The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge
ORDER: 1) GRANTING MOTION TO DISMISS (Doc. No. 3) and 2) DENYING MOTION FOR PRELIMINARY INJUNCTION (Doc. No. 9)
On January 5, 2009, Plaintiff Jeffrey Allen Pittman*fn1 ("Plaintiff") initiated an action in San Diego Superior Court, North County Division, alleging violations of California Commercial Code § 3301, California Civil Code §§ 2924, 1708, and 1788, et seq. ("Rosenthal Act"), and California Business and Professions Code § 17200 (Unfair Competition Law). (Doc. No. 1, Exh. A ("Compl.") at 2.) On February 10, 2009, Defendant Barclays Capital Real Estate Inc. d/b/a Homeq Servicing ("HomEq"), removed the case to federal court. (Doc. No. 1.)
Pending before the court are two motions: 1) HomEq's motion to dismiss the Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure (Doc. No. 3, "MTD"); and 2) Plaintiff's motion for a preliminary injunction to enjoin any foreclosure sale of his property (Doc. No. 9, "MPI"). Each party opposes the motion filed by the other. Pursuant to Civ.L.R. 7.1(d), the matters were taken under submission by the court without oral argument on April 17, 2009. For the reasons set forth below, the court GRANTS HomEq's motion to dismiss and DENIES Plaintiff's motion for a preliminary injunction.
On November 18, 2005, Plaintiff obtained a home mortgage loan from lender HomeLoanAdvisors.Com with which he purchased the subject property. (Compl. ¶ 18.) Plaintiff's promise to pay the Adjustable Rate Note was secured by a Deed of Trust on the property. (Compl. ¶ 55, Exh. A; MTD, Exh. 3.) Plaintiff later defaulted on the loan, leading to the initiation of foreclosure proceedings. (Compl. ¶¶ 28, 47, 49, 84, Exhs. C and E.) During a status conference before the court on February 27, 2009, HomEq represented that no foreclosure sale would take place until Plaintiff's motion for preliminary injunction was decided by the court.
In his first cause of action, Plaintiff argues HomEq does not have the authority to enforce the Note through foreclosure proceedings and requests declaratory and injunctive relief. Next, Plaintiff alleges HomEq committed a "tort-in-se" by breaching a statutory duty allegedly imposed by Cal. Civil Code § 2923.6(a) when it refused to accept his loan modification demand. Plaintiff claims this conduct also violated Cal. Civ. Code § 1708 and California's Unfair Competition Law (UCL), Cal. Bus. Prof. Code § 17200 et seq. Plaintiff asserts his fifth cause of action under the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788.17. Plaintiff seeks injunctive relief, damages, attorneys' fees and costs, and rescission.
A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the motion, the court must construe the pleadings in the light most favorable to the plaintiff, accepting as true all material allegations in the complaint and any reasonable inferences drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). While Rule 12(b)(6) dismissal is proper only in "extraordinary" cases, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level...." U.S. v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981); Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) (allegations must provide "plausible grounds to infer" that plaintiff is entitled to relief). The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In testing the complaint's legal adequacy, the court may consider material properly submitted as part of the complaint or subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). Furthermore, under the "incorporation by reference" doctrine, the court may consider 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." Janas v. McCracken (In re Silicon Graphics Inc. Sec. Litig.), 183 F.3d 970, 986 (9th Cir. 1999) (internal quotation marks omitted).*fn2
1. Lack of Standing to Enforce the Note
In his first cause of action, Plaintiff argue HomEq lacks standing to proceed to foreclosure because it has no enforceable rights in the Note. (Compl. ¶ 71.) In particular, Plaintiff alleges HomEq is absent from the Note's chain of title and has not otherwise shown it is a "holder" or "nonholder in possession" of the instrument as required by Cal. Comm. Code § 3301. Because HomEq arguably lacks standing to foreclose, Plaintiff contends any actions taken under the statutes governing non-judicial foreclosures, Cal. Civ. Code § 2924 et seq., were unlawful. (Compl. ¶ 70.)
Plaintiff's contentions are, in fact, correct, but they actually work in HomEq's favor. As Plaintiff notes, HomEq is neither the beneficiary nor the trustee. HomEq is merely the loan servicer and has no beneficial interest in the Note. However, at no point in any of his submissions does Plaintiff allege that HomEq, on its own behalf or as an agent to purported beneficiary Deutsche Bank, has taken any action whatsoever to effect foreclosure on the property. Rather, only foreclosure trustee Old Republic Default Management Services ("Old Republic") has taken such action; Old Republic recorded both the Notice of Default and Notice of Trustee's Sale. (Compl., Exhs. C, E.) While Plaintiff is right that HomEq does not have any enforceable rights in the Note, Plaintiff has failed to show HomEq has made any attempt to enforce the obligation. Plaintiff's lack of standing claim is properly brought against Deutsche Bank and Old Republic and, based on the record before the court, fails to state a claim against HomEq.
As to the chain of title, HomEq contends Plaintiff, in his capacity as principal of the original beneficiary, HomeLoanAdvisors.Com, transferred an interest in the Deed of Trust and the Note to New Century Mortgage Corporation by Allonge. (Doc. No. 16 at 2, Exh. D.) The Allonge is undated and it appears neither it nor any assignment to New Century was never recorded. Thereafter, New Century assigned its interest to Deutsche Bank National Trust Company ("Deutsche Bank").*fn3 (MTD, Exh. 3.) Plaintiff argues the Allonge was ineffective as an endorsement to New Century, and thus, it is unclear at this point who, including Plaintiff's company, holds the right to enforce the Note.*fn4 (Doc. No. 18 at 2.) Regardless of whether Deutsche Bank is properly ...