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George J. Gehron; Cheryl L. Gehron v. Best Reward Credit Union

March 15, 2011

GEORGE J. GEHRON; CHERYL L. GEHRON, PLAINTIFFS,
v.
BEST REWARD CREDIT UNION, F/K/A VANTAGE FEDERAL CREDIT UNION, F/K/A REWARD [DOC. NO. 27, 33, 34] ONE, F/K/A BEST EMPLOYEES FEDERAL CREDIT UNION; JOHN J. SHIRILLA; CUMANET; ASSURED LENDER SERVICES, INC.; MERS (MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.), DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AMENDED COMPLAINT AND DENYING AS MOOT MOTION TO STRIKE AMENDED COMPLAINT

In their amended complaint, Plaintiffs assert eight claims arising from Defendants' alleged securitization and sale of their mortgage loans. Presently before the Court is a motion to dismiss and a motion to strike the amended complaint brought by Defendants Best Reward Credit Union ("Best") and John J. Shirilla (Doc. Nos. 33, 34) and a motion to dismiss the amended complaint brought by Defendant CUMANET (Doc. No. 27). For the reasons stated herein, the Court GRANTS Defendants' motions to dismiss and DENIES AS MOOT the motion to strike.

BACKGROUND

Plaintiffs' amended complaint has been copied more or less wholesale from a complaint filed in a number of unrelated cases. See Def. Best's Mot. at 1.*fn1 As another Court noted, the complaint is "chockablock with vague and conclusory allegations, and the Court doubts it even complies with the requirements of Rule 8 that a complaint contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.'"*fn2 Gervais v. Am. Express Centurion Bank, 2010 WL 4929077, at *2 (S.D. Cal. Nov. 30, 2010). Nevertheless, the Court discerns the following allegations from Plaintiffs' amended complaint.

Plaintiffs appear to allege that on or about October 17, 2003 and May 4, 2004, they obtained mortgages on some property. (Id. ¶¶ 32-33.) Defendants then sold Plaintiffs' mortgages "to New York Stock Exchange," and the mortgages ended up being pooled and traded by "Fidelity Funds" or "Fidelity Investment." (Id. ¶¶ 19, 34-35.) On September 10, 2010, one or more of the Defendants "filed a foreclosure action against the Plaintiff on the property . . ." (Id. ¶ 17.)

Plaintiffs filed their original complaint in this Court on October 1, 2010. (Doc. No. 1.) Certain Defendants moved to dismiss the original complaint, and Plaintiffs responded by filing an amended complaint on December 8, 2010. (Doc. Nos. 12, 16.) Defendant CUMANET filed a motion to dismiss the amended complaint on December 22, 2010, and Defendants Best and John J. Shirilla filed a motion to dismiss and a motion to strike the amended complaint on January 6, 2011. (Doc. Nos. 27, 33-34.) Plaintiffs filed an opposition and Defendants filed replies. (Doc. Nos. 41, 43-44.) The Court vacated a hearing scheduled for February 24, 2011, electing instead to take the matter under submission pursuant to Local Civil Rule 7.1(d). (Doc. No. 47.) /// ///

DISCUSSION

I. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "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). 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." Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556).

However, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). A court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009). In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

II. Analysis

A. The Banking Act of 1933

The Banking Act of 1933, also known as the Glass-Steagall Act, established the Federal Deposit Insurance Corporation and separated commercial banking from investment banking, prohibiting commercial banks from speculating in securities. See P.L. 73-66, 48 Stat. 162. The subheading to Count I of Plaintiffs' amended complaint is "Glass-Steagall Request for Reinstatement of Repealed Parts." Plaintiffs allege that the "Act provides strict policies preventing investment banking activities of commercial banks and forces them to withdraw completely from important segments of the investment banking business." See Am. Compl. ¶ 62. Plaintiff appears to be asserting rights under sections of the Banking Act of 1933 (sections 20 and 32) that were repealed on November 12, 1999, when the Gramm-Leach-Bliley Act was signed into law. See P.L. 106-102, 113 Stat. 1338. The Gramm-Leach-Bliley Act specifically allowed affiliations between commercial banks and securities firms. See id. To the extent that Plaintiffs seek reinstatement of repealed parts, the Court is unable to provide the requested relief. See U.S. Const. art. I, § 1 ("All legislative Powers herein granted shall be ...


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