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Audrey Derusseau v. Bank of America

March 28, 2012


The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge


Currently pending before the Court is Defendants Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, L.P. ("BAC" or "BAC Servicing") and Federal Home Loan Mortgage Corporation's ("Freddie Mac") motion to dismiss Plaintiff Audrey Derusseau's second amended complaint ("SAC") for failure to state a claim upon which relief can be granted. [Doc. No. 30.] Plaintiff opposed the motion [Doc. No. 33], and Defendants submitted a reply [Doc. No. 34]. Plaintiff is represented by counsel. On February 1, 2012, the Court deemed the matter suitable for decision on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons set forth below, the Court GRANTS Defendants' motion to dismiss. BACKGROUND

This action arises out of foreclosure-related events with respect to Plaintiff's real property, located at 2235 Cliff Street, San Diego, California 92116 (the "Property"). [SAC, Doc. No. 28 ¶1.]*fn1 On or about April 2, 2007, Plaintiff executed a promissory note ("Note") to obtain a loan from Bank of America, secured by a Deed of Trust, to purchase the Property. [Id.] The Deed of Trust names PRLAP, Inc. as the trustee. [Id. ¶15; Exh. D, p.2.] In March 2009, Plaintiff was "experiencing financial hardship" and contacted BAC to apply for a loan modification to lower her monthly payments. [SAC ¶19.] Plaintiff alleges BAC offered her a forbearance plan in April 2009, but abruptly cancelled it without explanation in November 2009. [Id. ¶20.] Notably, however, Plaintiff defaulted on her loan on July 1, 2009. [Doc. No. 15-1, Exh. A, p.6.] From November 2009 through March 2011, BAC represented that Plaintiff's loan was in "review status." [SAC ¶20.] In April 2011, BAC cancelled its review of her loan. [Id. ¶21.] Ultimately, BAC foreclosed on Plaintiff's Property. [Id. ¶23.] Plaintiff "felt she had been treated unfairly and sought counsel to investigate why BAC" forced her into foreclosure. [Id.]

Plaintiff asserts her "initial investigation has confirmed that there was an attempt to securitize the Mortgage by assigning and transferring the Mortgage into the Securitized Trust, but the mortgage loan was never actually assigned and transferred to the Securitized trust." [Id. ¶24 (bold in original).] Stated another way, "Freddie Mac attempted but failed to become a party to the Note and Deed of Trust when it was purportedly assigned Bank of America's interest in Plaintiff's Note and Deed of Trust, thereby becoming purported owner of Plaintiff's Note and Deed of Trust." [Id. ¶54.] Therefore, according to Plaintiff, Freddie Mac never acquired an interest in Plaintiff's Note. "Despite this failure to assign, transfer, and grant Plaintiff's Mortgage to Freddie Mac, Defendants have made numerous attempts to collect on Plaintiff's Mortgage." [Id. ¶¶33, 54.] Further, although Plaintiff defaulted on her mortgage on July 1, 2009, she alleges that she "has been paying the wrong creditor and all payments to the Securitized trust must be disgorged and refunded." [Id. ¶¶35, 55.] In the alternative, Plaintiff asserts that if Freddie Mac did acquire an interest in her Note, Freddie Mac failed to comply with the Truth in Lending Act's notice of new creditor requirements under 15 U.S.C. § 131(g).

Plaintiff also alleges Freddie Mac violated the Fair Debt Collection Practices Act by fraudulently representing the status of her loan and "attempt[ing] to collect on the Note under false pretenses, namely that they [sic] were assigned Plaintiff's debt when in fact they [sic] were not." [Id. ¶¶62, 66.] As a result of Defendants' alleged conduct, Plaintiff initiated this action on August 8, 2011, and filed her SAC on December 14, 2011. Plaintiff's SAC alleges nine causes of action for: (1) Declaratory Relief under 28 U.S.C. §§ 2201 and 2202; (2) Quasi Contract; (3) Violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e; (4) Violation of the Truth in Lending Act, 15 U.S.C. § 1641(g); (5) Violation of California Business and Professions Code §§ 17200 et seq.; (6) Accounting; (7) Breach of Contract; (8) Breach of the Implied Covenant of Good Faith and Fair Dealing; and (10) Violation of California Civil Sections 2923.5 and 2924 et seq.*fn2

Defendants move to dismiss Plaintiff's entire SAC under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.


A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of [her] entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks, brackets and citations omitted).

In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Legal conclusions need not be taken as true merely because they are cast in the form of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Similarly, "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998).

In determining the propriety of a Rule 12(b)(6) dismissal, generally, a court may not look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003); Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir. 1998). Despite Plaintiff's argument to the contrary [Doc. No. 33, p.4-6], a court may however consider items of which it can take judicial notice without converting the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

Under Federal Rule of Evidence 201(b), judicial notice may be taken of facts that are "not subject to reasonable dispute" because they are "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). Applying Rule 201(b), federal courts routinely take judicial notice of facts contained in publically recorded documents, including Deeds of Trust, Substitutions of Trustee, and Notices of Defaults, because they are matters of public record, and are not reasonably in dispute. See, e.g., Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (quoting MGIC Indem. Corp. v. Weisman, 803

F.2d 500, 504 (9th Cir. 1986)); Lingad v. IndyMac Fed. Bank, 682 F. Supp. 2d 1142, 1146 (E.D. Cal. 2010); Vogan v. Wells Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 132944 *6-8 (E.D. Cal. Nov. 17, 2011); Tiqui v. First Nat'l Bank of Arizona, 2010 U.S. Dist. LEXIS 33326 *2 n.2 (S.D. Cal. April 5, 2010).

Defendants request the Court take judicial notice of: (1) the Notice of Default, dated June 28, 2011 and recorded in the San Diego Recorder's Office on July 1, 2011; and (2) the Substitution of Trustee, dated June 16, 2011, and recorded in the San Diego Recorder's Office on July 1, 2011. [Doc. No. 31.] Because the Court already granted judicial notice of these documents [Doc. No. 27, p.4-5; see also Doc. No. 15], the Court denies Defendants' pending, duplicative request for judicial notice as moot.

Plaintiff requests the Court take judicial notice of a report published by the Office of the Assessor-Recorder in San Francisco entitled, "Foreclosure in California A Crisis of Compliance." [Doc. No. 36.] The Court declines to do so for two reasons. First, Plaintiff's request is untimely, as it was filed roughly three weeks after briefing on Defendants' motion to dismiss was complete and the motion was taken under submission. Second, regardless of whether judicial notice of the document might be proper, the content is entirely irrelevant to the pending motion. To survive a motion to dismiss, Plaintiff must allege facts that demonstrate she is entitled to relief. Documents such as the Deed of Trust and Notice of Default on Plaintiff's Property are judicially noticeable and relevant, because they provide facts relevant to the specific transactions at issue. Conversely, a general report on the mortgage industry's compliance with various statutes provides no facts regarding Plaintiff's circumstances and purported injuries, and is therefore unhelpful at this stage of the proceedings.


In her SAC, Plaintiff alleges this Court has jurisdiction because her allegations present a federal question. [SAC, ¶3.] Plaintiff no longer alleges diversity jurisdiction exists. [Compare Doc. No. 11, FAC, ¶4 with Doc. No. 28, SAC ¶¶3-14.] The Court therefore addresses ...

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