FINDINGS AND RECOMMENDATIONS
This case came before the court on July 23, 2010, for hearing on defendants' motions to dismiss plaintiff's amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(6). (Doc. Nos. 25 and 28.) Michael Rapkin, Esq. appeared at the hearing for defendants Wells Fargo Bank, NA ("Wells Fargo") and Mortgage Electronic Registrations Systems, Inc. ("MERS"). Lawrence Harris, Esq. appeared telephonically for defendant First American Trustee Servicing Solutions ("First American"), formerly known as First American Loanstar Trustee Services. Plaintiff Joseph Edward Marty, 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' motions to dismiss plaintiff's amended complaint be granted.
Plaintiff commenced this action by filing a "Motion for Injunction" in this court on March 9, 2010. On that same date the assigned district judge denied that motion. (Doc. No. 5.) The following day plaintiff filed a motion for a temporary restraining order. That motion was denied by the assigned district judge on March 12, 2010. (Doc. No. 9.)*fn1 Defendants then filed motions to dismiss this action. (Doc. Nos. 10, 14, 16 and 19.) However, before those motions came on for hearing before the undersigned, on May 14, 2010, plaintiff filed a first amended complaint which is the operative pleading before this court. (Doc. No. 20.) Accordingly, on May 24, 2010, the court denied the then-pending motions to dismiss as having been rendered moot by the filing of the amended complaint. (Doc. No. 24.) On June 15, 2010, defendant First American filed their motion to dismiss the amended complaint. (Doc. No. 25.) On June 18, 2010, defendants Wells Fargo and MERS filed their motion to dismiss the amended complaint. (Doc. No. 28.) On July 6, 2010, plaintiff filed a "rebuttal" to defendants' motions, which the court has construed as plaintiff's opposition thereto. (Doc. No. 30.) Defendants filed replies. (Doc. Nos. 31, 33.) The motions were then heard and taken under submission.*fn2
In his amended complaint, plaintiff alleges as follows. He is the owner of the subject residential property located in El Dorado, California. (Doc. No. 20 at 3, ¶ 8.) On October 6, 2008, he borrowed $397, 658.00 from New Line Mortgage, Div. Republic Mortgage Home Loan and executed a promissory note, secured by a Deed of Trust, thereby encumbering the property. (Doc. No. 20 at 3, ¶10 and Exs. A & B.) The Deed of Trust was recorded with the El Dorado County Recorder's Office on October 20, 2008 and identified plaintiff as the borrower, defendant MERS as the nominee of the lender and Fidelity National Title as the trustee. (Id., Ex. B.)
When plaintiff defaulted on the mortgage loan, a Notice of Default and Election to sell was recorded on May 29, 2009, by defendant First American as an agent for defendant Wells Fargo. (Id. at ¶23, Ex. D.) However, it was not until July 21, 2009, that an Assignment of Deed of Trust from defendant MERS to defendant Wells Fargo was recorded with the El Dorado County Recorder's Office. (Id. at ¶24, Ex. E.) The individual who signed that Assignment of Deed of Trust as a certifying officer for defendant MERS, Chet Sconyers, was actually employed by defendant First American and not by defendant MERS. (Id.) Nonetheless, when the default was not cured, successor trustee defendant First American recorded a Notice of Trustee Sale with the El Dorado County Recorder's Office on September 3, 2009, initially setting a sale date of September 23, 2009 for the subject property. (Id. at ¶25, Ex. H.)*fn3 Plaintiff demanded of defendant Wells Fargo all information and records showing the transfer of any obligations under the note and deed of trust but never received a response. (Id. at ¶22, Ex. C.)
Based upon these allegations, plaintiff contends that the defendants "lack any interest under the Deed of Trust which may be enforced by lien upon or sale of the subject property." (Id. at ¶33.) Plaintiff contends that all of the transfers of the obligations under the note outlined above were invalid and, as a result, defendants lack authority to declare a default on the loan, foreclose, sell the subject property or to receive any proceeds from such a sale. (Id. at¶¶ 35-41.) Plaintiff claims that he is entitled to title in the subject property, free and clear of any obligation under the mortgage loan. (Id. at ¶46.) Plaintiff also claims that the "securitization" of the note was an improper conversion and alteration of the note and deed of trust undertaken without his consent, making the Deed of Trust unenforceable against him. (Id. at ¶¶ 48-57.)
Based on these allegations, plaintiff's amended complaint alleges causes of action for estoppel, declaratory judgment, quiet title, improper conversion and alteration, slander of title and refund. In terms of relief, plaintiff essentially seeks an order declaring that defendants lack any interest in the subject property, terminating all collection and foreclosure activities, restoring unencumbered title to plaintiff, refunding to plaintiff all fees and charges he paid on the Trust Deed that has now been rendered invalid, and damages, fees and costs. (Id. at 19-20.)
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 claim upon which relief can be granted.
Specifically, defendants Wells Fargo and MERS argue that plaintiff's failure to tender the indebtedness vitiates both his declaratory relief and quiet title claims as a matter of law. (Doc. No. 28 at 4.) In addition, they assert that plaintiff's separate declaratory relief claim is not actionable. (Id. at 6.) Defendants next argue that because the recording of the notice of default and notice of trustee sale are privileged under California law, plaintiff's slander of title claim fails as well. (Id. at 6-7.) According to defendants Wells Fargo and MERS, the Deed of Trust that plaintiff signed reflected his agreement that the successors and assigns of the Lender benefitted from the covenants and agreements of the security instrument, thus defeating his improper conversion claim based on the securitization of the loan. (Id. at 7-8.)
In addition, defendant First American contends that its actions as trustee are protected under California law by the litigation privilege because it acted without malice and only commenced foreclosure proceedings only on the instructions of the beneficiary. (Doc. No. 25 at 7-8.) Defendant First American also argues that in carrying out its statutorily protected role of foreclosure trustee, it owed no duty to plaintiff. (Id. at 8.) Recognizing that plaintiff's claims are primarily based on his contention that it served the Notice of Default on May 29, 2009, before it was named the trustee of record in the Substitution of Trustee recorded July 21, 2009, First American contends, as do the other moving defendants, that California Civil Code § 2934a(b) & (c) authorizes the Substitution of Trustee to be filed subsequent to the serving of the Notice of Default, so long as it is recorded prior to the Notice of Trustee Sale. (Id. at 9.) Defendant First American argues that plaintiff's contention that the individual who signed the Assignment of Deed of Trust lacked authority to do so is unsupported "hyper-technical minutiae" that, even if true, did not prejudice plaintiff. (Id. at 10.) Finally, defendant First American argues that the remainder of plaintiff's claims are "fanciful" and not cognizable.
In his opposition plaintiff argues that his is similar to many other cases in which defendant Wells Fargo has attempted to foreclose on properties without standing to do so. (Doc. No. 30 at 2.) Plaintiff repeats his principle arguments that defendant Wells Fargo did not record its Assignment of Deed of Trust until July 21, 2009, long after the Notice of Default was filed on May 29, 2009 and that defendant MERS involvement is as a mere strawman to avoid recording laws. Plaintiff also argues that although California law allows a Substitution of Trustee after a Notice of Default is recorded, it does not allow a company that has no authority to file a Notice of Default ...