Rodriguez v. Nationstar Mortgage, LLC et al

Filing 34

ORDER. IT IS HEREBY ORDERED that 13 Defendants Nationstar and HSBC's Motion to Dismiss is GRANTED; IT IS FURTHER ORDERED that 17 Bank of America's Joinder is GRANTED; IT IS FURTHER ORDERED that the Clerk of the Court enter JUDGMENT for Defendants and against Plaintiff. Signed by Judge Kent J. Dawson on 4/18/17. (Copies have been distributed pursuant to the NEF - MR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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JOSE BENJAMIN RODRIGUEZ, an
individual,
Case No. 2:16-cv-02180-KJD-CWH

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Plaintiff,
ORDER

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v.

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NATIONSTAR MORTGAGE, LLC;
HSBC BANK N.A. AS TRUSTEE FOR
HOLDERS OF DEUTSCHE ALT-A
SECURITIES MORTGAGE LOAN
TRUST, MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 2006-0A1;
CLEAR RECON CORP;
COUNTRYWIDE BANK, NA; BANK OF
AMERICA, N.A. AS SUCCESSOR BY
MERGER TO BAC HOME LONAS
SERVICING LP FKA COUNTRYWIDE
HOME LOANS SERVICING LP,

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Defendants.
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Presently, before the Court is Defendants HSBC Bank and Nationstar Mortgage, LLC’s

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(“Nationstar”) Motion to Dismiss (#13). Defendant Bank of America, N.A. (“BANA”) filed a

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substantive Joinder (#17) to the motion. Plaintiff filed a response in opposition (#15) to which

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Defendant replied (#28).

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I. Background

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On or about August 31, 2006, Plaintiff, Jose Rodriguez, purchased property at 4353 Grey

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Spencer Drive. Plaintiff financed the purchase with a $726,543.00 loan from Defendant Countrywide

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Bank NA (“Countrywide”). Beginning sometime between 2007 and 2008 Plaintiff admits that he

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began to fall behind in his loan payments. Plaintiff claims that during this time he was in the process

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of obtaining a loan modification from Countrywide. However, on or about March 2009, Plaintiff

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alleges that he sent a letter to Countrywide, informing it that Plaintiff was exercising his right to

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recission under the Truth in Lending Act (“TILA”). Countrywide responded by informing Plaintiff

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that his time for recission had expired. Plaintiff claims that he continued in loan modification

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discussions with Countrywide, who was later acquired by Defendant BANA.

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On or about May 24, 2010, the Mortgage Electronic Registration System assigned the Deed

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of Trust to Defendant HSBC Bank N.A. (“HSBC”). On or about July 8, 2014, Defendant HSBC

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executed a substitution of trustee through Nationstar, its attorney in fact, designating Defendant Clear

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Recon Corp. (“Clear Recon”), as trustee under the deed of trust. Clear Recon, on behalf of HSBC,

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initiated the foreclosure process and recorded a notice of trustee’s sale. HSBC then purchased the

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property at a trustee's sale on July 15, 2016 with a credit bid of $850,219.77.

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Plaintiff alleges wrongful foreclosure proceedings and fraud. Plaintiff also alleges that he

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properly rescinded the loan under TILA on or about March of 2009. He seeks to quiet title and to

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void the foreclosure sale. Defendants argue that Plaintiff has failed to state a claim upon which relief

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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).

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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. Discussion

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A. Plaintiff’s Right of Recision Under TILA

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Plaintiff claims that he successfully exercised his right to rescind under TILA when he sent a

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recission letter to Defendant Countrywide in 2009. In the letter, Plaintiff claimed that he had not

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received the necessary disclosures that TILA requires. Several of Plaintiff’s causes of action are

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based on the theory that Defendants’ interest in the property were extinguished by the allegedly

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successful recission.

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The purpose of TILA is “to assure a meaningful disclosure of credit terms so that the

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consumer will be able to compare more readily the various credit terms available to him and avoid

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the uninformed use of credit ...” 15 U.S.C. § 1601(a). If the creditor fails to make the required

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disclosures or rescission notices, the borrower’s “right of rescission shall expire three years after the

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date of consummation of the transaction.” 15 U.S.C. § 1635(f); see 12 C.F.R. § 226.23(a)(3);

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Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790, 792-93 (2015)(notice to lender of intent

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to rescind must be sent within three years of loan execution). However, TILA does not apply to

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“residential mortgage transactions.” 15 U.S.C. § 1635(e). Residential transactions are defined as “a

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transaction in which a mortgage, deed of trust, purchase money security interest arising under an

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installment sales contract, or equivalent consensual security interest is created or retained against the

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consumer’s dwelling to finance the acquisition or initial construction of such dwelling.” 15 U.S.C. §

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1602(x). This means that “loans used to finance the acquisition or initial construction of a dwelling

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cannot be rescinded under TILA.” Lial v. Bank of America, N.A., 2016 WL 6405812 at *2 (D. Nev.

