Pazmino v. LaSalle Bank, N.A. et al

Filing 63

MEMORANDUM OPINION Re: 38 MOTION to Dismiss the Amended Complaint by LaSalle Bank, N.A., Lehman XS Trust 2006-19, Aurora Loan Services, LLC and 56 MOTION to Strike Notice of Supplemental Exhibit by Lehman XS Trust 2006-19, Mortgage Electronic Registration Systems, Inc. Signed by District Judge Gerald Bruce Lee on 05/20/2010. (stas)

IN THE FOR THE

UNITED

STATES

DISTRICT

COURT

EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION

Liliana E.

Pazmino,

)
)

Plaintiff,

v.
LaSalle Bank, for Lehman XS N.A., as Trustee

)
) )
)

Case No.

l:09cvll73(GBL)

Trust Mortgage

Pass-Through Certificates,

Series 2006-19 c/o Bank of America, N.A., a federally
successor by
N.A.,

) )
)
)
)

chartered bank,
et al.,

merger to LaSalle Bank,

Defendants.

)

MEMORANDUM OPINION

THIS MATTER is before
N.A., as Trustee

the Court on Defendants LaSalle Bank,

for Lehman XS Trust Mortgage Pass-Through

Certificates, 19 ("Lehman");

Series 2006-19

("LaSalle");

Lehman XS Trust 2006("Aurora") Motion

and Aurora Loan Service,

LLC's

to Dismiss the Amended Complaint
LaSalle, Lehman, Aurora,

(Dkt.

No.

38)1 and Defendants

and MERS's Motion to Strike Notice of
No. 56). This case concerns

Supplemental Exhibit

(Dkt.

Plaintiff's allegations that Defendants improperly instituted a
non-judicial foreclosure proceeding on her home. There are five

Motion to Dismiss the Amended Complaint.

1 Defendant Mortgage Electronic Registration Systems,
(Dkt. No.

49.)

Inc.

("MERS") joined the

issues before the Court.2

The first issue is whether Ms.

Pazmino
the to

sufficiently alleges a claim for declaratory relief where foreclosure sale has already occurred but
now declare that the

she asks

the Court

foreclosure on her property is void and

that none of

the Defendants

has any right,

title,

or interest in

the First Promissory Note.

The second issue

is whether Ms.

Pazmino sufficiently alleges a similar claim for declaratory relief as to the
whether Ms.

Second Promissory Note.

The

third issue

is

Pazmino states that

a plausible quiet

title claim where

she acknowledges

she defaulted on the promissory notes.

The fourth issue is whether Ms.

Pazmino sufficiently states a

claim for fraud on the state court under section 8.01-428 of the
Virginia Code where she alleges that Aurora, MERS and ALG

committed fraud on the state circuit court by misrepresenting
their authority to conduct the foreclosure. Motion to Dismiss Counts
The

The Court grants Defendants'
II, IV, V, and VI of

I,

the Amended Complaint.

Court grants

Defendants'

Motion as

to Counts I and II because declaratory

relief is not available where the alleged wrongs have already
been suffered and, alternatively, because Plaintiff fails to

state plausible grounds for declaratory relief.

The Court

2 A fifth issue is presented with regard to Defendants' Motion to Dismiss
Count V
U.S.C.
(PI.'s

(Violation of the Fair Debt Collection Practices Act
§§ 1692, et seq. (2000)). However,

("FDCPA"),

15

Plaintiff withdrew the claim and

thus the Court dismisses Count V without analyzing the issue presented.
Opp'n 26.)

grants Defendants' Plaintiff alleges

Motion as fail

to Count

IV because that

the she

facts has

to plausibly suggest

superior title mortgage
released.

since Plaintiff admits

that

she has not paid her

in full

and the note has not been cancelled or
Motion as to Count VI

The Court grants Defendants'

because

the Amended Complaint

fails

to allege

sufficient

facts

to establish a fraud on the court claim under section 8.01-428 of
I.

the Virginia Code.
BACKGROUND

This action arises Ms.

from a residential mortgage

foreclosure. 3752 Mary
on

Liliana Pazmino purchased the property located at
Alexandria, 2006. She Virginia 22309 (the of

Evelyn Way,

"Property")

September 19,

signed two deeds

trust and two

promissory notes Promissory Note") respectively,

in the and

amounts of

$502,448.00

("First

$62,800.00

("Second Promissory Note"), Company, LLC ("CTX") as

each naming CTX Mortgage

the Lender and MERS as the beneficiary.3
In 2008, Ms. Pazmino began receiving demands for payment

and threats of

foreclosure

from Aurora and ALG Trustee,

LLC

("ALG"),

who alleged that the first loan was in default.4

On or

3 The first Deed of Trust

(the "Deed")

indicates that MERS is also the
(Deed 4.)

"nominee for Lender and Lender's

successors and assigns."

