Opinion
No. 2:10-cv-03004 JAM KJN PS.
August 16, 2011
ORDER and FINDINGS AND RECOMMENDATIONS
Presently before the court are several motions filed by various named defendants in this case, which are addressed to plaintiffs' claims alleged in the Amended Complaint (Dkt. No. 5): (1) defendants David J. Boyer and Robert Jackson Associates, Inc.'s motion to specially strike plaintiffs' claims pursuant to California's anti-SLAPP statute, Cal. Civ. Proc. Code § 425.16, and to dismiss plaintiffs' claims pursuant to Federal Rule of Civil Procedure 12(b)(6) (Dkt. No. 13); (2) defendant Citi Residential Lending, Inc.'s motion to dismiss plaintiffs' claims pursuant to Rule 12(b)(6) (Dkt. No. 15); (3) defendants Fidelity National Title Company and Default Resolution Network Division's motion to dismiss plaintiffs' claims pursuant to Rule 12(b)(6) (Dkt. No. 16); and (4) defendants David J. Boyer, Robert Jackson Associates, Inc., Deutsche Bank National Trust Co., American Home Mortgage Servicing Co., and Power Default Services, Inc.'s motion to dismiss or for a more definite statement filed pursuant to Rule 12(b)(6) and Rule 12(e) (Dkt. No. 18).
This action proceeds before the undersigned pursuant to Eastern District of California Local Rule 302(c)(21) and 28 U.S.C. § 636(b)(1).
The acronym "SLAPP" stands for "strategic lawsuit against public participation." Jarrow Formulas, Inc. v. La Marche, 31 Cal. 4th 728, 732 n. 1, 74 P.3d 737, 739 n. 1 (2003).
Curiously, defendants David J. Boyer and Robert Jackson Associates, Inc. are parties to two different pleadings-based motions.
Plaintiffs initially failed to file a written opposition or statement of non-opposition to the various motions. (Order, Jan. 4, 2011, Dkt. No. 20.) The undersigned continued the hearing date on the various motions and provided plaintiffs with additional time to file a written opposition. Plaintiffs filed a single, relatively non-responsive opposition to all of the pending motions. (Pls.' Oppn, Dkt. No. 21.)
The court heard this matter on its law and motion calendar on February 24, 2011. (Minutes, Dkt. No. 27.) Attorney Shar Bahmani appeared via telephone on behalf of defendants David J. Boyer and Robert Jackson Associates (collectively, the "Boyer Defendants"), as well as defendants David J. Boyer, Robert Jackson Associates, Inc., Deutsche Bank National Trust Co., American Home Mortgage Servicing Co., and Power Default Services, Inc. (collectively, the "Deutsche Bank Defendants"). Attorney Imran Hayat appeared on behalf of defendant Citi Residential Lending, Inc. ("Citi"). Attorney Christine Starkie appeared on behalf of defendants Fidelity National Title Company and Default Resolution Network Division (collectively, the "Fidelity Defendants"). Plaintiffs, who are proceeding without counsel, appeared and represented themselves at the hearing.
The undersigned has considered the briefs, oral arguments, and appropriate portions of the record in this case and, for the reasons stated below, recommends that all of plaintiffs' claims alleged against the Boyer Defendants, Citi, the Fidelity Defendants, and the Deutsche Bank Defendants be dismissed with prejudice.
The remaining named defendants are defendants Olympus Corporation, Stephanie Alonzo, and Natalie Gold. None of these defendants has appeared in the action. A clerk's entry of default has been entered against Alonzo and Gold. (Cert. of Clerk's Entry of Default, Dkt. No. 44.)
I. BACKGROUND
Plaintiffs' Amended Complaint concerns the alleged unlawful foreclosure on, and trustee's sale of, real property located at 10268 Pequot Lane in Nevada City, California. (Am. Compl. ¶ 4.) Plaintiffs are not the borrowers who defaulted on the loan; Bryan Byrd Chagnon and Shelley Y. Chagnon, who are husband and wife, are the borrowers. On or around September 2, 2003, Bryan and Shelley Chagnon executed a promissory note in the amount of $256,000 in favor of defendant Olympus Mortgage Company ("Olympus"), and the note was secured by a deed of trust naming Olympus as lender, trustee, and beneficiary. (Boyer Defs.' Req. For Judicial Notice ("Boyer Defs.' RFJN"), Ex. A, Dkt. No. 14;see also Am. Compl. ¶¶ 18-20.) On December 23, 2008, Olympus executed an Assignment of Deed of Trust, through Citi, Olympus's "attorney-in-fact," in favor of defendant Deutsche Bank National Trust Company as trustee ("Deutsche Bank"). (Boyer Defs.' RFJN, Ex. B.) The Chagnons defaulted on their loan, and on December 26, 2008, a Notice of Default and Election to Sell Under Deed of Trust was recorded. (Id., Ex. C.)
The undersigned addresses the Boyer Defendants' and Deutsche Bank Defendants' respective requests for judicial notice below, in Section III. Briefly stated, the undersigned grants both requests for judicial notice in their entirety.
Plaintiffs' allegations against Citi, which are sparse, relate only to Citi's role as "attorney-in-fact" for Olympus in connection with the Assignment of the Deed of Trust. (See Am. Compl. ¶¶ 22-26.)
It appears that plaintiffs now occupy the property; plaintiffs allege that they "live on the Land." (Am. Compl. ¶¶ 3a-3b.) Plaintiffs allege that they are the "real party(s) in interest and now hold the beneficial interest in the property by assignment." (Id. ¶ 14.) They further allege that on June 5, 2010, plaintiff McFadden obtained a Quitclaim Deed pertaining to the subject property, and judicially noticeable documents substantiate that McFadden and the Chagnons executed a purported Quitclaim Deed conveying the property. (Id. ¶ 16; Deutsche Bank Defs.' Req. for Judicial Notice ("Deutsche Bank Defs.' RFJN"), Ex. 5, Dkt. No. 18, Doc. No. 18-1.) Plaintiffs further allege, and judicially noticeable documents support, that on June 11, 2010, a Grant Deed purporting to grant plaintiff Willardson fee simple title to the property was recorded — the Grant Deed purports to convey the property to "Spiritual Alliances, Corporation Sole, Marcia Ann Willardson, Public Minister." (Am. Compl. ¶ 17; Deutsche Bank Defs.' RFJN, Ex. 6.) At the hearing, plaintiffs represented that through their private transactions with the Chagnons, McFadden was somehow assigned an interest only in the "chattel paper," i.e., the promissory note and the Deed of Trust, and Willardson was somehow assigned an interest only in the physical property itself, free and clear of the Chagnon's existing obligations on the promissory note and Deed of Trust. McFadden stated at the hearing that the Chagnons received approximately $3,500 as consideration for the purported assignment.
On June 18, 2010, after plaintiffs and the Chagnons conducted their transaction, a Substitution of Trustee was recorded. (Am. Compl. ¶ 29; Boyer Defs.' RFJN, Ex. D.) The Substitution of Trustee substituted defendant Power Default Services, Inc. as trustee under the Deed of Trust, care of Fidelity National Title Company. (Id.) The Substitution of Trustee reflects that at that point, American Home Mortgaging Servicing, Inc. was the servicer of the Chagnon's loan. (Id.)
Fidelity National Title Company's role in this litigation is limited to its acts of recording documents, as an agent of the trustee, in connection with the loan and the foreclosure on and trustee's sale of the property. (See Am. Compl. ¶¶ 3f; Boyer Defs.' RFJN, Exs. A, D, E, and F.)
