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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,
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.


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. ...

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