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Tim Deerink, et al v. Bank of New York Mellon

August 6, 2012


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


Before the Court is Defendants Bank of New York Mellon, N.A. and Bank of America Corporation's Motion to Dismiss Plaintiffs' First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 (Defs.' Mot. To Dismiss, ECF No. 25.) For the reasons discussed below, Defendants' Motion to Dismiss is GRANTED.*fn2


A. Introduction

On June 28, 2011, Plaintiffs Tim and Dina Deerink ("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 Alternative Trust 2006-8T1 ("Countrywide Trust"), and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants").*fn3 Plaintiffs' Complaint sought relief under five causes of action: (1) declaratory relief under 28 U.S.C. §§ 2201-02; (2) negligence; (3) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1641(g); (4) violation of the Unfair Competition Law ("UCL"), California Business and Professions Code and § 17200 et seq.; and (5) quiet title.

B. Allegations in Plaintiffs' Initial Complaint*fn4

In January of 2006, Plaintiffs executed a promissory note for $585,000.00 with Heritage Plaza Mortgage, Inc. ("Heritage"), in order to purchase property located in Manteca, California. (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 MERS as the beneficiary. (Compl. ¶ 58; Defs.' RJN, Ex. A at 1-2.) Plaintiffs identified Bank of America as the loan servicer. (Compl. ¶ 95.)

Plaintiffs' claims focused on the securitization and sale of their Deed of Trust and Promissory Note on the secondary mortgage market. (Id. at ¶ 3.) Specifically, at some point after origination, Heritage attempted to securitize and sell Plaintiffs' Deed of Trust and Promissory Note to Countrywide Trust. (Id. at ¶¶ 4, 9-10.) Bank of New York is the Trustee of the Countrywide Trust, which is governed by a Pooling and Servicing Agreement ("PSA"). One of the terms of the PSA is that the Deed of Trust and Promissory Note must be properly endorsed, transferred, accepted, and deposited with Countrywide Trust on or before the date specified in the PSA. Plaintiffs alleged that the parties involved failed to adhere to this term of the PSA, and thus, Plaintiffs contended, the Promissory Note and Deed of Trust are not part of the Countrywide Trust. (Id. at ¶ 10.) As a result of the failed securitization, Plaintiffs claimed that Bank of New York, as Trustee for Countrywide Trust, has no authority to collect on the loan. (Id. at ¶¶ 4, 10-11.)

Plaintiffs claimed that as a result of Defendants' conduct, they have suffered damages trying to determine the true owners of their loan, they have overpaid in interest, and their credit limit and credit score have been reduced as a result of Defendants' improper reports to credit agencies. (Id. at ¶¶ 71, 74-75, 77.)

In their first cause of action in their initial Complaint, Plaintiffs sought 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 that they lack authority to collect Plaintiffs' mortgage payments or enforce Plaintiffs' debt obligation. (Id. at ¶¶ 89-91.) Plaintiffs alleged that an actual controversy exists 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. at ¶¶ 85-88.)

Second, Plaintiffs claimed that Defendants negligently failed to exercise reasonable care in following California law with respect to the enforcement of debts. (Id. at ¶¶ 93-97.)

Third, Plaintiffs claimed that Defendant Bank of New York violated the Truth in Lending Act § 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 of the date of the assignment of the Deed of Trust. (Compl. at ¶ 105.)

Fourth, Plaintiffs alleged that Defendants violated California Business and Profession Code § 17200 by engaging in "unlawful, fraudulent, and deceptive business practices" with respect to mortgage loan servicing, assignment of Plaintiffs' Note and Deed of Trust, and other related matters. (Compl. at ¶ 115.)

Finally, Plaintiffs requested the Court quiet title to the subject property in the Plaintiffs. Specifically, Plaintiffs alleged that they were the sole owners, that Defendants had no right, title, or interest in the property. Additionally, Plaintiffs alleged that they had offered and were ready, ...

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