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Title: Brian Mclaughlin v. Wells Fargo Bank

November 30, 2012

TITLE: BRIAN MCLAUGHLIN
v.
WELLS FARGO BANK, N.A. ET AL.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

O

CIVIL MINUTES -- GENERAL

PRESENT: THE HONORABLE DAVID O. CARTER, JUDGE

Julie Barrera N/A Courtroom Clerk Court Reporter ATTORNEYS PRESENT FOR PLAINTIFF: ATTORNEYS PRESENT FOR DEFENDANT: None Present None Present PROCEEDINGS: (IN CHAMBERS): ORDER GRANTING DEFENDANTS'

MOTION TO DISMISS AND DISMISSING IN PART WITH PREJUDICE AND IN PART WITHOUT PREJUDICE

Before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint ("FAC") (Dkt. 16). After reviewing the motion, opposition, and reply, the Court herby GRANTS Defendant's Motion to Dismiss and Dismisses in part with prejudice and in part without prejudice.*fn1

I.Background

On September 14, 2006, Plaintiff Brian McLaughlin ("Plaintiff") signed a promissory note for $1,000,000 in exchange for a mortgage loan from Countrywide Bank, N.A. ("Countrywide") for the purchase of the property located at 753 Barracuda Way, Laguna Beach, CA ("the property"). Mot. (Dkt. 20) at 2. The property was used to secure a Deed of Trust. Id. Recontrust Company, N.A. ("Recontrust") was named the trustee and Mortgage Electronic Registration Systems ("MERS") was listed as the beneficiary. Id.

Defendants claim that MERS, as the beneficiary of the Deed of Trust, assigned the Deed of Trust to Defendant Bank of America on September 6, 2011. Id. On April 4, 2012, Bank of America assigned the Deed of Trust to Defendant Wells Fargo as trustee on behalf of HarborView Mortgage Loan Trust, Mortgage Loan Pass-Through Certificates Series 2006-12 ("HarborView Trust"). Id. Defendant Bank of America continued to service the loan. Id.

On October 6, 2011, Recontrust, as the trustee, recorded a notice of default. Id. On April 27, 2012, Recontrust recorded a Notice of Trustee's Sale for May 21, 2012. Id. at 3.

a.State Court Action

On April 12, 2012, Plaintiff filed an action in state court seeking declaratory relief, alleging that no valid assignment of the Deed of Trust took place. Defs.' Request for Judicial Notice (Dkt. 21) at Ex. 6. The Superior Court granted Plaintiff's application for a Temporary Restraining Order ("TRO") and the Trustee's Sale was postponed to July 6, 2012. Id. at Ex. 8. On June 29, 2012, the Superior Court subsequently denied Plaintiff's application for a preliminary injunction finding the plaintiff was unlikely to succeed on the merits. Id. at Ex. 12. Plaintiff then dismissed his state court lawsuit without prejudice. Id. at Ex. 13.

b.District Court Action

On July 9, 2012, Plaintiff filed a complaint with this Court based on similar arguments as the state court action and seeking declaratory relief. On August 10, 2012, Defendants filed a Motion to Dismiss Plaintiff's Complaint; it was granted unopposed on August 21, 2012. Order Granting Mot. to Dismiss (Dkt. 8).

On September 10, 2012, Plaintiff filed the FAC. FAC (Dkt. 16.) On October 8, 2012, Defendants filed the present Motion to Dismiss the FAC. Mot. (Dkt. 20). Plaintiff filed an Opposition on October 16, 2012. Opp. (Dkt. 24); Defendants filed a Reply on November 5, 2011. Rep. (Dkt. 28).

On November 6, 2012, Plaintiff filed an Emergency Ex Parte Application for a TRO ("TRO Application") to stop a Trustee's Sale scheduled for November 13, 2012. TRO Application (Dkt. 30). On November 13, 2012, this Court issued an Order Denying the TRO Application due to Plaintiff's insufficient showing of likelihood of success on the merits.

The Court now grants Defendants' Motion to Dismiss and dismisses for the reasons stated below.

II.Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555(citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). On a motion to dismiss, this court accepts as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.

In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc.,896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Under the incorporation by reference doctrine, the court may also consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading." Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by 307 F.3d 1119, 1121 (9th Cir. 2002).

A motion to dismiss under Rule 12(b)(6) can not be granted based upon an affirmative defense unless that "defense raises no disputed issues of fact." Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984). For example, a motion to dismiss may be granted based on an affirmative defense where the allegations in a complaint are contradicted by matters properly subject to judicial notice. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). In addition, a motion to dismiss may be granted based upon an affirmative defense where the complaint's allegations, with all inferences drawn in Plaintiff's favor, nonetheless show that the affirmative defense "is apparent on the face of the complaint." See Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010).

Additionally, Federal Rule of Evidence 201 allows the court to take judicial notice of certain items without converting the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). The court may take judicial notice of facts "not subject to reasonable dispute" because they are either: "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201; see also Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (noting that the court may take judicial notice of undisputed "matters of public record"), overruled on other grounds by 307 F.3d 1119, 1125-26 (9th Cir. 2002). The court may disregard allegations in a complaint that are contradicted by matters properly subject to judicial notice. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010).

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. 2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given "when justice so requires." This policy is applied with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990).

Federal Rule of Civil Procedure 9(b) states that an allegation of "fraud or mistake must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The "circumstances" required by Rule 9(b) are the "who, what, when, where, and how" of the fraudulent activity. Vess v. Ciba--Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993) ("[Rule 9(b) requires] the times, dates, places, benefits received, and other details of the alleged fraudulent activity."). In addition, the allegation "must set forth what is false or misleading about a statement, and why it is false." Vess, 317 F.3d at 1106 (quoting In re Glenfed, Inc. Secs. Litig., 42 F.3d 1541, 1548 (9th Cir.1994)). Rule 9(b)'s heightened pleading standard applies not only to federal claims, but also to state law claims brought in federal court. Id. at 1103. This heightened pleading standard ensures that "allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir.1985).

However, "intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b); see also Neubronner, 6 F.3d at 672 (explaining that Rule 9(b)'s heightened pleading standard may be relaxed when the allegations of fraud relate to matters particularly within the opposing party's knowledge, such that a plaintiff cannot be expected to have personal knowledge).

III.Discussion

Plaintiff alleges that Defendants are "third-party strangers to his mortgage loan and have no ownership interest entitling them to collect payment, declare a default or conduct a trustee's sale." FAC at 3. Based on these allegations, Plaintiff states the following claims: (1) declaratory relief pursuant to 28 U.S.C. ยงยง 2201-2202; (2) negligence; (3) quasi contract; (4) violations of 15 U.S.C. ...


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