4 Plaintiff does not allege that her loans were current when she received the
demands. In fact, she admits that she "owes someone money." (Pl.'s Opp'n

11.)

about October 14,

2008,

Ms.

Pazmino, ("QWR")

through counsel, pursuant to the

sent out

a

"Qualified Written Request" Section 6 of the Real

FDCPA and ("RESPA")

Estate Settlement

Procedures Act

to determine the status of the First Promissory Note.5
January 5, 2009, Ms. Pazmino received a notice 2009. On January 13, of a

On

foreclosure Ms. Pazmino

sale date of

January 19,

2009,

filed a petition for an injunction to stay the
proceeding in the Circuit Court
Aurora and MERS. On January 23,

foreclosure

for Fairfax County against
2009, Aurora responded to the

QWR and notified Ms.

Pazmino that

the

owner of

the First

Promissory Note was

LaSalle

in trust

for Lehman.

Aurora also

provided copies of

the First Promissory Note,
closing, and the payment

the Deed,

other
the

documents executed at

history of

account.6
Security

The Deed7 states that n[t]he beneficiary of this
Instrument is MERS (solely as nominee for Lender and

5 The Amended Complaint does not specify to whom Plaintiff sent the QWR.

6 In the original Complaint,
"as of December 1,
assigned, sold,

Plaintiff alleged that Aurora notified her that
from CTX to Aurora. (Compl. U 22.) This

2006,

the servicing of her lot trust mortgage loan was

or transferred"

allegation has been omitted from the Amended Complaint.

7 Plaintiff references and relies on the terms of the Deed in the Amended
Complaint.
Deed as

In addition,
the Court

Plaintiff does not challenge the authenticity of the
Motion to Dismiss the Amended Complaint.

attached

to Defendants'

Therefore,

can consider this document

in deciding

the current

motion.

See American Chiropractic Ass'n v.

Trigon Healthcare, that

Inc.,

367

F.3d

212,

234

(4th Cir.

2004)

(stating that

in deciding whether to dismiss a
is attached to a defendant's

complaint,

a court may consider a document

motion to dismiss if the document is "integral to and explicitly relied on in the complaint" and "the plaintiffs do not challenge its authenticity."
(citing Phillips v. LCI Int'l Inc., 190 F.3d 609, 618 (4th Cir. 1999)).

Lender's of MERS."

successors and assigns) (Deed 4.)

and the

successors

and assigns

The Deed also provides
that MERS holds only legal

Borrower understands and agrees

title
MERS

to the

interests granted by Borrower in this Security
but, if necessary to comply with law or custom, successors and for Lender and Lender's

Instrument,

(as nominee

assigns)

has

the right to exercise any or all of but not limited to,
Property, but not the and to take

these to

interests,
required of

including,
Lender

the right

foreclose and sell

any action

including,

limited to releasing

and canceling this Security Instrument. (Deed 4.) The Deed further provides "[t]he [First Promissory]

Note or a partial

interest
can be (Deed

in the Note

(together with this
times without prior

Security Instrument) notice to Borrower."

sold one or more 13.)

After an evidentiary hearing conducted on February 12, 2009, the Circuit Court
strike,

for Fairfax County granted Defendants'
the ex parte injunction to stay

motion to

dissolved

foreclosure, Mot.

and dismissed Compl. Ex.

the case with prejudice. B.) The property was

(Aurora's

to Dismiss
10, 2009.

foreclosed on

August

On August Circuit violated Court the

10,

2009,

Ms.

Pazmino filed a complaint (1)

in the

for Fairfax County alleging: FDCPA during the

Defendants (2) an

foreclosure process;

entitlement to a judgment declaring the
(3) ALG breached its

foreclosure unlawful;
the foreclosure

fiduciary duty during

process;
alone,-

(4)

the title of
MERS

the Property was vested in Plaintiff
fraudulently misrepresented their

and

(5)

and Aurora

authority

to conduct

the

foreclosure.

On October

16,

2009,

Aurora removed the action to this
1331. Thereafter,

Court pursuant
Court

to 28

U.S.C.

§

Aurora moved the

to dismiss

the

Complaint for failure

to state a claim against Aurora upon which The Court granted the motion on 2010, the Ms. Pazmino filed an

relief could be granted. November 20, 2009.

On January 8,

Amended Complaint which includes

following counts:

Count I

(Declaratory Action on the First Trust Note),
CTX, LaSalle, Lehman, Aurora and MERS;

Defendants

Count

II

(Declaratory Action on the

Second Trust Note),

Defendant CTX and any named Defendant claiming an interest;
Count III (Breach of Fiduciary Duty), Defendant ALG;

Count

IV

(Quiet Title), (Violation of

any competing

interest; Equity and

Count V

the FDCPA),

Defendants

Countrywide;8 and
Count VI
and ALG.

