Hernandez v. Saxon Mortgage Services et al

Filing 36

ORDER that 5 Motion to Dismiss is GRANTED. FURTHER ORDERED that 22 Motion to Dismiss is GRANTED. Signed by Judge James C. Mahan on 7/1/13. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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PERLA HERNANDEZ,

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2:13-CV-323 JCM (NJK)

Plaintiff(s),
v.
SAXON MORTGAGE SERVICES, et
al.,

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Defendant(s).

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ORDER

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Presently before the court is defendants’, NovaStar Mortgage, Inc., and Ocwen Loan Services

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LLC, motion to dismiss. (Doc. # 5). Pro se plaintiff Perla Hernandez filed a response in opposition

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(doc. # 8), and the defendants filed a reply (doc. # 15). Defendants Quality Loan Service

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Corporation and Mortgage Electronic Registration Services, Inc. filed a joinder to the motion to

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dismiss. (Docs. # 10 & 18).

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Also before the court is defendant Saxon Mortgage Services’ motion to dismiss. (Doc. # 22).

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Plaintiff has not responded and the deadline date has passed. Defendant Saxon filed a notice of non-

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opposition. (Doc. # 34).

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Also before the court is defendants’ Bank of New York Mellon, Mortgage Electronic

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Registration Services, Inc., NovaStar Mortgage, Inc., and Ocwen Loan Services LLC, motion to

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quash summons. (Doc. # 35).

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James C. Mahan
U.S. District Judge

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I.

Background

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This case is a mortgage and foreclosure related lawsuit by a pro se plaintiff. Plaintiff

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purchased property at 12113 Vista Linda Avenue, Las Vegas, Nevada. On or about March 26, 2006,

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plaintiff executed a note secured by a deed of trust on the property.1 The deed of trust was recorded

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on March 30, 2006.

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NovaStar originally serviced plaintiff’s loan. NovaStar transferred the loan to Saxon on or

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about November 1, 2007. On or about May 7, 2010, Saxon transferred the loan to Ocwen for

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servicing.

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Mortgage Electronic Registration Systems, Inc. (“MERS”) was named as nominal beneficiary

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under the deed of trust. MERS assigned the deed of trust to Bank of New York Mellon (“BNY”)

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on or about March 21, 2009. That same day, BNY substituted Quality Loan Service Corporation

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(“Quality”) as trustee under the deed of trust.

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On or about March 24, 2009, Quality recorded a notice of breach and default of election to

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cause sale of real property under the deed of trust. Plaintiff began defaulting on her mortgage

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payments as early as December 1, 2008. A notice of trustee’s sale was recorded on April 30, 2012.

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A trustee’s sale was held on May 31, 2012, and BNY purchased the property via a credit bid in the

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amount of $375,000.

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Based on the foregoing, plaintiff filed the instant suit against the following defendants:

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Saxon, Ocwen, Quality, NovaStar, BNY, First National Bank of Arizona, and MERS. The

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complaint does not meaningfully differentiate between any of the defendants. The complaint was

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filed in state court and defendants removed to this court. The complaint alleges the following six

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causes of action: (1) intentional misrepresentation/fraud; (2) negligence per se; (3) negligence; (4)

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rescission; (5) wrongful foreclosure; and, (6) quiet title.

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James C. Mahan
U.S. District Judge

The court judicially recognizes the following documents properly recorded in Clark County: the note, the deed
of trust, assignments of the deed of trust, notice of breach and default, election to cause sale of real property, and notice
of trustee’s sale.

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II.

Legal Standard

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A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can

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be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and plain

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statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell

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Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual

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allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements

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of a cause of action.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). “Factual

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allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus,

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to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim

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to relief that is plausible on its face.” Iqbal, 129 S.Ct. at 1949 (citation omitted).

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In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when

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considering motions to dismiss. First, the court must accept as true all well-pled factual allegations

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in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950.

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Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not

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suffice. Id. at 1949. Second, the court must consider whether the factual allegations in the complaint

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allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's

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complaint alleges facts that allows the court to draw a reasonable inference that the defendant is

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liable for the alleged misconduct. Id. at 1949.

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Where the complaint does not “permit the court to infer more than the mere possibility of

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misconduct, the complaint has alleged, but it has not shown, that the pleader is entitled to relief.”

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Id. (internal quotations and alterations omitted). When the allegations in a complaint have not

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crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550

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U.S. at 570.

