JAMES L. ROBART, District Judge.
Before the court is Defendant Deutsche Bank Trust Company Americas as Trustee for the Certificate Holders of Dover Mortgage Capital 2005-A Corporation, Grantor Trust Certificate, Series 2005-A's ("Deutsche Bank") motion to dismiss Plaintiffs Wayne R. Lake and Cynthia A. Lake's (collectively, "the Lakes") first amended complaint. (MTD (Dkt. # 18); see also FAC (Dkt. # 17).) The court has considered the motion, the Lakes' response (Resp. (Dkt. # 19)), Deutsche Bank's reply (Reply (Dkt. # 20)), the relevant portions of the record, and the applicable law. Considering itself fully advised,
This case arises out of foreclosure proceedings related to the Lakes' residential property, which is located at 18214 25th Avenue Northeast, Lake Forest Park, Washington 98155 ("the Property"). (See, e.g., FAC ¶¶ 3, 13, 32 ("[Deutsche Bank] made false representations that it had rights to foreclose against the [Lakes'] residential property under the provisions of a deed of trust that is recorded against the title of the [Lakes'] property in King County."), 33.) In October 2002, the Lakes took out a loan for $145,000.00, which is secured by a deed of trust on the Property. (Id. ¶¶ 3, 7; Compl. (Dkt. # 1) at 9, Ex. A at 15
In May 2010, BANA recorded an assignment of the deed of trust to Deutsche Bank ("May 2010 Assignment"). (Gibbons Decl. (Dkt. # 9) ¶ 3, Ex. A.) In their first amended complaint, the Lakes acknowledge the existence of the May 2010 Assignment but question its validity. (FAC ¶ 16 ("An assignment of the deed of trust was purportedly executed on May 4, 2010 . . . which purports to assign the note and deed of trust to [Deutsche Bank].") see also Compl. at 9; Resp. at 2.) The first amended complaint also acknowledges that the May 2010 Assignment "was recorded on May 6, 2010[,] in King County." (FAC ¶ 16; see Resp. at 2.) The first amended complaint alleges that "`G. Hernandez,' Assistant Secretary for [BANA]," signed the May 2010 Assignment on behalf of BANA and that he or she "is a documented `robo-signer'. . . [who] did not review or investigate the information in the document he or she signed." (FAC ¶ 16; see Resp. at 2.)
On May 6, 2010, Deutsche Bank recorded an Appointment of Successor Trustee, naming ReconTrust Company, N.A. ("ReconTrust") as the successor trustee. (Gibbons Decl. ¶ 4, Ex. B.) On July 2, 2015, Deutsche Bank recorded another Appointment of Successor Trustee, naming MTC Financial Inc. dba Trustee Corps ("MTC") as the successor trustee. (Id. ¶ 5, Ex. C.) On October 30, 2015, MTC recorded a Notice of Trustee's Sale scheduling a sale for March 11, 2016, and stating that the Lakes were $133,890.81 in arrears on their loan payments. (Id. ¶ 6, Ex. D; see also Compl. Ex. A at 37-40.) The March 11, 2016, sale did not take place, and MTC recorded a second Notice of Trustee's sale on May 24, 2016, scheduling a sale date for September 23, 2016, and stating that the Lakes were $142,622.36 in arrears on their payments. (Gibbons Decl. ¶ 7, Ex. E; see also Compl. Ex. A at 25-28.) On July 6, 2016, MTC recorded a notice that discontinued the September 23, 2016, sale. (Gibbons Decl. ¶ 8, Ex. F.)
In their first amended complaint, the Lakes allege that (1) Deutsche Bank is falsely representing that it is the holder of the Lakes' note and (2) Deutsche Bank had no right to foreclose on the Lakes' residential property under the deed of trust. (FAC ¶¶ 31-34.) The Lakes further allege that BANA "continue[s] to enforce the same interests that it allegedly had before the purported assignment by acting as the lender and communicating with Plaintiffs as late as June 29, 2016," and that "[a]t no time did [BANA] ever identify itself as the servicer of [their] loan." (Id. ¶¶ 18-19.) This latter allegation, however, is contradicted by documents the Lakes attached to their original complaint. For example, in letters to the Lakes dated November 8, 2012, May 6, 2013, June 20, 2014, and December 5, 2014, BANA informed the Lakes they were in default on their loan, and in each of those letters, BANA specifically identified itself as the servicer of the Lakes' loan. (Compl. Ex. A at 134 ("[BANA] services the mortgage loan on your property. . . ."), 137 (same), 140 ("[BANA] services your mortgage loan."), 143 (same).
