Shwurong Lee v. The Bank of New York Mellon FKA The Bank of New York as Successor Trustee to JPMorgan Chase Bank N.A. as Trustee of MASTR Adjustable Rate Mortgages Trust 2004-7 et al, No. 3:2016cv05094 - Document 34 (N.D. Cal. 2016)

Court Description: ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS by Judge Jon S. Tigar granting 18 Motion to Dismiss; granting 19 Motion to Dismiss. (wsn, COURT STAFF) (Filed on 12/9/2016)
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Shwurong Lee v. The Bank of New York Mellon FKA The Ba...djustable Rate Mortgages Trust 2004-7 et al Doc. 34 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SHWURONG LEE, Plaintiff, 8 United States District Court Northern District of California 11 12 ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS v. 9 10 Case No.16-cv-05094-JST THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS SUCCESSOR TRUSTEE TO JPMORGAN CHASE BANK N.A. AS TRUSTEE OF MASTR ADJUSTABLE RATE MORTGAGES TRUST 2004-7, et al., 13 Re: ECF No. 18, 19 Defendants. 14 Before the Court are two Motions to Dismiss Plaintiff’s Complaint; one filed by 15 Defendants JPMorgan Chase Bank, N.A. (“Chase”) and The Bank of New York Mellon 16 (“Mellon”) (collectively, “the Bank Defendants”), and the other by Defendant MTC Financial 17 18 19 20 21 22 (“MTC”). ECF Nos. 18 and 19. The Court refers to the Bank Defendants and MTC together as “Defendants.” For the reasons stated below, the Court grants both Motions to Dismiss. Defendants have also filed separate requests for judicial notice, ECF Nos. 18-1 and 19-1, which are granted in part. I. BACKGROUND In May 2004, Plaintiff Shwurong Lee (“Plaintiff”) obtained a $1,000,000 mortgage loan in 23 connection with the property located at 1240 Cutlet Ranch Road, Danville, California (“the 24 Subject Property”). ECF No. 1 ¶ 9; ECF No. 18-1 Exhibit 1. The loan was secured by a Deed of 25 Trust (“the Deed”) recorded on May 18, 2004 with the Contra Costa County Recorder’s Office 26 (“the Recorder’s Office”) as instrument number 2004-0184646-00. ECF No. 1 ¶ 9; ECF No. 18-1 27 Ex. 1. The Deed identifies Washington Mutual Bank (“WaMu”) as the lender, California 28 1 Reconveyance Company (“CRC”) as the trustee, and Plaintiff as the borrower. ECF No. 1 ¶ 10; 2 ECF No. 18-1 Ex. 1. The Deed secured a promissory note (“the Note”) for $1,000,000 in favor of 3 WaMu. ECF No. 1 ¶ 9; ECF No. 18-1 Ex. 1. 4 On September 25, 2008, WaMu and certain of its affiliates were declared insolvent and the 5 Federal Deposit Insurance Company (“the FDIC”) was appointed as receiver. ECF No. 1 ¶ 11. 6 The same day, Chase entered into a Purchase and Assumption Agreement (“the PAA”) with the 7 FDIC acting in its corporate capacity as well as receiver for WaMu. ECF No. 1 ¶ 11; ECF No. 18- 8 1 Ex. 2. Under the PAA, the FDIC transferred to Chase “all right, title, and interest of the 9 Receiver in and to all the assets” of WaMu. ECF No. 1 ¶ 11; ECF No. 18-1 Ex. 2. In his Complaint, Plaintiff alleges, “on information and belief[,]” that the Note and the Deed “were not 11 United States District Court Northern District of California 10 specifically identified in the receivership as an asset subject to the [PAA]” and therefore “neither 12 were [sic] actually transferred to [Chase].” ECF No. 1 ¶ 11. 13 On March 15, 2011, CRC, as trustee of the Deed, recorded a Notice of Default (“the 14 NOD”) with the Recorder’s Office as instrument number 2011-0054937-00 against the Subject 15 Property, identifying $37,184.42 as the amount in arrears. ECF No. 1 ¶ 12; ECF No. 18-1 Ex. 3. 16 On June 16, 2011, CRC recorded a Notice of Trustee’s Sale with the Recorder’s Office as 17 instrument 2011-0119536-00, identifying $1,017,931.21 as the unpaid balance and July 7, 2011 as 18 the date of the trustee’s sale. ECF No. 1 ¶ 13; ECF No. 18-1 Ex. 4. The July 7, 2011 sale was 19 postponed and, on March 2, 2012, a second Notice of Trustee’s Sale was recorded by CRC with 20 the Recorder’s Office as instrument 2012-0049230-00, identifying $1,049,193,42 as the unpaid 21 balance and March 23, 2012 as the date of the trustee’s sale. ECF No. 1 ¶ 14; ECF No. 18-1 22 Ex. 5. The March 23, 2012 sale was also postponed. 23 On January 25, 2016, an Assignment of Deed of Trust (“the Assignment”) was recorded in 24 the Recorder’s Office as instrument number 2016-0012799-00. ECF No. 1 ¶ 15; ECF No. 18-1 25 Ex. 6. The Assignment transferred “all beneficial interest” under the Deed from Chase to Mellon. 26 ECF No. 1 ¶ 15; ECF No. 18-1 Ex. 6. On July 19, 2016, Mellon recorded a Substitution of 27 Trustee with the Recorder’s Office, substituting MTC for CRC as trustee under the Deed. ECF 28 No. 1 ¶ 18; ECF No. 19-1 Ex. D. 2 On August 4, 2016, MTC recorded a third Notice of Trustee’s Sale with the Recorder’s 1 2 Office, identifying the unpaid balance as $1,248,825.01 and September 12, 2016 as the date of the 3 trustee’s sale. ECF No. 1 ¶ 19; ECF No. 18-1 Ex. 7. The scheduled sale has been postponed until 4 November 21, 2016. 5 In October of 2015, Plaintiff entered into a Residential Purchase Agreement with a third 6 party, who was to purchase the Subject Property. ECF No. 1 ¶ 16. That deal did not go through 7 and, on August 17 of this year, Plaintiff entered into another Residential Purchase Agreement with 8 a different third party. Id. ¶¶ 20-21. Plaintiff alleges Chase was aware of the first Residential 9 Purchase Agreement, and further alleges an agreement between himself and Chase allowing him to proceed with the sale. Id. ¶ 17. Plaintiff claims that the foreclosure process violated the alleged 11 United States District Court Northern District of California 10 agreement between himself and Chase, and constituted unlawful dual-tracking. Id. ¶¶ 20-21. 