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Tung Q. Lam v. Jp Morgan Chase Bank

November 14, 2012

TUNG Q. LAM,
PLAINTIFF,
v.
JP MORGAN CHASE BANK, N.A. AND` MTC FINANCIAL INC. DBA TRUSTEE CORPS,
DEFENDANTS



MEMORANDUM OPINION AND ORDER ON MOTIONS TO DISMISS BY DEFENDANTS JPMORGAN CHASE BANK AND MTC FINANCIAL, INC.

Doc. #'s 18 and 22

This is an action in diversity for damages and injunctive relief by plaintiff Tung Q. Lam ("Plaintiff") against defendants JPMorgan Chase Bank, N.A. and MTC Financial, Inc. dba Trustee Corps (hereinafter, "Trustee Corps") (collectively, "Defendants"). Plaintiff's complaint alleges claims for wrongful foreclosure, slander of title, cancellation of written instruments, fraud, quiet title, and claims for declaratory and injunctive relief. Currently before the court are separate motions by each Defendant to dismiss all claims alleged in the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state claims upon which relief can be granted. The parties do not dispute that diversity jurisdiction exists pursuant to 28 U.S.C. § 1332. Venue is proper in this court.

JUDICIAL NOTICE

The court may take notice of facts that are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b); United States v. Bernal-Obeso, 989 F.2d 331, 333 (9th Cir. 1993). Facts subject to judicial notice may be considered by a court on a motion to dismiss. In re Russell, 76 F.3d 242, 244 (9th Cir. 1996). In actions arising from mortgage disputes, courts may take judicial notice of the deed of trust and other documents pertaining to the loan. Kelley v. Mortgage Electronic Registration Systems, Inc., 642 F.Supp.2d 1048, 1052-1053 (N.D. Cal. 2009). A court may also take "judicial notice of matters of public record outside the pleadings." Indemnity Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).

Defendants request for judicial notice, Document # 19, seeks judicial notice of: (1) the deed of trust securing the subject property, Exh. "A"; (2) Notice of Default and Election to Sell, recorded by Trustee Corps on June 1, 2011, Exh. "B"; (3) Assignment of Deed of Trust to JPMorgan Chase Bank, recorded by MERS on July 20, 2012, Exh. "C"; (4) Substitution of Trustee Corps as trustee under the Deed of Trust, recorded on August 7, 2012, Exh. "D"; and (5) Notice of Trustee's Sale, recorded by Trustee Corps on August 7, 2012, Exh. "E". The court has examined each of the exhibits for which judicial notice is requested and finds that each of the exhibits is suitable for judicial notice as matters of public record outside of the pleadings. Judicial notice of Exhibits "A" through "E" of Document # 19 will therefore be granted.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This action arises out of a mortgage entered into by Plaintiff and Reunion Mortgage that resulted in a deed of trust encumbering Plaintiff's property in Modesto, California (the "subject Property"). At the time the mortgage was executed, Mortgage Electronic Registration Systems, Inc. ("MERS") was nominated as beneficiary of the Deed of Trust. Plaintiff's complaint alleges that MERS was a Delaware corporation that was "not qualified to do business in California." Doc. # 1 at ¶ 12. Plaintiff alleges MERS "did not become qualified to do business in California until July 21, 2010," and that the nomination of MERS as beneficiary to the Deed of Trust was therefore was void. Id. Plaintiff alleges that shortly following the execution of the mortgage, Reunion Mortgage bundled his and other mortgages and sold them to Indymac Bank, FSB, without contemporaneously assigning the Deed of Trust to the new buyer. Plaintiff contends that as a result of the separation of the Deed of Trust and the Promissory Note, none of the Defendants have any interest in the subject property.

The Notice of Default and Election to Sell was recorded on June 1, 2011. There is no contention that the Notice of Default was improperly served. Plaintiff contends that, because Trustee Corps, the entity that recorded the Notice of Default, was not substituted as beneficiary for the Deed of Trust until August 7, 2012, the Notice of Default was void. Plaintiff also contends that JPMorgan Chase was not assigned the Deed of Trust until after the Notice of Default was record and that JPMorgan Chase therefore lacked authority to declare default in 2011. As of the date the Notice of Default was recorded, the amount Plaintiff's mortgage was claimed to be in arrears was $12,506.14. Plaintiff's complaint does not dispute the amount of claimed arrearage nor does the complaint allege any attempt to tender the amount in arrears nor does it allege the present ability to do so.

The assignment of the Deed of Trust from MERS to JPMorgan Chase was signed by MERS on July 11, 2012, and was recorded on July 20, 2012. The assignment of the Deed of Trust from JPMorgan Chase to Trustee Corps was signed by JPMorgan Chase on July 11, 2012, and was recorded on August 7, 2012, the same date that the Notice of Trustee's Sale was recorded. Plaintiff filed the complaint in this action on August 30, 2012. Within the complaint and in a separate motion filed on the following day, Plaintiff requested that the sale of the subject property pursuant to the Notice of Trustee's Sale be temporarily restrained. Plaintiff's request for TRO was granted by order of the court on September 5, 2012. The TRO was extended through October 22, 2012, by an order filed on September 21, 2012. The instant motions to dismiss and to deny TRO were filed on September 17, 2012, and September 19, 2012, by JPMorgan Chase and Trustee Corps, respectively. Plaintiff's opposition was filed on October 8, 2012, and both Defendants filed reply briefs on October 15, 2012. Defendants' motions to dismiss were taken under submission as of October 22, 2012.

LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure can be based on the failure to allege a cognizable legal theory or the failure to allege sufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must set forth factual allegations sufficient "to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("Twombly"). While a court considering a motion to dismiss must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), and must construe the pleading in the light most favorable to the party opposing the motion, and resolve factual disputes in the pleader's favor, Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969), the allegations must be factual in nature. See Twombly, 550 U.S. at 555 ("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 of action will not do"). The pleading standard set by Rule 8 of the Federal Rules of Civil Procedure "does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) ("Iqbal").

The Ninth Circuit follows the methodological approach set forth in Iqbal for the assessment of a plaintiff's complaint:

"[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume ...


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