United States District Court, N.D. California, San Francisco Division
ROBERT H. O'CONNOR, Plaintiff,
NATIONSTAR MORTGAGE, LLC, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS, and DENYING PLAINTIFF'S APPLICATION FOR TRO Re: Dkt. Nos. 16, 33, 34
NATHANAEL M. COUSINS, Magistrate Judge.
The issue before the Court is whether pro se plaintiff Robert O'Connor has stated any claim for relief against defendant Nationstar Mortgage, the beneficiary under a deed of trust to property formerly owned by O'Connor. Nationstar purchased the property in non-judicial foreclosure proceedings. For the reasons set forth below, the Court finds that the complaint is barred in part by res judicata and otherwise fails to state a claim for relief. Accordingly, the Court GRANTS Nationstar's motion to dismiss the complaint. The Court DENIES O'Connor's application for a temporary restraining order and order to show cause why a preliminary injunction should not be granted.
A. O'Connor's Allegations
In analyzing claims under Federal Rule of Civil Procedure 12(b)(6), the Court assumes that all material facts alleged in the complaint are true. Coal. For ICANN Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495, 501 (9th Cir. 2010). The operative complaint here alleges that O'Connor is the sole owner of residential property located at 3157 Baker Street, San Francisco ("the property"). Dkt. No. 6 ¶ 4. The complaint alleges that defendant Nationstar "claims to be the actual owner under a [sic] Assigned of Deed of Trust to the property" and that "Nationstar became the beneficiary under a Deed of Trust recorded on plaintiff's property on April 11, 2007, by Assignment of Deed recorded on April 12, 2012." Id. ¶¶ 5-6. The complaint further alleges that on November 13, 2013, Nationstar gave notice of trustee's sale. Id. ¶ 9.
Public records submitted by the parties, of which the Court takes judicial notice as specified below, show that on April 23, 2007, a deed of trust was recorded on the property as security for a loan. Dkt. No. 29 at 42-43. The deed of trust identifies the lender as SCME Mortgage Bankers, Inc. ("SCME"), the beneficiary as Mortgage Electronic Registration Systems ("MERS"), "acting solely as a nominee" for the lender and its successors and assigns, and the trustee as Stewart Title Company of San Diego. Id. On August 11, 2009, a substitution of trustee was recorded showing that MERS designated Cal-Western Reconveyance Corporation ("Cal-Western") as trustee dated July 8, 2009. Dkt. No. 16-1 at 27-30. On July 14, 2009, Cal-Western recorded a notice of default due to O'Connor's failure to make the payments on the loan. Id. at 31-33. On February 15, 2011, an assignment of deed of trust was recorded showing that on July 14, 2009, MERS assigned the deed of trust to Aurora Loan Services LLC ("Aurora"). Id. at 34-36. On December 12, 2012, another assignment of deed of trust was recorded, showing that on September 20, 2012, Aurora assigned the deed of trust to Nationstar. Dkt. No. 6 at 11-13 (assignment of deed of trust, attached as Exhibit B to the operative complaint); see also Id. ¶ 6.
On January 29, 2010, a notice of trustee's sale for the property was recorded, noticing a public auction for February 18, 2010. Dkt. No. 16-1 at 49. On July 14, 2010, O'Connor filed a lawsuit in San Francisco Superior Court, Trustee (the "state court action"). Dkt. Nos. 7-4 at 1-30. In the complaint, O'Connor asserted various claims, including for wrongful foreclosure, fraud, unfair business practices, declaratory relief, and to quiet title, all of which challenged the authority of the defendants to foreclose on the property and sought to void the deed of trust and quiet title "in Fee Simple" to O'Connor as to the interest of the defendants. Id. ¶¶ 1-2, 44-58, 68-86, 93-95. On April 6, 2011, the state court entered an order sustaining defendants' demurrers to the complaint without leave to amend, finding that O'Connor "has not pleaded any basis to avoid [defendants'] rights to proceed against the property" and dismissed the case with prejudice. Dkt. No. 31-1 at 3-8. Also on the same date, the state court issued a final judgment against O'Connor and in favor of defendants. Dkt. Nos. 7-4 at 31-36.
On November 4, 2013, a notice of trustee's sale for the property was recorded, noticing a public auction for November 26, 2013. Dkt. No. 16-1 at 38. On February 12, 2014, a trustee's deed upon sale was recorded showing that Cal-Western, as trustee, conveyed the property to Nationstar on January 15, 2014, after the property was sold to Nationstar at the public auction held on November 26, 2013. Dkt. No. 31-1 at 9-12.
B. Procedural History
O'Connor initiated this action on December 18, 2013. Dkt. No. 1. On January 28, 2014, O'Connor filed his first amended complaint. Dkt. No. 6. O'Connor brings six causes of action against Nationstar: (1) to set aside trustee's sale; (2) to cancel trustee's deed; (3) to quiet title; (4) for wrongful foreclosure; (5) for violation of California Business and Professions Code § 17200 et seq.; and (6) for violation of the Fair Debt Credit Reporting Act ("FCRA"). See generally Dkt. No. 6. Throughout the operative complaint, O'Connor also alleges violations of the Fair Debt Collection Practices Act ("FDCPA"), although no claim is titled as being brought under the FDCPA. Id. The relief sought by O'Connor includes, among other things, (1) "a declaration that the sale of the property is null and void"; (2) "an order setting aside the trustee's sale or [sic] the property"; (3) an order that "Nationstar deliver the Substitute Trustee's Deed to the Court" and that "cancels the Assignment/Substitute Trustee's Deed"; (4) a "judgment quieting title to O'Connor as the owner of the property"; (5) compensatory damages; and (6) "all relief to which he is entitled under the Fair Credit Reporting Act, including an award of punitive damages against the Defendants for willful violations of the FCRA." Id. at 7.
