Evans et al v. Bac Home Loans Servicing LP, No. 2:2010cv00656 - Document 18 (W.D. Wash. 2010)
Court Description: ORDER granting dft's 5 Motion to Dismiss without prejudice by Judge Ricardo S Martinez.(RS) Modified on 12/10/2010/cc D Evans (RS).
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Evans et al v. Bac Home Loans Servicing LP Doc. 18 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 DAVID L. EVANS and DALA EVANS, Plaintiffs, 11 12 13 14 CASE NO. C10-0656 RSM ORDER GRANTING DEFENDANT’S MOTION TO DISMISS v. BAC HOME LOANS SERVICING LP, Defendant. 15 16 This matter comes before the Court upon Defendant’s Motion to Dismiss. Dkt. #5. 17 Because Plaintiffs fail to allege any facts that would support their claim of superior title to the 18 real property at issue, Plaintiffs fail to state a claim upon which relief can be granted. 19 Defendant’s Motion to Dismiss is GRANTED. 20 21 I. BACKGROUND Plaintiffs purchased property in Federal Way. Dkt. # 7 Ex. B. In connection with that 22 purchase, Plaintiffs executed an original deed of trust (the “Deed of Trust”) in favor of 23 beneficiary Headlands Mortgage Company in September 1998. Dkt. #6 Ex. A. The Deed of 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 1 Dockets.Justia.com 1 Trust was recorded in King County. Id. In July of 2009, Greenpoint Mortgage Funding, Inc., 2 successor to Headlands Mortgage Company, assigned the Deed of Trust to Defendant (now 3 going by the name BAC Home Loans Servicing LP). Dkt. #6 Ex. B. The assignment was 4 recorded in King County that same month. Id. 5 On March 2, 2010, Plaintiffs were served with a Notice of Trustee’s Sale listing 6 Defendant as assignee of the beneficial interest in the obligation secured by the Deed of Trust. 7 Dkt. #6 Ex. C. The Notice stated that Plaintiffs were $0.00 in arrears on their monthly payments. 8 Id. On March 10, 2010, Northwest Trustee Services, Inc., the Trustee under the Deed of Trust, 9 recorded a Notice of Discontinuance of the Trustee’s Sale respecting Plaintiffs’ property. Dkt. 10 #16. A week later, Plaintiffs brought this action to quiet title. 11 Defendants move to dismiss Plaintiffs’ complaint on the basis that Plaintiffs have failed 12 to state a claim for which relief may be granted pursuant to Fed. R. Civ. P. 12(b)(6). Dkt. #5. 13 The Court granted Defendant’s request for oral argument on its Motion to Dismiss. Both parties 14 provided the Court with supplemental briefing in advance of oral argument. Dkt. #s 11 & 13. 15 Oral argument was held on December 1, 2010. Dkt. # 17. 16 II. DISCUSSION 17 A. Standard of Review 18 In considering a Rule 12(b)(6) motion to dismiss, the Court must determine whether 19 plaintiff has alleged sufficient facts to state a claim for relief which is “plausible on its face.” 20 Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1951 (2009) (quoting Bell Atlantic Corp. v. 21 Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible if the plaintiff has pled 22 “factual content that allows the court to draw the reasonable inference that the defendant is liable 23 for the misconduct alleged.” Id. (citing Twombly, 550 U.S. 556). Iqbal introduced a two-step 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 2 1 process for applying this standard in the Rule 12(b)(6) context. First, the court must “identify the 2 allegations in the complaint that are not entitled to the assumption of truth.” (Iqbal, 129 S. Ct. at 3 1951.) Second, the court determines whether the remaining factual allegations “plausibly 4 suggest an entitlement to relief.” Id. In making this assessment, the Court accepts all facts 5 alleged in the complaint as true, and draws all inferences in the light most favorable to the non6 moving party. Baker v. Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009). 7 The court is not, however, bound to accept plaintiff’s legal conclusions. Iqbal, 129 S. Ct. at 8 1949-50. 9 The parties submitted a number of exhibits with their Supplemental Briefing. The 10 documents submitted include loan modification agreements, a copy of the promissory note 11 underlying the Deed of Trust, a Corporations Assignment of Deed of Trust, and two declarations 12 provided by Defendant to Northwest Trustee Services, Inc. See Dkt. #s 12, 14, 15. When the 13 Court considers “matters outside the pleading” on a Rule 12(b)(6) motion, that motion must be 14 treated as a motion for summary judgment. See Fed. R. Civ. P. 12(b); Bonilla v. Oakland 15 Scavenger Co., 697 F.2d 1297, 1301 (9th Cir. 1982), cert. denied, 467 U.S. 1251 (1984). 16 However, on a motion to dismiss, a Court may consider documents that are referenced by the 17 complaint, are central to plaintiff’s claims, and the authenticity of which is undisputed without 18 converting the motion to a motion for summary judgment. See Janda v. T-Mobile USA, Inc., 378 19 Fed.Appx. 705, 707, 2010 WL 1849028 at *1 (9th Cir. 2010) (citing Marder v. Lopez, 450 F.3d 20 445, 448 (9th Cir.2006)). 