United States District Court, N.D. California
ORDER GRANTING MOTIONS TO DISMISS
JON S.
TIGAR United States District Judge.
Before
the Court is Defendants Ocwen Loan Servicing, LLC
(“Ocwen”), Mortgage Electronic Registration
Systems, Inc. (“MERS”), and HSBC Bank USA’s
(“HSBC”) Motion to Dismiss Plaintiff’s
Complaint, ECF No. 43, as well as Defendant First American
Trustee Servicing Solutions, LLC’s (“First
American”) Motion to Dismiss Plaintiff’s
Complaint, ECF No. 41. Both motions will be granted with
leave to amend.
I.
BACKGROUND
A.
Allegations in the Complaint
On
April 20, 2006, Plaintiff Tsuneyoshi Suruki obtained a
mortgage loan in the amount of $740, 000, consisting of a
Deed of Trust (“DOT”) and 30-year Adjustable Rate
Note (“Note”) from Fremont Investment and Loan to
purchase real property in Foster City, California. ECF No. 1
¶ 7; ECF No. 38 at 2. The DOT named Fremont General
Credit Corporation as trustee and MERS as the beneficiary,
and was recorded in San Mateo County on April 28, 2006. ECF
No. 1 ¶ 7. The original loan servicer, Fremont
Investment and Loan, was acquired by Litton Loan Servicing,
LP, which was later succeeded by Ocwen. Id. ¶
8. Plaintiff subsequently defaulted on the loan, and the
property was sold at a trustee’s sale in 2012. ECF No.
38 at 2.
Plaintiff’s
six causes of action arise from alleged irregularities in the
assignment and securitization of his mortgage loan, which, he
claims, invalidated Defendants’ right to engage in
foreclosure proceedings. Specifically, Plaintiff alleges that
Fremont Investment and Loan bundled Plaintiff’s
mortgage into a pool with other mortgages and sold it to its
affiliate Fremont Mortgage Securities Corporation on August
1, 2006. Id. ¶ 9. Plaintiff claims that this
sale was done without an effective assignment and transfer
from Fremont Investment and Loan to Fremont Mortgage
Securities in violation of the terms of the Mortgage Loan
Purchase Agreement (“MLPA”) agreed to by both
parties and filed with the U.S. Securities and Exchange
Commission. Id.
Plaintiff
further alleges that Fremont Mortgage Securities formed a
mortgage-backed securities trust (the “Fremont Home
Loan Trust 2006-B”) pursuant to a Pooling and Servicing
Agreement (“PSA”) dated August 1, 2006.
Id. ¶ 10. Fremont Mortgage Securities then
“sold and securitized each of the pooled mortgage loans
(including the Subject Loan)” into the Fremont Home
Loan Trust 2006-B, which was sold to HSBC. Id.
¶ 11. The PSA sets forth a closing date of “August
3, 200[6], or 90 days thereafter[, which served as] the
absolute deadline for HSBC as Trustee for the FREMONT HOME
LOAN TRUST 2006-B to legally receive and accept contribution
of any mortgage loan asset into its trust fund.”
Id. ¶ 12.
Plaintiff
claims that the official records of the San Mateo County
Recorder do not show any assignment of the DOT from Fremont
Investment and Loan to any entity by August 3, 2006 or
“90 days thereafter, ” and that there is,
therefore, no record of the required intervening assignment
of the DOT from the original lender to Fremont Mortgage
Securities, as well as from Fremont Mortgage Securities to
HSBC, as required by the MLPA and PSA. Id.
¶¶ 14-15. Plaintiff asserts that this undocumented
transfer was a material breach of the MLPA and PSA, resulting
in a break in the chain of title of the mortgaged property.
Id. ¶¶ 16-18.
Plaintiff
further claims that the only mortgage assignment found on
record with the San Mateo County Recorder is from MERS,
acting as agent on behalf of the original lender, to HSBC,
dated January 6, 2011. Id. ¶¶ 22-24, 68.
Plaintiff alleges that this assignment was made after the PSA
closing date and that MERS lacked the authority to assign the
Note and DOT. Id. ¶ 22-24. Finally, Plaintiff
alleges numerous violations of California and New York trust
law, id. ¶ 26-30, based on the theory that the
assignment of the DOT to HSBC was void and HSBC, therefore,
did not have legal standing to authorize Litton or Ocwen to
service Plaintiff’s loan or to allow First American
Trustee to pursue foreclosure activities against Plaintiff.
B.
Procedural Background
On
February 19, 2015, Plaintiff filed a complaint, asserting
claims for (1) wrongful foreclosure; (2) fraud; and (3)
violations of the California Business and Professions Code
§ 17200 et seq. against all Defendants.
Plaintiff further asserts claims for (4) unjust enrichment
against Ocwen and HSBC; (5) quiet title; and (6)
“accounting” against MERS, Ocwen, and HSBC.
On
April 3, 2015, Defendants HSBC, MERS, and Ocwen filed a
Motion to Dismiss Plaintiff’s Complaint. ECF No. 17. On
June 22, 2015, the Court stayed the case pending the
California Supreme Court’s decision in Yvanova v.
New Century Mortgage Corp., 331 P.3d 1275 (Cal. 2014).
ECF No. 34. The stay was subsequently lifted on February 29,
2016 after the Yvanova opinion issued. ECF No. 40.
On March 25, 2016, Defendant First American Trustee and
Defendants HSBC, MERS, and Ocwen filed separate amended
Motions to Dismiss Plaintiff’s Complaint, ECF Nos. 41
& 43, which motions the Court now considers.
II.
JURISDICTION
The
Court has diversity jurisdiction over this action pursuant to
28 U.S.C. § 1332. The parties are diverse because
Plaintiff is domiciled in California and none of the
defendants are either incorporated in or have their primary
places of business in California. ECF No. 1 ¶¶ 1-5.
The amount in controversy ...