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Russell Dodd v. Federal Home Loan Mortgage Corporation

December 19, 2011



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). Plaintiff filed a complaint against Federal Home Loan Mortgage Corporation's ("Freddie Mac") and various doe defendants on June 14, 2011. Compl., Dckt. No. 1 at 1, 3. Freddie Mac now moves to dismiss that complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Dckt. No. 6. Plaintiff opposes the motion and seeks to consolidate this action with an unlawful detainer action currently pending in Sacramento County Superior Court. Dckt. No. 9.


In this action, plaintiff challenges the origination of a refinance loan and the foreclosure sale of his home. See generally Compl., Dckt. No. 1. Plaintiff and his wife purchased the residential property at 3548 Domich Way, Sacramento, CA 95821 ("the subject property") in February 2002. Id. ¶ 35. On or about May 1, 2006, plaintiff and wife entered into a $241,500.00 refinance loan agreement with LoanCity.*fn1 Id. ¶ 39. Plaintiff planned to use the loan monies to purchase an investment property. Id. ¶ 40.

The refinance loan closed in May 2006 as evidenced by the Deed of Trust recorded against the subject property on May 5, 2006. Id. ¶ 39; see also Def.'s Req. for Jud. Notice, Dckt. No. 6-2 Ex. A.*fn2 The Deed of Trust lists the borrowers as plaintiff and his wife, the Lender as LoanCity, the Trustee as Chicago Title Company, and Mortgage Electronic Registration Systems ("MERS") as a nominee for the Lender and the Lender's successor and assigns.*fn3 Id. MERS is also a beneficiary under the Deed of Trust. Id. On May 1, 2006, plaintiff and his wife executed an Adjustable Rate Mortgage Note for the subject property. Id. On November 2, 2009, MERS executed a Assignment of Deed of Trust granting all of Loancity's beneficial interest in the Deed of Trust to CitiMortage, Inc. ("CitiMortgage"). Dckt. No. 1 ¶ 76. On November 23, 2009, CitiMortage, through Cal Western Reconveyance Corporation ("Cal Western"), recorded a Notice of Default. Def.'s Req. for Jud. Notice, Dckt. No. 6-2 Ex. B. On January 19, 2010 MERS, as servicing agent for Chicago Title Company ("Chicago Title Company"), recorded a Substitution of Trustee, wherein it substituted Cal Western as trustee in place of Chicago Title Company. Id. Ex. C. On February 24, 2010, Cal Western recorded a Notice of Trustee's Sale setting the sale of the subject property for March 16, 2010. Id. Ex. D. On January 20, 2011, the sale occurred and the subject property reverted back to CitiMortgage as the highest bidder at the sale, paying $172,213.00. Id. Ex. E.

Plaintiff's complaint alleges fifteen causes of action, which appear from the allegations to be asserted against a variety of defendants.*fn4 See generally Dckt. No. 1. The first, second, fifth, and sixth causes of action challenge the constitutionality of California Civil Code sections 2924-2924(I) under 42 U.S.C. §§ 1981, 1982, and 1983. Id. ¶¶ 105-117, 140-159. The third cause of action requests that the court declare California Civil Code section 1714.10 unconstitutional because it violates 42 U.S.C. § 1981 by creating a special class of privileged citizens, and the fourth cause of action claims that Section "1714.10 does not immunize Citibank, N.A., CitiMortgage, N.A., Cal Western Recon Trustee Servicing Solutions Nor Their Attorneys." Id. ¶¶ 127-39; see also id. at 33. Plaintiff's seventh cause of action seeks injunctive relief staying Cal Western's sale of plaintiff's home and eviction of plaintiff; the eighth cause of action seeks accounting relief; and the tenth cause of action seeks a declaratory judgment that no valid contract exists between plaintiff and CitiMortgage. Id. ¶¶ 160-75, 201-20. Plaintiff also alleges claims for unfair debt collection practices and predatory lending (ninth cause of action); slander of title (eleventh cause of action); fraud or negligent misrepresentation (twelfth cause of action); quiet title (thirteenth cause of action); intended third party beneficiary for breach of contract (fifteenth cause of action); and negligence (sixteenth cause of action). Id. ¶¶ 176-200, 221-64.

