Walls v. Recontrust Company, N.A. et al, No. 2:2010cv00291 - Document 20 (D. Nev. 2010)
Court Description: ORDER Denying 18 Motion for Temporary Restraining Order. IT IS FURTHER ORDERED that 7 Motion to Dismiss is GRANTED and STAYED while the parties engage in mediation. Signed by Judge Robert C. Jones on 5/24/10. (Copies have been distributed pursuant to the NEF - EDS)
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1, - - - 8fLF') N LhfJlillqa 1 -. -.... -trw.;f y() r . (t. r;y C0b' %1(î-1 7r VI-RsSuO,F,$aJïys ga' a - - 2 -- J pjy z . gj s yg 3 / / (( t -. g.w.... . .. ?. ..r ? UNITED STATES DISTRIG COURYv 4 t.-- '- c xr.-.uuurs-r .....u - 5 DISTRIC T O F NEVA DA '.1 '' ' ' 1*i '' ë- . .... . 0-. rc a ,.,rj, = -2 6 ROBERT A LLEN W ALLS, 7 Plaintifll 2:10-cv-00291-RCJ-lUJ 8 VS. 9 O RD ER RECO NTRUST CO .,N .A .etal., l0 D efendants. l1 12 l3 Plaintiffhassued Defendants on multiple causesofaction related to the foreclosureofhis 14 m ortgage. Pending before the Courtare Plaintitr sM otion forTemporary Restraining Order, l5 originallytiledirlstatecourt,andDefendants'MotiontoDismiss(#7),towhichPlaintiffhasnot 16 responded.l For thc reasonsgiven herein,the Courtshould denies the M otion forTem porary 17 RestrainingOrderandgrantstheMotiontoDismiss(//7). Walls v. Recontrust Company, N.A. et al Doc. 20 18 1. FACTS A ND PR O CED UM L H ISTO RY 19 On oraboutM arch 1,2004,PlaintiffRobertAllen W allspurchased realproperty located 20 at5222PioneerCabin Ct,,North LasVegas,NV 89031(dttheProperty'')for$171,500.(//8,Ex. 21 C,at1,3).2 Thedeed oftrustlistsnon-party M ortgageHomeSpecialists,lnc.aslenderand non- 22 partyChicagoTitleastrustee.(f#.,Ex.C,at1).Wallsmadeanadjustable-ratenotetoMortgage 23 l'l-hisconstitutesconsentto grantingthemotion.L.R.7-2(d). 24 2TheCourttakesjudicialnoticeofthepublicrecordsadducedbyDefendants(//8). 25 SeeM ackv.S.BayBeerDistribs.,798F.2d 1279,1282(9thCir.1986). Dockets.Justia.com 1. # 1 HolzleSpecialists,flxedat4.250% fortwoyears,andreadjustingeverysixrnonthsthereafterto 2 3.250% plustheitcurrentindex,''asdefmedinthenote,butnevertoexceed 10.250%.(1d.,Ex. 3 D,at1,2,5). 4 On October 16,2006,W allsrefmanced the Property by making an interest-only 5 adjustable-ratcnoteto CountrywideHomeLoans,lnc.for$229,000,(id.,Ex.B,at1),and 6 securing the note with a new deed oftrustto lender Countrywide,w ith DefendantRecontrust 7 Co.,N.A.astrusteeandMortgageElectronicRegistrationSystems,lnc.(S6MERS'')asdçnominee'' 8 andti benetkialy''(id.,Ex.A,at2,4).Theiçsecondhomcrider''tothedeedoftrust,signedby 9 Plaintiq makesclcarthatthePropertywasPlaintiff'ssecond home,nothisprimaly residence. 10 (f#.,Ex.A,at29-31).Thedeed oftrustitselfnotestheexistenceofthesecond homerider.(f#., 11 Ex.A,at2).Theinitialinterestrateunderthenew notewas5.8750/0,fixed fortllretyears,with l2 monthlypaymentsof$1121.15.(f#.,Ex.B,at1-2).Theinterestratewasadjustableevery 13 tw elve months thereafter by adding 2.250% percentto the 'Yurrentindex,''asdesned therein,not 14 toexceed 11.875%.(1d.,Ex.B,at2).AssumingPlaintiffhadzeroequityinthehomeatthetime 15 ofrefnancing(based onthepriorinterest-onlyloan),therefmancinggavehim acashproftof 16 $57,500,representing theincreasein equitybetween purchasein2004 and refnancing in 2006. l7 Plaintiff'sprotitfrom the 2006 refmancing was suflicientto mcetthe ftrstthreeyearsofpaym ents 18 attheinitialrateof5.875% ,with$17,l38.60remaining asofNovember2009when therateftrst 19 reset. W hateverPlaintiffdid w ith theseprofits,he did notuse them to pay hismorlgage. O n June 20 25,2009,Recontrustrecordedthenoticeofdefault.