Hagos v. MTC Financial, Inc.

Filing 12

ORDER Granting 6 MOTION to Dismiss filed by MTC Financial, Inc. IT IS FURTHER ORDERED that Plaintiff is given leave to amend Complaint consistent with this order by 6/11/12. Signed by Judge Gloria M. Navarro on 5/18/12. (Copies have been distributed pursuant to the NEF - EDS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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DANIEL HAGOS,
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Plaintiff,

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vs.

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MTC FINANCIAL, INC.,
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Defendant.

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Case No.: 2:11-cv-01272-GMN-RJJ
ORDER

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This is a foreclosure case filed by Plaintiff Daniel Hagos against Defendant, MTC

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Financial, Inc. Pending before the Court is the Motion to Dismiss (ECF No. 6) filed by

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Defendant MTC Financial, Inc., dba Trustee Corps (“Trustee Corps”).

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I.

BACKGROUND
Plaintiff obtained a mortgage loan with Washington Mutual Bank as beneficiary, as shown

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by a Deed of Trust recorded on September 26, 2006, secured by the property at 6659 Catoctin

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Avenue, Las Vegas, Nevada. Plaintiff subsequently defaulted on the loan, and Trustee Corps

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recorded a Notice of Default (“NOD”) on August 30, 2011. (Ex. A to Compl., ECF No. 1.) A

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Notice of Trustee’s Sale was recorded on July 13, 2011. (Ex. B to Compl., ECF No. 1.) Plaintiff

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filed his Complaint on August 5, 2011.
Plaintiff’s Complaint alleges four causes of action: (1) common law fraud; (2) violation of

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the Fair Debt Collection Practices Act – first cause of action; (3) violation of the Fair Debt

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Collection Practices Act – second cause of action; and (4) extreme emotional distress. In a

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separate section of his Complaint, Plaintiff also “demands strict verified proof” “of a complete

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chain of legal possession” of the loan note and that “Defendant is the true holder” of the loan

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note.

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II.

LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action

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that fails to state a claim upon which relief can be granted. See North Star Int’l. v. Arizona Corp.

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Comm’n., 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule

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12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not

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give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See

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Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is

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sufficient to state a claim, the Court will take all material allegations as true and construe them in

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the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th

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Cir. 1986).
The Court, however, is not required to accept as true allegations that are merely conclusory,

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unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State

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Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with

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conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is

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plausible, not just possible. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550

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U.S. at 555) (emphasis added).

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A court may also dismiss a complaint pursuant to Federal Rule of Civil Procedure 41(b)

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for failure to comply with Federal Rule of Civil Procedure 8(a). Hearns v. San Bernardino Police

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Dept., 530 F.3d 1124, 1129 (9th Cir.2008). Rule 8(a)(2) requires that a plaintiff's complaint

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contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”

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Fed. R. Civ. P. 8(a)(2). “Prolix, confusing complaints” should be dismissed because “they impose

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unfair burdens on litigants and judges.” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir.1996).

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Mindful of the fact that the Supreme Court has “instructed the federal courts to liberally construe

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the ‘inartful pleading’ of pro se litigants,” Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir.

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1987), the Court will view Plaintiff’s pleadings with the appropriate degree of leniency.

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“Generally, a district court may not consider any material beyond the pleadings in ruling

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on a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the

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complaint may be considered on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner

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& Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly, “documents

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whose contents are alleged in a complaint and whose authenticity no party questions, but which

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are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6)

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motion to dismiss” without converting the motion to dismiss into a motion for summary

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judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule of Evidence

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201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay Beer Distrib.,

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798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside

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of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See

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Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).

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If the court grants a motion to dismiss, it must then decide whether to grant leave to

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amend. The court should “freely give” leave to amend when there is no “undue delay, bad

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faith[,] dilatory motive on the part of the movant . . . undue prejudice to the opposing party by

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virtue of . . . the amendment, [or] futility of the amendment . . . .” Fed. R. Civ. P. 15(a); Foman v.

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Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is only denied when it is clear that

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the deficiencies of the complaint cannot be cured by amendment. See DeSoto v. Yellow Freight

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Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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III.