Although the allegations appear to be asserted against a variety of defendants, plaintiff has only named defendant Freddie Mac in the action. See id. at 1, 2, 5. Freddie Mac's alleged role in the origination of plaintiff's refinance loan contract and the non-judicial foreclosure sale of his home is unclear. The complaint includes the following allegations against Freddie Mac: * "Plaintiff . . . complain[s] of damages inflicted by the slander of title and conspiracy to defraud committed by Freddie Mac, and therefore seek[s] quiet title to real estate located in Sacramento County, California, from Freddie Mac, by and through their so called servicing Trustees, agents or nominees at [Cal Western]." Id. ¶ 1.

* "Apparently Freddie Mac became involved in the subprime 'mortgages' sold to investors without an actual asset backing, where the only 'security' is the belief that the price will continue to rise and the 'owner' will in fact pay only the interest (and in many cases less than the interest) is not a mortgage at all." Id. ¶ 5.

* In December 2009, plaintiff was contacted by "Freddie Mac Prommis Homeownership Solutions" in an attempt to modify his loan. In response, he submitted a set of required documents, at least half of which were never acknowledged. Plaintiff called Freddie Mac multiple times a day to follow up about a loan modification, but was given contradictory information about what documents had been received and which documents were still needed to process a loan modification. Id. ¶ 48.

* When plaintiff's home was put up for auction, Freddie Mac reduced the principal of his loan from $285,000 to $180,000. Plaintiff filed this complaint . . . to investigate why they would not reduce his payment; 2) why his documents appeared to have been deliberately misplaced; 3) why these foreclosing entities have been allowed to receive funds to modify loans and yet fail to do so; and 4) is the government benefiting or complicit in this fraud upon the taxpayers . . . ." Id. ¶ 55.

II. Motion to Dismiss

Freddie Mac now moves to dismiss plaintiff's complaint pursuant to Rule 12(b)(6) for failure to state a claim, arguing that because plaintiff fails to assert any claims against Freddie Mac, all causes of action against Freddie Mac should be dismissed with prejudice. Dckt. No. 6.

A. Standard of Review

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 deficiencies could not be cured by amendment. See Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987).

B. Plaintiff's Claims

Plaintiff's entire complaint against Freddie Mac must be dismissed for failure to state a claim. The majority of plaintiff's claims fail because plaintiff has not sufficiently alleged Freddie Mac's role in the origination of his loan or in the non-judicial foreclosure sale of his home. Plaintiff specifically notes that neither MERS nor LoanCity are defendants. Dckt. No. 1 at 5. And, while plaintiff alleges most claims against CitiMortgage and Cal Western, neither of those entities has been named as a party or has been served in this action. Additionally, although plaintiff makes certain allegations which suggest plaintiff was contacted by Freddie Mac to execute a home loan modification and that Freddie Mac made certain representations to plaintiff about modifying plaintiff's loan to avoid default and foreclosure, as provided in greater detail below, those allegations do not sufficiently state claims for fraud or negligent misrepresentation.

