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Carmen R. Naranjo v. Sbmc Mortgage

July 24, 2012

CARMEN R. NARANJO,
PLAINTIFF,
v.
SBMC MORTGAGE, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [DOC. 12]

On September 29, 2011, Plaintiff Carmen R. Naranjo commenced this action against Defendants SBMC Mortgage ("SBMC"),*fn1 JPMorgan Chase ("JPMorgan"), and U.S. Bank N.A. After defaulting on her home loan, Plaintiff now sues Defendants in an attempt to prevent foreclosure of the property securing the loan. Defendants now moves to dismiss the First Amended Complaint ("FAC"). Plaintiff opposes.

The Court found this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 15.) For the following reasons, the Court GRANTS IN PART and DENIES IN PART Defendants' motion to dismiss.

BACKGROUND*fn2

On or about February 21, 2006, Plaintiff executed a promissory note in favor of SBMC Mortgage ("SBMC") in the amount of $825,000.00, secured by a deed of trust ("DOT"), to finance real property located in La Jolla, California. (FAC ¶¶ 1, 15 [Doc. 10].*fn3 ) The DOT, attached as Exhibit E to the FAC, identified Plaintiff as Borrower, SBMC Mortgage as Lender, T.D. Service Co. as Trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as both nominee and beneficiary under the security instrument. (DOT 1.)

Shortly thereafter, SBMC sold her loan to a currently unknown entity or entities. (FAC ¶ 15.) Plaintiff alleges that these unknown entities and Defendants were involved in an attempt to securitize the loan into the WAMU Mortgage Pass-through Certificates WMALT Series 2006-AR4 Trust ("WAMU Trust"). (Id. ¶ 17.) However, these entities involved in the attempted securitization of the loan "failed to adhere to the requirements of the Trust Agreement necessary to properly assign the mortgage loan into the Trust."*fn4 (Id.) Specifically, Plaintiff alleges that her loan "was not properly assigned to the WAMU Trust on or before May 30, 2006, the 'Closing Date' as set forth in the Trust Agreement." (Id. ¶¶ 17, 21.) "The Closing Date is the date by which all of the notes and mortgages had to be transferred into the WAMU Trust in order for the mortgage loan to be a part of the trust res." (Id. ¶ 21.)

In May 2009, Plaintiff sought to modify her loan with JPMorgan Chase Bank, N.A. ("JPMorgan") under the belief that it had the authority to negotiate her loan. (FAC ¶¶ 22--24.) However, she made little progress. (Id.) She continued to follow-up and submit loan- modification applications for over 19 months. (Id. ¶ 27.)

In August 2009, Plaintiff was hospitalized, resulting in unforeseen financial hardship. (FAC ¶ 25.) As a result, she defaulted on her loan. (See id. ¶ 26.)

On May 26, 2010, Defendants recorded an Assignment of Deed of Trust, which states that MERS assigned and transferred to U.S. Bank as trustee for the WAMU Trust under the DOT. (RJN Ex. B.) Colleen Irby executed the Assignment as Officer for MERS. (Id.) On the same day, Defendants also recorded a Substitution of Trustee, which states that the U.S. Bank as trustee, by JP Morgan, as attorney-in-fact substituted its rights under the DOT to the California Reconveyance Company ("CRC"). (RJN Ex. C.) Colleen Irby also executed the Substitution as Officer of "U.S. Bank, National Association as trustee for the WAMU Trust." (Id.) And again, on the same day, CRC, as trustee, recorded a Notice of Default and Election to Sell. (RJN Ex. A Notice of Trustee's sale was recorded, stating that the estimated unpaid balance on the note was $989,468.00 on July 1, 2011. (RJN Ex. E.)

On August 8, 2011, Plaintiff sent JPMorgan a Qualified Written Request ("QWR") letter in an effort to verify and validate her debt. (FAC ¶ 35 & Ex. C.) In the letter, she requested that JPMorgan provide, among other things, a true and correct copy of the original note and a complete life of the loan transactional history. (Id.) Although JPMorgan acknowledged the QWR within five days of receipt, Plaintiff alleges that it "failed to provide a substantive response." (Id. ¶ 35.) Specifically, even though the QWR contained the borrow's name, loan number, and property address, Plaintiff alleges that "JPMorgan's substantive response concerned the same borrower, but instead supplied information regarding an entirely different loan and property." (Id.)

On September 26, 2011, Plaintiff commenced this action. Thereafter, Plaintiff filed her FAC asserting nine claims: (1) declaratory relief; (2) negligence; (3) quasi contract; (4) violation the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692; (5) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605; (6) violation of California Business and Professions Code § 17200; (7) accounting; (8) breach of contract; and (9) breach of implied covenant of good faith and fair dealing. Defendants now moves to dismiss the FAC in its entirety with prejudice. Plaintiff opposes. (Doc. 14.)

LEGAL STANDARD

The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court must accept all allegations of material fact as true and construe them in light most favorable to the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat'l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not "necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (internal quotation marks omitted). In fact, the court does not need to accept any legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, - , 129 S. Ct. 1937, 1949 (2009)

"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 action will not do." Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id. Thus, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully."

A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, the court may consider the full text of those documents, even when the complaint quotes only selected portions. Id. It may also consider material properly subject to judicial notice without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

DISCUSSION

Plaintiff's primary contention here is that Defendants "are not her true creditors and as such have no legal, equitable, or pecuniary right in this debt obligation" in the loan. (Pl.'s Opp'n 1:5--11.) She contends that her promissory note and DOT were never properly assigned to the WAMU Trust because the entities involved in the attempted transfer failed to adhere to the requirements set forth in the Trust Agreement and thus the note and DOT are not a part of the trust res. (FAC ¶¶ 17, 20.) Defendants moves to dismiss the FAC in its entirety with prejudice.

A. Applicability of Gomes

Plaintiff alleges that the May 2010 assignments are improper for two primary reasons: (1) the assignment of her loan into the WAMU Trust is improper because it was not assigned before the end of May 2006 as required by the Trust Agreement, and (2) the May 2010 assignments are improper because Collen Irby lacked the authority to execute the assignments. Defendants argue that like the borrower in Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149 (2011), Plaintiff seeks to "'test whether the person initiating the foreclosure has the authority to do so' without presenting any competent, particularized factual allegations or evidence Defendants 'lack[] authority to proceed with the foreclosure.'" (Defs.' Mot. 4:13--18.) They go on to explain that the assignments and notice of default and election to sell executed in May 2010 are proper. (Defs.' Reply 3:26--4:4.) However, Defendants put the cart before the horse.

The vital allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. (See Defs.' Mot. 3:16--6:2; Defs.' ...


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