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Daniels v. Comunity Lending, Inc.

United States District Court, S.D. California

February 9, 2015

ELLINGTON DANIELS and DIANE DANIELS, Plaintiffs,
v.
COMUNITY LENDING, INC.; BANK OF NEW YORK; BANK OF AMERICA, N.A.; RECONTRUST COMPANY, N.A.; GINNIE MAE; ET. AL; NEW CENTURY MORTGAGE; BAC HOME LOANS SERVICING, LP; COUNTRYWIDE HOME LOANS; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; CLEAR RECON CORP.; and JOHN DOES (Investors) 1-10, 000, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matters before the Court are: (1) the Motion to Dismiss Plaintiffs' Fourth Amended Complaint filed by Defendants (ECF No. 103), (2) the "Motion to Strike Defendants Documents Dispute Authenticity" filed by Plaintiffs (ECF No. 107), (3) the "Amended Motion to Strike Defendants Immaterial Evidence Dispute Authenticity" filed by Plaintiffs (ECF No. 121), (4) the Motion to Strike Defendants' Answer to Plaintiffs' Fourth Amended Complaint filed by Plaintiffs (ECF No. 119), (5) the Motion for Default Judgment filed by Plaintiffs (ECF No. 118), (6) the Amended Motion for Default Judgment filed by Plaintiffs (ECF No. 120), and (7) the Motion for a Permanent Injunction filed by Plaintiffs (ECF No. 121).

I. Background

On February 28, 2013, Plaintiffs Ellington and Diane Daniels commenced this action by filing a Complaint in this Court. (ECF No. 1). The Complaint asserted claims for violation of the Fair Debt Collection Practices Act ("FDCPA"), violation of the Telephone Consumer Protection Act ("TCPA"), and violations of the U.S. Constitution. On April 16, 2013, Defendants Bank of New York, Bank of America, N.A. ("Bank of America"), ReconTrust Company, N.A. ("ReconTrust"), and Mortgage Electronic Registration Systems, Inc. ("MERS") filed a motion to dismiss the Complaint. (ECF No. 10). On June 5, 2013, the Court granted the motion to dismiss and dismissed the Complaint without prejudice. (ECF No. 30).

On July 9, 2013, Plaintiffs filed the First Amended Complaint ("FAC"). (ECF No. 34). The FAC reasserted claims for violation of the FDCPA, violation of the TCPA, and constitutional violations, and added a claim for violation of the Fair Credit Reporting Act ("FCRA") and various state-law claims. On August 26, 2013, Defendants The Bank of New York, Bank of America, Countrywide Home Loans, Inc. ("Countrywide"), ReconTrust, and MERS filed a motion to dismiss. (ECF No. 45). On January 6, 2014, the Court granted the motion to dismiss and dismissed the FAC without prejudice. (ECF No. 60).

On May 14, 2014, Plaintiffs filed the Second Amended Complaint ("SAC"). (ECF No. 79). On May 28, 2014, Defendants The Bank of New York, Bank of America, Countrywide, ReconTrust, and MERS filed a motion to dismiss. (ECF No. 80). On July 21, 2014, the Court granted the unopposed motion to dismiss and dismissed the SAC without prejudice. (ECF No. 82). On September 29, 2014, Plaintiffs filed the Third Amended Complaint. (ECF No. 90).

On November 14, 2014, Plaintiffs filed the Fourth Amended Complaint ("Fourth AC"), which is the operative pleading in this case. (ECF No. 97). The Fourth Amended Complaint names ComUnity Lending, Inc., New Century Mortgage, BAC Home Loans Servicing, LP, Countrywide, Bank of America, Ginnie Mae, The Bank of New York, MERS, ReconTrust, and Clear Recon Corp. as Defendants.

On December 3, 2014, Defendants Bank of New York Mellon (formerly known as The Bank of New York), Bank of America, Countrywide, ReconTrust, and MERS (collectively "Moving Defendants") filed the Motion to Dismiss Plaintiffs' Fourth Amended Complaint, accompanied by a request for judicial notice.[1] (ECF No. 103). On January 5, 2015, Plaintiffs filed a document titled "Response in Accordance with F.R.C.P. 15(a)(1)(B) to Defendants 12(b) Motion Amended Complaint" that included a one-paragraph memorandum of points and authorities. (ECF No. 109).

