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Sollenne v. U.S. Bank National Association

United States District Court, S.D. California

July 8, 2014

PETER R. SOLLENNE and PATRICIA D. SOLLENNE, as Trustees for the Sollenne Family Trust, dated December 12, 2007, Plaintiffs,
v.
U.S. BANK NATIONAL ASSOCIATION, as Trustee for Lehman XS Trust Mortgage Pass-Through Certificates, Series 2007-18N; NATIONSTAR MORTGAGE, LLC; and DOES 1-10, inclusive, Defendants.

ORDER: (1) GRANTING MOTION TO DISMISS (2) DENYING LEAVE TO AMEND [Docket No. 53]

ROGER T. BENITEZ, District Judge.

Before this Court is a Motion to Dismiss (Docket No. 53) filed by Defendants Nationstar Mortgage LLC (Nationstar) and U.S. Bank National Association (USBNA). For the reasons stated below, the Motion is GRANTED.

I. Background

On March 28, 2013, Peter R. Sollenne and Patricia D. Sollenne (Plaintiffs), acting in their capacities as trustees for the "Sollenne Family Trust, dated December 12, 2007, " and proceeding pro se, filed a First Amended Complaint (FAC) alleging misconduct relating to a mortgaged property in Carlsbad, California. (Docket No. 17). This Court granted Defendants' Motion to Dismiss the FAC on December 13, 2013. (Docket No. 25). Plaintiffs filed a Second Amended Complaint (SAC) on May 5, 2014. (Docket No. 49). On May 21, 2014, Defendants filed the instant Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

Plaintiffs allege that they executed a note and deed of trust, in their personal capacities, with Washington Mutual Bank (WaMu) as the lender in May 2004. (SAC ¶¶ 13-14). Plaintiffs refinanced with Countrywide Home Loans in May 2006, ( id. ¶ 15), and again with CMG Mortgage, Inc. (CMG) in June 2007, ( id. ¶ 16). At that time they were informed their servicer would be Aurora Loan Servicing. ( Id. ). In 2012, Nationstar identified themselves as the servicer of the loan. ( Id. ¶ 17). On January 22, 2008, Plaintiffs deeded their interest in the property into the Sollenne Family Trust, dated December 12, 2007. ( Id. ¶ 18).

Plaintiffs allege that their loan was bundled into a group of notes and sold as a derivative "mortgage backed security, " to Lehman XS Trust Mortgage Pass-Through Certificates, Series 2007-18N ("Trust"). ( Id. ¶ 19). They allege that, accordingly, none of the Defendants own the loan or the note; that Defendants cannot be a beneficiary or a lawfully appointed trustee under the deed of trust; and that they have no right to declare a default, cause notices of foreclosure sale to issue or be recorded, or to foreclose on their interest in the property. ( Id. ) USBNA is alleged to be the trustee for Trust, and Nationstar is alleged to be Trust's servicer. ( Id. ¶¶ 20-21).

Plaintiffs also allege that the procedures in the Pooling and Services Agreement (PSA) for the Trust have not been followed. ( Id. ¶ 27). They allege that the note and the mortgage were not properly assigned and transferred from CMG (the originator) to USBNA (the trustee of the Trust) in accordance with the PSA. ( Id. ¶¶ 29-32). Plaintiffs claim the PSA was violated by a failure to complete the assignment before the closing date, and a failure to provide a complete and unbroken chain of transfers and assignments. ( Id. ¶¶ 31-32). Plaintiffs claim that no perfected chain of title exists transferring the mortgage loan from CMG to the Trust. ( Id. ¶ 35).

In the alternative, Plaintiffs claim that Nationstar alleges that it is the holder and owner of the note and the beneficiary of the deed of trust, but that the note identifies the originator as the holder, and there is no perfected chain of title between CMG and Nationstar. ( Id. ¶ 36).

Plaintiffs claim that no documents or records have been produced to demonstrate the note or deed of trust was properly transferred prior to the closing date, and that any documents transferring it after the closing date are void under the PSA. ( Id. ¶¶ 37-38).

Plaintiffs list the following deficiencies which they contend render invalid any security interest in the deed of trust: 1) the separation of title, ownership and interest in the note and deed of trust; 2) the lack of assignments to or from the intervening entities when the loan was sold; 3) the failure to assign and transfer the beneficial interest in the deed of trust to Defendants in accordance with the PSA; 4) the failure to endorse, assign, and transfer the note to USBNA in accordance with the PSA and California law; 5) that there were no assignments of beneficiary or endorsements of the note to each intervening entity; and 6) Defendants violated terms of the PSA. ( Id. ¶¶ 49, 66-72).

Plaintiffs allege that the mortgage was never assigned, and state that they "believe" that after failing to record an assignment of the deed of trust after so many years, the party with the interest in the loan "has either abandoned the [deed of trust] or the [deed of trust] was never assigned to the new lender, making the [deed of trust] a nullity." ( Id. ¶¶ 75-76).

