ORDER ON PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION AND ORDER ) TO SHOW CAUSE
This case stems from a mortgage obtained by Plaintiffs Dean Knopp and Shaun Knopp for real property located in Moccasin, California. Plaintiffs obtained the mortgage from Washington Mutual. Defendants are attempting to foreclose on the real property. In response, Plaintiffs have filed this action and are proceeding pro se. Plaintiffs allege violations of 12 U.S.C. § 226 ("TILA"), 12 U.S.C. § 2605 ("RESPA"), 12 U.S.C. § 1821 ("FIRREA"), fraud, UCC Art. 3, quiet title, declaratory and injunctive relief, intentional and negligent infliction of emotional distress, and California Business & Professions Code § 17200 ("UCL"). On August 31, 2012, the Court granted Plaintiffs' motion for an ex part temporary restraining order, issued an order to show cause why a preliminary injunction should not issue, and set a briefing schedule. Defendants have filed their opposition, and Plaintiffs have filed their reply. After considering the submissions of the parties, the Court concludes that a preliminary injunction should not issue and that Plaintiffs should show cause why this case should not be dismissed.
ALLEGATIONS FROM THE COMPLAINT
From the verified complaint, Knopp obtained a construction/roll over loan from Washington Mutual Bank ("Wamu") on July 26, 2006, for real property located at 14600 Moccasin Ranch Road, Moccasin, California 95347 ("the Property"). A Deed of Trust was issued that identified Washington Mutual as the lender and beneficiary, California Reconveyance Company as the Trustee, and Plaintiffs (along with Peggy Knopp) as the borrowers.
Plaintiffs are informed and believe that, between August 1, 2006, and August 30, 2006, Wamu transferred the Plaintiffs' note to Washington Mutual Mortgage Securities Corporation ("WMMSC"). The note was then sold to an investment trust and became part of, or was subject to, a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage Pass-Through Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. The security is identified with a Standard & Poors CUSIP number and Pool Number. Thereafter, Wamu acted solely as a servicer of the loan, and was neither the lender nor the beneficiary after August 30, 2006.
On September 25, 2008, the Office of Thrift Supervision closed Wamu and appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver. Defendant JP Morgan Chase ("Chase") purchased certain assets and liabilities of Wamu from the FDIC pursuant to a Purchase and Assumption Agreement ("PAA").
Chase represented to Plaintiffs that Wamu was the previous servicer on the loan, and that Chase was the new servicer. Chase later represented that it was the beneficiary of the loan under the note and deed of trust. Chase claims that it is the note holder, lender, beneficiary, and servicer, but it has not recorded a claim of ownership. Chase asserts that it is the beneficiary of the deed of trust at issue because it acquired that interest through the PAA.
On March 15, 2009, a notice of default was executed by Defendant Quality Loan Service Corporation ("QLS") and recorded on March 19, 2009, in the Tuolumne County Recorder's Office. The notice of default represented that QLS was the agent of the beneficiary and the qualified trustee. A substitute of trustee was executed by Jodie Sobatta for Chase on March 25, 2009, and recorded on May 1, 2009, in the Tuolumne County Recorder's Office. The substitution represented that Chase was the beneficiary and that Chase now desired for QLS to be the new trustee.
A notice of trustee's sale was executed on June 6, 2009, and recorded on June 29, 2009, in the Tuolumne County Recorder's Office. The notice represented that the sale would be held by the duly appointed trustee and that QLS was attempting to collect a debt on behalf of the holder and owner of the note.
A new notice of trustee sale was recorded on August 16, 2012, in the Tuolumne County Recorder's Office. This notice also represented that the sale would be held by the duly appointed trustee and that QLS was attempting to collect a debt on behalf of the holder and owner of the note. The trustee sale was scheduled to take place on September 4, 2012, at 3:30 p.m., but this Court enjoined that sale until further notice on August 31, 2012.
ADDITIONAL INFORMATION FROM SUBMISSION OF PARTIES *fn1
A notice of default and an election to sell under deed of trust was recorded in the Tuolumne County Recorder's Office on March 19, 2009. See RJN Ex. 3.
On July 13, 2009, Plaintiffs filed a complaint in the Tuolumne County Superior Court ("Knopp I"), case number CV54873 . See RJN Ex. 7. In addition to the original complaint, four amended complaints were filed. See RJN Exs. 8, 10, 12, 14. The Tuolumne County Superior Court sustained demurrers to each of the amended complaints. See RJN Exs. 9, 11, 13, 15. The demurrers were sustained with leave to amend some causes, and without leave to amend other causes of action. See id. When the superior court granted the demurrer to the fourth amended complaint on February 3, 2011, leave to amend was not granted and final judgment was entered against Plaintiffs. See RJN Exs. 15, 16.
In granting the various demurrers, leave to amend was denied with respect to the following causes of action: fraud due to lack of standing by Chase to foreclose, intentional misrepresentation, violations of California Civil Code §§ 1572, 2923.5, 2923.52, 2923.53, 2923.54, 2923.6 and 2924, California Commercial Code § 3-301 based on an alleged false notice of default and an unlawful pursuit of a foreclosure sale against the Property, and California Business & Professions Code § 17200 based on lack of standing by Chase to foreclose because Chase was not assigned rights under the deed of trust and was not the holder of the note and QLS was not validly substituted as trustee. See RJN Exs. 8-15.
On April 13, 2011, Plaintiffs appealed the judgment of dismissal in Knopp I to the Fifth District Court of Appeal ("DCA"). See RJN Ex. 17. As part of their reply brief to the DCA, Plaintiffs argued that, between August 1, 2006, and August 30, 2006, Wamu transferred the Knopp's note to WMMSC. See RJN Ex. 18. The note was then sold to an investment trust and became part of, or was subject to, a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage Pass-Through Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. Id.
On September 26, 2011, Plaintiffs filed a complaint in the Tuolumne County Superior Court ("Knopp II"), case number 56909. See RJN Ex. 20. The issues raised and the causes of action alleged in Knopp II were extremely similar as those raised in Knopp I. Cf. RJN Exs. 8, 10, 12, 14 with RJN Ex. 20. Chase filed a demurrer to the complaint, and the Superior Court granted the demurrer without leave to amend. See RJN Ex. 21. On January 21, 2012, judgment was entered against Plaintiffs in Knopp II. See RJN Ex. 22. The judgment stated in pertinent part that the action was dismissed "with prejudice." Id. No appeal was taken from this order. *fn2
On July 11, 2012, the DCA issued an opinion that affirmed the superior court's orders and dismissal. See Knopp v. JPMorgan Chase Bank, N.A., 2012 Cal. App. Unpub. LEXIS 5105 (July 11, 2012). As part of the ruling, the DCA held:
Plaintiffs claim that their loan was sold by Washington Mutual to its subsidiary, Washington Mutual Mortgage Securities Corporation, that the contract between FDIC and Chase does not contain a listing of each individual loan or deed of trust, that Chase failed to establish by evidence subject to judicial notice that it was assigned the deed of trust plaintiffs had signed with Washington Mutual, and that the loan was subsequently securitized.
The trial court impliedly took judicial notice of Chase's contract with FDIC. The trial court's reliance on the agreement was appropriate under Evidence Code section 452, subdivision (h), as facts "not reasonably subject to dispute[,] ... capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." That document established that Chase was assigned all loans owned by Washington Mutual and its subsidiaries. The mere fact that the FDIC contract did not contain a listing of each individual loan or deed of trust did not negate the broad and inclusive language of the agreement itself, assigning all such loans to Chase. Nor does the fact, the loan was ...