Also on June 18, 2010, a Notice of Trustee's Sale was recorded that noticed a sale date of July 8, 2010. (Boyer Defs.' RFJN, Ex. E.) On September 17, 2010, a Trustee's Deed Upon Sale in favor of Deutsche Bank was recorded, reflecting that the sale of the property occurred on September 13, 2010. (Id., Ex. F.)
On or around September 30, 2010, McFadden found pinned to the wall of a structure on the property a three-day notice to vacate the property. (Am. Compl. ¶ 40.) The notice was signed by defendant David J. Boyer, an attorney with the law firm defendant Robert J. Jackson and Associates. (Id.; see also Boyer Defs.' RFJN, Ex. G, Exhibit B to Compl. for Unlawful Detainer.)
On October 14, 2010, Deutsche Bank instituted, through attorneys at the firm of Robert J. Jackson and Associates, an unlawful detainer action in the Nevada County Superior Court, naming Bryan and Shelley Chagnon as defendants. (Boyer Defs.' RFJN, Ex. G.) Nothing in the record suggests that a judgment has yet been entered in the unlawful detainer action, and counsel for the Boyer Defendants represented at the hearing that he was unaware of any such judgment.
On November 8, 2010, plaintiffs filed their complaint and, on November 10, 2010, filed the Amended Complaint. Plaintiffs' Amended Complaint alleges thirteen claims for relief against eleven named defendants and over 1,000 "Doe" defendants. Plaintiffs indiscriminately allege all of the following "counts," not all of which are actually stand-alone claims for relief, against all of the named defendants: (1) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692f; (2) violation of the FDCPA, 15 U.S.C. § 1692e(2)(A); (3) violation of the FDCPA, 15 U.S.C. § 1692e(5); (4) negligence; (5) slander of title; (6) "respondeat superior liability"; (7) "negligent or wanton hiring, supervision, training or retention"; (8) "joint venture liability"; (9) wrongful foreclosure; (10) unjust enrichment; (11) civil conspiracy; (12) fraudulent misrepresentation; and (13) declaratory relief. Plaintiffs' Amended Complaint is generally and vaguely pled in that plaintiffs failed to differentiate among the various named defendants in terms of each named defendant's alleged conduct that gave rise to each specific claim.
II. EVIDENTIARY OBJECTION
With their written opposition, plaintiffs filed an attachment that consists of a "Foreclosure Investigation Report" regarding the subject property, which was prepared by Charles J. Horner and dated November 7, 2010 (the "Horner Report"). (See Attachment to Pls.' Opp'n.) Plaintiffs' opposition to the pending motions is largely premised on this report. The reply brief filed by the Fidelity Defendants includes an evidentiary objection to the Horner Report. (Reply Br. Evid. Objection at 5-7, Dkt. No. 22.)
The undersigned sustains the Fidelity Defendants' evidentiary objection and has not considered the Horner Report in reaching the recommendations set forth below. The Horner Report is not the proper subject of judicial notice, was not attached to the Amended Complaint, and is not subject to consideration under the incorporation by reference doctrine. Accordingly, it is not the proper subject of consideration in the context of motions to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6). Furthermore, the undersigned declines to convert the pending motions into motions for summary judgment.
Plaintiffs only cite Federal Rule of Evidence 301 in support of the admissibility of the Horner Report. Rule 301 generally concerns the function of presumptions in civil cases and is irrelevant to the dispute regarding consideration of the Horner Report.
III. REQUESTS FOR JUDICIAL NOTICE
In support of their respective motions, the Boyer Defendants and the Deutsche Bank Defendants each filed requests for judicial notice. The Boyer Defendants request that the court take judicial notice of documents labeled Exhibits A through G (Dkt. No. 14). Specifically, the Boyer Defendants seek judicial notice of: (a) a Deed of Trust dated September 2, 2003, which was recorded with the Nevada County Recorder's Office on September 10, 2003, as document number DOC-2003-0048457; (b) an Assignment of Deed of Trust dated December 23, 2008, which was recorded on December 30, 2008, as document number DOC-2008-0030931-00; (c) a Notice of Default and Election to Sell Under Deed of Trust dated December 23, 2008, which was recorded on December 26, 2008, as document number DOC-2008-0030712-00; (d) a Substitution of Trustee dated June 11, 2010, which was recorded on June 18, 2010, as document number 20100014235; (e) a Notice of Trustee's Sale dated June 18, 2010, which was recorded on June 18, 2010, as document number 20100014236; (f) a Trustee's Deed Upon Sale dated September 15, 2010, which was recorded on September 17, 2010, as document number 20100022243; and (g) a summons, civil case cover sheet, and complaint pertaining to an unlawful detainer action against Bryan and Shelley Chagnon, which was filed on October 14, 2010, in the Superior Court of California, County of Nevada, as Case No. C10-224. (See Boyer Defs.' RFJN, Exs. A-G.)
Many of the documents that are the subject of the requests for judicial notice are also appended to plaintiffs' original Complaint as Exhibits A through T. However, plaintiffs did not file those exhibits with their Amended Complaint. Although plaintiffs' exhibits attached to the Complaint are technically before the court, the undersigned has considered those exhibits.See Loux v. Rhay, 375 F.2d 55, 57 (9th Cir. 1967) ("The amended complaint supersedes the original, the latter being treated thereafter as non-existent.").
To the extent that the documents that are the subject of the requests for judicial notice were recorded, they were recorded with the Nevada County Recorder's Office.
The Deutsche Bank Defendants' request for judicial notice (Dkt. No. 18, Doc. No. 18-1) is partially duplicative of the Boyer Defendants' request in that the Deutsche Bank Defendants' Exhibits 2, 3, 4, 7, 8, 9, and 10 correspond with the Boyer Defendants' Exhibits A through G. The Deutsche Bank Defendants request that the court take judicial notice of three additional documents numbered as Exhibits 1, 5, and 6: (1) a Grant Deed dated September 5, 2003, which was recorded on September 10, 2003, as document number DOC-2003-0048456-00; (2) a Quitclaim Deed dated June 5, 2010, which was recorded on June 7, 2010, as document number 20100013212; and (3) a Grant Deed dated June 5, 2010, which was recorded on June 11, 2010, as document number 20100013544. (See Deutsche Bank Defs.' RFJN, Exs. 1, 5, and 6.)
The court may take judicial notice of matters of public record, but "may not take judicial notice of a fact that is 'subject to reasonable dispute.'" Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001) (citing Fed.R.Evid. 201(b)). Additionally, the court may take judicial notice of filings in state court actions where the state court proceedings have a direct relation to the matters at issue. See, e.g., Betker v. U.S. Trust Corp. (In re Heritage Bond Litig.), 546 F.3d 667, 670 n. 1, 673 n. 8 (9th Cir. 2008);Bias v. Moynihan, 508 F.3d 1212, 1225 (9th Cir. 2007); see also Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) ("We may take judicial notice of court filings and other matters of public record.").
The undersigned grants the respective requests for judicial notice filed by the Boyer Defendants and the Deutsche Bank Defendants. The court may review these documents in connection with the pending motions because they consist of public records that are not the subject of reasonable dispute, directly relevant state court filings, or both.