(Void Judgment by Fraud),

Defendants Aurora,

MERS,

Defendants

LaSalle,

Lehman,
the

Aurora,
Court

and MERS

(collectively,
Counts I, II, IV, V,

"Defendants")

now move

to dismiss

and VI of

the Amended Complaint.

9 Equity and Countrywide are not named defendants in this suit.
the Court that Plaintiff
Aurora.

It appears

to

actually alleges Count V against Defendants ALG and

II.

STANDARD

OF

REVIEW

A Federal

Rule of

Civil

Procedure

12(b)(6)

motion should be

granted unless an adequately stated claim is
showing any set complaint." (2007) of facts consistent Corp. v. with

"supported by
in the 561

the allegations 550 R. U.S. Civ.

Bell Atlantic citations

Twombly, see Fed.

544, P.

(internal

omitted);

12(b)(6).

"A pleading that offers
recitation of Ashcroft v. the

labels and conclusions
of a cause Ct. 1937,

or a

formulaic
not do." 550

elements 129 S.

of action will (2009);

Iqbal,

1949

Twombly,

U.S.

at

555.

A complaint

is also insufficient
further factual

if

it relies upon

"naked assertions devoid of
Iqbal, 129 S. Ct. at 1949

enhancement."
omitted).

(internal

citations

In order to complaint must on its face."

survive a Rule forth

12(b)(6)

motion to dismiss a that is plausible

set Id.;

"a claim

for relief at 570.

Twombly,

550 U.S.

A claim is factual inference content that the

facially plausible that allows the

"when the plaintiff pleads to draw the reasonable

court

defendant
Ct. at

is

liable

for the misconduct alleged."
555 U.S. at 556.

Iqbal,

129

S.

194 9;

Twombly,

In considering

a Rule

12(b)(6)

motion,

the court must

construe the complaint
plaintiff, read the

in the light most
as a whole,

favorable to the
and take
v.

complaint
true. 1993).

the

facts
7 F.3d the

asserted therein as 113 0, 1134 (4th Cir.

Mylan Lab.,

Inc.

Matkari,

In addition to

the complaint,

court may also examine

"documents

incorporated

into

the

complaint by reference,

and matters of which a court may take

judicial notice."
127 S. Ct. 24 99,

Tellabs,
2509

Inc.

v.

Makor Issues & Rights,

Ltd.,

(2007).

"Conclusory allegations alleged"
921

regarding

the legal effect of
Labram v. Havel, 43

the facts
F.3d 918,

need not be accepted.
1995). Because the

(4th Cir. is

central purpose of

the complaint

to provide

the defendant

"fair notice of what the plaintiff's claim is and the grounds
upon which it rests,"
supported by some

the plaintiff's

legal allegations must be
to allow the Gibson, 355

factual basis

sufficient

defendant to prepare a fair response.
U.S.
III.

Conley v.

41,

47

(1957).

ANALYSIS

The Court grants Defendants' II

Motion to Dismiss

Counts

I and

because a declaratory action cannot be used to redress and, alternatively, because Plaintiff fails

alleged past wrongs

to allege facts plausibly suggesting an entitlement declaratory relief. The Court dismisses Count

to

IV because

Plaintiff fails to sufficiently plead superior title.
dismisses Count VI because Plaintiff

The Court

fails to sufficiently
The

allege facts that establish a fraud on the court claim.
Court analyzes each count in order below.

A.

Count

I:

Declaratory Action -

First

Trust Note

The Court grants Defendants'
I because declaratory relief is

Motion to Dismiss
as the

as

to Count

inappropriate

foreclosure

has already occurred and because
set forth facts

the Amended Complaint
grounds

fails

to

establishing plausible

for declaratory

relief.
federal judgment

Federal
rules

Rule of

Civil

Procedure

57 provides that

the

"govern

the procedure § 2201." 28 U.S.C. the

for obtaining a declaratory Fed. § R. Civ. P. 57. Under of the the

under 28 U.S.C.

Declaratory Judgment Act, United States . . .

2201(a),

"any court legal

may declare

rights

and other

relations of any interested party seeking

such declaration,

whether or not further relief is or could be sought."9
"[D]eclaratory judgments are designed to declare to avoid future rights so that

parties can conform their conduct and are untimely if

litigation," already Co,

the questionable conduct has See

occurred or damages have already accrued.
Inc., 589 F. Supp. 2d at 615.

The Hipage

Here,
"Deed of

Plaintiff

asks

the Court
that

to void the
of

foreclosure
has any

Sale"

and declare

"none

the Defendants

9 Plaintiff's Amended Complaint cites
declaratory actions (Counts I and II).

to Virginia law as the grounds
However the federal rules

for her
Inc.,

apply to

these

claims after removal.

See

The Hipage

Co,

Inc.

v.

