Opinion
Case No. CV 14-01287 DMG (JCx)
10-29-2014
Deborah G. Allshouse v. Caliber Home Loans, Inc.
CIVIL MINUTES—GENERAL Present: The Honorable DOLLY M. GEE, UNITED STATES DISTRICT JUDGE KANE TIEN
Deputy Clerk NOT REPORTED
Court Reporter Attorneys Present for Plaintiff(s)
None Present Attorneys Present for Defendant(s)
None Present
Proceedings: IN CHAMBERS—ORDER RE PLAINTIFF DEBORAH ALLSHOUSE'S MOTION TO REMAND [DOC. #12] AND DEFENDANT CALIBER HOME LOANS, INC.'S MOTION TO DISMISS [DOC. #11]
This matter is before the Court on Plaintiff Deborah Allshouse's motion to remand [Doc. # 12], and Defendant Caliber Home Loans Inc.'s motion to dismiss [Doc. # 11], both originally set for hearing on August 22, 2014. On August 19, 2014, the Court took the motions under submission because it deemed them appropriate for decision without oral argument. [Doc. # 16.]
Having duly considered the parties' written submissions, the Court DENIES Allshouse's motion to remand, and GRANTS Caliber's motion to dismiss, with leave to amend.
I.
PROCEDURAL BACKGROUND
On May 20, 2014, Allshouse filed a Complaint against Defendant Caliber Home Loans, Inc. in San Bernardino County Superior Court, asserting a single claim for quiet title. (Complaint ("Compl.") [Doc. #1].) Caliber was served with a copy of the Complaint on May 29, 2014. (Defendant's Notice of Removal ("Def.'s Not. of Rem."), Exh. B [Doc. # 1].)
On June 24, 2014, Caliber filed a notice of removal, asserting diversity jurisdiction under 28 U.S.C § 1331. (Def.'s Not. of Rem. [Doc. #1].)
On July 1, 2014, Caliber filed a motion to dismiss. ("MTD" [Doc. # 11].) On July 23, 2014, Allshouse filed a motion to remand. ("MTR" [Doc. # 12].) On August 1, 2014, Caliber filed an opposition to Allshouse's motion to remand. ("Opp'n to MTR" [Doc. # 13].) On August 1, 2014, Allshouse filed an opposition to Caliber's motion to dismiss. ("Opp'n to MTD" [Doc. # 14].) On August 8, 2014, Caliber filed a reply in support of its motion to dismiss. ("Reply in Supp. of MTD" [Doc. #15].) Allshouse did not file a reply in support of her motion to remand.
II.
REQUESTS FOR JUDICIAL NOTICE
A. Request for Judicial Notice of Documents In Support of Caliber's Opposition to Allshouse's Motion to Remand
On a motion to remand, when challenged on allegations of jurisdictional facts, the parties may support their allegations with competent proof. Hertz Corp. v. Friend, 559 U.S. 77, 96-97, 130 S. Ct. 1181, 1194-95, 175 L. Ed. 2d 1029 (2010). Federal Rule of Evidence 201 permits a court to take judicial notice of facts not subject to reasonable dispute that are either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201; Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986); see also Rosal v. First Fed. Bank of Cal., 671 F. Supp. 2d 1111, 1120-21 (N.D. Cal. 2009) (taking judicial notice of deed of trust); Paulhus v. Fay Servicing, LLC, Case No. 14-736, 2014 WL 3845051, *1, n.2 (E.D. Cal. Aug. 6, 2014) (taking judicial notice of "several recorded documents pertaining to plaintiff's property," including a deed of trust, assignment of deed of trust, notice of default, rescission of default, and substitution of trustee); Valasquez v. Mortgage Elec. Registration Sys., Inc., Case No. 08-3818, 2008 WL 4938162, *2-3 (N.D. Cal. Nov. 17, 2008) (citing W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F. Supp. 790, 792 (N.D. Cal. 1992) (same).
