Prince v. Loop Capital Markets, LLC., et al

Filing 20

ORDER Granting with prejudice 5 Motion to Dismiss and 18 Joinder. Signed by Chief Judge Robert C. Jones on 10/16/2013. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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THOMAS PRINCE,

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Plaintiff,
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v.
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LOOP CAPITAL MARKETS, LLC, WELLS )
FARGO BANK, N.A., and BANK OF
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AMERICA,
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Defendants.
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___________________________________ )

Pursuant to Fed. R. Civ. P. 12(b)(6) (#5).
BACKGROUND

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ORDER

Currently before the Court is Defendants’ Motion to Dismiss Plaintiff’s Complaint

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2:13-cv-429-RCJ-GWF

I.

Foreclosure Facts

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Plaintiff Thomas R. Prince and, his wife, Sarah K. Prince executed a note secured by

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a deed of trust on a piece of property located at 8138 Villa Duenas Court, Las Vegas, Nevada,

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which was recorded in Clark County on August 14, 2009. (Deed of Trust (#5-1) at 2-3). The

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mortgage dated, August 11, 2009, was for $274,928. (Id. at 2). The lender on the deed of

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trust was New Line Mortgage, Div. Republic Mortgage Home Loans, LLC. (Id.). The trustee

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on the deed of trust was Equity Title of Nevada. (Id.). The Mortgage Electronic Registration

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Systems, Inc. (“MERS”) was named as “nominee for Lender . . . and Lender’s successors and

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assigns” and claimed to be the beneficiary under the security instrument. (Id.).

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On August 16, 2012, MERS, as the nominee for New Line Mortgage Div. Republic

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Mortgage Home Loans, LLC, executed a corporate assignment of the deed of trust and
granted, assigned, and transferred all beneficial interest in the deed of trust to Bank of

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America, N.A. (Corporate Assignment of Deed of Trust (#5-2) at 3). On December 19, 2012,

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MERS, as nominee for New Line Mortgage Div. Republic Mortgage Home Loans, LLC,

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executed an assignment of deed of trust and assigned and transferred the right, title, and

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interest in the deed of trust to Bank of America, N.A. (Assignment of Deed of Trust (#5-3) at

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2).
No notice of default has been filed in this case. (See Mot. to Dismiss (#5) at 7 n.4).

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II.

Complaint
In March 2013, Defendants Wells Fargo Bank, N.A. and Bank of America, N.A. filed

a petition for removal based on diversity jurisdiction.

(Pet. for Removal (#1) at 1-2).

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Defendants attached pro se Plaintiff Thomas Prince’s complaint which had been filed in the

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Eighth Judicial District in Clark County, Nevada, against Defendants Loop Capital Markets,

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LLC, Wells Fargo Bank, N.A., and Bank of America (collectively “Defendants”) for intentional

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misrepresentation and negligent misrepresentation. (Compl. (#1-1) at 2-3).

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The three-page complaint alleged the following. (Id. at 3). Plaintiff had entered into a

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mortgage with New Line Mortgage on or about August 11, 2009 for real property located at

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8138 Villa Duenas Court, Las Vegas, Nevada. (Id.). The deed of trust was pooled and

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securitized in a trust whose lead beneficiaries or managers were Defendants.

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Certificates of ownership were later sold and discovery revealed that a proper endorsement

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of the note at the time of formation of the securitized trust did not occur. (Id.). Plaintiff had “a

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justified reliance on truthfulness of ownership and proper assignments which was

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misrepresented by defendants’ account of ownership beneficiary through endorsements,

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assignments, and Notice of Default.” (Id.). Plaintiff alleged that he had directly suffered loss

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of income and “deformation of character as a result of the intentional misrepresentation

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orchestrated” by Defendants. (Id.). Plaintiff sought “relief of reconveyance of said real

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property free of levy and lien, and equitable relief of $275,000.00 plus incurred legal fees.”

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(Id.). Plaintiff also sought injunctive relief caused by the foreclosure procedure of the property

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during litigation. (Id. at 4).

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The pending motion now follows.
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(Id.).

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LEGAL STANDARD

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When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court

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must accept as true all factual allegations in the complaint as well as all reasonable inferences

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that may be drawn from such allegations. LSO, Ltd. v. Stroh, 205 F.3d 1146, 1150 n.2 (9th

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Cir. 2000). Such allegations must be construed in the light most favorable to the nonmoving

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party. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). In general, the court

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should only look to the contents of the complaint during its review of a Rule 12(b)(6) motion

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to dismiss. However, the court may consider documents attached to the complaint or referred

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to in the complaint whose authenticity no party questions. Id.; see Durning v. First Boston

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Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).

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The analysis and purpose of a Rule 12(b)(6) motion to dismiss for failure to state a

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claim is to test the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th

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Cir. 2001). The issue is not whether a plaintiff will ultimately prevail but whether the claimant

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is entitled to offer evidence to support the claims. Gilligan v. Jamco Dev. Corp., 108 F.3d 246,

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249 (9th Cir. 1997) (quotations omitted). To avoid a Rule 12(b)(6) dismissal, a complaint does

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not need detailed factual allegations; rather, it must plead “enough facts to state a claim to

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relief that is plausible on its face.” Clemens v. Daimler Chrysler Corp., 534 F.3d 1017, 1022

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(9th Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955,

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1964, 167 L.Ed.2d 929 (2007)); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949,

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173 L.Ed.2d 868 (2009) (stating that a “claim has facial plausibility when the plaintiff pleads

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factual content that allows the court to draw the reasonable inference that the defendant is

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liable for the misconduct alleged”). Even though a complaint does not need “detailed factual

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allegations” to pass muster under 12(b)(6) consideration, the factual allegations “must be

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enough to raise a right to relief above the speculative level . . . on the assumption that all the

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allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555, 127

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S.Ct. at 1965. “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the

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elements of a cause of action will not do.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. “Nor

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does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
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enhancements.’” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966).

