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Dinsmore-Thomas v. Ameriprise Financial

August 3, 2009


The opinion of the court was delivered by: David O. Carter United States District Judge


Before the Court is Defendant Ameriprise Bank, FSB's, improperly named as Ameriprise Financial, Inc., ("Ameriprise" or "Defendant") Motion for Summary Judgment and Lifting the Temporary Restraining Order (the "Motion"). After considering the moving, opposing, and replying papers, as well as the parties' oral arguments, the Court hereby GRANTS Defendant's Motion.

I. Background

a. Defendant's Version of the Facts

On April 4, 2006, Plaintiff Rita P. Dinsmore-Thomas ("Thomas" or "Plaintiff") executed an American Express Home Equity Line of Credit Agreement ("Note") in the amount of $100,000.00. Under the Note, $100,000.00 was advanced to Plaintiff with monthly payments due on the loan balance and a March 4, 2026 maturity date. The Note was secured by a Deed of Trust on the property located at 481 North Seranado Street, Orange, CA 92869, also dated April 4, 2006. The Deed of Trust was assigned from original lender American Express Bank to Defendant on August 20, 2007. Defendant contends that the last payment made by Thomas on the loan was on October 10, 2007, and was applied to the October 2007 payment.

Under the terms of the Note and pursuant to Thomas's default, Ameriprise terminated the account and accelerated repayment of the entire balance. The Deed of Trust provides for the right to foreclose on the property and the power of sale upon foreclosure. Defendant used Regional Trustee Services Corporation ("Regional") to foreclose on the Deed of Trust. A Notice of Default was recorded on February 1, 2008. Plaintiff then sent a debt verification request to Ameriprise on February 4, 2008. Defendant avers that "Plaintiff's request made unreasonable demands, not required of the defendant under the Fair Debt Collection Practices Act, including providing a 'wet ink signature note' and claiming that no debt would be owed if a response was not made within three days." Def.'s Mot. at 5-6. Plaintiff made the same requests on February 8, 2008, February 13, 2008, and February 19, 2008.

On February 28, 2008, Ameriprise responded to Thomas's letters by sending Thomas copies of the Note and Deed of Trust, a payment history on the account, a reinstatement letter showing the amount due to bring the loan current and a Demand/Payoff Statement if Thomas instead wished to pay off the loan in full. Defendant contends that Thomas still failed to cure the default.

On April 29, 2008, Plaintiff purportedly sent Ameriprise a cover letter with documents that she contended constituted a payoff of her loan and a copy of a letter to the IRS. The letter declared:

Enclosed you will find a Money Orders [sic] for the above account that I have submitted to the Internal Revenue Service for payment against my Private Exemption account no. 434647170.

When you, the Vendor, receive the 1040-V with your bill/statement/money order made payable to U.S. Treasury, transmit it to your senior accountant for processing.

Please send me a statement of account showing a "0" balance as soon as you have made your adjustment. Also, enclosed please find Form W9, please provide your TIN number.

Attached to the above letter directed to Ameriprise was a letter also dated April 29, 2008, written directly to the IRS stating:

The enclosed Money Orders and 2007 Federal Tax forms 1040-V, 1040, red 1099 O.I.D., red 1096 and 56 are filed to the best of my knowledge. The 1099 O.I.D. and 1040 form is to identify me as the sponsor for the credit that funded the Treasury Bill in the first place; proof that a federal tax debt exists; and proves pre-payment using my credit.

However, Defendant contends that in connection with the two above-quoted letters, as well as a series of attachments, no negotiable instrument was submitted that would function as a payoff of Thomas's loan.

In addition, on May 16, 2008, Thomas sent the trustee, Regional, a letter again contending that Thomas had paid of the loan with an attached document titled, "Private Bond Order for Payment - Non-Negotiable." The bond document lists its value at one-million dollars and states that the Hawaiian Treasury is surety of the bond.

Not considering the bond legitimate, Ameriprise continued with foreclosure, including recording a Notice of Trustee's Sale setting the foreclosure sale for May 28, 2008, at 2:00 p.m. On May 28, 2008, hours before the foreclosure sale, Thomas filed a Complaint and Ex Parte Application for a Temporary Restraining Order against Defendant Ameriprise in order to enjoin the foreclosure proceedings (the "TRO Application"). By her TRO Application, Thomas contended that Ameriprise had consistently failed to respond to her requests to verify and validate her debt. Thomas thus claimed that Ameriprise could not properly foreclose due to its failures to respond. In addition, Thomas claimed that she had twice tendered full payment of the loan. This Court granted the Temporary Restraining Order the same day, noting that it was "troubled by the fact that Thomas did not file suit until the day of the proposed foreclosure sale, mere hours before the sale was to take place." TRO: Doc. No. 2, at 3. However, the Court noted that it was "equally troubled by Ameriprise' [sic] failure to properly respond to Thomas's request to verify the debt," citing to 15 U.S.C. § 1692g. Id. The Court also recognized that the foreclosure was particularly problematic if Thomas properly attempted to pay the debt. Id.

As Defendant avers, the Ameriprise loan was junior to a senior lien held by Central Mortgage Company. The senior lender proceeded to foreclose on its lien, for which Plaintiff also was in default, with a Trustee's Sale scheduled for December 3, 2008. On December 2, 2008, Plaintiff filed a second complaint against Central Mortgage Company and sought a temporary restraining order enjoining that sale. The Honorable Andrew J. Guilford denied the emergency request. Due to that case's relation to the instant case, that matter was transferred to this Court.

On December 3, 2008 (i.e. the date set for the foreclosure sale), Thomas filed a voluntary bankruptcy petition. However, the bankruptcy case was ultimately dismissed and closed due to Thomas's failure to file the necessary documentation. As a result, the property went to sale on January 20, 2009. Ameriprise purchased the property in order to protect its junior interest. Defendant ...

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