United States District Court, S.D. California
JOSE L. TAVARES & CARMEN TAVARES, AS INDIVIDUALS, Plaintiffs,
NATIONSTAR MORTGAGE LLC; CAL-WESTERN RECONVEYANCE CORP.; All unknown persons claiming any legal or equitable right, title, estate, lien or interest in the property described in the Complaint adverse to Plaintiffs' title thereto, and DOES 1 through 60, inclusive, Defendants.
WILLIAM Q. HAYES, District Judge.
The matter before the Court is the Motion to Dismiss Plaintiffs' Complaint, filed by Defendant Nationstar Mortgage LLC. (ECF No. 6).
In February 2007, Plaintiffs borrowed $508, 000 from Lehman Brothers Bank, FSB, a Federal Savings Bank ("Lehman Bros."). (ECF No. 6-4 at 2-3). The loan was secured by a Deed of Trust encumbering the real property at issue, 287-289 Fifth Avenue, Chula Vista, California. Id. The Deed of Trust lists Lehman Bros. as the lender, Ticor Title Company as the trustee and Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary. Id. at 3.
On November 10, 2008, MERS assigned the beneficial interest under the Deed of Trust to Aurora Loan Services LLC ("Aurora"). Id. at 85. This document was recorded on December 11, 2008. Id. On November 10, 2008, a Notice of Default and Election to Sell under Deed of Trust was recorded. Id. at 91-92. On February 18, 2009, a first Notice of Trustee's Sale was recorded. Id. at 94. On August 2, 2010, a second Notice of Trustee's Sale was recorded. Id. at 101. On May 23, 2012, a third Notice of Trustee's Sale was recorded. On March 24, 2013, Defendant Nationstar Mortgage LLC ("Defendant" or "Nationstar") assigned the beneficial interest under the Deed of Trust. Id. at 121. On November 15, 2013, a fourth Notice of Trustee's Sale was recorded. Id. at 123.
On December 27, 2013, Plaintiffs initiated this action by filing a Complaint in the Superior Court of California, County of San Diego. (ECF No. 1 at 15). On January 30, 2014, Nationstar removed the case to this Court on the basis of diversity jurisdiction. (ECF No. 1). At the time of removal, Nationstar filed documents indicating that Defendant Cal-Western Reconveyance Corp. is a nominal defendant for the purposes of determining subject-matter jurisdiction. See id. ¶ 11.
On February 6, 2014, Nationstar filed the Motion to Dismiss the Complaint. (ECF. No. 6). On February 14, 2014, Plaintiffs filed a response. (ECF No. 7). On February 28, 2014, Nationstar filed a reply. (ECF No. 8).
A. Allegations of the Complaint
In February 2007, Plaintiffs refinanced the property at 287-289 Fifth Avenue in Chula Vista, California. (ECF No. 1 at 17 ¶ 14). Plaintiffs secured a loan in the amount of $508, 000 from Lehman Bros. Id. ¶ 15. On February 12, 2007, a Deed of Trust was recorded as Document No. 2007-0115130. Id.
On December 11, 2008, MERS, as nominee for Lehman Bros., recorded a Corporate Assignment of Deed of Trust to Aurora as Document Number No. 2008-0631934. Id. ¶ 17.
The Complaint alleges:
The Assignment of the Deed of Trust did not occur on/or ninety (90) days thereafter, but rather on December 11, 2008 long after the Trust had closed. Said Assignment was ineffective as the Trust could not have accepted the Deed of Trust after the Closing Date and the requirements for a REMIC Trust. If the assignment was made after the closing date, the non-compliance with the REMIC statutes would terminate the trust by extinguishing its tax exempt status under the REMIC statutes.
Id. ¶ 18.
This Corporate Assignment of Deed of Trust was signed by Joann Rein acting as Vice President of MERS. (ECF No. 1 at 18 ¶ 20). "Joann Rein... signs thousands of property record documents without any legal or corporate authority whatsoever... as Joann Rein... was actually an employee of Aurora...." (ECF No. 1 at 18-19 ¶¶ 21, 31).
The Complaint asserts the following causes of action: (1) fraud; (2) violation of California Business and Professions Code § 17200 et seq.; (3) violation of California Civil Code §§ 2923.5 2923.55; (4) cancellation of instruments. (ECF No. 1 at 15, 23).
B. Motion to Dismiss
On February 6, 2014, Nationstar filed a Motion to Dismiss the Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 6). Nationstar contends that the Complaint fails to state a claim upon which relief can be granted because "(1) Plaintiffs lack standing to challenge the securitization or assignment of their loan; (2) the assignments of Plaintiffs' deed of trust were lawful; (3) Plaintiffs were not prejudiced; (4) Plaintiffs' claims are barred by the statute of limitations; (5) Plaintiffs cannot establish all essential elements for fraud; (6) Plaintiffs did not sustain any injury; (7) ...