United States District Court, N.D. California
ORDER GRANTING MOTION TO DISMISS AND DENYING DEFENDANT'S REQUEST FOR JUDICIAL NOTICE AND MOTION TO STRIKE
WILLIAM ALSUP, District Judge.
In this wrongful-foreclosure action, defendant moves to dismiss pursuant to Rule 12(b)(6). For the reasons stated below, defendant's motion is GRANTED.
Pro se plaintiff Patricia Bonelli's claims arise out of an attempt to invalidate a pending nonjudicial foreclosure by attacking the mortgage securitization process. In 2005, plaintiff and then-husband Mark Worthen executed a promissory note, secured by a deed of trust, with Wells Fargo Bank, N.A. for their residential property. Wells Fargo eventually assigned all beneficial interests under the deed to defendant U.S. Bank, N.A. as trustee for Citigroup Mortgage Loan Trust Inc., Mortgage Pass-Through Certificates, Series 2005-3 ("U.S. Bank"), and later recorded a Corporate Assignment of Deed of Trust in February 2012. In the meantime, plaintiff and Worthen divorced. The divorce court awarded plaintiff the property. Plaintiff, however, fell behind on her loan payments and acknowledges that she "lawfully owes money under the Note" (First Amd. Compl. ¶ 3.1).
In 2012, plaintiff sued Wells Fargo in Sonoma County Superior Court "for relief [from] loan modification" (Id. ¶ 2.1). In May 2014, after learning that Wells Fargo had already assigned plaintiff's note to U.S. Bank, she filed this action against defendants. Although plaintiff names multiple defendants, she only served defendant U.S. Bank (Dkt. No. 23). Plaintiff eventually dismissed the state-court lawsuit, "reach[ing] a compromise with Wells Fargo given their limited scope of involvement" (Plaintiff's Amd. Response 5).
Defendant U.S. Bank, the only defendant that has appeared in this case, asserts that when dismissing the state-court action, plaintiff "signed a release of all past, present or future claims against Wells Fargo and its successors and assigns in any way arising from the loan, " and is thus barred from seeking relief in this action (Br. 1). Defendant, however, submits no evidence to support this assertion and does not include this purported agreement in the present record.
The first amended complaint alleges the following claims: (1) declaratory relief; (2) negligence; (3) quasi-contract; (4) violation of the Real Estate Settlement Procedures Act ("RESPA"); (5) unfair debt collection; (6) unfair competition; (7) accounting; (8) quiet title; (9) civil extortion; (10) violation of California Civil Code 2924.17; (11) injunctive relief under California Civil Code 2923.5; (12) infliction of emotional distress; (13) injunctive relief against threatened default and foreclosure; and (14) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO").
This May 2014 action was originally assigned to Magistrate Judge Maria-Elena James. After Judge James issued three orders to show cause, plaintiff finally served this lawsuit on defendant in April 2015. The case was subsequently reassigned to the undersigned judge in June 2015. Plaintiff has also filed multiple responses to defendant's motion to dismiss, including a motion for injunctive relief on July 27, 2015, three days before the scheduled hearing (Dkt Nos. 2, 13, 17, 21, 37, 51).
This order follows full briefing and oral argument.
To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A claim is facially plausible when there are sufficient factual allegations to draw a reasonable inference that defendants are liable for the misconduct alleged. While a court "must take all of the factual allegations in the complaint as true, " it is "not bound to accept as true a legal conclusion couched as a factual allegation." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (citation omitted). Pro se complaints, however, are held to less stringent standards than complaints drafted by attorneys. Erickson v. Pardus, 551 U.S. 89, 94 (2007).
Plaintiff acknowledges she owes a balance on her note. She argues, however, that defendant does not have a valid interest in her note or deed, and thus has no authority to foreclose. This argument derives from plaintiff's attack on the mortgage-securitization process. She asserts that the note and deed were transferred or recorded "over six and a half years after the closing date, " in violation of the pooling and servicing agreement ("PSA") and New York laws. Based on these alleged violations, plaintiff argues the transfer was improper and so defendant has no legal interest in her note or mortgage (First Amd. Compl. ¶¶ 27-31).
Our court of appeals, however, has rejected this argument. The majority rule in California under Jenkins v. JP Morgan Chase, N.A., 216 Cal.App.4th 497 (2013), which our court of appeals has endorsed, holds that a borrower lacks standing to challenge an entity's authority to foreclose based on an alleged void transfer of her loan.
As a borrower, [the plaintiff] does not have standing under California law to challenge irregularities in the assignment of her Note or Deed of Trust because those instruments are negotiable and her obligations thereunder remain unchanged even if her creditor changes... Nor does [the plaintiff] have standing to challenge the late assignment of her loan... under New York law since [the plaintiff] is not an intended beneficiary of the... Trust.
Christie v. Bank of New York Mellon, N.A., No. 14-55012, 2015 WL 3621870, at *1 (9th Cir. June 11, 2015). So too here. Plaintiff was not a party to the securitization transactions and thus has no standing to challenge foreclosure based on the loan's securitization process or PSA breaches.
1. CLAIMS RELYING ON ALLEGED DEFECTS IN LOAN SECURITIZATION.
Nine of plaintiff's fourteen claims for relief rely on alleged defects in the mortgage-securitization process: (1) declaratory relief; (3) quasi-contract; (5) unfair debt collection; (6) unfair competition; (7) accounting; (8) quiet title (9) civil extortion; (10) violation of California Civil Code section 2924.17; and (13) injunctive relief against threatened default and foreclosure. As discussed above, plaintiff has no standing to challenge defendant's authority to foreclose based on alleged defects in the mortgage-securitization process. Thus these nine ...