Michael F. Sullivan v. Wells Fargo Bank, N.A.

Filing 35

ORDER denying 11 Motion to Remand; granting 16 and 19 Motions to Dismiss. The Clerk shall enter judgment and close the case. Signed by Chief Judge Robert C. Jones on 08/30/2013. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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MICHAEL F. SULLIVAN,

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This is a residential foreclosure avoidance action. Pending before the Court are a Motion

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to Remand (ECF No. 11) and two Motions to Dismiss (ECF Nos. 16, 19). For the reasons given

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herein, the Court grants the Motions to Dismiss and denies the Motion to Remand.

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I.

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Plaintiff,
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vs.
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WELLS FARGO BANK, N.A. et al.,
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Defendants.

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3:13-cv-00055-RCJ-WGC
ORDER

FACTS AND PROCEDURAL HISTORY
Plaintiff Michael Sullivan gave lender Washington Mutual Bank, FA (“WaMu”) a

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$297,500 promissory note (the “Note”) to purchase or refinance real property at 850

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Thoroughbred Cir., Reno, NV 89506, secured by a deed of trust (the “DOT”) to trustee

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California Reconveyance Co. (“CRC”). (See DOT 1–3, Aug. 26, 2005, ECF No. 16-1).

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Mortgage Electronic Registration Systems, Inc. (“MERS”) does not appear to have been a party

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to the DOT. WaMu later assigned the Note and DOT to Wells Fargo Bank, N.A. (“Wells

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Fargo”). (See Assignment, Feb. 26, 2007, ECF No. 16-1). Wells Fargo then substituted Quality

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Loan Servicing Co. (“QLS”) as trustee on the DOT. (See Substitution, July 8, 2011, ECF No. 16-

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3). QLS filed a Notice of Breach and Default and Election to Cause Sale of Real Property Under

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Deed of Trust (the “NOD”). (See NOD, July 15, 2011, ECF No. 16-4). Upon judicial review of

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the Foreclosure Mediation Program (“FM”) proceedings, the state district court found that the

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beneficiary and trustee had been represented at the mediation by a person with the proper

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documents and authority to modify the loan, and that they had acted in good faith. (See Order,

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Sept. 25, 2012, ECF No. 16-5). The Deputy Director of the FMP Program therefore issued an

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FMP Certificate permitting the foreclosure to proceed. (See FMP Certificate, Nov. 8, 2012, ECF

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No. 16-6). QLS noticed a trustee’s sale for December 26, 2012. (See Notice of Trustee’s Sale,

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Nov. 29, 2012, ECF No. 16-7). Plaintiff filed the Complaint in state court to prevent the sale,

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(see Compl., Dec. 19, 2012, ECF No. 1-1). The state district court dismissed all claims for

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failure to state a claim, with leave to amend. (See Order, Jan. 25, 2013, ECF No. 16-8). Wells

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Fargo, having been served less than thirty days earlier, removed to this Court on February 4,

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2013. Plaintiff has moved to remand for lack of diversity and has filed the First Amended

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Complaint (“FAC”). Defendants have separately moved to dismiss. In the meantime, Wells

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Fargo has given the Federal National Mortgage Association (“Fannie Mae”) a Trustee’s Deed

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upon Sale and assigned it the DOT. (See Trustee’s Deed Upon Sale, Feb. 6, 2013, ECF No. 16-

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10; Assignment, Jan. 10, 2013, ECF No. 16-9).1

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II.

LEGAL STANDARDS

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Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the

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claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of

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what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47

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(1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action

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that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule

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The assignment of the DOT to the purchaser at the trustee’s sale (Fannie Mae) was
superfluous, as a DOT is extinguished by a trustee’s sale and is thereafter of no further utility or
value.
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12(b)(6) tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n, 720

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F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for

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failure to state a claim, dismissal is appropriate only when the complaint does not give the

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defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell

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Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is

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sufficient to state a claim, the court will take all material allegations as true and construe them in

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the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th

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Cir. 1986). The court, however, is not required to accept as true allegations that are merely

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conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden

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State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action

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with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation

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is plausible, not just possible. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly,

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550 U.S. at 555).

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

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

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

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& Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents

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whose contents are alleged in a complaint and whose authenticity no party questions, but which

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are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6)

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motion to dismiss” without converting the motion to dismiss into a motion for summary

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judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule

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of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay

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Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court

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considers materials outside of the pleadings, the motion to dismiss is converted into a motion for

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summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir.

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2001).

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III.

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ANALYSIS
The FAC lists the same seven nominal causes of action as the Complaint. The FAC does

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not cure the deficiencies in the Complaint. Plaintiff admits, adamantly, that Wells Fargo never

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offered any modification and that Wells Fargo was clear that the temporary payment plan it

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offered was not an offer of modification. The Court also rejects the “show me the note”

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arguments in the FAC. Plaintiff need not fear being harassed by any subsequent holder of the

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Note. The foreclosure of the DOT extinguished the Note by operation of law. No party may ever

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again attempt to enforce it. Nor was an affidavit of authority required to be filed with the NOD

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in this case under section 107.080, because that requirement only became effective on October 1,

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2011, which is also true of the requirements under section 107.028. There is simply no

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indication of a statutorily defective foreclosure in this case, and it appears undisputed that the

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Note was in default at the time of foreclosure, negating any common law wrongful foreclosure

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claim. Plaintiff has not cured the defects in the other claims identified in the state court.

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Accordingly, the Court grants the motions to dismiss.

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Plaintiff also argues that removal was improper because there is a Nevada Defendant, i.e.,

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Kristin A. Schuler-Hintz. Defendant QLS has adduced an affidavit attesting that Schuler-Hintz

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is merely its registered agent for service of process in Nevada and an attorney working for a

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private law firm representing QLS, not an employee of QLS. The Court’s own docket and the

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Nevada Secretary of State’s website confirm this. Schuler-Hintz is not properly joined. Her only

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alleged wrongdoing is in representing QLS, except insofar as she may be the target of the abuse

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of process claim, which is clearly unmeritorious under state law. See Wensley v. First Nat’l Bank

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of Nev., 874 F. Supp. 2d 957, 968 (D. Nev. 2012) (Reed, J.) (“Plaintiff's claim for abuse of

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process fails as a matter of law because non-judicial foreclosure is not the type of ‘process’

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addressed by the abuse of process tort as it does not involve judicial action.”).

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CONCLUSION
IT IS HEREBY ORDERED that the Motions to Dismiss (ECF Nos. 16, 19) are
GRANTED.

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IT IS FURTHER ORDERED that the Motion to Remand (ECF No. 11) is DENIED.

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IT IS FURTHER ORDERED that the Clerk shall enter judgment and close the case.

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IT IS SO ORDERED.

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Dated this 30th day of August, 2013.
Dated this 12th day of August, 2013.

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_____________________________________
ROBERT C. JONES
United States District Judge

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