Shum v. American Sterling Bank et al

Filing 26

ORDER granting 6 Motion to Dismiss. The Complaint is DISMISSED without prejudice. Plaintiff shall have until February 18, 2015 to file an Amended Complaint. Signed by Chief Judge Gloria M. Navarro on 1/21/2015. (Copies have been distributed pursuant to the NEF - DKJ)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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Philip H. Shum,
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Plaintiff,

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vs.
American Sterling Bank; et al.

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Defendants.

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Case No.: 2:14-cv-0973-GMN-PAL
ORDER

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

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Federal Home Loan Mortgage Corporation (“FHLMC”) and Mortgage Electronic Registration

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Systems, Inc. (“MERS”). Pro se Plaintiff Philip H. Shum filed a Response, (ECF No. 9), to

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which Defendants replied, (ECF No. 10).

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I.

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BACKGROUND
This case centers upon pro se Plaintiff Philip H. Shum’s allegations of mortgage fraud

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against Defendants American Sterling Bank, FHLMC, and MERS. (Compl., ECF No. 1-1).

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Plaintiff has a long litigious history with MERS, having filed two prior suits against it and

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various other entities in the District of Nevada, each involving similar claims. Shum v.

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Countrywide Home Loans, Inc., No. 2:11-cv-1932-GMN-RJJ, 2012 WL 4846150 (D. Nev. Oct.

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10, 2012); Shum v. BAC Bank Home Loans, N.A, No. 2:13-cv-1890, (D. Nev. February 13,

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2014). Both of these cases resulted in a final judgment in favor of the defendants as to all of

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Plaintiff’s claims.

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The Complaint alleges that Plaintiff executed a promissory note and Deed of Trust on

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September 24, 2007, that was secured by the property identified as “Spring Valley Unit #10B,

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Plat Book 32, Page 84, Lot 21, Block 3, in the Official Records of the Recorder’s Office of

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Clark County, Nevada.” (Compl. 2:10-14). The Deed of Trust named Defendant American

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Sterling Bank as the lender. (Id.). Plaintiff alleges that following the execution of the loan

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documents, a “qualifying trust” was created for which the sponsor and trustee was Defendant

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FHLMC. (Id. at 2:19-23). Though it implies such, the Complaint does not actually assert that

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there is any relationship between FHLMC’s “qualifying trust” and the loan documents at issue.

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Following these allegations, the Complaint lists various legal assertions regarding the

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transfer of promissory notes and deeds of trust, including, inter alia: “If the Deed of Trust and

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the Note are separated, foreclosure cannot legally occur”; “Once a loan has been securitized . . .

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the right to foreclose through the Deed of Trust is forever lost”; and “Once a Note is converted

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into a stock, or stock equivalent, it is not [sic] longer a Note.” (Id. at 3:3-4:17).

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Based on these allegations, the Complaint sets forth claims for fraud and “specific

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performance.” (Id. at 4:18-5:11). As relief, Plaintiff seeks title to the disputed property as well

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as fees and costs. (Id. at 5:14-17).

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In the instant Motion, Defendants argue that the fraud claim should be dismissed for

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failing to comply with Federal Rule of Civil Procedure 9 and that the “specific performance”

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claim should be dismissed because it cannot stand as an independent cause of action. (Mot. to

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Dism., ECF No. 6).

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II.

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LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon

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which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

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555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on

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which it rests, and although a court must take all factual allegations as true, legal conclusions

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couched as a factual allegation are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule

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12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements

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of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain

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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

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face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “A

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claim has facial plausibility when the plaintiff pleads factual content that allows the court to

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draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This

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standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

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If the court grants a motion to dismiss for failure to state a claim, leave to amend should

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be granted unless it is clear that the deficiencies of the complaint cannot be cured by

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amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant

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to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in

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the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the

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movant, repeated failure to cure deficiencies by amendments previously allowed, undue

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prejudice to the opposing party by virtue of allowance of the amendment, futility of the

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amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).

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III.

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DISCUSSION
As an initial matter, in light of Plaintiff’s status as a pro se litigant, the Court has

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liberally construed his filings, holding them to standards less stringent than formal pleadings

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drafted by attorneys. See Erickson v. Pardus, 551 U.S. 89, 94 (2007).

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Pursuant to Rule 9(b), claims of “fraud or mistake” must be alleged “with particularity.”

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Fed. R. Civ. P. 9(b). A complaint alleging fraud or mistake must include allegations of the

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

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

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does not allow a complaint to merely lump multiple defendants together but requires plaintiffs

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to differentiate their allegations when suing more than one defendant and inform each

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defendant separately of the allegations surrounding his alleged participation in the fraud.” Id. at

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764-65 (internal quotations and alterations omitted).

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Though the Complaint states generally that “Defendants have made false statements to

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Plaintiff regarding the security of the contract,” Plaintiff does not specify what these statements

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were, when they were made, or which Defendant made them. (Compl. 4:22-23, ECF No. 1-1).

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Confoundingly, despite the fact that Plaintiff asserts this fraud claim in regard to the formation

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of the mortgage agreement, the allegations in the Complaint imply only that Defendants failed

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to adhere to required practices when transferring the mortgage interest. Thus, even liberally

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construing the Complaint, Plaintiff has failed to set forth particularized allegations regarding

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any misrepresentations or misstatements of fact made by Defendants. Therefore, the Court

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finds it appropriate to dismiss Plaintiff’s fraud claim without prejudice. If Plaintiff chooses

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reassert this claim in an Amended Complaint, he should lay out his allegations clearly and

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distinctly, stating the specific misrepresentations made by each Defendant, and detailing when

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and how each misrepresentation was communicated to him. See Swartz, 476 F.3d at 764.

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Similarly, Plaintiff’s claim for “specific performance” fails to meet the standard set forth

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in Rule 12(b)(6). Specific performance is an equitable remedy that is utilized in actions for

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breach of contract, and cannot be asserted as an independent claim for relief. See, e.g.,

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Carcione v. Clark, 618 P.2d 346, 348 (Nev. 1980). Furthermore, even if the Court were to

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construe this as a claim to quiet title, Plaintiff has nonetheless failed to satisfy the Rule 12(b)(6)

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standard. A quiet title claim requires that a plaintiff allege “that the defendant is unlawfully

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asserting an adverse claim to title to real property.” Kemberling v. Ocwen Loan Servicing, LLC,

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No. 2:09-cv-0567-RCJ-LRL, 2009 WL 5039495, at *2 (D. Nev. Dec. 15, 2009) (citing Clay v.

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Cheeline Banking & Trust Co., 159 P. 1081 (Nev. 1916)). Here, Plaintiff has not alleged that

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Defendants are asserting a claim to the title of the property at issue or even that Plaintiff

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actually holds title to the property. Moreover, though the Complaint includes numerous legal

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assertions regarding the transfer of a promissory note and/or a deed of trust, Plaintiff has not

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clearly alleged that the Note or Deed of Trust at issue in this case were ever transferred.

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Accordingly, the Court finds it appropriate to dismiss Plaintiff’s second claim for relief without

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prejudice pursuant to Rule 12(b)(6).

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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 the Complaint is DISMISSED without prejudice.

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IT IS FURTHER ORDERED that Plaintiff shall have until February 18, 2015 to file

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an Amended Complaint in this action. Failure to file by this deadline will result in dismissal

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with prejudice.

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DATED this 21st day of January, 2015.

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Gloria M. Navarro, Chief Judge
United States District Court

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