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Neal v. Select Portfolio Servicing, Inc.

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

March 20, 2017

RALPH NEAL, Plaintiff,


          EDWARD J. DAVILA, United States District Judge

         Plaintiff Ralph Neal (“Plaintiff”) alleges in this action that Defendants Select Portfolio Servicing, Inc. (“SPS”) and Bank of America, N.A. (collectively “Defendants”) have improperly sought to foreclose on residential property.

         Federal jurisdiction arises pursuant to 28 U.S.C. § 1332. Presently before the court is Defendants' Motion to Dismiss the First Amended Complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 26. Plaintiff opposes the motion. Having carefully reviewed the relevant papers submitted by the parties, the court has concluded that none of Plaintiff's causes of action withstand scrutiny. Thus, Defendants' Motion to Dismiss will be granted for the reasons explained below.

         I. BACKGROUND

         Plaintiff is the trustor of a Deed of Trust (“DOT”) recorded on or about May 25, 2007, against residential property located on Calco Creek Drive in San Jose (the “Property”) pursuant to the refinance of a loan. FAC, Dkt. No. 25, at ¶ 1. The original lender on the DOT was Washington Mutual, FA, and the original trustee was California Reconveyance Company (“CRC”). Id. at ¶ 11.

         On November 4, 2010, CRC recorded an Assignment noting a transfer of the DOT from JP Morgan Chase Bank to “Bank of America, National Association successor by merger to LaSalle Bank NA as trustee for WaMu Mortgage Pass-Through Certificates Series 2007-OA6 Trust.” Req. for Judicial Notice, Dkt. No. 27, at Ex. B.[1] That same day, CRC also recorded a Notice of Default providing that Plaintiff owed past due payments of $70, 383.83. Id. at Ex. C. CRC thereafter recorded a Notice of Trustee's Sale on February 7, 2011. Id. at Ex. D.

         Though the balance of the allegations in the FAC are diffuse, Plaintiff generally alleges the DOT was subsequently transferred and assigned and that “due to the chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage” on the San Jose property. Id. at ¶ 12. He discovered “several material inconsistencies and inaccuracies” with the total loan amount, the crediting of payments, and the imposition of “exorbitant fees, ” and “undisclosed and hidden charges.” Id. at ¶ 21. Plaintiff also discovered “document irregularities” and other problems with the foreclosure process. Id. at ¶ 22.

         Plaintiff initiated this action on July 10, 2015, and all causes of action in his original complaint were dismissed, some with and some without leave to amend. Dkt. No. 22. Plaintiff filed the FAC on January 25, 2016, and now asserts the following causes of action: (1) quiet title, (2) Declaratory Relief, (3) violation of the California Homeowners Bill of Rights (“CHBOR”), (4) Promissory Estoppel, (5) unjust enrichment, (6) accounting, and (7) violation of the Unfair Competition Law (“UCL”), California Business and Professions Code § 17200 et seq. This motion followed the FAC.


         A. Federal Rule of Civil Procedure 12(b)(6)

         Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). The factual allegations in the complaint “must be enough to raise a right to relief above the speculative level” such that the claim “is plausible on its face.” Id. at 556-57. A complaint that falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

         When deciding whether to grant a motion to dismiss, the court must generally accept as true all “well-pleaded factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014) (providing the court must “draw all reasonable inferences in favor of the nonmoving party” for a Rule 12(b)(6) motion). However, “courts are not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678.

         Also, the court usually does not consider any material beyond the pleadings for a Rule 12(b)(6) analysis. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). Exceptions to this rule include material submitted as part of the complaint or relied upon in the complaint, and material subject to judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001).

         B. Pro Se Pleadings

         Where, as here, the pleading at issue is filed by a plaintiff proceeding pro se, it must be construed liberally. Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). In doing so, the court “need not give a plaintiff the benefit of every conceivable doubt” but “is required only to draw every reasonable or warranted factual inference in the plaintiff's favor.” McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974). The court “should use common sense in interpreting the frequently diffuse pleadings of pro se complainants.” Id. A pro se complaint should not be dismissed unless the court finds it “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Haines v. Kerner, 404 U.S. 519, 521 (1972).


         A. Quiet Title

         A claim to quiet title must describe five elements: “(1) a legal description of the property and its street address or common designation, (2) the title of the plaintiff and the basis of the title, (3) the adverse claims to the title of the plaintiff, (4) the date as of which the determination is sought and (5) a prayer for the determination of the title of the plaintiff against the adverse claims.” Janolkar v. Bank of Am., N.A., No. 5:12-cv-03693 EJD, 2012 U.S. Dist. LEXIS 174756, at *9, 2012 WL 6115629 (N.D. Cal. Dec. 10, 2012) (citing Cal. Civ. Proc. Code § 761.020).

         Defendants argue the allegations in the FAC fail to establish the second element of a quiet title cause of action, and the court previously dismissed the claim on that basis. The court observed that a basic requirement of the claim “is an allegation that plaintiffs ‘are the rightful owners of the property, i.e., that they have satisfied their obligations under the Deed of Trust.'” Santos v. Countrywide Home Loans, No. Civ. 2:09-02642, 2009 U.S. Dist. LEXIS 103453, at *10, 2009 WL 3756337 (E.D. Cal. Nov.6, 2009) (quoting Kelley v. Mortg. Elec. Reg. Sys., Inc., 642 F.Supp.2d 1048, 1057 (N.D. Cal. 2009)). Indeed, “[t]he cloud upon title persists until the debt is paid, ” and the borrower “cannot clear his title without satisfying his debt.” Aguilar v. Bocci, 39 Cal.App.3d 475, 477-78 (1974). Thus, “[u]nder California law, a borrower may not assert an action to quiet title against a mortgagee without first paying the outstanding debt on the property.” Williams v. Bank of America Nat'l Assoc., No. 15-CV-00792-LHK, 2015 U.S. Dist. LEXIS 148337, at *22, 2015 WL 6602403 (N.D. Cal. Oct. 30, 2015). However, “[f]ull tender of the indebtedness is not required if the borrower attacks the validity of the underlying debt.” Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49, 87 (2013).

         Here, Plaintiff is not challenging the validity of the underlying debt; to the contrary, he specifically recognizes the DOT in the FAC and none of his causes of action seek to circumvent any payment obligations under its terms. FAC, at ¶¶ 11, 24. Plaintiff also relies on the existence of the DOT as a basis to pursue the quite title claim. To that end, Plaintiff suggests a “legal and equitable interest” in the Property based on his position as trustor. Id. at ¶ 24. That sort of interest is not enough, though, in light of the FAC's particular allegations since they do not provide a plausible basis to excuse tender.

         Plaintiff's arguments in opposition do not alter the analysis. First, Plaintiff questions Defendants' ability to foreclose due to a purported defect in the transfer of assets from Washington Mutual to JP Morgan Chase Bank upon the latter bank's assumption of the former. Specifically, Plaintiff alleges that JP Morgan Chase “has no legal standing to execute the assignment to Bank of America National Association, as there was no prior chain of assignment(s), recorded or unrecorded, to JP Morgan Chase in the first place from the original lender Washington Mutual, or its assignees, nor any other legal documentation to prove such assignment(s).” FAC, at ¶ 29. This protestation has no bearing on whether Plaintiff has alleged facts in the FAC entitling him to proceed on a claim for quiet title, as opposed to one for wrongful foreclosure, because the elements of quiet title require him to plausibly and affirmatively identify a basis upon which he could be determined the rightful owner of the Property.[2]Gerhard v. Stephens, 68 Cal. 2d 864, 918 (1968) (holding that the quiet ...

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