12 Plaintiff further alleges the trustee’s sale was initiated by parties with no lawful interest in the 13 Subject Property. Id. ¶ 22. 14 II. JURISDICTION Federal courts have subject matter jurisdiction “when a federal question is presented on the 15 16 face of the plaintiff’s properly pleaded complaint.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 17 392 (1987); see also 28 U.S.C. § 1331. If a court has original jurisdiction over one claim in a case, 18 it may exercise “supplemental jurisdiction” over “all other claims that are so related to claims in 19 the action within such original jurisdiction that they form part of the same case or controversy.” 20 28 U.S.C. § 1367(a). Here, Plaintiff asserts four federal claims against Defendants, and his state 21 law claims stem from the same core set of facts on which his federal claims are based. Therefore, 22 this Court exercises supplemental jurisdiction over Plaintiff’s state law claims. 23 III. 24 LEGAL STANDARD A complaint must contain “a short and plain statement of the claim showing that the 25 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While detailed factual allegations are not 26 required, a complaint must have sufficient factual allegations to “state a claim to relief that is 27 plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and 28 citations omitted). A party may move to dismiss based on the failure to state a claim upon which 3 1 relief may be granted. See Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate 2 only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable 3 legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). 4 Dismissal is also proper where the complaint alleges facts that demonstrate that the complaint is 5 barred as a matter of law. See Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 6 1990); Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980). For purposes of a motion to dismiss, “all allegations of material fact are taken as true and 7 8 construed in the light most favorable to the nonmoving party.” Cahill v. Liberty Mut. Ins. Co., 80 9 F.3d 336, 337–38 (9th Cir.1996). However, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a [P]laintiff’s obligation to provide 11 United States District Court Northern District of California 10 the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a 12 formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 13 550 U.S. 544, 555 (2007) (internal citations omitted). To survive a motion to dismiss, a pleading 14 must allege “enough fact to raise a reasonable expectation that discovery will reveal evidence” to 15 support the allegations. Id. at 556. 16 IV. DISCUSSION The Complaint alleges eight causes of action: (1) Wrongful Foreclosure; (2) Promissory 17 18 Estoppel; (3) Violation of the California Homeowners’ Bill of Rights (“CHBR”), Cal. Civ. Code 19 Section 2924.11; (4) Slander of Title; (5) Violation of the Racketeer Influenced and Corrupt 20 Organizations Act (“RICO”), 18 U.S.C. § 1962; (6) Violation of the Fair Debt Collection Practices 21 Act (“FDCPA”), 15 U.S.C. § 1692; (7) Violation of the Truth in Lending Act (“TILA”), 15 U.S.C. 22 § 1601; and (8) Violation of the Real Estate Settlement Protection Act (“RESPA”), 12 U.S.C. 23 § 2605.1 24 25 26 27 28 In his Opposition to Defendants’ Motions to Dismiss, Plaintiff adds a cause of action “for unfair and deceptive acts and practices (“UDAP”), codified at California Code of Civil Procedure §§ 1750-1784 . . . and the Unfair Business Practices Act.” ECF No. 20 at 11. The Court will not consider Plaintiff’s new cause(s) of action because “new arguments raised in a reply need not be considered by the district courts.” U.S. Bank Nat’l Ass’n v. Friedrichs, No. 12CV2373GPC(KSC), 2014 WL 12576946, at *5 (S.D. Cal. Mar. 24, 2014) (citing Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007); United States v. Bohn, 956 F.2d 208, 209 (9th Cir. 1992)). 4 1 1 The Bank Defendants and MTC now move to dismiss all claims against them. 2 A. 3 Before addressing the merits of the motions before it, the Court must resolve the pending Judicial Notice requests for judicial notice. The Bank Defendants have filed a request for judicial notice in 5 support of their motion to dismiss. ECF No. 18-1. Defendant MTC also filed a request for 6 judicial notice. ECF No. 19-1. Except for the Substitution of Trustee, ECF No. 19-1 Ex. D, 7 MTC’s request for judicial notice overlaps with the Bank Defendants’ request. Both the Bank 8 Defendants and MTC ask the Court to take judicial notice of the Deed, the PAA, the NOD, the 9 Assignment, and the third Notice of Trustee’s Sale. Compare ECF No. 19-1, Exs. A-C, E, F, with 10 ECF No. 18-1 Exs. 1-3, 6, 7. In addition to these documents, the Bank Defendants ask the Court 11 United States District Court Northern District of California 4 to take judicial notice of the first two Notices of Trustee’s Sale, as well as various documents 12 relating to a prior litigation involving the Plaintiff. ECF No. 18-1 Exs. 4, 5, 8-10. Plaintiff filed 13 an opposition to both requests for judicial notice. See ECF No. 21. Plaintiff’s opposition states 14 correctly that, while this Court may take judicial notice of the existence of these documents, it 15 cannot take notice of allegations asserted in the documents, nor of disputed legal conclusions that 16 Defendants argue should be drawn from them. Id. at 2; see also Lee v. City of Los Angeles, 250 17 F.3d 668, 689-90 (9th Cir. 2001). 