IV. LEGAL STANDARDS
A. Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6)
A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1109 (E.D. Cal. 2009). Under the "notice pleading" standard of the Federal Rules of Civil Procedure, a plaintiff's complaint must provide, in part, a "short and plain statement" of plaintiff's claims showing entitlement to relief. Fed.R.Civ.P. 8(a)(2); see also Paulsen v. CNF, Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). "A complaint may survive a motion to dismiss if, taking all well-pleaded factual allegations as true, it contains 'enough facts to state a claim to relief that is plausible on its face.'" Coto Settlement v. Eisenberg, 593 F.3d 1031, 1034 (9th Cir. 2010) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). "'A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Caviness v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010) (quoting Iqbal, 129 S. Ct. at 1949). The court accepts all of the facts alleged in the complaint as true and construes them in the light most favorable to the plaintiff. Corrie v. Caterpillar, 503 F.3d 974, 977 (9th Cir. 2007). The court is "not, however, required to accept as true conclusory allegations that are contradicted by documents referred to in the complaint, and [the court does] not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Paulsen, 559 F.3d at 1071 (citations and quotation marks omitted).
A motion to dismiss pursuant to Rule 12(b)(6) may also challenge a complaint's compliance with Federal Rule of Civil Procedure 9(b) where fraud is an essential element of a claim.See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). Rule 9(b), which provides a heightened pleading standard, states: "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). These circumstances include the "time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam) (citation and quotation marks omitted); see also Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) ("Averments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged.") (citation and quotation marks omitted). "Rule 9(b) demands that the circumstances constituting the alleged fraud be specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong." Kearns, 567 F.3d at 1124 (citing Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001) (internal quotation marks omitted and modification in original).
The court must construe a pro se pleading liberally to determine if it states a claim and, prior to dismissal, tell a plaintiff of deficiencies in his complaint and give plaintiff an opportunity to cure them if it appears at all possible that the plaintiff can correct the defect. See Lopez v. Smith, 203 F.3d 1122, 1130-31 (9th Cir. 2000) (en banc); accord Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the court "may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899 (9th Cir. 2007) (citation and quotation marks omitted). Additionally, under the "incorporation by reference" doctrine, a court may also review documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (citation omitted and modification in original). The incorporation by reference doctrine also applies "to situations in which the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Id.
B. Anti-SLAPP Special Motion to Strike, Cal. Civ. Proc. Code § 425.16
One of the motions before the court was filed, in part, pursuant to California's anti-SLAPP statute, California Code of Civil Procedure § 425.16. The Ninth Circuit Court of Appeals has summarized the purpose and general mechanics of California's anti-SLAPP statute as follows:
The anti-SLAPP statute establishes a procedure to expose and dismiss meritless and harassing claims that seek to chill the exercise of petitioning or free speech rights in connection with a public issue. Analysis of an anti-SLAPP motion to strike involves a two-step process. First, the defendant must show that the cause of action arises from any "act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue. . . ." Cal. Code Civ. P. § 425.16(b)(1).
If the court determines that the defendant has met this burden, it must then determine whether the plaintiff has demonstrated a probability of prevailing on the merits. To establish a probability of prevailing, the plaintiff must show that "the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited."Kearny v. Foley Lardner, LLP, 590 F.3d 638, 648 (9th Cir. 2009) (footnote and citations omitted); accord Metabolife Int'l, Inc. v. Wornick, 264 F.3d 832, 839-40 (9th Cir. 2001); Jarrow Formulas, Inc., 31 Cal. 4th at 733, 74 P.3d at 740. "The [anti-SLAPP] statute is to be 'construed broadly.'" Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 595 (9th Cir. 2010) (citing Cal. Civ. Proc. Code § 425.16(a), and Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir. 2003)).
Generally, a party may bring an anti-SLAPP special motion to strike in federal court. Thomas v. Fry's Elecs., Inc., 400 F. 3d 1206, 1206 (9th Cir. 2005) (per curiam); Vess, 317 F.3d at 1109. But such a motion has limited reach. A party may seek to specially strike state law claims brought in federal court on the basis of the court's diversity subject matter jurisdiction and state law claims that are supplemental to federal claims in a federal question jurisdiction matter. See Hilton v. Hallmark Cards, 599 F.3d 894, 900 n. 2 (9th Cir. 2010) (stating that "we have long held that the anti-SLAPP statute applies to state law claims that federal courts hear pursuant to their diversity jurisdiction") (citing United States ex rel. Newsham v. Lockheed Missiles Space Co., 190 F.3d 963, 970-73 (9th Cir. 1999)); Globetrotter Software, Inc. v. Elan Computer Group, Inc., 63 F. Supp. 2d 1127, 1130 (N.D. Cal. 1999) ("[I]t appears that under the Erie analysis set forth in Lockheed the anti-SLAPP statute may be applied to state law claims which, as in this case, are asserted pendent to federal question claims."). However, a party may not use an anti-SLAPP special motion to strike to seek the dismissal of claims based on federal law. See Hilton, 599 F.3d at 901 (stating that "a federal court can only entertain anti-SLAPP special motions to strike in connection with state law claims"); accord Restaino v. Bah (In re Bah), 321 B.R. 41, 46 (B.A.P. 9th Cir. 2005) (holding that the anti-SLAPP statute does not apply to federal claims); Summit Media LLC v. City of L.A., 530 F. Supp. 2d 1084, 1094 (C.D. Cal. 2008) ("Several District Courts have determined that the Anti-SLAPP statute does not apply to federal question claims in federal court because such application would frustrate substantive federal rights."); Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, 634 F. Supp. 2d 1009, 1016 (N.D. Cal. 2007) (same); Bulletin Displays, LLC v. Regency Outdoor Adver., Inc., 448 F. Supp. 2d 1172, 1180 (C.D. Cal. 2006) (same);Globetrotter Software, Inc., 63 F. Supp. 2d at 1130 (same).
Decisions in this district are in accord. See Barker v. Koff, No. 2:09-cv-00001-GEB-JFM, 2009 WL 2914146, at *2 (E.D. Cal. Sept. 9, 2009) (unpublished) (denying defendant's special motion to strike to the extent it sought dismissal of the federal claims alleged against them); Smith v. Cal. Dep't of Correction, No. CIV-F-06-0368 AWI SMS, 2006 WL 3518257, at *1 (E.D. Cal. Dec. 6, 2006) (unpublished) ("Anti-SLAPP may not be used against federal Section 1983 claims.").
V. DISCUSSION
At the outset, the undersigned notes that plaintiffs' entire Amended Complaint is subject to dismissal on the grounds that plaintiffs have not differentiated among the thirteen named defendants in regards to those defendants' alleged conduct that gives rise to each defendant's purported liability in this case. Plaintiffs generally alleged all of their claims against all of the named defendants and over 1,000 "Doe" defendants, leaving each defendant to guess about its own allegedly unlawful conduct. Plaintiffs' failure in this regard violates the most basic pleading requirements of Federal Rule of Civil Procedure 8(a), and Rule 9(a) insofar as plaintiffs' fraud claim is concerned. However, the undersigned addresses below additional, fatal deficiencies in the Amended Complaint that justify dismissal with prejudice.
The undersigned also notes that some of the moving defendants have asserted that plaintiffs lack standing to bring this suit. This argument potentially has merit given that plaintiffs are not actually the borrowers who defaulted on the promissory note related to the subject property. However, in light of a lack of persuasive factual and legal bases for this argument asserted by the various defendants, the undersigned assumes without deciding that plaintiffs have standing to pursue this action.
A. The Boyer Defendants' Anti-SLAPP Motion
The Boyer Defendants argue that all of plaintiffs' claims, whether grounded in federal law or California state law, should be dismissed in response to their special motion to strike, filed pursuant to California's anti-SLAPP statute, California Code of Civil Procedure § 425.16. These defendants, which consist of a law firm and one of its attorneys, contend that all of the claims against them are subject to the anti-SLAPP statute because they arise from their efforts to pursue an unlawful detainer action against plaintiffs in state court. As explained below, the undersigned recommends that the Boyer Defendants' anti-SLAPP motion be granted as to plaintiffs' state law claims — claims four through twelve — but denied as to plaintiffs' claims brought under federal law — claims one, two, three, and thirteen.
