Labasan et al v. Countrywide Mortgage Ventures, LLC et al, No. 2:2009cv02315 - Document 28 (D. Nev. 2010)

Court Description: ORDER Granting 10 Motion to Dismiss. Signed by Judge Kent J. Dawson on 9/20/2010. (Copies have been distributed pursuant to the NEF - DXS)
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Labasan et al v. Countrywide Mortgage Ventures, LLC et al Doc. 28 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF NEVADA 9 10 ARACELI A. LABASAN, et al., 11 Plaintiffs, 12 v. 13 Case No. 2:09-CV-02315-KJD-LRL COUNTRYWIDE MORTGAGE VENTURES, LLC, et al., ORDER 14 Defendants. 15 16 Currently before the Court is Defendants Motion to Dismiss (#10). Plaintiffs filed a 17 Response in Opposition (#18), to which Defendants filed a Reply. 18 I. Background 19 On or about June 9, 2006, Plaintiffs applied for a loan using the real property located at 2004 20 Tanner Valley Circle, Las Vegas, Nevada as collateral in a mortgage contract which names 21 Countrywide Mortgage Lenders (“Countrywide”) as lender, Recontrust Company, N.A. 22 (“Recontrust”) as trustee under the deed of trust, and Mortgage Electronic Registration System 23 (“MERS”) as nominee beneficiary. Plaintiffs entered into two deeds of trust with said parties, in the 24 amounts of $394,415 and $49,302 respectively. (#11 Ex. B, Ex. C.) In or around December 2007, 25 Plaintiffs defaulted on the loans due to “lack of income and the confusing terms of their loans.” 26 Dockets.Justia.com 1 (Complaint at 3.) Subsequently, Defendants initiated foreclosure proceedings on the subject 2 property. 3 Plaintiffs filed their Complaint in state court on October 16, 2009, alleging seven causes of 4 action for: (1) Lack of standing to enforce non-judicial foreclosure; (2) Fraudulent misrepresentation; 5 (3) Fraudulent concealment; (4) Usury and fraud; (5) Unconscionability; (6) Unjust enrichment; and 6 (7) Quiet title. The Court has reviewed Defendants’ Motion to Dismiss, together with the Response 7 in Opposition and Reply, and for the reasons stated herein, grants Defendants’ Motion. 8 II. Standard of Law for Motion to Dismiss 9 Pursuant to Fed. R. Civ. P. 12(b)(6), a court may dismiss a plaintiff’s complaint for “failure 10 to state a claim upon which relief can be granted.” A properly pled complaint must provide “a short 11 and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 12 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require 13 detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation 14 of the elements of a cause of action.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Papasan 15 v. Allain, 478 U.S. 265, 286 (1986)). “Factual allegations must be enough to rise above the 16 speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint 17 must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 18 129 S. Ct. at 1949 (internal citation omitted). 19 In Iqbal, the Supreme Court recently clarified the two-step approach district courts are to 20 apply when considering motions to dismiss. First, the Court must accept as true all well-pled factual 21 allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. 22 Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory 23 statements, do not suffice. Id. at 1949. Second, the Court must consider whether the factual 24 allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially 25 plausible when the plaintiff’s complaint alleges facts that allow the court to draw a reasonable 26 inference that the defendant is liable for the alleged misconduct. Id. at 1949. Where the complaint 2 1 does not permit the court to infer more than the mere possibility of misconduct, the complaint has 2 “alleged—but not shown—that the pleader is entitled to relief.” Id. (internal quotation marks 3 omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, 4 plaintiff’s complaint must be dismissed. Twombly, 550 U.S. at 570. 5 III. Analysis 6 1. Foreclosure Authority 7 The cornerstone of Plaintiffs’ Complaint and Opposition is that MERS and its agents do not 8 have standing to initiate a non-judicial foreclosure on the Plaintiffs’ property. Using “cookie cutter” 9 allegations gleaned from other similarly-situated plaintiffs, Plaintiffs attack the mortgage industry, 10 alleging that MERS’ status as nominee of the beneficiary is the result of a conspiracy among lenders, 11 bankers, and the mortgage industry. This misconception, and the legal inaccuracy of MERS’ alleged 12 lack of standing to foreclose, infects all of Plaintiffs’ causes of action. 