United States District Court, N.D. California, San Francisco Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS RE:
ECF NO. 33
LAUREL
BEELER UNITED STATES MAGISTRATE JUDGE
INTRODUCTION
This is
an action brought to enforce a mortgage rescission and to
collect monetary relief for an alleged defective
securitization of the mortgage.[1] The plaintiffs, Farid Ghalehtak
and Shirin Tabatabai, who are representing themselves, allege
that the defendant, FNBN I, LLC, “is a third-party
stranger to their mortgage” that lacks ownership
interest in the loan and thus cannot collect on the
associated debt.[2] FNBN moves to dismiss the complaint under
Rules 12(b)(6) and 12(b)(1).[3]
The
court can decide this matter without oral argument.
See N.D. Cal. Civ. L.R. 7-1(b). The court grants the
motion because the plaintiffs do not state plausible claims
for relief supporting federal-question jurisdiction, and the
court declines to exercise supplemental jurisdiction over
their remaining state-law claims.
STATEMENT
In
2007, the plaintiffs Farid Ghalehtak and Shirin Tabatabai
mortgaged their home with lender First National Bank of
Arizona (“FNBA”).[4] They executed a Promissory Note
secured by a Deed of Trust that identified FNBA as the lender
and Mortgage Electronic Registration Systems
(“MERS”) as the beneficiary.[5] The plaintiffs do
not dispute that they owe money on the mortgage, but they
instead challenge FNBN’s right to collect their
mortgage payments due to an allegedly defective loan
securitization.[6]
At or
near the date of mortgage execution, “FNBA attempted to
securitize and sell [the plaintiffs’] loan[] to another
entity or entities[, ]” which the plaintiffs allegedly
discovered in 2014 after commissioning a Property
Securitization Analysis Report.[7] The securitization did not comply
with the terms of the securitization trust’s Pooling
and Servicing Agreement (“PSA”), which required
that the Note and Deed of Trust “be properly endorsed,
transferred, accepted, and deposited” with the trust
(or its custodian) by or within 90 days after November 1,
2011.[8] Alluding to a lack of valid assignments in
the Alameda County records, the plaintiffs assert that any
transfer of the instruments violated the PSA (and New York
trust law), broke the chain of title, and rendered
FNBN’s lien unperfected and
unenforceable.[9]
FNBN
obtained this challenged interest from MERS - the original
Deed of Trust beneficiary - on October 2, 2015, but FNBN
never provided notice of the assignment to the
plaintiffs.[10] The following week, the plaintiffs
mailed a Notice to Rescind their mortgage and a Qualified
Written Request (“QWR”) to PennyMac Loan
Services, LLC, the loan’s purported
servicer.[11] In response to the QWR, PennyMac
identified FNBN as the loan’s current
beneficiary.[12] Neither PennyMac nor FNBN responded to
or challenged the Notice to Rescind, which the plaintiffs
allege should automatically result in the rescission of the
loan.[13]
On
October 26, 2015, FNBN recorded a Notice of Default and
Election to Sell against the property, advising that all
mortgage payments owed since March 2012 were now due ($276,
230.43 plus accruing interest).[14] The plaintiffs sued FNBN
two months later.[15] FNBN moved to dismiss the initial
complaint, and the plaintiffs amended their complaint as of
right by filing their First Amended Complaint
(“FAC”).[16] FNBN again moved to
dismiss.[17]
This
court granted FNBN’s motion to dismiss
plaintiffs’ FAC.[18] The court dismissed plaintiffs’
TILA claims for rescission and damages with prejudice and
granted leave to assert any additional claims arising out of
the subject transactions.[19] In their Second Amended
Complaint (“SAC”), the plaintiffs reassert their
TILA claims and bring new claims against FNBN: 1) a violation
of 15 U.S.C. § 1641(g); 2) a violation of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692 et
seq. (“FDCPA”); 3) a violation of the Real
Estate Settlement Practices Act, 12 U.S.C. § 2605
(“RESPA”); 4) declaratory relief pursuant to 28
U.S.C. §§ 2201, 2202; 5) a claim seeking to
“Void and/or Cancel Ab Initio Deed of Trust and
Promissory Note”; 6) a violation of California Civil
Code §§ 2924.17 & 2924(a)(6); 7) quasi
contract; and 8) “Quiet Title Relating to Violations of
the Federal Truth in Lending Act.”[20]
FNBN
moved to dismiss the SAC, arguing that the plaintiffs’
federal-question claims fail, the court lacks diversity
jurisdiction, and the court should decline to exercise
supplemental jurisdiction over the remaining state-law
claims.[21]
RULE
12(b)(6) STANDARD
A
complaint must contain a “short and plain statement of
the claim showing that the pleader is entitled to
relief” to give the defendant “fair notice”
of what the claims are and the grounds upon which they rest.
See Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007). A complaint does
not need detailed factual allegations, but “a
plaintiff’s obligation to provide the
‘grounds’ of his ‘entitlement to
relief’ requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action
will not do. Factual allegations must be enough to raise a
claim for relief above the speculative level . . . .”
Twombly, 550 U.S. at 555 (internal citations
omitted).
To
survive a motion to dismiss, a complaint must contain
sufficient factual allegations, 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. “The
plausibility standard is not akin to a ‘probability
requirement, ’ but it asks for more than a mere
possibility that a defendant has acted unlawfully.”
Id. (quoting Twombly, 550 U.S. at 556).
“Where a complaint pleads facts that are ‘merely
consistent with’ a defendant’s liability, it
‘stops short of the line between possibility and
plausibility of ‘entitlement to
relief.’’” Id. (quoting
Twombly, 550 U.S. at 557).
“A
claim may be dismissed under Rule 12(b)(6) on the ground that
it is barred by the applicable statute of limitations only
when ‘the running of the statute is apparent on the
face of the complaint.’” Von Saher v. Norton
Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th
Cir. 2010) (quoting Huynh v. Chase Manhattan Bank,
465 F.3d 992, 997 (9th Cir. 2006)). Documents properly
incorporated by reference and judicially noticeable facts may
be considered on a Rule 12(b)(6) motion without converting it
to a motion for summary judgment. See Knievel v.
ESPN, 393 F.3d 1068, 1076-77 (9th Cir. 2005)
(incorporation by reference); Skilstaf, Inc. v. CVS
Caremark Corp., 669 F.3d 1006, 1016 n.9 (9th Cir. 2012)
(judicial notice).
If a
court dismisses a complaint, it should give leave to amend
unless the “the pleading could not possibly be cured by
the allegation of other facts.” Cook, Perkiss and
Liehe, Inc. v. Northern California Collection Serv.
Inc., 911 F.2d 242, 247 (9th Cir. 1990).
ANALYSIS
1.
Requests for Judicial Notice
The
plaintiffs ask the court to take judicial notice of certain
judicial opinions.[22] FNBN does not oppose the request. The
court considers these cases without taking judicial notice.
See Fed. R. Evid. 201 advisory comm. n. (1972);
Von Saher v. Norton Simon Museum of Art at Pasadena,
592 F.3d 954, 960 (9th Cir. 2010); Toth v. Grand Trunk
R.R., 306 F.3d 335, 349 (6th Cir. 2002)
(“[J]udicial notice is generally not the appropriate
means to establish the legal principles governing the
case.”).
FNBN
asks the court to take judicial notice of the Notice of
Default and Election to Sell Under Deed of Trust
(“Notice”).[23] The plaintiffs oppose the request,
generally citing California evidence law and asserting
(without explanation) that the document is
disputed.[24] A district court generally “may
not consider any material beyond the pleadings in ruling on a
Rule 12(b)(6) motion.” Lee v. City of Los
Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001),
overruled on other grounds by Galbraith v. Cnty. of Santa
Clara, 307 F.3d 1119 (9th Cir. 2002). A court may,
however, consider judicially noticeable “matters of
public record.” Id. Here, the Notice was
recorded in the Official Records of Alameda County,
California on October 26, 2015, as Document No.
2015287610.[25]The court thus judicially notices the
Notice’s existence - not the truth of its contents -
because it is a matter of public record.
2.
The Court Dismisses All Federal Claims
The
court’s subject-matter jurisdiction is premised on the
plaintiffs’ four federal-question claims for relief.
The court dismisses all four claims.
2.1
TILA Claim for Rescission
In
their FAC, the plaintiffs asserted a claim to enforce what
they called an automatic and already effective rescission of
their mortgage.[26] The court dismissed the claim with
prejudice because it was barred by the statute of
limitations.[27] The plaintiffs now assert the same claim
in their SAC without any new reasoning and without requesting
leave to reassert the claim or reconsideration of the
court’s prior order.[28] For the reasons set forth in
the earlier order at ECF No. 30, the court dismisses the
plaintiffs’ third claim with prejudice. Cf. Haines
v. Brand, 2012 WL 2237366, at *7 (N.D. Cal. June 14,
2012) (dismissing claim that was previously dismissed with
prejudice where the plaintiff did not seek leave to replead
the claim).
2.2
...