Access

2

Go,

589

F.

Supp.

2d 602,

614

(E.D.
federal

Va.

2008)

(applying Declaratory Judgment Act
state court and was

to a declaratory action which was subsequently removed to

originally filed in

court).

right,

title,

or interest

in the

First

Promissory note."

(Am.

Compl.
10,

H 15.)
as

However,
a result of

the Property was foreclosed on August
Plaintiff's admitted default on the

2009,

loans.10

Thus,

any wrong Plaintiff suffered as a result of the
foreclosure has already occurred.
at this stage is

allegedly deficient
Therefore,

a declaratory judgment

inappropriate."
Two cases with near identical facts were brought in this EMC
Mar.

District and dismissed on similar grounds.
Mortgage Corp., No. l:09-cv-1121, 2010 WL

See Merino v.
1039842 (E.D.

Va.

19,

2010)

(O'Grady, 2010 WL

J.);

Horvath v. (E.D. Va.

Bank of New York, 29, 2010)

No.

1:09J.).

cv-1129, Like

538039

Jan.

(Trenga,

Plaintiff,

the homeowners institutions of

in Merino and Horvath filed suits alleging a variety of claims on

against

financial

based on the

foreclosure

their homes

following a default

their mortgage 2010 WL 538039,

loans. at *1.
that

Merino,

2010 WL 103 9842,

at

*1;

Horvath,

In Merino,
"none of

the homeowner sought
any right,

declaratory relief

the Defendants has

10 The Amended Complaint reads "Defendants,
information concerning the and/or the and identity of true party in interest, . . .

having provided conflicting
the Promissory Notes (Am. Compl. H 1 49) 51).

the true owner of

Plaintiff refused to pay to them and Property" 2009" 10, (Am. Compl.

Defendants proceeded to foreclose on Plaintiff's "the foreclosure occurred on August

11 Even if Virginia law applied here,
declaratory relief

the Court would dismiss Count I because
section 8.01-184 of Virginia Code

is unavailable under

where the

"claims and rights asserted have Bd.

fully matured, v.

and the alleged Hylton Enters.,

wrongs have already been suffered."

of Supervisors

221 S.E.2d 534, 537 (Va. 1976) Co. v. Bishop, 111 S.E.2d 519,
have matured).

(citation omitted); see also Liberty Mut. Ins. 524 <Va. 1970) (declaratory judgment is not
rights and various duties of the parties

the correct cause of action when the

10

title, at
the

or interest" In Horvath,

in the promissory notes.

2010 WL 1039842, that
*1.

*4.

the homeowner sought declaratory relief
sale was void. 2010 WL 538039, at

foreclosure deed of

In both cases,

the

court noted that

the underlying purpose of

declaratory relief

is

to guide parties'

future conduct.

See

Merino,

2010 WL 1039842,

at

*4

("a declaratory judgment is an
intended to guide parties'
538039, at *1

inherently forward-looking mechanism,
behavior in the future"); Horvath,

2010 WL

(" [d]eclaratory relief actions").

is reserved for forward looking therefore held
the property at *4;

Both the Merino and Horvath courts
not appropriate Merino, *l.

that declaratory relief was had already been Horvath, foreclosed. at

because

2010 WL

1039842,

2010 WL 538039,

Furthermore,

even if

Plaintiff's

declaratory action was

appropriate,

Plaintiff

fails

to set forth plausible

facts

showing her entitlement

to declaratory relief.

Plaintiff argues

that she is entitled to declaratory relief
(1) Defendants (2)

for three reasons:
the terms of the the

lack the authority to enforce

Deed;

Defendants

lacked standing to institute

foreclosure proceedings because

they could not prove Article III

injury;

and

(3)

Defendants could not foreclose on the Property
The Court

because of

the prohibition on double recovery.

rejects

each of

these

arguments

in turn.

11

First, to enforce

Plaintiff the

argues the

that Defendants have no authority First Deed of Trust because,

terms of

according to Plaintiff,
interest

only the Lender or the

successor in
and appoint

to the Lender is authorized to remove

substitute finds

trustees to foreclose on the Property.

The Court

this argument unavailing because
Property in the event that

the Deed authorizes MERS
that Plaintiff defaulted this

to foreclose the on the loan.

The Deed states

"[t]he beneficiary of

Security Instrument is MERS
Lender's successors

(solely as nominee for Lender and
and the successors and assigns

and assigns)

of MERS."

(Deed 4.)

The Deed also provides
MERS (as nominee has the but

"if necessary to
for Lender and to exercise any limited to, the

comply with law or custom, Lender's or all of

successors and assigns) these interests,

right not

including,

right to foreclose and sell the Property,
required of Lender including, but not

and to take any action

limited to releasing and

canceling this Security Instrument."12
terms of the Deed, MERS has two roles:

(Deed 4.)

