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Aguilar v. Cabrillo Mortgage

February 3, 2010

ISMAEL AGUILAR, AN INDIVIDUAL; AND MARIA DOLORES HERNANDEZ, AN INDIVIDUAL, PLAINTIFFS,
v.
CABRILLO MORTGAGE; GMAC MORTGAGE; SBMC MORTGAGE; ETS SERVICES, LLC; AND SELECT PORTFOLIO SERVICING, INC., DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER: (1) GRANTING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT; and (2) GRANTING SELECT PORTFOLIO SERVICING INC.'S MOTION TO DISMISS. [Doc. Nos. 7, 8]

Currently before the Court are Defendant Select Portfolio Servicing Inc.'s ("SPS") Motion to Dismiss the First Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) and Plaintiffs' Motion for Leave to File a Second Amended Complaint. [Doc. Nos. 7, 8]. Having considered the parties' arguments, and for the reasons set forth below, the Court GRANTS the motion for leave to file a second amended complaint and also GRANTS the motion to dismiss.

BACKGROUND

I. Factual background

Plaintiffs Ismael Aguilar and Maria Dolores Hernandez were the owners of a single family residence located at 1202 Lagan Avenue, Vista, CA 92083 ("Property"). On August 17, 2006, Plaintiffs executed a promissory note in the amount of $368,000.00 in favor of Defendant SBMC Mortgage that was secured by a Deed of Trust ("First Deed of Trust").*fn1 (Def. RJN, Ex. 1.) The First Deed of Trust was recorded on August 22, 2006. (Id.) On August 17, 2006, Plaintiffs also executed a second promissory note in the amount of $46,100.00 in favor of Defendant SBMC Mortgage that was secured by a Deed of Trust ("Secondary Lien"). (Id., Ex. 2.) The Secondary Lien was similarly recorded on August 22, 2006. (Id.)

On April 21, 2009, Mortgage Electronic Registration Systems, Inc. ("MERS")--acting as the original beneficiary under the First Deed of Trust--executed a Substitution of Trustee, substituting Defendant Executive Trustee Services, LLC ("ETS Services") as a trustee under the First Deed of Trust. (Id., Ex. 3.) The Substitution of Trustee was recorded on April 23, 2009. (Id.) On April 23, 2009, Defendant ETS Services recorded a Notice of Default on the Property. (Id., Ex. 4.) On July 24, 2009, ETS Services recorded a Notice of Trustee's Sale of the Property in the amount of $425,563.58, setting August 20, 2009 as the date of the sale. (Id., Ex. 5.) The Property was subsequently sold at the scheduled trustee's sale, and a Trustee's Deed upon Sale was recorded on September 1, 2009, listing Lighthouse Homes, LLC as the purchaser. (Id., Ex. 6.)

II. Procedural history

Plaintiffs commenced this action on August 19, 2009, alleging seventeen causes of action. [Doc. No. 1]. After Defendant SPS filed a motion to dismiss, Plaintiffs filed an amended complaint alleging eight causes of action. [Doc. No. 5]. In light of the amended complaint, the Court denied as moot SPS's motion to dismiss. [Doc. No. 6]. Defendant SPS then filed the current motion to dismiss. [Doc. No. 7]. On January 15, 2009, Plaintiffs filed their "opposition" to the motion to dismiss in the form of a Motion for Leave to File a Second Amended Complaint. [Doc. No. 8]. SPS then filed a "reply" in the form of an opposition to the Plaintiffs' motion. [Doc. No. 9].

LEGAL STANDARD

I. Motion to Amend

Fed. R. Civ. P. 15(a) allows a party to amend its pleading with leave of court after the period for amendment as a matter of course has expired. See FED. R. CIV. P. 15(a)(2). Pursuant to Rule 15(a), "[t]he court should freely give leave when justice so requires." Id. The Ninth Circuit has construed this broadly, requiring that leave to amend be granted with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990) (citation omitted); Poling v. Morgan, 829 F.2d 882, 886 (9th Cir. 1987) (noting "the strong policy permitting amendment" (citation omitted)). This broad discretion "must be guided by the underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the pleadings or technicalities." United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981) (citing Conley v. Gibson, 355 U.S. 41, 47-48 (1957)).

The Supreme Court has articulated five factors that the court should consider in deciding whether to grant leave to amend: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment; and (5) whether the party has previously amended its pleadings. Forman v. Davis, 371 U.S. 178, 182 (1962); see also Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003). Not all factors merit equal weight, however. Eminence Capital, 316 F.3d at 1052. "Prejudice is the 'touchstone of the inquiry under rule 15(a)'" and "carries the greatest weight." Id. (citations omitted). Nevertheless, "[f]utility of amendment can, by itself, justify the denial of a motion for leave to amend." Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995).

II. Motion to dismiss

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings. A complaint survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.544, 570 (2007). The court may dismiss a complaint as a matter of law for: (1) "lack of cognizable legal theory," or (2) "insufficient facts under a cognizable legal claim." SmileCare Dental Group v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). The court only reviews the contents of the complaint, accepting all factual ...


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