18 Accordingly, with the exception of the documents relating to the prior litigation,2 ECF No. 19 18-1 Exs. 8-10, the Court grants Defendants’ requests for judicial notice as to the existence of the 20 remaining documents because each of these documents is properly a matter of public record. See 21 Lee, 250 F. 3d at 689 (“[U]nder Fed. R. Evid. 201, a court may take judicial notice of matters of 22 public record.”) (internal quotations and citation omitted). 23 B. 24 MTC’s Conduct is Privileged Pursuant to California Civil Code Section 2924(d) MTC argues that its motion to dismiss should be granted without leave to amend because 25 26 27 28 Because the Court is granting the Bank Defendants’ Motion to Dismiss on other grounds, it need not address whether the documents relating to Plaintiff’s prior litigation are part of the public record, or whether these documents contain disputed facts. The Court does not reach the issue of whether Plaintiff is judicially estopped by the prior litigation, or if the doctrines of claim and issue preclusion bar his allegations. 5 2 1 its conduct was privileged under California Civil Code section 2924(d). ECF No. 19 at 12. 2 Section 2924, which governs notice requirements in connection with non-judicial foreclosures and 3 provides that related communications are privileged, states as follows: 4 5 6 7 8 9 10 All of the following shall constitute privileged communications pursuant to Section 47: (1) The mailing, publication, and delivery of notices as required by this section. (2) Performance of the procedures set forth in this article. (3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Section 729.040, 729.050, and 729.080 of the Code of Civil Procedure. Cal. Civ. Code § 2924(d). Under California Civil Code section 47, “the privilege applies to communications made without malice by a person who has an interest in the communications to United States District Court Northern District of California 11 12 another person with an interest in the communications.” Powell v. Wells Fargo Mortgage, No. 14cv-04248-MEJ, 2015 WL 4719660, at *6 (N.D. Cal. Aug. 7, 2015). This privilege applies to all 13 torts other than malicious prosecution. Id. 14 15 16 17 18 MTC states that the privilege “essentially encompasses the entire foreclosure process, including the sale,” and therefore “all tort and restitution style causes of action, including for wrongful foreclosure and slander[,] should be [dismissed] without leave to amend.” ECF No. 19 at 12-14. MTC contends that, as the foreclosure trustee, MTC’s “sole duties, which it carried out, [were] to adhere to the statutory scheme for conducting a non-judicial foreclosure, including but 19 not limited to, the mailing, publication, and delivery of notices, and the performance of foreclosure 20 21 22 procedures.” Id. at 12. Plaintiff did not rebut this claim, instead arguing generally that the “trustee’s sale is being initiated by parties with no lawful interest in Plaintiff’s [Deed].” ECF No. 20 at 7. Yet, as MTC points out, it was not responsible for initiating the foreclosure proceedings 23 24 25 nor did it have a duty to “learn of . . . the alleged failure[s]” relating to the Deed. ECF No. 19 at 12; Kachlon v. Markowitz, 168 Cal. App. 4th 316, 335 (2008) (“The trustee in nonjudicial foreclosure is not a true trustee with fiduciary duties, but rather a common agent for the trustor and 26 27 28 beneficiary. The scope and nature of the trustee’s duties are exclusively defined by the deed of trust and the governing statutes. No other common law duties exist.”) (internal citations omitted). 6 1 Importantly, neither Plaintiff’s Complaint nor his Opposition challenges MTC’s duty to issue the 2 third Notice of Sale as the trustee. The Court agrees that MTC’s conduct is privileged under section 2924(d). “Under a deed 3 4 of trust containing a power of sale, . . . the borrower, or ‘trustor,’ conveys nominal title to property 5 to an intermediary, the ‘trustee,’ who holds that title as security for repayment of the loan to the 6 lender, or ‘beneficiary.’” Kachlon, 168 Cal. App. 4th at 334. “The trustee’s duties are twofold: 7 (1) to ‘reconvey’ the deed of trust to the trustor upon satisfaction of the debt owed to the 8 beneficiary, resulting in a release of the lien created by the deed of trust, or (2) to initiate 9 nonjudicial foreclosure on the property upon the trustor’s default, resulting in a sale of the property.” Id. “The trustee’s statutory duties in effectuating the foreclosure are designed, in major 11 United States District Court Northern District of California 10 part, to communicate relevant information about the foreclosure to other interested persons.” Id. 12 at 339. 13 Only a showing of maliciousness can defeat the privilege extended to a trustee executing 14 its obligations under the deed of trust under section 2924(d) and section 47. See, e.g., id. at 343- 15 44 (affirming dismissal of claims against foreclosure trustee for slander of title and negligence 16 based on its recording the notice of default and failing to rescind it upon satisfaction of debt); 17 Shelby v. Ocwen Loan Servicing, LLC, No. 2-14-cv-02844-TLN, 2015 WL 5023020, at *4 (E.D. 18 Cal. Aug. 24, 2015) (acknowledging that “[i]t is possible . . . for a trustee to be liable if the trustee 19 maliciously carries out its duties to provide for liability on the part of the trustee,” but that in the 20 absence of this, a trustee is not liable “for carrying out its routine duties”). Moreover, as MTC 21 points out, California Civil Code section 2924(b), which deals with transfers and sales of deeds of 22 trusts, states: “the trustee shall incur no liability for any good faith error resulting from reliance on 23 information provided in good faith by the beneficiary regarding the nature and the amount of the 24 default under the secured obligation, deed of trust, or mortgage.” Cal. Civ. Code § 2924(b); ECF 25 No. 19 at 14 n.3. 