On January 5, 2015, Plaintiffs filed a fifth amended complaint. (ECF No. 113). On January 7, 2015, the Court issued an order striking the fifth amended complaint because Plaintiffs did not obtain leave of Court or consent of Defendants to file it. (ECF No. 114). The January 7, 2015 Order stated: "Within fifteen (15) days of this Order, Plaintiffs shall file a response to Defendants' Motion to Dismiss Fourth Amended Complaint." Id. at 2. On January 28, 2015, Plaintiffs filed an opposition to the Motion to Dismiss. (ECF No. 125).

On January 5, 2015, Plaintiffs filed the "Motion to Strike Defendants Documents Dispute Authenticity." (ECF No. 107). On January 8, 2015, Plaintiffs filed the Motion for Default Judgment. (ECF No. 118). On January 12, 2015, Plaintiffs filed the Motion to Strike Defendants' Answer to Plaintiffs' Fourth Amended Complaint. (ECF No. 119). On January 12, 2015, Plaintiffs filed the Amended Motion for Default Judgment. (ECF No. 120). On January 12, 2015, Plaintiffs filed the "Amended Motion to Strike Defendants Immaterial Evidence Dispute Authenticity." (ECF No. 121). On January 21, 2015, Plaintiffs filed the Motion for a Preliminary Injunction. (ECF No. 122). On February 3, 2015, Defendant Clear Recon Corp. filed an opposition, which Bank of New York Mellon, Bank of America, Countrywide, ReconTrust, and MERS joined. (ECF Nos. 126, 128).

II. Motions to Strike (ECF Nos. 107, 119, 121)

A. "Motion to Strike Defendants Documents Dispute Authenticity" (ECF No. 107) and "Amended Motion to Strike Defendants Immaterial Evidence Dispute Authenticity" (ECF No. 121)

The document titled "Motion to Strike Defendants Documents Dispute Authenticity" moves to "strike defendants [sic] extrinsic and intrinsic fraudulent documentary evidence" and contends that Defendants' evidence is not judicially noticeable. (ECF No. 107 at 1). The only evidence in this case submitted by Defendants is in the Request for Judicial Notice accompanying the Motion to Dismiss. (ECF No. 103-2). Federal Rule of Civil Procedure 12(f) provides that "[t]he court may strike from a pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f) (emphasis added). The Federal Rules of Civil Procedure allow only the following pleadings: a complaint, an answer to a complaint, an answer to a counterclaim, an answer to a crossclaim, a third-party complaint, an answer to a third-party complaint, and a reply to an answer. See Fed.R.Civ.P. 7(a). Requests for judicial notice are not subject to Rule 12(f) striking. Plaintiffs have not identified any other authority for striking Defendants' Request for Judicial Notice.

Plaintiffs' "Motion to Strike Defendants Documents Dispute Authenticity" (ECF No. 107) and "Amended Motion to Strike Immaterial Evidence Dispute Authenticity" (ECF No. 121) are denied. The Court construes ECF Nos. 107 and 121 as oppositions to Defendants' Request for Judicial Notice (ECF No. 103-2).

B. Motion to Strike Defendants Answer to Plaintiffs' Fourth Amended Complaint (ECF Nos. 119)

Plaintiffs move to strike Defendants' answer to Plaintiffs' Fourth Amended Complaint. Plaintiffs' motion addresses various affirmative defenses allegedly asserted by Defendants, and addresses the merits of each of Plaintiffs' claims for relief asserted in the Fourth AC.

Defendants have not filed an answer to the Fourth Amended Complaint. The Moving Defendants filed a motion to dismiss. See Fed.R.Civ.P. 12(b). Plaintiffs' Motion to Strike Defendants' Answer to Plaintiffs Fourth Amended Complaint (ECF No. 119) is denied as moot.

III. Motion to Dismiss (ECF No. 103)

Defendants Bank of New York Mellon, Bank of America, Countrywide Home Loans, Inc., ReconTrust, and MERS move to dismiss all claims asserted against them in the Fourth AC with prejudice.

A. Allegations of the Fourth AC

Plaintiffs own equitable and legal title to the property at issue. Plaintiffs entered into a contractual agreement with Defendant ComUnity Lending. "Plaintiffs have no contacts with Bank of America, N.A. or any of the other defendants." (ECF No. 97 at 6). Defendant Bank of America committed fraud by falsifying the deed of trust on Plaintiffs' property by stating that Plaintiff Ellington Daniels "personally appeared" in San Bernardino on June 15, 2006, even though Plaintiff Ellington Daniels was never present. Id. at 6-7.

