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Malik Reed v. Wells Fargo Home Mortgage Inc

December 10, 2010



This case, in which plaintiff is proceeding pro se, is before the undersigned pursuant to Eastern District of California Local Rule 302(c)(21). See 28 U.S.C. § 636(b)(1). Pending before the undersigned are (1) defendant First American Trustee Servicing Solutions, LLC, f/k/a First American Loanstar Trustee Services, LLC's motion to dismiss plaintiff's complaint, Dckt. No. 9;

(2) defendant Wells Fargo Home Mortgage, Inc.'s motion to dismiss plaintiff's complaint, Dckt. No. 11; and (3) plaintiff's motion for a temporary restraining order, Dckt. No. 24.

I. Background

In this action, plaintiff challenges the foreclosure sale of his home. He alleges that he was "misled and taken advantage of" and that defendants engaged in fraud and unlawful, unfair, and deceptive business practices during and after the origination of his mortgage loan. Dckt. No. 1 at 1-2. He alleges that the mortgage loan at issue was created by America's Servicing Co., but that in order to deceive regulators and plaintiff, plaintiff's promissory note was unlawfully sold to Wall Street investors. Id. at 3. He further alleges that defendants wrongfully sold his property at a trustee's sale without producing the original note and without being the holder in due course, and he alleges that he never actually received a loan. Id. at 2; ¶¶ 8, 15. Plaintiff's complaint alleges claims for fraud; violations of the Truth in Lending Act ("TILA"); violations of the Federal Fair Debt Collection Practices Act ("FDCPA") and the California Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"); wrongful foreclosure; breach of the covenant of good faith and fair dealing; and declaratory relief. Id.

Specifically, plaintiff alleges that he was the owner of the real property at issue in this action ("the subject property"); that on December 15, 2005, he executed and delivered to defendant New Century Mortgage Corporation ("New Century") a written promissory note in the amount of $365,750.00 for the subject property; and that Wells Fargo Home Mortgage, Inc., dba America's Servicing Co. ("Wells Fargo") served as plaintiff's loan servicer. Compl. ¶¶ 1, 5; Loanstar's Req. for Jud. Notice, Dckt. No. 9-1, Ex. A; Wells Fargo's Req. for Jud. Notice, Dckt. No. 11, Ex. 1.*fn1 As security for the note, plaintiff executed and delivered to New Century a deed of trust dated January 11, 2006 in the amount of $365.750.00. Compl. ¶ 6; Dckt. No. 9-1, Ex. A; Dckt. No. 11, Ex. 1. The deed of trust was recorded in Sacramento County on January 11, 2006. Compl. ¶ 6; Dckt. No. 9-1, Ex. A; Dckt. No. 11, Ex. 1. First American Loanstar Trustee Servicing LLC ("Loanstar") is the successor trustee under the deed of trust pursuant to a Substitution of Trustee recorded in Sacramento County on January 23, 2009. Dckt. No. 9-1, Ex. C. The beneficial interest in the deed of trust was assigned to U.S. Bank pursuant to an assignment deed of trust recorded in Sacramento County on March 4, 2009. Dckt. No. 9-1, Ex. D; Dckt. No. 11, Ex. 3.

On December 10, 2008, Loanstar recorded a "Notice of Default and Election to Sell" and a "Declaration of Compliance" under California Civil Code section 2923.5 in Sacramento County. Dckt. No. 9-1, Ex. B; Dckt. No. 11, Ex. 2. Thereafter, on December 21, 2009, Loanstar recorded a "Notice of Trustee's Sale," noticing the sale for January 11, 2010. Compl. ¶ 7; Dckt. No. 9-1, Ex. E; Dckt. No. 11, Ex. 5; see also Dckt. No. 11, Exs. 4, 6. The subject property was then sold at a Trustee's Sale on February 11, 2010, and title to the subject property was conveyed to U.S. Bank. Dckt. No. 9-1, Ex. F; Dckt. No. 11, Ex. 7.

On February 19, 2010, plaintiff filed a complaint in Sacramento County Superior Court against defendants American's Servicing Co. and Loanstar, to enjoin foreclosure, for declaratory relief, and an accounting. Dckt. No. 9-1, Ex. G. Loanstar filed a demurrer, plaintiff opposed it, and on July 6, 2010, the state court sustained the demurrer without leave to amend. Dckt. No. 9-1, Exs. H, I, J. Then, on July 6, 2010, the state court entered judgment in Loanstar's favor. Dckt. No. 9-1, Ex. K.

On August 10, 2010, plaintiff filed a complaint herein against Wells Fargo, Loanstar, New Century, and U.S. Bank. Dckt. No. 1. According to plaintiff, the notice of default and election to sell were based on Loanstar's contention that plaintiff had breached the obligation secured by the deed of trust by failing to pay $409,072.76, and that Loanstar, as beneficiary, elected to sell the trust property to satisfy that obligation. Id. ¶ 7. Plaintiff contends that he is not in breach of that obligation since Loanstar is not the "holder in due course" and improperly refused plaintiff's tender offer to pay upon Loanstar's validation of the debt. Id. ¶ 8. Plaintiff contends that the debt is invalid under the FDCPA and the Rosenthal Act, and that defendants have failed to properly respond to plaintiff's offer and have failed to validate the purported debt.

Id. Plaintiff contends that all of the defendants acted in concert and ratified the conduct of the other defendants. Id. ¶¶ 9, 13.

II. Motions to Dismiss Plaintiff's Complaint

Defendants Loanstar and Wells Fargo both move to dismiss plaintiff's complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Dckt. Nos. 9, 11. Defendants also contend that plaintiff's complaint fails to comply with Rules 8(a) and 8(d) in that the complaint does not present a "short and plain statement" of plaintiff's claims and is not "simple, concise and direct," and that plaintiff has not pled fraud with particularity, as required by Rule 9(b). Id.

A. Standards

To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "The pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." Id. (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004)). "[A] complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "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." Id. Dismissal is appropriate based either on the lack of cognizable legal theories or the lack of pleading sufficient facts to support cognizable legal theories. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hosp. Trs., 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the party opposing the motion, and resolve all doubts in the pleader's favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). The court will "'presume that general allegations embrace those specific facts that are necessary to support the claim.'" Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 256 (1994) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

Pro se pleadings are held to a less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520 (1972); Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985). However, the court's liberal interpretation of a pro se litigant's pleading may not supply essential elements of a claim that are not plead. Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992); Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). Furthermore, "[t]he court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged." Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). Neither need the court accept unreasonable inferences, or unwarranted deductions of fact. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

The court may consider facts established by exhibits attached to the complaint. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The court may also consider facts which may be judicially noticed, Mullis v. U.S. Bankr. Ct., 828 F.2d at 1388, and matters of public record, including pleadings, orders, and other papers filed with the court. Mack v. South Bay Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986).

A pro se litigant is entitled to notice of the deficiencies in the complaint and an opportunity to amend, unless the complaint's deficiencies could not be cured by amendment. See Noll ...

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