26 Plaintiff did not allege that MTC acted with malice or in bad faith in discharging its duties 27 as trustee and issuing the third Notice of Trustee’s Sale on the Subject Property. Nor does he 28 allege that MTC acted beyond its duties as trustee. Given that all of Plaintiff’s claims against 7 1 MTC are based on MTC’s role in initiating foreclosure proceedings at the direction of the Bank 2 Defendants, the protections of sections 2924(d) and 2924(b) apply. Plaintiff’s state law claims 3 against MTC are dismissed. The Court is not extending section 2924(d)’s or section 2924(b)’s protections to federal 4 5 claims. Because, however, Plaintiff never specifically alleges any facts against MTC in its federal 6 law claims, see ECF No. 1 ¶¶ 65-129, MTC’s motion to dismiss is granted in full. C. 7 The Bank Defendants’ Motion to Dismiss is Granted 1. 8 Wrongful Foreclosure The Bank Defendants argue that “Plaintiff’s claim for wrongful foreclosure has no merit 9 because the [S]ubject [P]roperty has yet to be sold – where a plaintiff fails to allege that a 11 United States District Court Northern District of California 10 foreclosure sale has occurred, the plaintiff fails to bring a claim for wrongful foreclosure.”3 ECF 12 No. 18 at 25. To support their proposition, the Bank Defendants cite to several cases finding a 13 wrongful foreclosure case to be “premature” when no foreclosure sale has occurred. See ECF No. 14 18 at 25-26. Defendants rely primarily on Munger v. Moore, 11 Cal. App. 3d. 1, 7-8 (1970), Lona 15 v. Citibank, N.A., 202 Cal. App. 4th 89, 104 (2011), and their progeny. Neither of these cases 16 supports the Bank Defendants’ argument. First, “Lona dealt with a challenge to an already completed sale, and thus the court in Lona 17 18 quite sensibly explained the law only in relation to such claims.” Lundy v. Selene Finance, LP, 19 No. 15-cv-05676-JST, 2016 WL 1059423, at *7 (N.D. Cal. Mar. 17, 2016). The Bank 20 21 22 23 24 25 26 27 28 3 Defendants also argue that, as a matter of law, a plaintiff must allege proper tender of the debt due before bringing any claim that arises from a foreclosure sale. ECF No. 18 at 26; ECF No. 19 at 15. Defendants contend that the Court must dismiss the Complaint in its entirety because Plaintiff has failed to allege proper tender or facts supporting the ability to tender the outstanding indebtedness. This Court previously addressed the tender rule in Lundy v. Selene Finance, LP. See No. 15-cv-05676-JST, 2016 WL 1059423, at *6 (N.D. Cal. Mar. 17, 2016). In Lundy, as here, this Court noted that “Plaintiff seeks to prevent an upcoming foreclosure sale, arguing that [the Bank Defendant] is not the true holder of the [Deed] and does not have power of sale. Given the exceptions and qualifications to the tender rule . . ., the Court concludes it would be improper to apply the tender rule to Plaintiff’s case, especially at the pleading stage.” Id. at *7 (internal citations omitted). As this Court noted in Lundy, “courts often hold that it would be inequitable to prevent plaintiffs, through application of the tender rule, from preventing an erroneous foreclosure.” Id. at *6. Therefore, this Court will not apply the tender rule here. 8 1 Defendants’ reliance on Munger is similarly unavailing. In Munger, the California Court of 2 Appeal for the First District noted that “a trustee or mortgagee may be liable to the trustor or 3 mortgagor for damages sustained where there has been an illegal, fraudulent, or willfully 4 oppressive sale of property under a power of sale contained in a mortgage or deed of trust.” 11 5 Cal. App. 3d at 7. Contrary to the Bank Defendants’ assertion, Munger did not also hold the 6 converse to be true. In other words, it did not hold that a trustee or mortgagee would not be liable 7 to the trustor or mortgagor if there has not been a sale. Moreover, a complete bar on pre- 8 foreclosure challenges “would mean that even if a plaintiff offers plausible support for the claim 9 that the entity foreclosing on her property lacks any authority to do so, that plaintiff would nevertheless have to sit by idly until an allegedly improper foreclosure sale was completed before 11 United States District Court Northern District of California 10 bringing her otherwise valid challenge in court.” Lundy, 2016 WL 1059423, at *13. That 12 illogical result may explain why “numerous courts have allowed pre-foreclosure [wrongful 13 foreclosure] claims to proceed.” Id. at *7 (citing to Barrionuevo v. Chase Bank, N.A., 885 F. 14 Supp. 2d 694 (N.D. Cal. Aug. 6, 2012); Vissuet v. Indymac Mortg. Services, No. 09-cv-2321-IEG, 15 2010 WL 1031013 (S.D. Cal. Mar. 19, 2010); Giannini v. Am. Home Mortg. Servicing, Inc., No. 16 C11-04489 TEH, 2012 WL 298254 (N.D. Cal. Feb. 1, 2012)). Consequently, this Court rejects 17 the Bank Defendants’ argument that Plaintiff’s wrongful foreclosure claim has no merit because 18 the Subject Property has not yet been sold.4 19 4 20 21 22 23 24 25 26 27 28 In Lundy, this Court explained that the California Supreme Court had yet to decide whether presale wrongful foreclosure claims are permissible, although two cases presenting that question