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Arlene Hensley v. the Bank of New York Mellon

December 22, 2010



I. History*fn1

On November 8, 2005, Plaintiff Arlene Hensley obtained a $270,000.00 loan from First Bank Mortgage ("First Bank") in order to finance the property located at 2404 Buckley Way, Modesto, CA 95358. The loan terms were set forth in a promissory note, which was secured by a deed of trust that was recorded on November 23, 2005 in Stanislaus County. The deed of trust identifies First Bank as the lender, Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary and First Land Trustee Corporation ("First Land") as the trustee.

On March 29, 2010, Defendant ReconTrust Company, N.A. ("ReconTrust"), acting as an agent for MERS, recorded a notice of default against Plaintiff in Stanislaus County.*fn2 On April 7, 2010, a substitution of trustee and assignment of deed of trust was recorded in Stanislaus County. ReconTrust was substituted as trustee in place of First Land, and the deed of trust was assigned to Defendant The Bank of New York Mellon ("BNY Mellon"). Subsequently, ReconTrust filed a notice of trustee's sale that was recorded on July 7, 2010.

Plaintiff, proceeding pro se, filed a complaint on July 22, 2010 in federal district court. The Magistrate Judge dismissed the complaint for failure to state a claim with leave to amend on August 3, 2010. On August 30, 2010, Plaintiff filed a First Amended Complaint ("FAC") against BNY Mellon, MERS and ReconTrust. In the FAC, Plaintiff made claims for (1) predatory lending against all Defendants; (2) all applicable monetary and statutory damages under the Truth In Lending Act ("TILA"); (3) all applicable monetary and statutory damages under the Real Estate Settlement Procedures Act ("RESPA"); (4) all applicable monetary and statutory damages under the Home Ownership and Equity Protection Act ("HOEPA"); and (5) quiet title. Plaintiff asks the court to issue a temporary or permanent injunction to enjoin the foreclosure sale.

Defendants MERS and ReconTrust filed a motion to dismiss. Defendant BNY Mellon has not filed a responsive pleading to the FAC. No timely opposition was received and the matter was taken under submission.

II. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6),a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all of the complaint's material allegations of fact are taken as true, and the facts are construed in the light most favorable to the non-moving party. Marceau v. Balckfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The court must also assume that general allegations embrace the necessary, specific facts to support the claim. Smith v. Pac. Prop. and Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004). However, the court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Sci. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Although they may provide the framework of a complaint, legal conclusions are not accepted as true and "[t]hreadbare recitals of elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); see also Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). As the Supreme Court has explained:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949.

The plausibility standard is not akin to a 'probability requirement,' but it asks more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a Defendants' liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.' . . .

Determining whether a complaint states a plausible claim for relief will . . . be a context specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not shown -- that the pleader is entitled to relief.

Id. at 1949-50. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).

III. Discussion

As a preliminary matter, Plaintiff's FAC fails because it does not allege any specific claim against any specific Defendant. In dismissing the original complaint, the Magistrate Judge instructed Plaintiff that an amended complaint must link "the Defendants she names to each claim for which she claims that Defendant is liable." Plaintiff's FAC either generally alleges a claim against "all Defendants" or does not identify any Defendant in the claim. "Although a pro se litigant . . . may be entitled to great leeway when the court construes his pleadings, those pleadings must meet some minimum threshold in providing a defendant notice of what it is it allegedly did wrong." Brazil v. U.S. Dept. of Navy, 66 F.3d 193, 199 (9th Cir. 1995). Plaintiff has failed to place each of the Defendants on notice of the claim or claims being asserted against it. Nevertheless, the court will examine each of the claims alleged in the complaint to determine whether to grant the motion to dismiss.

A. Wrongful Foreclosure

In Plaintiff's Introduction and Facts section of the FAC, Plaintiff challenges MERS' right to foreclose and ReconTrust's right to conduct a foreclosure sale. Specifically, Plaintiff alleges that the original note was not endorsed to MERS and therefore "[w]ithout the endorsement or production of the original mortgage note, MERS cannot exercise the right to transfer/assign or foreclose." Plaintiff alleges ReconTrust does not have the right to conduct a foreclosure sale "because they were never given ...

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