ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [Dkt. No. 20]
GONZALO P. CURIEL, District Judge.
On November 8, 2013, Plaintiffs Michael and Erica Mottale (collectively, "Plaintiffs") filed an amended complaint ("FAC") in the above-captioned matter. (Dkt. No. 17.) On November 15, 2013, Defendants Kimball Tirey & St. John (" KTSJ"), Alegria Real Estate Fund IV, LLC ("Alegria"), Patricia Coyne ("Coyne"), and Christine Relph ("Relph") (collectively, "Defendants") filed a request for judicial notice, (Dkt. No. 20-2), and a motion to dismiss Plaintiffs' FAC pursuant to Federal Rule of Civil Procedure 12(b)(6), (Dkt. No. 20). The motion has been fully briefed. (Dkt. Nos. 22, 23.) Pursuant to L.Civ.R. 7.1(d)(1), the Court finds the matter suitable for adjudication without oral argument. For the reasons set out below, the Court GRANTS Defendants' Motion to Dismiss without prejudice as to Plaintiffs' First, Second, and Fourth Causes of Action.
On February 23, 2007, Plaintiffs completed a loan ("Loan") for the property located at 304 Crestview Drive, Bonita, California, 91902 ("Property"). (RJN, Ex. 2.) The Loan was secured by a deed of trust ("Deed of Trust") and a promissory note. (Dkt. No. 17, "FAC.") The deed of trust listed Mortgage Electronic Registration System ("MERS") as the beneficiary, Bear Stearns Residential Mortgage Corporation as the lender, and First American Title Company as the trustee. (RJN, Ex. 2.)
On September 22, 2010, Recontrust Company, acting as agent of MERS, executed a notice of default and election to sell under deed of trust ("Notice of Default") which showed that Plaintiffs were in default on the Loan in the amount of $52, 467.01. (RJN, Ex. 3.) The Notice of Default informed Plaintiffs that the Property "may be sold without any court action." (Id.)
On September 24, 2010, MERS executed a substitution of trustee and assignment of deed of trust ("Assignment"). (RJN, Ex. 7.) In the Assignment, MERS assigned the Deed of Trust to BAC Home Loan Serving, LP as the new beneficiary and substituted Recontrust Company as the new trustee. (Id.)
On August 3, 2011, Recontrust Company recorded a notice of trustee's sale in San Diego County, which showed that Plaintiffs were in default on the Loan in the amount of $854, 171.22. (RJN, Ex. 1.) The notice also stated that the Property may be sold at a public auction. (Id.) On March 14, 2013, Recontrust executed a trustee's deed upon sale, in which Recontrust sold the Property to Alegria. (RJN, Ex. 4.)
On April 2, 2013, KTSJ, on behalf of Alegria, filed an unlawful detainer action against Plaintiffs in California Superior Court. (RJN, Ex. 6.) Following the unlawful detainer action, Plaintiffs were removed from the Property. (FAC ¶ 19.)
On May 15, 2013, Plaintiff Michael Mottale filed the initial complaint in the present action against Defendants KTSJ, Alegria, Coyne, and Relph, seeking to quiet title and alleging fraudulent and negligent misrepresentation, violations of the Fair Debt Collection Practices Act ("FDCPA") and violations of California Business & Professional Code § 17200. (Dkt. No. 1, "Compl.") On October 9, 2013, the Court dismissed Plaintiff's Complaint without prejudice. (Dkt. No. 16.) On November 8, 2013, Plaintiffs Erica Mottale and Michael Mottale filed the FAC against Defendants KTSJ, Alegria, Coyne, and Relph, as well as against Defendant Bank of America. (Dkt. No. 17, "FAC.") Plaintiffs' FAC retains the causes of action for fraudulent misrepresentation and violations of the FDCPA from the initial Complaint and again seeks to quiet title. (FAC.) Plaintiffs' FAC adds one new cause of action alleging violation of the California Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788 et seq. (FAC ¶¶ 38-42.)
Plaintiffs' FAC challenges the validity of a home foreclosure based on the allegedly fraudulent assignment of Plaintiffs' Loan. Plaintiffs allege securitization of their Loan by unknown investors who misrepresented the identities of the actual lenders. (FAC ¶¶ 10, 13.) Plaintiffs allege the assignment of Plaintiffs' Deed of Trust was invalid and fraudulent because the assignment documents were forged and defective. (FAC ¶ 14.) Plaintiffs further allege the Notice of Default was void because BAC had "no prior recorded interest" in the Property when Recontrust recorded the Notice of Default. (FAC ¶ 16.) Plaintiffs allege the Assignment was also fraudulent because Reconstrust had no legal right to record a substitution of trustee. (FAC ¶ 16.)
Defendants KTSJ, Alegria, Coyne, and Relph move to dismiss Plaintiffs' FAC on several grounds. (Dkt. No. 20.) Defendants argue Plaintiffs lack standing to challenge the foreclosure because Plaintiffs fail to show tender of the amount owed under the Notice of Default. (Dkt. No. 20-1 at 5-7.) In addition, Defendants argue Plaintiff's securitization theory has been rejected by several courts in California. ( Id. at 7-8.) Defendants further contend that possession of the promissory note is not a pre-requisite to commence Non-Judicial Foreclosure proceedings, (id. at 8-9), and that Alegria should be insulated from Plaintiffs' claims as a bona fide purchaser, (id. at 9-10). Defendants also challenge Plaintiffs' FDCPA allegations for failure to state a claim. ( Id. at 10-12.)
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted under Rule12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc. , 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams , 490 U.S. 319, 326 (1989) ("Rule12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law."). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson , 749 F.2d at 534. While a plaintiff need not give "detailed factual allegations, " a plaintiff must plead sufficient facts that, if true, "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 545 (2007). "To survive a motion to dismiss, 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 , 556 U.S. 662, 678 (2009) (quoting Twombly , 550 U.S. at 547). A claim is facially plausible when the factual allegations permit "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . In other words, "the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Service , 572 F.3d 962, 969 (9th Cir. 2009). "Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 556 U.S. at 679.
In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Davis , 295 F.3d 890, 895 (9th Cir. 2002); Cahill v. Liberty Mut. Ins. Co. , 80 F.3d 336, 337-38 (9th Cir. 1996). Legal conclusions, however, need not be taken as true merely because they are cast in the form of factual allegations. Ileto v. Glock, Inc. , 349 F.3d 1191, 1200 (9th Cir. 2003); W. Mining Council v. Watt , 643 F.2d 618, 624 (9th Cir. 1981). When ruling on a motion to dismiss, the court may consider the facts alleged in the complaint, documents attached to the complaint, documents relied ...