GONZALO P. CURIEL, District Judge.
On June 14, 2012, Plaintiff Martha Ros filed a complaint against Defendants U.S. Bank National Association as Trustee for the Holders of Bear Stearns Arm Trust, Mortgage Pass-Through Certificates, Series 2005-7 ("U.S. Bank") and Bank of America, N.A. as successor by merger to BAC Home Loans Servicing, LP ("BOA") (erroneously sued as "Bank of America N.A. D/B/A BAC Home Loans Servicing, LP"). (Dkt. No. 1.) On August 27, 2012, Defendants filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 4.) On October 9, 2012, the case was transferred to the undersigned judge. (Dkt. No. 7.) On February 13, 2013, the Court granted Plaintiff's motion for extension of time to file an opposition. (Dkt. NO. 10.) On February 14, 2012, Plaintiff filed an opposition. (Dkt. No. 11.) Defendants filed a reply on March 1, 2013. (Dkt. No. 12.) The motions are submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1). After a review of the briefs, supporting documentation, and applicable law, the Court GRANTS Defendants' motion to dismiss.
According to the Complaint, Plaintiff has been the owner of real property at 1548 Apache Drive, #B, Chula Vista, CA 91910. (Dkt. No. 1, Compl. ¶ 6.) Around April 5, 2006, Ros obtained title to the property by grant deed. (Dkt. No. 1-2, Compl., Ex. A.) She also executed a Mortgage Note in favor of Countrywide Home Loans, Inc. ("Countrywide") secured by a Deed of Trust on the property. (Dkt. No. 1, Compl. ¶ 27; Ex. B.) The Deed of Trust named Recontrust Company, N.A. as the Trustee and named Mortgage Electronic Registration Systems ("MERS") as "beneficiary." (
On November 15, 2010, MERS assigned the beneficial interest in the Deed of Trust to U.S. Bank National Association as Trustee for the Holders of Bear Stearns ARM Trust, Mortgage Pass-Through Certificates, Series 2005-7 ("Assignment"). (
Plaintiff alleges that Countrywide attempted to securitize and sell her loan to U.S. Bank but contends that Countrywide never sold, transferred or granted her Note or Mortgage to U.S. Bank as they failed to comply with the Pooling and Servicing Agreement ("PSA") by failing to properly endorse, transfer, accept and deposit with the Securitization Trust before the "closing date" on the prospectus. (
Plaintiff alleges eight causes of action: 1) declaratory relief; 2) negligence; 3) quasi-contract; 4) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605; 5) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq.; 6) violation of California's Unfair Competition Law ("UCL), California Business & Professions Code section § 17200 et seq.; 7) accounting; and 8) violation of 18 U.S.C. § 1951(b)(2) — extortion. (Dkt. No. 1.)
Federal Rule of Civil Procedure ("Rule") 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.
A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face."
In ruling on a motion to dismiss pursuant to Rule 12(b)(6), a Court may consider exhibits attached to the complaint, matters subject to judicial notice, or documents necessarily relied on by the complaint whose authenticity no party questions.
Defendants seek judicial notice of documents recorded in the official records of the San Diego County Recorder's Office, (Dkt. No. 4-3, Exs. A-D), and documents filed in the case of
Defendants argue that the complaint should be barred by the doctrine of collateral estoppel and res judicata. Plaintiff argues that this argument is not proper on a motion to dismiss under Rule 12(b).
The Full Faith and Credit Act, 28 U.S.C. § 1738, requires that we "give the same preclusive effect to a state-court judgment as another court of that State would give."
"To determine whether two proceedings involve identical causes of action for purposes of claim preclusion, California courts have consistently applied the primary rights theory."
What is key to the analysis is "`the harm suffered.'"
Plaintiff's state court action, filed on February 2, 2012, sought declaratory relief stemming from the assertion that Defendants U.S. Bank, BOA and Recontrust Company are not the successors, purchasers or assignors to Countrywide Home Loan relative to the Mortgage Note and have no standing to seek or collect payments as Defendants do not have actual possession of the Note and failed to provide Plaintiff with any documents concerning the transfer of the Note and Deed of Trust. (Dkt. No. 4-4, Ds' RJN, Ex. E.) In this case, Plaintiff allege additional facts, based on the securitization and failure to comply with the PSA, explaining why Defendants U.S. Bank and BOA are not the successors of the Note and Deed of Trust.
