Bowler et al v. ING Direct et al

Filing 44

ORDER granting 40 Defendant's Motion to Dismiss; Plaintiff's Complaint is DISMISSED Without Prejudice. Signed by Judge Ronald B. Leighton.(DN)

HONORABLE RONALD B. LEIGHTON

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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RICK R. BOWLER and MARILEE J.
THOMPSON,

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No. 3:10-cv-05871-RBL

Plaintiffs,

ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS

v.
ING DIRECT et al.,
Defendants.

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THIS MATTER comes before the Court on Defendants’ Motion to Dismiss [Dkt. #40]
for failure to state a claim upon which relief can be granted and for lack of personal jurisdiction.

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Plaintiffs Rick R. Bowler and Marilee J. Thompson (now deceased) contend Defendants ING
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Direct, ING Bank FSB, LaTessa Brown, and Cal-Western Reconveyance Corporation of

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Washington (collectively, Defendants or ING) (1) violated the Racketeering and Corrupt

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Organizations Act (RICO); (2) committed mail fraud; and (3) committed perjury throughout the

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course of a loan arrangement that ended in foreclosure. Because the Plaintiffs have failed to

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state a claim upon which relief can be granted, the Court GRANTS Defendants’ Motion to
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Dismiss [Dkt. #40] pursuant to Rule 12(b)(6).

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ORDER - 1

I. BACKGROUND

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Mr. Bowler and Ms. Thompson, appearing pro se, are victims of the subprime mortgage

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crisis. In 2008, Plaintiffs secured a loan in the amount of $1,410,000 against real property

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located at 1111 Southeast 201st Avenue in Camas, Washington. Pls.’ Compl. at 9 [Dkt. #1];

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Defs.’ Mot. at 2 [Dkt. #40]. Lighthouse Financial Group (Lighthouse) prepared the loan
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application and, unbeknownst to Plaintiffs or to ING, produced false loan documents to inflate

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Plaintiffs’ borrowing capacity. Defs.’ Mot. at 3 [Dkt. #40]. The loan application did disclose,

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however, that Plaintiffs were defending a multi-million dollar class action law suit at the time.

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Pls.’ Compl. at 9 [Dkt. #1]. ING lent Plaintiffs the full amount and recorded a Deed of Trust

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against the property. Defs.’ Mot. at 2 [Dkt. #40].
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When Plaintiffs fell behind in payments, Cal-Western (a foreclosure service) initiated

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foreclosure on the collateral property. Plaintiffs have demanded that ING produce the original

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“Blue Ink” promissory note. Pls.’ Compl. at 12 [Dkt. #1]. Because ING has refused, Plaintiffs

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conclude ING repackaged the mortgage into a mortgage-backed security and sold the loan to an
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investor. Pls.’ Mot. at 9 [Dkt. #1]. Plaintiffs now allege endemic fraud and conspiracy between

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lenders and mortgage brokers; specifically, they contend ING violated RICO and federal mail

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fraud statutes.

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II. AUTHORITY

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Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal
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theory or absence of sufficient facts alleged under a cognizable legal theory. Balistreri v.

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Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff’s complaint must allege

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facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662

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(2009). A claim has “facial plausibility” when the party seeking relief “pleads factual content

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ORDER - 2

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that allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.” Id. Although the Court must accept as true the complaint’s well-pled

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facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise

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proper [Rule 12(b)(6)] motion. Vasquez v. L.A. Cty., 487 F.3d 1246, 1249 (9th Cir. 2007);

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Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation
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to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions,

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and a formulaic recitation of the elements of a cause of action will not do. Factual allegations

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must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,

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550 U.S. 544, 555 (2007) (citations and footnote omitted). In addition, allegations of fraud must

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be pled with particularity, meaning a plaintiff must allege “the time, place, and nature of the . . .
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fraudulent activities.” Fed. R. Civ. P. 9(b); Fecht v. Price Co., 70 F.3d 1078, 1082 (9th Cir.

