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Gutierrez v. Bank of America, N.A.

United States District Court, E.D. California

April 8, 2014

ISAAC GUTIERREZ AND PURIFICACION M. INFANTE, Plaintiffs,
v.
BANK OF AMERICA, N.A., et al. Defendants.

ORDER

TROY L. NUNLEY, District Judge.

This matter is before the Court pursuant to Defendants Bank of America, N.A. ("Defendant B.A."), Mortgage Electronic Registration Systems, Inc. ("Defendant MERS"), U.S. Bank ("Defendant U.S. Bank") and National Association as Trustee for the Harborview Mortgage Loan Trust 2005-12 Mortgage Loan Pass-through Certificates, Series 2005-12's ("Defendant Trustee") (collectively referred to as "Defendants") Motion to Dismiss.[1] (ECF No. 8.) Plaintiffs Isaac Gutierrez ("Plaintiff Gutierrez") and Purificacion Infante ("Plaintiff Infante") (collectively referred to as "Plaintiffs") oppose Defendants' motion. (ECF No. 14.) Defendants filed a reply in response to Plaintiffs' opposition. ( See ECF No. 17.) The Court has carefully considered the arguments raised by both parties. For the reasons stated below, Defendants' Motion to Dismiss (ECF No. 8) is hereby GRANTED.

I. FACTUAL AND PROCEDUREAL BACKGROUND

On August 2, 2005, Plaintiff Gutierrez entered into a mortgage loan transaction for the Subject Property. (Compl., ECF No. 1 at ¶ 7.) The loan documents consisted of a Deed of Trust, Adjustable Rate Note, Adjustable Rate Rider, and Prepayment Rider. (ECF No. 1 at ¶ 7.) The loan product was an adjustable rate mortgage with negative amortization (110%). (ECF No. 1 at ¶ 7.) The loan documents were recorded in the Solano County Recorder's Office on August 11, 2005. (ECF No. 1 at ¶ 7.) The Deed of Trust identifies Paul Financial, LLC as the lender and Foundation Conveyancing, LLC as the trustee. (ECF No. 1 at ¶ 8.) Defendant MERS is identified as the nominal beneficiary for Paul Financial, LLC. (ECF No. 1 at ¶ 8.) The original servicer of the loan was Paul Financial, LLC. (ECF No. 1 at ¶ 9.) The servicer assigned No. XXXXXXXXX to the loan. (ECF No. 1 at ¶ 9.) Shortly after the loan closed, Countrywide Home Loans, Inc. assumed the servicing role. (ECF No. 1 at ¶ 9.)

In July, 2008, when Defendant B.A. acquired Countrywide Financial Corporation, Defendant B.A.'s loan servicing company, BAC Home Loans Servicing LP ("BAC") became the servicer of Plaintiff Gutierrez's loan. (ECF No. 1 at ¶ 9.) BAC subsequently merged into Defendant B.A. and so Defendant B.A. became the servicer. (ECF No. 1 at ¶ 9.)

Shortly after the Gutierrez loan closed, it was sold to the HVMLT 2005-12 Trust on or before September 30, 2005, the Closing Date of the Trust. (ECF No. 1 at ¶ 11.) Countrywide Home Loans, Inc., the loan originator sold the loan to Greenwich Capital Financial Products, Inc. ("GCFP") as Sponsor/Seller in the securitization transaction. (ECF No. 1 at ¶ 13.) Immediately thereafter, GCFP sold the subject loan, pooled with other mortgages, on September 1, 2005, to Greenwich Capital Acceptance, Inc. ("GCA"), the securitization "Depositor." (ECF No. 1 at ¶ 13.) Finally, GCA transferred the loan to Defendant U.S. Bank, National Association ("Defendant U.S. Bank"), as trustee for the HVMLT 2005-12 Trust.

On June 8, 2006, Plaintiff Gutierrez recorded a Grant Deed conveying the Subject Property to Jorge Infante. (ECF No. 1 at ¶ 20.) On June 23, 2008, Recontrust Company, acting as an agent for the (unidentified) Beneficiary, recorded a Notice of Default and Election to Sell Under Deed of Trust ("NOD") against the Subject Property. ( See NOD, ECF No. 1-3.) The NOD states that "[t]o find out the amount you must pay, or to arrange for payment to stop the foreclosure, or if your property is in foreclosure for any other reason, contact: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. C/O Countrywide Home Loans, Inc." (ECF No. 1-3.) On December 23, 2009, Defendant MERS filed a Substitution of Trustee purporting to substitute Recontrust Company for the original trustee under the Deed of Trust executed by Plaintiff Gutierrez. (Substitution of Trustee, ECF No. 1-4.) Concurrently with the Substitution of Trustee, on December 23, 2009, Recontrust recorded a Notice of Trustee's Sale scheduling a foreclosure sale of the Subject Property for January 7, 2010. (Notice of Trustee's Sale, ECF No. 1-5.) However, the scheduled sale did not take place. On January 13, 2010, MERS recorded a second Substitution of Trustee, again purporting to substitute Recontrust for the original trustee under the Gutierrez Deed of Trust. (Second Substitution of Trustee, ECF No. 1-6.) Again, Recontrust concurrently recorded another Notice of Trustee's Sale with the Second Substitution of Trustee on January 13, 2010, this time scheduling the foreclosure sale of the Subject Property for February 5, 2010. (Notice of Trustee's Sale, ECF No. 1-7.) Again, the scheduled sale did not take place.

On February 5, 2010, Jorge I. Infante recorded a Grant Deed conveying his interest in the Subject Property to Jorge I. Infante and Purificacion M. Infante, husband and wife. (ECF No. 1 at ¶ 26.) The Grant Deed was executed on June 19, 2009. (Grant Deed, ECF No. 1-8.)

On February 10, 2011, Defendant MERS recorded: (1) a third Substitution of Trustee again purporting to substitute Recontrust for the original trustee under the Deed of Trust (Third Substitution of Trustee, ECF No. 1-9); (2) a Corporation Assignment of Deed of Trust assigning its beneficial interest in the Subject Loan to BAC Home Loans Servicing, LP, FKA Countrywide Home Loans Servicing, LP (Assignment of Deed of Trust, ECF No. 1-10); and (3) a Notice of Trustee's Sale scheduling a foreclosure sale of the Subject Property for March 8, 2011 (Notice of Trustee's Sale, ECF No. 1-11). The Subject Property was sold at the March 8, 2011 foreclosure auction to BAC for $659, 700.00, and the Trustee's Deed Upon Sale was recorded on March 24, 2011. (Trustee's Deed Upon Sale, ECF No. 1-12.)

Plaintiffs filed a complaint on August 15, 2013. (ECF No. 1.) The Complaint alleges five causes of action: (1) wrongful foreclosure; (2) quiet title; (3) slander of title; (4) cancellation of instruments; and (5) violation of California Business and Professions Code §17200 et seq. (ECF No. 1.) Defendants have filed a motion to dismiss all of Plaintiffs' claims pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 8.)

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim... is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "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." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 544, 556 (2007)).

Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts that it has not ...


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