Thomas v. Mortgage Electronic Registration Systems, Inc. et al
Filing
68
OPINION & ORDER: Defendants BANA's motion to dismiss for failure to state a claim 28 is granted. Plaintiff's complaint is dismissed with prejudice against Defendants BANA. Defendant Quality Loan's motion to set aside the entr y of default and dismiss 44 is also granted. Plaintiff may file an amended complaint against Quality Loan within 30 days of this order. All other pending motions [10, 16, 57, 58] are denied as moot. See 7-page opinion & order attached. Signed on 6/23/2014 by Judge Marco A. Hernandez. (mr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
RUDIE THOMAS,
No. 3:13-cv-02197-HZ
Plaintiff,
OPINION & ORDER
v.
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
DOES 1-10, RESMAE MORTGAGE
CORP., BANK OF AMERICA NA,
WILSHIRE CREDIT CORP., and
QUALITY LOAN SERVICE CORP.,
Defendants.
Rudie Thomas
496 NE 17th Ave
Hillsboro, OR 97124
Pro Se Plaintiff
James P. Laurick
Kilmer Voorhees & Laurick, PC
732 NW 19th Avenue
Portland, OR 97209
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Ellis W. Wilder
McCarthy & Holthus
920 SW 3rd Avenue, First Floor
Portland, OR 97204
Attorneys for Defendants
HERNÁNDEZ, District Judge:
Plaintiff Rudie Thomas alleges ten causes action, including fraud, violation of the Truth
in Lending Act, violation of California’s Rosenthal Act, negligence, violation of the Real Estate
Settlement Procedures Act, breach of fiduciary duty, violations of California’s business and
professions code, breach of contract, breach of implied covenant of good faith and fair dealing,
and wrongful foreclosure. An entry of default has been entered against Defendant Quality Loan
Service Corporation.
Defendants Bank of America NA, MERS, and Wilshire Credit Corporation (collectively
BANA) move to dismiss for failure to state a claim and for lack of jurisdiction [28]. Defendant
Quality Loan moves to set aside the entry of default and also moves to dismiss for failure to
comply with Rule 8 and for failure to state a claim [44]. Because Plaintiff’s claims against
Defendants BANA are barred by res judicata, their motion to dismiss is granted and Plaintiff’s
claims are dismissed with prejudice. Defendant Quality Loan’s motion is also granted because
there is good cause to set aside the entry of default. I also find that Plaintiff has failed to state a
claim against Quality Loan and that Plaintiff’s complaint fails to comply with Rule 8.
BACKGROUND
Plaintiff’s complaint is 74 pages long with over 50 pages of exhibits. The following
allegations were discernable. Plaintiff alleges that he is the owner of residential property located
at 5048 Crescent Bay Drive in San Diego, California. Compl. ¶¶ 7, 22. Plaintiff entered into a
loan with Resmae Mortgage for $632,454.40. Id. at ¶ 40, Compl. Ex. 1 at 2. The loan was
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secured by a deed of trust for the residential property that was recorded March 21, 2006. Id. at
¶¶ 40, 44. Wilshire Credit acquired the rights to service the loan. Id. at ¶ 45. On August 15,
2007, Wilshire Credit filed a notice of default in San Diego County. Id. at ¶ 46. Throughout the
complaint, Plaintiff repeatedly alleges that MERS was a suspended California corporation as of
December 1, 2005. See Compl.
STANDARDS
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency
of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “All allegations of material
fact are taken as true and construed in the light most favorable to the nonmoving party.” Am.
Family Ass’n, Inc. v. City & Cnty. of S.F., 277 F.3d 1114, 1120 (9th Cir. 2002). However, the
court need not accept conclusory allegations as truthful. Warren v. Fox Family Worldwide, Inc.,
328 F.3d 1136, 1139 (9th Cir. 2003) (“[W]e are not required to accept as true conclusory
allegations which are contradicted by documents referred to in the complaint, and we do not
necessarily assume the truth of legal conclusions merely because they are cast in the form of
factual allegations.”) (quotation and citations omitted).
A motion to dismiss under Rule 12(b)(6) will be granted if plaintiff alleges the “grounds”
of his “entitlement to relief” with nothing “more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action[.]” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007). “Factual allegations must be enough to raise a right to relief above the speculative
level…on the assumption that all the allegations in the complaint are true (even if doubtful in
fact)[.]” Id. (citations and footnote omitted).
To survive a motion to dismiss, the complaint “must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face[,]” meaning “when the
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plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quotation omitted). Additionally, “only a complaint that states a plausible claim for relief
survives a motion to dismiss.” Id. at 679. The complaint must contain “well-pleaded facts”
which “permit the court to infer more than the mere possibility of misconduct.” Id.
DISCUSSION
I.
Defendants BANA’s Motion to Dismiss
Defendants BANA move to dismiss Plaintiff’s complaint with prejudice because of
improper service and res judicata. Defendants BANA has produced convincing evidence that
they were never properly served by Plaintiff. The Salem, Oregon office of CT Corporation,
where Plaintiff asserts that he served Defendants BANA, does not have any record of any
attempted or actual service by Plaintiff. Poole Decl. [63] ¶¶ 8-9. Additionally, in a prior action
involving Plaintiff and Bank of America in the Southern District of California, CT Corporation
disputed Plaintiff’s proof of service. Laurick Decl. Opp’n Default [27] Ex. 6 (“CTCS
determined that it had not been served with the summons or the complaint filed by Plaintiff.”).
