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)

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

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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
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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
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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.
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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

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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

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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

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