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Moreland v. U.S. Bank, N.A.

United States District Court, E.D. California

April 15, 2015

TERRY MORELAND, Plaintiff,
v.
U.S. BANK, N.A. AS TRUSTEE FOR LB-UBS COMMERCIAL MORTGAGE TRUST 2004-C6 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2004-C6; LB-UBS 2004-C6. STOCKDALE OFFICE LIMITED PARTNERSHIP; LB-UBS STOCKDALE OFFICE GP; LNR PARTNERS CALIFORNIA MANAGER, LLC; LNR PARTNERS, LLC, and DOES 1 THROUGH 10, inclusive, Defendants. LBUBS 2004-C6 STOCKDALE. OFFICE LIMITED PARTNERSHIP, a Delaware limited partnership, Counter-Claimant,
v.
TERRY L. MORELAND, an individual, and PEGGY J. MORELAND, an individual, Counter-Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS, GRANTING DEFENDANTS' MOTION TO EXPUNGE LIS PENDENS, AND DENYING COUNTER-DEFENDANTS' MOTIONS TO DISMISS

JOHN A. MENDEZ, District Judge.

This matter is before the Court on Defendants U.S. Bank, N.A., as trustee for LB-UBS Commercial Mortgage Trust 2004-C6 Commercial Mortgage Pass-through Certificates Series 2006-C6, LB-UBS 2004-C6 Stockdale Office Limited Partnership, LB-UBS Stockdale Office GP, LNR Partners California Manager, LLC, and LNR Partners, LLC's ("Defendants") Motion to Dismiss (Doc. #3) Plaintiff Terry Moreland's ("Plaintiff") Complaint (Doc. #1), and Defendants' Motion to Expunge Lis Pendens (Doc. #5). Plaintiff opposed Defendants' Motion to Dismiss (Doc. #43) and Defendants' Motion to Expunge (Doc. #44). Defendants replied to both oppositions (Doc. #45; Doc. #47). For the following reasons, Defendants' Motion to Dismiss is granted without leave to amend, and Defendants' Motion to Expunge is granted.

Also before the Court are Counter-Defendant Terry Moreland's Motion to Dismiss (Doc. #19) and Counter-Defendant Peggy Moreland's Motion to Dismiss (Doc. #34) Counter-Claimant LBUBS 2004-C6 Stockdale Office Limited Partnership's ("Counter-Claimant") Counterclaim (Doc. #9). Counter-Claimant opposed both motions to dismiss (Doc. #50; Doc. #52). Neither Counter-Defendant filed a reply. For the following reasons, Counter-Defendants' motions to dismiss are denied.[1]

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

On August 2, 2004, UBS Real Estate Investments, Inc. ("Original Lender") made a loan to Stockdale Tower I, LLC ("Borrower") in the amount of $24, 000, 000 ("the Loan"). In connection to the Loan, Borrower executed a Deed of Trust Note and a Deed of Trust (collectively, "Loan Documents"), which encumbered the commercial office building located at 5060 California Avenue, Bakersfield, California ("Stockdale Tower"). DRJN, Ex. 1 and 2.

Soon thereafter, the Loan was transferred from Original Lender to a real estate mortgage investment conduit ("REMIC") trust, LaSalle Bank National Association, in its capacity as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2004-C6, Commercial Mortgage-Pass Through Certificates, Series 2004-C6 ("the Trust"). Compl. Ex. 1. For ease of reference, this transfer is hereinafter referred to as "the 2004 transfer."

In connection with the 2004 transfer, the Loan was securitized pursuant to a pooling and servicing agreement ("the PSA"). Compl. ¶ 1; DRJN, Ex. 3. The parties to the PSA were as follows: (1) LaSalle Bank National Association, in its capacity as trustee; (2) Structured Asset Securities Corporation II, as depositor ("Depositor"); (3) Lennar Partners, Inc., as special servicer; (4) Wachovia Bank, National Association, as master servicer; and (5) ABN Amro Bank, N.V., as fiscal agent.

