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HPG Corp. v. Aurora Loan Services

September 20, 2010

HPG CORPORATION, A CORPORATION; TWIN BUILDERS FOUNDATION CORPORATION, A NONPROFIT CORPORATION; HOME AND BUSINESS PRESERVATION GROUP CORPORATION, A NON-PROFIT CORPORATION; CRESENCIO CAROLINO, AN INDIVIDUAL; FLORO ESPINOZA, AN INDIVIDUAL; ELEANOR BUENVIAJE, AN INDIVIDUAL; BENJAMIN BUENVIAJE, AN INDIVIDUAL; EDUARDO FERRER, AN INDIVIDUAL; ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
AURORA LOAN SERVICES, LLC, A CORPORATION; HOUSEHOLD FINANCE CORP OF CALIFORNIA, A CORPORATION; ING DIRECT, A CORPORATION; ON BEHALF OF THEMSELVES AND AS REPRESENTATIVES FOR ALL OTHERS SIMILARLY SITUATED, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on defendant Aurora Loan Services LLC's ("defendant" or "Aurora") motion to dismiss plaintiffs' complaint pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(1) and 12(b)(6).*fn1 Plaintiffs oppose the motion. For the reasons set forth below,*fn2 defendant Aurora's motion to dismiss is GRANTED.

BACKGROUND

Plaintiffs Cresnecio Carolino ("Carolino") and Floro Espinosa ("Espinosa") are both residents of California who own and reside in single family homes. (Compl., filed Feb. 12, 2010, ¶¶ 13-14.) Plaintiff HPG Corporation ("HPG") is a California foreign corporation, which represents thousands of homeowners in California, providing services and access to services that help to educate and assist homeowners in alleviating financial issues. (Id. ¶ 10.) Plaintiff Twin Builders Foundation Corporation ("Twin Builders") is a California foreign Non-Profit Corporation. The purpose of Twin Builders is to "(1) instruct and train individuals for the purpose of improving and developing their capabilities; and (2) provide relief to the poor, distressed and underprivileged." (Id. ¶ 11.) Plaintiff Home and Business Preservation Group Corporation ("HBP") is a California foreign Non-Profit Corporation, whose purpose is "to teach, train and assist homeowners to protect the financial and emotional stability of their household and to assist small businesses in obtaining financial stability." (Id. ¶ 12.) Defendant Aurora, through various agents, purportedly has conducted foreclosure sales of plaintiffs Carolino and Espinosa's properties. (Id. ¶ 17.)

A. Plaintiff Carolino

On September 27, 2006, a Deed of Trust was recorded in the County of San Joaquin, listing Carolino as a borrower for property located at 3054 Joshua Tree Circle in Stockton, California. (Ex. 1 to Def.'s Req. for Judicial Notice ("RFJN"), filed July 19, 2010.) On October 17, 2008, a Substitution of Trustee was executed, substituting Quality Loan Service Corporation as Trustee under the Deed of Trust. (Ex. 2 to RFJN.)

Carolino filed a bankruptcy petition on March 25, 2009, which was dismissed on May 6, 2009 for unreasonable delay and failure to file documents. (Ex. 13 to RFJN.) Carolino filed a second bankruptcy petition on November 13, 2009, which was also dismissed for unreasonable delay and failure to file documents on January 7, 2010. (Ex. 15 to RFJN.)

On May 19, 2009, a Trustee's Deed Upon Sale was filed after the property was sold at public auction on May 13, 2009. (Ex. 3 to RFJN.)

B. Plaintiff Espinosa

On June 15, 2007, a Deed of Trust was recorded in El Dorado County, listing Floro Espinosa as a borrower for property located at 371 Chagall Court in El Dorado Hills, California. (Ex. 4 to RFJN.) On November 18, 2008, a Substitution of Trustee was executed, substituting Quality Loan Service Corporation as Trustee under the Deed of Trust; it was recorded on January 2, 2009. (Ex. 6 to RFJN.) On November 19, 2008, a Notice of Default and Election to Sell Under Deed of Trust was filed in El Dorado County. (Ex. 5 to RFJN.)

Espinosa filed a complaint arising out of pending foreclosure proceedings against defendant Aurora, Quality Loan Service Corporation, and Summit Funding, Inc. on March 18, 2009, which he later stipulated to dismiss. (Ex. 7 to RFJN.) Subsequently, Espinosa filed a bankruptcy petition on August 10, 2009, which was dismissed on October 23, 2009. (Ex. 8 to RFJN.) He filed a second bankruptcy petition on November 25, 2009, which was dismissed with prejudice on February 8, 2010. (Ex. 10 to RFJN.)

On June 16, 2010, a Trustee's Deed Upon Sale was filed after the property was sold at public auction on June 9, 2010. (Ex. 21 to RFJN.)

C. General Allegations

Plaintiffs allege that defendant Aurora foreclosed on plaintiffs' and others' properties without complying with the statutory procedures for non-judicial foreclosure. (Compl. ¶ 1.) Specifically, plaintiffs contend that defendant has foreclosed on properties without having first obtained assignment of the mortgage and the power of sale on the property it purports to foreclose. (Id. ¶¶ 2-3.) As such, plaintiffs bring claims on behalf of themselves and on behalf of putative classes based on alleged California statutory violations and breach of the duty of good faith and reasonable diligence. Plaintiffs seek, inter alia, (1) declaratory and/or injunctive relief setting aside foreclosure sales; (2) declaratory and/or injunctive relief preventing foreclosure sales; (3) damages; and (4) attorney's fees.

STANDARD

A. Lack Of Subject Matter Jurisdiction

"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). Lack of subject matter jurisdiction may be asserted by either party or by a court, sua sponte, at any time during the course of an action. Fed. R. Civ. P. 12(h)(2)-(3). Once challenged, the burden of establishing a federal court's jurisdiction rests on the party asserting the ...


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