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Michael Bowe v. American Mortgage Network

March 28, 2013


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge


Presently before the court is the Motion to Dismiss First Amended Complaint filed by Defendants Mortgage Electronic Registration System, Inc. ("MERS"); California Reconveyance Company ("CRC"); JP Morgan Chase Bank, N.A. ("Chase"); and Bank of America, N.A. ("BANA") (collectively "Defendants"). Having considered the submissions of the parties, the court grants the motion and adopts the following order.

I. Background

As described in this court's earlier order granting Defendants' motion to dismiss, Plaintiff Michael Bowe obtained home loan refinancing ("Loan" or "Note")that was secured by a Deed of Trust ("Deed") to the property located at 3958 Keeshen Drive, Los Angeles, California 90066 on October 26, 2005. The Deed listed Defendant MERS as beneficiary of the Deed and the nominee for the lender.

Sometime between October 26, 2005, and March 17, 2011, the lender transferred the Note to an investment trust. On March 18, 2011, MERS assigned the beneficial interest under the Deed to BANA. (FAC ¶ 39.) The Assignment was signed by Colleen Irby, who Plaintiff believes is not an officer, employee or agent of MERS. (FAC ¶ 41.) The same day, BANA executed a Substitution of Trustee ("Substitution"), identifying Defendant CRC as the new trustee under the Deed. (FAC ¶ 43.) Plaintiff alleges that CRC is a wholly owned subsidiary of Chase. The Substitution was also signed by Colleen Irby, who Plaintiff believes is not an officer, employee or agent of Chase. (FAC ¶ 45). Additionally, on that same day, CRC, as the new trustee under the Deed, executed a Notice of Default ("NOD"). (FAC ¶ 50.)

On June 20, 2011, CRC executed a Notice of Trustee's Sale ("NOTS"). Plaintiff alleges that the NOTS was unsigned, but was said to be on the authority of Regina Cantrell, Assistant Secretary of CRC, as Trustee. (Id. at ¶ 43). A public auction of the Subject Property was set for October 12, 2011.

Plaintiff filed a verified complaint alleging seven causes of action, including violations of California Civil Code § 2923.5 and California Civil Code § 2924f, against Defendants in connection with their attempt to foreclose upon Plaintiff's home. Defendants MERS, CRC, Chase, and BANA filed a Motion to Dismiss. Defendant AMN filed a separate Motion to Dismiss. This court granted both motions, dismissing all causes of action against AMN with prejudice and dismissing all other claims with leave to amend. Plaintiff subsequently filed a First Amended Complaint alleging six causes of action that were also alleged in the original complaint. Defendants now move to dismiss the FAC in its entirety.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

A. Tender As in their first motion, Defendants argue that all of Plaintiff's causes of action, except for the first cause of action for violation of California Civil Code § 2923.5, are barred because Plaintiff has failed to satisfy the tender rule. To repeat, "when a debtor is in default of a home mortgage loan, and a foreclosure is either pending or has taken place, the debtor must allege a credible tender of the amount of the secured debt to maintain any cause of action for wrongful foreclosure." Alicea v. GE Money Bank, 2009 WL 2136969 *3 (N.D. Cal. 2009). The tender requirement spares courts from being called upon to "order a useless act performed" in cases where plaintiffs would be unable, even under proper sale procedures, to redeem a property. FPCI RE-HAB 01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018, 1021-22 (1989). An exception to the tender rule may apply, however, where it would be inequitable to require tender. Onofrio v. Rice, 55 Cal. App. 4th 413, 424 (1997). Courts have applied the equitable exception to the tender rule where plaintiffs contest the validity of a foreclosure prior to the foreclosure sale. See, e.g., Tamburri v. Suntrust Mortgage, Inc., 2011 WL 6294472 *3, 5 (N.D. Cal. December 15, 2011); Sacchi v. Mortgage Electronic Registration Systems, Inc., 2011 WL 2533029 *9-10 (C.D. Cal. June 24, 2011). The court dismissed Plaintiff's original claims for failure to allege tender, but granted Plaintiff leave to amend to allege specific facts to support his claim that the pending foreclosure sale is void. See Tamburri, 2011 WL at *5; Sacchi, 2011 WL at *8.

Plaintiff appears to argue that the Note is void, and therefore the tender rule does not apply, because "there was no shared expectation -- no meeting of the minds -- no contract was formed between Plaintiff and AMN." (FAC ¶ 32.) The FAC does not, however, include any specific factual allegations supporting the assertion that a meeting of the minds was lacking. Plaintiff's opposition points to paragraphs seventy-four to seventy-seven of the FAC. Those paragraphs, however, simply assert, without factual support, that CRC, BANA, MERS, and Chase, respectively, have no standing to enforce the note because the note is void, and, alternatively, no defendant is the owner, holder or beneficiary of the Note. These tautological assertions cannot support Plaintiff's allegation that the Note is void ab initio.*fn1 *fn2

Plaintiff also argues, in the alternative, that he has tendered. The FAC includes a new "tender offer," which states that "Plaintiff does not believe that the Note is valid . . . . However, Plaintiff is and remains ready, willing and able and hereby makes an unconditional offer of performance of his obligations under the Note to the holder of the Note, if any." (FAC ΒΆ 48.) This allegation is insufficient to satisfy the tender rule. "[I]t is a debtor's responsibility to make an unambiguous tender of the entire amount due . . . ." Gaffney v. Downey Savings & Loan Association, 200 Cal.App.3d 1154, 1165 (1988). Furthermore, an allegation of ability to tender the entire amount borrowed must be credible. Chavers v. GMAC Mortg., ...

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