The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITHOUT LEAVE TO AMEND
Plaintiff brought the instant suit based on a loan obtained in 2006 and secured by a Deed of Trust encumbering certain real property, and the subsequent foreclosure proceedings instituted against him. In his First Amended Complaint, Plaintiff lists seventeen individual causes of action and seeks relief in the form of invalidation of the underlying loan, restoration of his ownership interest in the property, damages, and injunctive relief. (Doc. No. 11, "FAC.") Defendants Federal Home Loan Mortgage Corporation ("FHLMC") and JP Morgan Chase Bank, N.A. ("Chase") now bring a motion to dismiss the Complaint. (Doc. No. 11.)
Pursuant to CivLR 7.1(d)(1), the court determines this matter is appropriate for resolution without oral argument. For the reasons set forth below, the court hereby GRANTS Defendants' motion.
Plaintiff Hermilo Tellez is an individual residing in San Diego County and the alleged owner of a parcel of real property located at 331 Camino Redondo, San Marcos, California 92069 (the "Property"). (FAC ¶ 2.) On or around December 12, 2006, Plaintiff obtained a five-year loan from Washington Mutual Savings Bank ("Washington Mutual") secured by a Deed of Trust encumbering the Property. (Id. ¶ 15.) The Deed of Trust named Washington Mutual as the lender, and California Reconveyance Company as the trustee. (Id. ¶ 28; Doc. No. 13-2, Defendants' Request for Judicial Notice ("RJN"), Exh. 1.) Plaintiff's loan was subsequently acquired, along with other assets, from Washington Mutual by Defendant Chase. (Complaint ¶ 18; RJN at Exh. 2.)
A Notice of Default executed on December 17, 2008 and recorded on December 18, 2008 showed that Plaintiff owed $10,898.27 in past-due payments, costs, and expenses. (RJN at Exh. 3.) The following month, a Substitution of Trustee was executed, substituting Defendant Quality Loan Service Corp. ("Quality") in place of the previous trustee. (Id. at Exh. 7.) A Notice of Trustee's Sale was then executed on March 19, 2009. (Id. at Exh. 4.) The Property was ultimately sold by Quality at a public auction on August 4, 2009, which sale was reflected in a Trustee's Deed Upon Sale executed on August 13, 2009. (Id. at Exh. 8.)
On April 8, 2009, in the midst of the foreclosure proceedings described above, Plaintiff filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Southern District of California. (Id. at Exh. 5, Doc. No. 1.) This matter was subsequently converted to a Chapter 7 case by Plaintiff on April 24, 2009. (Id. at Doc. No. 14.) The case was ultimately dismissed by the bankruptcy court based on Plaintiff's failure to appear at and testify before a First Meeting of Creditors. (Id. at Doc. No. 42.)
On January 25, 2011, Plaintiff filed the instant action in San Diego Superior Court, naming as defendants Chase, Quality, and FHLMC. (Doc. No.1, Exh. A.) According to Plaintiff, he was improperly induced to enter into the loan agreement based on various acts of deception and trickery by Washington Mutual. (See FAC ¶¶ 17-28.) Plaintiff now seeks to invalidate the loan and reclaim title to the Property.
Chase and FHLMC removed the action to federal court on February 28, 2011, citing federal jurisdiction under 12 U.S.C. § 1452(f). (Doc. No. 1.) Both defendants then filed a motion to dismiss, which was granted on the grounds that Plaintiff was not the real party in interest in the case, his cause of action having been ceded to the bankruptcy estate. (Doc. No. 9.) However, the court granted Plaintiff leave to seek participation of the trustee and re-file his action thereafter. (Id. at p.6.) Plaintiff subsequently filed his First Amended Complaint on May 27, 2011. Chase and FHLMC now once again move to dismiss. (Doc. No. 13.) Plaintiff opposes Defendants' motion.*fn1 (Doc. No. 14.)
A motion to dismiss under FED. R. CIV. P. 12(b)(6) challenges the legal sufficiency of the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the motion, the court must construe the pleadings in the light most favorable to the non-moving party, accepting as true all material allegations in the complaint and any reasonable inferences drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). While Rule 12(b)(6) dismissal is proper only in "extraordinary" cases, United States v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981), the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
As mentioned above, this court previously dismissed this case after finding that Plaintiff was not the proper party to bring the action absent a showing that the action was exempt from the bankruptcy proceedings or abandoned by the bankruptcy trustee. Leave to amend was granted on the condition that Plaintiff seek the trustee's participation in his suit. However, the FAC does not include any joinder in the action by the trustee; instead, Plaintiff has merely amended his complaint to include the allegation that, because the instant suit was not filed until a year and a half after the dismissal of his bankruptcy case, "any issue as to the real party in interest in this case is moot." (FAC ¶ 35.)
Chase and FHLMC argue that this allegation is insufficient to cure the defect recognized in the original complaint because the trustee cannot be said to have abandoned Plaintiff's causes of action where the suit or potential suit was not listed among Plaintiff's assets when he filed for bankruptcy. (Doc. No. 13-1 p.6.) Plaintiff does not deny that he did not list the instant litigation in the schedule of property filed as part of his bankruptcy proceedings. Nevertheless, he claims that his causes of action against Defendants have reverted to him by abandonment under 11 U.S.C. § 554(c), which provides that property "not otherwise administered at the time of the closing of a [bankruptcy] case is abandoned to the debtor." (Doc. No. 14 p.6.) However, as Plaintiff also ...