13 Plaintiffs ignore case law related to MERS’ standing to initiate non-judicial foreclosures and 14 relies on opinions narrowly tailored to apply to standing requirements to bring a motion for relief 15 from stay in bankruptcy court and on extra-jurisdictional opinions about judicial foreclosure 16 proceedings. (#18 at 9)(citing In re Mitchell, 2009 WL 1044368, at *2-6 (Bankr. D. Nev. Mar. 31, 17 2009). This Court has recently held however, that MERS does have standing to implement non- 18 judicial foreclosure proceedings under Nevada law. See eg., Croce v. Trinity Mortgage Assur., Case 19 No. 2-08-cv-01612-KJD (D. Nev. Sept. 28, 2009); Elias v. HomeEQ Servicing, No. 08-1836, 2009 20 WL 481270, at *1 (D. Nev. Feb. 25, 2009); Dunlap v. Mortgage Elec. Registration Sys., Inc., No. 21 2:08-cv-00918, slip op. at 1 (D. Nev. Jan. 5, 2009) (granting motions to dismiss filed by MERS and 22 ReconTrust because MERS “does have standing and the authority to initiate foreclosure proceedings 23 on the subject property under the language of the Deed of Trust”). 24 25 Plaintiffs’ allegations that MERS does not have standing to initiate a non-judicial foreclosure are unsupported. Accordingly, each of Plaintiffs’ claims based on this premise are dismissed. 26 3 1 2. Fraud-based Claims 2 Defendants seek to dismiss Plaintiffs’ fraud-based claims for failure to plead with the 3 requisite particularity. Plaintiffs, in opposition, request that the Court apply the relaxed pleading 4 standard for fraud articulated by the Nevada Supreme Court in Rocker v. KPMG, LLP, 148 P.3d 703 5 (Nev. 2006) (overturned on other grounds by Buzz Stew, LLC v. City of N. Las Vegas, 181 P.3d 6 670, 672 (Nev. 2008)). (#18 at 17.) While the Court recognizes the relaxed standard articulated in 7 Rocker, the type of leniency Plaintiffs advocate in this case can only apply if the Court is convinced 8 that “the facts necessary for pleading with particularity ‘are peculiarly within the defendant’s 9 knowledge or are readily obtainable by him.’” Id., 148 P.3d at 709. Accordingly, as per the Court’s 10 11 finding above, the Rocker standard does not apply. Specifically, Plaintiffs aver that the fraudulent acts alleged in the Complaint are “within the 12 knowledge of the Defendants” because Defendants “are collectively the main actors for the [alleged] 13 illegal scheme.” (#18 at 16.) Plaintiffs are incorrect however, as they do not allege any actual 14 representations upon which they relied, or any information that was fraudulently concealed by 15 Defendants. Accordingly, the Court finds that Plaintiffs’ fraud-based claims fail as a matter of law. 16 3. Usury 17 Plaintiffs’ fourth claim seeks relief for usury and fraud. Defendants seek that the claim be 18 dismissed because usury is not a cognizable claim in Nevada. The Court agrees. Pursuant to N.R.S. 19 § 99.050, there is no general usury limit in Nevada for loans. Nevada’s usury statute only requires 20 that the rate and terms of a loan be specified in writing and agreed to by all parties. Id. Here 21 Plaintiffs respond to Defendants’ Motion by reciting general information regarding Nevada’s usury 22 law, and likening the state’s usury atmosphere to the “Wild West”. (#18 at 21.) Ultimately unable to 23 state a cognizable claim for usury, Plaintiffs seek leave to file an amended complaint to “include 24 additional facts regarding this cause of action.” (Id.) While under Rule 15(a) leave to amend “shall 25 be freely given when justice so requires”, because there is no general usury limit in Nevada for loans, 26 4 1 any amendment to add facts to Plaintiffs’ usury claim would be futile. Accordingly, Defendants’ 2 Motion to Dismiss Plaintiffs’ claim for usury is also granted. 3 (4) Unconscionability 4 Defendants seek that the Court dismiss Plaintiffs’ fifth claim for relief for unconscionability 5 because unconscionability is an affirmative defense to a contract, not a cause of action. Here, 6 Plaintiffs’ claim for unconscionability, alleges breach of fiduciary duty on behalf of the lenders. 7 Specifically, the claim alleges that the Plaintiffs were “unsophisticated loan borrowers” who were not 8 informed regarding the amortization feature of their loan until after the loan documents were signed, 9 that Plaintiffs “were not informed of the recast feature” or that the loan “would not have any way for 10 the borrowers to escape without foreclosure.” (Complaint at ¶¶ 55–60.) Plaintiffs aver that the 11 lenders had “superior bargaining position” because they are “experienced business entities”. (Id. at ¶ 12 62.) The Ninth Circuit has acknowledged however, that the Nevada Supreme Court does not 13 recognize a fiduciary relationship as a matter of law between a lender and borrower, or between a 14 lender and guarantor. See Giles v. General Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 15 2007)(citing Yerington Ford, Inc. v. Gen. Motors Acceptance Corp., 359 F.Supp.2d 1075, 1088–90, 16 1092 (D.Nev.2004). Thus, a fiduciary relationship between a lender and borrower can only exists if 17 specific actions and particular situations of the parties are alleged. Plaintiff has failed to allege 18 sufficient actions or situations that would give rise to such a duty. Accordingly, for these reasons, 19 the Court finds that Plaintiffs’ claim alleging unconscionability also fails. 