Caliber requests judicial notice of four documents relating to its opposition to Allshouse's motion to remand: (1) deed of trust; (2) notice of default and election to sell under deed of trust; (3) trustee's deed upon sale; and (4) assignment of deed of trust. (Defendant's Request for Judicial Notice in Support of Opposition to Remand, Exhs. A-D ("Def's RJN Opp'n to MTR") [Doc. # 13-2].).
Allshouse does not oppose this request (although she opposes the request for judicial notice filed in support of Caliber's motion to dismiss, see infra, Part II.B.). Accordingly, the Court takes judicial notice of these matters of public record, which are not subject to reasonable dispute. See Fed. R. Evid. 201. B. Request for Judicial Notice of Documents in Support of Caliber's Motion to Dismiss
A court's review of a Rule 12(b)(6) motion to dismiss is generally limited to the contents of the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). If considering evidence outside the pleadings on a Rule 12(b)(6) motion, a court "must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment, and it must give the nonmoving party an opportunity to respond." U.S. v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003).
The Ninth Circuit has identified two exceptions to this general rule: (1) "a court may consider material which is properly submitted as part of the complaint," and "[i]f the documents are not physically attached to the complaint, they may be considered if the documents' authenticity . . . is not contested and the plaintiffs' complaint necessarily relies on them"; and (2) "under Fed. R. Evid. 201, a court may take judicial notice of matters of public record," but "a court may not take judicial notice of a fact that is subject to reasonable dispute." Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (internal quotations and citations omitted).)
Caliber filed a request for judicial notice with its motion to dismiss, requesting that the Court take judicial notice of the following ten documents: (1) deed of trust; (2) grant deed; (3) notice of default and election to sell under deed of trust; (4) substitution of trustee; (5) notice of trustee's sale; (6) rescission of notice of default and election to sell under deed of trust; (7) notice of default and election to sell under deed of trust; (8) assignment of deed of trust; (9) notice of trustee's sale; and (10) trustee's deed upon sale, all of which are publicly recorded documents in San Bernardino County, California. (Defendant's Request for Judicial Notice in Support of Motion to Dismiss ("Def.'s RJN MTD") [Doc.#11-1].)
Allshouse partially opposes Caliber's request for judicial notice. (Pls' Opp'n at 4-6.) She asserts that the Court may not take judicial notice of the contents of the documents—only of their existence. (Id. at 4 (emphasis added).) She states, "[w]hile it is true that the acts of the county recorder may be subject to judicial notice, Defendant's compilation of such acts and the deductions that they proffer in that regard are not appropriate subjects for judicial notice." (Id. at 4.) For this proposition, she cites Mangini v. R. J. Reynolds Tobacco Co., 7 Cal. 4th 1057, 1063 (1994), overruled on other grounds by In re Tobacco Cases II, 41 Cal. 4th 1257 (2007), which held that "[w]hile courts may notice official acts and public records, we do not take judicial notice of the truth of all matters stated therein." Id. at 1063 (internal quotation marks and citations omitted). The crux of Allshouse's opposition to Caliber's request for judicial notice, however, appears to be that Caliber allegedly unfairly "injects" facts into its motion to dismiss. (Pls.' Opp'n at 5.) Allshouse asserts that she "specifically disputes the validity and veracity" of the documents showing that Caliber was "actually assigned her Deed of Trust." (Id. at 6.) But she provides no evidence or argument as to why this document should not be relied upon, other than this conclusory assertion.
Courts routinely take judicial notice of assignments of deed of trust and similar recorded documents. See, e.g., Rosal, 671 F. Supp. 2d 1120-21 (deed of trust); Paulhus, 2014 WL 3845051, *1, n.2 (deed of trust, assignment of deed of trust, notice of default, rescission of default, and substitution of trustee); Valasquez, 2008 WL 4938162, *2-3 (citing W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F. Supp. 790, 792 (N.D. Cal. 1992) (same). Regardless, the only document in Caliber's request for judicial notice that the Court relies upon in its analysis of the motion to dismiss is Exhibit J, Trustee's Deed Upon Sale, stating that Allshouse's property was sold to Donovan Development, LLC. (Def.'s RJN MTD, Exh. J.) Allshouse does not specifically contest the "validity and veracity" of this document. (See generally, Pls. Opp'n.) The Court takes judicial notice of this document of public record, which is not subject to reasonable dispute. See Fed. R. Evid. 201.