The PSA purports to create a REMIC trust, consisting, in part, of mortgage loans purchased from Original Lender. Section 2.01(a) of the PSA provides as follows:

"[t]he Depositor, concurrently with the execution and delivery hereof, does hereby assign, sell, transfer, set over and otherwise convey to the Trustee in trust, without recourse, for the benefit of the Certificateholders, all the right, title and interest of the Depositor in, to, and under (i) the Trust Mortgage Loans, (ii) the UBS/Depositor Mortgage Loan Purchase Agreement, (iii) the respective Co-Lender Agreements; and (iv) all other assets included or to be included in the Trust Fund." DRJN, Ex. 3.

Section 2.01(b) of the PSA further provides that:

"[i]n connection with the Depositor's assignment pursuant to Section 2.01(a) above, ... the UBS Mortgage Loan Seller has (pursuant to the UBS/Depositor Mortgage Loan Purchase Agreement) agreed, in the case of each UBS Trust Mortgage Loan, to deliver to and deposit with, on or before the Closing Date: (i) the Trustee or a Custodian appointed thereby, the Mortgage File for such Trust Mortgage Loan." DRJN, Ex. 3.

Section 1.01 of the PSA defines "Mortgage File" as including, among others, the following two documents:

"the original executed Mortgage Note for such Trust Mortgage Loan, endorsed (without recourse, representation, or warranty, express or implied) to the order of LaSalle Bank National Association, as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2004-C6, Commercial Mortgage Pass-Through Certificates, Series 2004-C6' or in blank... [and] an original executed assignment [of the Deed of Trust] in favor of LaSalle Bank National Association, in its capacity as trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2004-C6, Commercial Mortgage Pass-Through Certificates, Series 2004-C6.'" DJRN, Ex. 3.

In June 2010, the Trust assigned its rights under the Loan to Defendant LBUBS 2004-C6 Stockdale Office Limited Partnership ("Defendant Owner"). Compl., Ex. 2. On August 3, 2010, Defendant Owner caused a Notice of Default and Election to Sell under Deed of Trust ("Notice of Default") to be recorded against Borrower, due to its failure to make timely payments under the Loan. Compl., Ex. 3. In February 2013, Defendant Owner completed a non-judicial foreclosure proceeding against Stockdale Tower. Defendant Owner was the successful bidder at the Trustee's Sale with a credit bid of $20, 000, 000, leaving an unpaid balance owing on the Loan of $11, 306, 472.73. DRJN, Ex. 4.

In January 2013, Plaintiff and Borrower filed a lawsuit against Defendants in state court, alleging that Defendants had interfered with Borrower's ability to pay off the Loan. DRJN, Ex. 5. In February 2013, Defendant Owner filed an action against Plaintiff and his wife to collect the unpaid balance owing on the Loan, pursuant to the personal guaranty that Plaintiff and his wife had executed in connection with the Loan. DRJN, Ex 6. In August 2013, Plaintiff and Defendants executed a written settlement agreement, which contained a mutual general release as to all known and unknown claims between the parties to the agreement. DRJN, Ex. 7.

On October 14, 2014, Plaintiff filed the Complaint in Kern County Superior Court. On November 21, 2014, Defendants removed the matter to this Court. On December 3, 2014, Defendant Owner filed the Counter-Claim against Terry Moreland and Peggy Moreland.

II. OPINION

A. Judicial Notice

1. Legal Standard

Generally, the Court may not consider material beyond the pleadings in ruling on a motion to dismiss. However, the Court may take judicial notice of matters of public record, provided that they are not subject to reasonable dispute. See, e.g., Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. 2009) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) and Fed.R.Evid. 201). The Court may also take judicial notice of documents whose "authenticity... is not contested" and which are referenced in the complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001); In re Calpine Corp. Sec. Litig., 288 F.Supp.2d 1054, 1075 (N.D. Cal. 2003).

2. Defendants' Request for Judicial Notice

In support of their motion to dismiss, Defendants request that the Court take judicial notice of seven documents. Defendants' Request for Judicial Notice ("DRJN"), Doc. #4. Specifically, Defendants request judicial notice of: (1) a Deed of Trust Note, dated August 2, 2004, executed by Stockdale Tower I, LLC; (2) a Deed of Trust, recorded in Kern County, California on August 3, 2004; (3) pertinent pages of the Pooling and Servicing Agreement, referenced in the Complaint; (4) a Trustee's Deed Upon Sale, recorded in Kern County, California on February 6, 2013; (5) a complaint filed by Stockdale Tower I, LLC in Kern County Superior Court on January 11, 2013; (6) a complaint filed by LBUBS 2004-C6 Stockdale Office Limited Partnership in this Court on February 26, 2013; and (7) the Settlement Agreement and Mutual General Release, referenced in the Complaint.