20 (5) Unjust Enrichment and Civil Conspiracy 21 Defendants seek that Plaintiffs’ claim for unjust enrichment fails because unjust enrichment 22 is not an available remedy where there is a written contract between the parties. The Court agrees. 23 Unjust enrichment occurs where “a person has and retains a benefit which in equity and good 24 conscience belongs to another.” Mainor v. Nault, 101 P.3d 308, 317 (Nev. 2004) (citation omitted). 25 This standard is met where there is “a benefit conferred on the defendant by the plaintiff, 26 5 1 appreciation by the defendant of such benefit, and acceptance and retention by the defendant of such 2 benefit.” Topaz Mut. Co. v. Florence Marsh, 839 P.2d 606, 613 (Nev. 1992) (citation omitted). 3 Under Nevada law, unjust enrichment may not be alleged “where there is an express, written 4 contract” that governs the relationship of the parties. Leasepartners Corp. v. Robert L. Brooks Trust, 5 942 P.2d 182, 187 (D.Nev. 1997). Here, the mortgage contract clearly governs the dispute giving 6 rise to Plaintiffs’ unjust enrichment claim. Accordingly, Plaintiffs’ claim for unlawful retention of 7 funds must be pursued as a contract remedy. See Robins v. Wolf Firm, 2010 WL 2817202 (D. Nev. 8 July 15, 2010). The Court therefore grants Defendants’ Motion to dismiss Plaintiffs’ claim for unjust 9 enrichment. 10 (6) Civil Conspiracy 11 Additionally, Plaintiffs’ sixth claim for relief alleges Defendants “agreed, between and 12 among themselves, to engage in actions and a course conduct designed to further an illegal act . . . for 13 the common purpose of accruing economic gains for themselves at the expense of and detriment to 14 the Plaintiffs.” (Complaint ¶ 67–68.) In order to state a claim for civil conspiracy in Nevada, a 15 plaintiff must show: (1) defendants, by acting in concert, intended to accomplish an unlawful 16 objective for the purpose of harming the plaintiff; and (2) the plaintiff sustained damages as a result. 17 Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 862 P.2d 1207, 1210 (Nev.1993) (citing Collins v. 18 Union Fed. Savings & Loan, 662 P.2d 610, 622 (Nev.1983)). 19 Upon review of the Complaint, the Court finds that Plaintiffs have failed to state an adequate 20 claim for civil conspiracy because they do not state facts specifically indicating how Defendants 21 acted in concert in order to harm them. Plaintiffs’ conclusory assertion that Defendants engaged in a 22 conspiracy in order to obtain “economic gains” does not state a viable claim under Twombly because 23 the Plaintiffs do not indicate exactly what the conspiracy was or how each individual Defendant was 24 a part of it. Without this information, the Court has to speculate regarding the specific details of the 25 alleged conspiracy and how it involves each Defendant. See Robins v. Wolf Firm, 2010 WL 26 6 1 2817202 at *4. Accordingly, Plaintiffs’ civil conspiracy claim also fails as a matter of law and is 2 dismissed. 3 (6) Quiet title 4 Defendants also seek that the Court dismiss Plaintiffs’ cause of action for quiet title. An 5 action to quiet title may be brought by “any person against another who claims an estate or interest in 6 real property, adverse to him, for the purpose of determining such adverse claim.” NRS § 40.010 7 (2009); Del Webb Conservation Holding Corp. v. Tolman, 44 F.Supp.2d 1105, 1110–11 8 (D.Nev.1999). Plaintiffs’ seventh cause of action for quiet title is based upon the allegation that 9 Defendants must show the original note before initiating non-judicial foreclosure proceedings. As 10 discussed above however, under Nevada law, Defendants are not required to “show Plaintiffs the 11 original note” to begin a non-judicial foreclosure. Additionally, Plaintiffs do not allege that there is 12 any other entity seeking to collect payments or to foreclose on the subject property. Accordingly, the 13 Court grants Defendants’ Motion to Dismiss Plaintiffs’ quiet title claim. 14 IV. Conclusion 15 Accordingly, and for the reasons stated herein, IT IS HEREBY ORDERED that 16 Defendants’ Motion to Dismiss (#10) is GRANTED. Judgment to be entered on behalf of 17 Defendants. 18 DATED this 20th day of September, 2010. 19 20 21 22 _____________________________ Kent J. Dawson United States District Judge 23 24 25 26 7