Fresquez v. Nationstar Mortgage, LLC et al

Filing 36

ORDER Granting Defendant MER's 5 Motion to Dismiss. The Clerk of the Court shall enter judgment for Defendant MERS and against Plaintiff. Signed by Judge Kent J. Dawson on 3/28/2017. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ERNEST FRESQUEZ, JR.,
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Plaintiff,

Case No.: 2:16-cv-01274-KJD-NJK

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v.

ORDER

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NATIONSTAR MORTGAGE, LLC; U.S.
BANK, N.A.; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., and DOES 1-10
INCLUSIVE,

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Defendants.
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Presently before the Court is Defendant Mortgage Electronic Registration System’s

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(“MERS”) Motion to Dismiss Complaint (#5). Plaintiff filed a response in opposition (#14) to which

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Defendant replied (#16).

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I. Background.

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On August 25, 2005, Plaintiff Ernest Fresquez Jr. obtained a mortgage loan from

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Countrywide Home Loans, Inc. in the amount of $523,800.00. Beginning on or about June 30, 2008,

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Plaintiff alleges that Defendants, and other beneficiaries and services, filed a series of notices of

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default, elections to sell, and notices of trustee’s sales. This pattern continued over the next eight

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years. During this time, on March 27, 2012, the deed of trust was assigned by MERS to Defendant

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U.S. Bank, N.A.(“U.S. Bank.”) Currently, Defendant U.S. Bank is the beneficiary of Plaintiff’s

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mortgage loan which Defendant Nationstar Mortgage LLC (“Nationstar”) services.

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Plaintiff alleges that the instrument assigning the deed of trust to U.S. Bank, as well as other

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instruments in the various foreclosure processes, were fraudulently signed. Plaintiff claims that

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Defendants Nationstar and U.S. Bank also violated Nevada Law by engaging in dual tracking of

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Plaintiff’s property and failing to provide Plaintiff with a single point of contact.

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Defendant MERS filed the present motion to dismiss Plaintiff’s Fourth Cause of Action for

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violation of the Nevada Deceptive Trade Practices Act (“NDTPA”), and Plaintiff’s Fifth Cause of

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Action for cancellation of written instruments. MERS argues that Plaintiff’s Fourth and Fifth Causes

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of Action fail to state a claim upon which relief may be granted.

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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

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

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plain statement of the claim showing that the pleader is entitled to relief.” F.R.C.P. 8(a)(2);

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

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detailed factual allegations, it demands more than “labels and conclusions or a formulaic

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recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

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(citations omitted). “Factual allegations must be enough to raise a right to relief above the

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speculative level.” Twombly, 550 U.S. at 555. Thus, “[to]survive a motion to dismiss, a

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complaint must contain sufficient factual matter to ‘state a claim for relief that is plausible on its

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face.’” Iqbal, 556 U.S. at 678 (citation omitted).

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

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when considering motions to dismiss. First, a district court must accept as true all well-pled

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factual allegations in the complaint; however, legal conclusions or mere recitals of the elements

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of a cause of action, supported only by conclusory statements, are not entitled to the assumption

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of truth. Id. at 678. Second, a district court must consider whether the factual allegations in the
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complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the

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plaintiff’s complaint alleges facts that allow the court to draw a reasonable inference that the

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defendant is liable for the alleged misconduct. Id. at 678. Further, where the complaint does not

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permit the court to infer more than the mere possibility of misconduct, the complaint has

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“alleged–but it has not show[n]–that the pleader is entitled to relief.” Id. at 679 (internal

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quotation marks omitted). Thus, when the claims in a complaint have not crossed the line from

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conceivable to plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570.

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Moreover, “[a]ll allegations of material fact in the complaint are taken as true and construed in

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the light most favorable to the non-moving party.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399,

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1403 (9th Cir. 1996) (citation omitted).
Fraud has a stricter pleading standard under Rule 9, which requires a party to “state with

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particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b); Nev. R. Civ. P. 9(b).

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Pleading fraud with particularity requires “an account of the time, place, and specific content of the

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false representations, as well as the identities of the parties to the misrepresentations.” Swartz v.

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KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007); see also Morris v. Bank of Nev., 886 P.2d 454, 456,

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n.1 (Nev.1994). Fraud claims against corporate or business entities require allegations that

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specifically identify names of individuals who made the misrepresentation, that they had authority to

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speak for the corporation, and what was said or written and when. Smith v. Accredited Home

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Lenders, 2016 WL 1045507, at *2 (D. Nev. 2016).

