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Janell Gomes v. Mortgage Electronic Registration Systems

February 3, 2012

JANELL GOMES, PLAINTIFF,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS

This diversity action, originally filed on July 7, 2011, was referred to the undersigned pursuant to E.D. Cal. L.R. 302(c)(21). Plaintiff has paid the filing fee and is proceeding pro se with her first amended complaint.*fn1 Currently pending before the court is defendants Mortgage Electronic Registrations Systems, Inc. ("MERS") and Bank of America, N.A., as successor by merger with BAC Home Loans Servicing, LP's ("BANA") motion to dismiss the first amended complaint pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. No. 14.) Plaintiff filed an opposition and defendants filed a reply. (Dkt. Nos. 18, 19.) At the hearing on defendants' motion, plaintiff appeared pro se and Craig Baumgartner appeared on behalf of defendants. After considering the papers in support of and in opposition to the motion, the parties' oral arguments, and the applicable law, the court FINDS AS FOLLOWS:

BACKGROUND

The background facts are taken from the operative first amended complaint, unless otherwise noted. On August 8, 2007, plaintiff executed a promissory note in the amount of $220,000 secured by a deed of trust on her real property at 7706 Spring Valley Avenue in Citrus Heights, California. (See First Amended Complaint ["FAC"] ¶ 6; Defendants' Request for Judicial Notice, Dkt. No. 15 ["RJN"], Ex. A at 2.)*fn2 The deed of trust identifies Janell A. Gomes as the borrower; Countrywide Home Loans, Inc. as the lender; CTC Real Estate Services as the trustee; and MERS as the nominee for the lender and the lender's successors and assigns, as well as the beneficiary under the deed of trust. (FAC ¶ 6; RJN Ex. A at 1-2.)

Plaintiff alleges that Countrywide subsequently transferred or assigned the loan to another party, and that further transfers and assignments were made after that. (FAC ¶ 11.) Despite these transfers, no assignment of the mortgage was recorded, and the current records still reflect that MERS is the nominee for the lender and the lender's successors and assigns. (FAC ¶ 12.) However, according to plaintiff, neither Countrywide nor the current assignee/transferee of the loan is a member of MERS and therefore MERS allegedly cannot act as their nominee. (FAC ¶¶ 10-11.) On March 14, 2011, plaintiff sent a notice to MERS purportedly rescinding any previous authorization she gave for MERS to act as the nominee on the deed of trust, and requesting that MERS cancel the deed of trust. (FAC ¶ 15.) To date, MERS has failed to comply with plaintiff's request. (FAC ¶ 15.) Plaintiff claims that, since MERS is not owed anything and is not the actual creditor, the continuing inclusion of its name on the deed of trust is a false statement in the county record, clouds title to the property, and impairs its market value. (FAC ¶¶ 13, 16-17.)

As to defendant BANA, plaintiff alleges that in 2009, BANA began making representations to plaintiff that it was the servicer of her mortgage and that plaintiff should make her payments to it. (FAC ¶ 25.) In August, 2010, BANA even offered plaintiff an incentive to open an account with Bank of America to allow for automatic mortgage payments to be made from that account, which plaintiff did. (FAC ¶¶ 28-29.) Subsequently, after "hearing reports in the media of the serious problems of fraud within the mortgage industry," plaintiff decided to investigate her own mortgage. (FAC ¶ 31.) Plaintiff sent BANA a request which, in part, sought an accounting of (i) to whom BANA was sending plaintiff's monthly payments and (ii) documentation showing that the party to which BANA was sending plaintiff's payments was the actual mortgage owner at the time. (FAC ¶ 32.) BANA did not provide this information. (FAC ¶ 32.) Plaintiff now contends that BANA is not the mortgage servicer for the actual creditor/owner of the mortgage, is not authorized by the actual creditor/owner to act as the mortgage servicer for plaintiff's mortgage, and (based on information and belief) has not been sending any of plaintiff's payments to the actual creditor/owner of the mortgage. (FAC ¶¶ 23,

33.) Plaintiff further contends that BANA engaged in "false representations, deceptive means, and actions" and "wrongfully obtained monies" from her. (FAC ¶¶ 19-20, 34-35, 37-38.)

Plaintiff's first amended complaint contains four causes of action: (1) cancellation of the deed of trust against MERS; (2) conversion against BANA; (3) violation of the federal Fair Debt Collection Practices Act ("FDCPA") against BANA; and (4) violation of California's Rosenthal Fair Debt Collection Practices Act ("RFDCPA") against BANA. (FAC at 6.)*fn3

DISCUSSION

In considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, the court must accept as true the allegations of the complaint in question, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and construe the pleading in the light most favorable to the plaintiff, see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). However, to avoid dismissal for failure to state a claim, a complaint must contain more than "naked assertions," "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). In other words, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Furthermore, a claim upon which the court can grant relief must have facial plausibility. 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." Iqbal, 129 S. Ct. at 1949.

The court now proceeds to analyze plaintiff's causes of action in accordance with the principles outlined above.

First Cause of Action for Cancellation of Deed of Trust In support of her claim for cancellation of the deed of trust, plaintiff contends that the inclusion of MERS's name on the deed of trust is a false statement in the county record, clouds title to the property, and impairs its market value.

Section 3412 of the California Civil Code provides that "[a] written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled." Cal. Civ. Code § 3412. Here, plaintiff fails to allege why the deed of trust is void or voidable, and how she has suffered or will suffer serious harm as a result of MERS's designation in the deed of trust. California courts have held that MERS*fn4 may properly serve as a beneficiary and nominee for the lender when the deed of trust so specifies. See Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149, 1156 n.7, 1157-58 (2011) (holding that under California law, MERS may initiate a foreclosure as the nominee, or agent, of the noteholder); see also Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1190 (N.D. Cal. 2009) (noting that "courts have been clear to allow MERS to conduct the foreclosure process when granted the power of sale provision"). Thus, the mere status of MERS as nominee for the lender and beneficiary under the deed of trust cannot cause plaintiff any injury.

Furthermore, plaintiff's allegations that neither Countrywide nor the current assignee/transferee of the loan is a member of MERS and that MERS therefore cannot act as their nominee are unavailing. The deed of trust specifically authorized MERS to act as the nominee for the original lender, Countrywide. (RJN, Ex. A at 2.) Whether Countrywide is officially a member of MERS or not is irrelevant here -- the fact remains that Countrywide, via the deed of trust, authorized MERS to be its nominee and beneficiary under the deed of trust. MERS on its part does not object to that designation and has apparently consented to it. Additionally, plaintiff's allegation that the current assignee/transferee of the loan is ...


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