(f#.,Ex.E,at2). 21 OnFebruary2,2010,PlaintiffsuedRecontrtlst(erroneouslynamedastçlkeconstruct'')and 22 BAC HomeLoanSenzicing,LP (1çBAC'')instatecourtonthreecausesofaction:(1)injunctive 23 relietl(2)breachoftiduciaryduty;and(3)fraud.PlaintiffalsofiledthepresentMotionfor 24 25 Temporary Restraining Orderin state court. 0n February 4,2010,BAC extended an ofrerof Page 2 of 8 l 1 modifkationtoPlaintiff(ittheOffer'').(1d.,Ex.J).TheOfrerindicatesthatasofFebrual'y4, 2 2010,theamountowed onthenotewas$245,420.53.BAC offered to modifytheinterest-only 3 adjustable-rateloantoaflxed,step-rateloan.UndertheOFer,theratewouldbe3.875% forthe 4 ftrstliveyears,with amonthlypayrnentof$1231.38, *4.875% forthesixth year,with amonthly 5 paym entof$1349.49* ,and 5.375% thereatteruntilthe m aturity date ofNovember 1,2036,w ith a 6 monthlypaymentof$1408.44.(f#.,Ex.J,at3,5).The Ofrerwassetto terminateon Febnlary 7 19,2010.(f#.,Ex.J,at1).Apparently,Plaintifrdidnotacceptthemodifcationofrer. 8 Defendantsrem oved on M arch 3,2010 and have now m oved to dism iss. 9 ll. LEG A L STAN DA RDS 10 A. Rule 12(b)(6) 11 FederalRuleofCivilProcedure8(a)(2)requiresonlyiûashortandplainstatementofthe 12 claim showing thatthe pleader is entitled to relief'in orderto Stgivethe defendantfairnotice of 13 whatthe ...claim is and the groundsupon which ftrests.''Conley v.Gibson,355 U.S.41,47 14 (1957).FederalRule ofCivilProcedure 12(b)(6)mandatesthatacourtdismissacauseofaction 15 thatfailsto state a claim upon w hich reliefcan be granted. A motion to dismissunderRule 16 12(b)(6)teststhecomplaint'ssumciency.SeeNorthStar1nt'l.v.ArizonaCorp.Comm 'rl.,720 17 F.2d578,581(9thCir.1983).W henconsideringamotiontodismissunderRule12(b)(6)for 18 faslure to state a claim,dism jssalisappropriate only when the complaintdoes notgive the l9 defendantfairnotice ofa legally cognizable claim and thegroundson which itrests.See Bell 20 Atl.Corp.v.Twombly,550U.S.544,555(2007).Inconsideringwhetherthecomplaintis 21 sum cientto state aclaim ,the courtw illtake allmaterialallegationsastrue and construe them in 22 the lightmostfavorableto theplaintiff.SeeNL lndus.,Inc.v.Kaplan,792F.2d 896,898 (9th 23 Cir.1986).Thecourt,however,isnotrequired to acceptastrueallegationsthataremerely 24 conclusory,unwarranted deductionsoffact,orunreasonable inferences.See Sprewellv.Golden 25 Page 3 ef 8 l State Warrïors,266 F.3d 979,988 (9th Cir.2001).A formulaicrecitation ofacauseofaction 2 w ith conclusol'y allegationsisnotsuflk ient;a plaintiffmustplead factsshowing thata violation 3 isplausible,notjustpossible.Ashcrojtv.Iqbal,129S.Ct.1937,1949(2009)(citingTwomblyv. 4 BellAtl.Corp.,550U.S.554,555(2007)). 5 lr enerally,a districtcourtm ay notconsiderany materialbeyond the pleadingsin ruling 6 onaRule12(b)(6)motion...Howevcr,materialwllichisproperlysubmittedaspartofthe 7 complaintm aybe considered on a m otion to dismiss.HalRoach Studios,Inc.v.Richard Feiner 8 & Co.,896F.2d 1542,1555n.19(9thCir.1990)(citationsomitted).Similarly,içdocuments 9 w hose contentsare alleged in acom plaintand w hose authenticity no party questions,butw hich 10 arenotphysicallyattachedtothepleading,maybeconsidcredinrulingonaRule12(b)(6) 11 m otion to disrniss''withoutconverting the m otion to dism issinto a motion forsurnm ary 12 judgment.Branchv.Tunnell,14F.3d449,454(9thCir.1994).Moreover,underFederalRule 13 ofEvidcnce201,acourtmaytakejudkialnoticeofûk mattersofpublicrecord.''Mackv.S.Bay 14 BeerDistrib.,798F.2d 1279,1282 (9th Cir.1986).Otherwise,ifthedistrictcourtconsiders 15 m aterials outside ofthe pleadings,them otion to dism issisconverted irlto a motion for summ ary 16 judgment.SeeArpinv.SantaClara Valley Transp.Agency,261F.3d912,925(9thCir.2001). 