Burd v. J.P. Morgan Chase et al

Filing 13

ORDER Granting 4 Defendants' Motion to Dismiss without prejudice. Signed by Judge James C. Mahan on 04/25/2013. (Copies have been distributed pursuant to the NEF - AC)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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RACHEL BURD,

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2:13-CV-337 JCM (PAL)

Plaintiff(s),

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v.

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JP MORGAN CHASE and BANK OF
NEW YORK MELLON
,

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Defendant(s).

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ORDER

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Presently before the court is defendants JP Morgan Chase and Bank of New York Mellon’s

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motion to dismiss. (Doc. # 4). Pro se plaintiff Rachel Burd responded (doc. # 8), and defendants

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filed a reply (doc. # 9).

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I.

Background Facts

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On or about June 30, 2006, plaintiff purchased property located at 3017 Prairie Princess

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Avenue in North Las Vegas (“the property”). (Doc. 4-1, Ex. A). Plaintiff executed a promissory

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note in the amount of $232,950 in favor of Countrywide Bank, N.A., which was secured by a deed

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of trust against the property naming Mortgage Electronic Registration System, Inc. (“MERS”) as the

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beneficiary. (Id.). CTC Real Estate Services was named as the trustee for the deed of trust. (Id.).

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On October 6, 2009, MERS executed a corporation assignment of deed of trust, assigning

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the deed to the Bank of New York Mellon (“BNY”) as the successor in interest of JP Morgan Chase.

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(Id. at Ex. B). Subsequently BNY executed a substitution of trustee, naming ReconTrust Company

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James C. Mahan
U.S. District Judge

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as trustee. (Id. at Ex. C).

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Also, on October 6, 2009, ReconTrust Company recorded a notice of default. (Id. at Ex. D).

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ReconTrust Company recorded a rescission of the notice of default on April 8, 2010. (Id. at Ex. E).

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A notice of trustee’s sale was recorded by ReconTrust Company on August 3, 2010. (Id. at Ex. F).

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A foreclosure mediation certificate was recorded by ReconTrust Company on October 25, 2010, and

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notices of trustee’s sale were recorded on October 25, 2010, and March 15, 2011. (Id. at Exs. G-I).

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The property was sold at a trustee’s sale on June 2, 2011, and a trustee’s deed upon sale was recorded

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on June 21, 2011. (Id. at Ex. J)

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Plaintiff filed her complaint on February 4, 2013, in state court. (Doc. # 1, Ex. A). Although

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not abundantly clear, the court, in fairness, construes plaintiff’s pro se complaint to allege the

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following claims: (1) securitization, (2) validity of assignment, (3) misrepresentation and fraud, and

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(4) quiet title. (Id.). Defendants removed the case on February 27, 2013 (doc. # 1), and subsequently

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filed the instant motion to dismiss (doc. # 4).

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II.

Legal Standard

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A.

Rule 8

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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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James C. Mahan
U.S. District Judge

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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. July 25, 2011). The Starr court stated, “First, to be entitled to the presumption of

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

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

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

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

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

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

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

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may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896

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F.2d 1542, 1555 n.19 (9th Cir.1990) (citations omitted). Similarly, “documents whose contents are

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alleged in a complaint and whose authenticity no party questions, but which are not physically

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attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without

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converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d

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449, 454 (9th Cir. 1994). Under Fed. R. Evid. 201, a court may take judicial notice of “matters of

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public record.” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if

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the district court considers materials outside of the pleadings, the motion to dismiss is converted into

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James C. Mahan
U.S. District Judge

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a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912,

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925 (9th Cir. 2001).

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B.

