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Robert Baum v. America's Servicing Company

April 5, 2012

ROBERT BAUM,
PLAINTIFF,
v.
AMERICA'S SERVICING COMPANY, QUALITY LOAN CORPORATION; CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., CSMC MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 2007-2; AND ALL PERSONS UNKNOWN WHO MAY CLAIM AN INTEREST IN TITLE TO THE SUBJECT PROPERTY; AND DOES 1 THROUGH 20, INCLUSIVE, DEFENDANT.



The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH 30 DAYS LEAVE TO AMEND

On February 13, 2012, Defendants filed a motion to dismiss Plaintiff Robert Baum's complaint. (Doc. No. 3.) On March 16, 2012, the Court requested Plaintiff's opposition briefing as soon as possible. (Doc. No. 4.) On March 21, 2012, the Court again requested Plaintiff's opposition by March 27, 2012. (Doc. No. 5.) The Court still has not received Plaintiff's opposition. The Court, pursuant to its discretion under Local Rule 7.1(d)(1), determines that these matters are appropriate for resolution without oral argument, submits the motion on the parties' papers, and vacates the hearing scheduled for April 9, 2012, at 10:30 a.m. For the following reasons, the Court grants Defendants' motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) and grants Plaintiff 30 days leave to amend to cure the deficiencies in the complaint.

Background

Plaintiff's complaint arises out of a non-judicial foreclosure sale initiated by Defendants. (Doc. No. 1.) On June 30, 2006, Plaintiff executed a Deed of Trust ("DOT") to obtain a loan for $779,850 to refinance the real property located at 2290 Calle Caralene, Fallbrook, California 92028. (Doc. Nos. 1; 3, Ex. 1.) In October 2010, Plaintiff applied for a loan modification. (Doc. Nos. 1, 3.) Plaintiff was subsequently denied a loan modification. (Doc. Nos. 1, 3.) On April 6, 2011, the Assignment of Deed of Trust to U.S. Bank National Association, as Trustee for Credit Suisse First Boston Mortgage Securities Corp., CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-2 ("U.S. Bank") was recorded. (Doc. No. 3, Ex. 2.) On May 13, 2011, Quality Loan Service Corp. ("Quality") was substituted in as Trustee under the DOT. (Doc. Nos. 1; 3, Ex. 3.) On May 18, 2011, Quality recorded a Notice of Default. (Doc. Nos. 1; 3, Ex. 4.) On August 23, 2011, a Notice of Trustee's Sale was recorded. (Doc. Nos. 1; 3, Ex. 5.) The foreclosure sale has not yet occurred.

Plaintiff filed a complaint against Defendants on February 6, 2012, alleging that Defendants lack authority to commence the foreclosure process, causes of action one and two; alleging fraud, cause of action three; and seeking cancellation of the DOT, cause of action four. (Doc. No. 1.) Defendants filed their motion to dismiss on February 13, 2012. (Doc. No. 3.) Defendants argue that the complaint fails because Plaintiff has not tendered the outstanding loan balance. (Doc. No. 3.) In the alternative, Defendants argue that Plaintiff lacks standing to challenge the non-judicial foreclosure, Plaintiff has failed to allege fraud with the required specificity of Federal Rule of Civil Procedure 9(b), and Plaintiff has failed to sufficiently allege reasons why the DOT should be cancelled. (Doc. No. 3.)

Discussion

I. Request for Judicial Notice

Defendants' motion to dismiss is accompanied by a request for judicial notice, in which Defendants ask the Court to take judicial notice of several documents. (Doc. No. 3-2, Ex. 1--5.) In general, the scope of review on a motion to dismiss for failure to state a claim is limited to "allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). The Court may consider additional documents under the "incorporation by reference" doctrine as long as "the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

Defendants submit for judicial notice the DOT recorded in the San Diego County Recorder's Office on July 7, 2006. (Doc. No. 3-2, Ex. 1.) The Deed is a public record, and is referenced in and included as an exhibit to the complaint. (See Doc. No. 1, Ex. D.) Defendants also submit for judicial notice a copy of the Notice of Default and Election to Sell, recorded on May 18, 2011 in the San Diego County Recorder's Office. (Doc. No. 3-2, Ex. 4.) The Notice of Default is also a public record and is referenced and included as an exhibit to the complaint. (See Doc. 1-2, Ex. E.) Defendants submit a copy of the Assignment recorded in the San Diego County Recorder's Office on April 6, 2011. (Doc. No. 3-2, Ex. 2.) The Assignment is a public record and is referenced in the complaint. (See Doc. No. 1-2, ¶ 20.) Defendants submit a copy of the Substitution of Trustee, recorded on May 13, 2011 in the San Diego County Recorder's Office. (Doc. No. 3-2, Ex. 3.) It is a public record and is referenced in the complaint. (See Doc. No. 1-2, ¶ 22, 28--33.) Defendants also submit a copy of the Notice of Trustee Sale recorded on August 23, 2011 in the San Diego County Recorder's Office. (Doc. No. 3-2, Ex. 5.) It is a public record and is referenced in the complaint. (See Doc. No. 1-2, ¶ 22.) The Court grants Defendants' request to the extent the offered documents are properly subject to judicial notice.

II. Motion To Dismiss-Legal Standard

A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "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 his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. A complaint does not "suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 557). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (citing 5 Wright & Miller, Federal Practice and Procedure § 1216, 235--36 (3d ed. 2004)). "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996); see also Twombly, 550 U.S. at 555.

A. Plaintiff's General Allegations

1. Failure To Allege Tender of Outstanding Loan Balance

In his complaint, Plaintiff requests an order enjoining the foreclosure sale and any eviction proceedings on his property, claiming that Defendants lacked authority to commence the non-judicial foreclosure process. (Doc. No. 1.) Defendants argue that Plaintiff's complaint fails as a matter of law because he did not allege that he tendered or is willing to ...


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