Toone et al v. Wells Fargo Bank NA et al

Filing 39

MEMORANDUM DECISION and Order on Pending Motionsdenying as moot 26 Motion to Strike Amended Complaint; denying as moot 29 Plaintiffs' Motion for Extension of Time to Oppose Defendant Wells Fargo's Motion to Strike the Amended Complaint; denying as moot 30 Plaintiffs' Motion for Leave to File Their Amended Complaint; granting 5 Motion to Dismiss; granting 8 Motion to Dismiss. Signed by Judge Ted Stewart on 09/27/2011. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

BRYAN TOONE and JOLYNNE TOONE
Plaintiffs,

MEMORANDUM DECISION AND
ORDER ON PENDING MOTIONS

vs.

WELLS FARGO BANK, N.A.; PREMIER
MORTGAGE CORPORATION OF
AMERICA; ACCUBANK MORTGAGE
CORPORATION DBA ACCUMORTGAGE
CORPORATION; NORWEST
MORTGAGE, INC.; LASALLE BANK
N.A., as Trustee; BANK OF AMERICA, NA;
ETITLE INSURANCE AGENCY;
LUNDBERG & ASSOCIATES; KENT W.
PLOTT; MARK S. MIDDLEMAS; DOES 150

Case No. 2:11-CV-170

Defendants.

This matter is before the Court on several motions. Defendants Bank of America,
LaSalle Bank, Norwest Mortgage, and Wells Fargo Bank, NA (collectively “Wells Fargo”) filed
a Motion to Dismiss on February 22, 2011.1 Defendants eTitle Insurance Agency, Lundberg &

1

Docket No. 5.
1

Associates, Mark S. Middlemas, Kent W. Plott and (collectively “eTitle”) also filed a Motion to
Dismiss on the same day.2 On April 15, 2011, Plaintiffs filed an amended complaint without
prior leave from the Court or stipulation of Defendants and more than 21 days after the initial
complaint was filed.3 On May 10, 2011 ,Wells Fargo filed a Motion to Strike Plaintiffs’
Amended Complaint. On June 1, 2011, Plaintiffs filed a Motion for Extension of Time to
Oppose Defendant Wells Fargo’s Motion to Strike the Amended Complaint.4 On June 6, 2011,
Plaintiffs filed a Motion (1) for Leave to File Their First Amended Complaint and (2) to Strike
Wells Fargo’s Reply Memorandum.5
I. STANDARD OF REVIEW
In considering a motion to dismiss under Rule 12(b)(6), all well-pleaded factual
allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the
light most favorable to Plaintiffs as the nonmoving party.6 Plaintiffs must provide “enough facts
to state a claim to relief that is plausible on its face”7 and the court “need not accept . . .
conclusory allegations without supporting factual averments.”8 “The court’s function on a Rule

2

Docket No. 8.

3

Docket No. 21.

4

Docket No. 29.

5

Docket No. 30.

6

Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002).

7

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).

8

S. Disposal, Inc., v. Tex. Waste, 161 F.3d 1259, 1262 (10th Cir. 1998); Hall v. Bellmon,
935 F.2d 1106, 1110 (10th Cir. 1991).
2

12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to
assess whether the plaintiff’s complaint alone is legally sufficient to state a claim for which relief
may be granted.”9 The Supreme Court has explained that a plaintiff must “nudge[ ][his] claims
across the line from conceivable to plausible” to survive a motion to dismiss.10
Thus, the mere metaphysical possibility that some plaintiff could prove some set
of facts in support of the pleaded claims is insufficient; the complaint must give
the court reason to believe that this plaintiff has a reasonable likelihood of
mustering factual support for these claims.11
The Supreme Court recently provided greater explanation of the standard set out in
Twombly in Ashcroft v. Iqbal.12 In Iqbal, the Court reiterated that while FED.R.CIV.P. 8 does not
require detailed factual allegations, it nonetheless requires “more than unadorned, the-defendantunlawfully harmed-me accusation[s].”13 “A pleading that offers ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action will not do.’”14 “Nor does a complaint
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’”15
The Court in Iqbal stated:

9

Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991).

10

Twombly, 550 U.S. at 547.