Rule 9

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Rule 9 provides that for a party to allege fraud, he “must state with particularity the

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circumstances constituting fraud . . . . Malice, intent, knowledge, and other conditions of a person’s

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mind may be alleged generally.” FED. R. CIV. P. 9(b). Assertions of fraud must include “the who,

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what, when, where, and how” of the misconduct alleged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d

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1097, 1106 (9th Cir. 2003). Rule 9 serves several purposes, including: (1) providing defendants with

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adequate notice so they are able to defend the charge and deter plaintiffs from filing complaints “‘as

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a pretext for the discovery of unknown wrongs’; (2) to protect those whose reputation would be

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harmed as a result of being subject to fraud charges; and (3) to ‘prohibit [ ] plaintiff[s] from

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unilaterally imposing upon the court, the parties and society enormous social and economic costs

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absent some factual basis.’” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009)

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(quoting In re Stac Elecs. Sec Litig., 89 F.3d 1399, 1405 (9th Cir. 1996) (citation omitted)).

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III.

Discussion

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As an initial matter, the court acknowledges that the complaint and opposition to the instant

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motion are pro se, which is held to less stringent standards. Erickson v. Pardus, 551 U.S. 89, 94

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(2007) (“A document filed pro se is to be liberally construed, and a pro se complaint, however

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inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by

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lawyers.”) (internal quotations and citations omitted). However, “pro se litigants in the ordinary civil

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case should not be treated more favorably than parties with attorneys of record.” Jacobsen v. Filler,

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790 F.2d 1362, 1364 (9th Cir.1986).

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Defendants argue that plaintiff has not met the proper pleading requirements under Fed. R.

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Civ. P. 9 and that plaintiff’s complaint presents no potentially viable claims for relief against

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defendants. Plaintiff asserts that her complaint meets and exceeds the standard governed by Fed. R.

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Civ. P. 8(a).

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...

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James C. Mahan
U.S. District Judge

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A.

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Securitization does not inherently change the “existing legal relationship between the parties

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to the extent that the original parties cease to occupy the roles they did at the closing.” Reyes v.

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GMAC Mortgage, LLC., 2:11-cv-100-JCM-RJJ, 2011 WL 1322775, *2 (D. Nev. 2011).

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“Securitization of a loan does not in fact alter or affect the legal beneficiary’s standing to enforce the

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deed of trust.” Id. (collecting cases). Since “securitization merely creates a separate contract,

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distinct from plaintiffs’ debt obligations[ ] under the note and does not change the relationship of

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the parties in any way, plaintiffs’ claims arising out of the securitization fail.” Id. at *3 (citing

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Commonwealth Prop. Advocates, LLC v. First Horizon Home Loan Corp., No. 2:10-cv-375, 2010

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Securitization

WL 4788209, at *4 (D. Utah Nov. 16, 2010) (quotation marks and citation omitted)).

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The court construes plaintiff’s pro se complaint to allege claims premised upon the

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securitization of the note. (Doc. # 1-1, 2: ¶ 4). To the extent that plaintiff’s claims rely upon

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securitization of the note changing the legal relationship of the parties, these claims are dismissed

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because there are no grounds in which relief may be granted.

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B.

Validity of Assignment

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It is well-established that “a third party lacks standing to raise a violation of a [Pooling and

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Servicing Agreement (‘PSA’)].” Benoist v. U.S. Bank N.A., 2012 WL 3202180, at *5 (D.Haw. Aug.

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3, 2012) (collecting cases); see also, e.g., Viloria v. Premium Capital Funding LLC, 2012 WL

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4361252, at *3 (D.Nev. Sept. 20, 2012) (“Plaintiffs lack standing . . . to enforce or assert claims

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arising under the trust purchase agreement or [PSA] surrounding the ‘securitization’ of the Note.”)

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(collecting cases).

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The court construes plaintiff’s pro se complaint to allege that the assignment of the note and

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deed of trust was invalid for violating various provisions of the PSA. (Doc. # 1-1, 2: ¶ 3). However,

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even if these allegations are true, plaintiff was neither a party, nor an intended third-party beneficiary,

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to the assignment of the PSA. Plaintiff has also failed to assert that she is a party to, or a thirty-party

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of, the PSA’s terms or the assignment of deed of trust. Therefore, plaintiff does not have standing

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to allege any violations of the PSA or attack the validity of the assignment.

