This case came before the court on June 4, 2010, for hearing on motions to dismiss plaintiff's first amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and to strike plaintiff's opposition, brought on behalf of defendant Greenpoint Mortgage Funding, Inc. (Doc. Nos. 5 and 14.)*fn1 Defendants Vanderbilt Mortgage & Finance, Inc. and Reliable Deed Services, Inc. joined in those motions. (Doc. Nos. 9 and 15.) Casey J. McTigue, Esq. appeared at the hearing for defendant Greenpoint Mortgage Funding, Inc., Mark Blackman, Esq. appeared telephonically for defendants Vanderbilt Mortgage & Finance, Inc. and Reliable Deed Services, Inc. Plaintiff Raymond Usher, proceeding pro se, appeared at the hearing on his own behalf. Upon consideration of all written materials filed in connection with the motions, arguments at the hearing, and the entire file, the undersigned recommends that defendants' motion to strike plaintiff's opposition be denied and that their motion to dismiss be granted.
Plaintiff originally filed his complaint on September 30, 2009, in the Placer County Superior Court. On March 18, 2010, plaintiff filed a first amended complaint in that action. Thereafter, on April 19, 2010, defendant Greenpoint Mortgage Funding, Inc., with the consent of defendants Vanderbilt Mortgage & Finance, Inc. and Reliable Deed Services, Inc., removed the action pursuant to 28 U.S.C. § 1441(b) on the grounds that this court has original jurisdiction over the claims brought under federal law by plaintiff in his first amended complaint, including those brought pursuant to the Federal Fair Debt Collections Practices Act (FDCPA) and the Truth in Lending Act (TILA). See Notice of Removal (Doc. No. 1).
In his first amended complaint, plaintiff alleges as follows. He is the owner of the subject property located in Auburn, California. (Doc. No. 1-2 at 3, ¶ 1.) On May 8, 2007, he borrowed $770,000 through defendant Greenpoint Mortgage Funding, Inc. secured by a First Deed of Trust on the subject property. (Id. at 4, ¶¶ 5-6.) Plaintiff executed a deed of trust conveying to defendant Reliable Trust Deed Services, Inc., as trustee, the subject property with that Deed of Trust being recorded on May 5, 2007. (Id.) At some point thereafter, defendant Reliable Trust Deed Services, Inc. claimed plaintiff had breached the obligation secured by the Deed of Trust by failing to pay $39, 978.41 on the loan. (Id. at 5, ¶ 7.) Accordingly, on March 5, 2009, defendant Reliable Trust Deed Services, Inc. recorded a Notice of Default and Election to Sell under Deed of Trust. (Id.)
Plaintiff appears to allege that defendant Reliable Trust Deed Services, Inc. is not the "holder in due course" of the note identified in the Notice of Default. (Id. at 5, ¶ 8) (emphasis in original). In addition, plaintiff asserts that defendants refused his conditional tender offer, failed to validate the purported debt, and defrauded him. (Id. at 5-6, ¶¶ 8, 13.)) Specifically, plaintiff alleges that defendant Greenpoint fraudulently transferred his loan to defendant Vanderbilt Mortgage and Finance, Inc. (Id. at 7, ¶ 15.) Plaintiff also claims that defendant Greenpoint violated TILA by concealing the fact that it was not funding his loan and that Greenpoint engaged in "check-kiting" when it assigned the Deed of Trust. (Id. at 7, ¶ 16.)*fn2
Plaintiff asserts that defendants violated the Fair Debt Collections Practices Act (FDCPA) and California's Rosenthal Fair Debt Collections Practices Act (RFDCPA) by unlawfully proceeding with foreclosure despite the fact that he was challenging the validity of the purported debt and without being the "holder in due course" of the Note and Deed of Trust as of the date of foreclosure. (Id. at 7-9, ¶¶ 17-18.) Finally, plaintiff appears to possibly claim that defendants breached their obligation to act in "good faith and fair dealing." (Id. at 9, ¶¶ 19-20.)
Based on these allegations, plaintiff contends that the note in question is invalid, the non-judicial foreclosure and trustee sale are unlawful and that he is entitled to have all rights of ownership in the subject property restored to him. (Id. at 9-10, ¶ 21 and 11, ¶24.) Accordingly, plaintiff seeks actual and punitive damages, declaratory relief, a permanent injunction enjoining defendants from foreclosing on his home or holding a trustee sale of that property, reinstatement of title to the property in his name, and attorney fees and costs. (Id. at 11-12.)