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III. Analysis

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Plaintiff alleges violations of the NDTPA and cancellation of written instruments as his

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Fourth and Fifth Causes of Action. These are the only two causes of action in which MERS is

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implicated. Defendant MERS argues that both Plaintiff’s Fourth and Fifth Causes of Action are

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insufficiently plead and that Plaintiff’s Fifth Cause of Action is time barred. In his reply, Plaintiff

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stipulates that the NDTPA does not provide him with a legal remedy in this case, and therefore his

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Fourth Cause of Action is without merit. However, Plaintiff asks that this Court grant him a leave to
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amend his complaint. He proposes changing his Fourth Cause of Action to seek declaratory relief

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pursuant to NRS § 30.040. Plaintiff further contends that the rest of his complaint is sufficiently

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plead.

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A. Pleading fraud with particularity

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In his Complaint, Plaintiff alleges that the instruments that assigned the Deed of Trust to U.S.

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Bank, and initiated the other foreclosure processes, were fraudulently “robo-signed” and thereby

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“void ab initio.” These allegations form the basis for Plaintiff’s complaints against MERS. However,

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Plaintiff does not allege any factual information about the signing of these documents that would

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raise his claims past mere speculation. Iqbal, 556 U.S. at 679. Plaintiff’s complaint does not allow

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this Court to infer more than the mere possibility of misconduct. Id. Furthermore, Plaintiff’s

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allegations of fraud fail to give “an account of the time, place, and specific content of the false

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representations, as well as the identities of the parties to the misrepresentations.” Swartz, 476 F.3d at

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764. Therefore, Plaintiff’s Fourth and Fifth Causes of Action are insufficiently plead and must be

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dismissed. Iqbal, 556 U.S. at 679. Normally, the Court would grant Plaintiff leave to amend.

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However, in this case, granting leave to amend the claims against MERS would be futile.

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B. Statute of Limitations

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Plaintiff’s Fourth and Fifth Causes of Action are time barred by the statute of limitations.

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N.R.S. § 11.190(d) sets the statute of limitation for an action for relief on the ground of fraud at three

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years from the time that the aggrieved party becomes aware or should have been aware of the fraud.

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MERS argues that Plaintiff became aware or should have been aware of the fraud when the

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Assignment of the Deed of Trust was recorded, March 27, 2012. See N.R.S. § 111.320 (“[e]very

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such conveyance or instrument of writing, acknowledged or proved and certified, and recorded in the

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manner prescribed . . . must from the time of filing with the. . . recorder for record, impart notice to

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all persons of the contents thereof”). Plaintiff has failed to contest the argument that he first received

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notice of MERS’s allegedly fraudulent behavior on or about March 27, 2012. Therefore the statute of

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limitations on this action against MERS expired on March 27, 2015, a full year before Plaintiff filed
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his complaint on May 12, 2016. Plaintiff’s claims of fraud in the Assignment of the Deed of Trust

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are time barred. Therefore, granting Plaintiff leave to amend this claim as to Defendant MERS would

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be futile.

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C. Standing

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Additionally, any attempt by Plaintiff to amend his complaint against MERS would be futile

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because he would lack standing. The Nevada Supreme Court has held that a borrower lacks standing

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to challenge the assignment of a mortgage when the borrower is neither a party to the assignment of

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the pooling service agreement nor a third-party beneficiary to the transaction. Smith v. Accredited

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Home Lenders, 2016 WL 1045507, at *3 (D. Nev. Mar. 15, 2016); see also Wood v. German, 331

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P.3d 859, 861 (Nev. 2014), Christie v. Bank of N.Y. Mellon, N.A., 617 Fed. Appx. 680, 2015 WL

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3621870 (9th Cir. 2013). Both Plaintiff’s Fourth and Fifth Causes of Action against MERS are based

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on the validity of the instrument that assigned the deed of trust from MERS to U.S. Bank. Plaintiff is

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neither a party to the allegedly fraudulent assignment, nor a third party beneficiary to the transaction.

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Therefore, he lacks standing to challenge the validity of the Assignment of the Deed of Trust from

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Defendant MERS to Defendant U.S. Bank.

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IV. Conclusion

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IT IS HEREBY ORDERED that Defendant MER’s Motion to Dismiss (#5) is GRANTED;

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IT IS FURTHER ORDERED that the Clerk of the Court enter JUDGMENT for Defendant

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MERS and against Plaintiff.
DATED this 28th day of March 2017.

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_____________________________
Kent J. Dawson
United States District Judge

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