It appears that the primary right is the same in both the state and the instant federal complaint. While this complaint provided additional facts and asserts additional legal theories, not provided in the state court complaint, the harm to Plaintiff, of having paid Defendants moneys that they were not entitled to, and the alleged wrong by Defendants, of collecting payments from Plaintiff that they were not entitled to, is the same.
Another factor to address is whether "the prior proceeding resulted in a final judgment on the merits."
Here, on June 1, 2012, the San Diego Superior Court, in a minute order, sustained Defendants' unopposed demurrer to Plaintiff's complaint without leave to amend for failure to state a cause of action, and ordered that the action be dismissed with prejudice which was later accompanied by a proposed order sustaining demurrer to Plaintiff's complaint. (Dkt. No. 4-4, Ds' RJN, Exs. G, H.) On June 11, 2012, the Superior Court issued an order sustaining the demurrer to Plaintiff's complaint and judgment was entered for Defendants on June 11, 2012. (
The underlying purpose of res judicata and collateral estoppel is to prevent the relitigation of claims and issues already decided on the merits in a prior case. It contemplates that the prior court adjudicated or considered the merits of the case. This is a unique situation where Defendants' demurrer was unopposed and the Court sustained the demurrer without leave to amend and dismissed the complaint with prejudice. It is not clear whether the state court's order was based on a review or actual determination on the merits. Defendants have not provided the Court with authority that such a situation, where the court sustains an unopposed demurrer without leave to amend and dismisses the complaint with prejudice, constitutes a final judgment on the merits. Accordingly, the Court concludes that Defendants have failed to establish that res judicata and collateral estoppel bar Plaintiff's complaint.
Defendant argues that all claims as to all causes of action are predicated on allegations of a wrongful foreclosure and that the complaint should be dismissed because Plaintiff did not tender the full amount of the debt. Plaintiff argues that she has properly tendered and can easily cure any defect by appropriate amendment. She further argues that even if she did not tender, the exception to tender applies as she is attacking the validity of the underlying debt.
"As a condition precedent to an action by the borrower to set aside the trustee's sale on the ground that the sale is voidable because of irregularities in the sale notice or procedure, the borrower must offer to pay the full amount of the debt for which the property was security."
There are, however, four exceptions to the tender requirement. Tender is not required "1) if the borrower's action attacks the validity of the underlying debt; 2) if the person who seeks to set aside the trustee's sale has a counter-claim or set-off against the beneficiary; 3) where it would be inequitable to impose such a condition on the party challenging the sale; and 4) where the deed is void on its face."
Here, Plaintiff challenges the allegedly improper transfer of the Note and Deed of Trust from Countrywide to U.S. Bank and not any irregularity in the sale procedure. Because Plaintiff is not attacking a trustee's sale
Plaintiff alleges that Defendants do not have a "secured or unsecured legal, equitable, or pecuniary interest in the lien evidenced by the Deed of Trust and that its purported assignment or substitution has no value since the Deed of Trust is wholly unsecured." (Dkt. No. 1, Compl. ¶ 84.) Plaintiff requests that the Court find that Defendants "have no right or interest in Plaintiff's Note, Deed of Trust, or the Property, which authorized them . . . to collect Plaintiff's mortgage payments or enforce the terms of the Note or Deed of Trust . . . ." (
Defendants move to dismiss arguing that because all other claims fail, Plaintiff has no right to relief as declaratory relief is an additional remedy. Plaintiff opposes.
The Declaratory Judgment Act ("DJA") provides that, "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. "A declaratory judgment offers a means by which rights and obligations may be adjudicated in cases `brought by any interested party' involving an actual controversy that has not reached a stage at which either party may seek a coercive remedy and in cases where a party who could sue for coercive relief has not yet done so."