11

The Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)
(emphasis in original).
12

129 S.Ct. 1937 (2009).

13

Id. at 1949.

14

Id. (quoting Twombly, 550 U.S. at 555).

15

Id. (quoting Twombly, 550 U.S. at 557).
3

Two working principles underlie our decision in Twombly. First, the tenet
that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice. Rule 8 marks
a notable and generous departure from the hyper-technical, code-pleading regime
of a prior era, but it does not unlock the doors of discovery for a plaintiff armed
with nothing more than conclusions. Second, only a complaint that states a
plausible claim for relief survives a motion to dismiss. Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.
But where the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged—but it has not
show[n]—that the pleader is entitled to relief.
In keeping with these principles a court considering a motion to dismiss
can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions
can provide the framework of a complaint, they must be supported by factual
allegations. When there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief.16
In considering the adequacy of a plaintiff’s allegations in a complaint subject to a motion
to dismiss, a district court not only considers the complaint, but also “documents incorporated
into the complaint by reference, and matters of which a court may take judicial notice.”17 Thus,
“notwithstanding the usual rule that a court should consider no evidence beyond the pleadings on
a Rule 12(b)(6) motion to dismiss, ‘[a] district court may consider documents referred to in the
complaint if the documents are central to the plaintiff’s claim and the parties do not dispute the

16

Id. at 1949-50 (alteration in original) (internal quotation marks and citations omitted).

17

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citing 5B
WRIGHT & MILLER § 1357 (3d ed. 2004 & Supp. 2007)).
4

documents’ authenticity.’”18

II. BACKGROUND
In 1998, Bryan and Jolynne Toone borrowed money from Premier Mortgage Corporation
against their home, and executed a promissory note and trust deed.19 Wells Fargo was apparently
the servicer of the loan from the beginning, though the note and trust deed were subsequently
transferred several times.20 In 2010, Wells Fargo notified the Plaintiffs that they were in
default.21 Defendant eTitle, the successor trustee, then served and recorded notices of default and
trustee’s sale, and Wells Fargo began foreclosure proceedings.22
Plaintiffs pursue six causes of action against Defendants. The Court will address each in
turn.
III. DISCUSSION
A.

DECLARATORY JUDGMENT
Plaintiffs’ first cause of action seeks declaratory relief on several grounds. The Court notes

18

Alvarado v. KOBTV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007) (quoting Jacobsen v.
Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)).
19

Docket No. 6, at 4.

20

Docket No. 4, at 6-7.

21

Docket No. 6, at 4.

22

Id.
5

that this cause of action is filled with theories that the Court has repeatedly rejected.23 Plaintiffs
are apparently aware of this, having done away with paragraphs (a)-(g) of their first cause of
action in their First Amended Complaint.24
The remainder of Plaintiffs’ first claim seeks a declaration that each of the Defendants
have committed various improper acts. This Court has recently noted that declaratory judgments
are “‘designed to declare rights so that parties can conform their conduct to avoid future
litigation’”25 not to fix “‘alleged past wrongs.’”26 Each paragraph of Plaintiffs’ first cause of
action requests a declaration that one of the named Defendant’s past actions was improper.27
“Accordingly, the causes of action for declaratory judgment can be dismissed independently for
failure to state a claim.”28
However, even if declaratory judgment were a proper vehicle for any of Plaintiffs’ claims,
the claims would still fail to meet the pleading standard. Plaintiffs explain that the “gravamen of
[their] complaint is the allegation that the purported endorsements on the Toone Note are

23

Plaintiffs original Complaint pursued both a “split note” and a “show me the note”
theory. For a rejection of the “split note” theory see Rodeback v. Utah Financial, 2010 WL
2757243 (D. Utah 2010). For a rejection of the “show me the note” theory see Marty v.
Mortgage Electronic Registration System, 2010 WL 4117196 (D. Utah 2010).
24

Docket No. 22, at 3.

25

Scarborough v. LaSalle Bank, 2011 WL 1549432, *3 (D. Utah Apr. 21, 2011) (quoting
Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., 386 F.3d 581, 593-94 (4th Cir. 2004)).
26

Id. (quoting Tapia v. U.S. Bank, N.A., 718 F. Supp. 2d 689, 695 (E.D. Va. 2010)).

