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Moran v. Gmac Mortgage, LLC

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

June 18, 2014

GMAC MORTGAGE, LLC, et al., Defendants.


LUCY H. KOH, District Judge.

Plaintiff Patricia Moran ("Moran") brings this mortgage action against GMAC Mortgage, LLC, Executive Trustee Services, LLC, Mortgage Electronic Registration Systems, Inc., U.S. Bank National Association as Trustee for the Greenpoint Mortgage Funding Trust, and OCWEN Loan Servicing, LLC (collectively, "Defendants"). Defendants now move to dismiss the First Amended Complaint. Having considered the briefing, the record in this case, and applicable law, the Court GRANTS Defendants' Motion to Dismiss.


A. Factual Background

Except where otherwise noted, the Court draws the following facts, taken as true for purposes of a motion to dismiss, from Plaintiff's First Amended Complaint. ECF No. 29 ("FAC").

On September 13, 2006, Plaintiff entered into a residential mortgage loan with Greenpoint Mortgage Funding, Inc. ("Greenpoint Mortgage"), a subsidiary of Capital One Financial Group, to finance the purchase of property at 10920 Ridgeview Avenue, San Jose, CA 95127. FAC at 2, 13. The Note and Deed of Trust secured the property, and the deed was recorded in the Santa Clara County Recorder's office on November 9, 2005. FAC at 13. Defendant Mortgage Electronic Registration Systems, Inc. ("MERS"), which holds title to mortgages and tracks ownership interests and servicing rights in mortgages, acted as the nominal beneficiary of Greenpoint Mortgage as stated in the deed of trust signed by the Plaintiff. FAC at 3.

According to the FAC, sometime on or before November 1, 2006, Greenpoint Mortgage sold Plaintiff's loan to Lehman Brothers Holdings, Inc. FAC at 13-14. Lehman Brothers then sold the loan to a securitization depositor, Defendant Structured Asset Securities Corporation ("SASC"). Id. SASC then sold and securitized the Plaintiff's mortgage loan into a mortgage-backed security ("MBS") trust organized under New York law called Greenpoint Mortgage Funding Trust 2006-AR7. FAC at 5, 16. Defendant U.S. Bank National Association (US Bank) was named as the trustee. FAC at 5. Plaintiff alleges Defendant GMAC Mortgage LLC (GMAC) represented itself as the "purported servicer, successor lender, mortgagee and secured creditor" in Plaintiff's loan. FAC at 3. Plaintiff claims however that GMAC was actually a "complete stranger, " as it was never a party to the original loan transaction and was never a successor lender. Id. Executive Trustee Services, LLC (ETS Services) was an affiliate company of GMAC and the substitute trustee in Plaintiff's deed of trust. FAC at 4. ETS was later sold to Defendant Ocwen Loan Services, LLC. Id.

Allegedly, none of these transactions were initially recorded in the Santa Clara County Clerk-Recorder's office at the time of the transaction. FAC at 14-16. Plaintiff also alleges that the transfer of Plaintiff's mortgage into a MBS fund violated procedural rules in the trust agreement because it did not take place before the closing date specified in the trust. FAC at 11. Plaintiff alleges this violated the Pooling and Serving Agreement ("PSA") as well as the Mortgage Loan Purchase Agreement. FAC at 10.

Plaintiff entered into a loan modification agreement with Defendant GMAC on February 10, 2010. FAC at 14. Plaintiff alleges GMAC represented itself as the lender in her loan and "deceived" her based on her lack of knowledge between a servicer and a lender of a loan. Id. However, Greenpoint Mortgage, not GMAC, remained the stated lender on Plaintiff's deed of trust throughout this transaction. Id. Plaintiff argues that due to the failure to transfer the full and unencumbered interest in the mortgage loan from Greenpoint Mortgage to GMAC, Plaintiff's loan modification with GMAC is void. FAC at 14-15.

Furthermore, during April of 2011, MERS assigned the beneficial interest in the original deed to GMAC. FAC at 17. MERS' assignment of the deed of trust was notarized in Pennsylvania on April 15, 2011, which was three days before Plaintiff alleges it was signed by MERS' secretary. FAC at 17-18. Plaintiff contends that because Greenpoint Mortgage initially failed to properly assign and transfer the mortgage to the purchaser, MERS had no beneficial interest in the deed of trust. FAC at 17. Moreover, Plaintiff alleges that the discrepancy in signing dates was due to automatic computerized signing, or "robo-signing" by the company. FAC at 18. On April 18, 2011, MERS issued an assignment of deed of trust which was later recorded on April 26, 2011. FAC at 24-25. According to Plaintiff, this transfer occurred without ownership of the underlying note, and this transfer was an attempted "cover-up" of previous improper transactions by the Defendants. FAC at 18.

B. Procedural Background

Moran filed her complaint in state court on September 4, 2013, which Defendants removed to federal court on October 25, 2013. ECF No. 1. On November 1, 2013, Defendants filed a Motion to Dismiss. ECF No. 7. Moran did not file a timely opposition to Defendants' Motion to Dismiss. Nearly four months after the opposition was due, the Court ordered Moran to show cause why the case should not be dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b). ECF No. 18. At the hearing on the order to show cause, the Court "noted that this is at least the fifth Northern District of California home foreclosure case [in the last two years] in which Plaintiff's counsel has failed to oppose a first motion to dismiss. Thus, the Court gave Plaintiff's counsel notice that should Plaintiff's counsel fail to miss another deadline in this case, the Court would refer Plaintiff's counsel to the Northern District of California's Standing Committee on Professional Conduct and levy $1, 000 in sanctions." ECF No. 27, Order Vacating Order to Show Cause and Granting Motion to Dismiss. The Court also granted Defendants' Motion to Dismiss for failure to oppose, and gave Moran leave to file an amended complaint. Id. However, the Court cautioned Moran that failure to cure the deficiencies identified in Defendants' Motion to Dismiss would result in a dismissal with prejudice. Id.

Moran timely filed the FAC on April 9, 2014, ECF No. 29, which the Defendants moved to dismiss on April 28, 2014, ECF No. 30 ("Mot."). Moran filed an opposition ("Opp."), ECF No. 32, and Defendants filed a reply ("Rep."), ECF No. 33. Defendants also filed a Statement of Recent Decision pursuant to Civ. L. R. 7-3(d)(2). ECF No. 35. Plaintiff's counsel responded with a new six page opposition, which is not authorized under the Civil Local Rules. See Civ. L. R. 7-3(d). The Court therefore STRIKES Moran's Opposition to Notice of New Authority.


A. Motion to Dismiss

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). In considering whether the complaint is sufficient to state a claim, the Court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662 (2009). However, the Court need not accept as true "allegations that contradict matters properly subject to judicial notice or by exhibit" or "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. 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.'" Iqbal, 556 U.S. at 678 (quoting 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." Id. at 678. "Determining whether a complaint states a plausible claim for relief... [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). A plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b). To satisfy this standard, the allegations must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Accordingly, claims sounding in fraud must allege "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

B. Leave to Amend

If the Court determines that the complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "should be freely granted when justice so requires, " bearing in mind that "the underlying purpose of Rule 15... [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks omitted). Nonetheless, a court "may exercise its discretion to deny leave to amend due to undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing ...

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