Plaintiffs' first, second, third, and thirteenth claims for relief are premised on federal law. Plaintiffs' first through third claims allege violations of the FDCPA, and their thirteenth claim seeks declaratory relief. As the standards set forth above provide, these federal claims are not the proper subject of an anti-SLAPP motion. Accordingly, the Boyer Defendants' anti-SLAPP motion should be denied insofar as it is addressed to claims one, two, three, and thirteen.
Plaintiffs' state law claims consist of claims four through twelve. The state law claims asserted by plaintiffs against the Boyer Defendants are the proper subject of a special motion to strike. Those claims arise out of the Boyer Defendants' representation of their client, Deutsche Bank, in connection with the unlawful detainer action filed in the Nevada County Superior Court.
With respect to the first step of the anti-SLAPP analysis, the Boyer Defendants have demonstrated that plaintiffs' state law claims arise from protected activity, i.e., the acts of which plaintiffs complain were taken in furtherance of a right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue.See Cal. Code Civ. P. § 425.16(b)(1); see also Jarrow Formulas, Inc., 31 Cal. 4th at 733, 74 P.3d at 740. Such protected acts include the following: "(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law. . . ." Cal. Code Civ. P. § 425.16(e).
A defendant moving to strike a claim arising from a statement made before, or in connection with an issue under consideration by, a legally authorized official proceeding is not required to separately demonstrate that the statement concerned an issue of public significance. See Briggs v. Eden Council for Hope Opportunity, 19 Cal. 4th 1106, 1123, 969 P.2d 564, 575 (1999).
The allegations contained in the Amended Complaint and the judicially noticeable documents filed in this case indicate that the Boyer Defendants' conduct of which plaintiffs complain relates to the Boyer Defendants' legal representation of Deutsche Bank in an unlawful detainer action in state court. California courts have held that claims against an attorney arising out of that attorney's representation of his or her client are the proper subject of an anti-SLAPP special motion to strike. See Rusheen v. Cohen, 37 Cal. 4th 1048, 1056, 128 P.3d 713, 717-18 (2006) ("A cause of action 'arising from' defendant's litigation activity may appropriately be the subject of a section 425.16 motion to strike" (citation omitted).); Jarrow Formulas, Inc., 31 Cal. 4th at 733, 74 P.3d at 740 (holding that malicious prosecution claim arising from attorney's representation of client was subject to anti-SLAPP statute); see also Zamos v. Stroud, 32 Cal. 4th 958, 965, 87 P.3d 802, 806 (2004) (same);Feldman v. 1100 Park Lane Assocs., 160 Cal. App. 4th 1467, 1479-80, 74 Cal. Rptr. 3d 1, 10-12 (Ct. App. 2008) (holding that the filing of an unlawful detainer action and the posting of notices that are prerequisites to maintaining such an action are "indisputably" subject to anti-SLAPP protection) (citing Birkner v. Lam, 156 Cal. App. 4th 275, 282-83, 67 Cal. Rptr. 3d 190, 195-96 (Ct. App. 2007)); White v. Lieberman, 103 Cal. App. 4th 210, 221, 126 Cal. Rptr. 2d 608, 614-15 (Ct. App. 2002) (holding that a malicious prosecution claim against attorney arising from attorney's representation of clients was subject to anti-SLAPP statute); Dowling v. Zimmerman, 85 Cal. App. 4th 1400, 1418-20, 103 Cal. Rptr. 2d 174, 188-90 (Ct. App. 2001) (attorney's representation of clients in prior unlawful detainer action that gave rise to plaintiff's claims of defamation, misrepresentation, and intentional and negligent infliction of emotional distress against the attorney constituted protected activity). Accordingly, the Boyer Defendants have met the threshold requirement of their special motion to strike as to the state claims alleged against them.
Because the Boyer Defendants met their initial burden under California's anti-SLAPP framework, the burden shifts to plaintiffs to demonstrate a probability of prevailing on the merits, i.e., that their complaint is "both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." Kearny, 590 F.3d at 648. Plaintiffs do not directly address the anti-SLAPP motion in their written opposition.
The Boyer Defendants offer three arguments in support of their contention that plaintiffs are unable to demonstrate a probability of success. First, the Boyer Defendants argue that plaintiffs' claims are not specific as to any named defendants. As noted above, this argument is well-taken, but the undersigned addresses the Boyer Defendants' remaining arguments to determine whether dismissal of plaintiffs' claims should be with or without prejudice.
Second, the Boyer Defendants argue that plaintiffs' entire action is barred by the Rooker-Feldman doctrine as a collateral attack on a state court judgment, characterized as the unlawful detainer proceedings. This argument is unpersuasive because there is no evidence of an actual state court judgment that plaintiffs are attempting to collaterally attack.
"Under Rooker-Feldman, a federal district court does not have subject matter jurisdiction to hear a direct appeal from the final judgment of a state court." Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir. 2003). The Supreme Court has stated that theRooker-Feldman doctrine occupies "narrow ground," Skinner v. Switzer, 131 S. Ct. 1289, 1297 (2011), and has held that it is "confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments," Exxon Mobile Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). "[W]hen a losing plaintiff in state court brings a suit in federal district court asserting as legal wrongs the allegedly erroneous legal rulings of the state court and seeks to vacate or set aside the judgment of that court, the federal suit is a forbidden de facto appeal." Noel, 341 F.3d at 1156. "Once a federal plaintiff seeks to bring a forbidden de facto appeal . . ., that federal plaintiff may not seek to litigate an issue that is 'inextricably intertwined' with the state court judicial decision from which the forbidden de facto appeal is brought." Id. at 1158.
In Noel v. Hall, the Ninth Circuit Court of Appeals provided the following "general formulation" of the Rooker-Feldman doctrine:
If a federal plaintiff asserts as a legal wrong an allegedly erroneous decision by a state court, and seeks relief from a state court judgment based on that decision, Rooker-Feldman bars subject matter jurisdiction in federal district court. If, on the other hand, a federal plaintiff asserts as a legal wrong an allegedly illegal act or omission by an adverse party, Rooker-Feldman does not bar jurisdiction. If there is simultaneously pending federal and state court litigation between the two parties dealing with the same or related issues, the federal district court in some circumstances may abstain or stay proceedings; or if there has been state court litigation that has already gone to judgment, the federal suit may be claim-precluded under § 1738. But in neither of these circumstances does Rooker-Feldman bar jurisdiction.Noel, 341 F.3d at 1164.
As a fundamental matter, the Rooker-Feldman doctrine does not apply here because there is no evidence that plaintiffs are attempting to directly or indirectly appeal a judgment of the Nevada County Superior Court entered before plaintiffs commenced this lawsuit in federal court. The Supreme Court's most recent formulations of this narrow doctrine require that the appeal sought by the "state-court loser" be of a state-court judgment rendered before the district court proceedings commenced. See Exxon Mobile Corp., 544 U.S. at 284; accord Skinner, 131 S. Ct. at 1297. Here, plaintiffs' Amended Complaint and the Boyer Defendants' motion and request for judicial notice do not evidence a state court judgment that is the subject of any de facto appeal. The Boyer Defendants only submitted the complaint in the state court unlawful detainer action (Boyer Defs.' RFJN, Ex. G), and at the hearing counsel for the Boyer Defendants stated that he did not believe that a judgment had been entered in Deutsche Bank's favor in the unlawful detainer action. Accordingly, Rooker-Feldman does not apply.
