ORDER: (1) GRANTING MOTION TO DISMISS BY BANK OF AMERICA, NATIONAL ASSOCIATION, AND FEDERAL HOME LOAN MORTGAGE CORPORATION [Doc. No. 15]; and (2) DENYING AS MOOT MOTION TO AMEND/CORRECT COMPLAINT [Doc. No. 26]
IRMA E. GONZALEZ, District Judge.
Presently before the Court is the motion of Defendants Bank of America, National Association ("BANA") and Federal Home Loan Mortgage Corporation's ("Freddie Mac") to dismiss Plaintiffs Michael Marques and Cristina Robles' (collectively "Plaintiffs") second amended verified complaint ("SAC"). [Doc. No. 15, Def. Mot. to Dismiss ("Def. Mot.").] For the following reasons, the Court GRANTS the motion. The Court also DENIES AS MOOT Plaintiffs' motion to amend/correct the complaint. [Doc. No. 26, Pl.'s Mot. to Amend.]
On July 30, 2012, Plaintiffs filed an initial complaint against Freddie Mac, BANA, and Does 1 through 10. [Doc. No. 1, Compl.] Plaintiffs filed their FAC on August 16, 2012 and added Defendant APG Fund I, LLC ("APG Fund"). [Doc. No. 3, FAC.] Freddie Mac filed a motion to dismiss the FAC, and the Court granted in part and denied in part the motion. [Doc. No. 5, Def.'s Mot.; Doc. No. 9.] Plaintiffs subsequently filed a SAC, alleging the following causes of action: (1) declaratory relief; (2) declaratory relief; (3) negligence; (4) quasi contract; (5) violation of California Business and Professions Code § 17200, et seq.; (6) accounting; and (7) quiet title. [Doc. No. 12, SAC.]
Plaintiffs allege the following facts in their SAC. On or about January 6, 2004, Plaintiffs obtained title to real property commonly known as 172 Whitney Street, Chula Vista, California ("the Property") by grant deed. [Doc. No. 12, SAC §§ 7, 29.] On or about September 6, 2006, Plaintiffs executed a mortgage note ("Note") and a deed of trust in favor of First Magnus Financial Corporation ("First Magnus") to borrow $376, 000 to finance the Property. [Id. § 30; Doc. No. 15-1, Def.'s Mot. at 10.] The Deed of Trust named Mortgage Electronic Registration Systems ("MERS") as the nominee for First Magnus and as the beneficiary of the Deed of Trust to secure the loan against the Property. [Doc. No. 12-2, Ex. B, Deed of Trust.]
Plaintiffs then allege that First Magnus attempted to securitize and/or sell their loan. Plaintiffs allege that neither the promissory note nor the deed of trust were validly transferred to an Unknown Trust "due to the failure to follow the basic legal requirements for the transfer of a negotiable instrument." [Doc. No. 12, SAC §§ 21-22.] Plaintiffs argue that consequently, "Defendants are merely third-party strangers to the loan transaction." [Id. § 31.]
Plaintiffs state that Freddie Mac "is either the trustee of a Mortgage Backed Security ("MBS") established pursuant to the laws of the state of New York [or] claims to own the relevant MBS that Defendants claim contains the Mortgage Note that is the subject of this cause of action." [Id. § 9.] Plaintiffs state that they "are ignorant as to the method... Defendant Freddie Mac claims to own an interest in the subject Mortgage Note." [Id.]
Defendants Freddie Mac and BANA argue in their motion to dismiss that an assignment transferred the Deed of Trust from MERS to BANA on January 24, 2012. [Doc. No. 15-1, Def.'s Mot. at 10.] Defendants also argue in their motion to dismiss that Quality Loan Service Corporation became the record trustee under the Deed of Trust. [Id.]
Plaintiffs, however, allege that "no recorded assignment of the original Deed of Trust was executed before the closing date of the trust." [Doc. No. 12, SAC § 33.] They claim that the assignment of January 24, 2012 by MERS in favor of BANA was both untimely and invalid because it was executed after the closing date of the Unknown Trust, which violates the Pooling and Servicing Agreement ("PSA"). [Id.] Plaintiffs also contend that the assignment was invalid because it was fraudulently executed by Jeanine Abramoff, who Plaintiffs claim "lacked the requisite corporate and legal authority to effect an actual assignment' of the Mortgage Note and Deed of Trust. [Id. § 47.]
Plaintiffs further allege that First Magnus declared bankruptcy on August 21, 2007. [Id. § 34.] Because they contend that the assignment to BANA was fraudulent, Plaintiffs argue that the Mortgage Note and Deed of Trust "became subject to the jurisdiction of the Bankruptcy Trustee and the Bankruptcy Court." [Id.] Plaintiffs also argue that the Bankruptcy Trustee did not authorize the January 24, 2012 assignment of the Deed of Trust. [Id. § 37.]
Plaintiffs allege that on April 11, 2012, BANA caused to be recorded and sent to Plaintiffs a Notice of Default and Election to Sell Under Deed of Trust. [Id. § 99.] In July 2012, Plaintiffs allege that BANA, on behalf of Freddie Mac, caused BANA's agent Quality Loan Service Corporation to send to Plaintiffs an undated and unsigned Notice of Trustee Sale to notify Plaintiffs that the Property would be sold on August 10, 2012. [Id.; Doc. No. 12-5, Ex. E, Notice of Trustee Sale.] On August 10, 2012, Quality Loan Service Corporation conducted a trustee's sale and sold the Property to Defendant APG Fund. [Doc. No. 12, SAC, § 99.]
Plaintiffs allege that any actions by BANA to collect mortgage payments from Plaintiffs and then to undertake a non-judicial foreclosure and sell the Property are unlawful because the assignment of the deed of trust was invalid. [Id. §§ 61, 99.] Plaintiffs also allege that "Defendants failed to properly credit payments made, incorrectly calculated interest on the accounts, and failed to accurately debit fees, as these payments belonged to the true beneficiary of the Note and Deed of Trust." [Id. § 105.]
I. Motion to Dismiss
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6); Navarro v. Block , 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co. , 80 F.3d 336, 337-38 (9th Cir.1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Twombly , 550 U.S. at 556). "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 556 U.S. at 1949 (quoting Twombly, 550 U.S. at 678).
"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires 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 (quoting Papasan v. Allain , 478 U.S. 265, 286 (1986)) (alteration in original). A court need not accept "legal conclusions" as true. Iqbal , 556 U.S. at 678. Despite the deference the court must pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the... laws in ways that have not been alleged." Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters , 459 U.S. 519, 526 (1983).
Further, a court generally may not consider materials beyond the pleadings when ruling on a Rule 12(b)(6) motion. United States v. Ritchie , 342 F.3d 903, 907-08 (9th Cir. 2003). However, a court "may take judicial notice of matters of public record... as long as the facts noticed are not subject to reasonable dispute." Skilstaf, Inc. v. CVS Caremark Corp. , 669 F.3d 1005, 1016 n.9 (9th Cir. 2012).
As a general rule, a court freely grants leave to amend a complaint which has been dismissed. Fed.R.Civ.P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." ...