They claim no party to the securitized transaction or any Defendant holds a perfected and secured claim in the property, and that all Defendants are estopped and precluded from asserting a secured or unsecured claim against the property. ( Id. ¶ 50). Plaintiffs also claim that the only individuals with standing to foreclose on the note would be the certificate holders of the trust, rather than Defendants, since the certificate holders are "the end users and pay taxes on their interest gains" and Defendants were paid in full. ( Id. ¶ at 93).

Plaintiffs claim California law requires that a transfer of mortgage paper as collateral requires the owner to physically deliver the note to the transferee. ( Id. ¶¶ 96, 99). They also claim that the note must be endorsed to be transferred. ( Id. ¶ 97).

Plaintiffs allege eight causes of action: 1) quiet title; 2) violation of RESPA; 3) violation of California Civil Code 17200 & 1710 "as well as fraud"; 4) breach of security instrument; 5) breach of duty of good faith and fair dealing; 6) violation of the Federal Debt Collection Practices Act; 7) injunctive relief for violation of California Civil Code § 2923.5; and 8) slander of title. In their Prayer for Relief, Plaintiffs request injunctive and declaratory relief. ( Id. at p. 33-34).

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), dismissal is appropriate 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, 570 (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"). "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 (citation omitted). 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; Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990).

III. Discussion

Plaintiffs were only given leave "to amend the claims which were dismissed without prejudice." (December 13 Order at 10). Plaintiffs were not granted permission to amend the complaint to assert new claims, and did not seek such permission from this Court. Plaintiffs' attempt to assert additional claims is therefore improper, and dismissal is appropriate. See FED.R.CIV.P. 15; Simmons v. Seal, No. C 07-1205, 2008 WL 1869702, at *5 (N.D. Cal. Apr. 24, 2008). Plaintiff's FAC asserted causes of action for quiet title, declaratory relief, and injunctive relief. (Docket No. 17). Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs' claims two (violation of RESPA), three (violation of California Civil Code 17200 & 1710 "as well as fraud"), four (breach of security instrument), five (breach of duty of good faith and fair dealing), six (violation of the Federal Debt Collection Practices Act), seven (injunctive relief for violation of California Civil Code § 2923.5[1]) and eight (slander of title).

The Court previously dismissed with prejudice Plaintiffs' claims premised upon the securitization of the loan and violations of the PSA. To the extent Plaintiffs improperly attempt to re-assert these claims, they have not stated a claim upon which relief can be granted, and such claims remain DISMISSED WITH PREJUDICE.

Upon review of the SAC, it is apparent that Plaintiffs have not remedied the fundamental defects which underlay the FAC, and that these defects require dismissal of this action without leave to amend. This Court has carefully reviewed the Second Amended Complaint. Plaintiffs' remaining claims are premised upon their contention that the Defendants did not have authority to take actions with respect to Plaintiffs' note or deed of trust. This Court previously ruled that Plaintiffs cannot challenge Defendants to prove their authority to foreclose without making specific factual allegations.[2] (December 13 Order at 4-5). Similarly, this Court ruled that Plaintiffs failed to provide a basis from which this Court could conclude that the note and deed of trust were impermissibly split, and that speculation was insufficient. ( Id. at 9). Plaintiffs have not alleged specific factual allegations in the SAC from which this Court could conclude that Plaintiffs' claims regarding a lack of proper chain of title and improper assignment or transfer are more than mere speculation. There are no factual allegations from which this Court might infer that the note and deed of trust were impermissibly split. Examination of all of the theories put forward by Plaintiffs clearly indicates that they have not alleged sufficient facts from which this Court might infer that Defendants lacked authority with respect to any actions taken with respect to the note, the deed of trust, or Plaintiffs' property. Accordingly, this Court DISMISSES WITHOUT PREJUDICE Plaintiff's claim one (quiet title).

IV. Conclusion

This Court clearly indicated to Plaintiffs that the factual allegations in the FAC were insufficient, and specifically cautioned Plaintiffs that "they must plead specific factual allegations from which this Court could conclude that Plaintiffs' claims that Defendants lack authority are more than speculation." ( Id. at 10). Review of the SAC reveals that Plaintiffs have not corrected the defects specifically identified by this Court. Plaintiffs have already amended their complaint twice, and there is no indication that Plaintiffs will be able to cure the deficiencies.

Plaintiffs' claims premised upon the securitization of the loan and violations of the PSA remain DISMISSED WITH PREJUDICE. All other claims that Plaintiffs may be attempting to assert are DISMISSED WITHOUT PREJUDICE. Plaintiffs are DENIED leave to amend. The Clerk of the Court may close the case.

IT IS SO ORDERED.


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