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Walsh v. Summit Lending Solutions

September 15, 2010

PATRICK TERUO WALSH, PLAINTIFF,
v.
SUMMIT LENDING SOLUTIONS; HOMECOMINGS FINANCIAL; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; EXECUTIVE TRUSTEE SERVICES, LLC; AND DOES 1--10, DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER (1) DISMISSING MOTION TO DISMISS AND (2) DENYING MOTION FOR DEFAULT JUDGMENT (Doc. Nos. 23, 33.)

Presently before the Court is Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC's ("Defendants") motion to dismiss Patrick Teruo Walsh's ("Plaintiff") first amended complaint. (Doc. No. 23.) Also before the Court is Plaintiff's motion for default judgment filed against Summit Lending Solutions, Inc., Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC, and Does 1--100. (Doc. No. 33.) For the reasons stated below, the Court DISMISSES WITHOUT PREJUDICE Defendants' motion to dismiss and DENIES WITHOUT PREJUDICE Plaintiff's motion for default judgment.

BACKGROUND

Plaintiff Patrick Teruo Walsh, proceeding pro se, filed his first complaint on June 16, 2009. (Doc. No. 1.) Defendants Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC ("Defendants") responded by filing a motion to dismiss the complaint on July 16, 2009. (Doc. No. 5.) Defendant Summit Lending Solutions, Inc. ("Summit Lending"), however, failed to respond. On October 9, 2009, the Clerk of Court issued an entry of default as to Summit Lending, and Plaintiff filed a motion for default judgment soon thereafter. (Doc. No. 17.) After consideration, the Court granted Defendants' motion to dismiss and denied Plaintiff's motion for default judgment. (Doc. No. 19.)

Plaintiff then filed an amended complaint ("First Amended Complaint") on March 25, 2010. (Doc. No. 21.) Plaintiff alleges that he purchased the property located at 16277 Winecreek Road, San Diego, California 92127 on or about December 19, 2006, and financed his purchase through Summit Lending. (Id. at 3.) Two years later, Defendant Executive Trustee Services, LLC recorded a notice of default. (Id. at Exhibit 1.) Plaintiff alleges that, although he was notified that he was in default, the notice was void because it did not comply with California Civil Code § 2923.5. (Id. at 3.)

Plaintiff also challenges the validity of the foreclosure sale in his amended complaint. Plaintiff alleges that the parties listed on the notice of default and/or the notice of trustee's sale did not have the right to conduct a foreclosure sale. (Id.) Moreover, Plaintiff alleges that the foreclosure sale was not conducted in accordance with California law. (Id.) And finally, Plaintiff alleges that every defendant is engaged in multiple violations of California law, and "that public benefit necessitates that Defendants be restrained from such conduct in the future." (Id.)

Plaintiff asserts five causes of action: (1) Violation of California Civil Code § 2923.5; (2) Fraud; (3) Intentional Misrepresentation; (4) Violation of California Civil Code § 1572; and (5) Violation of Business and Profession Code § 17200. (Id. at 3--12.)

Defendants filed a motion to dismiss the First Amended Complaint on April 12, 2010. (Doc. No. 23.) The hearing set for June 17, 2010, was thereafter vacated, and the matter was taken under submission on the papers. (Doc. No. 26.)

Plaintiff filed a request for entry of clerk default against Summit Lending on June 18, 2010, and against Defendants on July 6, 2010. Both requests were entered on July 6, 2010, but the entry of default against Defendants was subsequently marked to indicate that it was issued in error. (Doc. Nos. 30, 31.) On July 14, 2010, Plaintiff filed a motion for default judgment pursuant to Federal Rule of Civil Procedure 55(b). (Doc. No. 33.)

The Court will discuss both motions independently, below.

DEFENDANTS HOMECOMINGS FINANCIAL, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AND EXECUTIVE TRUSTEE SERVICES, LLC'S MOTION TO DISMISS

Defendants Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC ("Defendants") filed a motion to dismiss on April 12, 2010, in response to Plaintiff's First Amended Complaint. (Doc. No. 23.) But the motion to dismiss was not properly served on Plaintiff. Parties that are not registered participants of the Case Management and Electronic Case Filing System ("CM/ECF") must be served pursuant to the Federal Rules of Civil Procedure. CA. ELEC. CASE FILING ADMIN. POLICIES AND PROCEDURES MANUAL 2(d)(2). Plaintiff is not registered with CM/ECF and was not served pursuant to Federal Rule of Civil Procedure 5. Accordingly, Defendants' motion to dismiss is DISMISSED WITHOUT PREJUDICE for failure to serve.

PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

Plaintiff's motion for default judgment requested default judgment against every Defendant. For procedural reasons, the Defendants will be divided into to two groups. In the first group is Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC. In the second group is Summit Lending Solutions.

I. Default Judgment Against Homecomings Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC On July 6, 2010, the Clerk of Court entered an entry of default as to Homecomings

Financial, Mortgage Electronic Registration Systems, Inc., and Executive Trustee Services, LLC ("Defendants") for failing to plead or otherwise defend against the First Amended Complaint. (Doc. No. 29.) The entry was modified on July 8, 2010, to indicate that it was issued in error. As a matter of court ...


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