Additionally, in support of their motion to expunge the lis pendens, Defendants request that the Court take judicial notice of three documents. Defendants' Request for Judicial Notice in support of the Motion to Expunge ("DRJN Mot. to Expunge"), Doc. #6. Specifically, Defendants request judicial notice of: (1) pertinent pages of the Pooling and Servicing Agreement, referenced in the Complaint; (2) the declaration of Don Kerr, filed on May 23, 2012, in the United States Bankruptcy Court for the Eastern District of California; and (3) a Trustee's Deed Upon Sale, recorded in Kern County, California on February 6, 2013.

Plaintiff objects to both of these requests, arguing that they relate to matters outside the pleadings, and that judicial notice of the facts contained within the documents would be improper. Opp. to MTD at 3.

All of these documents are proper subjects of judicial notice. The August 2, 2004 Deed of Trust Note, the Pooling and Servicing Agreement, and the Settlement Agreement and Mutual General Release are all referenced in the complaint. Compl. ¶¶ 1, 3, 29. The remaining documents are all public records, having been either filed as public court records or recorded in a county recorder's office. Accordingly, Defendants' requests for judicial notice (Doc. #4; Doc. #6) are GRANTED in their entirety. However, as urged by Plaintiff, the Court merely takes notice of the existence of these documents, not the truth of any facts contained therein.

3. Counter-Defendants' Request for Judicial Notice

In support of their motions to dismiss, Counter-Defendants request that the Court take judicial notice of eight documents. Counter-Defendants' Request for Judicial Notice ("CDRJN"), Doc. #35; Doc. #20. Specifically, Counter-Defendants request judicial notice of the following documents: (1) a "Mortgage Loan Purchase Agreement;" (2) the Pooling and Servicing agreement, referenced in the Counter-Complaint; (3) an underwriting agreement; (4) a B5 prospectus; (5) an assignment of deed of trust, recorded in Kern County, California on December 13, 2004; (6) an assignment of deed of trust, recorded in Kern County, California on June 1, 2010; (7) the state-court complaint originally filed by Plaintiff in this action; and (8) a document identified by Counter-Defendants as "Loan Level Files as published by U.S. Bank." CDRJN at 2.

With regard to the state court complaint filed by Plaintiff in this action, this document is already part of the record in this case, and the request for judicial notice is unnecessary and DENIED. With regard to the Pooling and Servicing Agreement, this document is referenced in Counter-Claimant's complaint, and Counter-Defendant's request is GRANTED. With regard to the two assignments of deed of trust, these matters are public documents obtained from a county recorder's office, and the request for judicial notice is GRANTED. With regard to the remaining documents - the Mortgage Loan Purchase Agreement, the underwriting agreement, the B5 prospectus, and the document identified as "Loan Level Files as published by U.S. Bank" - Counter-Defendants have not made an adequate showing that they are public records or explained their source, and the request for judicial notice is DENIED.

B. Analysis

1. Defendants' Motion to Dismiss

a. Plaintiff's Challenge to the PSA

Plaintiff's overarching argument, upon which each of his causes of action rests, is that the 2004 transfer was ineffective because Depositor failed to obtain a "beneficial interest in the loan before it was assigned to the trust." Opp. to MTD at 9. According to Plaintiff, the failure of Original Lender to transfer a recorded assignment of the Loan Documents to Depositor was in violation of "the trust's own law and the law of the state of New York and the laws of the Internal Revenue Code." Opp. to MTD at 9. Plaintiff argues that, due to this alleged flaw in the 2004 transfer, Defendant Owner "did not acquire any beneficial interest by the sham assignment [during the 2010 transfer] and thus lacked any authority to execute, or direct to execute, the Notice of Default." Compl. ¶ 11.

