Opinion
Case No. CV 11-08201 DDP (PJWx)
03-28-2013
SHERI M. JUNTILLA, an individual, Plaintiff, v. AURORA LOAN SERVICES, LLC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, MINC.; DEUTSCHE BANK TRUST COMPANY AMERICAS AS TRUSTEE FOR THWE RESIDENTIAL ACCREDIT LOANS, INC. MORTGAGE ASSET-BACKED PASS-THROUGHT CERTIFICATES, SERIES 2007-QH8; CAL-WESTERN RECONVENYANCE CORPORATION, Defendants.
ORDER GRANTING DEFENDANTS' MOTION
TO DISMISS
[Dkt. No. 22]
Presently before the court is the Motion to Dismiss filed by defendants Aurora Loan Services, LLC ("Aurora"), Mortgage Electronic Registration Systems, Inc. ("MERS"), and Deutsche Bank Trust Co. Americas ("Deutsche") as Trustee for the Residential Accredit Loans, Inc. Mortgage-Backed Pass-Through Certificates, Series 2007-QH8 ("RALI Trust") (collectively, "Defendants"). Having considered the submissions of the parties and heard oral arguement, the court grants the motion and adopts the following Order.
I. Background
In July 2007, Plaintiff Sherri M. Juntilla ("Plaintiff") executed a promissory note ("Note") in favor of lender Homecoming Financial, Inc. ("Homecoming") in the amount of $743,200.00 for a property located at 409, 411, 411 ½ N. Mar Vista Ave., in Pasadena, California 91106. (First Amended Complaint ("FAC") ¶ 1.) Plaintiff's Deed of Trust listed Homecoming as "Lender" and MERS as "nominee for lender" and "beneficiary." (FAC ¶¶ 15-16.) In May 2010, Plaintiff filed for bankruptcy. (Id. ¶ 19.)
Meanwhile, in May 2010, MERS assigned the Deed of Trust to Aurora; the assignment was recorded in July. (FAC ¶ 39; Ex. 7C) In September 2010, Plaintiff attempted to negotiate a loan modification with Aurora. (FAC ¶¶ 20-21.) Aurora placed Plaintiff in a Trial Modification/Special Forbearance Agreement, and in accordance with its provisions, held the six monthly payments she timely sent "in suspense" instead of applying them to her loan. (Id. ¶¶ 21-22.)
In September 2010, Aurora denied the loan modification. (FAC ¶ 21.) In March 2011, Cal-Western Reconveyance Corporation ("Cal-Western"), acting as Aurora's agent, recorded a Notice of Default ("NOD"). (FAC Ex. 7B.) At this point, Plaintiff was $26,246.23 in arrears. (Id.) In April 2011, beneficiary Aurora recorded a substitution of Cal-Western as Trustee. (FAC Ex. 7D.) In June 2011, Cal-Western recorded a Notice of Trustee's Sale set for July 13, 2011, which was subsequently postponed; no sale has taken place to date. (FAC Ex. 7E.)
In July 2011, Plaintiff made a formal request of Aurora, under the Real Estate Settlement Procedures Act (RESPA, 12 U.S.C. § 2601 et seq.), to provide a life-of-loan transaction history report. (FAC ¶ 25.) Aurora responded in August 2011 by identifying Deutsche as the owner of her Deed of Trust, but refused to provide the requested report, stating that Plaintiff's request was "vague." (Id.)
Plaintiff filed a complaint in the district court in October 2011 and the FAC on January 18, 2012. The FAC alleges seven causes of action, for 1) declaratory judgment under 28 U.S.C. § 2201 that Defendants have no right of interest in the Note; 2) fraud in endorsement of the assignment and substitution; 3) negligence in following the law and contract provisions relevant to the Note; 4) unjust enrichment; 5) violation of the Federal Debt Collection Practices Act ("FDCPA"), 15 U.S.C. 1692(e); 6) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §17200 et seq.; and 7) breach of contract. (FAC ¶¶ 82-176.)
As Defendants point out, this is not actually a cause of action, but a form of relief. (Mot. at 12.)