Under the

beneficiary and nominee

for Lender.

By signing the Deed,

Plaintiff agreed that MERS,

as

nominee for Lender and Lender's successors and assigns,

had the

right to foreclose the Property and recognized that MERS could
12 Plaintiff alleges Aurora informed Plaintiff that LaSalle is the "current
owner of the first trust note" (Am. Compl. U 29), but later alleges that none of Defendants is Lender under the Deed (Am. Compl. IHi 61-64). For purposes of this argument, the Court uses the term "Lender" instead of a specific
entity that is in fact the Lender or Noteholder.

12

take

any action required of

Lender.

Furthermore,

Plaintiff

makes

no

legally-supported argument and pleads

no

facts

in the

Amended Complaint as

to why MERS as nominee did not have

the

right to foreclose and sell

the Property in accordance with law

or custom.13
Defendants

As such,
the

Plaintiff's allegation that none of
the Deed is untenable.
al., No. l:09-cv-688,

have

authority to enforce
I. White, P.C., et

In Ruiz v.

Samuel

2009 WL 4823933,
court examined a

at

*1

(E.D.

Va.

Dec.

11,

2009)

(Ellis,
as

J.),
the

the

similar

issue

and

found that MERS,

nominee,

had the authority to appoint
the deed of trust.

successor trustees under
In that case, a homeowner

the plain terms of

who defaulted on her mortgage to appoint a substitute

loan alleged MERS

lacked authority

trustee

to conduct a foreclosure

proceeding on her property.
claim because according to

Id.

The Ruiz court dismissed the
trust, "MERS (as nominee

the deed of

for Lender and Lender's
to exercise any or all

successors and assigns)
of those interests,

has

the right:
but not

including,

limited to,

the right

to foreclose and sell

the Property."

Id.

13 Plaintiff argues that under section 55-59(9)
beneficiary,
proceedings.
trust, or the

of Virginia Code, MERS,

as the

cannot

appoint a substitute trustee to conduct
states
than fifty percent reason." Va. of

the foreclosure

Section 55-59(9)

"[t]he party secured by the deed of
the monetary Ann. § 55-59(9) to

holders of greater

obligations secured thereby,
substitute (2009). According to

shall have the right
for any MERS

and power to appoint a
Code.

trustee or trustees

Plaintiff,

lacked the power as beneficiary

appoint

a

substitute

trustee because

it was not

entitled to greater than

Plaintiff,
Lender,

fifty percent of the obligations due under the First Note. However, who signed the Deed in 2006 and received a copy of the Deed and
on January Property 23, 2009, knew that of MERS is also the nominee of the Lender the to and that the the Deed authorizes in the event MERS to act a default on behalf of on the loans.

other document foreclose

13

at

*2.

The Ruiz court held
language does

"[t]he
not .

*if
. .

necessary to comply with
require that the nominee

law or custom'

have

the power to act

only when directed by

law;

rather,

the

nominee may act on behalf of
deed of trust." Id. at *1.

the Lender as authorized by the
Similarly, in the current suit,

Plaintiff's allegation that Defendants
foreclose the Property fails.

have no right

to

Second,

Plaintiff argues

that Defendants could not
the foreclosure because
The Court rejects

demonstrate standing to institute
could not prove Article III

they

injury.

Plaintiff's standing argument to the extent that Plaintiff uses the term "standing" to refer to a requirement that a secured
its right
The

party first prove in court

to initiate a foreclosure
fundamental flaw in

before the proceedings commence.

Plaintiff's argument is
foreclosure state.
forth the procedural foreclosure,

that Virginia is a non-judicial
through 55-59.4, which set

Sections 55-59.1
requirements

for a non-judicial

do not require

an interested party to prove

"standing"
process.

in a court of
See Va. Code Ann.

law before
§ 55-59.1

initiating the foreclosure
(requiring notice before

sale by trustee

to owners,

lienors,

etc.);

§

55-59.2

(requiring

advertisement before sale by trustee); contents of advertisement of sale);
powers and duties of trustee

§

55-59.3

(specifying

§

55-59.4

(setting forth

in event of

sale under or

14

satisfaction of Plaintiff's

deed of

trust). argument.

The Court

therefore

rejects

"standing"

Third,

Plaintiff

asserts

that Defendants have already
and thus Defendants had

recovered damages

caused by her default

no right to foreclose on the Property due to the prohibition
against double recovery.
received pay-outs

Plaintiff

asserts

that Defendants

have

from mortgage According

insurance policies or other to Plaintiff, these pay-outs

credit derivatives.

cured the
thus,

injury allegedly caused by her default on the
are barred from double recovery. The

loans,
Court

Defendants

rejects

Plaintiff's double

recovery argument

for two reasons.

First, "[A]

Plaintiff pleads no facts

to support her allegations. the 'ground' of
and

plaintiff's

obligation to provide
requires more

...

