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Gardener James Doane v. First Franklin Financial

June 11, 2012


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


Before the Court are Defendants' Motion to Dismiss Plaintiff's First Amended Complaint (ECF No. 13) ("FAC"),*fn1 Motion to Strike (ECF No. 14) ("MTS"), and Request for Judicial Notice (ECF No. 13, Att. 1) ("RJN").*fn2

For the reasons that follow, Defendants' Motion to Dismiss is GRANTED, the Request for Judicial Notice is GRANTED and the Motion to Strike is DENIED as MOOT.


In March 2007, Plaintiff Gardener James Doane ("Plaintiff" or "Doane"), using Defendant Summit Funding ("Summit") as his broker, obtained two mortgage loans from Defendant First Franklin Financial Corp. ("First Franklin") for his property located at 8333 Raffia Court, Antelope, CA 95843. (FAC, ¶¶ 67-68, see also ECF No. 13, Att. 1 (Request for Judicial Notice),*fn4 Exs. A-B). The principal amount of the first mortgage was $300,000 and the second mortgage was for $75,000. (FAC, ¶ 68, RJN, Exs., A-B.)

The loans were funded by First Franklin and Doane signed promissory notes and executed deeds of trust in favor of First Franklin. (FAC, ¶¶ 68-69.) The Deed of Trust names Defendant Mortgage Electronic Registration System ("MERS") as the nominee beneficiary under the loan.*fn5 (See FAC, ¶ 79; RJN, Ex. A at 1; Ex. 2 at 1.) Doane's loan was allegedly securitized (FAC, ¶ 72), and Defendant U.S. Bank, N.A., is alleged to be the trustee for the securitization pool that currently contains Doane's loans pursuant to a pooling and servicing agreement. (FAC, ¶ 74.)

Although Doane's FAC does not make this clear, he apparently defaulted on the loan in 2009 and his house was sold pursuant to a trustee's sale in 2010. Specifically, on February 4, 2009, a Notice of Default was recorded with the Sacramento County Recorder on the $300,000 loan. (RJN, Ex. C.) Then, on May 7, 2009, a Notice of Sale was recorded. (RJN, Ex. C.) Doane's property was thereafter sold in a trustee's sale and a trustee's deed upon sale was recorded on April 28, 2010. (RJN, Ex. D.)

On June 3, 2011, Doane filed his complaint in state court, (see ECF No. 1, Ex. A), and Defendants thereafter removed the case to this Court on the basis of federal question jurisdiction stemming from Doane's federal-law causes of action. (Id.) On September 26, 2011, after Doane amended his complaint, Defendants filed the present motions to dismiss and to strike.

Doane's forty-four page FAC raises factual allegations in both his "Factual Allegations" section, as well as in each separate cause of action, and he appears to be incorporating previously raised factual allegations in each claim without clearly identifying the facts upon which he relies, thereby making it difficult to ascertain what, exactly, he is alleging and relying on for any given claim.*fn6 To the extent the Court understands his claims, it appears that Doane is generally alleging that:

1. The loan documents he signed do not reflect the agreement of the parties due to unspecified mistakes by the parties, or due to unspecified fraud on every Defendants' part (FAC, ¶¶ 155-56);

2. All Defendants engaged in "bogus and fraudulent" assignments and transfers of Doane's loan (Id. at ¶¶ 75-80);

3. He was orally promised (by whom is unspecified), but never received, a permanent home loan through the HAMP (Id. at ¶¶ 116, 159-63, 166-69, 175, 181-88);

4. All Defendants "manufactured" unspecified documents (Id. at ¶¶ 131-32, 140);

5. All Defendants intentionally, illegally, and improperly securitized his loan and did so by means of unspecified misrepresentations and/or omissions (see, e.g., id. at ¶¶ 7-18, 66-85, 189-212);

6. Unspecified Defendants represented to him that no foreclosure sale would occur, but then conducted the foreclosure anyway. (Id. at ¶¶ 146-49.)

7. All Defendants committed mail fraud by mailing him the notices of default, notice of trustee's sale, and documents related to the loan modification (Id. at ¶¶ 218-19).

As a result of Defendants' actions, Doane contends that he "has no idea who, if anyone, to whom [he] owe[s] money under the note and no idea who, if anyone, holds an enforceable security interest." (Id. at ¶ 85) (altered for clarity.) He contends that the loan was an illegal security, based on an unlawful object, so lacks consideration and is void or voidable. (Id. at ¶ 212.) He claims the contract must be reformed to reflect the (unspecified) intent of the parties. (Id. at ¶ 157.) He also asserts that the trustee's sale constituted a wrongful foreclosure because none of the Defendants had a lawful interest in the property at issue. (Id. ¶ 1.) He also claims Defendants' actions caused him extreme emotional distress. (Id. at ¶¶ 240, 243, 247-48).

Doane asserts ten causes of action; two federal law claims and eight state or common law claims. His first federal cause of action, his seventh listed claim, is an intentional misrepresentation claim for violations of the Securities Exchange Act of 1934 ("Securities Exchange Act") and U.S. Tax Code, in which he essentially asserts that the note was securitized by means of a pooling agreement, and that the parties involved in the securitization intentionally did not follow the proper securitization process to qualify as Real Estate Mortgage Investment Conduit ("REMIC"). (Id. at ¶¶ 189-212.)

Doane's second federal cause of action, his eighth claim, is for Civil Racketeer Influenced and Corrupt Organization Act ("RICO") violations. (Id. at ¶¶ 213-33.) Doane's remaining causes of action are for: (1) declaratory relief (Id. at ¶¶ 123-44); (2) detrimental reliance (Id. at ¶¶ 145-51); (3) reformation of contract (Id. at ¶¶ 152-57); (4) promissory estoppel (Id. at ¶¶ 158-63); (5) misrepresentation (Id. at ¶¶ 164-72); (6) unfair business practices under California's Bus. & Prof. Code § 17200, et seq. (Id. at ¶¶ 173-88); (7) ...

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