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Shull v. Ocwen Loan Servicing, LLC

United States District Court, S.D. California

April 10, 2014

GREG O. SHULL, Plaintiff,
OCWEN LOAN SERVICING, LLC dba T.D. SERVICES COMPANY, and DOES 1-100, inclusive, Defendants.


ROGER T. BENITEZ, District Judge.

Before this Court is the Motion to Dismiss filed by Defendant Ocwen Loan Servicing, LLC (Ocwen). (Docket No. 3). For the reasons stated below, the Motion is GRANTED.


In October 2006, Plaintiff Gregory O. Shull obtained a mortgage loan from First Guaranty Financial Corporation, and executed a promissory note secured by a deed of trust. (Deed of Trust, Docket No. 3-4).[1] Plaintiff defaulted upon his loan, and a notice of default was recorded on December 18, 2012. (Notice of Default, Docket No. 3-5). The beneficial interest in the Deed of Trust was assigned to Deutsche Bank National Trust Company, in its role as a trustee of a trust containing mortgage-backed assets. ( See id. at 2). Plaintiff did not cure the default, and a notice of trustee's sale was recorded on June 5, 2013. (Notice of Trustee's Sale, Docket No. 3-6). The foreclosure sale of the property does not appear to have proceeded.

Plaintiff alleges that the Deed of Trust was executed in favor of First Guaranty Financial Corporation (First Guaranty), an alleged predecessor of Ocwen. (FAC ¶ 22). Commonwealth Land Title Company was listed as the trustee, and Mortgage Electronic Registration System (MERS) was named the "nominee of the lender" and the "beneficiary." ( Id. ¶ 23; Deed of Trust, at 1).

Plaintiff filed a First Amended Complaint (FAC) against Ocwen, MERS, and T.D. Services Company, a wholly owned subsidiary of Ocwen (collectively, "Defendants"). ( Id. ¶¶ 3-5). Plaintiff's claims for relief are founded upon the allegation that Defendants are "strangers" to the Deed of Trust, and have no ownership interest that entitles them to collect payment, declare a default, or conduct a trustee's sale. ( Id. at 3).

Plaintiff alleges that on or around the time of the origination, First Guaranty sold the debt obligation to an unknown entity. ( Id. ¶ 24). He contends that the Note and Deed of Trust were never validly assigned to any defendant. ( E.g., id. ¶¶ 15-16). Plaintiff contends that no defendant can demonstrate that the Note was ever properly endorsed and transferred to a defendant. ( Id. ¶ 25). Plaintiff claims that no defendant has provided any evidence to verify the owner and amount of the mortgage, or validate the claim to the debt obligation. ( Id. ) Plaintiff also contends that Ocwen failed to follow the legal requirements for transferring a negotiable interest and did not properly securitize his loan. ( Id. ¶¶ 26-28).

Plaintiff admits that he owes money on his mortgage obligation. ( Id. ¶ 20). He claims to dispute the amount owed, and asks this Court to determine who holds the Note and Deed of Trust, and to determine the rights of Defendants. ( Id. ) Plaintiff claims he has been damaged because multiple parties may seek to enforce the debt, title to his home has been clouded, and he has been paying the wrong party. ( Id. ¶ 30).

Plaintiff challenges the role of MERS in the securitization and the effect on chain of title. He contends that MERS could not, and did not, properly authorize the assignments and substitutions of the Deed of Trust to Defendants. ( Id. ¶¶ 34, 36, 40, 46-47, 52, 55, 75). He further contends that even if the assignment and substitution of the Deed of Trust was authorized, it would result in the splitting of the Note and Deed of Trust, rendering the Deed of Trust unenforceable. ( Id. ¶¶ 39, 71).

The FAC asserted: (1) declaratory relief pursuant to 28 U.S.C. §§ 2201, 2202; (2) negligence; (3) quasi contract; (4) violation of 15 U.S.C. §§ 1692 et seq. ; (5) violation of the California Business and Professions Code § 17200[2]; (6) accounting; and (7) extortion pursuant to 18 U.S.C. § 1951(b)(2). The Court notes that there is some inconsistency in the causes of action asserted. The title page lists ten causes of action, many of which differ from the causes of action actually asserted in Plaintiff's FAC. This Court will address only the seven causes of action asserted in the FAC.


Under Federal Rule of Civil Procedure 12(b)(6), a district court may grant a motion to dismiss if, taking all factual allegations as true, the complaint fails to state a plausible claim for relief on its face. FED. R. CIV. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (requiring plaintiff to plead factual content that provides "more than a sheer possibility that a defendant has acted unlawfully"). Under this standard, dismissal is appropriate if the complaint fails to state enough facts to raise a reasonable expectation that discovery will reveal evidence of the matter complained of, or if the complaint lacks a cognizable legal theory under which relief may be granted. Twombly, 550 U.S. at 556.


A. ...

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