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Manown v. Cal-Western Reconveyance Corp.

August 4, 2009


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


On April 17, 2009, Plaintiffs William J. Manown, Jr. and Maria R. Cabrales ("Plaintiffs") filed a complaint in the Superior Court of the State of California, County of San Diego, raising claims arising out of a mortgage loan transaction. (Doc. No. 1, Exh. 1, "Compl.") On March 9, 2009, Defendants First Franklin Financial Corporation ("First Franklin") and Bank of America, N.A., as successor by merger to LaSalle Bank, N.A., as trustee for Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-2 ("LaSalle," or collectively with First Franklin, "Defendants") removed the action to federal court on the basis of federal question jurisdiction, 28 U.S.C. § 1331. (Doc. No. 1.) Defendant Cal-Western Reconveyance Corporation ("Cal-Western"), which has yet to be served in this action, joined in the notice of removal. (Doc. No. 2.) Pending before the court is Defendants' motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6), or in the alternative, to strike Plaintiffs' demands for punitive damages. (Doc. No. 4, "Mot.") Defendants' motion was accompanied by a Request for Judicial Notice. (Doc. No. 5, "RJN.")

To date, Plaintiffs have filed no opposition nor sought additional time to do so. When an opposing party does not file papers in the manner required by Civ.L.R. 7.1(d)(2), the court may deem the failure to "constitute a consent to the granting of a motion or other request for ruling by the court." Civ.L.R. 7.1(f)(3)(c). Notwithstanding Plaintiffs' failure to respond, the court reviews the motion on the merits to ensure dismissal is appropriate. Pursuant to Civ.L.R. 7.1(d), these matters were taken under submission by the court without oral argument on July 24, 2009.

For the reasons set forth below, the court GRANTS Defendants' motion to dismiss.


Plaintiffs purchased their primary residence at 15335 Paseo Ajanta, San Diego, California (the "Property") with a loan for $433,600. (Compl. ¶¶ 1, 6.) The loan was secured by a Deed of Trust on the Property, which was recorded March 27, 2007. (Compl. ¶ 6; RJN, Exh. 1, "DOT.") Plaintiffs obtained the loan through First Franklin, the original lender. (Compl. ¶ 6.) The DOT named New Century Title Company as the trustee and Mortgage Electronic Registration Systems, Inc. ("MERS") as beneficiary. (DOT.) Plaintiffs allege there is no public record of any substitution of trustee or assignment of the Note. (Compl. ¶¶ 11-12.) However, both an assignment of the DOT from First Franklin to LaSalle and a substitution of trustee in favor of Cal-Western were recorded February 23, 2009. (RJN, Exhs. 2, 3.) Consistent with these documents, Plaintiffs allege "MERS is neither a mortgage lender nor does it own or have any beneficial interest in any note or mortgage" and they refer to LaSalle as "beneficiary." (Compl. ¶¶ 3, 10.) On January 15, 2009, at Cal-Western's direction as trustee, a Notice of Default was recorded on the Property, indicating the loan was $20,211.56 in arrears. (Compl. ¶¶ 13-14.) On April 21, 2009, a Notice of Trustee's Sale was recorded against the Property. (RJN, Exh. 4.)

Plaintiffs assert causes of action for intentional and negligent misrepresentation and breach of fiduciary duty, unfair debt collection practices, predatory lending practices, and to quiet title in the Property. Plaintiffs seek an accounting and declaratory and injunctive relief (labeled as separate causes of action), as well as rescission, statutory, actual, and punitive damages, attorneys' fees and costs, and judgment quieting title in favor of Plaintiffs.


A. Legal Standards

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, 550 US 544, 555 (2007). 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). Under the "incorporation by reference" doctrine, the court may refer to 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). Consideration of matters of public record "does not convert a Rule 12(b)(6) motion to one for summary judgment." Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104, 111 (1991). To this end, the court considers the Deed of Trust, Substitution of Trustee, Assignment of Deed of Trust, and Notice of Trustee's Sale, as sought by Defendants in their Request for Judicial Notice. (RJN, Exhs. 1-4.)

B. Analysis

1. Intentional Misrepresentation

In their first claim, Plaintiffs assert Defendants "falsely represented that they had the right to payment" under the mortgage note and "to foreclose the Trust Deed...and sell the Subject Property." (Compl. ¶ 25.) According to Plaintiff, Defendants do not have such rights because they "are not and were not in possession of a note secured by the Subject Property." (Compl. ¶ 26.) Furthermore, Plaintiff alleges Defendants "falsely represented the payoff amount, if any, required to redeem the Subject Property from potential ...

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