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Del Rosario v. Wells Fargo Bank National Association

United States District Court, S.D. California

April 5, 2017



          Hon Roger T. Benitez United States District Judge.

         Defendants Wells Fargo Bank, National Association, as Trustee for the Merrill Lynch Mortgage Investors Trust, Series 2006-F1, and PNC Bank, N.A. (erroneously sued as PNC Mortgage, Inc., FKA National City Mortgage Company) (“Defendants”) have filed a Motion to Dismiss Plaintiffs Amor Medina Del Rosario and Elvie Canlas Del Rosario's (“Plaintiffs”) First Amended Complaint. (Mot., ECF No. 13.) For the reasons discussed below, the Motion is GRANTED.


         Plaintiffs, proceeding pro se, have filed a complaint, seeking to avoid nonjudicial foreclosure on a piece of residential property at 10685 Brookhollow Court, San Diego, California (the “Subject Property”) that they own and occupy. On October 20, 2016, this Court granted Defendants' motion to dismiss Plaintiffs' original complaint on several grounds. Plaintiffs thereafter filed a First Amended Complaint. (FAC, ECF No. 12.) The First Amended Complaint repeats the allegations of the initial complaint.

         On or about December 29, 2005, Plaintiffs executed a promissory note in the amount of $499, 000 for the Subject Property, secured by a deed of trust. (FAC ¶ 14; Defs.' Request for Judicial Notice (“RJN”) Ex. C.)[2] The lender and beneficiary of the deed of trust was National City Mortgage, a division of National City Bank of Indiana, and now known as PNC Mortgage Inc. (Id. ¶¶ 15, 17; RJN Ex. C.) National City Bank of Indiana was the named trustee on the note and deed of trust. (Id. ¶ 16; RJN Ex. C.) Plaintiffs allege that there has been “no documented assignment of the Note.” (FAC ¶ 24.)

         Plaintiffs fell behind on their payments. On August 6, 2009, Cal-Western Reconveyance Company (“Cal-Western”) recorded a Notice of Default. (Id. ¶ 76 & Ex. F.) The Notice states that Cal-Western is “either the original trustee, the duly appointed substituted trustee, or acting as agent for the trustee or beneficiary under [the] deed of trust.” (Id. Ex. F) Plaintiffs claim that Cal-Western acted ultra vires and was never substituted as trustee or authorized to act as an agent. (Id. ¶ 80.)

         The Notice of Default further states that “the mortgagee, beneficiary or the mortgagee's or beneficiary's authorized agent has either contacted the borrower or tried with due diligence to contact the borrower as required by California Civil Code 2923.5.” (Id.) But Plaintiffs allege that they were never contacted prior to the recording of the Notice of Default. (Id. ¶ 79.) They claim that Defendants “did not review Plaintiffs' financial situation and further did not advise them of all options available to avoid foreclosure.” (Id. ¶ 81, 83-84, 90-91.) Plaintiffs contend these and other failures violated California law, thereby nullifying Defendants' authority to foreclose. (Id. ¶ 82.)

         In 2010, Plaintiffs sued PNC Bank, Cal-Western, and Pacific Data Mortgage in California state court to stop foreclosure on the home. (Id. ¶ 49 & Ex. C.) In that lawsuit, Plaintiffs alleged that the defendants fraudulently induced them to enter the loan agreement on inferior terms and wrongfully sought to foreclose on Plaintiffs when they were not in default. (See Id. Ex. C.) Plaintiffs allege that “both parties agreed to settle the manner by PNC agreeing to provide Plaintiffs with an acceptable loan modification, in exchange for Plaintiffs' agreement to voluntarily dismiss the lawsuit.” (Id. ¶ 52.) However, Plaintiffs contend that “PNC reneged on the agreement, and failed to provide Plaintiffs with the loan modification they were promised.” (Id. ¶ 54.) Plaintiffs claim that this conduct by PNC constitutes fraud. (See Id. ¶¶ 55-61.)

         On or about May 9, 2012, Cal-Western Reconveyance Company recorded a Notice of Trustee Sale, bearing instrument number 2012-0273037. (Id. ¶ 97 & Ex. G.) Plaintiffs again contend that Cal-Western acted without authority (id. ¶ 99-100), and that Defendants did not review Plaintiffs' financial situation or advise them of their options to avoid foreclosure (id. ¶¶ 101-02). Plaintiffs once more claim these failures nullify Defendants' authority to foreclose. (Id. ¶ 101.)

         At some point, “Plaintiffs' loan was . . . sold into a securitized Trust, entitled the Merrill Lynch Mortgage Investors Inc., 2006-F1.” (Id. ¶ 23.) The trust had a “cut-off date” of April 1, 2006, and a “closing date” of April 28, 2006. (Id. ¶¶ 23, 29, 38.) “Plaintiffs' note and loan were not transferred to the Merrill Lynch Securitized Trust prior to its closing date.” (Id. ¶ 29.)

         On September 25, 2015, PNC Bank recorded an Assignment of Deed of Trust to “Wells Fargo Bank, N.A., as Trustee, for Merrill Lynch Mortgage Investors Trust, Series MLMI 2006-F1” (“Wells Fargo”). (Id. ¶ 70, Ex. E.) The assignment made Wells Fargo the beneficiary of the deed of trust. (Id. Ex. E.) Plaintiffs allege that the assignment of the deed of trust was ineffective, invalid, and void because it occurred after the closing date of the Merrill Lynch securitized trust. (See Id. ¶ 29-30, 34-35.) They also contend that because “there has been no documented assignment of the Note, . . . the [deed of trust] and note were not properly transferred together, which consequently has bifurcated the [deed of trust] and note, rendering them unenforceable.” (Id. ¶ 24.)

         On November 25, 2015, Wells Fargo, as beneficiary under the deed of trust, recorded a Notice of Rescission of Notice of Default, bearing instrument number 2015-0613850. (Id. ¶ 103 & Ex. H.) The Notice states that Wells Fargo “does hereby rescind, cancel and withdraw said Declaration of Default and Demand for Sale and said Notice of Breach and Election to Cause Sale.” (Id. Ex. H.) The Notice is signed by Bernis M. Gonyea of Clear Recon Corp. (Id.) Plaintiffs allege that Clear Recon Corp. is “the new foreclosing trustee” but there is no “evidence of a recorded Substitution of Trustee document authorizing Clear Recon. Corp. to be substituted as trustee.” (Id. ¶ 104.)

         On April 29, 2016, PNC denied Plaintiffs hardship assistance on their loan. (Id. ¶ 63 & Ex. D.) The letter from PNC states that Plaintiffs' “loan on the related property has received the maximum number of foreclosure alternative options that are permitted by the assignee or mortgage owner of your loan.” (Id. Ex. D.) Challenging this decision, Plaintiffs contend that they made “the requisite 3 trial payments which should have resulted in a full and final modification.” (Id. ¶ 63.)

         Plaintiffs bring three claims for relief. The first claim for relief alleges wrongful foreclosure. The second claim for relief alleges ...

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