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Mamerto v. Deutsche Bank National Amended Complaint Trust Co.

June 4, 2009


The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court


On March 30, 2009, Defendant Deutsche Bank National Trust Company, as trustee for the registered holders of Argent Securities, Inc. ("Deutsche") filed a motion to dismiss Plaintiff Copernico Mamerto's ("Mamerto") fourth amended complaint and a request for judicial notice. (Doc. No. 58.) On May 26, 2009 Plaintiff filed a response in opposition. (Doc. No. 59.) Deutsche filed a reply on May 29, 2009. (Doc. No. 60.) The Court determines this matter is appropriate for resolution without oral argument and submits it on the papers pursuant to Local Rule 7.1(d)(1).

For the reasons below, the Court grants Defendant Deutsche's motion to dismiss for failure to state a claim.


Plaintiff's fourth amended complaint ("FAC") arises from foreclosure proceedings on his home. In the FAC, Plaintiff alleges causes of action for (1) wrongful foreclosure; (2) declaratory judgment; (3) injunctive relief; (4) statutory damages under various federal and state statutes; (5) fraud; (6) cancellation of instruments; and (7) quiet title. In addition, Plaintiff alleges in his complaint that he negotiated in his native language of Tagalog and was never delivered a translation of the contract or agreement in the language in which the contract or agreement was negotiated in violation of California Civil Code §1632(b) (FAC ¶ 14.)

Plaintiff is the owner of real property located at 8485 Niguel Vista Place, San Diego, California (the "Property"). (FAC ¶ 30.) On or about February 15, 2006, Plaintiff allegedly entered into a consumer credit transaction with the lender Argent Mortgage Company, LLC, which loan was originally payable to Argent or its assigned service AMC. (Id. ¶ 31.) Subsequently, the servicing of the loan was allegedly assigned to Citibank Residential Lending and Specialized Loan Servicing, LLC. (Id. ¶ 31.) Plaintiff alleges that Argent Mortgage Company, LLC (now defunct) was the original lender who transferred its interest to Defendant Deutsche as trustee for Argent Mortgage Securities, Inc., asset backed certificates series 2006-W4 (c/o Citi Residential Lending Inc., as attorney in fact). (Id. ¶27.) According to Plaintiff, the material terms of the loan, including the interest rate, annual percentage rate, and closing costs were misrepresented and were greater than the original good faith estimate of closing costs given to Plaintiff and that these discrepancies were never explained. (Id. ¶ 34.) Plaintiff alleges that he began making payments to the Trustee, but believes that the mortgage payments were misapplied by the trustee or loan servicer and when questioned was never given a satisfactory accounting of how the funds were applied. (Id. ¶¶ 35-36.) Plaintiff alleges that misapplication of the mortgage payments include incorrect interest rate adjustments, incorrect tax impound adjustments, misapplied payments, misapplied escrow payments, and misapplied insurance payments. (Id. ¶ 37.) Plaintiff alleges that Defendants had no authority to sell the subject property because they obtained their alleged title through fraud, misrepresentation, nondisclosure, and concealed the broken chain of title. (Id. ¶ 40.) Plaintiff alleges that Deutsche now claims title by trustee sale resulting from the wrongful foreclosure and has never showed the right to title, and that no one proved a legal right to commence foreclosure proceedings. (Id. ¶¶ 40-41.) Defendants, according to Plaintiff, claims that Plaintiff is in arrears on the payment of his mortgage. (Id. ¶46.) Plaintiff alleges that the substituted trustee CR Title Services filed a notice of default and that his property was subject to a trustee's foreclosure sale on April 23, 2008, and then in July 2008, which did not occur at that time. (Id. ¶54.) The Court has previously dismissed Plaintiff's second amended complaint and third amended complaint for failure to state a claim. (See Doc. Nos. 41 & 54.) Defendant Deutsche now moves to dismiss the FAC under Federal Rules of Civil Procedure 8, 9, 12(b)(6). (Doc. No. 58.) Deutsche also requests the Court take judicial notice of a Notice of Default and Election to Sell Under Deed of Trust, recorded on January 2, 2008 with the San Diego County Recorder's Office, as Instrument No. 2008-0000379, and the Court's two previous Orders dismissing Plaintiff's second and third amended complaints. (Doc. No. 58, RJN.)