Plaintiff's argument is flawed in two ways. First, Plaintiff lacks standing to challenge the validity of the 2004 transfer, as he was not a party to the PSA. See, e.g. Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 515 (2013) ("As an unrelated third party to the alleged securitization... Jenkins lacks standing to enforce any agreements, including the investment trust's pooling and servicing agreement, relating to such transactions). Although one California court had previously indicated that a borrower in Plaintiff's shoes might have standing to challenge an allegedly invalid transfer to a REMIC trust ( Glaski v. Bank of Am., Nat'l Ass'n, 218 Cal.App.4th 1079, 1099 (2013)), the Ninth Circuit recently rejected this view. In re Davies, 565 F.Appx. 630, 633 (9th Cir. 2014). In Davies, the Ninth Circuit noted that "California courts have divided over this issue, " but concluded that "the weight of authority holds that debtors in Davies' shoes - who are not parties to the pooling and servicing agreements - cannot challenge them." Davies, 565 F.Appx. at 633. Accordingly, under Davies, Plaintiff lacks standing to challenge the transfer made pursuant to the PSA, unless he can establish that he was a party to that agreement.

Plaintiff does not - and cannot - argue that he was a signatory to the PSA. Opp. to MTD at 7. Rather, Plaintiff alleges that he was a third-party "intended beneficiary" to the PSA. Compl. ¶ 4. Under California law, a "contract made solely for the benefit of the contracting parties cannot be enforced by a stranger or one who stands to benefit merely incidentally by its performance." Gordon Bldg. Corp. v. Gibraltar Sav. & Loan Ass'n, 247 Cal.App.2d 1, 8 (1966). However, a third party has standing to sue as a "contract beneficiary where the contracting parties... intended to benefit that individual, an intent which must appear in the terms of the agreement." Principal Mut. Life Ins. Co. v. Vars, Pave, McCord & Freedman, 65 Cal.App.4th 1469, 1486 (1998). Although Plaintiff contends that the Court must also consider the "surrounding circumstances" of the PSA, in addition to its express terms, in determining the intent of the contracting parties, the plain language of the PSA makes this dispute academic. Opp. to MTD at 17 (citing Septembertide Pub., B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989)). Section 11.09 of the PSA ("Successors and Assigns; Beneficiaries") expressly enumerates a number of intended third-party beneficiaries, none of whom are Plaintiff or Borrower. DRJN, Ex. 3. The last sentence of Section 11.09 reads as follows: "No other Person, including any Mortgagor, shall be entitled to any benefit or equitable right, remedy or claim under this Agreement." DRJN, Ex. 3. It is clear that the contracting parties to the PSA did not intend for Borrower (or Plaintiff, as a member of Borrower) to be a third-party beneficiary of the agreement. Accordingly, Plaintiff lacks standing to challenge the validity of any assignments made pursuant to the PSA.[2]

Moreover, Plaintiff's central argument - that the assignment to the Trust was invalid - fails on the merits. As quoted above, Section 2.01(a) of the PSA provides that Depositor "does hereby assign, sell, transfer, set over and otherwise convey to the Trustee in trust... all the right, title and interest of the Depositor in, to, and under... the Trust Mortgage Loans[.]" DRJN, Ex. 3. Immediately thereafter, Section 2.01(b) of the PSA provides that "the UBS Mortgage Loan Seller has (pursuant to the UBS/Depositor Mortgage Loan Purchase Agreement) agreed, in the case of each UBS Trust Mortgage Loan, to deliver to and deposit with, on or before the Closing Date: (i) the Trustee or a Custodian appointed thereby, the Mortgage File for such Trust Mortgage Loan." DRJN, Ex. 3. In other words, Depositor and Original Lender reached a separate agreement - referred to in the PSA as the "UBS/Depositor Mortgage Loan Purchase Agreement" - in which Original Lender agreed to deliver the "Mortgage File" for Plaintiff's Loan. DRJN, Ex. 3. As defined in Section 1.01 of the PSA, the "Mortgage File" includes (1) the original executed Mortgage Note on Plaintiff's Loan, endorsed to the Trust, and (2) an original executed assignment of the Deed of Trust on Stockdale Tower, also endorsed to the Trust.