*entitle[ment]

to relief

than labels

conclusions."
Legal the

Twombly,

550

U.S.

at

555

(citations omitted).
allegations and to

conclusions must be supported by factual must

"[f]actual allegations above the

be enough to raise a right id., as the Supreme

relief

speculative

level,"

Court

did not

intend to

"unlock the doors of discovery than conclusions."

for a plaintiff 129 S.Ct. at

armed with nothing more
1950.

Iqbal,

Here,
support of

Plaintiff
her double

sets

forth only conclusory statements
theory. In one sweeping

in

recovery

generalization Plaintiff

alleges

15

the applicable securitized mortgage pool has already been
paid out by one
loan loss

or more

of

the

following;
mortgage

i.)

credit

enhancement policies,
insurance policies

ii.)

overcollateralization,
iv.) default

iii.)

reserves pay-outs,

pay-outs,

v.)

credit default

swaps,

and/or vi.)

other credit derivatives.

These payouts the subject of

satisfied the alleged this Complaint.

indebtedness which is

(Am.

Compl.

t 79.)

However,

the Amended Complaint contains no

specific
occurred;

facts plausibly suggesting that any pay-out actually
that any Defendant received a pay-out as the result of

Plaintiff's default on her loans;
Plaintiff's obligation under the
statements do not adequately set

or that
loans.
forth a

the pay-outs
These
claim

satisfied

conclusory
for relief that

is plausible on its

face. reached a similar result on

The Merino and Horvath courts

this

issue.

The plaintiffs
that,

in Merino and Horvath raised
their default on the the default

identical arguments loans,

as a result of were

their obligations

satisfied because

triggered a pay-out.
2010 WL 538039, at *2.

Merino,

2010 WL 103 984 2,

at

*4;

Horvath,
and

The Merino and Horvath courts held,

this Court agrees,
legal basis,

that

"[Plaintiff]

provides no factual
to support his

or

and the Court

finds none,

contention

that because
losses

[Plaintiff's]

default triggered insurance for any
or 'credit enhancement,' he is

caused by that

default

discharged from the promissory notes and the Property

is

16

released from the
*4; Horvath, 2010

deeds
WL

of

trust."
at *2.

Merino,

2010

WL

103 9842,

at

538039,

Second,
support of

the Court

finds

the

cases

cited by Plaintiff

in

her

"double recovery"

argument

irrelevant on these

facts.

Plaintiff

relies

on Nizan v. (Va.

Wells Fargo Bank Minnesota 2007), for the proposition foreclose on the In

National Ass'n,

650

S.E.2d 497

that Defendants who received pay-outs

cannot

Property because double recovery is prohibited in Virginia. Nizan, a trustee of a real
of a

estate

investment

trust acquired an
loan pool. Id.

apartment

loan as part

securitized mortgage

at 4 99.

After the

loan went

into default,
Id. The

the

trustee
sued the guarantor

foreclosed on the property.

trustee

to recover a deficiency after the foreclosure. learning that
the loan pool,

Id.

Upon

the
the

trustee had settled with the
guarantor then sought

lender regarding
discovery.

additional

Id.

at

500.

The Supreme

Court

of Virginia discussed the common

law defense of

"double

recovery"

and stated that

"a party with

two valid causes of action is entitled to
each, amount [but [of is], nonetheless,

'seek compensation in
full

estopped from collecting the

damages]

in the second action if

they were partially

paid therefor in the first.'"

Id.

at 502

(citation omitted).
First,

Nizan has minimum value here

for two reasons.

although Nizan provides

for a double recovery defense,
trustee

Nizan

focuses on a dispute between a

and a guarantor over a

17

deficiency after a no cases extending the legitimacy of a

foreclosure. this defense

Here,

however,

Plaintiff

cites

to apply to actions The Merino court 2010 WL 1039842,

challenging reached a

foreclosure. See Merino,
double

similar conclusion.

at

*4

n.6

(rejecting homeowner's

recovery argument

because

"Plaintiffs cite no case

indicating

[double

recovery]

defense

can be converted somehow into a basis on which to bring a claim before this Court.").
theory applies here, as

Second,

even if

the double

recovery

mentioned above,

"Plaintiffs'

allegations on this further factual
the relief she

issue are completely naked and

'devoid of for

enhancement'
seeks. Id.

and provide no plausible basis"
129 S.Ct. no at

(quoting Iqbal,

1949). that Plaintiff

In short, allow the Court

the Amended Complaint contains to conclude that,

facts

despite her default,

is

discharged from the promissory notes and that
to the Property because of

she alone can
to

claim title

any alleged pay-outs

Defendants. Dismiss Count

Therefore, I because

the the

Court

grants

Defendants'

Motion

to

declaratory action is untimely and

Plaintiff
relief.

fails

to plead plausible grounds

for declaratory

18

B.