Defendant Bank of America further committed fraud by filing an assignment of the deed of trust with the county recorder. Defendant Bank of America further committed fraud by falsely asserting that Plaintiffs' property was in default, and demanding payment in excess of $400, 000. Defendant Bank of America further committed fraud by recording another fraudulent deed of trust "illegally transferring assignment to Clear Recon Trust." Id. at 7. "Defendants used fraud to place Plaintiffs [sic] property in foreclosure." Id.

Because Plaintiffs "attack the validity of the underlying alleged debt, ... tender is not required since it would constitute an affirmation of the unlawful debt" and the "deed is void on its face." Id. at 8.

Defendants are debt collectors as defined by the Fair Debt Collection Practices Act ("FDCPA"), and Plaintiffs are consumers as defined by the FDCPA. Defendants violated the FDCPA, sections 1692(e) and 1692(f) by demanding "to collect in excess $400, 000, an illegal lump sum of money, on an alleged debt, not validated, and not permitted by law, defendants had no authority to make, and threatened to unlawfully begin foreclosure on Plaintiffs [sic] property." Id. at 9. Because Defendant ReconTrust was employed by the other Defendants to conduct non-judicial foreclosure, ReconTrust is jointly liable for violating the FDCPA. Because Defendant ReconTrust lacks the power of sale, Defendant ReconTrust's foreclosure activity falls within the FDCPA's definition of "debt collection." Id. at 10. Defendants Bank of America, Countrywide Home Loans, Bank of America Home Loans, Bank of New York Mellon, Ginnie Mae, MERS, and New Century failed to validate the alleged debt in response to Plaintiff's Qualified Written Request ("QWR"), sent on November 27, 2012, and violated the FDCPA by "demanding to collect" on a illegal sum of money that was not validated. Id. at 9.

Defendants violated the Telephone Consumer Practices Act ("TCPA") by continuing to contact Plaintiffs by telephone regarding the alleged debt, despite Plaintiffs giving Defendant Bank of America written notice to validate the alleged debt and to cease and desist "calling, writing, and contacting Plaintiffs." Id. at 17. "Plaintiffs were harassed by Defendant Bank of America, N.A., from January 3, 2011 through March 11, 2014. The frequency of calls increased, to Plaintiffs cell phones, and residential phones 3-5 times per day, all hours of the day, calls were before 8AM in the morning, and other calls were after 9PM, causing the phone to ring repeatedly, and continuously with intent to annoy, abuse and to harass Plaintiffs." Id. "Defendant Bank of America, N.A., placed random telephone calls, using an automatic telephone dialing system, and left prerecorded voice messages, to Plaintiffs cell phones, and residential phones." Id. "Prior to January 2, 2011, when Plaintiffs received calls from Bank of America, N.A., human agents, Plaintiffs demanded cease and desist calling [sic], Defendants Bank of America, N.A., responded with insults, and threaten [sic] to take legal action to collect the alleged debt, and calls continued with even more frequency." Id. at 18. Defendants violated the TCPA because they had no business relationship or contractual agreement with Plaintiffs.

Defendant Bank of America violated the Fair Credit Reporting Act ("FCRA") by pulling Plaintiffs credit report "without permissible purpose" and reporting "false information to all credit bureaus." Id. at 20.

Defendant Bank of America violated the Truth In Lending Act ("TILA") by submitting fraudulent documents to the county recorder and seeking to collect a debt they did not own. Defendant Bank of America failed to disclose the amounts paid by Plaintiffs.

Plaintiffs assert the following claims for relief: (1) violation of the FDCPA; (2) violation of the TCPA; (3) violation of the FCRA; (4) violation of TILA; (5) violation of the Fifth and Fourteenth Amendments' due process clauses; (6) violation of the Fifth and Fourteenth Amendments' equal protection clauses; (8) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"); and various state law claims.

B. 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides that "[a] pleading that states a claim for relief must contain... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citation omitted). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citation omitted). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations and citation omitted).

Claims sounding in fraud or mistake must additionally comply with the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a complaint "must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). Rule 9(b) "requires... an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quotation omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (stating that averments of fraud must be accompanied by "the who, what, when, where, and how of the misconduct charged") (quotation omitted).

C. Discussion

i. ...


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