Thus, although Original Lender did not make an assignment of Plaintiff's Loan Documents to Depositor, the PSA - read as a whole and in conjunction with the UBS/Depositor Mortgage Loan Purchase Agreement - provided for Original Lender to make this assignment directly to the Trust, in effect cutting out Depositor as a middle-man. Plaintiff's contention appears to be that this was improper, and violated "the trust's own law and the law of the state of New York and the laws of the Internal Revenue Code." Opp. to MTD at 9. It is unclear what Plaintiff refers to as "the trust's own law, " but the transfer of Plaintiff's Loan Documents complied with the procedure set forth in the PSA. See Compl., Ex. 1 (Assignment of Deed of Trust from Original Lender to the Trust).

b. Plaintiff's Claims

In light of foregoing analysis, the Court turns to each of Plaintiff's four causes of action. Plaintiff's first cause of action is a claim for breach of contract. Specifically, Plaintiff alleges that Defendants have breached the contract consisting of "Plaintiff's deed of trust, and the note it supports." Compl. ¶ 29. Although not entirely clear from the Complaint, it appears that Plaintiff's breach of contract cause of action is grounded in two distinct claims. First, Plaintiff alleges that Defendants "materially breached the contract's conditions precedent as codified at C.F.R. § 203.606(a) by: lacking contractual authority to declare... a breach and falsely declaring a breach where none existed." Compl. ¶ 33 (citing Code of Fed. Reg. § 203.606). Section 203.606(a) of the Code of Federal Regulations ("C.F.R."), cited by Plaintiff, provides for certain procedural safeguards which must be followed by a lender, prior to foreclosing on a property. However, Section 203.606(b) provides that those safeguards need not be met "if the property is owned by a corporation or a partnership." C.F.R. § 203.660(b)(4). As Borrower was a limited liability company, and not a private individual, the procedural safeguards set forth in C.F.R. § 203.660(a) do not apply. The first basis for Plaintiff's breach of contract claim is without merit.

As a second basis for his breach of contract claim, Plaintiff alleges that "Defendants materially breached the contract by failing to acquire a valid beneficial interest in Plaintiff's loan prior to executing a settlement agreement with Plaintiff." Compl. ¶ 36. As discussed above, the plain terms of the PSA foreclose any argument that the Trust - or Defendant Owner, as its eventual successor-in-interest - "fail[ed] to acquire a valid beneficial interest in Plaintiff's loan." Compl. ¶ 36. Moreover, to the extent that Plaintiff's breach of contract claim relates to an alleged breach of the PSA, Plaintiff lacks standing to make this claim. See supra at 9-10. For all of these reasons, Plaintiff has failed to state a claim for breach of contract, and Defendants' motion to dismiss Plaintiff's first cause of action is GRANTED WITHOUT LEAVE TO AMEND. See Sayegh v. John Enright, Inc., 473 F.Appx. 605 (9th Cir. 2012) (denial of leave to amend proper if amendment would be futile).

Plaintiff's second cause of action alleges a violation of the Equal Credit Opportunity Act ("ECOA"), codified at 15 U.S.C. § 1691; Compl. ¶ 42. The ECOA protects those applying for credit from discrimination, by prohibiting creditors from taking "adverse actions" for discriminatory reasons. Plaintiff has failed to allege that Defendants acted with a discriminatory motive, nor does he explain how he was subjected to an adverse action, other than a barebones allegation that Defendants "substantially and materially violated Plaintiff's rights under the ECOA by revoking and changing the terms of an existing credit arrangement without cause." Compl. ¶ 45. Plaintiff's explanatory allegation that "Plaintiff points to the Exhibits submitted to this court (Plaintiff's Ex's. 1-3) as proffered evidence of these material violations" is not helpful. Compl. ¶ 45. These exhibits (two assignments of a deed of trust, and notice of default) do not, on their face, suggest any discriminatory conduct nor do they explain how Defendants' action constituted a violation of the ECOA. As Plaintiff does not propose any additional allegations that would save this claim, Defendants' motion to dismiss Plaintiff's second cause of action is GRANTED WITHOUT LEAVE TO AMEND.