To the extent that the Boyer Defendants contend that plaintiffs' claims here are "inextricably intertwined" with the underlying unlawful detainer action and thus barred by theRooker-Feldman doctrine, that contention is not persuasive. TheRooker-Feldman doctrine's "inextricably intertwined" rule does not apply when, as in this case, there has been no "de facto" appeal. See Noel, 341 F.3d at 1158; accord Manufactured Home Cmtys. Inc. v. City of San Jose, 420 F.3d 1022, 1030 (9th Cir. 2005); Maldanado v. Harris, 370 F.3d 945, 950 (9th Cir. 2004). On the record presented here, plaintiffs' claims do not constitute a de facto appeal. Accordingly, a condition precedent to application of the "inextricably intertwined" rule is absent.
Third, the Boyer Defendants argue that plaintiffs have failed to state cognizable claims as a matter of law under the Rule 12(b)(6) standard. The undersigned addresses the Boyer Defendants' arguments in this regard below, along with the other defendants' similar arguments. In short, the undersigned concludes that all of the claims asserted against the Boyer Defendants should be dismissed with prejudice, and claims four through twelve should be specially stricken pursuant to the anti-SLAPP statute.
B. The Defendants' Motions To Dismiss For Failure to State A Claim
1. Plaintiffs' FDCPA Claims (Claims 1-3)
Plaintiffs' first three claims allege violations of the FDCPA. Plaintiffs allege violations of 15 U.S.C. §§ 1692f, 1692e(2)(A), and 1692e(5) in claims one, two, and three, respectively. (See Am. Compl. ¶¶ 47-61.) As noted above, plaintiffs' claims almost entirely fail to delineate which defendants are alleged to have committed which acts in violation of the FDCPA. Although the various defendants offer several theories in support of dismissal, all of the moving defendants argue that dismissal with prejudice is warranted because they are not "debt collectors" within the meaning of the FDCPA and that even if they were to be considered debt collectors, the acts of foreclosing on a property pursuant to a deed of trust is not considered "debt collection" under the FDCPA.
Also underlying plaintiffs' FDCPA claims is the thoroughly rejected argument that only the holder of the original note can proceed with a non-judicial foreclosure. (See Am. Compl. ¶¶ 55, 59.) Plaintiffs' claims are subject to dismissal to the extent they rely on the "original holder" or "holder in due course" theories. California law "does not require possession of the note as a precondition to non-judicial foreclosure under a Deed of Trust." Alicea v. GE Money Bank, No. C 09-00091 SBA, 2009 WL 2136969, at *2 (N.D. Cal. July 16, 2009) (unpublished); see also Bennett v. One West Bank, No. 10cv1884-BTM (RBB), 2011 WL 2493699, at *5 (S.D. Cal. June 23, 2011) (unpublished) ("Plaintiff contends that foreclosure would be invalid because Defendants do not possess the original note. This holder in due course argument has been consistently rejected by the courts. It is well-settled under California law that non-judicial foreclosures can be commenced without producing the original promissory note.") (citations omitted); accord Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1035 (N.D. Cal. 2010); McCain v. Bank of Am., NA, No. CIV 10-1266 JAM KJM PS, 2010 WL 4323044, at *1 (E.D. Cal. Oct. 26, 2010) (unpublished) (collecting cases); De Valle v. Mortgage Bank of Cal., No. CV-F-09-1316 OWW/DLB, 2010 WL 1813505, at *13 (E.D. Cal. May 5, 2010) (unpublished) (collecting cases); Nool v. HomeQ Servicing, 653 F. Supp. 2d 1047, 1053 (E.D. Cal. 2009).
"The Fair Debt Collection Practices Act prohibits 'debt collector[s]' from making false or misleading representations and from engaging in various abusive and unfair practices." Heintz v. Jenkins, 541 U.S. 291, 292 (1995) (second modification in original). In order to be liable under the FDCPA, a defendant must fall within the statutory definition of "debt collector" and have been engaged in the collection of a debt. See Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1198-99 (C.D. Cal. 2008). The FDCPA defines a "debt collector" generally as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). In addition, district courts in this Circuit have persuasively held that the act of foreclosing on a property pursuant to a deed of trust is not the collection of a debt within the meaning of the FDCPA. Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002) ("[T]he activity of foreclosing on the property pursuant to a deed of trust is not the collection of a debt within the meaning of the FDCPA."); accord Lipscomb v. Mortgage Elec. Registration Sys., Inc., No. 1:1 1-CV-497 AWI JLT, 2011 WL 3361132, at *8 (E.D. Cal. Aug. 3, 2011) (unpublished) (collecting cases); Arvizu v. GMAC Mortgage, LLC, No. 1:10-cv-00990-OWW-JLT, 2011 WL 1087157, at *3-4 (E.D. Cal. Mar. 23, 2011) (unpublished) (rejecting claims that foreclosing on the plaintiff's property and filing an unlawful detainer action supported cognizable claims under the FDCPA).
In Hulse, the district court reasoned: "Foreclosing on a trust deed is distinct from the collection of the obligation to pay money. The FDCPA is intended to curtail objectionable acts occurring in the process of collecting funds from a debtor. But, foreclosing on a trust deed is an entirely different path. Payment of funds is not the object of the foreclosure action. Rather, the lender is foreclosing its interest in the property."Hulse, 195 F. Supp. 2d at 1204.
The undersigned concludes that even assuming that the Boyer Defendants, Citi, the Fidelity Defendants, and the Deutsche Bank Defendants are considered "debt collectors" under the FDCPA, which is unsupported, these defendants participated in the foreclosure of the subject property pursuant to the Deed of Trust and were not engaged in the collection of a debt under the FDCPA. Additionally, the unlawful detainer action filed in Nevada County Superior Court simply sought possession of the already re-sold property, not the collection of any debt. Accordingly, the undersigned recommends that plaintiffs' first, second, and third claims for relief be dismissed. Based on prevailing case law, plaintiffs will be unable to amend their Amended Complaint to state a claim under the FDCPA. As a result, the undersigned recommends that plaintiffs' FDCPA claims be dismissed with prejudice.
2. Plaintiffs' Negligence Claim (Claim 4)
Plaintiffs allege a claim of negligence against all defendants. (Am. Compl. ¶¶ 62-66.) The only specific factual allegation included in this claim is that "DEUTSCHE and BOYER have negligently attempted to compel Plaintiff's [sic] to abandon property they rightfully own. Actions taken by Defendants, (foreclosure, and threatened unlawful detainer) are void." (Am. Compl. ¶ 63.)
Generally, "[t]o prevail on [a] negligence claim, plaintiffs must show that [the defendant] owed them a legal duty, that it breached the duty, and that the breach was a proximate or legal cause of their injuries." Merrill v. Navegar, Inc., 26 Cal. 4th 465, 477, 28 P.3d 116, 123 (2001). "'The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for the court to decide.'" Castaneda v. Saxon Mortgage Servs., Inc., 687 F. Supp. 2d 1191, 1197 (E.D. Cal. 2009) (quoting Vasquez v. Residential Invs., Inc., 118 Cal. App. 4th 269, 278, 12 Cal. Rptr. 3d 846 (Ct. App. 2004)).