17 B. Tem porary Restraining O rders 18 UnderFed.R.Civ.P.65(b),aplaintiffmustmakeaslaowingtlmtirrmaediateand 19 irreparableinjury,loss,ordamagewillresulttoplaintiffwithoutatemporaryrestrainingorder. 20 Tem porary restraining ordersare governed by the same standard applicable to prelim inary 21 injunctions.SeeCal.Indep.uvyç.OperatorCorp.v.ReliantEncrgpSetm .,Inc.,181F.Supp.2(1 22 1111,1126(E.D.Cal.2001)(lçThestandardforissuingapreliminaryinjunctionisthesameasthe 23 standardforissuingatemporaryrestrainingorden''),TheNinthCircuitinthepastsetforthtwo 24 separatesdsofcriteriafordtterminingwhethertograntpreliminaryinjunctiverelief: 25 Page 4 of 8 1 2 Underthetraditionaltest,aplaintifl-mustshow:(1)astronglikelihoodofsuccesson themerits,(2)thepossibilityofirreparableinjul'ytoplaintiffifpreliminaryreliefisnot granted,(3)abalanceofhardshipsfavoringtheplaintiflland(4)advancementofthe public interest (in certain cases).The alternative test requires that a plaintifr 3 dem onstrateeitheracom bination ofprobablesuccessonthem eritsand thepossibility ofkreparableinjuryorthatseriousquestionsareraisedandthebalanceofhardships 4 tipssharply in hisfavor. 5 Taylorv.Westly,488F.3d 1197,1200(9thCir.2007),'Thesetwoformulationsrepresenttwo 6 pointson a sliding scale in which the rcquired degree ofirreparablehann increases asthe 7 probability ofsuccessdecreases.''f#. The Supreme Courtrecently reiterated,however,thata 8 plaintiffseekinganinjunctionmustdemonstratethatirreparableharm isinlikel y,''notjustpossible. 9 Winterv.NRDC,129S.Ct.365,374-76(2008)(rejectingtheNinthCircuit'salternativeltsliding 10 scale''test). TheNinth Circuithasexplicitly recognized thatitsçipossibility''testwasoverruled by 11 Winter,andthatttgtlheproperlegalstandardforpreliminaryinjunctivereliefrequiresapartyto 12 dem onstrate tthathe isIikely to succeed on the merits,thathe islikely to suflkr irreparableharm 13 in theabsenccofpreliminaryrelieflthatthebalanceofequitiestipsin hisfavor,and thatan 14 injunctionisin thepublicinterest.'''Stormans,Inc.v.Selecky,586 F.3d 1109,1127 (9thCir. 15 2009)(quoting Winter,129S.Ct.at374). 16 111. A NA LYSIS 17 A. M otion to Dism iss 18 1. Breach ofFiduciar.y Duty 19 A lenderisnota fiduciary ofaborrower,buta tnlstee is a Gduciary ofboth a 20 trustorand a beneGciary undcra deed oftrust. ltmustactfairly w ith respectto both entities. 2l Plaintifl-alleges thattrustee Recontrustbreached itstiduciary duty by initiating foreclosure 22 proceedingsagainstthe Property withoutbeing instructed to do so by the benefcialy w ithout 23 obtaining the originalprornissory note from thebeneficial' y,and withoutinvestigating w hetherthe 24 25 page 5 of 8 1 note had been ç' paid ofrby insurance.''3 In Ncvada,the powcrofsale cannotbe exercised untilthe 2 beneticiaryorthetrusteerecordsthcnotice.Nev.Rev.Stat.j107.080(2)(c).Recontrustwasthe 3 trusteewhenitrecordedthenoticeofdefaultandnoticeoftrusteesale,(//8,Ex.A,at2' ,id.,Ex. 4 E,at2),anditthereforedidnotneeddirectionfrom thebenefciary.Inanycase,Plaintifralleges 5 laterin theComplaintthatBAC instructedRecontrustto foreclose.(#1!