The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge
Pending before the Court is Defendants Bank of America, N.A. and Bank of New York Mellon's Motion to Dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1
(Defs.' Mot. to Dismiss, ECF No. 10.) For the reasons discussed below, Defendants' Motion to Dismiss is granted.*fn2
On June 28, 2011, Plaintiffs Tim and Dina Deerinck ("Plaintiffs") filed the present action against Bank of America, N.A. ("Bank of America"), doing business as BAC Home Loans Servicing, and Bank of New York-Mellon ("Bank of New York"), as trustee for the benefit of the Countrywide Alternate Trust 2006-8T1 ("Countrywide Trust")(collectively, "Defendants").*fn3
Plaintiffs' Complaint seeks relief under five causes of action:
(1) declaratory relief under 28 U.S.C. § 2201-2202; (2) negligence; (3) violation of the Truth in Lending Act, 15 U.S.C. § 1641(g); (4) violation of Cal. Bus. & Prof. Code section 17200 et seq.; and (5) quiet title.
B. Allegations in Plaintiffs' Complaint*fn4
In January of 2006, Plaintiffs executed a promissory note for $585,000.00 ("Promissory Note") with Heritage Plaza Mortgage, Inc. ("Heritage"), in order to purchase property located in Manteca, California (the "subject property"). (Compl., ECF No. 1 ¶¶ 16, 58; Defs.' Request for Judicial Notice ("RJN"), ECF No. 11, Ex. B.)*fn5 The Deed of Trust named Heritage as the lender, First American Title Company of Stockton as the trustee, and Mortgage Electronic Registrations System, Inc. ("MERS") as the beneficiary. (Compl. ¶ 58; Defs.' RJN, Ex. A at 1-2.)*fn6 Plaintiffs identify Bank of America as the loan servicer. (Compl. ¶ 95.)
Plaintiffs' claims focus on the securitization and sale of their Deed of Trust and Promissory Note on the secondary mortgage market. (Id. ¶ 3.) Specifically, at some point after origination, Heritage attempted to securitize and sell Plaintiffs' Deed of Trust and Promissory Note to the Countrywide Alternative Trust Series 8T1-2006 (the "Countrywide Trust"). (Id. ¶¶ 4, 9-10.) Bank of New York is the Trustee of the Countrywide Trust and the Countrywide Trust is governed by a Pooling and Servicing Agreement ("PSA"). The parties involved in the securitization allegedly failed to adhere to the PSA's requirement that the Deed of Trust and Promissory Note must be properly endorsed, transferred, accepted, and deposited with the Countrywide Trust on or before the date specified in the PSA.
(Id.) As a result of this failure to comply with the PSA, Plaintiffs' contend that the Promissory Note and Deed of Trust are not part of the Countrywide Trust. (Id. ¶ 10.) Thus, Bank of New York, as Trustee for the Countrywide Trust, has no authority to collect on the loan. (Id. ¶¶ 4, 10-11.)*fn7
Plaintiffs contend they then attempted to determine the identity of the current owner of their Deed of Trust and Promissory Note. On or around April 12, 2010, Plaintiffs sent a Qualified Written Request ("QWR") letter to Bank of America requesting specific information about the status of Plaintiffs' loan account. (Id. ¶ 44, Ex. B.) In response to the April 12, 2010 QWR, Bank of America represented that Bank of New York was the owner of Plaintiffs' Deed of Trust and Promissory Note and that Bank of America is the servicer. (Id. ¶ 45, Ex. C.) Per Plaintiffs' April 12, 2010 request, Bank of America enclosed a copy of Plaintiffs' Promissory Note. (Id.) According to the Plaintiffs, the Promissory Note was not endorsed by or to Bank of America or Bank of New York. (Id.)
On May 13, 2010, Plaintiff Tim Deerinck e-mailed Alicia Reatz, a relationship manager with the Bank of New York, to obtain more information about the ownership status of their Deed of Trust. (Id. ¶ 46.) Ms. Reatz informed Plaintiffs that Bank of New York is "a Trustee, therefore, we [Bank of New York] do not physically own the loan or the property." (Id. ¶ 47.)
On August 9, 2010, Plaintiffs commissioned a company called Luminaq to conduct a securitization audit on their Deed of Trust and Promissory Note to determine the current owner of their loan. (Id. ¶ 48.) Plaintiffs contend that Neil L. Garfield, Esq., an attorney with Luminaq, determined that: (1) Heritage did not effectively dispose of the beneficial interest in Plaintiffs'
Deed of Trust and Promissory Note; (2) Heritage failed to transfer Plaintiffs' Promissory Note and Deed of Trust to Bank of New York and the Countrywide Trust; (3) that Heritage Plaza and Bank of New York intentionally and knowingly failed to follow the PSA governing the Countrywide Trust; (4) that Heritage Plaza failed to perfect title by not following the PSA; and (5) "[t]he beneficiaries have no power to enforce the terms of the [Countrywide] Trust." (Id. ¶¶ 49-50.)
On May 9, 2011, Plaintiffs sent a second QWR letter to Bank of America demanding the name, address, and contact information of the current owner of the Note. (Id. ¶ 55, Ex. E.) On June 7, 2011, Bank of America responded to Plaintiffs' second QWR by sending a life loan history report of Plaintiff's loan. (Id. ¶ 56, Ex. F.) According to Plaintiffs, Bank of America did not include any additional response. (Id.) Plaintiffs allege that because they cannot identify the true owner of their note, they do not know if they are sending their monthly mortgage payments to the correct party and that multiple banks may seek to enforce Plaintiffs' debt obligation.*fn8 (Id. ¶ 8; emphasis added.)
In the course of Plaintiffs' quest to identify the owner of their loan, Defendants allegedly failed to properly credit payments made, incorrectly calculated interest on accounts, and failed to accurately debt fees. (Id. ¶¶ 71, 74-75, 77.) As a result, Plaintiffs contend that they have overpaid in interest, their credit limit has been reduced, and their credit score has been damaged. (Id. ¶¶ 71, 74-75, 77.)
Based on these allegations, Plaintiffs challenge the securitization of their loan and seek relief under five causes of action against Defendants. First, Plaintiffs request a judicial determination pursuant to 28 U.S.C. §§ 2201-2202 that Defendants do not have any right or interest in Plaintiffs' Promissory Note, Deed of Trust, or the subject property and similarly, lack the authority to collect Plaintiffs' mortgage payments or enforce Plaintiffs' debt obligation. (Id. ¶¶ 89-91.) Plaintiffs allege that an actual controversy exists between Plaintiffs, Bank of New York, and Bank of America with regard to Bank of New York's authority to collect mortgage payments and enforce Plaintiffs' loan and as to the secured or unsecured status of Plaintiffs' loan. (Id. ¶¶ 85-88.) Plaintiffs seek punitive damages in order to deter Defendants from engaging in similar conduct. (Id. ¶ 92.)
Second, Plaintiffs allege a negligence claim against Defendants. (Id. ¶¶ 93-97.) Specifically, Plaintiffs contend that Defendants owe a duty to exercise reasonable care to follow California law with respect to the enforcement of debts and to refrain from taking actions against Plaintiffs outside the scope of their legal authority. (Id. ¶¶ 95-96.)
Third, Plaintiffs allege that Defendant Bank of New York violated Truth in Lending Act section 1641(g) by failing to provide Plaintiffs with written notice specifying that Bank of New York had been assigned the beneficial interest in Plaintiffs' Deed of Trust within thirty days ...