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2016), Sanchez v. Bank of New York, 2016 WL 1449597 at *4 (D. Nev. 2016).

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In Plaintiff’s transaction with Countrywide, the deed of trust was created to finance the

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acquisition of Plaintiff’s dwelling.. Therefore, it is a residential mortgage transaction. Therefore,

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TILA does not apply, and Plaintiff had no right of recission. Id. Plaintiff’s recission letter did not

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extinguish Defendants’ interest in the disputed property. See Id.

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B. Wrongful Foreclosure

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Plaintiff’s first cause of action is for wrongful foreclosure. To prevail on a wrongful

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foreclosure claim, a trustor or mortgagor must show that there was no breach of contract or failure of

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performance on their part that would justify the foreclosure. Collins v. Union Fed. Sav. & Loan

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Ass’n, 662 P.2d 610, 623 (Nev. 1983). A claim for wrongful foreclosure in Nevada must be

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dismissed if the trustor or mortgagor cannot show a lack of default. In re Mortg. Electronic

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Registration Systems, Inc., 754 F.3d 772, 785 (9th Cir. 2014). Plaintiff has not alleged in his

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complaint that there was no breach of contract on his part. In fact, he claimed that he “f[e]ll behind

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on payments,” beginning at some point in 2007 or 2008. Plaintiff cannot show a lack of default.

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Therefore, Plaintiff’s claim for wrongful foreclosure must be dismissed. Collins, 662 P.2d at 623.

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C. Quiet Title

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Plaintiff’s second cause of action seeks to quiet title. He asks this court to quiet the title of the

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disputed property on the grounds that his recission letter extinguished Defendants’ interest in the

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property from the date that the letter was received. Therefore, the foreclosure proceedings were void

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and invalid. However, Plaintiff’s recission letter did not extinguish Defendants’ interest in the

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property. Therefore, Plaintiff’s action for quiet title on the grounds that the foreclosure proceedings

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were void fails.

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D. Fraud

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In his third cause of action, Plaintiff alleges that Defendants engaged in fraudulent behavior.

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Plaintiff claims that Defendants customarily record fraudulent documents with the Clark County

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Recorder’s Office so that they may use these documents later to unlawfully foreclose on the

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properties. Plaintiff also alleges that Defendants acted fraudulently in violation of NRS 107.086 and

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fraudulently executed the Notice of Default and Election to Sell.

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Fraud is subject to a heightened pleading standard. Fed. R. Civ. P. 9(b), Swartz, 476 F.3d at

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764. A plaintiff who alleges fraud must also allege the “who, what, when, where, and how” of the

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fraudulent behavior. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). It is not enough for the
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plaintiff to just allege the “neutral facts necessary to identify the transaction,” he must also allege

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what the false statement was, and why it is false or misleading. Vess v. Ciba-Geigy Corp. USA, 317

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F.3d 1097, 1106 (9th Cir. 2003). Plaintiff alleges that Defendants acted fraudulently but has not met

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the heightened pleading standard set forth in Rule 9. Plaintiff has not plead sufficient factual

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information beyond the neutral facts necessary to identify the fraudulent transactions. Id. Therefore,

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Plaintiff’s third cause of action for fraud must be dismissed. Id.

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E. Action to Set Aside the Trustee’s Sale

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Plaintiff’s fourth cause of action seeks to set aside the Trustee’s Sale. Plaintiff claims that the

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sale violated N.R.S. § 107.080. Plaintiff alleges that Defendants never had legal authority to

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foreclose based on a theory that is dependant on Defendants’ rights being terminated by the recission

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letter. In order “[to] survive a motion to dismiss, a complaint must contain sufficient factual matter to

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‘state a claim for relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (citation omitted).

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Plaintiff’s recission letter did not extinguish Defendants’ interest in the property. Therefore,

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Plaintiff’s fourth cause of action is not facially plausible and must be dismissed. Id.

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IV. Conclusion

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IT IS HEREBY ORDERED that Defendants Nationstar and HSBC’s Motion to Dismiss
(#13) is GRANTED;

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IT IS FURTHER ORDERED that Bank of America’s Joinder (#17) is GRANTED;

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

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Defendants and against Plaintiff.
DATED this 18th day of April 2017.

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_____________________________
Kent J. Dawson
United States District Judge

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