Even if Plaintiff were to correct the improper service, I find that Plaintiff’s complaint is
barred by res judicata. In Oregon, a plaintiff is barred on res judicata grounds from bringing a
second action against the same defendant, where plaintiff has brought a first action against the
defendant to final judgment and “the claim in the second action … is based on the same factual
transaction that was at issue in the first [action], seeks a remedy additional or alternative to the
one sought earlier, and … could have been joined in the first action.” Rennie v. Freeway
Transport, 656 P.2d 919, 921 (Or. 1982). This type of res judicata, commonly known as claim
preclusion, “bars prosecution of claims [that may] have never in fact been litigated between the
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parties.” Id. In other words, “[t]he prior judgment is deemed to have effected a merger or bar of
all claims against the defendant available to the plaintiff arising from the transaction that was at
issue irrespective of whether plaintiff had actually asserted them in that action.” Id. at 921-22.
This case is one in a series of cases that Plaintiff has brought against Bank of America
and other parties in state and federal courts to challenge the foreclosure of the same residential
property. Supp. Laurick Decl. [56] Ex. 1 at 2-4 (Apr. 10, 2014 Order in Thomas v. Bank of
America et al, No. 13-cv-1576). In Plaintiff’s most recent two federal court cases brought in the
Southern District of California, Plaintiff continued to challenge the foreclosure of the same
residential property. Id. at 3-4. Both courts dismissed Plaintiff’s complaints on res judicata
grounds. Furthermore, Plaintiff has been declared a vexatious litigant and must seek court
approval before filing any future actions against Bank of America regarding the foreclosure of
the same residential property. Id. at 6.
Defendants BANA again raise res judicata and urge the court to dismiss Plaintiff’s claims
with prejudice. Plaintiff offers no response to Defendants BANA’s res judicata argument.
Plaintiff’s claims are based on the foreclosure of the same residential property that has been the
subject of the prior state and federal actions. I find that Plaintiff’s claims are barred by res
judicata. Because amendment would be futile, Plaintiff’s claims against Defendants BANA are
dismissed with prejudice.
II.
Defendant Quality Loan’s Motions
Quality Loan moves to set aside the clerk’s entry of default and to dismiss the complaint
for failure to state a claim.
Under Rule 55(c), a court may set aside an entry of default for “good cause.” See United
States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir.
5 - OPINION & ORDER
2010). To determine whether a defendant has shown good cause to justify vacating entry of
default, a court considers three factors: (1) whether the defendant engaged in culpable conduct
that led to the default; (2) whether the defendant had a meritorious defense; and (3) whether
reopening the default would prejudice plaintiff. See id. (citing Franchise Holding II, LLC v.
Huntington Rests. Group., Inc., 375 F.3d 922, 925 (9th Cir. 2004)). This standard is disjunctive;
and the court may deny the request to vacate default if any of the three factors is true. See id.
“Crucially, however, ‘[j]udgment by default is a drastic step appropriate only in extreme
circumstances; a case should, whenever possible, be decided on the merits.’” Id. (quoting Falk v.
Allen, 739 F.2d 461, 463 (9th Cir. 1984)).
Quality Loan explains that the default should be set aside because it did not engage in
culpable conduct, would likely have a meritorious defense, and there would be no prejudice to
Plaintiff. I agree. Plaintiff’s complaint mentions Quality Loan as a defendant only in the context
of relief requested and was not listed in the case caption as a defendant. Quality Loan was
unsure of its obligation to answer. Quality Loan also anticipates having a meritorious defense
against any claims that it was not a valid successor trustee regarding the foreclosure of Plaintiff’s
residential property. Finally, Plaintiff has not indicated what prejudice it would suffer if the
default were set aside. Plaintiff instead argues that he suffered prejudice resulting from the
foreclosure. I find good cause to set aside the entry of default.
Regarding the motion to dismiss, the complaint is void of any factual allegations
involving Quality Loan. As stated earlier, Quality Loan only appears in the prayer for relief
section. Therefore, Plaintiff has failed to state a claim against Quality Loan, and the motion to
dismiss is granted. Plaintiff’s complaint also fails to comply with Rule 8, which requires that a
pleading contain a “short and plain statement of the claim showing that the pleader is entitled to
6 - OPINION & ORDER
relief.” Fed. R. Civ. P. 8(a)(2) (emphasis added). “[T]he pleading standard Rule 8 announces
does not require detailed factual allegations, but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quotation omitted). If
Plaintiff wishes to file an amended complaint, the complaint must comply with Rule 8.
CONCLUSION
Based on the foregoing, Defendants BANA’s motion to dismiss for failure to state a
claim [28] is granted. Plaintiff’s complaint is dismissed with prejudice against Defendants
BANA. Defendant Quality Loan’s motion to set aside the entry of default and dismiss [44] is
also granted. Plaintiff may file an amended complaint against Quality Loan within 30 days of
this order. All other pending motions [10, 16, 57, 58] are denied as moot.
IT IS SO ORDERED.
Dated this
day of June, 2014.
MARCO A. HERNÁNDEZ
United States District Judge
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