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Kilpatrick v. U.S. Bank, NA

United States District Court, Ninth Circuit

August 26, 2013

JOHN KILPATRICK, et al., Plaintiffs,
v.
US BANK, NA, et al., Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH LEAVE TO AMEND [DOC. 6]

THOMAS J. WHELAN, District Judge.

Pending before the Court is Defendants' motion to dismiss Plaintiffs' Complaint under Federal Rule of Civil Procedure 12(b)(6). ( MTD [Doc. 6]; Reply [Doc. 10].) Defendants also request judicial notice of seven documents attached to their motion. ( Defs.' RJN [Doc. 7].) Plaintiffs oppose. ( Opp'n [Doc. 9].) The Court decides the matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons below, the Court GRANTS Defendants' request for judicial notice, and GRANTS Defendants' motion WITH LEAVE TO AMEND.

I. BACKGROUND

On November 20, 2006, Plaintiffs John Kilpatrick and Cheryl Berglund ("Plaintiffs") obtained a loan ("Note") for $417, 000.00 from Family Lending Services ("Originator"). ( Def's RJN Ex. 1. [1]) The Note was secured by a Deed of Trust ("DOT") that was recorded on November 22, 2006. ( Id. ) The DOT identifies Originator as the lender, Plaintiffs as the borrowers, and S.P.S. Affiliates as trustee. ( Id. )

On August 16, 2010, NDEx West, LLC, as agent for the beneficiary of the DOT, recorded a "Notice of Default and Election to Sell Under Deed of Trust" in the San Diego County Recorder's Office. ( Def's RJN Ex. 2. ) The Notice informed Plaintiffs that as of August 12, 2010, they were behind $11, 388.49 on their payments. ( Id. )

On September 8, 2010, Stephen Goble, assistant secretary of Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for Originator, recorded an "Assignment of Deed of Trust" in the San Diego County Recorder's Office. ( Def's RJN Ex. 3. ) This assignment transferred "all beneficial interest" under the DOT from Originator to "U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR BAFC 2007-2." ( Id. )

On September 22, 2010, China Brown, as attorney in fact for U.S. Bank recorded a "Substitution of Trustee" in the San Diego County Recorder's Office. ( Def's RJN Ex. 4. ) U.S. Bank substituted NDEx West, LLC as Trustee. ( Id. )

On November 17, 2010, NDEx West recorded a "Notice of Trustee's Sale" in the San Diego County Recorder's Office. ( Def's RJN Ex. 5. ) The notice explained that Plaintiffs were in default under the November 20, 2006 DOT and that NDEx would sell the subject property on December 7, 2010 if Plaintiffs took no action. On March 16, 2012, NDEx recorded another "Notice of Trustee's Sale" in the San Diego County Recorder's Office, establishing April 9, 2012 as the sale date. ( Def's RJN Ex. 6. )

On June 14, 2012, NDEx recorded a "Trustee's Deed Upon Sale" in the San Diego County Recorder's Office. ( Def's RJN Ex. 7. ) The deed indicated that NDEx sold the subject property on June 8, 2012 for $511, 776.09. ( Id. )

On July 13, 2012, Plaintiffs filed the instant Complaint. ( Compl. [Doc. 1].) In their complaint, Plaintiffs assert claims for (1) declaratory relief, (2) negligence, (3) quasi contract, (4) violation of the Helping Families Save Their Homes Act, (5) violation of the Fair Debt Collection Practices Act, (6) violation of the Business and Professions Code, (7) an accounting, (8) a constructive trust, (9) wrongful foreclsure and setting aside of trustee's sale, (10) voiding or cancellation of trustee's deed upon sale, (11) quiet title, (12) breach of contract, and (13) civil conspiracy. ( Id. )

The gravamen of Plaintiffs Complaint is that Defendants are not the proper payee of the Note, due to several allegedly deficient transfers and assignments. Plaintiffs summarizes their position as follows:

Under the Plaintiff's theory of the case, it is clear that the Defendants are strangers to their mortgage loan and that success upon their claims against Defendants will not defeat the right of a holder in due course to enforce their promissory note executed in conjunction with the home mortgage loan. In effect, Plaintiff asserts that there is a proper payee of their mortgage promissory not but it is not the Defendants or its agents who were involved in the foreclosure upon which Plaintiff sues in the present case.

( Compl. ΒΆ 27.) Defendants move to dismiss all Plaintiffs' claims.

Plaintiffs oppose Defendants' motion with respect to claims (1), (2), (4), (9) and (11). Therefore, the Court GRANTS Defendants motion to dismiss with respect to claims (3), (5), (6), ...


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