Count

II:

Declaratory Action

-

Second Trust Note

The

Court grants

Defendants'

Motion as

to Count

II

for the

same that

reasons

it dismissed Count

I,

above.

Count

II

requests any

the Court declare

that none of

the Defendants has

right,

title,

or interest in the
facts

Second Promissory Note.
to Count II are that (1)

However,

the only

alleged as

Plaintiff entered into a mortgage loan and she began paying her

loan

(Am.

Compl.

UK 15,

18,

19)

and

(2)

the Second Trust Note

was placed in an unknown pool or trust
These facts are insufficient

(Am.

Compl.

1 41).14
for the

to show plausible grounds Accordingly, Count

requested declaratory relief. Defendants'
it dismisses C^

the Court grants same grounds that

Motion to Dismiss
Count IV: I.

II on the

Count

Quiet Title Defendants' Motion as to Count IV because

The Court grants

the Amended Complaint

contains no facts

supporting Plaintiff's

claim of

superior title.

"An action to quiet

title

is based on

the premise that a person with good title

to certain real or
future

personal property should not be subjected to various

claims against that title."

Maine v.

Adams,

672 S.E.2d 862,

866

" Although Plaintiff does not explicitly plead that she defaulted on the
loan, she does allege "Defendants, having provided conflicting information concerning the identity of the true owner of the Promissory Notes and/or the
proceeded to

true party in interest, Plaintiff refused to pay to them and Defendants foreclose on Plaintiff's Property." (Am. Compl. H 4 9.)

19

(Va.

2009).

A party asserting a quiet

title action must plead

that he or she has
Here,

superior title
alleges no

to the property.

See id.

Plaintiff

facts

that plausibly suggest

that

she has

superior title.

In fact,

the allegations the opposite.
is the

contained Plaintiff
that

in the Amended Complaint
alleges in conclusory legal

suggest quite
she

fashion that

only party in the

"can prove

and equitable ownership

interest

Property."

(Am.

Compl.

H 94.)

However,

she makes no factual
or fully paid.
refused to pay

showing that the debt was
In fact,

forgiven,

cancelled,
Plaintiff

the Amended Complaint

admits

Defendants on the Notes
acknowledges
money"

(Am.

Compl.

U 49)

and Plaintiff
"owes someone

in her Opposition that
The facts

she still
pled

(PL's Opp'n 11).

in the Amended have no

Complaint do not plausibly suggest

that Defendants

rightful

claim to the

Property. she has

Plaintiff

therefore

fails

to

plead facts

showing that the

superior title

to the Property.

Moreover,

Court rejects

Plaintiff's allegation that,

"[g]iven the splitting,
pieces of the Notes

selling,

trading,

and insuring of
the Deeds ..."

the

on the

secondary market,

of Trust (Am.

are split from the Notes

and are unenforceable

Compl.
legal Iqbal,

H 99)

for three reasons.

First,

this allegation is a
truth. See

conclusion not entitled 129 S. Ct. at 1940.

to the

assumption of

Second,

in arguing against cites no legal

Defendants'

Motion to Dismiss,

Plaintiff

20

authority supporting her assertion of unenforceability.

Third,

this

allegation contradicts

the terms of

the Deed and Virginia

law.15
is

"Transfer of an instrument,
vests in the

whether or not the transfer
of the as a The

a negotiation,

transferee any right

transferor to enforce holder in due course." Deed states
interest

the

instrument, Code Ann. §

including any right 8.3A-203(b) Notes (2009).

Va.

"[t]he

[First

Promissory]

or a partial

in the Note

{together with this

Security Instrument)

can be sold one or more

times without prior notice

to Borrower."

(Deed 13.)

The

language of the Deed indicates that
transfers of the Note

the parties
the Note the

contemplated subsequent and the Deed could be right to enforce

and that

sold together.

With each transfer, from

the Deed passed along with the Note

transferor to transferee. by Plaintiff's argument
lost due to the

Therefore,

the Court

is unpersuaded

that the right

to enforce the Deed is
the loan.

transfer and securitization of Court grants Defendants'

Consequently,
Count IV.

the

Motion to Dismiss

ls Recently,
pieces of
relief
2010 WL

the Merino court held,
"given the

and this Court agrees,
selling, trading,

that an identical
insuring of the for

allegation that

splitting,

and

the Notes on the
the
*2.

secondary market,
law of

the Deeds of Trust are
instruments and the

split

from the Notes and are unenforceable" in view of
1039842 at

failed to provide a plausible basis negotiable after their negotiation. See

settled trust

enforcement of deeds of

securing notes

21

D.