21 The loan modification documents fall outside the scope of the exception articulated in 22 Janda. They are not referenced in Plaintiffs’ complaint and are not central to Plaintiffs’ claims. 23 The declarations provided to the Trustee also fall outside the scope of the complaint. However, 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 3 1 because the Court does not consider these documents or any other documents that fall outside the 2 pleading in reaching its decision upon Defendant’s Motion to Dismiss, the Court need not 3 convert Defendant’s Motion into a Motion for Summary Judgment. 4 B. Plaintiffs Fail to State a Claim Upon Which Relief May be Granted 5 Plaintiffs’ complaint seeks to quiet title to real property located in Federal Way, 6 Washington. Plaintiffs allege in their complaint that (1) they are the owner and grantees of the 7 disputed property, (2) that the Defendant claims to be their creditor by virtue of assignment of a 8 Deed of Trust, (3) that Defendants served Plaintiffs with a Notice of Trustee’s Sale, and (4) that 9 Defendants failed to attach to the Notice of Trustee’s Sale any evidence of any debt underlying 10 its claimed Assignment of Deed of Trust or any debt respecting Plaintiffs’ property. On this 11 basis, Plaintiffs assert that “Defendant has entirely failed to demonstrate any legitimate interest 12 in Plaintiff’s property” and seek to quiet title to their property. Pls.’ Compl. ¶2.4. Plaintiffs 13 attach a Declaration by David and Dala Evans stating that the Evans are the owners of the 14 disputed property and that the referenced deed of trust and assignment of deed of trust encumber 15 their property. 16 Plaintiffs cite to section 3 of the Washington Deed of Trust Act in their complaint. This 17 portion of the Act provides that it shall be a prerequisite to a Trustee’s Sale that “a default has 18 occurred in the obligation secured or a covenant of the grantor, which by the terms of the deed of 19 trust makes operative the power to sell.” RCW 61.24.030(3). They claim that Defendant’s 20 failure to attach evidence of any debt underlying its claimed assignment of deed of trust, or 21 evidence of any debt respecting Plaintiff’s property to the Notice of Trustee’s Sale violated that 22 portion of the Act. Dkt. #7 Ex. B ¶¶ 2.4, 3.2. 23 Defendant disputes Plaintiffs’ ability to lawfully challenge a trustee’s sale through a quiet 24 title action. Defendant argues that Plaintiffs should not be able to obtain free and clear title to ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 4 1 their home without showing that they have paid their mortgage. Specifically, Defendant submits 2 five grounds on which to dismiss Plaintiffs’ Complaint to Quiet Title: 3 1. A plaintiff in a quiet title action must succeed on the strength of its claim, not on 4 the weakness of the defendant’s, and Plaintiffs have not alleged sufficient facts to 5 state a plausible claim to superior title. 6 7 8 9 10 11 12 2. Plaintiffs do not allege that Defendant is claiming ownership of the Property, so Defendant is not a proper party to a quiet title action. 3. Washington’s Deed of Trust Act does not require that the beneficiary possess evidence of the defaulted debt, citing RCW 61.24.030(3). 4. Plaintiffs are not entitled to a free and clear title even if their interpretation of the statute were accurate. 5. Allowing a suit to quiet title to proceed as a means to challenge a foreclosure 13 would conflict with the procedural framework provided in the Washington Deed 14 of Trust Act. 15 The Court agrees with the Defendant. Plaintiffs have not alleged enough facts to entitle 16 them to the rights and interests they seek in this quiet title action. First, Plaintiffs fail to make 17 any factual allegations in their complaint to support the legal conclusion that they are the owners 18 of the disputed property. Second, Plaintiffs fail to allege that Defendant has asserted a title 19 interest in the subject property. Third, even if the first two deficiencies were not present in 20 Plaintiffs’ complaint, Plaintiffs cannot assert an action to quiet title against a purported lender 21 without demonstrating they have satisfied their obligations under the Deed of Trust. Because 22 Plaintiffs have not satisfied the basic pleading requirements for stating a claim for relief in a 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 5 1 quiet title action, the Court does not reach the question of what is required under Washington’s 2 Deed of Trust Act to commence a Trustee’s Sale. 3 RCW 7.28.120 provides that, “The plaintiff in [a quiet title] action shall set forth in his 4 complaint the nature of his estate, claim or title to the property, and the defendant may set up a 5 legal or equitable defense to plaintiff's claims; and the superior title, whether legal or equitable, 6 shall prevail.” Plaintiffs make two allegations in setting forth the nature of their claim to the 7 property. First, Plaintiffs allege in their complaint that, “Plaintiffs are the owners and grantees of 8 certain real property located in King County.” Second, Plaintiffs’ declaration states, “I am the 9 owner of certain real property in King County, Washington, identified as Assessor’s Parcel 10 Number 367440-0202.” Both statements are legal conclusions, which are not entitled to the 11 assumption of truth. See Ashcroft v. Iqbal, 129 S. Ct. at 1951. Since Plaintiffs fail to provide 12 any factual support for their allegation that they are the owners and grantees of the disputed 13 property, their complaint falls short of stating a claim for which relief can be granted. Id. 14 Furthermore, Plaintiffs fail to allege that Defendant has asserted a claim of title to the 15 disputed property. Plaintiffs allege that Defendant “caused Plaintiffs to be served with a Notice 16 of Trustee’s Sale.” Pls.’ Comp. ¶ 2.3. RCW 7.28.010 requires that an action for quiet title be 17 "brought against … the person claiming the title or some interest” in real property in which 18 plaintiff has a valid interest. See also Kozba v. Tripp, 105 Wn. App. 90, 95, 18 P.3d 621 (2001) 19 (“An action to quiet title allows a person in peaceable possession … to compel others who assert 20 a hostile right or claim to come forward and assert that right or claim and submit to judicial 21 determination.”). The service of Notice of Process alleged in Plaintiffs’ complaint does not 22 constitute a claim of title on the part of the Defendant. Absent an allegation that Defendant has 23 asserted any title interest in the disputed property, Defendant is not a proper party to this action. 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 6 1 See also Eason v. IndyMac Bank, FSB, No. CV-090-1423-PHX-JAT, 2010 WL 1381889 (D. 2 Ariz. Apr. 6, 2010) (dismissing quiet title action because plaintiff had not alleged that defendant 3 had asserted any title interest in the subject property). 4 Finally, Plaintiffs’ complaint refers to an assignment of deed of trust recorded in King 5 County in favor of Defendant, and an original deed of trust recorded in King County in favor of 6 Defendant’s predecessor in interest, Headlands Mortgage Company (“Headlands”).1 In at least 7 one other jurisdiction, in order to bring an action to quiet title, a plaintiff must allege that they 8 “are the rightful owners of the property, i.e., that they have satisfied their obligations under the 9 Deed of Trust.” See Santos v. Countrywide Home Loans, 2009 WL 3756337 at *4 (E.D. Cal. 10 Nov. 6, 2009) (citing Kelley v. Mortgage Elec. Reg. Sys., Inc., No. C 09-01538 SI, ---F.Supp.2d 11 ---, 2009 WL 2475703, at *7 (N.D. Cal. Aug.12, 2009); Watson v. MTC Financial, Inc., No. 12 2:09-CV-01012 JAM-KJM, 2009 WL 2151782 (E.D.Cal. Jul.17, 2009)). The logic of such a 13 rule is overwhelming. Under a deed of trust, a borrower’s lender is entitled to invoke a power of 14 sale if the borrower defaults on its loan obligations. As a result, the borrower’s right to the 15 subject property is contingent upon the borrower’s satisfaction of loan obligations. Under these 16 circumstances, it would be unreasonable to allow a borrower to bring an action to quiet title 17 against its lender without alleging satisfaction of those loan obligations. Plaintiffs have not 18 provided any rationale that would support an alternate rule. 19 Plaintiffs’ argument that Defendant has failed to provide any evidence of debt underlying 20 its assignment of deed of trust or respecting Plaintiffs’ property is inapposite. “The plaintiff in 21 an action to quiet title must succeed on the strength of his own title and not on the weakness of 22 23 1 Defendant attaches said Deed of Trust and Assignment of Deed of Trust to its Motion to 24 Dismiss. Dkt. #6 Exs. A & B. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 7 1 his adversary.” See Desimone v. Spence, 51 Wn.2d 412, 415, 318 P.2d 959 (Wash. 1957); 2 Wash. State Grange v. Brandt, 136 Wn. App. 138, 153, 148 P.3d 1069 (Wash. Ct. App. 2006). 3 See also Mitchell v. Cunningham, 8 F.2d 813, 815 (9th Cir. 1925). Plaintiffs must first satisfy 4 their burden alleging a set of facts which states a claim for relief which is plausible on its face. 5 Ashcroft v. Iqbal, 129 S. Ct. at 1951. For this same reason, whether or not Washington’s Deed of 6 Trust Act requires the Defendant to attach evidence of the debt underlying its assignment of deed 7 of trust to the Notice of Trustee’s Sale is irrelevant. For all of these reasons, Defendant’s Motion 8 to Dismiss is GRANTED. 9 10 III. CONCLUSION Having reviewed the relevant pleadings, the declarations and exhibits attached thereto, 11 and the remainder of the record, the Court hereby finds and ORDERS: 12 (1) Defendant’s Motions to Dismiss (Dkt. #5) is GRANTED. 13 (2) This action is DISMISSED without prejudice. 14 (3) The Clerk is directed to close this case and to forward a copy of this Order to all 15 counsel of record. 16 Dated December 10, 2010. 17 18 19 A 20 RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 21 22 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS - 8
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