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Ahmadyar v. First Horizon Home Loans

March 25, 2010

PATRICIA AHMADYAR, AN INDIVIDUAL, AHMAD AHMADYAR, AN INDIVIDUAL, PLAINTIFFS,
v.
FIRST HORIZON HOME LOANS, A TEXAS CORPORATION AND A DIVISION OF FIRST TENNESSEE BANK NATIONAL ASSOCIATION, DEFENDANT.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING FIRST HORIZON'S MOTION TO DISMISS AND MOTION TO EXPUNGE*fn1

First Horizon Home Loans ("First Horizon") filed a motion under Federal Rule of Civil Procedure 12(b)(6), in which it seeks to dismiss all of Plaintiffs' claims except for Plaintiffs' RESPA allegations. (Docket No. 29.) First Horizon also filed a motion to expunge the lis pendens recorded on the property at issue in this case, which includes a request for attorneys' fees under California Civil Code section 405.38. (Docket No. 33.) Plaintiffs did not file an opposition to either First Horizon's motion to dismiss or motion to expunge. For the reasons stated below, First Horizon's motions are GRANTED.

I. LEGAL STANDARD

A. Motion to Dismiss

A Rule 12(b)(6) motion "challenges a complaint's compliance with... pleading requirements." Champlaie v. BAC Home Loans Servicing, LP, No. S-09-1316 LKK/DAD, 2009 WL 3429622, at *1 (E.D. Cal. Oct. 22, 2009). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests...." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Further, "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

To avoid dismissal, the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547. "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." Iqbal, 129 S.Ct. at 1949. Plausibility, however, requires more than "a sheer possibility that a defendant has acted unlawfully." Id. "When a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quotations and citation omitted).

In evaluating a dismissal motion under Rule 12(b)(6), the court "accept[s] as true all facts alleged in the complaint, and draw[s] all reasonable inferences in favor of the plaintiff." Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements nor legal conclusions are entitled to a presumption of truth. See Iqbal, 129 S.Ct. at 1949-50.

First Horizon's dismissal motion is accompanied by a request for judicial notice of certain documents related to Plaintiffs' loan transaction and the subsequent sale of Plaintiffs' property at a trustee's sale. Specifically, First Horizon requests that judicial notice be taken of the following six documents: a Deed of Trust executed October 27, 2004, a Substitution of Trustee executed on January 12, 2009, an Assignment of Deed of Trust executed April 2, 2009, a Notice of Default executed January 12, 2009, a Notice of Trustee's Sale executed April 24, 2009 and a Trustee's Deed Upon Sale executed May 23, 2009. (Request for Judicial Notice ("RJN") A-F.) First Horizon's motion to expunge also includes a request that judicial notice be taken of a Notice of Lis Pendens recorded with the Sacramento County Recorder's Office on June 23, 2009.

"[A]s a general rule, a district court may not consider materials not originally included in the pleadings in deciding a Rule 12 motion.... [However,] [the court] may take judicial notice of matters of public record and may consider them without converting a Rule 12 motion into one for summary judgment." United States v. 14.02 Acres of Land, 547 F.3d 943, 955 (9th Cir. 2008) (quotations and citations omitted). Facts that are "generally known within the territorial jurisdiction of the trial court" or "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned" are appropriate for judicial notice. Fed. R. Evid. 201(b). The six documents that First Horizon requests be judicially noticed are publically recorded with the Sacramento County Recorder's Office, and therefore, may be judicially noticed. Therefore, First Horizon's requests for judicial notice are granted.

B. Motion to Expunge Lis Pendens

"A lis pendens is recorded by someone asserting a real property claim, to give notice that a lawsuit has been filed which may, if that person prevails, affect title to or possession of the real property described in the notice." Fed. Deposit Ins. Corp. v. Charlton, 17 Cal. App. 4th 1066, 1069 (1993) (citing Cal. Code Civ. Pro. §§ 405.2, 405.4, 405.20). "Once a lis pendens is filed, it clouds the title and effectively prevents the property's transfer until the litigation is resolved or the lis pendens is expunged." BGJ Associates, LLC v. Superior Court, 75 Cal. App. 4th 952, 966-67 (1999).