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James C. Mahan
U.S. District Judge

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Plaintiff’s implied claims based on alleged PSA violations or the validity of the assignment
are dismissed.

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C.

Misrepresentation and Fraud

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Intentional misrepresentation requires that the plaintiff state “(1) the defendant made a false

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representation; (2) with the knowledge or belief that the representation was false (knowledge that

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it had an insufficient basis for making the representation); (3) and was made with the intention of

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inducing the party to act or refrain from acting upon the misrepresentation; (4) plaintiff justifiably

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relied upon the misrepresentation; and (5) plaintiff suffered damage as a result of the reliance.”

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Scaffidi v. United Nissan, 425 F. Supp. 2d 1159, 1168-69 (D. Nev. 2005).

Intentional

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misrepresentation and negligent misrepresentation are related, the difference being “that a negligent

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misrepresentation is made without a reasonable basis for believing its truthfulness.” Id. at 1170.

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“[A] plaintiff asserting fraud against a corporate [entity] must state the names of the persons

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who made the allegedly fraudulent representations, their authority to speak, to whom they spoke,

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what they said or wrote, and when it was said or written.” Roberts v. McCarthy, no. 2:11-cv-00080,

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2010 WL 1363811, at *3 (D. Nev. April 11, 2011) (quoting Spencer v. DHI Mortg., Inc., 642

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F.Supp.2d 1153, 1164 (E.D. Cal. 2009)).

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Plaintiff’s reliance upon Rule 8(a)’s requirement of a “short and plain statement of the claim

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showing that the pleader is entitled to relief” is not applicable in cases of fraud. Fraud claims must

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meet the heightened pleading standard of Rule 9 and allege the who, what, when where, and how.

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Plaintiff’s complaint only states that she had a “justified reliance on truthfulness of ownership and

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proper assignments which was misrepresented by defendant’s account of ownership beneficiary

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through endorsements, assignments, notice of default and notice of trustee sale.” (Doc. # 1-1, 2: ¶

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5).

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Plaintiff fails to provide the time, place, substance of the alleged misrepresentation, or the

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identity of the person who made the alleged misrepresentation. Thus, even with plaintiff’s complaint

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construed liberally, she has failed to make sufficient allegations under the heighten pleading

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standard. Further, plaintiff has failed to provide any factual assertions that she justifiably relied on

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James C. Mahan
U.S. District Judge

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the alleged misrepresentation or allege how her reliance on the misrepresentation caused her to suffer

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her damages.

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Since plaintiff has failed to adequately plead or allege fraud or misrepresentation, these
claims are dismissed.

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D.

Quiet Title

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“A quiet title claim requires a plaintiff to allege that the defendant is unlawfully asserting an

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adverse claim to title to real property.” Kemberling v. Ocwen Loan Servicing, LLC, 2:09-CV-00567-

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RCJ (LRL), 2009 WL 5039495, at *2 (D. Nev. 2009). Where such adverse claims exist, the party

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seeking to have another party’s right to property extinguished bears the burden of overcoming the

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“presumption in favor of the record titleholder.” See Breliant v. Preferred Corp., 918 P.2d 314, 318

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(Nev. 1996); see also Clay v. Scheeline Banking & Trust Co., 159 P. 1080, 1082 (Nev. 1916).

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The court construes plaintiff’s pro se complaint to assert a claim for quiet title. (Doc. # 1-1,

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2: ¶ 5). In plaintiff’s complaint she asserts no other party claiming any interest in the property that

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is adverse to plaintiff’s title or the deed of trust. She also has not identified any party with an adverse

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interest. There is not presently a dispute between two or more parties over the right to foreclosure

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under the mortgage. Plaintiff has not overcome the burden of a “presumption in favor of the record

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titleholder.” Therefore, plaintiff’s quiet title is dismissed.

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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants JP Morgan

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Chase and Bank of New York Mellon’s motion to dismiss (doc. # 4) be, and the same hereby is,

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GRANTED without prejudice.

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DATED April 25, 2013.

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

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