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Haddad v. Bank of America, N.A.

United States District Court, Ninth Circuit

January 8, 2014

FIRAS HADDAD, Plaintiff,
v.
BANK OF AMERICA, N.A.; BAC HOME LOAN SERVICING, LP; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS); LaSALLE BANK, N.A.; and MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES 2006-HE6, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matters before the Court are the Motions to Dismiss Plaintiff's First Amended Complaint, filed by all Defendants. (ECF Nos. 22, 25).

I. Background

In August 2006, Plaintiff borrowed $770, 000 from Novastar Mortgage, Inc. (ECF No. 25-3 at 2).[1] The loan was secured by a Deed of Trust encumbering the real property at issue, 3256 Greystone Drive, Jamul, California. Id. at 6. The Deed of Trust lists Novastar Mortgage, Inc. as the lender, Quality Loan Services as the trustee and Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary. (ECF No. 25-4 at 2).

On March 24, 2011, MERS assigned the beneficial interest under the Deed of Trust to "U.S. Bank, National Association, As Successor Trustee to Bank of America, N.A. As Successor By Merger to LaSalle Bank, N.A., As Trustee For The Certificate Holders Of The MLMI Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE6." (ECF No. 25-5 at 2). This document was recorded on April 5, 2011. Id. On March 28, 2011, a Notice of Default and Election to Sell under Deed of Trust was recorded. (ECF No. 25-6 at 2). On June 20, 2012, a "Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Default and Election to Sell" was recorded as to the Deed of Trust. (ECF No. 25-8 at 2).

On December 19, 2012, Plaintiff, proceeding pro se, initiated this action by filing a Complaint in this Court. (ECF No. 1).

On August 21, 2013, the Court granted the motion to dismiss the Complaint filed by all Defendants. (ECF No. 19). The Court dismissed the Complaint without prejudice for lack of personal jurisdiction as to Defendants Bank of America, N.A. ("Bank of America") and Merrill Lynch Mortgage Lending, Inc. ("Merrill Lynch"), and dismissed the Complaint without prejudice for failure to state a claim as to all remaining Defendants.

On September 20, 2013, Plaintiff filed the First Amended Complaint, which is the operative pleading. (ECF No. 20).

A. Allegations of the First Amended Complaint

Novastar Mortgage, Inc. was the original lender, and "the failure of Novastar Mortgage, Inc. to record a transfer or assignment of the Deed of Trust to [Defendant Merrill Lynch Mortgage Investors Trust Series 2006-HE6 (MLMI Trust')] is a violation of the Pooling and Servicing Agreement (PSA') of the MLMI Trust and therefore the underlying transaction or sale of the Plaintiff's Promissory Note to the MLMI Trust is void." Id. at 10. "The parties involved in the alleged securitization and transfer of Plaintiff's Promissory Note and Mortgage failed to adhere to §2.01 of the PSA which requires that Plaintiff's Promissory Note and Mortgage be properly endorsed, transferred, accepted and deposited with the securitized trust... on or before the closing date' as indicated on the prospectus." Id. at 11. "The failure to deposit Plaintiff's Promissory Note into the MLMI Trust before the closing date is a violation of the PSA and of New York Trust Law. Consequently, the MLMI Trust cannot claim any legal or equitable right, title or interest in... Plaintiff's Promissory Note and Deed of Trust/Mortgage since neither the MLMI Trust, Bank of America, N.A. or any other entity cannot take any action which is not authorized by the securitization agreements that created and governed the MLMI Trust." Id. "Due to the fact that Novastar Mortgage, Inc. is now out of business, there is no party that can actually and validly enforce the terms of the underlying and original Promissory Note allegedly entered into between Plaintiff and Novastar Mortgage, Inc." Id. at 14.

The First Amended Complaint asserts the following causes of action: (1) quiet title, (2) slander of title, (3) declaratory relief, and (4) violation of California Business and Professions Code § 17200. The Complaint alleges diversity subject-matter jurisdiction pursuant to 28 U.S.C. § 1332.

B. Motions to Dismiss

On October 7, 2013, Defendants Bank of America (individually and as successor by merger to BAC Home Loans Servicing, LP and LaSalle Bank, N.A.), Merrill Lynch (sued as the MLMI Trust), and MERS filed a Motion to Dismiss the First Amended Complaint. (ECF No. 22). On October 25, 2013, Defendant Nationstar Mortgage, LLC filed a Motion to Dismiss the First Amended Complaint. (ECF No. 25). Bank of America moves to dismiss the First Amended Complaint for lack of personal jurisdiction for failure to properly serve Bank of America pursuant to Federal Rule of Civil Procedure 4. All Defendants move to dismiss the First Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants contend that Plaintiff's underlying legal theory is without merit, and Plaintiff lacks standing to maintain his claims. Defendants contend that each of Plaintiff's individual claims fail for other reasons. Defendants request that the First Amended Complaint be dismissed with prejudice.

On November 7, 2013 and November 25, 2013, Plaintiff filed oppositions to the pending Motions to Dismiss. (ECF Nos. 28, 30). Plaintiff contends that the First Amended Complaint adequately states claims for relief pursuant to the holding of Glaski v. Bank of America, N.A., 218 Cal.App.4th 1079 (2013). Plaintiff contends that each of his individual causes of action are adequately pled. Plaintiff states: "[I]f any ...


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