Here, plaintiffs have not alleged any facts establishing that any of the defendants in this case owed them a legal duty under California law or that those defendants breached such a legal duty. Plaintiffs have offered no authority, and the undersigned has found none, supporting the contention that an attorney or law firm pursuing an unlawful detainer action following a foreclosure and trustee's sale owes a legal duty to purported assignees of the original defaulting borrowers. Additionally, "[a]bsent 'special circumstances' a loan transaction 'is at arms-length and there is no fiduciary relationship between the borrower and lender.'" Rangel v. DHI Mortgage Co., No. CV F 09-1035 LJO GSA, 2009 WL 2190210, at *3 (E.D. Cal. July 21, 2009) (unpublished) (citing Oaks Mgmt. Corp. v. Superior Court, 145 Cal. App. 4th 453, 466, 51 Cal. Rptr. 3d 561 (Ct. App. 2006)). And "as a general rule, a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money."Nymark v. Heart Fed. Sav. Loan Ass'n, 231 Cal. App. 3d 1089, 283 Cal. Rptr. 53, 56 (Ct. App. 1991); see also Wagner v. Benson, 101 Cal. App. 3d 27, 35, 161 Cal. Rptr. 516 (Ct. App. 1980) ("Liability to a borrower for negligence arises only when the lender 'actively participates' in the financed enterprise 'beyond the domain of the usual money lender'" (citation omitted).). Similarly, a loan servicer and a trustee under a deed of trust owe no legal duty to a borrower in an arms-length transaction that would support a negligence claim. See Wong v. Am. Servicing Co., No. 2:09-CV-01506 FCD/DAD, 2009 WL 5113516, at *5-6 (E.D. Cal. Dec. 18, 2009) (unpublished). Plaintiffs' allegations support that the Chagnon's and some of the defendants were engaged in, at most, an arms-length financial transaction. Moreover, plaintiffs cannot substantiate any stronger legal duty running from any defendant to plaintiffs where plaintiffs were not even the original borrowers. The undersigned finds no basis for a legal duty as between any of the defendants and plaintiffs and, accordingly, recommends that the negligence claim be dismissed with prejudice.
3. Plaintiffs' Slander of Title Claim (Claim 5)
Plaintiffs' fifth claim is for slander of title, and it is specific to plaintiff Willardson. (See Am. Compl. ¶¶ 68-69.) In substance, plaintiffs only allege that "Defendants filing of TRUSTEE'S DEED UPON SALE which is a void instrument and conveyance has caused a 'cloud on the title' of the interest of Plaintiff Willardson." (Id. ¶ 68.)
As an initial matter, only defendants Fidelity National Title Company and Power Default Services, Inc. could be liable for the tort alleged because Power Default Services, Inc. was the trustee listed on the and Fidelity National Title Company recorded the Trustee's Deed Upon Sale. (See Boyer Defs.' RFJN, Ex. F.) Accordingly, the undersigned recommends that this claim be dismissed with prejudice as to all other defendants.
Turning to the merits of the claim, "[s]lander of title 'occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes pecuniary loss.'" Kennedy v. Lehman Bros. Bank, FSB, No. 10-CV-1516 JLS (AJB), 2010 WL 4537831, at *3 (S.D. Cal. Nov. 2, 2010) (unpublished) (quoting Truck Ins. Exch. v. Bennett, 53 Cal. App. 4th 75, 84, 61 Cal. Rptr. 2d 497, 503 (Ct. App. 1997). "The elements of the tort are (1) publication, (2) absence of justification, (3) falsity and (4) direct pecuniary loss." Truck Ins. Exch., 53 Cal. App. 4th at 84, 61 Cal. Rptr. at 503 (citation and quotation marks omitted).
Here, defendants Fidelity National Title Company and Power Default Services, Inc. argue that plaintiffs' slander of title claim fails as a matter of law because the recording of the Trustee's Deed Upon Sale in connection with the non-judicial foreclosure was absolutely privileged under California Civil Code §§ 47(b) and 2924(d). California Civil Code §§ 2924 et seq. govern non-judicial foreclosure in California, and section 2924(d) provides:
(d) All of the following shall constitute privileged communications pursuant to Section 47:
(1) The mailing, publication, and delivery of notices as required by this section.
(2) Performance of the procedures set forth in this article.
(3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure.
There is a split of authority regarding whether, as suggested by the defendants here, the absolute privilege in California Civil Code § 47(b) applies to the recording of documents required under California's foreclosure laws, or whether the qualified privilege found in California Civil Code § 47(c) applies. See Salondaka v. Countrywide Home Loans, Inc., No. 2:09-cv-01550-JAM-JEM, 2010 WL 529361, at *4 (E.D. Cal. Jan. 28, 2010) (unpublished).
However, assuming only the qualified privilege in California Civil Code § 47(c) applies, plaintiffs' slander of title claim fails because plaintiffs have not alleged, and cannot reasonably allege, actual malice on the part of Fidelity National Title Company or Power Default Services, Inc. Section 47(c)(1) provides in pertinent part that "[a] privileged publication or broadcast is one made . . . [i]n a communication, without malice, to a person interested therein, (1) by one who is also interested. . . ." Cal. Civ. Code § 47(c)(1). Courts have held that "section 2924 deems the statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, to be privileged communications under the qualified common-interest privilege of section 47, subdivision (c)(1)." See Kalchon v. Markowitz, 168 Cal. App. 4th 316, 333, 85 Cal. Rptr. 3d 532, 545 (Ct. App. 2008); accord Consumer Solutions REO, LLC v. Hillery, 658 F. Supp. 2d 1002, 1017-19 (N.D. Cal. 2009). Here, the recording of the Trustee's Deed Upon Sale is subject to a qualified privileged, and plaintiffs have not alleged actual malice on the part of the recording parties. Because nothing in the Amended Complaint or the record suggests that plaintiffs could plead facts in a further amended complaint substantiating actual malice in the recording of the Trustee's Deed Upon Sale, the undersigned recommends that plaintiffs' slander of title claim be dismissed with prejudice.
4. Plaintiffs' Claim for Negligent Hiring, Supervision, Training, or Retention (Claim 7)
In addition to their ordinary negligence claim, plaintiffs also allege a claim for "Negligent or Wanton Hiring, Supervision, Training or Retention." (Am. Compl. ¶¶ 75-77.) The only somewhat specific allegation supporting this claim is that "Plaintiffs believe defendants negligently or wantonly hired, trained, supervised and retained their employees in an ongoing scheme to defraud Plaintiffs and others of their real property through the non-judicial foreclosure process in California." (Id. ¶ 76.)
"California case law recognizes the theory that an employer can be liable to a third person for negligently hiring, supervising, or retaining an unfit employee." Doe v. Capital Cities, 50 Cal. App. 4th 1038, 1054, 58 Cal. Rptr. 2d 122, 132 (Ct. App. 1996). "Liability for negligent hiring . . . is based upon the reasoning that if an enterprise hires individuals with characteristics which might pose a danger to customers or other employees, the enterprise should bear the loss caused by the wrongdoing of its incompetent or unfit employees." Phillips v. TLC Plumbing, Inc., 172 Cal. App. 4th 1133, 1139, 91 Cal. Rptr. 3d 864, 868 (Ct. App. 2009) (citation and quotation marks omitted, modification in original). "Negligence liability will be imposed on an employer if it 'knew or should have known that hiring the employee created a particular risk or hazard and that particular harm materializes.'" Id. (citing Capital Cities, 50 Cal. App. 4th at 1054, 58 Cal. Rptr. 2d 122)). "Liability for negligent supervision and/or retention of an employee is one of direct liability for negligence, not vicarious liability." Delfino v. Agilent Tech., Inc., 145 Cal. App. 4th 790, 815, 52 Cal. Rptr. 3d 376, 397 (Ct. App. 2006).
