Opinion
NO. CIV. S-12-0901 LKK/JFM
03-21-2013
CHARLES ALIMENA and CHERYL ALIMENA, Plaintiffs, v. VERICREST FINANCIAL, INC.; CITIMORTGAGE, INC., LSF7 NLP VI TRUST; CR TITLE SERVICES, INC.; LOAN STAR FUND, and DOES 1 through 50, inclusive, Defendants.
ORDER
Pending before the court are two motions to dismiss Plaintiffs' Second Amended Complaint under Fed. R. Civ. P. 12(b)(6), one brought by defendants Vericrest Financial, Inc., Lone Star U.S. Acquisitions, LLC, and LSF7 NPL VI Trust ("Vericrest Defendants") (ECF No. 42), and the other by defendants Citimortgage, Inc. and C.R. Title Services, Inc. ("Citi Defendants") (ECF No. 45). These motions are currently set for hearing on March 25, 2013 at 10:00 a.m.
Having reviewed the parties' submissions in support of, and in opposition to, the motions, the court has determined that it requires further briefing on one issue.
Judicial notice is taken of that certain deed of trust, recorded on July 25, 2005, naming Plaintiffs as borrower, Wilson Resources as lender, Advantage Title, Inc. as trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as beneficiary ("Deed of Trust"). (Vericrest Defendants' Request for Judicial Notice ("RJN") Ex. 1, ECF No. 43.)
Plaintiffs allege that, since July 2005, defendant Lone Star has been the sole owner of the promissory note securing their home loan (SAC ¶¶ 145, 153), as well as the true beneficiary under the Deed of Trust (SAC ¶ 153). But neither the documents attached to the complaint, nor those documents of which the Vericrest Defendants request judicial notice indicate that Lone Star succeeded to MERS's beneficial interest under the Deed of Trust. The court infers that no instrument documenting the alleged transfer has been recorded against the subject property.
Plaintiffs' eighth cause of action alleges that the foreclosure on their home loan was unlawful as, inter alia, MERS assigned its beneficial interest under the Deed of Trust to Citimortgage; Citimortgage, in turn, substituted C.R. Title as the Trustee under the Deed of Trust; and C.R. Title, in turn, issued the Notice of Default, Notice of Trustee's Sale, and Trustee's Deed Upon Sale. Under Plaintiffs' theory, C.R. Title lacked the authority to issue these instruments, because only Lone Star, as the true beneficiary under the Deed of Trust, had the authority to assign the beneficial interest thereunder.
The court wishes further briefing on one point: under California law, could the beneficial interest under the Deed of Trust have been lawfully assigned in an unrecorded document? Specifically, would it have been lawful for MERS to assign its entire beneficial interest under the Deed of Trust to Lone Star without recording the transfer with the Sacramento County Recorder's Office?
The court orders as follows:
[1] The parties are DIRECTED to file opening briefs on the specified issue no later than April 1, 2013, and reply briefs no later than April 8, 2013. Plaintiffs' briefs may be no more than eight pages in length. Defendants may jointly file briefs no more than eight pages in length; or, if the Citi Defendants and Vericrest Defendants each wish to file their own briefs, each group's briefs may be no more than four pages in length.
[2] The hearing on Defendants' motions, currently set for March 25, 2013 at 10:00 a.m., is CONTINUED until April 22, 2013 at 10:00 a.m.
IT IS SO ORDERED.
___________
LAWRENCE K. KARLTON
SENIOR JUDGE
UNITED STATES DISTRICT COURT