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Melanie I. Cornell v. That Certain Instrument Entitled "Deed of Trust

May 21, 2012

MELANIE I. CORNELL,
PLAINTIFF,
v.
THAT CERTAIN INSTRUMENT ENTITLED "DEED OF TRUST," UNDER RECORDER'S DOCUMENT NUMBER 20110015747 ORIGINALLY DATED AUGUST 8, 2005 AND FILED IN NEVADA COUNTY; THAT CERTAIN "CORPORATE ASSIGNMENT OF DEED OF TRUST," UNDER RECORDER'S DOCUMENT NUMBER 20110015748 DATED JUNE 14, 2011 AND FILED IN NEVADA COUNTY; THAT CERTAIN INSTRUMENT ENTITLED "DEED OF TRUST," UNDER RECORDER'S DOCUMENT NUMBER DOC-2005-0111849 ORIGINALLY DATED AUGUST 8, 2005 AND FILED IN PLACER COUNTY; NEW CENTURY MORTGAGE CORPORATION; U.S. BANK NATIONAL ASSOCIATION, ALLEGED TRUSTEE; CHICAGO TITLE INSURANCE COMPANY, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION TO DISMISS AND MOTION TO STRIKE

Plaintiff Melanie I. Cornell brought this action against defendants New Century Mortgage Corporation ("New Century"), U.S. Bank National Association ("U.S. Bank"), and Chicago Title Insurance Company ("Chicago Title") arising out defendants' allegedly fraudulent public filings regarding plaintiff's home. Presently before the court is U.S. Bank's motion to dismiss plaintiff's Second Amended Complaint ("SAC") pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff has additionally filed a Motion to Strike Defendant's Reply Brief. (Docket No. 24.)

I. Factual and Procedural Background Plaintiff is the owner of real property located at 23629 Fagerlie Road in Auburn, California ("the property"). (SAC ¶ 10.) The property is located in Nevada County. (Id. ¶ 11.)

A Deed of Trust for the property was recorded in Placer County, which neighbors Nevada County, on August 23, 2005. (Id. Ex. C.) The Deed of Trust identifies the lender as New Century Mortgage Corporation ("New Century") and the trustee as Chicago Title. (Id.)

The Deed of Trust was refiled in Nevada County on July 6, 2011. (Id. Ex. A.) On the same day, a Corporate Assignment of Deed of Trust ("Corporate Assignment") was filed in Nevada County. (Id. Ex. B.) The Corporate Assignment purported to transfer New Century's interest in the property to U.S. Bank. (Id.)

Plaintiff disputes the validity of the recorded Deeds of Trust recorded in both Nevada and Placer County for numerous reasons. Plaintiff alleges that her signature on the Deed of Trust that was filed in Placer County and then refiled in Nevada County was forged and that she never signed the document. (Id.

¶ 19A.) Plaintiff alleges that a handwriting expert has reviewed the signature on the Deed of Trust and concluded that the signature is not hers. (Id. ¶ 19B.) Plaintiff further alleges that there are numerous defects regarding the notarial acknowledgments, (id. ¶¶ 19C-19E), the description of the property, (id. ¶¶ 19F, 19H, 19J), and the manner in which the documents were recorded, (id. ¶¶ 19G, 19I, 19J, 19K).

Plaintiff also disputes the validity of the Corporate Assignment. Plaintiff alleges that at the time the Corporate Assignment was filed on July 6, 2011, New Century did not have an interest in the loan because it was in bankruptcy proceedings and all of its assets had been divested as of January 9, 2008. (Id.

¶ 19O.) Plaintiff further alleges that the Corporate Assignment is void because it is dependant on a void Deed of Trust, (id.

¶ 19L), was improperly recorded, (id. ¶¶ 19M, 19N), lacked a proper power of attorney, (id. ¶¶ 19P, 19R), was not signed by a corporate officer, (id. ¶ 19Q), and lacked an adequate substitution of trustee, (id. ¶ 19S).

As a result of the alleged defects in the recorded instruments, plaintiff claims that the recordings are "wild encumbrances" on her property. (Id. ¶ 20.) If the instruments are left outstanding, plaintiff alleges that she will suffer serious injury because the instruments have clouded the title to her property and U.S. Bank has begun non-judicial foreclosure proceedings. (Id. ¶ 22.) Plaintiff requests that the court declare the instruments in question void and with no further force and effect pursuant to California Civil Code section 3412. (Id. ¶ 23.)

In an action regarding the same property, plaintiff filed suit in state court against Select Portfolio Servicing, Inc. ("SPS"), bringing claims for quiet title and permanent injunction. (Request for Judicial Notice Ex. D (Docket No. 6).) SPS removed the case to federal court and the case was dismissed for lack of jurisdiction and ripeness. Cornell v. Select Portfolio Servicing Inc., Civ. No. S-11-1462 (E.D. Cal. Sept. 7, 2011).

Plaintiff alleges that she was not aware of the Deed of Trust recorded in Placer County until March 2011, when it was raised during her first lawsuit. (SAC ¶ 18.)

Plaintiff filed this action for cancellation of instrument in state court on October 6, ...


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