27

E.g., Docket No. 4, ¶ 50(h) (“a declaration that neither LaSalle nor BOA had any right
to appoint eTitle as ‘successor trustee’ under the Toones’ Trust Deed. ”).
28

Scarborough, 2011 WL 1549432, at *3.
6

defective for many reasons, such that neither LaSalle nor BOA ever legally became the
owner/endorsee of the Toone Note.”29 Rather than coupling allegations of fact with valid legal
principles to support this proposition, Plaintiffs have instead proffered the rather unhelpful
argument that because the initial transfer from Premiere to an assignee is signed by the assignee
rather than Premiere, the endorsement “can not possibly be a proper and effective endorsement.”30
The remaining transfers Plaintiffs describe as “robo-signed,” which purportedly renders them
void.31 Though Plaintiffs allege that the supposed invalidity of “robo-signing” has been
“documented extensively in cases throughout the country,” they fail to provide any supporting
citations.32 These unsupported contentions of invalid endorsement are the linchpin of all of
Plaintiffs’ requests for relief under their first cause of action. Accordingly, the Court will dismiss
Plaintiffs’ first cause of action.
B.

THE FAIR DEBT COLLECTION PRACTICES ACT (FDCPA)
The FDCPA is a federal statute that applies to the practice of parties who are “debt

collectors.”
The term “debt collector” means any person who uses any instrumentality of interstate
commerce of the mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.33

29

Docket No. 22, at 2.

30

Docket No. 4, at 6.

31

Id. at 7.

32

Id. at 5.

33

15 U.S.C. § 1691a (6).
7

Plaintiff apparently alleges that all Defendants are debt collectors and that each violated the
FDCPA in pursuing the foreclosure in this matter. This claim fails because none of the
Defendants qualify as debt collectors.
The question of whether mortgagees and their assigns are debt collectors for purposes of
the FDCPA has been addressed by this Court. In Kee v. R-G Crown Bank, the Court held that a
mortgage servicer was not a debt collector where the servicer had acquired the note before it was
in default.34 Nothing in the record indicates, and Plaintiffs do not allege, that Wells Fargo began
servicing the loan after it was in default. Accordingly, Wells Fargo cannot be a “debt collector.”
Furthermore, “the holder of the Note . . . is not a ‘debt collector’ within the meaning of [the
FDCPA] because [the Note holder] is not attempting to collect the debt of another.”35 Thus,
because Premier and all subsequent assignees were merely note holders, they cannot be classified
as “debt collectors.”
As to eTitle, the successor trustee, and Lundberg & Associates, Kent W. Plott, and Mark
S. Middlemas, legal counsel that assisted with the foreclosure, this Court has held that “[a] trustee
engaged in a non-judicial foreclosure is not acting ‘in connection’ with the ‘collection of [a]
debt,’” and therefore is not subject to the FDCPA.36 This principle extends to attorneys aiding in
the foreclosure process as well.37 However, the Court has recognized that one of the FDCPA’s

34

656 F. Supp. 2d. 1348 (D. Utah 2009).

35

Id. at 1354-55.

36

Id.

37

Maynard v. Cannon, 650 F. Supp. 2d 1138, 1142 (D. Utah 2008).
8

provisions could be read to impose some restrictions on attorneys acting to enforce a security
agreement.38 That provision prohibits
Taking or threatening to take any nonjudicial action to effect dispossession or
disablement of property if–
(a) there is no present right to possession of the property claimed as collateral
through an enforceable security interest;
(b) there is no present intention to take possession of the property; or
(c) the property is exempt by law from such dispossession or disablement.39
Plaintiffs have alleged no facts indicating that these Defendants have violated this provision,
instead relying on their ill-fated invalid endorsement theory (which would, theoretically, destroy
the right of any party to take possession of the property). Without these essential facts, Plaintiffs
have failed to do anything more than state the bare legal conclusion that these Defendants have
violated the FDCPA.
In light of the foregoing, the Court will dismiss Plaintiffs’ FDCPA claims against all
Defendants.
C.