The Lakes filed their original complaint on September 20, 2016. (See Compl.) In that complaint, the Lakes alleged two claims against Deutsche Bank: (1) breach of a "License Agreement" (see id. at 17, Ex. B) and (2) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1962 et seq. (see Compl. at 13). On April 11, 2017, the court granted Deutsche Bank's motion to dismiss the Lakes' complaint. (4/11/17 Order (Dkt. # 16).) The court dismissed the Lakes' breach of contract claim with prejudice and without leave to amend, but granted the Lakes leave to amend their Section 1692f(6) FDCPA claim.
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court construes the complaint in the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded allegations of material fact as true and draw all reasonable inferences in favor of the plaintiff. See Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.
The court, however, need not accept as true a legal conclusion presented as a factual allegation. Id. Although Federal Rule of Civil Procedure 8 does not require "detailed factual allegations," it demands more than "an unadorned, the-defendantunlawfully-harmed-me accusation." Id. (citing Twombly, 550 U.S. at 555). A pleading that offers only "labels and conclusions or a formulaic recitation of the elements of a cause of action" will not survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id. A complaint does not survive dismissal where "it tenders `naked assertion[s]' devoid of `further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 557).
Generally, a district court may not consider material beyond the complaint in ruling on a Rule 12(b)(6) motion to dismiss. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). The Ninth Circuit, however, has carved out limited exceptions to this rule. First, a court may consider material properly submitted as a part of the complaint. Id. Second, a court may consider documents that are not physically attached to the pleading if their contents are alleged in the complaint and no party questions their authenticity. Id. Third, under Federal Rule of Evidence 201, a court may take judicial notice of matters of public record. Id. at 688-89; see also United States v. Ritchie, 342 F.3d 903, 908-09 (9th Cir. 2003) (citing Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002)).
Rule 201 provides, in pertinent part, "[a] judicially noticed fact must be one not subject to reasonable dispute in that it is . . . capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2). "A trial court may presume that public records are authentic and trustworthy," Gilbrook v. City of Westminster, 177 F.3d 839, 858 (9th Cir. 1999), and thus, fall within the purview of Rule 201. See also Allshouse v. Caliber Home Loans, Inc., No. CV1401287DMGJCX, 2014 WL 12594210, at *3 (C.D. Cal. Oct. 29, 2014) ("Courts routinely take judicial notice of assignments of deed of trust and similar recorded documents" in motions to dismiss.).
Based on the foregoing authority, the court considers the documents the Lakes attached to their original complaint. See Lee, 250 F.3d at 688. The fact that the Lakes did not append these items to their first amended complaint does not undermine the court's ability to rely on them when considering Deutsche Bank's motion to dismiss. "[W]here an amended complaint has been filed, items pleaded or attached as exhibits to the original complaint may be considered to the extent they contradict assertions in the amended complaint." Ticketmaster Corp. v. Tickets.Com, Inc., No. CV 99-7654 HLH(BQRX), 2000 WL 525390, at *1 (C.D. Cal. Mar. 27, 2000); see also Gabarrete v. Hazel, No. 1:11-CV-00324-MJS PC, 2012 WL 1966023, at *3 (E.D. Cal. May 31, 2012) ("Plaintiff is not allowed to proceed on his excessive force claim . . . unless he provides sufficient explanation as to the contradictions between the allegations of the Second Amended Complaint and the exhibits attached to his original Complaint."). Thus, the court considers the Notices of Trustee's Sale (Compl. Ex. A at 25, 37), the original Deed of Trust (id. at 15), and the communications BANA sent to the Lakes (id. at 134, 137, 140, 143), which the Lakes appended to their original complaint.
Deutsche Bank also asks the court to take judicial notice of the May 2010 Assignment and the appointment of ReconTrust, as the successor trustee, both of which were recorded at the King County Recorder's Office. (MTD at 5; see also Gibbons Decl. ¶¶ 3-4, Exs. A-B.) Deutsche Bank further requests that the court take judicial notice of the appointment of successor trustee to MTC on July 2, 2015, as well as the notice discontinuing the September 23, 2016, trustee's sale, both of which Deutsche Bank recorded at the King County Recorder's Office.
The Lakes did not respond to Deutsche Bank's request for judicial notice. (See generally Resp.; Dkt.) Although the Lakes allege in their first amended complaint that Deutsche Bank "has no rights to . . . make the claims it has made against the Deed of Trust and Note" (FAC ¶ 22), these allegations do not overcome the presumption that the public records at issue are authentic and trustworthy, Gilbrook, 177 F.3d at 858. Indeed, the court does not need to accept as true the Lakes' allegations concerning the note and deed of trust because they are legal conclusions unsupported by sufficient "factual enhancement."