Plaintiff's third cause of action alleges a violation of the Fair Credit Reporting Act ("FCRA"), codified at 15 U.S.C. 1681. Compl. ¶ 50. Plaintiff alleges that Defendants breached their duties under the FCRA to "conduct a reasonable investigation of information on a consumer's credit contract when put on notice by the consumer that false information was being used in recorded instruments." Compl. ¶ 52. Plaintiff's allegations necessarily rely on the presence of false information in his Loan Documents or the Notice of Default. Although Plaintiff does not specifically allege what he believes this "false information" to be, it is reasonable to infer from the remainder of Plaintiff's allegations that he believes any representation that Defendant Owner has a beneficial interest in the Loan is false. However, as discussed at length above, Plaintiff's challenge to the 2004 transfer is meritless. Accordingly, any representation that Defendant Owner has a beneficial interest in the Loan is not false, and Plaintiff has failed to state a claim for violation of the FCRA. Defendants' motion to dismiss Plaintiff's third cause of action is GRANTED WITHOUT LEAVE TO AMEND. See Sayegh v. John Enright, Inc., 473 F.Appx. 605 (9th Cir. 2012) (denial of leave to amend proper if amendment would be futile).

Plaintiff's fourth cause of action alleges that Defendants engaged in fraud by "publish[ing] purported facts contained as recitals within the false instruments (NOD and assignment of deed)... that are false." Compl. ¶ 58. Again, Plaintiff's claim of falsity relies on his position that "Defendant did not acquire beneficial interest in Plaintiff's loan as a result of the sham assignment of deed of trust." Compl. ¶ 58. As Plaintiff's challenge to the 2004 transfer is without merit, he has failed to establish that Defendants made a "false representation, concealment or nondisclosure, " an essential element of fraud. Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996). Accordingly, Plaintiff has failed to state a claim for fraud, and Defendants' motion to dismiss Plaintiff's fourth cause of action is GRANTED WITHOUT LEAVE TO AMEND. See Sayegh v. John Enright, Inc., 473 F.Appx. 605 (9th Cir. 2012) (denial of leave to amend proper if amendment would be futile).

c. Plaintiff's Remaining Arguments

In opposing Defendants' motion to dismiss, Plaintiff appears to challenge the Court's jurisdiction over the parties. Opp. to MTD at 2. Specifically, Plaintiff notes that he "hereby objects to this court's subject matter jurisdiction over all Defendant Parties [and that] Defendants are invoking the power of the court through a motion and all Parties lack standing to move this court." Opp. to MTD at 2. To the extent that Plaintiff is challenging the Court's jurisdiction, such an argument is improperly before the Court, and is more appropriately made in a motion to dismiss or a motion to remand. Regardless, Plaintiff's argument is without merit. As discussed in Defendants' Notice of Removal, the Court has both diversity and federal question jurisdiction over Plaintiff's claims. Notice of Removal ¶¶ 9-25.

Returning to the merits, Plaintiff also argues that the 2004 transfer was invalid because "Defendants have offered no proof of valuable consideration in either of the purported assignments of the deed[.]" Opp. to MTD at 15. As Plaintiff correctly notes, both assignments of the Deed of Trust provide that consideration has passed from the Assignee to the Assignor. Compl., Ex. 1 (Assignment of Deed of Trust from Original Lender to Trust, providing that the assignment is made "for good and valuable consideration"); Compl., Ex. 2 (Assignment of Deed of Trust from Trust to Defendant Owner, providing that the assignment is made "for value received"). However, just as Plaintiff lacks standing to challenge the PSA, Plaintiff lacks standing to challenge either Assignment of Deed of Trust. As he is neither a party nor a third-party intended beneficiary to either assignment, Plaintiff cannot enforce the "consideration" requirement contained therein.

Finally, Plaintiff extensively cites provisions of the Uniform Commercial Code ("UCC") and New York Estate, Powers and Trusts Law ("New York EPTL"). Opp. to MTD at 11-12 (citing the UCC); Opp. to MTD at 13 (citing N.Y. Est. Powers & Trusts Law § 7-2.4). Plaintiff argues that the 2004 transfer violated both of these codes. However, this argument ultimately depends on an interpretation of the PSA that the Court has rejected: The UCC and the New York EPTL are only violated if the PSA itself is violated. As Plaintiff notes, the "PSA terms trump the normal Article 3 and 9" provisions in the UCC. Opp. to MTD at 12. Similarly, the New York EPTL merely provides that the act of a trustee is void if it is taken "in contravention of the trust." N.Y. Est. Powers & Trusts Law § 7-2.4. Thus, these arguments fail for a familiar reason: the express terms of the PSA contradict Plaintiff's position that the assignment from Original Lender to the Trust was invalid. Accordingly, Plaintiff's reliance on the UCC and the New York EPTL is misplaced.