Plaintiff alleges various irregularities in connection with the assignment of the Note to Deutsche and the substitution of Cal-Western as Trustee: that the Note lacks the proper endorsements; that it was not endorsed by the closing date set forth in the Pooling Services Agreement ("PSA") governing the RALI Trust; and that the endorsers of both documents lacked the authority to sign on behalf of MERS and Aurora, respectively. (Id. ¶¶ 27-65.) With regard to this last, Plaintiff further alleges that because Defendants knew the endorsers lacked authority to sign - and were merely acting as "robo-signers" - the attempted assignment and substitution were fraudulent. (Id.) As a result, Plaintiff alleges that she does not know who currently owns her Note, and that Aurora, Deutsche, and the RALI Trust are all making rival claims. (Id. ¶ 73). This cloud on title has rendered the property unsaleable. (Id.) Additionally, Deutsche has negatively reported against Plaintiff's credit. (Id.) Defendants now move to dismiss the FAC.
II. Legal Standard.
A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).
"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.
III. Discussion
All of Plaintiff's causes of action, with the exception of the Seventh Cause of Action for Breach of Contract, appear to be based upon her allegation that Homecoming never successfully transferred the Note. Plaintiff alleges that there was no "true sales" of her Note because Defendants failed to follow the rules set out by a Pooling and Servicing Agreement ("PSA"). (FAC ¶ 17.) As a result, Plaintiff alleges, the attempt to securitize her loan failed, and Deutchse and Aurora are therefore strangers to her loan. (Id. ¶¶ 16-17, 28-29.)
The circumstances and allegations here are strikingly similar to those presented in Armeni v. America's Wholesale Lender, No. CV 11-8537 CAS, 2012 WL 603242 (C.D. Cal. Feb. 24, 2012). As the Armeni court explained, debtors such as Plaintiff here are not parties to PSAs, and therefore have no standing to challenge assignments based on noncompliance with the terms of a PSA. Armeni, 2012 WL at *3 (listing cases).
Neither party cites to or discusses Armeni.
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Furthermore, with respect to Plaintiff's FDCPA claim against Aurora, the FAC fails to allege that Aurora is a "debt collector" within the meaning of the Act. First, foreclosure activity pursuant to a deed of trust does not constitute the collection of a debt under the FDCPA. Shapiro v. Bank of Am., N.A., No. 11-CV-576-JAM, 2012 WL 670960 at *4 (E.D. Cal. Feb. 29, 2012). Though Plaintiff here argues that she is not challenging a foreclosure, her prayer for relief in the form of an order deeming her Note unsecured and restraining Defendants "from continuing or initiating any action against the Property" belies that contention. Even if Plaintiff were not challenging foreclosure activity, her opposition fails to address Defendants' argument that a debt collector does not include "any person collecting or attempting to collect any deby owed . . . to the extent such activity . . . concerns a debt which was not in default at the time it was obtained by such person . . . ." 15 U.S.C. §1692a(6)(f). The exhibits attached to Plaintiff's complaint, however, indicate that Aurora obtained its interest in Plaintiff's loan in May 2010, almost a year before Cal-Western recorded the Notice of Default. Lastly, as in Armeni, Plaintiff's FDCPA claim must fail because it is premised upon the insufficiently pled PSA-based claims discussed above. Armeni, 2012 WL at *4.
Plaintiff's Breach of Contract claim, pled in the alternative, alleges that Defendants "fail[ed] to apply the payments made by Plaintiff in the order of priority set forth in [the Deed]." (FAC ¶ 173.) This allegation is no more than a bare recitation of an element of a breach of contract claim. The FAC does not identify which payments were misallocated, when the misallocation occurred, or how Defendant's allocation of payments was improper. Plaintiff's breach of contract claim is therefore dismissed, with leave to amend. See Derusseau v. Bank of America, N.A., No. 11 CV 1766 MMA, 2011 WL 5975821 at *7 (S.D. Cal. Nov. 29, 2011).
IV. Conclusion
For the reasons stated above, Defendants' Motion to Dismiss is GRANTED. The Seventh Cause of Action for Breach of Contract is dismissed with leave to amend. All other causes of action are dismissed with prejudice. Any amended complaint shall be filed within fourteen days of the date of this order. IT IS SO ORDERED.
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DEAN D. PREGERSON
United States District Judge