In its order dismissing the Lakes' original complaint, the court granted the Lakes leave to amend their FDCPA claim. (4/11/17 Order at 15-16.) In so ruling, the court stated that "[s]ince Section 1692f(6) of the FDCPA offers limited protection against foreclosure activity, it is not `absolutely clear' that the Lakes could offer no amendment to cure deficiencies in their complaint with respect to this provision of the FDCPA." (Id. at 15 (quoting Gartiy v. APWU Nat'l Labor Org., 828 F.3d 848, 854 (9th Cir. 2016).) Thus, to survive dismissal, the Lakes' first amended complaint must adequately state an FDCPA claim that is consistent with Section 1692f(6).
In order to state an FDCPA claim under Section 1692f(6), the Lakes must (1) have standing to challenge the assignments of their Deed of Trust and (2) allege facts indicating that Deutsche Bank's foreclosure actions are subject to Section 1692f(6). The court addresses each issue in turn.
As they did in their original complaint, the Lakes allege that the May 2010 Assignment was ineffective or did not occur. (FAC ¶¶ 13, 14; see also Compl. at 9.) In their first amended complaint, the Lakes also add allegations that a "robo-signer" executed the May 2010 Assignment. (FAC ¶ 16.)
Borrowers, as third parties to an assignment, generally "lack standing to challenge an allegedly fraudulent assignment of a deed of trust and/or an appointment of a successor trustee." Brodie v. Nw. Tr. Servs., Inc., No. 12-CV-0469-TOR, 2012 WL 6192723, at *2 (E.D. Wash. Dec. 12, 2012), aff'd, 579 F. App'x 592 (9th Cir. 2014). The rationale for this rule is "that a borrower cannot be injured by the allegedly fraudulent conduct because the borrower is neither a party to nor an intended beneficiary of the challenged agreements." Id. An exception to the rule is where "the borrower shows that it is at a genuine risk of paying the same debt twice." Andrews v. Countrywide Bank, NA, 95 F.Supp.3d 1298, 1301-02 (W.D. Wash. 2015), reconsideration denied, No. C15-0428JLR, 2015 WL 12085856 (W.D. Wash. Apr. 7, 2015).
In its April 11, 2017, order, the court held that the Lakes, as third parties to the assignment, lacked standing to challenge the May 2010 Assignment. (See 4/11/17 Order at 7-8.) The court determined that the Lakes had not alleged in their original complaint that they were at risk of paying the same debt twice. (Id. at 8.) Although the Lakes alleged that BANA "continued to express the same interests as it had before the purported assignment by acting as the lender" (Compl. at 9), the court did not accept this allegation as true because the exhibits that the Lakes attached to the original complaint contradicted that allegation (4/11/17 Order at 8 (citing Compl. Ex. A at 134, 137, 140, 143)). The exhibits in question consist of letters to the Lakes that expressly identify BANA as the servicer of the Lakes' loan and Deutsche Bank as the noteholder. (See Compl. Ex. A at 134, 137, 140, 143.)
Using language similar to the language in their original complaint, the Lakes now allege that BANA "continue[s] to enforce the same interests that it allegedly had before the purported assignment by acting as the lender." (FAC ¶ 18; see Compl. at 9.) In their first amended complaint, the Lakes also allege that "[a]t no time did [BANA] ever identify itself as the servicer of [the Lakes'] loan, so [the Lakes] had no reason to believe that it was and continues to be the lender, beneficiary and holder of the note." (FAC ¶ 19.) The same exhibits to the original complaint that expressly identified BANA as the servicer of the Lakes' loan and Deutsche Bank as the noteholder contradict these same allegations in the amended complaint. (See Compl. Ex. A at 134, 137, 140, and 143.) The court is "not . . . required to accept as true allegations that contradict exhibits attached to the Complaint." Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). Because the first amended complaint provides no additional consistent allegations giving rise to the inference that the Lakes were, or are, subject to any genuine risk of paying the same debt twice, the court grants Deutsche Bank's motion to dismiss the Lakes' FDCPA claim.
The Lakes' new allegation that a BANA "robo-signer" executed the May 2010 Assignment does not alter the court's analysis or conclusion. (See FAC ¶ 16 ("`G. Hernandez' is a documented `robo-signer' and upon information and belief, did not review or investigate the information in the [May 2010 Assignment] he or she signed.").) The Lakes' allegation of robo-signing fails as a matter of law because, as discussed above, the Lakes lack standing to challenge the allegedly fraudulent assignment of their Deed of Trust. Numerous courts faced with similar allegations of robo-signing have likewise concluded that a borrower lacks standing to challenge an allegedly fraudulent assignment or appointment of a successor trustee. See Brodie, 2012 WL 6192723, at *2 (citing cases); see also Martin v. Litton Loan Servicing LP, No. 2:12-CV-970-MCE-EFB, 2015 WL 692099, at *8 (E.D. Cal. Feb. 18, 2015), report and recommendation adopted, No. 2:12-CV-970-MCE-EFB, 2015 WL 1334893 (E.D. Cal. Mar. 20, 2015) ("[C]ourts have . . . generally held that plaintiffs lack standing to challenge the validity of robo-signatures."). Thus, the Lakes lack standing to challenge the May 2010 Assignment and the court grants Deutsche Bank's motion to dismiss the Lakes' FDCPA claim on this ground.