As discussed below, the Court grants Defendants' motion to dismiss as to all causes of action. Therefore, the declaratory relief claim fails as there are no remaining causes of action, and declaratory relief, by itself, cannot state a claim. Accordingly, the Court GRANTS Defendants' motion to dismiss the first cause of action for declaratory relief without prejudice.
Plaintiff contends that Defendants breached their duty to exercise reasonable care to "follow California law with regard to enforcement of monetary obligations and to refrain from taking or failing to take any action against Plaintiff that they did not have the legal authority to do." (Dkt. No., 1, Compl. ¶ 93.) She alleges that U.S. Bank breached that duty when it "failed to follow guidelines established in the PSA requiring the transfer of the Note and Deed of Trust into the Bear Stearns Arm Trust, Mortgage Pass-Through Certificates, Series 2005-7 by the requisite closing date." (
Defendants argue that there is no duty of care owed to Plaintiff because a lender-borrower relationship does not give rise to a special or fiduciary relationship. Plaintiff maintains that Defendants owed her a duty of care because of their unconventional relationship.
Under California law, the elements of a claim for negligence are that: (1) defendant had a legal duty to plaintiff, (2) defendant breached this duty, (3) defendant was the proximate and legal cause of plaintiff's injury, and (4) plaintiff suffered damage. Cal. Civ. Code § 1714;
As a general rule, under California law, "a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money."
In this case, Plaintiff's assertions are contradictory because, in the Complaint, she states that Defendants are "third-party strangers to her mortgage loan and have no ownership interest entitling them to collect payment or declare a default." (Dkt. No. 1, Compl. ¶ 1.) Yet, in opposition, Plaintiff claims she and Defendants had an unconventional relationship which creates a special duty. Moreover, Plaintiff has not provided any legal support that this alleged "unconventional relationship" creates a legal duty between Plaintiff and Defendants. Accordingly, the Court GRANTS Defendants' motion to dismiss the negligence claim without prejudice.
In the third cause of action, Plaintiff alleges that Defendants were unjustly enriched because they collected Plaintiff's monthly mortgage payments even though Defendants did not have an interest in Plaintiff's Note. (Dkt. No. 1, Compl. ¶¶ 98-101.) Plaintiff seeks restitution for any payments she made to U.S. Bank and BOA.
Defendants argue that the recorded document of the Assignment of the Deed of Trust to U.S. Bank is evidence of Defendants' interest in the Note and Deed of Trust. Plaintiff opposes arguing that the legitimacy of this recorded assignment was fabricated and fraudulent.
"The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched."
In
Plaintiff alleges that on March 21, 2012 and again on April 26, 2012, she sent a qualified written request ("QWR") to U.S. Bank and U.S. Bank failed to provide the required information which violated 12 U.S.C. § 2605. (Dkt. No. 1, Compl. ¶¶ 104, 107.)
Defendants argue that the RESPA claim fails because U.S. Bank was not the loan servicer at the time she sent the qualified written request. In addition, Defendants maintain that the complaint fails to allege the "actual damages" she suffered as a result of Defendants' failure to properly respond to the QWR. Plaintiff disagrees.
Only servicers are required to respond to a QWR.
Moreover, RESPA provides that "[w]hoever fails to comply with any provision of this section shall be liable" for "any actual damages to the borrower as a result of the failure." 12 U.S.C. § 2605(f)(1)(A).
In the complaint, Plaintiff alleges that damages include the "overcalculation and overpayment of interest on Plaintiff's loan, the costs of repairing Plaintiff's credit, the reduction and/or elimination of Plaintiff's credit limits, costs associated with removing the cloud on her property title and setting aside the trustee's sale, and attorneys' fees and costs . . . ." (Dkt. No. 1, Compl. ¶ 108.) These conclusory damages do not explain the connection between these alleged damages and any failure to respond to Plaintiff's QWR.
Moreover, under 12 U.S.C. § 2605(a), a loan servicer has an obligation to act when it receives a QWR from the borrower or borrower's agent "for information relating to the servicing of [the] loan." 12 U.S.C. § 2605(e)(1)(A). Servicing "means receiving any scheduled periodic payments from a borrower . . . and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower."