Defendants seek dismissal of plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that he has failed to state any cognizable claim.
Specifically, defendants advance the following arguments. Plaintiff has failed to plead any claim of fraud with the particularity required under Federal Rule of Civil Procedure 9(b). Plaintiff has failed to allege any material violation of the Truth in Lending Act (TILA). Plaintiff has not stated, and cannot state, cognizable claims for violation of the FDCPA or RFDCPA because those provisions do not apply to non-judicial foreclosure actions such as that at issue here. Plaintiff cannot state a cognizable claim challenging the non-judicial foreclosure procedure utilized in this case without tendering the full amount owed and, in any event, his reliance on the "holder in due course theory in support of this claim has been consistently rejected by the courts.
In his untimely-filed opposition plaintiff argues that on numerous occasions he tendered offers to pay his debt in full on the condition that the purported debt "be validated" but the defendants failed to properly respond. Plaintiff repeats the contention, set forth in his first amended complaint, that the promissory note he signed was the equivalent of cash and, therefore, the transaction he entered into was not a loan at all and any purported debt associated therewith is invalid. He also argues that defendants defrauded him and violated TILA by failing to disclose that the transaction was not, in actuality, a loan. Plaintiff asserts that because the purported debt has not been validated, defendants violated the FDCPA and state law in continuing with collection and foreclosure activities. Plaintiff notes that judicial foreclosures proceedings have been halted in some instances where the mortgagee has failed to authenticate the Note and Deed of Trust and failed to establish its authority to enforce the Note. Finally, plaintiff requests that leave to amend be granted if the court were to grant the pending motion.*fn3
Defendants moved to strike plaintiff's opposition as having been untimely filed. (Doc. No. 14.) They argue, that even if the court considers the untimely opposition, their motion to dismiss this action with prejudice should be granted for all the reasons set forth in their moving papers.
LEGAL STANDARDS APPLICABLE TO DEFENDANTS' MOTION
The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal sufficiency of the complaint. N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Thus, a defendant's Rule 12(b)(6) motion challenges the court's ability to grant any relief on the plaintiff's claims, even if the plaintiff's allegations are true.
In determining whether a complaint states a claim on which relief may be granted, the court accepts as true the allegations in the complaint and construes the allegations in the light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the form of factual allegations. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).
With regard to claims of fraud, "the circumstances constituting fraud . . . shall be stated with particularity." Fed. R. Civ. P. 9(b). "Rule 9(b) serves not only to give notice to defendants of the specific fraudulent conduct against which they must defend, but also 'to deter the filing of complaints as a pretext for the discovery of unknown wrongs, to protect [defendants] from the harm that comes from being subject to fraud charges, and to prohibit plaintiffs from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.'" Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001) (quoting In re Stac Elec. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996)). Thus, pursuant to Rule 9(b), a plaintiff alleging fraud at a minimum must plead evidentiary facts such as the time, place, persons, statements and explanations of why allegedly misleading statements are misleading. In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541');">42 F. 3d 1541, 1547 n.7 (9th Cir. 1994); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); Fecht v. Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995).*fn4
For the reasons set forth below, the undersigned will recommend that defendants' motion to dismiss be granted and that this action be dismissed with prejudice.
At the outset, defendants have requested judicial notice of documents related to the matters at issue. (Docs. No. 6.) Specifically, defendants request that the court take judicial notice of the following: (1) a Deed of Trust executed by plaintiff and his wife and recorded in the Placer County Recorder's Office on May 14, 2007; (2) the Notice of Default and Election to Sell recorded with the Placer County Recorder's Office on March 20, 2009; (3) a Notice of Trustee Sale recorded with the Placer County Recorder's Office on September 29, 2009; and (4) a Notice of Trustee's Deed Upon Sale recorded in the Placer County Recorder's Office on October 21, 2009. (Doc. No. 6, Exs. A - D.) Defendants' requests for judicial notice will be granted pursuant to Federal Rule of Evidence 201. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (on a motion to dismiss, court may consider matters of public record); MGIC Indem. Corp.
v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986) (on a motion to dismiss, the court may take judicial notice of matters of ...