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Huestis v. Indymac Federal Bank

April 7, 2010

MARK HUESTIS AND DIANE HUESTIS, PLAINTIFFS,
v.
INDYMAC FEDERAL BANK; HOME LOAN SERVICING; INDYMAC BANK, F.S.B.; QUALITY LOAN SERVICE CORP.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; ABSOLUTE LOANS, INC.; KEVIN DANIEL MCGILL, DEFENDANTS.



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

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS*fn1

Defendant Mortgage Electronic Systems, Inc. ("MERS") filed a motion to dismiss Plaintiffs' First Amended Complaint ("FAC") under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, and under Federal Rule of Civil Procedure 9(b) for Plaintiffs' failure to plead their fraud claim with sufficient particularity. Plaintiffs allege the following claims against MERS concerning a mortgage loan on Plaintiffs' residential property: (1) negligence; (2) fraud; (3) violation of California Business and Professions Code section 17200 et seq.; and (4) wrongful foreclosure. MERS seeks dismissal of Plaintiffs' claims against it, arguing "the FAC is vague and ambiguous and raises no cognizable claims for relief above the speculative level." (Mot. 6:3-4.)

I. LEGAL STANDARD

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.

MERS requests that judicial notice be taken of five documents related to Plaintiffs' mortgage loan which are publically recorded in the Official Records of El Dorado County: (1) the Deed of Trust recorded October 5, 2006; (2) the Notice of Default and Election to Sell recorded February 23, 2009; (3) the Notice of Trustee's Sale recorded June 2, 2009; (4) the Assignment of Deed of Trust recorded April 9, 2009; and (5) the Trustee's Deed Upon Sale recorded June 24, 2009. (Request for Judicial Notice ("RJN") Exs. 1-5.) "[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,] it 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). Exhibits 1-5 are publically recorded and may be considered in deciding MERS's dismissal motion. See Champlaie, 2009 WL 3429622, at *4 (finding judicial notice of recorded Notice of Default, Notice of Trustee's Sale, and Trustee's Deed Upon Sale proper).

I. BACKGROUND

Plaintiffs completed a mortgage loan on their "residential property . . . located at 3704 Malachite Way, Rescue, County of El Dorado, California" ("the Property") on or about September 27, 2006.

(FAC ¶¶ 8, 36.) "The terms of the Loan were memorialized in a promissory note, which was secured by a Deed of Trust on the Property." (FAC ¶ 37.) "The Deed of Trust identified Fidelity National Title Insurance Company as [t]rustee, and [] IndyMac Bank as [the] [l]ender." (Id.) The Deed of Trust also identified MERS as the beneficiary and nominee for the lender and the lender's successors and assigns. (Id. ¶ 38.) Plaintiffs allege MERS is "engaged in the business of holding title to mortgages." (Id. ¶ 10.)

MERS executed an Assignment of Deed of Trust on January 29, 2009, in which it assigned and transferred to IndyMac Federal Bank F.S.B. "all beneficial interest under . . . [the] Deed of Trust dated 9/27/2006 executed by [Plaintiffs] Mark Huestis and Diane G. Huestis . . . ." (RJN Ex. 4.) The Assignment was recorded on April 9, 2009. (Id.)

III. DISCUSSION

A. Plaintiffs' Negligence Claim

MERS argues Plaintiffs' negligence claim should be dismissed because "MERS does not owe a duty to Plaintiffs." (Id. 7:7.) Plaintiffs respond, "a general duty not to harm ...


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