"The FDCPA imposes liability only when an entity is attempting to collect debt. For the purposes of the FDCPA, the word `debt' is synonymous with `money.'" Vien-Phuong Thi Ho v. ReconTrust Co., NA, 858 F.3d 568, 571 (9th Cir. 2016) (citing 15 U.S.C. §§ 1692a(5), 1692(e)). The object of foreclosure, however, is to retake and resell a security, not to collect money. Id. Indeed, "`foreclosing on a deed of trust is an entirely different path' than `collecting funds from a debtor.'" Id. at 572 (quoting Hulse v. Ocwen Fed. Bank, 195 F.Supp.2d 1188, 1204 (D. Or. 2002)). Thus, the FDCPA applies to foreclosure activities only through the limited provisions of Section 1692f(6). See Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 990 (9th Cir. 2017) ("[W]here an entity is engaged solely in the enforcement of a security interest and not in debt collection . . . it is subject only to § 1692f(6) rather than the full scope of the FDCPA."). Section 1692f(6) prohibits, in pertinent part, the "[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if . . . there is no present right to possession of the property claimed as collateral through an enforceable security interest." 15 U.S.C. § 1692f(6)(A).
The Lakes fail to allege facts that bring Deutsche Bank's foreclosure action within the narrow provisions of Section 1692f(6). The court has already addressed the Lakes' allegations that May 2010 Assignment is defective or otherwise invalid because it was signed by a "documented `robo-signer.'" See supra § III.C.1; (see also FAC ¶ 16.) The Lakes have no standing to raise these allegations, and the allegations are therefore insufficient to support an FDCPA claim under Section 1692f(6). Further, even if the Lakes had standing, their allegations are conclusory and thus also insufficient to support a Section 1692f(6) claim. See James v. ReconTrust Co., 845 F.Supp.2d 1145, 1169 (D. Or. 2012) (dismissing conclusory claims of unauthorized robo-signing of an assignment of an deed of trust and the appointment of a successor trustee); In re MERS Litig., No. 09-2119-JAT, 2011 WL 4550189, at *5 (D. Ariz. Oct. 3, 2011) (dismissing vague robo-signing allegations concerning MERS assignments as mere "legal conclusions . . . not supported by sufficient factual pleading").
The Lakes also allege that (1) Deutsche Bank "made false representations that it had rights to foreclose against the [Lakes'] residential property" (FAC ¶ 32) and (2) "Deutsche Bank acquired a copy, forged, or counterfeit version" of the note (FAC ¶ 34). The court declines to accept these conclusory allegations and legal conclusions as true. See Iqbal, 556 U.S. at 678. The Lakes allege no basis for their assertion that Deutsche Bank acquired a fraudulent copy of the note (see generally FAC), nor do they explain why Deutsche Bank is not entitled to foreclose based on the documents attached to the Lakes' complaint in Exhibit A and the documents submitted by Deutsche Bank of which the court takes judicial notice (see generally Resp.). The Lakes' conclusory allegations concerning the Note, the May 2010 Assignment, and Deutsche Bank's lack of a present right to possess the property based on the Note and Assignment, are devoid of any factual enhancement and contravene the documents the court reviews for purposes of this motion to dismiss. See Daniels-Hall, 629 F.3d at 998 ("We are not . . . required to accept as true allegations that contradict exhibits attached to the complaint or matters that are properly subject to judicial notice, or allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences."). Accordingly, the court dismisses the Lakes' Section 1692f(6) FDCPA claim in their first amended complaint.
Although the district court should grant leave to amend if the claim can possibly be cured by additional factual allegations, Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995), the district court need not grant leave to amend if amendment would be futile, see Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051-52 (9th Cir. 2008) (finding that amendment would be futile where plaintiff was granted leave to amend once and the amended complaint contained the same defects as the prior complaint). The district court's discretion to deny leave to amend is particularly broad where the plaintiff has previously amended the complaint. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). The court previously granted the Lakes leave to amend their Section 1692f(6) FDCPA claim. (See 4/11/17 Order at 15-16.) The Lakes' first amended complaint contains the same defects as its original complaint with respect to the Section 1692f(6) FDCPA claim, and the court concludes that permitting further amendment would be futile. Thus, the court denies the Lakes leave to amend their first amended complaint.
For the reasons set forth in this order, the court GRANTS Deutsche Bank's motion to dismiss (Dkt. # 18), DENIES leave to amend the first amended complaint, and DISMISSES this action with prejudice.
