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Hughey v. Wells Fargo & Co.

January 19, 2010



Presently pending for decision are the motions to dismiss plaintiffs' complaint (or for more definite statement) filed by defendants Wells Fargo Bank NA and John Stumpf, Dckt. Nos. 9 and 10, First American Title Insurance Company and Gary L. Kermott, Dckt. No. 12, and Citi Mortgage, Citigroup and Vikram Pandit, Dckt. No. 18. These matters were submitted for decision on the papers by order filed July 6, 2009. Dckt. No. 42.

Also pending are plaintiffs' motion for a preliminary injunction.*fn1 Dckt. No. 22. This matter was also submitted for decision on the papers on July 6, 2009, Dckt. No. 42, following the court's findings and recommendations recommending that plaintiffs' simultaneously filed motion for a temporary restraining order be denied. Dckt. No. 24.

For the following reasons, the court recommends that this case be dismissed with prejudice.


In the instant action, plaintiffs Clifford and Laura Hughey challenge the foreclosure of their home. The complaint contains several causes of action, but the underlying theme is that the United States has been in bankruptcy since 1933, thus Federal Reserve notes have no intrinsic value. Compl. at 6-7. Plaintiffs used their home to secure a $379,000 mortgage on the home and later a $250,000 second mortgage. Id. at 5. Plaintiffs maintain that because Federal Reserve notes are worthless, they received no consideration in exchange for using the home to secure the loans, thus the loans should be cancelled. Id. at 6. Plaintiffs also allege a Racketeer Influenced and Corrupt Organizations Act ("RICO") violation. Id. at 18-19. Defendants move to dismiss the entire complaint for failure to state a claim.

The court notes that substantially similar complaints were filed in Nycole Ostrander v. HSBC Bank USA, CIV S-09-1255 JAM EFB, Beverly Ostrander v. Fremont Reorganizing Corporation, CIV S-09-1392 MCE KJM, Michael William Ostrander v. Mortgage Electronic Registration Systems, Inc., CIV S-09-0099 JAM KJM and Khangura v. American Mortgage Express, CIV S-09-0720, LKK JFM.*fn2 All of these cases were dismissed for the same reasons discussed below.


In order to survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action;" it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "The pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." Id., quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004). "[A] complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "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." Id.

In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the party opposing the motion and resolve all doubts in the pleader's favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). The court will "'presume that general allegations embrace those specific facts that are necessary to support the claim.'" National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 256 (1994) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). Moreover, pro se pleadings are held to a less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520 (1972).

The court may consider facts established by exhibits attached to the complaint. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The court may also consider facts which may be judicially noticed, Mullis v. United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 1987); and matters of public record, including pleadings, orders, and other papers filed with the court, Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). The court need not accept legal conclusions "cast in the form of factual allegations." Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

A pro se litigant is entitled to notice of the deficiencies in the complaint and an opportunity to amend, unless the complaint's deficiencies could not be cured by amendment. See Noll v. Carlson, 809 F. 2d 1446, 1448 (9th Cir. 1987).


The gravamen of the complaint is that Federal Reserve notes have no value thus plaintiffs received no consideration in exchange for using their home to secure several loans. Compl. at 6-7. Plaintiffs contend the loans should be voided as the money they received was worthless. Id. at 6, 21.

The theory underlying the complaint is untenable, frivolous and must be rejected outright. Plaintiffs' claims and other similar theories, have been repeatedly dismissed by the courts as baseless and insufficient to withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See, e.g., United States v. Condo, 741 F. 2d 238, 239 (9th Cir. 1984) (theory that federal reserve notes are not valid currency is frivolous); Foret v. Wilson, 725 F.2d 254, 254-55 (5th Cir. 1984) (argument, that gold and silver is the only legal tender in United States, is hopeless and frivolous); Beaner v. United States, 361 F. Supp.2d 1063, 1067-69 (D.S.D. 2005) (granting defendants' motion to dismiss plaintiffs' claim that their mortgage was void because they did not receive legal tender of gold or silver and ordering plaintiffs to pay sanctions for making frivolous arguments); Rene v. Citibank, N.A., 32 F. Supp.2d 539, 544-45 (E.D.N.Y. 1999) (dismissing the defaulting plaintiff's attempt to rescind a home loan based on its allegation that the lender had provided "illegal tender"); Nixon v. Indiv. Head of Saint Joseph Mortgage Co., 615 F. Supp. 898, 899-901 (N.D. Ind. 1985) (dismissing the plaintiff's case to rescind his home loan based on plaintiff's argument that the loan was not backed by legal money and noting that ...

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