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Cox v. Old Republic National Title Insurance Co.

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

August 8, 2016

KIMBERLY COX, Plaintiff
v.
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, et al., Defendants.

          ORDER RE MOTIONS TO DISMISS AND DENYING MOTIONS FOR DEFAULT JUDGMENT [RE: ECF 95, 99, 117, 135, 137, 138]

          BETH LAB SON FREEMAN United States District Judge

         Plaintiff brings this action to rid herself of a purported mortgage refinancing loan. The Court previously dismissed her complaint for seeking to bring claims that she had failed to properly schedule in her Chapter 7 bankruptcy, but granted leave to amend. See ECF 91. Plaintiff has now filed a prolix 91 page, 218 paragraph amended complaint. In four separate motions pled by Old Republic Default Management Services, Old Republic National Title Insurance Company, Shellpoint and Bank of New York, and MERS, Defendants[1] argue that she again exclusively asserts claims that she failed to schedule in her bankruptcy. Defendants therefore ask the Court to dismiss the complaint with prejudice. For the reasons stated below, the Court GRANTS Defendants’ motions to dismiss, docketed at ECF 99, 117, and 135, without leave to amend.[2]

         I. BACKGROUND

         Having detailed Plaintiff’s allegations in its first Order Granting Motions to Dismiss (“First Dismissal Order”), see ECF 91, the Court briefly summarizes Plaintiff’s amended allegations below. Plaintiff alleges that she acquired the property located at 131 Sutphen Street in Santa Cruz, CA (“Property”) and recorded the deed on September 1, 1998. Second Amended Compl. (“SAC”) ¶ 11, ECF 93. Though Plaintiff is now a citizen of Nevada, she alleges that, at all relevant times, the Property was her principal residence. Id. ¶ 41.

         On December 14, 2004, Plaintiff secured a $544, 000 refinancing loan with a deed of trust (“DOT”) on the Property. Id. ¶¶ 12-13, 18. The DOT was recorded on December 21, 2004 and named non-party America’s Wholesale Lender as the lender. Id. ¶¶ 12-13. Plaintiff alleges that, though $544, 000 was credited primarily to refinance a previous loan, neither AWL nor any of the Defendants provided that funding. Id. ¶ 18. Rather, Plaintiff alleges, AWL did not exist as named (i.e., as a New York corporation) and the actual lender was never disclosed. Id. ¶¶ 12, 19.

         Nevertheless, for the purposes of her Truth in Lending Act (“TILA”) claim, Plaintiff alleges that AWL was the creditor and that AWL violated TILA by failing to provide her with the required disclosures. Id. ¶¶ 2, 20. Plaintiff alleges that she therefore properly rescinded the refinancing loan by mailing a notice of rescission to AWL on July 13, 2007. Id. ¶ 16. AWL then “failed to comply with its duties under 15 U.S.C. § 1635(b)” or to challenge the rescission within 20 days of receiving the rescission. Id. ¶ 20.

         On December 7, 2009, non-party Reconstruct Company requested that a Substitution of Trustee and Assignment of Deed of Trust (“SOT and Assignment”)[3] be recorded. Id. ¶ 31. Plaintiff alleges that the SOT and Assignment was invalid and void because the Defendants and AWL were not what they purported to be (i.e., the lender, assignee, trustee, or beneficiary of the loan) and because Plaintiff had previously rescinded the DOT. Id. ¶ 32. In March 2010, Reconstruct Company recorded a Notice of Trustee’s Sale of the Property. Id. ¶ 29.[4]

         On November 12, 2010, Plaintiff filed for Chapter 7 bankruptcy. Id. ¶ 22; see also Case No. 5:10-bk-61716. Plaintiff scheduled the Property and the loan at issue as unsecured, nonpriority, contingent, unliquidated, and disputed. SAC ¶ 22.

         Plaintiff also filed an adversary proceeding in bankruptcy court against MERS and other entities who are not parties to this action to determine whether or not the purported refinancing debt was secured. Id. ¶ 22; see also Case No. 5:11-ap-05106. Plaintiff did not mention the alleged rescission. SAC ¶¶ 22-23. The bankruptcy court dismissed the adversary proceeding for lack of subject matter jurisdiction because only the Chapter 7 trustee had standing to pursue Plaintiffs claims at that time. Id. ¶ 22.

         In January 2012, Plaintiffs bankruptcy case was closed. Plaintiff alleges that, at that point, the Property was abandoned back to Plaintiff and the purported refinancing debt was deemed unsecured and void by operation of law. Id. ¶ 25.

         In May 2012, Plaintiff filed a lawsuit in Santa Cruz Superior Court, Case No. CV 174201. Id. ¶ 29. Plaintiff alleges that, with trial looming, Reconstruct Company recorded a Notice of Rescission and Declaration of Default and Demand for Sale and of Notice of Default and Election to Sell on January 23, 2014. Id. ¶ 29. Plaintiff alleges that, because this effectively ended the attempts to foreclose on the Property, Plaintiff dismissed her state case without prejudice and her appeal of the bankruptcy adversary ruling. Id. ¶ 29.

         But Plaintiff alleges that Defendants’ wrongful activities did not end there. Instead, Plaintiff alleges that Defendants collectively recorded or “caused to be recorded” the following: a Notice of Default and Election to Sell Under Deed of Trust (“NOD 1”) and second Substitution of Trustee (“SOT 2”) on October 28, 2014, id. ¶¶ 33-34; a second Notice of Default (“NOD 2”) and third Substitution of Trustee (“SOT 3”) on December 19, 2014, id. ¶¶ 35-36, and a second Notice of Trustee’s Sale on April 30, 2015, id. ¶ 37.[5] Plaintiff alleges that the documents wrongfully identified Shellpoint and MERS as the beneficiary, MERS as the nominee, ORNTIC as the trustee, and BONYMCorp as the assignee of the DOT. Id. ¶¶ 32, 84. Plaintiff alleges that each of these documents was invalid and void because Plaintiff had rescinded the DOT on which they were based. Id. ¶¶ 33-37.

         Based on the above allegations, Plaintiff asserts: (1) cancellation of invalid instruments; (2) slander and disparagement of the title to Plaintiff’s property against all Defendants; (3) fraud against ORNTIC and Shellpoint; (4) violation of the Federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq, and the Rosenthal Debt Collection Practices Act (“RFDCPA” or “Rosenthal Act”), Cal. Civil Code § 1788 et seq, against ORNTIC and Shellpoint; (5) violation of California’s Unfair Practices Act (“UPA”), Cal. Bus. & Prof. Code § 17000 et seq., against ORNTIC, Shellpoint, and MERS; and (6) a new 42 U.S.C. § 1983 claim against all Defendants.

         II. ...


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