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Moran v. HSBC Bank Usa, N.A.

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

January 9, 2015

KELLY N. MORAN, Plaintiff,
HSBC BANK USA, N.A., et al., Defendants.


LUCY H. KOH, District Judge.

Plaintiff Kelly Moran ("Moran") brings this action against HSBC Bank USA, N.A. ("HSBC"), as Trustee for Luminent Mortgage Trust 2006-7; Wells Fargo Bank ("Wells Fargo"); Power Default Services, Inc. ("Power Default"); Ocwen Loan Servicing, LLC ("Ocwen"); Mortgage Electronic Registration Systems, Inc. ("MERS"); and Does 1-100 (collectively, "Defendants"). First Am. Compl. ("FAC"), ECF No. 20. Before the Court is Defendants' motion to dismiss the First Amended Complaint. ("Mot."), ECF No. 21. Moran opposes the motion. ("Opp'n"), ECF No. 23. Defendants filed a reply. ("Reply"), ECF No. 25. Having considered the submissions of the parties and the relevant law, the Court hereby GRANTS Defendants' motion to dismiss with prejudice.


A. Factual Background

On September 1, 2006, Moran recorded a deed of trust in favor of American Brokers Conduit ("American Brokers"), on real property located at 73 Piazza Court, San Jose, CA 95127 ("Subject Property"). FAC ¶ 14. The deed of trust named Alliance Title as trustee and MERS as beneficiary. Id.

On or around December 2006, American Brokers sold Moran's deed of trust and promissory note to a mortgage-backed securitized trust entitled the "Luminent Mortgage Trust 2006-7, Mortgage Pass-Through Certificates, Series 2006-7" ("LMT 2006-7 Trust" or "Trust"). Id. ¶ 17. On October 5, 2010, a notice of default was recorded against the Subject Property. Id ¶ 19. Although Moran's mortgage had by that point been sold to the LMT 2006-7 Trust, the notice of default continued to list MERS as the beneficiary. Id.

On January 7, 2011, MERS recorded an assignment of deed of trust to assign all beneficial interest in the deed of trust on the Subject Property to HSBC as Trustee of the LMT 2006-7 Trust. Id. ¶ 20. On the same day, HSBC recorded a substitution of trustee to appoint Power Default as trustee under the deed of trust. Compl. ¶ 22. Fidelity, acting as agent for Power Default, recorded a notice of trustee's sale against the Subject Property. Id.

On August 17, 2011, Fidelity recorded a notice rescinding the earlier October 5, 2010 Notice of Default. Id. ¶ 23. On or around September 6, 2013, a new notice of default was issued against Moran. Id. ¶ 24. The new notice of default listed HSBC, in its capacity as trustee for the LMT 2006-7 Trust, as the beneficiary. Id.

Moran claims that the foreclosure proceedings initiated in September 2013 were unlawful, because the entities seeking foreclosure "did not hold any beneficial interest in his deed of trust." Id. ¶ 25. According to Moran, American Brokers's 2006 sale of Moran's mortgage to the LMT 2006-7 Trust and MERS's subsequent assignment were "void and invalid" because "they were executed by (or on behalf) of an entity that was not in fact American Brokers Conduit, a New York corporation." Id. Moran alleges that no such corporate entity existed according to the records contained in the New York Department of State Corporation and Business Entity Database. Id. ¶ 15. As a consequence of the allegedly "void" transfer of Moran's mortgage, Moran asserts that the foreclosure proceedings were "initiated by entities that had no standing or authority to foreclose." Id. ¶ 26. According to Moran, the true beneficiary of his deed of trust is unknown.

B. Procedural Background

Moran filed his original Complaint in the Superior Court of California, Santa Clara County on December 19, 2013. Compl. at 1, ECF No. 1. Defendants removed the case to this Court on February 11, 2014 pursuant to 28 U.S.C §§ 1331, 1441(a), because Moran's sixth cause of action (for violation of 28 U.S.C. § 1962) arises under federal law. ECF No. 1. Defendants subsequently filed a motion to dismiss on March 17, 2014, which Moran opposed. ECF Nos. 12, 13. On August 4, 2014, the Court granted Defendants' motion to dismiss with leave to amend. ("Order"), ECF No. 19.

Plaintiff filed his FAC on August 25, 2014. ECF No. 20. Though Moran's theory of liability has changed, he has retained the same causes of action: (1) violations of California Civil Code Sections 2923.55 and 2924; (2) wrongful foreclosure; (3) breach of express agreement; (4) breach of implied agreement; (5) slander of title, (6) violation of 18 U.S.C § 1962; and (7) violation of California Business and Profession Code Section 17200. Id. Defendants filed a second round motion to dismiss and a request for judicial notice ("RJN")[1] on September 9, 2014. ECF Nos. 21, 22. Moran filed an opposition, ECF No. 23, and objections to Defendants' RJN, ECF No. 24.


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