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Maria Lindsay, et al. v. America's Wholesale Lender

January 10, 2012

MARIA LINDSAY, ET AL.
v.
AMERICA'S WHOLESALE LENDER, ET AL.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

Before the Court is Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint ("FAC") (Dkt. 20). The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. After considering the moving, opposing, and replying papers thereon, and for the reasons stated below, the Court hereby GRANTS IN PART and DENIES IN PART the Motion. The Court also GRANTS Defendants' request for judicial notice.

I. BACKGROUND

Plaintiffs Maria and Dean Lindsay ("Plaintiffs" or "the Lindsays") filed this suit against America's Wholesale Lender ("AWL") in its capacity as the originating lender, Deutsche Bank National Trust Company ("Deutsche Bank") in its capacity as purported assignee of Plaintiffs' deed of trust, and Bank of America, N.A., as successor by merger to BAC Home Loan Servicing, LP ("BAC"), in its capacity as purported mortgage servicer. On April 24, 2006, Plaintiffs executed a $750,000 promissory note, secured by a deed of trust, to refinance real property located in Laguna Beach, California. Shortly after the origination of their loan, AWL attempted to sell the loan. (FAC ¶ 16.) Plaintiffs allege that their note and deed of trust were never properly assigned and transferred into the HarborView Mortgage Loan Trust for Mortgage Pass-Through Certificates, Series 2006-5 ("Harborview Trust). (Id. ¶ 17.) As a result, Plaintiffs conclude that their note was never properly transferred to Deutsche Bank as Trustee of the Harborview Trust, as required under California Civil Code § 2932.5, thereby preventing Defendants from collecting on the note and enforcing the deed of Id. ¶ 1.) Plaintiffs allege that because no assignment of the deed of trust was ever recorded, Defendants do not have an enforceable security interest. (Id.) In conclusion, Plaintiffs assert that Defendants do not have any legal, equitable, or pecuniary interest in either the note or deed of trust.

) Plaintiffs do not dispute that they owe money on their loan, rather, they dispute the amount owed and ask the Court to determine the true creditor of their note and deed of trust, and whether Deutsche Bank is entitled to demand payment, negotiate a loan modification, or enforce the deed of trust. (Id. ¶ Alternatively, if the Court finds an enforceable security interest in the note or deed of trust on behalf of any Defendant, Plaintiffs allege that Defendants have breached Section 2 of the deed of trust, as well as the implied covenant of good faith and fair dealing, by charging improper fees, miscalculating and misapplying payments to offset principal and interest, and that Defendants have committed various statutory violations, including the Fair Debt Collections Practices Act ("FDCPA") and the Real Estate Settlement Procedures Act ("RESPA"). (Id. ¶ 2.)

III. LEGAL STANDARD

Under Rule 12(b)(6), a defendant may move to dismiss for failure to state a claim upon which relief can be granted. A plaintiff must state "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" if the plaintiff pleads facts that "allow[] 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

In resolving a Rule 12(b)(6) motion under Twombly, the Court must follow a two-pronged approach. First, the Court must accept all well-pleaded factual allegations as true, but "[t]hread-bare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."

Nor must the Court "accept as true a legal conclusion couched as a factual allegation." Id. at 1949-

Twombly, 550 U.S. at 555). Second, assuming the veracity of well-pleaded factual allegations, the Court must "determine whether they plausibly give rise to an entitlement to relief." Id. at 1950. This determination is context-specific, requiring the Court to draw on its experience and common sense, but there is no plausibility "where the well pleaded facts do not permit the court to infer more than the mere possibility of misconduct." Id.

III. DISCUSSION

A. Section 2932.5

Because the bulk of Plaintiffs' claims turn on whether California Civil Code § 2932.5

applies to deeds of trust, as opposed to mortgages, the Court first considers this question.

Section 2932.5 pertains to assignment of instruments carrying the power of sale and requires the recording of any assignment of such an instrument before the assignee can sell the underlying property. Specifically, the section provides:

Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be ...


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