I. Motion to Dismiss Pursuant to 12(b)(6)

A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729, 731 (9th Cir. 2001). A complaint generally must satisfy only the minimal notice pleading requirements of Federal Rule of Civil Procedure 8(a)(2) to evade dismissal under a Rule 12(b)(6) motion. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964--65 (2007). A complaint does not "suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Igbal, 129 S.Ct. 1937, 1949 (2009) (quoting id. at 556). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 127 S.Ct. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235--36 (3d ed. 2004)). "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996); see also Twombly, 127 S.Ct. at 1964--65. A court dismissing a complaint for failure to state a claim may deny leave to amend if amendment of the complaint would be futile. Albrecht v. Lund, 845 F.2d 193, 195-96 (9th Cir. 1988).

"Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n .19 (9th Cir.1990). The court may, however, consider the contents of documents specifically referred to and incorporated into the complaint. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994). In evaluating a motion to dismiss, a court may consider evidence on which the complaint "necessarily relies" as long as: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). The Court concludes that it may consider the Notice of Default and Election to Sell under the Deed of Trust, as it is referenced in Plaintiff's complaint, it is central to Plaintiff's complaint, and neither party questions the authenticity of the copy attached to Defendant's motion. Additionally, the Court may take judicial notice of the Notice of Default because it is a matter of public record as it was filed in the San Diego County Recorder's office. See Lee v. City of Los Angeles, 250 F.3d 668, 689--90 (9th Cir.2001). The Court may also take notice of this Court's orders, as they are matters of public record.

A. Wrongful Foreclosure

Plaintiff's first cause of action asserts that Defendants wrongfully instituted a non- judicial foreclosure and trustee's sale. (FAC ¶¶ 56-62.) Plaintiff alleges that the mortgage rate was above the rate promised and disclosed in his original good faith estimate of closing costs and that Defendant should have known that Plaintiff could not afford the mortgage loan at the time of closing. (Id. ¶ 58.) Plaintiff admits in the FAC that he fell behind in the payment of his mortgage and alleges that Defendants instituted a non-judicial foreclosure and trustee's sale. (Id. ¶ 59.) Plaintiff alleges that Defendants used an incorrect amount allegedly due and owing in the notice of default due to incorrect and improper charges, incorrect tax impound amounts, incorrect escrow amounts, and misapplied mortgage payments, and that Defendant failed to give Plaintiff proper notice of the trustee's sale and follow the requirements of California Civil Code §§ 2924, et seq. (Id. ¶¶ 59, 61.) Plaintiff alleges that the foreclosure sale is void. (Id. ¶ 61.) Throughout his FAC, Plaintiff alleges that Defendants have not proven ownership of the mortgage and the right to foreclose. (See, e.g., id. ¶¶ 8, 9, 10, 11, 19, 20, 29.)

The California statute governing non-judicial foreclosure is codified in the California Civil Code at §§ 2924, et seq. This statute establishes an exhaustive comprehensive statutory framework governing non-judicial foreclosure sales and covers every aspect of exercise of the power of sale contained in a deed of trust. Moeller v. Lien, 30 Cal.Rptr.2d 777 (Cal. Ct. App. 1994); I. E. Assocs. v. Safeco Title Ins. Co., 29 Cal.Rptr.438 (Cal. 1985). The statute does not require the entity initiating the foreclosure sale to provide evidence to the borrower or a court establishing its right to do so, nor does it require that entity to have possession of the note. Because there is no evidence suggesting that Defendants do not have the right to foreclose on the Property as Plaintiff states in his FAC that he fell behind in his mortgage payments, Plaintiff's allegation is purely speculative. Plaintiff also does not allege how Deutsche took part in any foreclosure proceeding nor what provision of the California Civil Code Deutsche allegedly violated. Plaintiff alleges that Defendants failed to give proper notice of trustee's sale, but fails to allege how the notice given was improper. Furthermore, Plaintiff alleges that the foreclosure sale is void, but does not allege when any such foreclosure sale took place, as he alleges that one scheduled in July 2008 did not occur. Under Twombly, this allegation cannot survive a motion to dismiss. 127 S.Ct. at 1965. The Court grants Defendant's motion to dismiss Plaintiff's first cause of action.

The Court also notes that to challenge a foreclosure sale requires that the challenger first tender the undisputed mortgage lien in full, and this requirement applies to "any cause of action for irregularity in the sale procedure." Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1009 (1996). If a foreclosure sale has occurred on Plaintiff's property, which is ambiguous from ...

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