Pelzel v. LSI Title Agency, Inc. et al

Filing 30

ORDER denying 13 Defendants' Motion to Dismiss, 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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No. CV 11-05106RBL

KEITH PELZEL,

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ORDER DENYING MOTION TO
DISMISS [Dkt. #13]

Plaintiff,
v.
LSI TITLE AGENCY, INC., et al.,

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Defendants.

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THIS MATTER is before the court on Defendants’ Motion to Dismiss. The underlying

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case involves a “subprime” mortgage and subsequent foreclosure. Plaintiff is the debtor and the

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defendants all played some role in the loan and the foreclosure. A subset of the Defendants,

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including LSI, GMAC, Homecomings, and MERS, argue that Plaintiff’s Complaint does not

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state a claim under Fed. R. Civ. P. 12(b)(6).
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This case differs from more garden variety foreclosure cases in one important respect:

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the Plaintiff claims that the lender and/or other defendants surreptitiously changed the legal

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description on the Deed of Trust to encumber not only the home which was the subject of the

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loan transaction, but also an unrelated vacant parcel also owned by the Plaintiff.

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ORDER - 1

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Based primarily on this allegation, Plaintiff asserts a number of claims: defective

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trustee’s sale under RCW 61. 24.030; defective foreclosure; quiet title; slander of title; breach of

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contract; breach of the duty of good faith and fair dealing, violations of the Consumer Protection

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Act, and unjust enrichment. Plaintiff’s claims are also based on the more common array of

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complaints about the actual ownership of the note, the timing of the notice of default as
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compared to the dates the note was purportedly assigned, and the role of Defendant MERS as

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the lender’s (or its assigns’) “nominee” under Washington’s Deed of Trust Act, RCW 61.24.030

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Defendants’ Rule 12(b)(60 Motion is based on the now familiar Twombly/Iqbal standard.

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They argue that Plaintiff has not sufficiently pled any of the various claims he asserts.

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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, 129 S.Ct. 1937,

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1949 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual
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content 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 facts,

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

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

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v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation to
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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). This requires a plaintiff to plead

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ORDER - 2

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“more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at
1949 (citing Twombly).
The Defendants’ Motion does not address the Plaintiffs’ claim that his legal description

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was surreptitiously altered, in a manner that provided additional collateral for the loan without
the plaintiff borrower’s knowledge or consent. Their Reply1 does not address this claim, at all.

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Instead, Defendants stand on their claim that the Plaintiff’s pleading is deficient under

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Rule 8 and the Twombly/Iqbal standard. They claim that the Plaintiff’s allegations about

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MERSs’ role in the transaction are insufficient. Defendants argue that Plaintiff has not provided

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“any evidentiary support” for the claim that the Promissory Note was sold to a Securitized Trust.

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They argue that Plaintiffs’ allegations on these matters do not support a breach of contract claim.
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The Plaintiff’s Complaint sufficiently alleges facts in support of all of the claims arising

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out of the alleged surreptitious addition of a separate parcel to his Deed of Trust. The

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Defendants do not strenuously or persuasively contend otherwise. All nine of Plaintiff’s causes

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of action appear to be based at least in part on this factual allegation. The Motion to Dismiss
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these claims is DENIED.
Plaintiff also asserts a subset of these claims based on his contention that the “separation”

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of the Note and the Deed of Trust leaves the lender unsecured, and that MERS is not a valid

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beneficiary under Washington’s Deed of Trust Act. As this Court explained recently in Bain v

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OneWest Bank, et al, No. CV09-0149JCC, MERSs’ eligibility to serve as a beneficiary “remains
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patently unclear” and is an open question in this state. Indeed, that issue is currently working its

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way through the Washington Courts. See Vinlaun v. Fidelity National Title & Escrow, No. 10-2-

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27688-2 SEA (King County Superior Court).

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Defendants’ Reply also argues that the court should Strike the Plaintiff’s Response for being
four days late. This request is DENIED.
ORDER - 3

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The Plaintiffs’ Complaint sufficiently alleges claims arising out of MERSs’ relationship

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to the transaction, and regarding the timing and efficacy of various assignments, under the Rule

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12(b)(6) standard articulated above.

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Specific, fact-based attacks on Plaintiff’s various claims under Rule 56 may yield a

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different result. The Defendants’ Motion to Dismiss under Rule 12(b)(6) [Dkt. #13] is
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DENIED.
IT IS SO ORDERED.
Dated this 19th day of May, 2011.

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A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE

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ORDER - 4