"A motion for expungement may be brought at any time after notice of pendency has been recorded. The party who recorded the notice of lis pendens bears the burden of proof in opposing expungement." Balagapo v. GMAC Mortg., LLC, 2:09-cv-00405-JAM-GGH, 2010 WL 144108, at *1 (E.D. Cal. Jan. 8, 2010) (citing Cal. Code Civ. Pro. § 405.30). The lis pendens must be expunged "if the claimant has not established by a preponderance of the evidence the probable validity of the real property claim." Orange County v. Hongkong and Shanghai Banking Corp. Ltd., 52 F.3d 821, 823-24 (9th Cir. 1995) (quoting Cal Code Civ. Pro. § 405.32). "To constitute a 'real property claim' the cause of action, if meritorious, must affect the right of possession of specific real property or affect the title to the specific real property." Logan v. Resmae Mortgage Corp., 2:09-cv-01632-MCE-GGH, 2009 WL 5206716, at *1 (E.D. Cal. Dec. 24, 2009) (quoting Cal. Code Civ. Pro. § 405.4). To establish the "probable validity" of a "real property claim," the party who recorded the lis pendens must demonstrate "that it is more likely than not that the[y]... will obtain a judgment against the defendant...." Orange County, 52 F.3d at 824 (quoting Cal Code Civ. Pro. § 405.32).

II. BACKGROUND

On October 27, 2004, Plaintiffs executed a Deed of Trust on their property located at 4609 Careyback Avenue in Elk Grove, California, to secure a loan from First Horizon in the amount of $290,000.00. (RJN Ex. A; Compl. ¶¶ 8-9.) The Deed of Trust identifies First Horizon as the lender and trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS"), as the beneficiary and nominee for the lender and the lender's successors and assigns. (RJN Ex. A.) Plaintiffs allege that the "loan was originated based upon Plaintiffs' stated rather than verified income and ability to repay the loan." (Compl. ¶ 10.)

On January 12, 2009, First Horizon executed a Substitution of Trustee, naming Quality Loan Service Corporation ("Quality") as the trustee under the Deed of Trust in the place of the original trustee, First Horizon. (RJN Ex. B.) The Substitution of Trustee was recorded on February 24, 2009. (Id.) Also on January 12, 2009, MERS executed an Assignment of Deed of Trust, assigning all beneficial interest under the Deed of Trust to First Horizon. (RJN Ex. C.) The Assignment of Deed of Trust was recorded on April 17, 2009. (Id.)

Plaintiffs were unable to make their monthly payments required under their loan, and on January 12, 2009, Quality, as the agent for the beneficiary, executed a Notice of Default. (RJN Ex. D.) On April 24, 2009, Quality executed a Notice of Trustee's Sale that was recorded on May 2, 2009. (RJN Ex. E.) The Notice of Trustee's Sale stated that Quality intended to sell Plaintiffs' property at a trustee's sale to be held on May 21, 2009. (Id.) The Notice of Trustee's Sale also states that the amount of unpaid balance and other charges owed by Plaintiffs totaled $303,289.58. (Id.) Quality sold Plaintiffs' property at a trustee's sale, held on May 21, 2009, to First Horizon for $157,250.00. (RJN Ex. F.)

After the trustee's sale, Plaintiffs filed a complaint in the Sacramento County Superior Court on June 19, 2009, alleging ten claims under state and federal law against First Horizon, Quality and one hundred "Doe" defendants. Plaintiffs allege their "loan agreement is void based upon defendants' violations of disclosure requirements" and that the "non-judicial foreclosure sale was improper in that defendants are not holders of the original note." (Compl. ¶ 56.) Further, Plaintiffs contend that since defendants did not provide them "with full disclosure of the loan in the Farsi language" "the entire loan transaction... is subject to rescission." (Id.) Plaintiffs also recorded a Notice of Pendency of Action (Lis Pendens) in the Sacramento County Recorder's Office on June 23, 2009.

First Horizon removed this case to federal court based upon federal question jurisdiction on July 27, 2009. Following removal, a Joint Status Report was filed on October 30, 2009, in which Plaintiffs consented to the dismissal of Quality; therefore, Quality was dismissed from the action in a Scheduling Order filed on November 12, 2009. The Scheduling Order also dismissed the "Doe" defendants. As a result of these dismissals, First Horizon is the sole remaining defendant.

III. DISCUSSION

A. First Horizon's Dismissal Motion

1. Quiet Title

First Horizon argues Plaintiffs' quiet title claim should be dismissed since Plaintiffs' have not verified the claim as required by California ...


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