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Covarrubias v. Federal Home Loan Mortgage Corporation

United States District Court, Ninth Circuit

January 28, 2014

ROSEANN COVARRUBIAS, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION; DOES 1 through 50 inclusive, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matters before the Court are the Motion for Sanctions (ECF No. 11) filed by Plaintiff Roseann Covarrubias and the Motion to Dismiss (ECF No. 13) filed by Defendant Federal Home Loan Mortgage Corporation ("Freddie Mac").

I. Background

On November 16, 2012, Plaintiff Roseann Covarrubias initiated this action by filing a Complaint against Freddie Mac. (ECF No. 1). The Court dismissed the Complaint without prejudice for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 9).

On September 23, 2013, Plaintiff filed the First Amended Complaint, which is the operative pleading. (ECF No. 10).

A. Allegations of the First Amended Complaint

"At all relevant times to this action, Plaintiff has owned, and claims to be legally entitled to own, that real property commonly known as 247 Elm Avenue, Chula Vista, California...." (ECF No. 10 ¶ 6). In May 2006, "Plaintiff, together with her former co-owner Robert Toral, executed a Note and Mortgage in favor of Bank of America, N.A., obtaining a loan secured by the subject property in the amount of $399, 900.00. PRLAP, Inc. was named as the Trustee and remains the Trustee of Record, to the exclusion of all others who pretend to occupy said position." Id. ¶ 22.

"To date, there has been NO substitution or assignment of the Lender, Bank of America, N.A. or the Trustee PRLAP, Inc. recorded with the San Diego County Recorder's office." Id. ¶ 23. Subsequent to May 30, 2006, Bank of America, N.A. did not "sell, assign, transfer, or in any other manner dispossess itself, by any writing whatsoever, of the rights and benefits set forth under [the] May, 2006 Note and Deed of Trust to [Freddie Mac] or any predecessor in interest of [Freddie Mac]." Id. ¶ 24. "Bank of America never sold, transferred, or granted their Note or Mortgage to the Sponsor, or Depositor of any securitization trust established by [Freddie Mac]..." Id. ¶ 25. Freddie Mac is "merely a third party stranger to the loan transaction." Id.

Freddie Mac "claims to be the successor to the lender, Bank of America, N.A., by way of a purported assignment of the interests in the Note and Deed of Trust to a REMIC trust administered by Freddie Mac as Trustee... in the year 2012." Id. ¶¶ 26, 28. The "closing date" for the REMIC trust administered by Freddie Mac was in the year 2006. Id. ¶ 27. "The attempted assignment in the year 2012 of a trust closed in the year 2006 was void, and all interests in the Note and Deed of Trust remain with the original lender...." Id. ¶ 29.

On January 13, 2012, a Notice of Default, ' was executed and caused to be recorded in San Diego County by Rachel C. Hamburg, an employee of Quality Loan Service Corporation ("Quality"). The Notice of Default' "purported to declare [] Plaintiff's Note and Deed of Trust in default on behalf of the lender and the lender's successors." Id. ¶¶ 32, 33. Hamburg, "acting at the direction and control of Freddie Mac... knew when she signed the Notice of Default' that it was forged, and that it was not prepared by or on behalf of Bank of America, N.A., and that instead the document was forged, prepared, filed and recorded for the pecuniary benefit of [Freddie Mac]." Id. ¶ 33(m).

On September 28, 2012, Quality employee Daisy Rios, "acting at the direction, control, and for the benefit of [Freddie Mac], caused to be recorded with the County of San Diego a Notice of Trustee's Sale." Id. ¶ 34. "Daisy Rios knew when she signed the Notice of Trustee's Sale' that it was forged, and that it was not prepared by or on behalf of Bank of America, N.A." Id. ¶ 35(E).

On October 19, 2012, "a Trustee's Sale' was purportedly undertaken by [Quality] at the direction and control of, and on behalf of [Freddie Mac]." Id. ¶ 36. At the time of the Trustee's Sale, ' Quality knew that "it conducted said sale at the direction and control of Freddie Mac, " and that "Freddie Mac had no demonstrable or actual interest in the Note and Deed of Trust." Id. ¶¶37, 38. The agents and employees of Freddie Mac and Quality "acted in concert with and for the benefit of Freddie Mac, and at all times acted with the intent to fraudulently deprive [] Plaintiff of her money and property, including Plaintiff's home." Id. ¶ 41. No sale or auction of the property took place, and instead Freddie Mac "simply asserted that an event took place, when no event of any kind took place." Id. ¶ 42.

On October 30, 2012, a Trustee's Deed Upon Sale' was recorded by Quality employee Karla Sanchez "at the direction, control, and for the benefit of Freddie Mac." Id. ¶ 43. Sanchez knew when she signed the Trustee's Deed Upon Sale' that "it was forged, and that it was not prepared by or on behalf of Bank of America, N.A." Id. ¶ 44(D). Sanchez "knew the foreclosure sale' of the subject property was a sham, and that no auction took place, no bids were requested and received, and that the Trustee's Deed Upon Sale' was prepared and recorded without the requisite authority of the actual lender and/or the actual pecuniary beneficiary of the Note and Deed of Trust." Id. ¶ 44(K). Sanchez asserted several false and fraudulent statements in the Trustee's Deed Upon Sale' "in order to benefit her principal, Freddie Mac...." Id. ¶ 44(L)(a-m).

Plaintiff asserts five claims for relief: (1) declaratory relief pursuant to 28 U.S.C. §§ 2201, 2202; (2) quasi contract; (3) unlawful debt collection practices in violation of 15 U.S.C. § 1629, et seq.; (4) wrongful foreclosure; and (5) quiet title. Plaintiff seeks "compensatory, special and general damages, " as well as "punitive and exemplary damages." Id. at 52.

Plaintiff also seeks an order from the Court as follows:

... compelling Defendants to remove any instrument which does not or could be construed as constituting a cloud upon Plaintiff's title to the property, including any document filed with the County Recorder by Defendant relative to the subject property.... finding that Defendants have no legally cognizable rights as to Plaintiff, the Property, Plaintiff's Promissory Note, Plaintiff's Deed of trust or any other matter based on contract or any of the documents prepared by Defendants, tendered to and executed by Plaintiff.... restraining Defendants, their agents, or employees from continuing or initiating any action against the Property and enjoining Defendants, their agents or employees from doing so during the pendency of [t]his matter.... compelling Defendants to ...

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