TED STEWART, District Judge.
This matter is before the Court on Defendants Mortgage Electronic Registration Systems, Inc. ("MERS"), Countrywide Home Loans, Inc. ("Countrywide"), ReconTrust Company N.A. ("ReconTrust"), and BAC Home Loans Servicing L.P.'s ("BAC") (hereinafter referred to collectively as the "BAC Defendants") Motion to Dismiss Plaintiff's Complaint.
Plaintiff filed his Complaint in this matter on June 9, 2011. On June 28, 2011, Lexington Mortgage, Inc. filed a motion to dismiss. Shortly thereafter, on June 30, 2011, the BAC Defendants filed the instant Motion.
This action involves the refinance by Plaintiff of real property located in Orem, Utah.
On January 25, 2011, a corporate assignment of Deed of Trust was recorded by MERS, whereby MERS assigned the beneficial interest under the Deed of Trust to BAC Home Loans Servicing, L.P. On the same day, ReconTrust was substituted as trustee under the Deed of Trust and on January 26, 2011, ReconTrust recorded a notice of default against the property. A trustee's sale was subsequently held and the property was sold to Federal National Mortgage Association on May 31, 2011.
Plaintiff alleges numerous failures and violations of federal statutes on the part of the Defendants. Plaintiff asserts that because of these violations he is entitled to an award of $1,883,724.00 in damages and clear title to the Orem property.
In examining a 12(b)(6) motion, 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."
The BAC Defendants assert that Plaintiff's Complaint fails to state a claim against the BAC Defendants as a matter of law. The Court will address each of Plaintiff's claims applying the standard provided above.
For the same reasons provided in the Order entered in this case January 12, 2012, the Court finds that Plaintiff has failed to allege a claim for violation of the Real Estate Settlement Procedures Act ("RESPA").
Plaintiff's second cause of action is brought pursuant to 15 U.S.C. § 226, commonly referred to as the Truth In Lending Act ("TILA"). Plaintiff's TILA claim fails on several grounds. First, as indicated above, none of the BAC Defendants are alleged to have been involved in the loan origination process. The loan origination process is where a violation of TILA would usually occur.
Next, to the extent any of the BAC Defendant's may have been involved in the lending process, Plaintiff's TILA claim is time-barred by the applicable statute of limitations.
Furthermore, to the extent Plaintiff seeks recession under TILA, "a borrower's right to rescind expires three years after the date of the consummation of the transaction."
Plaintiff alleges that Defendants' actions in foreclosing on the Orem property violated Article 9 of the Universal Commercial Code ("UCC"). Specifically, Plaintiff alleges that "Defendants discriminatorily failed to acquire a UCC-1 lien and failed to provide papers for the borrower to sign acknowledging receipt of said notice of the UCC-1 lien."
Paragraphs twenty-two through twenty-five of Plaintiff's Complaint contain various conclusory allegations that Defendants have breached their contract with Plaintiff, violated their charter, and improperly used Defendant's credit. In a puzzling twist of logic, Plaintiff argues that because Defendants allegedly used the promissory note to obtain credit to fund the loan to Plaintiff, the loan originator provided no funds and, thus, the contract between Plaintiff and Defendants lacked any consideration.
Pursuant to the refinance loan on the Orem property Plaintiff was to receive $100,000. Plaintiff does not allege that he did not receive the $100,000 benefit of the refinance loan. Nonetheless, Plaintiff takes issue with the method by which Defendants obtained the $100,000 that was provided to him. The Court finds that the $100,000 Plaintiff received constitutes adequate consideration to support a binding contract.
Furthermore, Plaintiff has failed to plead any facts that would support a claim that Defendants have violated their charter or improperly used his credit. Therefore, the Court will dismiss Plaintiff's claim for violations in the funding of the loan as a matter of law.
Plaintiff alleges that Defendant MERS violated its fiduciary duty by separating the Deed of Trust from the promissory note. Plaintiff's claim against MERS is a recitation of what has been labeled the "split-note theory." The typical complaint in these type of cases alleges that the foreclosing promissory note was split from the deed of trust through securitization, thereby invalidating both the note and the deed of trust, and entitling the plaintiff to the property clear of all competing interests.
Moreover, the Tenth Circuit and Utah Court of Appeal have both recently rejected nearly identical arguments under substantially similar circumstances.
Plaintiff's next claim is for recovery under the Home Ownership Equity Protection Act ("HOEPA"). According to Plaintiff, under HOEPA the trustee cannot foreclose without paying the vested interest of the mortgagor. Plaintiff claims over $100,000 in protected equity in the Orem property.
"In order for HOEPA to be applicable, the annual percentage rate at consummation of the transaction must exceed by more than 10 percentage points the yield on comparable Treasury securities or the total points and fees paid by the borrower at or before closing must exceed the greater of 8 percent of the total loan amount or $400."
Plaintiff alleges a number of technical violations of Utah foreclosure statutes that he asserts require cancellation of the foreclosure sale and quiet title of the property in his favor. Specifically, Plaintiff alleges Defendants have failed to comply with Utah Code Ann. § 57-1-26(1)(A) and Utah Code Ann. § 57-1-24(2)-(3) by failing to provide notice of default by certified mail and allowing ninety days to pass before issuing a notice of sale.
The BAC Defendants request that the Court take judicial notice of various documents intended to demonstrate that the foreclosing entities did indeed comply with the Utah foreclosure statutes.
After review of the aforementioned documents, the Court finds that notice of default was provided to Plaintiff by certified mail and ninety days passed between the time of recording of notice of default and the publication of notice of sale. Based on this finding, the Court will dismiss Plaintiff's claim for violation of the Utah foreclosure statutes.
Plaintiff next alleges Defendants have violated the Fair Debt Collection Practices Act
Additionally, this Court has previously rejected similar claims under the FDCPA. In Maynard v. Cannon,
In sum, Plaintiff's FDCPA claim must fail because adequate consideration was provided under the refinance loan, the BAC Defendants are not "debt collectors," and the non-judicial foreclosure of the Orem property is not subject to the general provisions of the FDCPA.
Plaintiff's last cause of action is for violation of the Fair Credit Reporting Act ("FCRA"). Plaintiff alleges that "Defendants falsely reported negative reports to the 3 major credit bureaus for the last 8 months for an improperly obtained debt from the Plaintiff."
The "FCRA requires one who furnishes information to credit reporting agencies to (1) `provide accurate information; and (2) to undertake an investigation upon receipt of notice of dispute regarding credit information that is furnished.'"
Here, Plaintiff fails to allege that he contacted the credit reporting agencies to dispute the credit reporting. Nor does Plaintiff allege that said reporting agencies notified Defendants that the debt was disputed. Instead, Plaintiff's claim contains only the conclusory allegation that Defendants falsely reported negative reports for an improperly obtained debt after Plaintiff notified Defendants that he was disputing the debt.
In a separate claim, Plaintiff seeks an award of $1,883,724.00 in damages and clear title to the Orem property. Because the Court finds that Plaintiff's Complaint fails to state a claim upon which relief can be granted, the Court will decline to grant Plaintiff damages or quiet title to the Orem property in his favor.
Based on the foregoing, it is hereby
ORDERED that the BAC Defendants' Motion to Dismiss Plaintiff's Complaint (Docket No. 10) is GRANTED. The Clerk of Court is instructed to close this case forthwith.