Count VI;

Void Judgment

Obtained by

Fraud

The Court grants Defendants'

Motion as

to Count VI because

Plaintiff
of

fails

to allege sufficient facts
state court.

to support her claim
the right of a "to relieve a relief to a

fraud on the

Virginia preserves

court of equity to entertain an independent action party from any judgment or proceeding, defendant not
judgment

or to grant .

served with process

.

.

or to set aside a
Va. Code Ann. §

or decree (2009).

for fraud upon the The elements

court."

8.01-428(D)

that must be

established in

such an independent action are:
(1) a judgment which ought not, in equity and good

conscience,
(3) fraud,

to be enforced;
accident

(2)

a good defense
judgment

to the
is founded;

alleged cause of defendant in the

action on which the judgment and (5)

or mistake which prevented the from obtaining the absence of the benefit of his any adequate

defense;
of
remedy at Charles v.

(4)

the absence of

fault or negligence on the part

the defendant;
law.

Precision

Tune,

Inc.,

414

S.E.2d

831,

833

(Va.

1992).

"Fraud on

the

court,

no matter which party

it affects,

should be

remedied when appropriate."
12828, 2004 WL 3142307, at *4

Swofford v.
(Va. Cir.

Bowles,
Ct. June

No.
24,

CH032004). The

party alleging fraud as
false representation,

to

the third element must allege
of material fact, (3) made

(1)

a

(2)

intentionally and knowingly, reliance by the party misled,
party misled. Id. at *5.

(4) and

with intent (6)

to mislead,

(5)

resulting damage
the

to the
must

The

challenger of

judgment

22

clearly and conclusively establish particularly the element of The Amended Complaint intent. fails

the

existence

of

fraud,

Id. forth sufficient facts

to set

to establish a plausible
reasons. First,

claim for fraud on the court
does not plead sufficient

for three
facts

Plaintiff

pertaining to
alleges that

the
there

fraud element.

The Amended Complaint only
Trust

are discrepancies between the Deed of

and the Deed of MERS.

Substitute Trustee executed by Aurora,

ALG and

Plaintiff does not allege Defendants
court in order

intended to mislead
the the

the circuit foreclosure.

to commence or effectuate is no allegation as

Further,

there

to whether

state circuit court relied on Defendants'
misrepresentation.

alleged

Second,
remaining

the Amended Complaint does not even mention the
Tune elements. Plaintiff does not

four Precision

allege

that the circuit court's
she allege

judgment

should not be enforced;
the circuit that court had did

nor does merit. not have the

that her claims before

The Amended Complaint does the opportunity for to fully

not allege litigate the

Plaintiff issue was in an

state

Circuit Court

Fairfax County or whether there

appeal of Virginia.

the circuit court judgment to the The Amended Complaint does

Supreme

Court of

not allege an absence of nor does
law.

fault or negligence on the part of
the absence of any adequate

Plaintiff;

it

allege

monetary remedy at

23

Third,

Plaintiff's

claim The

for fraud on

the court

is based on

unsupported theories. on the theory that

allegations

in Count VI

are premised

Defendants As

lack authority and standing to discussed in Section A, above,

foreclose on the

Property.

this

line of

argument

is unavailing.

Therefore, Count VI of

the Court the Amended

grants Defendants' Complaint.
IV. CONCLUSION

Motion to Dismiss

The
II, IV,

Court grants
V, and VI of

Defendants'

Motion to Dismiss
The

Counts

I,

the Amended Complaint.

Court

grants

Defendants'

Motion as

to Counts

I and II because

declaratory

relief is not available where
been suffered and,

the alleged wrongs have already
because Plaintiff fails to

alternatively,

state plausible grounds grants Defendants'

for declaratory relief. to Count IV because

The Court the facts

Motion as

Plaintiff alleges
superior title. V as unopposed.

fail
The The

to plausibly suggest

that

she has
to Count to Count

Court grants Defendants' Court grants Defendants'

Motion as Motion as

VI because

the Amended Complaint

fails

to allege

sufficient

facts to establish a
8.01-428 of

fraud on the court claim under section
Code. Accordingly, it is hereby

the Virginia

ORDERED that Defendants' Complaint is GRANTED. It is

Motion to Dismiss further

the Amended

24

ORDERED that dismissal
Defendants and no further

is WITH PREJUDICE as

to all

leave

to amend will be granted because

Plaintiff has had two full opportunities
the Court's analysis set

to plead her case and
that further

forth herein demonstrates as a matter of
(1962). It is

pleading would be futile
Davis, 371 U.S. 178, 182

law.

See Foman v.

further

ORDERED that Defendants Motion to Strike Notice of the reasons set forth

LaSalle,

Lehman,

Aurora, is

and MERS's for

Supplemental Exhibit

GRANTED

in the Memorandum in Support.

The Clerk is directed to forward a copy of this Order to
counsel.

Entered this L/1/ day of May,

2010.

Alexandria,

Virginia

f6/
Gerald Bruce Lee United States District Judge

25