2. Defendants' Motion to Expunge Lis Pendens

Defendants move the Court to expunge the lis pendens on Stockdale Tower. Mot. to Expunge at 1. In brief, Defendants argue that the lis pendens must be expunged because Plaintiff has failed to establish the "probable validity" of the real property claim upon which the lis pendens is based. Mot. to Expunge at 10. Plaintiff filed a pro forma opposition to Defendants' motion, which contains the same arguments, verbatim, made in opposition to Defendants' motion to dismiss, and does not separately address Defendants' motion to expunge. See generally Opp. to Expunge.

California Code of Civil Procedure § 405.32 provides that the Court "shall order that the [lis pendens] be expunged if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim." Cal Code Civ. Proc. § 405.32. Thus, in evaluating Defendants' motion to expunge, the Court must look to the merits of Plaintiff's claims. As the Court has dismissed each of Plaintiff's claims without leave to amend, it follows that Plaintiff "has not established by a preponderance of the evidence the probable validity" of his real property claim.

Accordingly, Defendants' motion to expunge is GRANTED.

3. Counter-Defendants' Motions to Dismiss

Counter-Defendants[3] (Terry Moreland and Peggy Moreland) move to dismiss Counter-Claimant's complaint against them. Doc. #19; Doc. #34. The bulk of Counter-Defendants' motion is devoted to re-stating the same arguments made in opposition to Defendants' motion to dismiss and motion to expunge. Not only are these arguments based on a flawed interpretation of the PSA and relevant case law, they are also misplaced in a motion to dismiss. To the extent that Counter-Defendants argue that "disputed facts cannot be used as a set of facts that would allow this court to base a right upon which relief may be granted to [Counter-Claimant], " this argument is improper in a motion to dismiss, where the Court must take the non-moving party's allegations as true. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Ctr-Ds.' MTD at 10. As such, Counter-Defendants' argument that "the Settlement Agreement may, in fact, be judged void" does not warrant dismissal of the Counter-Complaint. Accordingly, the vast majority of Counter-Defendants' memorandum of law, which rehashes their position on why the 2004 transfer was ineffective, does not support their motion.

On the last two pages of their briefs, Counter-Defendants briefly address each of Counter-Claimant's causes of action. However, their argument is limited to the cursory statement - repeated with regard to each of Counter-Claimant's claims - that the "claim is subject to determination of validity and legality of Settlement Agreement and may be deemed void" by the Court. Ctr.-Ds.' MTD at 12-13. This argument - in addition to being foreclosed by the Court's foregoing analysis - does not address the elements of each individual cause of action, or otherwise explain why Counter-Claimant has failed to state a claim for relief. Accordingly, Counter-Defendants have failed to satisfy their burden on a motion to dismiss.

Finally, to the extent that Counter-Defendants challenge the Court's subject matter jurisdiction over the Counter-Complaint, this argument is not adequately developed. It is unclear how Counter-Claimant's alleged failure to offer "proof of valuable consideration in either of the purported assignments of the deed... confirms a complete lack of constitutional or prudential standing to bring" its complaint. Opp. to MTD at 9. Regardless, Counter-Claimant has adequately alleged subject matter jurisdiction for its state law claims under 28 U.S.C. § 1332, as complete diversity exists among the parties, and the amount in controversy exceeds $75, 000. Counter-Complaint ¶¶ 1-6. For all of the above reasons, Counter-Defendants' motion to dismiss is DENIED.

III. ORDER

For the reasons set forth above, the Court GRANTS WITHOUT LEAVE TO AMEND Defendants' Motion to Dismiss, GRANTS Defendants' Motion to Expunge Lis Pendens, and DENIES Counter-Defendants' Motions to Dismiss.

IT IS SO ORDERED.


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