] a ‘debt collector’ does not include one engaged in the mere enforcement of a security
interest.” Id.

MEMORANDUM DECISION AND ORDER - 15

record, the Deed of Trust and the assignment of the Deed of Trust name the Bank of New
York as the beneficiary of the deed of trust. Under this Court’s holding in Cherian, Bank
of New York is exempted from the purview of the FDCPA. See Cherian, 2012 WL
2865979 at *4 (“Countrywide is the lender, U.S. Bank is the lender's successor, and Bank
of America is the loan servicer—none of which qualify as ‘debt collectors' under the
FDCPA.”) (citing Caballero v. Ocwen Loan Serv., 2009 WL 1528128, at *1
(N.D.Cal.2009)); see also Fitzgerald, 2011 WL 1542138 at *3 (stating that FDCPA's
legislative history “suggests that a mortgagee and its assignee, including mortgage
servicing companies, are not debt collectors under the FDCPA when the debt is not in
default at the time the mortgage-holder acquires the debt.”).
Pioneer Title was appointed as the successor trustee, and Peak operates in
conjunction with Pioneer to mail non-judicial foreclosure notices to debtors. As the
successor trustee and the assistant, or agent, to the successor trustee, neither Pioneer Title
nor Peak Foreclosure have an ownership interest in the Note and they, too, are exempt
from the provisions of the FDCPA Plaintiff asserts here. See Cherian 2012 WL 2865979
at *4 (“ReconTrust, as the successor, has no ownership interest in the Note and no claim
be stated against it under the FDCPA.”); see also Jacobson v. Balboa Arms Drive Trust
No. 5402 HSBC Financial Trustee, 2011 WL 3328487, *5 (S.D.Cal.2011) (defining
trustees as “merely ‘middlemen’ in the foreclosure process” while dismissing FDCPA
claim). Plaintiff therefore has not stated a claim under the FDCPA.

MEMORANDUM DECISION AND ORDER - 16

4.

TILA Claims
Plaintiff’s alternative claims under the TILA (mentioned at page 22) seek to enjoin

non-Defendant Bank of America, N.A. (BANA) and Mortgage Electronic Registration
Systems, Inc. (MERS). (Dkt. 1 at 22-23.) The TILA requires a “creditor” to make certain
disclosures to a borrower in a consumer credit transaction where the lender received a
security interest in the borrower's residence. See 15 U.S.C. §§ 1631–1635. Plaintiff’s
claims assert a right of rescission under § 1635. The right of rescission, however, has a
three year statute of limitations that begins after the date of consummation of the
transaction or upon the sale of the property, whichever occurs first. 16 U.S.C. § 1635(f).
The three-year statute of limitations to exercise the right of rescission is not subject to
equitable tolling. See Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998) (holding that
“§ 1635(f) completely extinguishes the right of rescission at the end of the 3–year
period.”).
Plaintiff entered into his loan in June 24, 2005, but did not send his Notices of
Rescission until June of 2015. (Dkt. 1 at ¶¶ 13, 76-77.) Plaintiff argues there has been no
“consummation of the transaction” to trigger the beginning of the statute of limitations.
(Dkt. 11 at 12-13.) Plaintiff seeks rescission of loan number 599129. (Dkt. 1 at ¶¶ 76-77.)
Plaintiff argues that the “purported lender” Countrywide was a “straw entity” who never
actually lent any money to the borrower based on the fact that there is no
countersignature on the Note, and there was an apparent assignment to the Bank of New
York before Plaintiff signed the Note and Deed of Trust. (Dkt. 1 at ¶ 81.) Therefore, he

MEMORANDUM DECISION AND ORDER - 17

argues, there was no contract because both parties did not sign the document. (Dkt. 1 at ¶
82.)
Courts that have considered similar arguments alleging mortgage documents fail
to identify the “true lender” have rejected the claim where the deeding documents
identify the lender. See Sotanski v. HSBC Bank USA, N.A., No. 15-cv-01489-LHK, 2015
WL 4760506, at *6 (N.D. Cal. Aug. 12, 2015) (citing cases). The Deed of Trust in this
case identified the lender, originally Countywide Home Loans, Inc., and the trustee,
Fidelity National Title Insurance Co. (Dkt. 13, Ex. F.)
Based on the foregoing, the Court finds Plaintiff’s claims under TILA are
untimely.
5.