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DISCUSSION
As discussed below, the Court finds that Plaintiff has failed to state a claim pursuant to

Rule 12(b)(6), and his Complaint will therefore be dismissed with leave to amend.

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1.

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To prove a claim for fraud or intentional misrepresentation, a plaintiff must establish three

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Common law fraud

factors: (1) a false representation by the defendant that is made with either knowledge or belief

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that it is false or without sufficient foundation; (2) an intent to induce another’s reliance; and

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(3) damages that result from this reliance. Guthrie v. Argent Mort. Co., LLC, No. 2:11-cv-1811-

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JCM-PAL, 2011 WL 6140660, at * 2 (D. Nev. Dec. 9, 2011) (citing Nelson v. Heer, 163 P.3d

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420, 426 (Nev. 2007)). A claim of “fraud or mistake” must be alleged “with particularity.” Fed.

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R. Civ. P. 9(b); see also Desaigoudar v. Meyercord, 223 F.3d 1020, 1022 (9th Cir. 2000)

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(“Federal Rule of Civil Procedure 9(b) ... require[s] [plaintiff] to plead her case with a high

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degree of meticulousness.”). A complaint alleging fraud or mistake must include allegations of

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the time, place, and specific content of the alleged false representations and the identities of the

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parties involved. See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

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Here, Plaintiff has not alleged with sufficient particularity the circumstances constituting

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fraud on the part of Defendant. Plaintiff’s allegations center around the Notice of Breach and

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Default, and the Notice of Trustee’s Sale sent by Defendant, alleging that the demands for

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payment were knowingly false. Plaintiff alleges that “Defendant knew, or should have known

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that said demand was made without standing or capacity on the part of Defendant.” Plaintiff

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does not allege the specific false statements in the notices or the facts leading him to allege that

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this demand was made without standing or capacity on the part of Defendant. Accordingly, this

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claim must be dismissed.

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2.

Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.

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“Foreclosure does not constitute debt collection under the Fair Debt Collection Practices

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Act (‘FDCPA’).” Smith v. CommunityLending, Inc., 773 F.Supp.2d 941, 944 (D. Nev. 2011).

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“Although the Ninth Circuit has not ruled on the question, the district courts of this Circuit have

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held that the foreclosure of a mortgage in and of itself does not constitute debt collection as

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contemplated by the FDCPA.” Id.; see also Mansour v. Cal-Western Reconveyance Corp., 618

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F.Supp.2d 1178, 1182 (9th Cir. 2009).

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Plaintiff alleges violations of the FDCPA based on the Notice of Breach and Default and

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the Notice of Trustee’s Sale. Plaintiff makes no allegations or arguments demonstrating that a

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cause of action exists under the FDCPA for notices such as these, sent by an agent for a

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beneficiary of a loan note, and the Court finds no such support. Accordingly, this claim must be

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dismissed.

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3.

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Although Plaintiff titles this cause of action, “Extreme Emotional Distress,” his

Extreme Emotional Distress

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allegations appear to describe a cause of action for negligent infliction of emotional distress. In

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order to establish a claim for intentional or negligent infliction of emotional distress, a “plaintiff

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needs to show ‘extreme and outrageous conduct with either the intention of, or reckless disregard

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for, causing emotional distress.’” Nevada v. Eighth Judicial Dist. Court ex rel. County of Clark,

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42 P.3d 233, 241 (Nev. 2002) (quoting Shoen v. Amerco, Inc., 896 P.2d 469, 476 (1995)). Here,

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Plaintiff has not alleged any facts constituting extreme and outrageous conduct on the part of

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Defendant, and his claim must therefore be dismissed.
Because Plaintiff is representing himself pro se, the Court gives him leniency in amending

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the Complaint. If Plaintiff can do so, he is given leave to amend his Complaint to cure the

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deficiencies described above by June 11, 2012.

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IV.

CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 6) is GRANTED.

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IT IS FURTHER ORDERED that Plaintiff is given leave to amend his Complaint

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consistent with this order by June 11, 2012.

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DATED this 18th day of May, 2012.

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______________________________
Gloria M. Navarro
United States District Judge

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