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1995). RICO claims involving predicate acts based on fraud, including mail fraud, are subject to

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these heightened pleading requirements. Rotella v. Wood, 528 U.S. 549, 560 (2000).

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While Plaintiffs erroneously cite Conley v. Gibson, 355 U.S. 41 (1957), since abrogated
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by Twombly and Iqbal, the Court of Appeals for the Ninth Circuit has concluded “pro se

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complaints should continue to be liberally construed.” Hebbe v. Pliler, 627 F.3d 338, 342 n.7

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(9th Cir. 2010).

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III. ANALYSIS

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RICO prohibits “any person employed by or associated with any enterprise . . . to conduct
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or participate . . . in the conduct of such enterprise’s affairs through a pattern of racketeering

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activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). An unlawful debt is one that is

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incurred through illegal gambling or one that is unenforceable under state or federal usury laws,

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ORDER - 3

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18 U.S.C. § 1961(6); because Plaintiffs do not allege either of these circumstances, they
presumably rely on a “pattern of racketeering activity.”
The pattern of racketeering activity, or predicate act, that Plaintiffs indentify is mail
fraud. Even liberally construing the complaint, there simply are not sufficient facts to

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demonstrate a colorable argument for mail fraud under the heightened pleading requirements of
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Rule 9. Plaintiffs cite three specific mailings concerning the foreclosure action: (1) a May 2010

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letter from ING threatening foreclosure; (2) a “proof of standing” sent by ING to Cal-Western;

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and (3) an unidentified April 2010 Notice of Trustee Sale . See Pls.’ Compl. at 14–16 [Dkt. #1].

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While Plaintiffs have identified three specific instances of mail, there are no specific facts

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tending to show a “scheme or artifice to defraud” on the part of ING. 18 U.S.C. § 1341. Instead,
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Plaintiffs point to systemic fraud in the U.S. mortgage industry. See Pls.’ Compl. [Dkt. #1].

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Moreover, even if ING were to bundle and sell the loan, the Deed of Trust expressly states the

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promissory note may be assigned. Defs.’ Mot. at 9 [Dkt. #40].

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Plaintiffs’ next argument is that ING does not, in fact, own the note and therefore cannot
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foreclose on the property. Washington law requires a trustee to “have proof that the beneficiary

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is the owner of any promissory note or other obligation secured by the deed of trust,” but a

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trustee is not required to produce an original promissory note in order to prove ownership. See

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Wash. Rev. Code § 61.24.030(7)(a) (a declaration by the beneficiary may suffice). The fact that

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ING has not produced the original promissory note is not evidence that the note has been sold or
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transferred. See Bern v. Wells Fargo Bank, N.A., No. C10–1701JLR, 2011 WL 1561799, at *2

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(W.D. Wash. Apr. 22, 2011) (“Courts have routinely held [a claimant’s] ‘show me the note’

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argument lacks merit.”) (citation omitted); Wallis v. Indymac Fed. Bank, 717 F. Supp. 2d 1195,

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1200 (W.D. Wash. 2010) (same).

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ORDER - 4

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Finally, Plaintiffs’ perjury claim lacks merit and must be dismissed outright. In

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anticipation of future litigation, the Court also concludes LaTessa Brown, at least under the facts

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presented here, lacks personal jurisdiction in the State of Washington. Plaintiffs have failed to

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demonstrate Ms. Brown has been personally served in Washington, or that she has purposely

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availed herself of jurisdiction in Washington, or that she has sufficient contacts with Washington
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to warrant personal jurisdiction.
IV. CONCLUSION

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For the reasons stated above, Defendants’ Motion to Dismiss [Dkt. #40] is GRANTED
pursuant to Rule 12(b)(6). Plaintiffs’ Complaint [Dkt. #1] is dismissed without prejudice.

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IT IS SO ORDERED

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DATED this 30th day of April, 2012

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A
Ronald B. Leighton
United States District Judge

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ORDER - 5