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Lee v. Thornburg Mortgage Home Loans Inc.

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

September 29, 2014

SUSAN SHELDON LEE, Plaintiff,
v.
THORNBURG MORTGAGE HOME LOANS INC., and others, Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS Re: Dkt. Nos. 8, 14, 45, 46

NATHANAEL M. COUSINS, Magistrate Judge.

Defendants in this mortgage foreclosure case move to dismiss pro se plaintiff Susan Lee's complaint for the reason, among others, that the complaint is barred by res judicata following the dismissal of prior cases by Lee on the same claims asserted in this matter. Finding a sufficient identity of claims and identity or privity between the parties in the prior federal actions and this case, the Court concludes that, even though Lee's earlier dismissals were without prejudice, the two-dismissal rule bars her present claims. Accordingly, the Court GRANTS defendants' motions to dismiss on this basis under Rule 12(b)(6).

I. BACKGROUND

Lee brings this action against Thornburg Mortgage Home Loans Inc. ("Thornburg") "in its capacity as originating lender and purported mortgage servicer, " TMST Home Loans, Inc. formerly known as Thornburg Mortgage Home Loans Inc. ("TMST") "as purported servicer, " Select Portfolio Servicing Inc. ("SPS") "as purported servicer, " Mortgage Electronic Registration Systems Inc. ("MERS") as "purported Nominee for Thornburg, " Quality Loan Services Corporation ("Quality") "as purported Trustee under the Deed of Trust, " U.S. Bank National Association "(successor to Bank of America, N.A., successor by merger to LaSalle Bank N.A.), as Trustee, on behalf of the holders of the Thornburg Mortgage Securities Trust 2007-4 Mortgage Loan Pass-Through Certificates, Series 2007-4; (in its capacity as purported assignee of Plaintiff's Deed of Trust), " and Bank of America, N.A. "successor by merger to LaSalle Bank N.A., as former Trustee, on behalf of the holders of the Thornburg Mortgage Securities Trust 2007-4 Mortgage Loan Pass-Through Certificates, Series 2007-4." Dkt. No. 1 at 7.

Lee alleges that, on June 28, 2007, she executed a deed of trust on her property at 20 Kingsland Place, Oakland, California ("the property"), as security for a loan. Dkt. No. 1 ¶¶ 5, 18. Lee further alleges that she "timely paid her mortgage payments when she began experiencing an unforeseen financial hardship." Id. ¶ 19. Lee alleges that "there was an attempt to securitize the Mortgage by assigning and transferring the Mortgage" to the Thornburg trust "but the mortgage loan was never actually assigned and transferred." Id. ¶ 22. Lee claims that this "fatal defect renders Defendants third-party strangers to the underlying debt obligation without the power or right to demand payment, declare default, negotiate her Loan, and foreclose on her Property." Id. ¶¶ 30, 39, 85. Lee further alleges that the "failure of Defendants to assign her mortgage to LaSalle Bank as trustee of the Thornburg Trust, before the closing date of the trust or at any time, would not entitle [Bank of America] and/or U.S. bank to be the successor trustee due to the fact at no time any proper assignment was ever made to LaSalle Bank." Id. ¶ 37. Lee alleges that defendants' "fabricated Assignment of Deed of Trust, " that "purports to assign from MERS (as nominee for Thornburg Mortgage Home Loans Inc.), to U.S Bank for value received, all beneficial interest under said Deed of Trust, " is void. Id. ¶ 41.

On August 8, 2012, Lee filed an action in this Court, Case No. 12-cv-04174 JCS, asserting claims for injunctive relief, declaratory relief, and to quiet title to the property against Bank of America as trustee for the Thornburg trust, and Quality. Dkt. No. 14-1 at 45-51. Lee alleged that the deed of trust was transferred to Bank of America, and that MERS acted as a "Nominee Beneficiary" to hide the identity of the beneficiaries of the loan. Id. ¶¶ 15-16. Lee further alleged that the deed of trust was "never perfected" and became "a nullity." Id. ¶ 15. Among other relief, Lee sought to restrain the defendants from proceeding with foreclosure, invalidate the debt she owes, declare the deed of trust void, and require the defendants to execute a full reconveyance of the property to her. Id. at 51, ¶ 15. On August 17, 2012, Lee voluntarily dismissed the action without prejudice. Id. at 72-73.