were then pending before the California Supreme Court at the time. Lundy, 2016 WL 1059423, at *8 (referring to Mendoza v. JPMorgan Chase Bank, 337 P.3d 493 (Cal. 2014), and Keshtgar v. U.S. Bank, 334 P.3d 686 (Cal. 2014)). This Court was therefore free to “predict how the state’s highest court would resolve” that question. Hemmings v. Tidyman’s Inc., 285 F.3d 1174, 1203 (9th Cir. 2002). The California Supreme Court eventually remanded Mendoza and Keshtgar for reconsideration based on its ruling in Yvanova v. New Century Mortg. Corp., which held that a plaintiff has standing to challenge a foreclosure where the assignment underlying the foreclosure was allegedly void. 62 Cal. 4th 919, 942-43 (2016). However, likely because Yvanova confined its holding to post-foreclosure challenges, see id. at 924, 934, the Keshtgar court on remand found that “Yvanova has no bearing on this case. Yvanova applies only to actions alleging wrongful foreclosure, not actions to preempt foreclosure.” Keshtgar v. U.S. Bank, N.A., 2d Civil No. B246193, 2016 WL 4183750, at *1 (Ct. App. 2016). Therefore, although the Keshtgar court ultimately held that pre-sale wrongful foreclosure claims are not permissible, the court also confirmed the lack of binding California Supreme Court precedent. Mendoza has yet to be decided on remand. This Court continues to conclude, as it did in Lundy, that, were the California Supreme Court presented with this issue, it would allow wrongful foreclosure claims to proceed 9 1 Although the lack of a sale is not fatal to Plaintiff’s claim, the lack of facts supporting 2 wrongful foreclosure is. See Reed v. Wilmington Trust, N.A., No. 16-cv-01933-JSW, 2016 WL 3 3124611, at *4 (N.D. Cal. June 3, 2016). Plaintiff alleges a wrongful foreclosure “due to broken 4 chain of title and on equitable principles due to the additional violations alleged herein . . . on 5 several grounds including robo-signing, break in the chain of title due to recordation of a late 6 assignment and faulty securitization, inefficacy of the [PAA], and lack of authority by the 7 purported trustee, MTC, violation of the dual-tracking prohibition as well as JPMorgan’s promise 8 to allow a short-sale, and federal statute.” ECF No. 1 ¶ 23. The only ground for which Plaintiff 9 provides any non-conclusory factual allegations is the allegedly late Assignment. See id. ¶ 24. Thus, the Court takes the facts alleged as to the late Assignment as true, and rejects all of the other 11 United States District Court Northern District of California 10 bases for Plaintiff’s wrongful foreclosure claim. Iqbal, 556 U.S. at 679 (“While legal conclusions 12 can provide the framework of a complaint,” legal conclusions and conclusory statements are not 13 sufficient to state a claim upon which relief can be granted.) 14 Even construing the late assignment allegations in the light most favorable to Plaintiff, the 15 Court finds that Plaintiff has failed to allege facts sufficient to support a theory of wrongful 16 foreclosure. Plaintiff contends that the Assignment to Mellon is void because it was made after 17 the closing date set forth in the Pooling and Service Agreement (“PSA”) for the trust, specifically 18 that the Assignment was recorded twelve years after the closing date. Id. ¶¶ 24, 26. Even 19 assuming Plaintiff’s allegations relating to the PSA are true, Plaintiff’s argument fails. 20 Under the California Supreme Court’s decision in Yvanova v. New Century Mortgage 21 Corporation, third parties to an assignment who are claiming wrongful foreclosure must allege 22 facts rendering an aspect of the assignment void as opposed to voidable. 62 Cal. 4th 919, 923 23 (2016). Plaintiff offers no facts to support his claim that the late assignment renders the 24 Assignment to Mellon void. Plaintiff relies on Glaski v. Bank of America, 218 Cal. App. 4th 25 1079, 1096-97 (2013), which held that that an attempt to transfer a loan after the trust’s closing 26 27 28 absent an actual foreclosure provided that a specific factual basis for undermining the authority of the party or parties initiating the foreclosure is alleged. 10 date would be a void transaction under New York law. Later courts, however, have declined to 2 follow Glaski. The Second Circuit criticized the New York case upon which Glaski relied, noting 3 that “the weight of New York authority is contrary to plaintiff’s contention that any failure to 4 comply with the terms of the PSAs rendered defendants’ acquisition of plaintiffs’ loans and 5 mortgages void as a matter of trust law.” Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 6 88 (2nd Cir. 2014). The Ninth Circuit followed the Rajamin court’s analysis and held that “an act 7 in violation of a trust agreement is voidable – not void – under New York law.” Morgan v. Aurora 8 Loan Services, LLC, 646 Fed. App’x 546, 550 (9th Cir. Mar. 28, 2016); see also Saterbak v. 9 JPMorgan Chase Bank, N.A., 245 Cal. App. 4th 808, 815 (2016) (finding that an assignment to a 10 securitized trust that is made after the closing date is “merely voidable” and not void); Barcarse v. 11 United States District Court Northern District of California 1 Central Mortg. Co., No. 14-55287, 2016 WL 4784043, at *1 (9th Cir. Sept. 14, 2016) 12 (“[A]lleg[ations] that defendants violated a Pooling Services Agreement (PSA) when transferring 13 their note and deed to a trust . . . would make the transfers voidable, not void”) (internal citations 14 omitted). Therefore, Plaintiff’s claim for wrongful foreclosure based on a late assignment fails 15 and the Court dismisses this claim. 