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Sepehry-Fard v. Countrywide Home Loans. Inc.

United States District Court, N.D. California, San Jose Division

June 13, 2014

COUNTRYWIDE HOME LOANS. INC., et al., Defendants.



In this lawsuit for quiet title, defendants Countrywide Home Loans, Inc. ("Countrywide"), ReconTrust Company, N.A. ("ReconTrust"), The Bank of New York Mellon ("BONY"), and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants") have filed three identical motions to dismiss the Complaint on the grounds of res judicata and failure to state a claim on which relief can be granted. (Def.'s Mots., ECF 5, 13, 30) Plaintiff Fareed:Sepehry-Fard ("Plaintiff") opposed all three motions. (Pl.'s Opp., ECF 20, 29; Pl.'s Supp. Opp., ECF 38).[1]

The Court held a hearing on the motions on June 5, 2014 wherein the Court, sua sponte, raised the issue of subject matter jurisdiction over this lawsuit. For the reasons stated herein, the Court finds that the case must be DISMISSED for lack of subject matter jurisdiction.

Plaintiff also filed a Motion for Leave to File First Amended Complaint ("MFL") on April 22, 2014. (Pl.'s MFL, ECF 56) Defendants opposed that motion. (Def.'s Opp. to MFL, ECF 59-60) The Court has considered the Motion for Leave to File First Amended Complaint without oral argument and reviewed the proposed amended pleading in order to determine whether the proposed amendments would be permissible if the Court determined that it lacked subject matter jurisdiction in regard to the initial pleading. Because the Court finds that the proposed amendments are not permissible due to a lack of subject matter jurisdiction over the case as originally presented, the Court DENIES the Motion for Leave to File First Amended Complaint.


Plaintiff, proceeding pro se, filed this original action on December 12, 2013 seeking to quiet title to a house located at 18314 Baylor Avenue, Saratoga, CA 95070 ("Property"). The sole claim, as repeated throughout the Complaint, is for quiet title. ( See Compl., at 1:4, ¶¶ 1, 18-20, 61-63) Plaintiff's allegations are lengthy and at times veer into legal argument. What can be gleaned from the few factual allegations and the documents attached to the Complaint is that Plaintiff's Property is subject to two mortgage loans executed in September 2005 (collectively, "Notes"). ( See Compl., Exh. A, at 12-65; Def.'s Req. for Judicial Notice ("RJN") Exhs. A-B, ECF 6, 13-1, 30-1)[2] The Deeds of Trust identify Countrywide as the "Lender, " ReconTrust as the "Trustee, " and MERS as beneficiary and nominee. ( See id. ) Thereafter, defendants BONY and MERS engaged in an assignment transaction pursuant to which BONY became the beneficiary of the Notes. ( See Compl. Exh. F) It appears that the Notes may have subsequently been pooled with other loans and securitized. ( See Compl. ¶¶ 49-50, 56-58)

Plaintiff alleges that the assignment between MERS and BONY was either invalid or fraudulent. ( See id. ¶¶ 23-25, 38-45, 64-70) Plaintiff further alleges that the securitization of his Notes discharged any debt owed thereunder. ( See id. ¶¶ 49-50, 56-58) Plaintiff does not allege that Defendants have taken any collection activity or made an adverse claim to the Property, though Defendants have provided evidence that a notice of default was recorded and then rescinded in 2010. ( See Def.'s RJN Exhs. E-F)[3] Plaintiff's theory for quiet title appears to rest on the contention that either because the Notes were invalidly or fraudulently assigned or because the Notes were securitized and discharged the debt owed, Defendants do not have standing to enforce the Notes because they are not "real parties in interest" or "holder[s] in due course." ( See id. ¶¶ 43-47, 51, 54) Plaintiff thus alleges that "the Title is clouded, " ( id. ¶ 18), and requests the Court to "enter a judgment for a Quiet Title Action, " ( id. ¶ 19). ( See also id. ¶¶ 62-63)

On April 22, 2014, after the briefing on Defendants' motions to dismiss had concluded, Plaintiff filed his Motion for Leave to File First Amended Complaint. (Pl.'s MFL, ECF 56) In the proposed First Amended Complaint ("FAC"), Plaintiff seeks to add thirteen additional claims against all Defendants for (1) negligence; (2) violation of the Federal Telephone Consumer Protection Act of 1991 ("TCPA"); (3) violation of California's Business and Professions Code Sections 17200, et seq. ("UCL"); (4) violation of the Fair Debt Collection Practices Act ("FDCPA"); (5) violation of 18 U.S.C. §§ 1963-1965 (collectively, "RICO claims"); (6) violation of 42 U.S.C. §§ 1981-1982 (collectively, "Civil Rights claims"); (7) accounting; (8) violation of the Truth in Lending Act ("TILA"); and (8) violation of the Real Estate Settlement Procedures Act ("RESPA"). Defendants opposed this motion for leave to amend, arguing that Plaintiff's new claims are also barred by res judicata, and that permitting amendment would be futile because Plaintiff's proposed new claims either do not satisfy Rule 8(a), or are time barred, or both. ( See Def.'s Opp. to MFL)


A. Federal Jurisdiction

"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Federal jurisdiction generally arises in one of two ways: (1) from the presence of a federal question, or (2) from complete diversity of the parties, where the amount in controversy exceeds $75, 000. See 28 U.S.C. §§ 1331, 1332. Federal Rule of Civil Procedure 8(a)(1) requires a federal plaintiff to include in the complaint "a short and plain statement of the grounds for the court's jurisdiction, " because "[a] party invoking the federal court's jurisdiction has the burden of proving the actual existence of subject matter jurisdiction." Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996); see also Kokkonen, 511 U.S. 375, 377 ("It is to be presumed that a cause lies outside this limited jurisdiction and the burden of establishing the contrary rests upon the party asserting jurisdiction.").

Federal subject matter jurisdiction must "exist as of the time the action is commenced." Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (1988). Jurisdiction cannot be "expanded by judicial decree, " Kokkonen, 511 U.S. 375, 377, nor can it be conferred on the district court by agreement or consent, Morongo, 858 F.2d 1376, 1380. "If jurisdiction is lacking at the outset, the district court has no power to do anything with the case except dismiss.'" Id. (quoting 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 2844, at 332 (1986)).

B. Leave to Amend

A plaintiff may amend the complaint once as a matter of course within 21 days after serving, or after service of a motion under Rule 12(b). Fed.R.Civ.P. 15(a)(1). Any other amendments can only be made "with the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a)(2). Leave to amend should generally be freely given "when justice so requires." Id. However, certain factors can weigh against generous leave to amend, including "undue delay, bad faith or dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment." Foman v. Davis, 371 U.S. 178, 182 (1962); ...

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