III.
FACTUAL BACKGROUND
The Court assumes the truth of the factual allegations in the Complaint, solely for purposes of determining the motion to dismiss.
Allshouse's complaint raises a single cause of action for quiet title relating to real property located on Fremontia Road, in Oak Hills, CA ("the Property"), under Cal. Civ. Proc. Code § 760.020. (Compl. at pp. 2, 7.) On August 22, 2003, Allshouse executed a deed of trust with Chase Manhattan Mortgage Corporation. (Compl. at p. 8, ¶ 3.) The deed of trust was subsequently transferred to Caliber on June 25, 2013. (Compl., Exh. C.) Caliber is a mortgage servicer. (Compl. at pp. 2-3.)
Allshouse defaulted on her loan. (Def's RJN Opp'n to MTR, Exh. B.) As a result, Caliber commenced foreclosure proceedings and the property was sold to a third party, Donovan Development, LLC, for $169,000. (Id., Exh. C.) Caliber was the beneficiary of the deed of trust at the time of sale. (Id., Exh. D.)
IV.
MOTION TO REMAND
Allshouse moves to remand, asserting that the Court lacks jurisdiction because a quiet title action is equitable in nature, and therefore no monetary damages are sought and the amount in controversy does not exceed the jurisdictional requirement of $75,000. (MTR ¶ 7). She does not dispute Caliber's assertion of diversity of citizenship. A. Legal Standard
A civil action may be removed to the district court when it has original jurisdiction over the action. 28 U.S.C. § 1441(a). Original jurisdiction exists in the form of diversity jurisdiction when the parties are completely diverse and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). B. The Amount in Controversy Exceeds $75 ,000
To determine whether the amount in controversy meets the jurisdictional requirement, a court may first consider whether it is facially apparent from the complaint. Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 690 (9th Cir. 2006) (per curiam) (citing Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). Here, because "the complaint does not demand a dollar amount, the removing defendant bears the burden of proving by a preponderance of evidence that the amount in controversy exceeds $[75],000." Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005) (quoting Singer, 116 F.3d at 376) (internal quotation marks omitted).
In actions seeking equitable relief, the amount in controversy is established by measuring the value of the object of the litigation. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (quoting Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 347 (1997) (superseded on other grounds). In valuing foreclosure claims, courts in this Circuit measure the amount in controversy by either the value of the property or the value of the loan. See, e.g., Chapman v. Deutsche Bank Nat. Trust Co., 651 F.3d 1039, 104 n.2 (9th Cir. 2011) (affirming district court's valuation of the amount in controversy based upon value of property in action to quiet title); Ngoc Ngyuen v. Wells Fargo Bank, N.A., 749 F.Supp.2d 1022, 1028-29 (N.D. Cal. 2010) (collecting cases and recognizing split of authority as to whether amount in controversy is measured by the value of property or the value of loan).
