TED STEWART, District Judge.
This matter is before the Court on Defendant Wells Fargo Bank, N.A., as successor by merger to Wells Fargo Bank Minnesota, N.A.'s Motion to Dismiss Plaintiff's Complaint.
This case arises from the foreclosure, or attempted foreclosure, of property owned by Plaintiff Sherwin Koyle. On or about February 7, 2003, Plaintiff borrowed $139,000 from TLP Funding Corporation. Plaintiff executed a promissory note (the "Note") and deed of trust (the "Deed of Trust") referencing this transaction. The loan was secured with real property owned by Plaintiff located in Orem, Utah.
On or about May 1, 2003, TLP assigned its interest in the Note to Option One Mortgage Company ("Option One").
Meanwhile, after the assignment to Defendant, but before the recording of either Option One's or Defendant's interest, Plaintiff defaulted on the loan. As a result of Plaintiff's default, on October 15, 2003, Defendant filed a substitution of trustee naming Scott Lumberg as the successor trustee.
On February 3, 2005, Plaintiff filed a lawsuit against Option One in Utah state court. The complaint filed in that action was nearly identical to that filed in this action. Defendant was named as a party to that case, however, Plaintiff failed to properly serve the Defendant.
In examining a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the United States Supreme Court in Bell Atlantic Corporation v. Twombly,
"Plaintiff is proceeding pro se and, as a result, the [C]ourt construes his pleadings liberally and holds his pleadings to less stringent standards than formal pleadings drafted by lawyers."
"Dismissal of a pro se complaint for failure to state a claim is proper only where it is obvious that the plaintiff cannot prevail on the facts he has alleged and it would be futile to give him an opportunity to amend."
In considering the adequacy of a plaintiff's allegations in a complaint subject to a motion to dismiss, a district court not only considers the complaint, but also "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice."
In his Complaint, Plaintiff alleges the following grounds for relief: (1) violations of the Real Estate Settlement Procedures Act ("RESPA"); (2) violations of Utah Statutory Code; (3) breach of contract; (4) fraudulent notice of default and improper foreclosure; and (5) demand of proof. Defendant seeks dismissal of Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that Plaintiff fails to state a claim for relief as a matter of law. Defendant also argues that, in the alternative, Plaintiff's Complaint should be dismissed based on the first-filed state court action.
Defendant asserts that Plaintiff's RESPA claims should be dismissed as a matter of law because the RESPA sections relied upon by Plaintiff are inapplicable to Defendant and because Plaintiff's RESPA claims are time barred. Plaintiff contends that his claims were filed in a timely manner based upon the filing of his previous state court proceeding.
Plaintiff appears to assert a violation of RESPA as found in 12 U.S.C § 2605. That section provides: "Each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person." Section 2605 defines a "servicer" as "the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the loan)." "`Servicing' means receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan . . . and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan."
Here, Plaintiff alleges that Defendant failed to provide notice of its interest in the Note and Deed of Trust. The parties do not dispute that Defendant did not provide any notice to Plaintiff that it was assigned the Note in May of 2003.
However, Plaintiff has not alleged that Defendant is the servicer of his loan. Nor has Plaintiff alleged that Defendant performed any of the actions indicative of a loan servicer, i.e. receiving payments and applying such to the loan interest or principal. Plaintiff alleges that Defendant is the holder of the loan. A loan holder is only required to provide notice under § 2605 if it also services the loan. Defendant asserts that Option One was the servicer of the loan at the time of the allegedly missing notices. Plaintiff does not dispute this assertion. The Court is unable to infer from Plaintiff's allegations that Defendant is a servicer of the loan based merely on its receipt of the Note.
The Court further finds that Plaintiff's RESPA violation allegations are barred by the statute of limitations. Claims under RESPA, pursuant to § 2605, must be brought within three years of the alleged violation.
In sum, the Court finds that Plaintiff has failed to state a claim under RESPA as a matter of law because Plaintiff has not alleged any facts to demonstrate that Defendant was the servicer of his loan and because Plaintiff failed to file his Complaint within the time limitations proscribed for such violations.
Plaintiff alleges that Defendant failed to provide notice as required under Utah Code Ann. § 70D-2-303. Similar to RESPA's notification requirement, § 70D-2-303 requires that:
Section 70D-2-102(7) provides that a "`Servicer' means a person who in the regular course of business assumes the responsibility for servicing and accepting payments for a mortgage loan."
As addressed more fully above, Plaintiff has not alleged that Defendant was the servicer of his loan. For this reason, the Court finds § 70D-2-303 to be inapplicable to Defendant and will dismiss this claim as a matter of law.
Plaintiff's breach of contract claim is based on a provision of the underlying loan agreements that places a burden on the "loan servicer" to provide notice of the transfer or assignment of the servicing interest. The Deed of Trust provides that "[i]f there is a change of the Loan Servicer, Borrower will be given written notice of the change which will state the name and address to which payments should be made."
Defendant is not alleged to be the servicer of the loan, rather, Defendant received an ownership interest in the Note. The Deed of Trust provides that "The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to the Borrower."
Plaintiff's claim of fraudulent notice of default and improper foreclosure is premised on the technical argument that because Defendant did not record its interest in the Note until December 12, 2003, it could not authorize Mr. Lumberg to file a Notice of Default on October 16, 2003.
In Marty v. Mortgage Electronic Registration Systems,
"Utah Code Ann. § 70A-91-109(3)(b) states that Utah's commercial code, Section 9a, does not apply to the extent that another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state."
For this reason, the Court finds that Plaintiff has failed to state a claim for fraudulent notice of default and improper foreclosure as a matter of law. To the extent Plaintiff's allegations could be construed to allege a violation, such violation necessarily relies upon inapplicable Utah statutory code.
Plaintiff alleges that he is "entitled to an authoritative `Proof of Claim' that Defendant . . . has the legal right to enforce the promissory note on which they are attempting to foreclose and collect payment(s) for."
Defendant also alleges that Plaintiff's suit should be barred under the doctrine of claim splitting or claim preclusion because Plaintiff filed a nearly identical complaint in state court in 2005. Because the Court finds that Plaintiff's Complaint fails to state a ground for relief, it will decline to consider Defendant's arguments on this point.
For the foregoing reasons, it is hereby
ORDERED that Defendant's Motion to Dismiss Plaintiff's Complaint (Docket No. 4) is GRANTED. Plaintiff is ordered to release the lis pendens filed in connection with this case. The Clerk of Court is instructed to close this case forthwith.