16 17 2. Promissory Estoppel The elements of a promissory estoppel claim are “(1) a promise clear and unambiguous in 18 its terms; (2) reliance by party to whom the promise is made; (3) [the] reliance must be both 19 reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his 20 reliance.” Aceves v. U.S. Bank N.A., 192 Cal. App. 4th 218, 225 (2011) (internal quotations and 21 citations omitted). 22 Plaintiff asserts that “Defendants [Mellon], JPMorgan and/or MTC on behalf of 23 themselves or as agents or robosigners of one or more other Defendants made a promise through 24 oral and written representations, that they would not foreclose on the Subject Property if Plaintiff 25 were to sell the Subject [Property] by a short-sale transaction.” ECF No.1 ¶ 38. Specifically, 26 Plaintiff argues that a letter sent to him by Chase establishes that a short sale promise was made. 27 See ECF No. 1-1 Ex. F. This letter, however, simply states that Plaintiff has “agreed to a short 28 sale where [he] will be able to sell [his] home for less than what [he] owes[,]” but the letter 11 1 continues that “[t]his notice may not stop the foreclosure referral, process, or sale. Don’t 2 ignore any foreclosure notices.” Id. Even a perfunctory glance at this letter reveals that (a) 3 Chase made no promise and (b), the foreclosure process might continue. 4 5 Because the Plaintiff has failed to state facts sufficient to constitute a promissory estoppel cause of action, his second cause of action is dismissed. 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 3. Violation of CHBR Plaintiff’s third cause of action alleges a violation of the CHBR. Section 2924.11 states in relevant part: (a) If a foreclosure prevention alternative is approved in writing prior to the recordation of a notice of default, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default under either of the following circumstances: (1) The borrower is in compliance with the terms of the written trial or permanent loan modification, forbearance, or repayment plan. (2) A foreclosure prevention alternative has been approved in writing by all parties . . . and proof of funds or financing has been provided to the servicer. Cal. Civ. Code § 2924.11. Defendants correctly point out that Plaintiff has failed to establish that a foreclosure prevention alternative was approved in writing by all parties. See ECF No. 18 at 2829; ECF No. 19 at 21. Plaintiff’s own exhibits indicate that, even if the parties considered a foreclosure prevention alternative, it was ultimately rejected by Chase. See ECF No. 1-13 Ex. J 19 (“Your request for a short sale request isn’t approved . . . . You may be able to send a new offer, 20 but it won’t stop any collection and/or foreclosure activity if your account is past due.”). Because 21 22 23 24 25 Plaintiff has failed to plausibly allege the existence of a foreclosure prevention alternative, the Court concludes that Plaintiff has not stated a claim under section 2924.11. 4. Slander of Title To state a claim for slander of title, Plaintiff must allege: “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate 26 pecuniary loss.” Manhattan Loft, LLC v. Mercury Liquors, Inc., 173 Cal. App. 4th 1040, 1051 27 (2009) (internal citation omitted). Plaintiff argues that Defendants “acted with malice when they 28 recorded the false and void” Deed, Assignments, NOD(s), Substitution of Trustee, and Notices of 12 1 Trustee’s Sale. See ECF No. 1 ¶¶ 59-61. However, Plaintiff bases this cause of action on the 2 same allegations and theories on which he bases his claim for wrongful foreclosure; namely, that 3 the Assignment of the Deed is void. Id. at ¶ 56. For the reasons stated above, the Court dismisses 4 the slander of title claim because the record and authorities before the Court indicate that the 5 Assignment of the Deed was voidable, not void. 6 7 5. Violation of RICO 18 U.S.C. § 1962 makes it unlawful for persons and organizations to engage in a “pattern 8 of racketeering activity.” See 18 U.S.C. § 1962(a)-(d). Racketeering activity is defined to include 9 a number of generically specified criminal acts, as well as the commission of one of a number of listed predicate offenses. 18 U.S.C. § 1961(1). To state a civil claim under section 1962, a 11 United States District Court Northern District of California 10 plaintiff “must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering 12 activity.” Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir. 2007) (internal quotations and 13 citation omitted). To show a pattern of racketeering activity, the plaintiff must allege more than 14 the existence of one scheme with a “single purpose which happen[s] to involve more than one act 15 taken to achieve that purpose.” Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1535 (9th Cir. 1992) 16 (affirming dismissal of section 1962 claims because the plaintiff “has not alleged a pattern of 17 racketeering activity”). The plaintiff also must show that the activities “amount to or pose a threat 18 of continued criminal activity.” Id. (internal quotation marks and citation omitted). 19 In his Complaint, Plaintiff alleges that “[t]he conspirators intended to maintain an absolute 20 stranglehold on the American economy for many decades, if not centuries, into the future.” ECF 21 No. 1 ¶ 89. Plaintiff bases his allegations on “[t]he drafting of fraudulent affidavits and 22 documents and the subsequent execution of the documents.” Id. ¶ 67. But Plaintiff has not 23 pleaded any specific facts to support his claim that “[t]hese Defendants intentionally participated 24 in a scheme to defraud everyone, including the Plaintiff.” Id. ¶ 68. Plaintiff’s RICO claim is a 25 string of conclusory allegations intermixed with recitals of the elements of a RICO cause of action. 