(21).Noristhereany 6 requirem entthatthe trusteeobtain the originalprom issory note from thebenefciary. Thiscause 7 ofaction isnotplausible. 8 2. Fraud 9 The elem entsofconunon law fraud in Nevada are: 10 1.A false representation m adeby the defendant; 11 2.Defendant'sknowledgeorbeliefthattherepresentation isfalse(orinsumcient basisformaking therepresentationl; 12 13 3.Defendant'sintention to induce the plaintiffto actorto regain from acting in reliance upon them isrepresentatien' , 14 4.Plaintiff'sjustifiablerelianceuponthemisrepresentation' ,and 15 5.D am ageto the plaintiffresulting from such reliance. l6 Bulbman,Inc.v.Nev.Bell,825P.2d588,592(Nev.1992).UnderRule9(b),circumstances 17 constituting fraud orrnistakemustbe statedwïthparticularïty.Fed.R.Civ.P.9(b). 18 PlaintifrallegesthatRecontrustdefrauded Plaintifrby w rongly claim ing to have authority 19 to foreclose and thatBAC defrauded Plaintiffby instrueting Recontrustto foreclose. First, 20 Recontrustplainly had authority to forcclose,so there wassimply no false statem entm ade. 21 Second,Plaintifrhasnotalleged any reiiance on the allegedly false statem ent,butonly thathe was 22 harmed(orwillbeharmed)bytheallegedlywrongfulforeclosure.Thereisnoplausiblefraud 23 24 25 3'rhislastallegation isunintelligible as stated. page 6 of 8 1 claim here. 2 B. Tem porary Restraining O rder 3 Because no plausible claim srem ain,Plaintiffcannotsucceed on the merits. Even ifthe 4 Courtimplicsa cause ofaction for wrongfulforeclosure,a temporary restrairting orderisnot 5 w arranted because the foreclosure here isclearly proper. 6 Recently,theCourthasgrantedninety-daypreliminaryinjunctionsinsimilarcasesinorder 7 to perm itplaintifrstim e to utilizeN evada'sdelinquentmortgage m ediation program .SeeN ev. 8 Rev.Stat.j l07.086 (2009). lnthiscase,BAC hasalreadyextended an offerto convertthe 9 adjustable-ratenoteintoaveryreasonablestep-rateloan,beginningatafar-below-marketrateof 10 3.875% and increasing to no m orc than 5.875% .4 Thism oditication w ould have reduced ll paym ents and given Plaintiffthe oppol-tunity to earn equity in the hom e. Plaintifrdid nottake 1;! advantage ofthisoflbr. 13 Thisisnota case ofpredatory lending. Plaintifftook advantage ofa 1ow introductory rate 14 to buy asecond home,then stopped making paymcntsevenbeforetherateadjustedupward. 15 Plaintifrhasrejectedagenerousoflbrtoconverttheadjustableloanintoafxed,step-rateloanat 16 rateslow erthan those he could obtain ifhe were to seek a sim ilarloan in the m arket. 17 N evertheless,the Courtw illgive Plaintiffninety daysto engage in m ediation understate 1aw and 18 prove he isscriousaboutliving up to hisobligationsunderthe m ortgage. 19 C ON CLUSION 20 IT IS HEREBY O RDERED thatthe M otion forTemporary Restraining O rderis 2 l DEN IED . 22 IT IS FURTHER ORDERED thatthe second M otion forTem porary Restraining Order 23 4currentm ortgage rates arealready above 5% and are likely to rise overthenextfew 24 25 years. page 7 of 8 1 (#18),fledonthedayofthehearing,isDENIED. 2 IT ISFURTHER ORDERED thattheM otiontoDismiss(//7)isGRANTED and 3 STAY ED while the partiesengage in m ediation. Counselforthe defense shallsubm ita proposed 4 order form ediation and interim paym ents consistentw ith the Court'sinstructions atthe hearing. 5 DATED : This 24th day ofM ay,2010. 6 7 8 . United St s DistrictJudge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 page 8 of 8
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