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Hernandez v. First American Loanstar Trustee Services

April 12, 2010

SALVADOR HERNANDEZ, JR. AND WENDY CUEVAS, PLAINTIFFS,
v.
FIRST AMERICAN LOANSTAR TRUSTEE SERVICES, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER GRANTING MOTIONS TO DISMISS

Defendant First American Loanstar Trustee Services ("Loanstar") and Defendants Wells Fargo Bank, N.A. ("Wells Fargo") and HSBC Bank USA, N.A. ("HSBC"), have filed motions to dismiss Plaintiffs' Complaint for failure to stat a claim. For the reasons discussed below, Defendants' motions are GRANTED.

I. BACKGROUND

Plaintiffs commenced this action in the Superior Court of California, County of San Diego. On January 15, 2010, Defendants removed the action to federal court.

On or about February 15, 2007, Plaintiffs obtained a loan from Wells Fargo in the principal amount of $448,000, secured by real property located at 1551 Masterson Lane, San Diego, CA 92154 (the "Property"). (Ex. G to Compl.) On June 10, 2009, Loanstar recorded a Notice of Default. (Ex. D to Compl.) On July 16, 2009, Wells Fargo recorded a Substitution of Trustee that substituted Loanstar as the Trustee in lieu of Fidelity National Title Insurance Company. (Loanstar RJN, Ex. A.) On July 23, 2009, the Deed of Trust was assigned by Wells Fargo to HSBC Bank USA National Association as Trustee for Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2007-6. (Loanstar RJN, Ex. B.)

On September 11, 2009, Loanstar recorded a Notice of Trustee's Sale. (Ex. A to Compl.) On October 1, 2009, Loanstar conducted a trustee sale of the Property. HSBC was the successful purchaser, and Loanstar recorded a Trustee's Deed Upon Sale in favor of HSBC. (Ex. C to Compl.)

II. STANDARD ON MOTION TO DISMISS

Under Fed. R. Civ. P. 8(a)(2), the plaintiff is required only to set forth a "short and plain statement" of the claim showing that plaintiff is entitled to relief and giving the defendant fair notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47 (1957). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although detailed factual allegations are not required, factual allegations "must be enough to raise a right to relief above the speculative level." Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). "A plaintiff's obligation to prove the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id.

III. DISCUSSION

In their Complaint, Plaintiffs assert the following causes of action: (1) claim to set aside trustee's sale; (2) claim to cancel trustee's deed; (3) lack of standing; (4) negligence per se - violation of Cal. Bus. & Prof. Code § 17500 (against Wells Fargo only); (5) negligence per se - violations of the Home Ownership Equity Protection Act ("HOEPA"), 15 U.S.C. § 1602, et seq. (against Wells Fargo only); (6) negligence per se - violation of Cal. Civil Code § 2924b (against Loanstar and Wells Fargo only); (7) negligence per se - violation of Cal. Fin. Code § 4973(f)(1) (against Wells Fargo only); (8) negligence per se-violation of the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. and Regulation Z (against Wells Fargo only); (9) negligent lending (against Wells Fargo only); (10) quiet title; and (11) injunctive relief. Defendants contend that Plaintiffs' Complaint should be dismissed for failure to state a claim. The Court agrees with Defendants.

A. Claims to Set Aside Sale, Cancel Trustee's Deed, and Quiet Title

Plaintiffs seek to set aside the sale of the Property, cancel the Trustee's Deed Upon Sale in favor of HSBC, and quiet title. These claims fail because Plaintiffs have not alleged that they tendered the amounts owing under the loan.

Under California law, "an action to set aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security." Arnolds Management Corp. v. Eischen, 158 Cal. App. 3d 575, 577 (1984). "A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust." Karlsen v. American Sav. & Loan Assn., 15 Cal. App. 3d 112, 117 (1971). The reason for this requirement is that a court of equity will not use its remedial power to accomplish a futile act that has no beneficial purpose. Id. at 117-18.

Plaintiffs do not allege that they have tendered the amounts due under the loan. Therefore, Plaintiffs cannot bring a claim to set aside the trustee's sale or to quiet title. See Manown v. Cal-Western ...


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