Plaintiffs' generalized allegations fall far short of establishing the elements stated above. Not only do plaintiffs' allegations not establish negligence generally, as discussed above, the allegations specific to the claim of negligent hiring, supervision, training or retention are too vague to adequately plead any tort. Plaintiffs neither identify specific defendants that are liable for this tort nor specific employees that were negligently hired, supervised, trained, or retained. Indeed, plaintiffs have not even put defendants on notice of the nature of the negligence alleged, i.e., whether the negligence occurred in the context of hiring, supervision, training, or retention. Nothing in the Amended Complaint suggests that plaintiffs could successfully amend their complaint to state a cognizable claim and, accordingly, the undersigned recommends that plaintiffs' seventh claim for relief be dismissed with prejudice.
5. Plaintiffs' Wrongful Foreclosure Claim (Claim 9)
Plaintiffs' ninth claim alleges wrongful foreclosure. (Am. Compl. ¶¶ 84-87.) Plaintiffs allege that all defendants completed a foreclosure proceeding that was "ultra vires" and in violation of law. The undersigned recommends that plaintiffs' wrongful foreclosure claim be dismissed because plaintiffs have not made an unconditional tender of the entire indebtedness.
"Under California law, in an action to set aside a trustee's sale, a plaintiff must demonstrate that he has made a valid and viable tender [offer] of payment of the indebtedness." Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1183-84 (N.D. Cal. 2009) (citations and quotation marks omitted); see also Alcaraz v. Wachovia Mortgage FSB, 592 F. Supp. 2d 1296, 1304 (E.D. Cal. 2009) ("'A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust.'") (citing Karlsen v. Am. Sav. Loan Ass'n, 15 Cal. App. 3d 112, 92 Cal. Rptr. 851 (Ct. App. 1971)). A tender must be one of full performance and must also be unconditional. Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 580, 205 Cal. Rptr. 15, 18 (Ct. App. 1984). The California Court of Appeal has held that the tender rule applies in an action to set aside a trustee's sale for irregularities in the sale notice or procedure and has stated that "[t]he rationale behind the rule is that if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs." FPCI REHAB 01 v. E G Invs., Ltd., 207 Cal. App. 3d 1018, 1021, 255 Cal. Rptr. 157, 160 (Ct. App. 1989). Furthermore, a party must allege full tender "in order to maintain any cause of action for irregularity in the sale procedure." Abdallah v. United Savs. Bank, 43 Cal. App. 4th 1101, 1109, 51 Cal. Rptr. 2d 286, 292 (Ct. App. 1996), cert. denied 519 U.S. 1081 (1997); see also Arnolds Mgmt. Corp., 158 Cal. App. 3d at 579, 205 Cal. Rptr. at 18 ("A cause of action 'implicitly integrated' with the irregular sale fails unless the trustor can allege and establish a valid tender" (citation omitted)). This rule also generally applies to a claim to cancel a voidable sale under a deed of trust. See Karlsen, 15 Cal. App. 3d at 117, 92 Cal. Rptr. at 854 ("A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust.").
Here, plaintiffs rely on Exhibit H to their original Complaint, which consists of a letter dated June 25, 2010, from plaintiff McFadden to Fidelity National Title Company and Power Default Services, Inc., to substantiate their claim that they made an appropriate tender of the indebtedness under the tender rule. However, a review of this letter reveals two fatal flaws in regards to the tender rule. First, the letter is ambiguous as to whether plaintiffs were willing to pay the entire indebtedness, or simply the amount in arrears on the loan. The letter states: "As assignee, I am prepared to bring this account to complete satisfaction upon receipt of your demand for any interest you claim in these instruments." Second, even assuming that the letter conveyed a tender of the entire indebtedness, the tender was conditional. The June 25, 2010 letter conditioned any suggested payment by McFadden on compliance with a request for production of documents attached to the letter. Additionally, the letter and the attached request for production of documents convey an underlying and legally unsound contention, addressed above, that Fidelity National Title Company or Power Default Services, Inc. would have to produce the "original note" as a condition to the payment of the indebtedness. Because the tender here was conditional, it fails under the tender rule. Accordingly, the undersigned recommends that plaintiffs' wrongful foreclosure claim be dismissed with prejudice.
Although the Amended Complaint does not expressly allege an unconditional tender of the Chagnons' entire indebtedness, plaintiffs claims that they made such a tender at the hearing and pointed to the June 25, 2010 letter.
6. Plaintiffs' Claim for Unjust Enrichment (Claim 10)
Plaintiffs allege a claim for unjust enrichment consisting of the allegation that "each defendant" has been unjustly enriched by "avoiding payment of recording fees, insurance claim proceeds, sale and conversion of the Original Note into a Mortgage Backed Security, and now without the ability to reconvey the equity in the property." (Am. Compl. ¶ 89.)
As an initial matter, there is a split of authority in regards to whether a claim for unjust enrichment is a separate, stand-alone claim or simply a remedy. See Davenport v. Litton Loan Servicing, L.P., 725 F. Supp. 2d 862, 885 (N.D. Cal. 2010) ("Courts in this state and district diverge on whether unjust enrichment functions as an independent claim or is instead an effect that must be tethered to a distinct legal theory to warrant relief. Some courts have read a plaintiff's 'claim' for unjust enrichment as a claim for relief."). As summarized inDavenport:
Under both views, the effect of unjust enrichment is remedied with some form of restitution. A plaintiff advances a basis for obtaining restitution if he or she demonstrates defendant's receipt and unjust retention of a benefit. The fact that one person benefits another is not, by itself, sufficient to require restitution. Instead, [the] person receiving the benefit is required to make restitution only if the circumstances are such that, as between the two individuals, it is unjust for the person to retain it.Id. (citations and quotation marks omitted).
As an initial matter, even assuming that any of the defendants were unjustly enriched, such unjust enrichment was not at plaintiffs' expense; if anything, any unjust enrichment was at the Chagnons' expense. In any event, plaintiffs' unjust enrichment claim is fatally unintelligible. It is not clear what acts plaintiffs allege gave rise to any unjust enrichment. Moreover, it is not clear that how any defendant was unjustly enriched by "avoiding payment of recording fees" — indeed, some of the defendants ostensibly paid those fees. Furthermore, it is unclear what insurance claim proceeds, if any, were not paid by defendants. This claim, which is speculative at best, should be dismissed with prejudice.
7. Plaintiffs' Fraudulent Misrepresentation Claim (Claim 12)
Plaintiffs' twelfth claim for relief indiscriminately alleges fraud committed by all defendants. (See Am. Compl. ¶¶ 96-97.) Plaintiffs' fraud claim, which seeks to render the foreclosure void, is premised on two fatally flawed contentions. First, plaintiffs' contend that defendants lacked proper standing to foreclose and thus foreclosed on the deed of trust without any beneficial interest in the property. Second, plaintiffs contend that defendants failed to follow mandatory steps under California's foreclosure laws prior to carrying out the foreclosure.
The elements of an intentional misrepresentation claim under California law are: "(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage." Conroy v. Regents of Univ. of Cal., 45 Cal. 4th 1244, 1255, 203 P.3d 1127, 1135 (2009); accord Lazar v. Superior Court, 12 Cal. 4th 631, 638, 909 P.2d 981, 984 (1996). In addition, as stated above, a claim for fraud must be pled with particularity, see Fed.R.Civ.P. 9(b), including allegations regarding the time, place, and specific content of the false representations, and the identities of the parties to the misrepresentation. See Swartz, 476 F.3d at 764; see also Kearns, 567 F.3d at 1124 ("Averments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged.").
