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Spangler v. Selene Finance LP

United States District Court, N.D. California

July 22, 2016

SELENE FINANCE LP, et al., Defendants.


          WILLIAM H. ORRICK United States District Judge.


         Plaintiff Camilla Spangler’s complaint arises primarily out of her contention that because of alleged defects in the chain of assignments, defendants American Brokers Conduit, Law Offices of Les Zieve, Mortgage Electronic Registration Systems Inc. (“MERS”), Selene Finance LP, and Wilmington Savings Fund Society FSB wrongfully foreclosed on her home. She also accuses defendants of a variety of other misconduct associated with her home loan and foreclosure process. Defendants MERS, Wilmington, and Selene Finance have filed a joint motion to dismiss all of the alleged claims. For the reasons discussed below, the motion to dismiss is GRANTED.


         On April 10, 2007, Spangler and her husband, now deceased, executed a promissory note and a security interest in the form of a Deed of Trust in the amount of $344, 500. FAC ¶¶ 13-14; RJN, Exh. 1.[1] The Deed of Trust lists Spangler as the borrower, American Brokers Conduit as the lender, Financial Title Company as the trustee, and MERS as the nominee for American Brokers Conduit and the beneficiary. Id.

         On May 27, 2008, the first Notice of Default was recorded. RJN, Exh. 3. On September 3, 2008, MERS executed a Substitution of Trustee which substituted Recontrust Company as the new trustee. FAC ¶ 15; RJN, Exh. 4. The first Notice of Sale was also recorded on the same date. RJN, Exh. 5. Thereafter, MERS assigned “all right, title, and interest the loan” to Countrywide Home Loans Servicing, LP on March 24, 2009, making Countrywide the new beneficiary. FAC ¶ 16; RJN, Exh. 6.[2]

         Defendants assert, and Spangler does not dispute, that due to requirements imposed by the federal government, Bank of America acquired Countrywide’s loan portfolio in 2008.[3] As a result, in June 2010, MERS recorded a Substitution of Trustee and Assignment of Deed of Trust which substituted Recontrust as the trustee and granted all beneficial interest to BAC Home Loans Servicing, LP (previously Countrywide). RJN, Exh. 7. Subsequently, two more Notices of Sale were recorded, the first in June 2010 and the second in July 2011.[4] RJN, Exhs. 8, 9.

         On February 15, 2012, Recontrust recorded the first “Trustee’s Deed Upon Sale” against Spangler’s home. RJN, Exh. 10. The Trustee’s Deed Upon Sale initially transferred the Deed of Trust to Louden, LLC after Louden purchased the home on February 6, 2012. Id. But on May 9, 2013, Recontrust recorded a document titled “Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Default and Election to Sell, ” which rescinded all prior notices of sale and default. RJN, Exh. 11. As a result of the rescission, title was placed back into Spangler’s name, BAC Home Loans Servicing was the beneficiary, and Recontrust was the trustee.

         On November 10, 2014, Bank of America, as successor by merger of BAC Home Loans Servicing, recorded a Substitution of Trustee which substituted the Law Offices of Les Zieve as trustee. FAC ¶ 18; RJN, Exh. 12. On the same day, Les Zieve recorded a Notice of Default demonstrating that Spangler owed over $174, 000. RJN, Exh. 13.

         On January 16, 2016, Les Zieve recorded a final Notice of Sale. RJN, Exh. 16. A foreclosure sale was held on January 28, 2016 and a second Trustee’s Deed Upon Sale was recorded a few days later on February 4, 2016. RJN, Exh. 17. The Trustee’s Deed Upon Sale conveyed the property to Wilmington Savings Fund Society, FSB, dba Christiana Trust, [5] who at that time was also the foreclosing beneficiary. Id. Prior to the foreclosure sale, on January 22, 2016, BAC Home Loans Servicing had executed an “Assignment of Deed of Trust” which assigned Wilmington all of its beneficial interest under the deed of trust. RJN, Exh. 18. This assignment was recorded on February 5, 2016. Id.

         Based on this record, Spangler asserts eight causes of action: (1) wrongful foreclosure; (2) violation of California Civil Code § 2924(a)(6); (3) violation of California Civil Code § 2924.17; (4) violation of 15 U.S.C. § 1641(g); (5) rescission under the Truth in Lending Act and 15 U.S.C. § 1635; (6) violation of 15 U.S.C. § 1692c(b); (7) violation of Cal. Bus. & Prof. Code § 17200 (the “UCL”); and (8) a request for declaratory relief.


         Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A claim is facially plausible when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts do not require “heightened fact pleading of specifics, ” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 570.

         In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). If the court dismisses the complaint, it “should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)


         Defendants move to dismiss all of Spangler’s claims.


         “Wrongful foreclosure is an action in equity where a plaintiff seeks to set aside a foreclosure sale.” Hard v. Bank of New York Mellon, No. 14-cv-01948, 2016 WL 2593911, at *12 (E.D. Cal. May 5, 2016). In order to state a claim for wrongful foreclosure, a plaintiff must allege that: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) she was prejudiced or harmed; and (3) she tendered the amount of the secured indebtedness or was excused from tendering.” Simmons v. Aurora Bank FSB, No. 13-cv-00482-HRL, 2016 WL 192571, at *7 (N.D. Cal. Jan. 15, 2016).

         Spangler alleges that any assignment purporting to transfer the beneficial interest in the loan to Wilmington is void because it occurred after the trust’s closing date and that, even if it had been timely, it violates the Pooling Services Agreement which requires an unbroken chain of transfers and assignments. FAC ¶¶ 44-46.[6] The FAC specifically cites Yvanova v. New Century Mortgage Corporation, 62 Cal.4th 919 (2016), a recent California Supreme Court case, as providing the authority under which Spangler is entitled to challenge the foreclosure. Id. ¶ 53. But Spangler’s argument fails for at least two reasons: (1) she does not identify any requirement that the assignment of the deed of trust ...

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