Other Infirmities With Plaintiff’s Claims
Throughout Plaintiff’s complaint, several allegations are rooted in the past, and

others have been foreclosed as a matter of law by this Court. The Court will discuss each
in turn.
A.

Contract Claims Are Time Barred

Plaintiff alleges several causes of action related to the alleged breach of the Note
and Deed of Trust by Defendants. The loan documents, as the embodiment of the
contract, were executed in June of 2005. Plaintiff did not bring this action until August 4,
2015. Under Idaho Code § 5-216, “[a]n action upon any contract, obligation or liability
founded upon an instrument in writing” must be brought within five years. Claim number
one, alleging a failure to comply with the elements of a contract, is therefore time barred.

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B.

Claims Based Upon Separation of the Note and Deed of Trust Fail as a
Matter of Law

Plaintiff’s second, sixth, and eighth claims assert that the transfers and
assignments of the Note are invalid, resulting in separation of the security instrument
from the Note and their unenforceability. This has become known as the “split the note
theory.” See In re MERS, 2011 WL 251453 (D. Ariz. 2011) (identifying the “split the
note theory” and rejecting it as a basis for quiet title, slander of title, and unjust
enrichment).
In Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1044–45 (9th Cir.
2011), the Ninth Circuit found this theory has no sound basis in law or logic and should
be rejected. Id. The Ninth Circuit explained that splitting a note from a deed of trust is not
problematic as long as, at the time of foreclosure, the party attempting to foreclose holds
the note or is acting on behalf of the note-holder. Id. In other words, a split does not
render the note or the deed permanently unenforceable. See id. The “split the note” theory
has been rejected not only by the Ninth Circuit, but by this Court as well. Showell v. BAC
home Loans Servicing, LP, 2012 WL 4105472 at *8 (D. Idaho 2012) (“Applying Ninth
Circuit law, this Court finds that any alleged splitting of the note from the deed does not
preclude the proper Defendant in this case, or any other proper party, from foreclosing on
Plaintiff's Deed of Trust.”).
C.

Quiet Title

Plaintiff seeks as a remedy an order of quiet title to “remove the Deed of Trust”
from the title to the property. In Idaho, a quiet title “action may be brought by any person
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against another who claims an estate or interest in real or personal property adverse to
him, for the purpose of determining such adverse claim.” Idaho Code § 6–401. The
“purpose of a quiet title action is to establish the security of title.” Roselle v. Heirs and
Devisees of Grover, 789 P.2d 526, 529 (Idaho Ct. App.1990).
However, Plaintiff does not plead tender, and admits the loan is in default. “A
mortgagor cannot without paying his debt quiet title as against the mortgagee.” Trusty v.
Ray, 249 P.2d 814, 817 (Idaho 1952). This is true even where the mortgagee has failed to
pursue a foreclosure action within the applicable statute of limitations. Id.; see also In re
Mullen, 402 B.R. 353, 358 (Bankr. D. Idaho 2008). Plaintiff has not asserted that he ever
tendered payment of their debt obligation. Indeed, Plaintiff has, since the filing of his first
lawsuit in 2010, been attempting to keep his house without paying anything toward
satisfaction of the debt. Without evidence or even an assertion that Plaintiff can or is
willing to tender payment on his loan, Plaintiff cannot succeed on his quiet title action, as
a matter of law. Defendants’ motion to dismiss is properly granted. See Gilbert v. Bank of
America, N.A., et. al., Case No. 1:11–cv–00272–BLW, 2011 WL 4345004 *2–3 (D.
Idaho Sept.15, 2011).

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CONCLUSION
Plaintiff’s claims, in some form or another, have all been litigated here by other
homeowners who have ultimately lost their homes to the foreclosure process. Nonpayment of one’s mortgage entitles the lender, who has taken a security interest in the
real property securing the debt, to foreclose on one’s home to satisfy the debt. Plaintiff’s
circumstances are no different here, nor has he presented facts or arguments indicating
such. Indeed, Plaintiff has had not one, but two bites of the apple, and both times the
court has ruled in favor of the defendants.
Based upon the above, the Court will dismiss Plaintiffs’ complaint with prejudice,
without leave to amend because it would be futile under the facts presented.

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Defendants’ Motion for Judicial Notice (Dkt. 13) is GRANTED.

2)

Defendants’ Motion to Dismiss (Dkt. 12) is GRANTED.

December 15, 2015

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