ORDER ON DEFENDANTS' MOTION TO DISMISS
This is a mortgage related case brought by Plaintiff David Newman ("Newman") against Defendants Bank of New York Mellon ("BONY"), Mortgage Electronic Recording Systems ("MERS"), and Bank of America ("BOA"). Defendants move to dismiss the entirety of the complaint under Rule 12(b)(6).*fn1 For the reasons that follow, the motion will be granted.
From the Complaint and its attached exhibits, Newman obtained a mortgage loan in November 2006 on property located at 2517 Brandy Court, Modesto, California. The loan was secured by a deed of trust. The deed of trust identifies the lender as Decision One Mortgage Company, the trustee as Fidelity National Title, and MERS as the beneficiary and as the nominee of the lender and its assigns and successors.
After one payment, Newman was informed that Countrywide Home Loans ("Countrywide") was going to be a servicer of the loan. In January 2007, Newman began making payments to Countrywide.
In mid-2008, when attempting to make a payment to Countrywide, Newman was redirected to the BOA Home Loans website.
Newman contacted BOA about restructuring the mortgage, but was told that he did not qualify because he was not behind on his payments.
In December 2009, Newman stopped making mortgage payments. Plaintiff contacted BOA regarding loan modifications from 2010 through 2011, but to no avail.
On August 22, 2011, MERS assigned its beneficial interest in the deed of trust and the note to BONY. See Complaint Ex. D.
On August 23, 2011, Newman filed for Chapter 7 Bankruptcy.
On September 14, 2011, MERS assigned its beneficial interest in only the deed of trust to BONY. See Complaint Ex. C.
On October 19, 2011, BONY filed a motion for relief from the automatic bankruptcy stay. As part of that motion, Defendants filed a copy of the September 2011 assignment and a copy of Newman's note, which indicated that Countrywide had obtained the note from Decision One. Despite objections that the assignment by MERS appeared to be fraudulent, in November 2011 the Bankruptcy Court granted the motion.
On December 5, 2011, Newman filed an adversary proceeding against BONY and MERS. On June 4, 2012, Newman received a notice of default, signed by Recontrust Co. ("Recontrust"), who had been substituted as the deed of trust trustee on June 1, 2012.
On August 29, 2012, the Bankruptcy Court dismissed Newman's adversary proceeding due to lack of standing.
A foreclosure sale was later set for October 10, 2012.
On October 1, 2012, Newman filed this lawsuit. Newman alleges claims for declaratory relief, injunctive relief, quasi contract, the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et. seq.) ("FDCPA"), California Business & Professions Code § 17200 ("UCL"), and negligence.
Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). However, the Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). To "avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. The Ninth Circuit has explained:
First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.
Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited to reviewing only the complaint, but it may take judicial notice of public records outside the pleadings, review materials which are properly submitted as part of the complaint, and review documents that are incorporated by reference in the Complaint if no party questions their authenticity. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a Rule 12(b)(6) motion is granted, "[the] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). In other words, leave to amend need not be granted where amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).
1. 1st Cause of Action -- Declaratory Relief
Defendants' Arguments Defendants argue that dismissal is appropriate for several reasons. First, Newman cannot
bring an action to determine whether the person initiating the foreclosure is authorized to do so. Second, Newman's allegations that the assignments of the deed of trust involve illegible signatures and "robo-signers" is irrelevant. Third, Newman has no standing to challenge any violations of the Pooling and Servicing Agreement ("PSA") that applies in this case.
Newman argues that he is not challenging authorization to foreclose, nor is he requiring Defendants to "produce the note." Rather, he is challenging whether the correct entity is initiating foreclosure. BONY does not have the right to enforce the mortgage because it does not own the loan, the note, or the mortgage. The loan was purportedly securitized and sold to a Mortgage Backed Securities Trust. The PSA that governed that trust provided for a closing date of October 30, 2007. However, the relevant assignments were not made prior to October 30, 2007, and thus, the loan was not part of the Mortgage Backed Securities Trust res. Because the PSA was violated, BONY never obtained an interest in the mortgage. Further, the circumstances of the assignment of the deed of trust are questionable. Two assignments were made by MERS to BONY, and the relevant signatures on those assignments are ...