On October 2, 2012, Lee filed a complaint for damages, injunctive, and declaratory relief as to the property in the Bankruptcy Court for this District, Case No. 12-46666, against Bank of America as successor to LaSalle Bank and as trustee of the Thornburg trust, MERS, and Quality. Dkt. No. 14-1 at 75-96. The complaint asserted claims for quiet title, declaratory relief, injunctive relief, negligence per se, accounting, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, wrongful foreclosure, unjust enrichment, fraudulent misrepresentation, violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b), violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and violation of Home Ownership Equity Protection Act, 15 U.S.C. § 1639. Id. Lee alleged that her loan was "sold and bundled into a group of NOTES and subsequently sold to investors as a derivative Mortgage Backed Security' entitled the Thornburg Mortgage Securities Trust 2007-4 Mortgage Loan Pass-Through Certificates, Series 2007-4, ..., and therefore none of the Defendants owns this loan, or NOTE." Id. ¶ 17. Among other relief, Lee again sought "to quiet title against the claims of BofA, MERS, QUALITY LOAN and all others, including the THORNBURG TRUST, who claim any legal or equitable right, title, estate, lien, or interest in the Subject Property adverse to the Plaintiff's title, and/or whose claim(s) in any way cloud the Plaintiff's title." Id. ¶ 64. Lee also claimed that the Court should "enjoin any further collection activity, including foreclosure." Id. ¶ 76. On December 10, 2012, the Bankruptcy Court dismissed the adversary proceeding without prejudice pursuant to Lee's request for voluntary dismissal. Id. at 98-99.

On December 17, 2012, Lee filed a complaint in state court against U.S. Bank, Bank of America, MERS, Quality, and SPS again challenging the foreclosure proceedings. Dkt. No. 14-1 at 101-125. Lee dismissed the state court complaint without prejudice on December 4, 2013. Id. at 128.

On February 7, 2014, Lee filed her complaint in this case. Lee's complaint asserts claims for declaratory relief, quasi contract, negligence, violations of the FDCPA, violations of the California Business and Professions Code § 17200, violations of the TILA, 15 U.S.C. § 1641(g), violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, fraud, and accounting. Dkt. No. 1. The relief sought by Lee includes no less than $5, 000, 000 in damages, and "an order finding that Defendants have no legally cognizable rights as to Plaintiff, the Property, Plaintiff's Promissory Note, Plaintiff's Deed of Trust or any other matter based on contract or any of the documents prepared by Defendants, tendered to and executed by Plaintiff." Id. at 48.

Defendants Quality, SPS, MERS, and U.S. Bank moved to dismiss the complaint. Dkt. Nos. 8, 14. At Lee's request, the Clerk of the Court entered default against Thornburg and Bank of America. Dkt. No. 19. Those defendants then filed motions to set aside the default which the Court granted, allowing the filing of their proposed motions to dismiss the complaint. Dkt. Nos. 44, 45, 46. Lee opposed the motions to dismiss. Additionally, Lee filed an objection contending that the Court should disregard Quality's two-dismissal/res judicata argument because it was raised for the first time on reply. Dkt. No. 42. The Court permitted Lee to file a supplemental brief on this issue, which she did. Dkt. Nos. 55, 59.

The Court has federal question jurisdiction over the FDCPA, TILA, and RICO claims under 28 U.S.C. § 1331, and supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367. All parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). Dkt. Nos. 4, 11, 13, 23, 32.

II. LEGAL STANDARD

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). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Coal. For ICANN Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495, 501 (9th Cir. 2010). The Court, however, need not accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. 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." 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

"[I]n dismissing for failure to state a claim under Rule 12(b)(6), a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.'" Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). The rule ...


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