Moradi, et al v. ReconTrust Company, N.A. et al

Filing 15

Opinion and Order - Defendants' Motion to Dismiss for Failure to State a Claim (ECF 8 ) and Request for Judicial Notice (ECF 9 ) are GRANTED. Plaintiffs have leave to file an amended pleading within two weeks if they believe that additional allegations will cure the identified deficiencies. If no amended pleading is filed within such time, a judgment will be entered dismissing Plaintiffs complaint. Signed on 7/31/2017 by Judge Michael H. Simon. (mja)

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON KAMBIZ and HOMA MORADI, husband and wife, Case No. 3:17-cv-645-SI OPINION AND ORDER Plaintiffs, v. RECONTRUST COMPANY, N.A. et al., Defendants. Kambiz and Homa Moradi, pro se. James P. Laurick, KILMER, VOORHEES & LAURICK, P.C., 732 NW 19th Avenue, Portland, OR 97209. Of Attorneys for Defendants. Michael H. Simon, District Judge. Plaintiffs, Kambiz and Homa Moradi, bring claims against Defendants, ReconTrust Company, N.A. (“ReconTrust”), Bank of America, N.A. (“BoA”), and the Bank of New York Mellon (“BNYM”) (collectively, “Defendants”). Plaintiffs’ claims arise out of Defendants’ foreclosure on Plaintiffs’ home in Washington County, Oregon. Plaintiffs allege that because Mortgage Electronic Registration Systems, Inc., (“MERS”) unlawfully assigned its interest in the deed of trust on Plaintiffs’ home, the entire foreclosure process was a fraudulent and deceptive PAGE 1 – OPINION AND ORDER act in violation of Oregon law. Defendants move to dismiss Plaintiffs’ complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that Plaintiffs’ claims are barred by the applicable statutes of limitations. Defendants also request that the Court take judicial notice of several documents relating to Plaintiffs’ home loan. For the reasons discussed below, Defendants’ motion to dismiss and request for judicial notice are granted. STANDARDS A. Motion to Dismiss Under Rule 12(b)(6) A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. HewlettPackard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the PAGE 2 – OPINION AND ORDER expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). B. Pro Se Filings A court must liberally construe the filings of a pro se plaintiff and afford the plaintiff the benefit of any reasonable doubt. Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010). “‘Unless it is absolutely clear that no amendment can cure the defect, . . . a pro se litigant is entitled to notice of the complaint’s deficiencies and an opportunity to amend prior to dismissal of the action.’” Garity v. APWU Nat’l Labor Org., 828 F.3d 848, 854 (9th Cir. 2016) (alteration in original) (quoting Lucas v. Dep’t of Corrections, 66 F.3d 245, 248 (9th Cir. 1995) (per curiam)). Under Federal Rule of Civil Procedure 8(a)(2), however, every complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” This standard “does not require ‘detailed factual allegations,’” but does demand “more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at 555). BACKGROUND The following facts are alleged in Plaintiffs’ complaint and contained in documents of which the Court takes judicial notice.1 On June 19, 2007, plaintiff Homa Moradi executed a 1 Defendants request that the Court take judicial notice of: (1) the Deed of Trust, dated June 19, 2007 (ECF 10-1); (2) the Appointment of Successor Trustee, dated March 13, 2009 (ECF 10-3); (3) the Assignment of Deed of Trust, dated November 18, 2009 (ECF 10-2); and (4) the Trustee’s Deed, January 11, 2012 (ECF 10-4). Plaintiffs stipulate that the Court may take judicial notice of each of these documents except the Trustee’s Deed. Because the Trustee’s PAGE 3 – OPINION AND ORDER promissory note (the “Note”) and a deed of trust (the “Deed”). The Deed listed Countrywide Home Loans, Inc. dba America’s Wholesale Lender (“AWL”) as the lender, Fidelity National Title as the trustee, and MERS as the beneficiary “solely as a nominee for Lender and Lender’s successors and assigns.” ECF 10-1 at 1. The Deed was recorded in Washington County, Oregon, on June 25, 2007. On March 13, 2009, MERS appointed ReconTrust as successor trustee under the Deed. On November 18, 2009, MERS purported to assign its rights in the Note and the Deed to BAC Home Loan Servicing, LP (“BAC”). Plaintiffs allege that this assignment was a false representation because MERS acted in its individual capacity, but purported to be acting as nominee for AWL, the lender. BoA, having merged with BAC, then assigned its purported rights in the loan to BNYM. Plaintiffs also allege that this assignment was fraudulent because BoA knew or should have known that it never received any rights in the Note and the Deed because MERS did not have authority to assign such rights. Each of these assignments was recorded. On January 6, 2012, ReconTrust conducted a foreclosure sale on behalf of BoA and sold Plaintiffs’ property at public auction to BNYM, even though ReconTrust and BoA allegedly knew or should have known that they had no rights in the Deed on which to foreclose. ReconTrust also executed and recorded a trustee’s deed, conveying the property to BNYM. On February 17, 2012, Plaintiffs were served with a summons and complaint for eviction. Plaintiffs entered into a stipulated eviction, agreeing to vacate the property by May 3, 2012. Plaintiffs filed this lawsuit on January 23, 2017, bringing two claims against Defendants. First, Plaintiffs claim that the January 2012 foreclosure sale of their home violated Oregon’s Unlawful Trade Practices Act (“UTPA”) because BoA, acting through ReconTrust, sold Deed is recorded in Washington County, Oregon, the Court also takes judicial notice of this document. Thus, the Court grants Defendants’ request for judicial notice. PAGE 4 – OPINION AND ORDER Plaintiffs’ home even though BoA owned no interest in the home. Second, Plaintiffs assert a common law fraud claim, alleging that “[e]very action taken subsequent to the MERS assignment by each of the Defendants” was fraudulent because Defendants knew or should have known that the MERS assignment had “no legal force or effect.” ECF 1-2 ¶¶ 4.15-16. DISCUSSION Defendants move to dismiss, arguing that Plaintiffs’ claims are barred by the applicable statute of limitations because the foreclosure and eviction occurred in 2012, five years before Plaintiffs filed suit. UTPA claims are subject to a one-year statute of limitations, Or. Rev. Stat. § 646.638(6), and common law fraud claims are subject to a two-year statute of limitations. Or. Rev. Stat. §§ 12.010, 12.110(1); see also Murphy v. Allstate Ins. Co., 251 Or. App. 316, 321 (2012). Both claims are subject to the discovery rule. See Or. Rev. Stat. § 12.110; id. § 646.638(6); see also Mathies v. Hoeck, 284 Or. 539, 542-43 (1978); Cole v. Sunnyside Marketplace, LLC, 212 Or. App. 509, 514-18 (2007). Plaintiffs respond that they filed their claims within the statute of limitations, relying on their allegation that “[o]nly after conducting investigations were Plaintiffs recently able to determine the sale was unlawful and commence this lawsuit.” ECF 1-2 ¶ 4.12. Plaintiffs, however, do not allege any facts regarding when this investigation occurred or what sort of diligent investigation they conducted, nor do Plaintiffs point to any specific date on which their claims accrued. Plaintiffs’ complaint does not expressly refer to any dates after 2012. Plaintiffs’ conclusory allegation concerning their “investigation” does not demonstrate that they timely filed their claims. See Salem Sand & Gravel Co. v .City of Salem, 260 Or. 630, 637 (1971) (“When the pleadings disclose that the action was not commenced within two years after the alleged fraud was consummated, it is necessary for plaintiff to [negate] lack of diligence in the PAGE 5 – OPINION AND ORDER discovery of the fraud and to set forth the reasons why there was not an earlier discovery of the fraud.”). Thus, the Court dismisses Plaintiffs’ claims. Defendants argue that the Court should not grant Plaintiffs leave to replead because the allegations in the Complaint establish that Plaintiffs knew or should have known of their claims by 2012 at the latest. See Mathies, 284 Or. at 542; Forest Grove Brick v. Strickland, 277 Or. 81, 86 (1977) (“Not only knowledge but imputed or constructive knowledge will commence the period of limitations.”). Under the discovery rule, Courts conduct an objective two-step analysis to determine whether a plaintiff had or should have known about his claims. Mathies, 284 Or. at 542-43. First, the Court asks whether the plaintiff had “sufficient knowledge to ‘excite attention and put a party upon his guard or call for an inquiry notice.’” Id. at 543 (quoting Linebaugh v. Portland Mortgage Co., 116 Or. 1, 14 (1925)). Second, if the plaintiff had such knowledge, the Court must then determine whether a reasonably diligent inquiry would disclose the fraudulent or deceptive conduct. Id. (quoting Wood v. Baker, 217 Or. 279, 287 (1959)). Defendants argue that Plaintiffs knew or should have known about Defendants’ allegedly fraudulent and deceptive conduct that occurred during and before the foreclosure and eviction because Plaintiffs knew about the foreclosure and stipulated to their eviction. Plaintiffs respond that they had no reason to suspect that Defendants’ conduct was fraudulent and deceptive because they did not understand that MERS’s initial assignment was fraudulent. Plaintiffs assert that many practicing attorneys would be unaware that such an assignment is fraudulent. The Court agrees with Plaintiffs that their knowledge of the existence of the foreclosure and eviction would not necessarily place them on actual or inquiry notice that Defendants’ conduct was deceptive or fraudulent. Defendants also argue that the public recordation of the “foreclosure documents” placed PAGE 6 – OPINION AND ORDER Plaintiffs on constructive notice of their claims. Defendants rely on John Latta Associates, Inc. v. Vasilchenko, where the court held that a purchaser of property is on constructive notice of the existence of a recorded judgment lien on that property. 240 Or. App. 96, 106-07 (2010). Unlike in John Latta Associates, however, Defendants do not argue merely that Plaintiffs had constructive notice of the existence of the foreclosure documents. Rather, Defendants assert that Plaintiffs knew or should have known that the foreclosure documents were fraudulent. Plaintiffs respond that these documents appeared normal and routine at the time, but do not allege these facts in their Complaint. But for an extensive and costly investigation, argue Plaintiffs, they would never have known or have had reason to suspect that the MERS’ assignment and subsequent foreclosure sale were deceptive or fraudulent. The Court accepts Plaintiffs’ representations and finds that it is not “absolutely clear” that an amended pleading would not cure the identified deficiencies. See Garity, 828 F.3d at 854. Thus, the Court grants Plaintiffs leave to replead. CONCLUSION Defendants’ Motion to Dismiss for Failure to State a Claim (ECF 8) and Request for Judicial Notice (ECF 9) are GRANTED. Plaintiffs have leave to file an amended pleading within two weeks if they believe that additional allegations will cure the identified deficiencies. If no amended pleading is filed within such time, a judgment will be entered dismissing Plaintiffs’ complaint. IT IS SO ORDERED. DATED this 31st day of July, 2017. /s/ Michael H. Simon Michael H. Simon United States District Judge PAGE 7 – OPINION AND ORDER

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