In this case, Plaintiff's letter of March 21, 2012 and April 26, 2012 dispute the validity of the loan and not its servicing.
Plaintiff contends that Defendants violated the FDCPA by attempting to collect on the Note under false pretenses, namely that Defendants were assigned Plaintiff's debt when in fact they were not. (Dkt. No. 1, Compl. ¶ 112.)
Defendants argue that Plaintiff does not allege Defendants are "debt collectors" as defined under the FDCPA. U.S. Bank is the assignee of the Loan and BOA is the the Loan servicer and they argue they not subject to the FDCPA. They also argue that Plaintiff does not identify any specific improper debt collection activities. Plaintiff opposes.
A debt collector is defined as "any person who uses any instrumentality of interstate commerce or 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." 15 U.S.C. § 1692a(6). The term does not include any person who collects any debt owed or due to the extent such activity concerns a debt which "was originated by such person" or "was not in default at the time it was obtained by such person." 15 U.S.C. §§ 1692a(6)(F) (ii); (iii). The FDCPA's definition of debt collector "does not include the consumer's creditors, a mortgage servicing company, or any assignee of the debt, so long as the debt was not in default at the time it was assigned."
First, Plaintiff has failed to allege that Defendants are engaged in business with the "principal purpose" of collecting debts or that Defendants are persons who "regularly" collect debts on behalf of others. Moreover, U.S. Bank, as the assignee of the debt, and BOA, as the mortgage servicing company, are not subject to the FDCPA.
Plaintiff's sixth cause of action for violation of California Business and Professions Code section 17200 is grounded on Defendants' conduct described above. (Dkt. No. 1, Compl. ¶ 119.)
Section 17200 provides a cause of action for "unfair competition," which is defined as "any unlawful, unfair or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. "Unlawful" practices include "anything that can properly be called a business practice and at the same time is forbidden by law."
Since the Court grants Defendants' motion to dismiss as to all causes of action, the Court also GRANTS Defendants' motion to dismiss as to the claim of unfair business practices pursuant to California Business & Professions Code section 17200 without prejudice
Plaintiff alleges she is entitled to an accounting because she made mortgage payments to Defendants for many years and is due money which cannot be ascertained without an accounting. (Dkt. No. 1, Compl. ¶¶ 129-131.)
"A request for a legal accounting must be tethered to relevant actionable claims."
Plaintiff claims that Defendants have violated the Hobbs Act, 18 U.S.C. § 1951(b)(2), a criminal extortion statute, by falsely asserting a right to payments on the Note and Deed of Trust "as well as the filing and recording of multiple notices with the County Recorder designed to wrongfully threaten the Plaintiff with dispossession of her home absent voluntary payments as demanded by and on behalf of the Defendants." (Dkt. No. 1, Compl. ¶ 134.)
No private right of action exists under the Hobbs Act.
As Plaintiffs cannot make out a valid claim under 18 U.S.C. § 1951(b)(2), the Court GRANTS Defendants' motion to dismiss the claim for extortion with prejudice.
Based on the above, the Court GRANTS Defendants' motion to dismiss. Specifically, the Court:
1) DISMISSES without prejudice Plaintiff's first cause of action for declaratory relief;
2) DISMISSES without prejudice Plaintiff's second cause of action for negligence;
3) DISMISSES with prejudice Plaintiff's third cause of action for quasi-contract;
4) DISMISSES with prejudice Plaintiff's fourth cause of action for violation of RESPA, 12 U.S.C. § 2605;
5) DISMISSES with prejudice Plaintiff's fifth cause of action for violation of FDCPA, 12 U.S.C. § 692 et seq.;
6) DISMISSES without prejudice Plaintiff's sixth cause of action for violation of California's Business and Professions Code sections 17200 et seq.;
7) DISMISSES without prejudice Plaintiff's seventh cause of action for an accounting;
8) DISMISSES with prejudice Plaintiff eighth cause of action for violation of 18 U.S.C. § 1951(b)(2).
Plaintiff is granted twenty (20) days from the date this Order is filed to file an Amended Complaint addressing the deficiencies set forth above.