26 Moreover, the allegations do not give rise to the reasonable inference that the purported 27 fraud with respect to the instruments was a part of a pattern of racketeering activity. United 28 Energy Owners Committee, Inc. v. U.S. Energy Mgmt. Sys., Inc., 837 F.2d 356, 360 (9th Cir. 13 1 1988) (Finding that “a pattern of racketeering activity under RICO . . . need only allege predicate 2 acts which are not ‘isolated or sporadic.’ . . . RICO’s continuity requirement is not satisfied if 3 plaintiffs have merely alleged ‘a single fraud perpetrated on a single victim.’”) (internal citations 4 omitted). The Plaintiff also fails to plead the existence of the requisite RICO enterprise, which 5 much be pleaded independently from the acts of the individual RICO defendants. See Rae v. 6 Union Bank, 725 F.2d 478, 481 (9th Cir. 1984) (“If [the defendant] is the enterprise, it cannot also 7 be the RICO defendant.”). The Court is not persuaded that these deficiencies can be cured. First, courts routinely 9 dismiss with prejudice RICO claims predicated on a residential foreclosure proceeding on the 10 ground that foreclosure proceedings, without more, do not give rise to a RICO claim. See e.g., 11 United States District Court Northern District of California 8 Zacharias v. JPMorgan Chase Bank, N.A., No. 12-06525 SC, 2013 WL 588757, at *3 (N.D. Cal. 12 Feb. 13, 2013) (“Plaintiff’s attempt to cast a straightforward foreclosure proceeding as a pattern of 13 racketeering activity is simply improper.”); Johnson v. Wachovia Bank FSB, No. 10-2839 GEB, 14 2012 WL 4092426, at *3 n.2 (E.D. Cal. Sept. 17, 2012) (“The activity underlying plaintiff’s 15 claims was a simple loan transaction and foreclosure under a deed of trust. This is not the kind of 16 unlawful activity contemplated by the Civil RICO Act.”). Second, the allegations underlying 17 Plaintiff’s claims are premised exclusively on the purported invalidity of the instruments 18 supporting the foreclosure of the Subject Property. The Court has already found that Plaintiff’s 19 allegations of invalidity relating to the instruments at issue are unsupported by the facts and 20 authorities before the Court. Because the theory of fraud underlying Plaintiff’s RICO claim is 21 unmeritorious, and because the foreclosure at issue is insufficient on its own to give rise to a 22 RICO claim, the Court dismisses Plaintiff’s RICO claim with prejudice. 23 24 6. Violation of FDCPA Plaintiff argues that “Defendants are debt collectors within the meaning of the 25 [FDCPA][,]” and that “Defendants violated the FDCPA with actions pertaining to enforcement of 26 the Note and the Plaintiff’s [Deed].” ECF No. 1 ¶¶ 98, 99. Because the Court finds that the 27 statute of limitations relating to Plaintiff’s FDCPA claims has elapsed, it need not address whether 28 the Bank Defendants and MTC qualify as “debt collectors” under 15 U.S.C. § 1692a(6). 14 1 The FDCPA’s statute of limitations is “one year from the date on which the violation 2 occurs.” 15 U.S.C. § 1692k(d). Under Ninth Circuit precedent, the FDCPA limitations period 3 “begins to run when the plaintiff knows or has reason to know of the injury which is the basis for 4 the action.” Magnum v. Action Collection Serv., Inc., 575 F.3d 935, 940 (9th Cir. 2009) (internal 5 citations and quotations omitted). Here, Plaintiff alleges an FDCPA violation relating to the 2011 6 NOD, recorded five years before he filed his complaint. See ECF No. 1 ¶ 100; ECF 19-1 Ex. B. 7 Plaintiff has not alleged any facts indicating that he was unaware of the NOD or that he is entitled 8 to tolling. Consequently, the Court dismisses Plaintiff’s FDCPA cause of action as time-barred. 9 10 7. Violation of TILA Plaintiff alleges “Defendants . . . violated TILA by failing to provide Plaintiff with United States District Court Northern District of California 11 accurate material disclosures . . . and not . . . fully inform[ing] [him] of the pros and cons of 12 adjustable rate mortgages.” ECF No. 1 ¶ 109. Plaintiff also alleges Defendants did not notify him 13 when his loan was transferred to a new assignee within thirty days of the transfer. Id. ¶ 110; see 14 also 15 U.S.C. § 1641(g). 15 Under TILA, Plaintiff’s claims relating to the origination of the loan and any subsequent 16 transfers are subject to a one-year statute of limitations. See 15 U.S.C. § 1640(e) (“[A]ny action 17 under this section may be brought in any United States district court . . . within one year from the 18 date of the occurrence of the violation.”). Here, the limitations periods began to run in 2004 for 19 claims relating to improper disclosures during origination and in 2008 for claims relating to the 20 FDIC’s transfer of WaMu’s assets to Chase. Plaintiff has not alleged that the statute of limitations 21 is subject to tolling. Thus, to the extent that Plaintiff is alleging TILA violations relating to 22 improper disclosures and the PAA, his claims are time-barred. 23 Although unclear from the Complaint itself, presumably Plaintiff is also alleging violations 24 of TILA relating to the Assignment, which transferred interest in the DOT from Chase to BNY in 25 2016. While this claim is not time-barred, it also is unsupported by the record—in fact, the record 26 illustrates that the Assignment was dated January 1, 2016, and that it was filed with the Recorder’s 27 Office on January 25, 2016. See ECF 19-1 Ex. C. While Plaintiff properly points out that the 28 beneficiary of a DOT must notify the borrower of the transfer in writing within thirty days of the 15 1 transfer, see 15 U.S.C. § 1641(g), he has alleged no facts indicating that the Bank Defendants 2 failed to provide him such a notice. 