Allshouse seeks to quiet title to the Property. (Compl. - Prayer for Relief ¶ 1.) Therefore, the object of this litigation is the Property. See Chapman, 651 F.3d at 104 n.2. The Property sold at foreclosure for $169,000, and the outstanding debt at the time of the foreclosure sale was over $165,000. (Trustee's Deed Upon Sale, Def's RJN Opp'n to MTR, Exh. C at 2). By either measure of the amount in controversy—i.e., the value of the property or value of the loan—the amount in controversy exceeds $75,000. Accordingly, the motion to remand is DENIED. C. Allshouse's Compliance with Local Rules 6-1 and 7-3
In the alternative, Caliber asserts that the motion to remand should be dismissed because Allshouse failed to comply with Local Rules 6-1 and 7-3. Under Local Rule 6-1, a party mailing a motion must serve it no later than 31 days before the motion hearing date. Allshouse served her motion on July 23, which was only 30 days before the motion hearing date of August 22, 2014. In addition, although Allshouse stated in her motion to remand that she complied with the conference of counsel requirements of Local Rule 7-3, Caliber's counsel submits a declaration stating that Allshouse never contacted him. (Declaration of Ofunne Edoziem ¶ 2 [Doc. # 31-1].) Allshouse did not file a Reply to her motion to remand, and thus has not addressed these contentions. Although the Court prefers to address the motion to remand on its merits rather than on the basis of non-compliance with Local Rules 6-1 and 7-3, Allshouse is admonished to comply with all Local Rules in the future. Failure to do so may result in summary denial of any future motion.
V.
MOTION TO DISMISS
A. Legal Standard
Federal Rule of Civil Procedure 8(a)(2) requires a pleading that states a claim for relief contain "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964, 167 L. Ed. 2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)). While a pleading need not contain "detailed factual allegations," it must contain "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Id. (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986)). The pleading must articulate "enough facts to state a claim to relief that is plausible on its face." Id . at 570.
Under Rule 12(b)(6), a party may seek dismissal of a claim for failure to state a claim upon which relief can be granted. A court may grant such a dismissal only where the pleading party fails to present a cognizable legal theory or to allege sufficient facts to support a cognizable legal theory. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a pleading, as discussed supra, courts generally must accept all factual allegations as true. Legal conclusions, in contrast, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (citing Twombly, 550 U.S. at 555).
Should a court dismiss certain claims, it must also decide whether to grant leave to amend. "Courts are free to grant a party leave to amend whenever 'justice so requires,' and requests for leave should be granted with 'extreme liberality.'" Moss v. U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009) (citation omitted) (quoting Fed. R. Civ. P. 15(a)(2); Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). A court should not deny leave to amend unless the court "determines that the pleading could not possibly be cured by the allegation of other facts." Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009) (internal quotation marks omitted; quoting Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc)). B. Dismissal is Warranted Because Allshouse Fails to State a Claim for Quiet Title
To adequately plead a claim for quiet title under California Code of Civil Procedure section 761.020, a plaintiff must allege: (1) both a legal description and street address or a common description of the property; (2) the title of the plaintiff and the basis of the title; (3) the adverse claims to the title; (4) the date as of which the determination is sought; and (5) a prayer for the determination of the title of the plaintiff against adverse claims. Cal. Civ. Proc. Code § 761.020.
Section 761.020 also requires that the plaintiff plead these elements in a verified complaint. Although Allshouse signed her complaint, under "Verification" it states "I, Perry Johnson, am the Plaintiff in the above-entitled action." (Compl. pg. 9.) Perry Johnson is not a named plaintiff. In any amended complaint, Allshouse is advised that any verification should be verified by her, as the plaintiff.
Caliber asserts that Allshouse fails to adequately plead the "adverse claim" prong of her quiet title claim. (MTD ¶19). It contends that it is not the record title holder to the Property because it was sold to Donovan Development, LLC at a trustee's sale. (Def.'s RJN MTD, Exh. J.) Moreover, the only adverse claim alleged by Allshouse in her Complaint is Caliber's previous security interest in the Property as the former holder of the Deed of Trust. (Compl. at p. 8, ¶¶ 3-5.)
