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Williams v. Quality Loan Services Corp.

United States District Court, N.D. California

October 17, 2014

STEPHAN C. WILLIAMS, Plaintiff,
v.
QUALITY LOAN SERVICES CORP., et al., Defendants.

ORDER DISMISSING COMPLAINT PURSUANT TO 28 U.S.C. § 1915 WITH LEAVE TO AMEND

JOSEPH C. SPERO, Magistrate Judge.

I. INTRODUCTION

Plaintiff Stephan Williams filed this pro se action against Quality Loan Services Corp. ("QLS"), Chase Bank/JP Morgan ("Chase") and Fannie Mae asserting claims in connection with the foreclosure on his home. Having previously granted Plaintiff's Application to Proceed in Forma Pauperis, the Court now considers whether Plaintiff's Complaint should be dismissed under 28 U.S.C. § 1915(e)(2)(B), which requires dismissal of an in forma pauperis complaint that is (1) frivolous or malicious, (2) fails to state a claim on which relief may be granted, or (3) seeks monetary relief from a defendant who is immune from such relief. See Marks v. Solcum, 98 F.3d 494, 495 (9th Cir. 1996). Plaintiff has consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). For the reasons stated below, the Court dismisses Plaintiff's complaint with leave to amend.

II. THE COMPLAINT

Plaintiff Stephan Williams alleges that on April 12, 2005, a deed of trust ("DOT") was recorded in the Contra Costa County Recorder's Office against Plaintiff's residence, located at 68 Mozden Lane, Pleasant Hill, California ("the Property"), to secure a loan in the amount of $280, 000 in favor of Washington Mutual Bank, N.A. ("WaMu"). Complaint, ¶ 11.[1] WaMu was the Lender on the DOT and California Reconveyance Company ("CRC") was listed as Trustee. Id. According to Plaintiff, on July 13, 2005, after the DOT was recorded, WaMu securitized and sold the beneficial interest in the DOT to the Washington Mutual Mortgage Pass-Through Certificates Series 2005-ARS Trust ("Trust"). Id., ¶¶ 12, 29. WaMu allegedly retained only the right to service the note and mortgage. Id., ¶ 35.

According to Plaintiff, the Pooling and Servicing Agreement ("PSA") for the Trust established a closing date of March 30, 2006 for recording assignments to the Trust. Id., ¶¶ 30-31. Plaintiff alleges that the terms of the PSA further required that all promissory notes transferred to the Trust must have a complete chain of endorsements before the closing dated and "under no circumstances later than 90 days after the Trust's closing date." Id., ¶ 17. Instead, Plaintiff alleges, the assignment of the DOT was not recorded until June 22, 2009, apparently after Plaintiff refinanced his home and Chase became the mortgagor. Id., ¶¶ 1, 30. Plaintiff alleges that the assignment was invalid because it was not timely recorded and therefore, that the transfer was invalid, the DOT did not become an asset of the Trust, and the Trust did not obtain the power of sale on the Property. Id., ¶¶ 29-32.

In the meantime, in 2008, WaMu ceased conducting business and entered into a receivership. Id., ¶ 20. The Federal Deposit Insurance Corporation ("FDIC") acted as receiver. Id. According to Plaintiff, on September 25, 2008, Chase entered into a Purchase and Assumption Agreement "to acquire certain of WaMu's assets." Id., ¶¶ 20, 35.

Plaintiff alleges that on April 2, 2012 a Notice of Default ("NOD") was recorded on behalf of Chase. Id., ¶¶ 32, 36.[2] Plaintiff contends the NOD was "false because CRC was not authorized before a beneficial interest holder of Plaintiff's Deed of Trust due to the unrecorded sale and securitization [on] July 13, 2005. Id., ¶ 36. Plaintiff alleges that the NOD was also false and invalid because it "was signed by Kerime Asias as Assistant Secretary of CRC as Trustee; however, Ms. Arias is not, in fact, an Assistant Secretary of CRC, but instead Ms. Arias is an employee of [Chase Bank/JP Morgan, N.A.] and has signed the document on its behalf." Id., ¶ 36. Therefore, Plaintiff alleges, Ms. Arias had no authority to sign for the CRC. Id. Finally, Plaintiff alleges that the NOD falsely stated that the requirements of Cal. Civil Code § 2923.5 had been met. Id., ¶ 37. In particular, Plaintiff alleges that Chase had not contacted him, either in person or by telephone, at least 30 days prior to recording the NOD, as required. Id. Plaintiff also alleges that the NOD did not include an attestation by a person with personal knowledge "that someone tried with due diligence to contact the borrower as required by Section 2923.5, and Plaintiff was never contacted." Id.

Plaintiff alleges that in December 2012, "Defendants made an offer to Plaintiff to avoid a foreclosure sale by participating in a short sale of Plaintiff's property." Id., ¶ 69. In addition, Plaintiff attaches to the complaint a letter dated December 4, 2012 that states, in part, as follows:

You are at risk of losing your home and we understand this may be the hardest decision you've ever made. But it might be time to sell your home in order to stop the collection calls, avoid foreclosure, find financial peace of mind and make a fresh start.
Here's how it works:
FIRST - Call us today at 800-848-9380 to get started.
Since you are in the active foreclosure process, now is the time to contact us to discuss how to sell your home for less than you owe, so you can avoid foreclosure. To take advantage of this offer, list your home for sale by December 24, 2012.
SECOND - Sell your home and receive $20, 000 Once we agree on a sale price and a few other terms, you can sell your home for that amount, avoid foreclosure and get money back
FINALLY - Walk away owing nothing more on your mortgage
Your listing agreement must be received by December 24, 2012 so call... today to discuss listing your home for sale.

Complaint, Ex. B (hereinafter, "Short Sale Letter"). Plaintiff alleges that he relied on the "short sale promise" and retained a broker to seek a qualified buyer to purchase his home. Id., ¶ 70. According to Plaintiff, the broker found a qualified buyer and an offer was conveyed to Chase in May 2013. Id. Chase "refused to cooperate as promised, " Plaintiff alleges. Id. The complaint states that a letter from the broker evidencing Defendant's refusal to cooperate is attached. Id., ¶ 72. No such document was attached to the Complaint, however.

Plaintiff also alleges that sometime in 2013 he received a letter from Chase stating "categorically that nothing more is owed on this account.'" Id., ¶ 16. Plaintiff attaches to the Complaint a document carrying the Chase logo entitled "Frequently Asked Questions, " which answers the question "[w]hy are you cancelling the amount owed to Chase" as follows: "Chase and four other mortgage servicers have agreed to a mortgage servicing settlement with the states and Federal government. As part of the settlement, we are waiving the mortgage balance." Complaint, Ex. A. The next question is, "What are the benefits of cancelling the amount owed?" Id. The answer is, "Nothing more is owed on the account." Id.

A Notice of Trustees' Sale ("NOTS") was recorded on December 15, 2013. Id., ¶¶ 36-37. Plaintiff alleges that the NOTS, like the NOD, was false and invalid due to "Defendants' failure to comply with the Notice and Contact requirements" of Cal. Civ. Code § 2923.5." Id. Plaintiff alleges that Chase acted with malice in recording the NOD and NOTS because it did not have the power of sale as trustee and it knew its actions would cause pecuniary and other damages. Id., ¶¶ 40-41. According to Plaintiff, the false recordation of these documents also ...


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