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The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202,

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1216 (9th Cir. 2011). The Starr court stated, “First, to be entitled to the presumption of truth,

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allegations in a complaint or counterclaim may not simply recite the elements of a cause of action,

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but must contain sufficient allegations of underlying facts to give fair notice and to enable the

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James C. Mahan
U.S. District Judge

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opposing party to defend itself effectively. Second, the factual allegations that are taken as true must

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plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to

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be subjected to the expense of discovery and continued litigation.” Id.

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III.

Discussion

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The court will address each of the six causes of action in turn. As an initial matter, plaintiff

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does not substantively respond to the motions to dismiss. Plaintiff filed a response less than a page

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a length. Attached to the response was an order from a Florida state court applying Florida state law

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to a judicial foreclosure. This case involves the application of Nevada state law to a trustee sale, a

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non-judicial proceeding. Additionally, plaintiff did not file oppositions to all of the motions to

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dismiss.

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A.

Intentional Misrepresentation/Fraud

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To state a claim for fraudulent misrepresentation, a plaintiff must allege: (1) that defendant

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made a false representation; (2) with knowledge of its falsity; and, (3) with the intent to induce

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reliance on the misrepresentation. Nau v. Sellman, 757 P.2d 358, 360 (Nev. 1988).

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“In alleging fraud or mistake, a party must state with particularity the circumstances

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constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “[A] plaintiff asserting fraud against a corporate

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[entity] must state the names of the persons who made the allegedly fraudulent representations, their

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authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”

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Roberts v. McCarthy, no. 2:11-cv-00080, 2010 WL 1363811, at *3 (D. Nev. April 11, 2011) (quoting

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Spencer v. DHI Mortg., Inc., 642 F.Supp.2d 1153, 1164 (E.D. Cal. 2009).

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After reviewing the complaint, the court finds that it states no specific facts against any of
the defendants. The complaint does not allege the who, what, when, where, and how.

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Additionally, the intentional misrepresentation and/or fraud claims are time barred. These

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causes of action must be brought within three years. NRS 11.190(3)(d). The loan transaction was

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completed on March 23, 2006, giving plaintiff until March 23, 2009, to file her complaint. The

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complaint was not filed in state court until November 27, 2012. To the extent her fraud claims are

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based on the notice of default, the notice of default was recorded on March 24, 2009. The action

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James C. Mahan
U.S. District Judge

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needed to be filed on or before March 24, 2012. Plaintiff filed this action in state court on November

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27, 2012. The claims are time barred.

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Plaintiff’s cause of action for intentional misrepresentation and/or fraud is dismissed against
defendants Saxon, Ocwen, Quality, NovaStar, BNY, and MERS.

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B.

Negligence Per Se

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Plaintiff’s negligence per se claims are based on violations of the Truth in Lending Act

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(“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”). Even assuming plaintiff could

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recover under a negligence per se theory for violations of RESPA and TILA, the applicable statute

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of limitations is two years for negligence per se claims. NRS 11.190(4)(e). Plaintiff’s complaint

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states that the causes of action is based upon conduct “[a]t the time the loan transaction occurred.”

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(Compl. at ¶22). The claims are time-barred because they needed to have been filed on or before

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March 23, 2008.

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Additionally, even looking at the allegations in the complaint, the plaintiff has not stated a

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proper claim for RESPA or TILA because the complaint contains only conclusory allegations.

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Plaintiffs second cause of action is dismissed against defendants Saxon, Ocwen, Quality, NovaStar,

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BNY, and MERS.

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C.

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Plaintiff’s third cause of action alleges negligence against defendant Quality only. The

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complaint alleges that Quality was negligent because it did not properly conduct the foreclosure sale.

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The allegations really sound in wrongful foreclosure allegations, which are discussed more

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thoroughly in section III.E. infra. To the extent plaintiff is attempting to allege negligence against

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Quality then those claims are barred by the economic loss doctrine.

Negligence

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“[T]he economic loss doctrine marks the fundamental boundary between contract law, which

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is designed to enforce the expectancy interests of the parties, and tort law, which imposes a duty of

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reasonable care and thereby generally encourages citizens to avoid causing physical harms to others.”

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Terracon Consultants Western, Inc. v. Mandalay Resort Group, 125 Nev. 66, 72-73, 206 P.3d 81,

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86 (Nev. 2009). “[U]nless there is personal injury or property damage, a plaintiff may not recover

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James C. Mahan
U.S. District Judge

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in negligence for economic losses.” Id. All of plaintiff’s allegations are really contractual causes

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of action, and her claim for negligence is dismissed against Quality.

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D.