1. Constitutionality of California Civil Code §§ 2924-2924(I) (Claims 1, 2, 5, 6) Plaintiff's first, second, fifth, and sixth causes of action challenge the constitutionality of California Civil Code sections 2924-2924(I) ("Section 2924 ") under 42 U.S.C. §§ 1981, 1982, and 1983. Dckt. No. 1 ¶¶ 105-117, 140-159. Although plaintiff's claims challenging the constitutionality of Section 2924 are mostly unintelligible and the import of plaintiff's seemingly random statutory citations is unclear, it appears plaintiff purports to argue that Section 2924 violates due process and contract rights. Id. Specifically, plaintiff alleges that Section 2924 is unconstitutional because it denies certain classes of people, namely mortgagors, the equal rights to inherit, purchase, lease, sell, hold, and convey real and personal property within the meaning of 42 U.S.C. §§ 1982 and 1983. Id. ¶¶ 112, 141, 153. Plaintiff further claims that Section 2924 impairs and interferes with certain classes' right to make and enforce contracts, sue, be parties, give evidence, and enjoy the full and equal benefit of all laws and proceedings for the security of persons and property withing the meaning of 42 U.S.C. § 1981. Id. Plaintiff contends the enforcement and application of the non-judicial foreclosure process infringes on the civil rights of mortgagors and abolishes the right to private property. Id. ¶¶ 114-115. Plaintiff also alleges that he is Oriental. Id. ¶ 117. Plaintiff requests that the court declare the custom, practice, and policy of enforcement of non-judicial foreclosures by California courts as unconstitutional, declare Section 2924 unconstitutional on its face, and order that foreclosures against plaintiff or any person similarly situated in California and transfers effectuated under Section 2924 are null and void. Id. ¶¶ 121-22, 124, 147, 158.

Freddie Mac moves to dismiss these claims, arguing that plaintiff does not actually allege that his due process or private contractual rights were violated, plaintiff's allegations supporting the claims do not implicate Freddie Mac, and the California Supreme Court has held that the statutory framework governing non-judicial foreclosures is constitutional. Dckt. No. 6 at 4.

For the reasons set forth by Freddie Mac, plaintiff's §§ 1981, 1982, and 1983 claims against Freddie Mac regarding the constitutionality of Section 2924 must be dismissed. Plaintiff does not state a claim under § 1981 because plaintiff has not identified any contractual relationship that Freddie Mac impaired, nor has he alleged that Freddie Mac acted with any racial or class-based discriminatory animus. In fact, Freddie Mac was not a party to the original refinance loan. See 42 U.S.C. § 1981 ("[a]ll persons shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens."); Schiff v. Barrett, 2010 WL 2803037, at *4 (E.D. Cal. July 14, 2010) (providing that to state a claim under § 1981 a plaintiff must identify an "impaired contractual relation" by showing that intentional racial discrimination prevented the creation of a contractual relationship or impaired an existing contractual relationship).

Nor has plaintiff stated a claim under § 1982. See 42 U.S.C. § 1982 ("All citizens . . . shall have the same right . . . as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property."); Phiffer v. Proud Parrot Motor Hotel, Inc., 648 F.2d 548, 551 (9th Cir. 1980) (providing that to state a claim under § 1982 a plaintiff must demonstrate that (1) he is a member of a racial minority; (2) he applied for and was qualified to rent or purchase certain property or housing; (3) he was rejected; and (4) the housing or rental opportunity remained available thereafter). While plaintiff alleges he is "Oriental," he has not alleged that he applied for and was qualified to purchase certain property and was rejected by Freddie Mac. Further, the fact that plaintiff's 2006 refinance loan was approved by non-party LoanCity precludes plaintiff's ability to assert a § 1982 claim since it cannot be said that non-party LoanCity refused to contract with plaintiff on the basis of race.

Plaintiff also fails to state a claim under § 1983 since plaintiff does not allege that Freddie Mac violated plaintiff's constitutional or statutory rights, nor does he allege that Freddie Mac was a state actor or that it was otherwise acting under color of law.*fn5 See West v. Atkins, 487 U.S. 42, 48 (1988) (providing that to state a claim under § 1983 a plaintiff must allege: (1) the violation of a federal constitutional or statutory right; and (2) that the violation was committed by a person acting under the color of state law).

Because it appears amendment of these claims against Freddie Mac would be futile, plaintiff's claims regarding the constitutionality of Section 2924 (claims 1, 2, 5, and ...

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