UTAH CONSUMER SALES PRACTICES ACT (UCSPA)
Under the UCSPA, a “supplier” may not commit a “deceptive act or practice . . . in

connection with a consumer transaction.”40 Plaintiffs allege that “each of the defendants is a
‘supplier,’” that the note was a consumer transaction, and that “false representations by and other
actions of the defendants . . . constituted deceptive acts or practices, and/or unconscionable

38

Id.

39

15 U.S.C. § 1692f (6).

40

U.C.A. § 13-11-4.
9

conduct.”41 Plaintiffs decline to explain which of Defendants’ actions were misrepresentations,
and how those misrepresentations relate to any of the 23 different “deceptive acts” identified in
the statute. The Court can only assume that Plaintiffs are resorting to their invalid endorsement
claims. Because the Toones’ invalid endorsement theory is unsupported, all theories that rest
upon it are likewise deficient. Accordingly, the Court will dismiss Plaintiffs’ third cause of
action.
D.

ETITLE’S DUTY OF GOOD FAITH
Plaintiffs claim that eTitle had a duty to “not accept the appointment as successor trustee

and not to proceed to foreclose upon The Toones [sic] Property under the circumstances herein.”42
This is because, “[g]iven the National Foreclosure Crisis–it is common knowledge that the
underlying documentation is almost always incorrect and/or fraudulent in some form or fashion as
alleged herein.”43 Plaintiffs have failed to direct the Court to any authority for the proposition that
a trustee is under such an obligation, other than the principle that “a trustee owes a duty to act
with reasonable diligence and good faith on the trustor’s behalf.”44
The Court has rejected claims that a non-judicial foreclosure trustee’s duty of reasonable
diligence and good faith requires trustees to halt their work and investigate a trustor’s claims of a

41

Docket No. 4, at 9.

42

Docket No. 4, at 15.

43

Id.

44

Docket No. 13, at 10 (citing Russell v. Lundberg, 120 P.3d 541, 545 (Utah Ct. App.

2005)).
10

lack of authority to foreclose. In Burnett v. Mortgage Electronic Registration System,45 the Court
held that a successor trustee had no duty to stop foreclosing and investigate the plaintiff’s claims
that the entity that appointed the trustee had no authority to do so.46 Here, much like in Burnett,
Plaintiffs essentially contend that eTitle should make sure it has standing to foreclose by ensuring
the trust deed was validly signed over to it before foreclosing.47 Accordingly, Plaintiffs are
incorrect in their assertion that eTitle’s actions violated any duty eTitle owed to Plaintiffs as
trustee. Thus, the Court will dismiss Plaintiffs’ fourth cause of action.
E.

GOOD FAITH AND FAIR DEALING
Plaintiffs claim that Wells Fargo has breached its duty of good faith and fair dealing by

refusing to modify their loan under HAMP.48 The Court has repeatedly held that HAMP does not
authorize a private right of action and that “HAMP-based claims, disguised as other claims, such
as breach of contract, are not cognizable.”49 Accordingly, the Court will dismiss Plaintiffs’ fifth
cause of action.

45

2009 WL 3582294 (D. Utah 2009).

46

Id. at *5. Likewise, in Kee v. R-G Crown Bank, this Court held that attorneys intiating
foreclosure proceedings had no duty to “postpone the foreclosure and sale of Plaintiff’s property
and investigate Plaintiff’s claim that the Note and Trust Deed were invalid and unenforceable.”
656 F. Supp. 2d 1348, 1356 (D. Utah 2009).
47

Kee, 656 F. Supp. 2d at 1356.

48

Docket No. 22, at 6-7.

49

Terry v. IndyMac Mortg. Servs., 2011 WL 2112033, at *1 (D. Utah May 26, 2011)
(citing Shurtliff v. Wells Fargo Bank, NA, 2010 WL 4609397, at *3 (D. Utah Nov. 5, 2010);
Marks v. Bank of Am., NA, 2010 WL 2572988, at *5-6 (D. Ariz. June 22, 2010)).
11

F.