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“Rescission is an equitable remedy which totally abrogates a contract and which seeks to

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place the parties in the position they occupied prior to executing the contract.” Bergstrom v. Estate

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of DeVoe, 109 Nev. 575, 577, 854 P.2d 860, 861 (Nev. 1993). Upon rescission, the parties should

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be “returned as closely as possible to their respective positions prior to entering into the contract.”

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Id. A non-breaching party to the contract may either seek to rescind the contract or seek damages

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from the breach, but not both. Id.; see also Fuoroli v. Westgate Planet Hollywood Las Vegas, LLC,

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Rescission

no. 2:10-cv-2191-JCM, 2013 WL 431047, at *4 (D. Nev. Feb. 1, 2013).

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In this case, plaintiff has not properly alleged that she is a non-breaching party. Plaintiff has

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not properly alleged a breach of the contract or that the contract was void or voidable. Plaintiff, in

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fact, breached the contract by defaulting on their loans, and has not alleged that she is current.

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Plaintiff also fails to allege that she could return the money loaned to her to purchase the property.

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Plaintiff’s cause of action for rescission is dismissed against defendants Saxon, Ocwen, Quality,

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NovaStar, BNY, and MERS.

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E.

Wrongful Foreclosure

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“An action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can

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establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of

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condition or failure or performance existed on the mortgagor’s or trustor’s part which would have

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authorized the foreclose or exercise of the power of sale.” Collins v. Union Fed. Sav. & Loan Ass’n,

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99 Nev. 284, 304, 662 P.2d 610, 623 (Nev. 1983). “Therefore, the material issue of fact in a

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wrongful foreclosure claim is whether the trustor was in default when the power of sale was

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exercised.” Id.

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Plaintiff was in default at the time of her loan and has not alleged otherwise. Because

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plaintiff fails to allege that she was current on her loan or that she could tender full payment, her

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cause of action for wrongful foreclosure is dismissed against defendants Saxon, Ocwen, Quality,

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James C. Mahan
U.S. District Judge

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NovaStar, BNY, and MERS. See Winter v. Stearns Lending, Inc., 2:11-cv-00736-KJD-PAL, 2012

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WL 523698, at *2 (D. Nev. Feb. 16, 2012) (“Plaintiff’s wrongful foreclosure claims fail [ ] because

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Plaintiff does not dispute that she is in default and cannot cure the default.”).

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F.

Quiet Title

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Plaintiff asserts a claim for quiet title. “A trustor cannot quiet title without discharging his

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debt. The cloud upon his title persists until the debt is paid.” Lopez v. Bank of America, N.A., 2:12-

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cv-801-JCM-CWH, 2013 WL 1501449, at *3 (D. Nev. April 10, 2013) (applying Nevada law). “The

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purpose of a quiet title action is to establish one’s title against adverse claims to real property or any

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interest therein.” Hafiz v. Greenpoint Mortg. Funding, Inc., 652 F.Supp.2d 1039, 1049-50 (N.D. Cal.

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2009). In a quiet title action, the burden of proof rests with the plaintiff to provide good title in

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himself. Breliant v. Preferred Equities Corp., 918 P.2d 314, 318 (Nev. 1996).

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First, plaintiff has not alleged that she has free and clear title to the property. Second, she has

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not alleged any adverse interest she is seeking to quiet. A lien against her property, held as security

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by a defendant or anyone else, is not an interest adverse to her own. Both interests may exist in

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harmony, for one is a present interest and one is a future interest. For a plaintiff to quiet title, the

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plaintiff must show both that she holds good title to the property in question and that defendant is

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making a claim adverse to her interest. Plaintiff fails to plead either; therefore, she is not entitled to

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such relief. The quite title cause of action is dismissed against defendants Saxon, Ocwen, Quality,

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NovaStar, BNY, and MERS

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IV.

Conclusion

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Plaintiff alleged numerous causes of action against numerous defendants. The negligence

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cause of action was alleged against only Quality, and is dismissed. The remaining causes of action

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were alleged against all defendants. Every cause of action alleged is dismissed against defendants

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Saxon, Ocwen, Quality, NovaStar, BNY, and MERS. Defendant First National Bank of Arizona,

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LLC has yet to be served and is still a defendant subject to Federal Rule of Civil Procedure 4.

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James C. Mahan
U.S. District Judge

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants’, NovaStar

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Mortgage, Inc., and Ocwen Loan Services LLC, motion to dismiss (doc. # 5) be, and the same

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hereby, is GRANTED.

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IT IS FURTHER ORDERED that defendant Saxon Mortgage Services’ motion to dismiss
(doc. # 22) be, and the same hereby, is GRANTED.
DATED July 1, 2013.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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