The undersigned recommends that plaintiffs' fraud claim be dismissed because it is not pled with the requisite particularity. Additionally, the undersigned notes that plaintiffs have not alleged any facts regarding how plaintiffs actually relied on any misrepresentations by any of the defendants. (See Am. Compl. ¶ 97i (alleging that "other entities such as the Nevada County Tax Assessor and Recorder have relied on information which falsely represents defendants as the alleged owners of Plaintiff's [sic] property").) Thus, plaintiffs' claim of fraud does not adequately plead facts regarding the critical element of reliance. Furthermore, the undesigned recommends that plaintiffs' fraud claim be dismissed with prejudice because, as stated above, it is based on two meritless theories. The theory that parties foreclosing on a property pursuant to a deed of trust must possess the original note is not supported by the law applied in this Circuit. See, e.g., Bennett, 2011 WL 2493699, at *5. Second, to the extent that plaintiffs' claim of fraud is based on irregularities in the foreclosure process, the claim lacks merit because, as addressed above, plaintiffs did not unconditionally tender payment of the entire indebtedness. For these reasons, the undersigned recommends that plaintiffs fraud claim be dismissed with prejudice.
8. Plaintiffs' "Claims" of Respondeat Superior Liability, Joint Venture Liability, and Civil Conspiracy (Claims 6, 8, and 11)
Plaintiffs allege "claims" for respondeat superior liability, joint venture liability, and civil conspiracy. (See Am. Compl. ¶¶ 70-74, 78-83, 92-95.) These claims are alleged in conclusory terms, and largely refer to one another. (See, e.g., Am. Compl. ¶ 72 ("All of the above named parties who are defendants in this action served at the request of the Trustee as a nominee, alter-ego of the Trustee and/or as part of a joint venture with the Trustee. These parties are alleged . . . to be engaged in a civil conspiracy to engage in conduct which is unlawful for the purpose of unjustly enriching the members or participants in this joint venture.").) All of these claims allege, in essence, a civil conspiracy.
The undersigned recommends that these "claims" be dismissed with prejudice because none of them is actually an independent claim for relief; instead, they are doctrines through which liability may be imposed on others on the basis of an agency relationship or common plan to commit some underlying actionable conduct. See Davenport, 725 F. Supp. 2d at 881 ("A conspiracy is not an independent cause of action, but is instead 'a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.'") (quoting Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510-11, 869 P.2d 454 (1994)); Montoya v. Countrywide Bank, FSB, 2009 WL 1813973, at *12 (N.D. Cal. June 25, 2009) (unpublished) ("Civil conspiracy, aiding and abetting, unlawful joint venture and injunctive relief are not independent claims."); Lisa M. v. Henry Mayo Newhall Memorial Hosp., 12 Cal. 4th 291, 296, 907 P.2d 358, 360 (1995) ("The rule of respondeat superior is familiar and simply stated: an employer is vicariously liable for the torts of its employees committed within the scope of the employment."). Because none of plaintiffs' other claims has merit, plaintiffs' claims premised on the respondeat superior, joint venture, and civil conspiracy theories or doctrines also fail. Accordingly, the undersigned recommends that plaintiffs' sixth, eighth, and eleventh claims be dismissed with prejudice.
9. Plaintiffs' Declaratory Relief Claim (Claim 13)
Finally, plaintiffs allege a claim for declaratory relief that is based on their underlying claims and theories, all of which the undersigned has recommended be dismissed. (See Am. Compl. ¶¶ 98-107.) The undersigned recommends that this claim be dismissed with prejudice as well.
In seeking declaratory relief, a plaintiff must satisfy a two part test under the Declaratory Judgment Act, 28 U.S.C. § 2201, demonstrating that a declaratory judgment is appropriate. See Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). The court must first determine if an actual case or controversy exists; then, the court must decide whether to exercise its jurisdiction to grant the relief requested. Id.
For declaratory relief, there must be a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory judgment. Maryland Cas. Co. v. Pac. Coal Oil Co., 312 U.S. 270, 273 (1941). Unless an actual controversy exists, the district court is without power to grant declaratory relief.Garcia v. Brownell, 236 F.2d 356, 357-58 (9th Cir. 1956). The mere possibility, even probability, that a person may in the future be adversely affected by official acts not yet threatened does not create an "actual controversy." Id. Further, declaratory relief should be denied if it will "neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties." United States v. Washington, 759 F.2d 1353, 1357 (9th Cir. 1985).
Here, the declaratory relief that plaintiffs seek is commensurate with the relief sought through their other claims for relief. Thus, plaintiffs' declaratory relief claim is duplicative and unnecessary. See Permpoon v. Wells Fargo Bank Nat. Ass'n, No. 09-CV-01140-H (BLM), 2009 WL 3214321, at *5 (S.D. Cal. Sep. 29, 2009) (unpublished); accord Karimi v. GMAC Mortgage, No. 11-CV-00926-LHK, 2011 WL 3360017, at *5 (N.D. Cal. Aug. 2, 2011) (unpublished). In addition, because the contentions underlying plaintiffs' declaratory relief request are without basis in fact or law, they cannot establish an actual present controversy that justifies this remedy. Accordingly, there is no real, immediate controversy to adjudicate, and plaintiffs' claim for declaratory relief should be dismissed.
VI. CONCLUSION
In light of the foregoing, IT IS HEREBY ORDERED:
1. The Fidelity Defendants' evidentiary objection (Dkt. No. 22 at 5-7) to the "Foreclosure Investigation Report," which was prepared by Charles J. Horner and filed by plaintiffs with their written opposition, is sustained.
2. The Boyer Defendants' request for judicial notice (Dkt. No. 14) is granted.
3. The Deutsche Bank Defendants' request for judicial notice (Dkt. No. 18, Doc. No. 18-1) is granted.
It is FURTHER RECOMMENDED that:
1. The Boyer Defendants' special motion to strike (Dkt. No. 13) brought pursuant to California's anti-SLAPP statute be granted in part and denied in part. The anti-SLAPP motion should only be granted as to plaintiffs' claims for relief based on California law, which are numbered four through twelve. The undersigned further recommends that the Boyer Defendants' motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) be granted as to the remaining, federal claims numbered one, two, three, and thirteen. All of plaintiffs' claims against the Boyer Defendants should be dismissed with prejudice, and the Boyer Defendants should be dismissed from this action.
2. Citi's motion to dismiss (Dkt. No. 15) brought pursuant to Federal Rule of Civil Procedure 12(b)(6) be granted, that all of plaintiffs' claims against Citi be dismissed with prejudice, and that Citi be dismissed from this action.
3. The Fidelity Defendants' motion to dismiss (Dkt. No. 16) brought pursuant to Federal Rule of Civil Procedure 12(b)(6) be granted, that all of plaintiffs' claims against the Fidelity Defendants be dismissed with prejudice, and that the Fidelity Defendants be dismissed from this action.
4. The Deutsche Bank Defendants' motion to dismiss (Dkt. No. 18) brought pursuant to Federal Rule of Civil Procedure 12(b)(6) be granted, that all of plaintiffs' claims against the Deutsche Bank Defendants be dismissed with prejudice, and that the Deutsche Bank Defendants be dismissed from this action.
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Id.; see also E. Dist. Local Rule 304(b). Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any response to the objections shall be filed with the court and served on all parties within fourteen days after service of the objections. E. Dist. Local Rule 304(d). Failure to file objections within the specified time may waive the right to appeal the District Court's order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991).
IT IS SO ORDERED AND RECOMMENDED.
DATED: August 15, 2011