RESPA
Plaintiffs allege that they submitted multiple Qualified Written Requests for information to

Wells Fargo under the Real Estate Settlement and Procedures Act (RESPA),50 to which Wells
Fargo failed to respond.51 According to Plaintiffs, this failure entitles Plaintiffs to compensation
for actual damages, which they define as “distress, anxiety, damage to credit and the like.”52
Plaintiffs also ask for declaratory relief requested in their first cause of action as well as an order
cancelling the note and trust deed.
This Court considered and rejected nearly identical claims in Rodeback v. Utah
Financial.53 Under RESPA, any damages the Court awards must be caused by a defendant’s delay
in response to a QWR.54 As in Rodeback, none of Plaintiffs’ proposed damages are “the result of
Defendants’ delay in responding to the QWR. Rather they flow from Defendants’ actions
occurring after Defendants’ tardy response.”55 Thus, even if Plaintiffs’ requests for information
were proper QWRs, Plaintiffs have alleged no actual damages which can be compensated under
RESPA.
Plaintiffs also allege they are entitled to additional damages under RESPA because Wells

50

12 U.S.C. § 2605(e).

51

Docket No. 4, ¶ 42.

52

Id. ¶ 77.

53

2010 WL 2757243.

54

Id. at *3.

55

Id.
12

Fargo has engaged in a “pattern and practice” of noncompliance with RESPA. As Defendants
note, “Plaintiffs have failed to plead any facts that might support such a statutory damages claim
here.”56 The Toones have merely alleged that Wells Fargo’s supposed violations of RESPA in
regards to the Toones, coupled with “the manner in which they have failed to properly respond to
QWRs from other borrowers, demonstrate that they are knowing and wilful and that Wells Fargo
has a pattern and practice of knowingly and wilfully violating RESPA.”57 Such conclusory
allegations fail state a claim for which relief can be granted. Accordingly, the Court will dismiss
Plaintiffs’ sixth cause of action.
G.

PLAINTIFFS’ MOTION TO FILE A SECOND AMENDED COMPLAINT
A party may amend its pleading as a matter of course within 21 days of serving it.58 All

other amendments may only be filed with the opposing party’s consent or the Court’s leave.59
Plaintiffs submitted their First Amended Complaint more than 21 days after serving their original
Complaint and without the Court’s or Defendants’ permission, thus violating this rule. Now
Plaintiffs have asked the Court for leave to submit their First Amended Complaint.60
As a general matter, the Court should “freely give leave [to amend] when justice so

56

Docket No. 25, at 14.

57

Docket No. 4, ¶ 42.

58

Fed. R. Civ. Pro. 15(a)(1).

59

Id. (15)(2).

60

Docket No. 30.
13

requires.”61 Courts may depart from this general rule, however, when amendment would be
futile.62 A proposed amendment is futile if the complaint, as amended, would nonetheless be
subject to dismissal.63 After reviewing Plaintiffs’ First Amended Complaint, much of which
either restates or copies verbatim the original Complaint, the Court finds that nothing therein
cures the deficiencies of the original Complaint. Plaintiffs continue to base nearly all of their
allegations on the unsupported premise that the note was improperly endorsed. All Plaintiffs’
claims that do not rely on this theory misapply statutory or case law in the same manner as
detailed above. Accordingly, the Court will deny Plaintiffs’ Motion to File Their First Amended
Complaint.64
IV. CONCLUSION
In light of the foregoing, all motions pertaining to Plaintiffs’ Motion to File Their First
Amended Complaint are moot. It is therefore
ORDERED that Defendant Wells Fargo and Defendant eTitle’s Motions to Dismiss
(Docket Nos. 5 and 8) are GRANTED. It is further
ORDERED that Defendant Wells Fargo’s Motion to Strike Amended Complaint (Docket
No. 26), Plaintiffs’ Motion for Leave to File Their Amended Complaint (Docket No. 30) and
Plaintiffs’ Motion for Extension of Time to Oppose Defendant Wells Fargo’s Motion to Strike the

61

Fed. R. Civ. Pro. 15(a)(2).

62

Anderson v. Suiters, 499 F.3d 1228, 1238 (10th Cir. 2007).

63

Id.

64

Docket No. 30.
14

Amended Complaint (Docket No. 29) are DENIED AS MOOT.

DATED September 27, 2011.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

15