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Ghalehtak v. FNBN I, LLC

United States District Court, N.D. California, San Francisco Division

August 2, 2016

FARID GHALEHTAK, et al., Plaintiffs,
FNBN I, LLC, Defendant.




         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.


         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).


         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 ...

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