A deed of trust "carries none of the incidents of ownership of the property, other than the right to convey upon default on the part of the debtor in payment of his debt." Lupertino v Carbahal, 35 Cal. App. 3d 742, 748, 111 Cal. Rptr.112 (1973). For this reason, courts in this Circuit have held that a former or present security interest in a deed of trust does not constitute an "adverse claim" for the purposes of a quiet title action. For example, in Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1121 (E.D. Cal. 2009), Chase, which, like Caliber, succeeded an initial deed of trust holder's security interest by assignment, later assigned all interests to another holder. Id. at 1102-21. The Court held that:
As such, defendants have held a security interest in the [deed of trust], not an adverse claim in the property. A deed of trust 'carries none of the incidents of ownership of the property, other than the right to convey upon default on the part of the debtor in payment of his debt.'Id. at 1121 (quoting Lupertino, 35 Cal. App. 3d at 748). Similarly, in Monreal v. GMAC Mortgage, LLC, 948 F. Supp. 2d 1069 (S.D. Cal. 2013), the defendant was a beneficiary under the deed of trust until the property was sold to a third party at a trustee's sale. Id. at 1079. As Allshouse does here, the plaintiff in Monreal argued that the defendant lacked standing to sell the property at the trustee's sale because the transfer of the deed of trust to the defendant was void. Id. at 1079. The Monreal court held that the defendant's former security interest in the deed of trust did not qualify as an "adverse claim" for purposes of a quiet title action. Id. Instead, the court reasoned that any adverse claims must be brought against the current holder of the trust deed. Id.
Here, Caliber was assigned the beneficial interest under the Deed of Trust on June 25, 2013. (Assignment of Deed of Trust, Compl. Exh. C). The property was subsequently sold to Donovan Development, LLC, on June 2, 2014. (Trustee's Deed Upon Sale, Def.'s RJN MTD, Exh. J at 2). Even if Caliber had maintained its security interest in the Deed of Trust, such interest would not qualify as an adverse claim. Vega, 654 F. Supp.2d at 1121. Furthermore, given that the sale of the property to Donovan changes Caliber's interest to a former security interest, much like the situation in Monreal, any adverse claims would be held by Donovan rather than Caliber. Monreal, 948 F. Supp. 2d at 1079.
Caliber has no adverse claim to the property, and therefore Allshouse has failed to a state a claim for quiet title against Caliber. The motion to dismiss is GRANTED.
For the first time in her Opposition, Allshouse argues that Caliber failed to comply with the "Servicing & Pooling Agreement." (Opp'n at 16-18.) As Caliber points out in its Reply, Allshouse does not make this allegation or even mention this agreement in her Complaint. (Reply at 3.) It is not clear how this argument, even if the Court considered it, would save her quiet title claim.
In addition, in her Opposition, Allshouse also asserts for the first time that she had paid in full "at the time of the Selling, Assigning, or Transferring of the relative Deed of Trust." (Opp'n at 14.) The Court may not consider facts not alleged in the Complaint, and asserted only in the Opposition pleading. See Broam v. Bogan, 320 F.3d 1023, 1026 (9th Cir. 2003) ("In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to dismiss. Facts raised for the first time in plaintiff's opposition papers should be considered by the court in determining whether to grant leave to amend or to dismiss the complaint with or without prejudice.") (internal quotation marks and citations omitted).
V.
CONCLUSION
In light of the foregoing:
1. Allshouse's motion to remand is DENIED;
2. Caliber Home Loan's motion to dismiss is GRANTED, with leave to amend;
3. By no later than 21 days from the date of this Order, Allshouse shall file an amended complaint or notify Caliber that she does not intend to amend. Failure to file a timely amended complaint shall result in the dismissal of this action.
4. Caliber shall file its response within 21 days from the date of service of an amended complaint.
The Court may not provide legal advice to any party, including pro se litigants, i.e., parties who are not represented by a lawyer. There is a "Pro Se Clinic" in the courthouse that can provide information and assistance about many aspects of civil litigation in this Court. The Clinic is administered by Public Counsel, a public interest law firm, and is staffed by lawyers and a paralegal. The clinic is open to members of the public on Mondays, Wednesdays, and Fridays from 9:30 a.m. to noon and 2:00 p.m. to 4:00 p.m. It is located in room G-19, Main Street Floor of the United States Courthouse at 312 North Spring Street, Los Angeles, California. In addition, some information for pro se litigants can be found on the Central District's website. See Representing Yourself in Federal Courts, http://court.cacd.uscourts.gov/cacd/ProSe.nsf.