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

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

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bad faith or dilatory motive on the part of the movant . . . undue prejudice to the opposing party

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by virtue of allowance of the amendment, [or] futility of amendment.” Fed. R. Civ. P. 15(a)(2);

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Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Generally,

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leave to amend is only denied when it is clear that the deficiencies of the complaint cannot be

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cured by amendment. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.

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1992).
DISCUSSION

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Defendants Wells Fargo Bank, N.A. and Bank of America, N.A. file a motion to dismiss

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Plaintiff’s complaint in its entirety with prejudice.1 (Mot. to Dismiss (#5) at 1). Defendants

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assert that this Court has repeatedly rejected the argument that Plaintiff’s debt under the note

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and deed of trust are satisfied because the mortgage was pooled and securitized. (Id. at 4).

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Defendants argue that Plaintiff fails to state a claim for intentional misrepresentation with

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Rule 9(b) specificity. (Id. at 6-8).
Plaintiff, pro se, filed a response and Defendants filed a reply. (Opp’n to Mot. to

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Dismiss (#10); Reply to Mot. to Dismiss (#11)).

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As an initial matter, Federal Rule of Civil Procedure 9(b)’s heightened pleading standard

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applies to claims for fraud, intentional misrepresentation, and negligent misrepresentation.

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G.K. Las Vegas Ltd. P’ship v. Simon Prop. Grp., Inc., 460 F.Supp.2d 1222, 1238, 1244 (D.

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Nev. 2006). Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state with

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particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and

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other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). Under

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Rule 9(b), a plaintiff must be specific enough to give defendants notice of the particular

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misconduct so that they can defend against the charge and not just deny that they have done

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Defendant Loop Capital Markets LLC filed a joinder to the motion to dismiss. (Joinder

(#18)).
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anything wrong. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003).

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“Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the

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misconduct charged.” Id. A “plaintiff must set forth more than the neutral facts necessary to

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identify the transaction. The plaintiff must set forth what is false or misleading about a

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statement, and why it is false.” Id.

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In Nevada, negligent misrepresentation is defined as “[o]ne who, in the course of his

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business, profession or employment, or in any other action in which he has a pecuniary

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interest, supplies false information for the guidance of others in their business transactions,

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is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the

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information, if he fails to exercise reasonable care or competence in obtaining or

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communicating the information.” Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1387 (Nev.

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1998). In Nevada, the elements of intentional representation are: “a false representation made

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with knowledge or belief that it is false or without a sufficient basis of information, intent to

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induce reliance, and damage resulting from the reliance.” Collins v. Burns, 741 P.2d 819, 821

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(Nev. 1987).

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The Court finds that Plaintiff’s three-page complaint fails to plead intentional and

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negligent misrepresentation with Rule 9(b) specificity. The complaint does not identify a false

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or misleading statement or explain why the statement was false. Additionally, Plaintiff does

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not identify the who, what, when, where, or how of the alleged misconduct but instead states

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that “[d]iscovery reveals” that the alleged misconduct occurred. (See Compl. (#1-1) at 3). As

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such, the complaint fails to state a claim.

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Additionally, the Court finds that amendment to the complaint would be futile. Plaintiff’s

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entire complaint is based on the idea that securitization inherently changes the existing legal

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relationship between the parties to the extent that the original parties cease to occupy the roles

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they did at closing.

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2:11-cv-100-JCM-RJJ, 2011 WL 1322775, *2 (D. Nev. Apr. 5, 2011). Courts in this district

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have rejected this argument “because the securitization of a loan does not in fact alter or affect

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the legal beneficiary’s standing to enforce the deed of trust.” Id. Courts in this district have

(See Compl. (#1-1) at 3); see Reyes v. GMAC Mortgage LLC,

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found that claims arising out of securitization fail because “securitization merely creates a

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separate contract, distinct from plaintiffs’ debt obligations under the note and does not change

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the relationship of the parties in any way.” Id. (internal alterations and quotations omitted).

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As such, the Court finds that any amendment to Plaintiff’s securitization argument is futile and

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denies leave to amend the complaint. Accordingly, this Court grants Defendants Wells Fargo

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Bank, N.A. and Bank of America, N.A.’s Motion to Dismiss (#5) and Loop Capital Markets

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LLC’s Joinder to the Motion to Dismiss (#18) in its entirety with prejudice.
CONCLUSION

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For the foregoing reasons, IT IS ORDERED that Defendants Wells Fargo Bank, N.A.

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and Bank of America, N.A.’s Motion to Dismiss (#5) is GRANTED in its entirety with prejudice.

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IT IS FURTHER ORDERED that Loop Capital Markets LLC’s Joinder to the Motion to

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Dismiss (#18) is GRANTED in its entirety with prejudice.
There are no remaining claims or parties in this case. The Clerk of the Court shall enter
judgment accordingly.

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DATED: This _____ day of October, 2013.
15th

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_________________________________
United States District Judge

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