3 4 5 The Court grants Defendants’ motions to dismiss this claim. 8. Violation of RESPA Plaintiff alleges three separate RESPA violations. First, Plaintiff alleges that “Defendants 6 are liable for violation of RESPA, 12 U.S.C. § 2605, Section 6.” ECF No. ¶ 120. But section 7 2605 of RESPA contains no “Section 6,” nor does the Complaint elaborate on what exactly the 8 Plaintiff believes the violation is. Plaintiff’s reliance on Johnson v. HSBC Bank USA, Nat. Ass’n, 9 No. 3:11-cv-2091-JM-WVG, 2012 WL 928433, at *4 (S.D. Cal. Mar. 19, 2012), is unhelpful. The Johnson court evaluated a complaint which alleged improper assignment because (1) the initial 11 United States District Court Northern District of California 10 nominee had no knowledge of the assignment and (2) the person who authorized the assignment 12 was never actually appointed by the initial nominee’s board of directors and therefore lacked any 13 authority to make the assignment. Id. at *3. No such facts are pleaded here. 14 Second, Plaintiff alleges that he “has been harmed by the Defendants’ failure to adequately 15 respond to [his] qualified written request.” Id. ¶ 123; see also 12 U.S.C. § 2605(e)(2) (describing 16 a loan servicer’s obligations with respect to a qualified written request). But Plaintiff fails to 17 allege (a) when he submitted his qualified written request; (b) to whom he submitted his qualified 18 written request to; and (c) whether his qualified written request complied with the requirements of 19 section 2605(e)(1)(B). The Court therefore concludes that Plaintiff has failed to allege sufficient 20 facts to state a claim for alleged violations of RESPA relating to his qualified written request. 21 Finally, Plaintiff appears to allege violations of sections 2605(a) and 2605(b), which relate 22 to disclosure and notice requirement for assignments, sales, and transfers. See ECF No. 1 ¶ 124. 23 Any action alleging a section 2605 violation must be brought within three years of the occurrence 24 of the violation. 12 U.S.C. § 2614. Plaintiff asserts irregularities relating to the origination of the 25 loan and the transfer of the Deed. See ECF No. 1 ¶¶ 124, 121. Origination took place in May 26 2004. The FDIC, as receiver for WaMu, transferred all right, title, and interest in WaMu’s assets 27 to Chase in September 2008. By either measure, the facts giving rise to Plaintiff’s claims occurred 28 well over three years before the Complaint was filed. Plaintiff’s RESPA cause of action is barred 16 1 by the statute of limitations. Plaintiff argues that he is entitled to equitable tolling “[d]ue to the misrepresentations and 2 3 wrongful actions of Defendants.” ECF No. 1 ¶ 125. District courts, in their discretion, can 4 evaluate specific claims for equitable tolling and, because the doctrine often depends on matters 5 outside the pleadings, “the applicability of the equitable tolling doctrine . . . ‘is not generally 6 amenable to resolution on a Rule 12(b)(6) motion.’” Rosenfield v. JPMorgan Chase Bank, N.A., 7 732 F. Supp. 2d 952, 964 (N.D. Cal. Aug. 9, 2010) (quoting Supermail Cargo, Inc. v. U.S., 68 8 F.3d 1204, 1206 (9th Cir. 1995). “However, when a plaintiff fails to allege facts demonstrating 9 that he could not have discovered the alleged violations by exercising reasonable diligence, dismissal is appropriate.” Id. (internal citation omitted). Here, Plaintiff alleges no facts 11 United States District Court Northern District of California 10 demonstrating why the equitable tolling doctrine should be applied and, therefore, the relevant 12 statute of limitations bars his claims. Accordingly, the Court dismisses this claim. CONCLUSION 13 14 For the foregoing reasons, Defendants’ Motions to Dismiss are granted. Because MTC’s 15 conduct relating to the foreclosure process is privileged under California law, amendment would 16 be futile and the Court dismisses each of Plaintiff’s state law claims against MTC with prejudice. 17 See Universal Mortg. Co, Inc. v. Prudential Ins. Co., 799 F.2d 458, 459 (9th Cir. 1986) 18 (“Although leave to amend shall be freely given when justice so requires, it may be denied if the 19 proposed amendment either lacks merit or would not serve any purpose because to grant it would 20 be futile in saving the plaintiff’s suit.”) (internal citations and quotations omitted). “The district court’s discretion to deny leave to amend is particularly broad where plaintiff 21 22 has previously amended the complaint.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th 23 Cir. 1990) (internal quotations omitted) (quoting Ascon Properties, Inc. v. Mobile Oil Co., 866 24 F.2d 1149, 1160 (9th Cir. 1989). Here, Plaintiff has yet to amend his complaint. Therefore, as to 25 Plaintiff’s federal claims against MTC, the Court grants the Motion to Dismiss without prejudice. 26 Similarly, with the exception of the RICO claim, the Court grants the Bank Defendants’ Motion to 27 /// 28 /// 17 1 Dismiss without prejudice. Plaintiff must file any amended complaint within thirty (30) days of 2 this order. 3 4 IT IS SO ORDERED. Dated: December 9, 2016 5 6 7 ______________________________________ JON S. TIGAR United States District Judge 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18