Nationstar filed a motion to dismiss O'Connor's first amended complaint, which O'Connor opposed. Dkt. Nos. 16, 29. On April 15, 2014, O'Connor filed an ex parte application for temporary restraining order and order to show cause why a preliminary injunction should not be granted enjoining Nationstar from further interfering with O'Connor's possession of the property. Dkt. Nos. 33, 34. Nationstar has not filed an opposition to the TRO application. On April 23, 2014, the Court held a hearing on Nationstar's motion to dismiss and also addressed O'Connor's TRO application.
The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 because the complaint alleges violations of FCRA and FDCPA. See Dkt. No. 6 ¶ 1. The parties consented to the jurisdiction of a United States Magistrate Judge under 28 U.S.C. § 636(c). Dkt. Nos. 10, 24, 27.
C. Requests for Judicial Notice
As a preliminary matter, the Court addresses the parties' requests for judicial notice of documents submitted in connection with the motion to dismiss. Nationstar filed a request for judicial notice in support of its motion to dismiss, Dkt. No. 16-1 ("February 14 RJN"), and in support of its reply, Dkt. No. 31-1 ("April 11 RJN"). In addition, at the hearing on the motion to dismiss, Nationstar stated that it seeks judicial notice of the documents submitted in connection with its motion to dismiss the original complaint which was withdrawn by Nationstar due to the filing of the first amended complaint ("January 29 RJN"). See Dkt. Nos. 7, 7-2, 7-3, 7-4, 12. O'Connor also attaches voluminous exhibits to his opposition to the motion to dismiss, which the Court construes as a request for judicial notice ("April 4 RJN"). Dkt. No. 29 at 24-115, 29-1. The documents subject to the parties' requests for judicial notice are voluminous and duplicative. In addition, while both parties oppose each other's requests for judicial notice, they seek judicial notice of some of the same documents. See, e.g., Exhibit A to Nationstar's February 14 RJN and Exhibit E to O'Connor's April 4 RJN (Deed of Trust recorded April 23, 2007); Exhibits G-H to Nationstar's January 29 RJN and Exhibit F to O'Connor's April 4 RJN (complaint and judgment of dismissal in O'Connor's state court action).
Generally, a court may not look to matters beyond the complaint without converting a motion to dismiss into one for summary judgment. Datel Holdings Ltd. v. Microsoft Corp., 712 F.Supp.2d 974, 983 (N.D. Cal. 2010) (citations omitted). However, a court may take judicial notice of material that is submitted as part of the complaint, or is necessarily relied upon by the complaint, as well as matters of public record. Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001). Under Federal Rule of Evidence 201(b), "a judicially noticed fact must be one not subject to reasonable dispute that is either (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate determination by resort to sources whose accuracy cannot reasonably be questioned." Datel Holdings, 712 F.Supp.2d at 983. A court may "take judicial notice of undisputed matters of public record, including documents on file in federal or state courts." Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (internal citation omitted).
The Court takes judicial notice of the existence of Exhibits A-K to Nationstar's January 29 RJN, Exhibit A to Nationstar's April 11 RJN, and Exhibits F, M, and O to O'Connor's April 4 RJN as they are court records. See, e.g., Hunt v. Check Recovery Sys. Inc., 478 F.Supp.2d 1157, 1160-61 (N.D. Cal. 2007) ("Judicial notice may be taken of adjudicative facts' such as court records, pleadings."). The Court further takes judicial notice of the existence of Exhibits A-H to Nationstar's February 14 RJN, Exhibit B to Nationstar's April 11 RJN, and Exhibits E, G, N, and T to O'Connor's April 4 RJN, as they are public records. See e.g., W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F.Supp. 790, 792 (N.D. Cal. 1992) (taking judicial notice of documents in a county public record, including state court file and deeds of trust); Valasquez v. Mortgage Elec. Registration Sys., Inc., No. 08-3818 PJH, 2008 WL 4938162, at *2-3 (N.D. Cal. Nov. 17, 2008) (taking judicial notice of deed of trust and notice of default). The requests for judicial notice are granted as to the existence of the documents but not as to the truth of their contents. See Fed.R.Evid. 201(b); Lee, 250 F.3d at 690.
O'Connor's request for judicial notice of correspondence (Exhibits A-C, H-K, U, and AA-D. his April 4 RJN), credit report excerpts (Exhibits D, W-X, and Z to his April 4 RJN), documents titled "Foreclosure History" (Exhibits L and Q to his April 4 RJN), property listing (Exhibit P to his April 4 RJN), document titled "Amended Preliminary Report" (Exhibit R to his April 4 RJN), handwritten note (Exhibit S to his April 4 RJN), notice to tenants (Exhibit V to his April 4 RJN), and document titled "Adjustable Rate Note" (Exhibit Y to his April 4 RJN) is denied on the basis that O'Connor has not shown that the facts for which he seeks judicial notice are "not subject to reasonable dispute." Fed.R.Evid. 201(b).
II. LEGAL STANDARD
A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Coal. For ICANN Transparency, Inc., 611 F.3d at 501. The Court, however, need not accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). While a complaint need not allege detailed factual allegations, it must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
A. The First Amended Complaint Is Dismissed with Leave to Amend.
Nationstar contends that O'Connor's claims must be dismissed as barred by res judicata and otherwise for failing to state a claim. For the reasons discussed below, the Court agrees and dismisses the first amended ...