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Deck v. Wells Fargo Bank, N.A.

United States District Court, E.D. California

June 9, 2017

VERNON DECK, Plaintiff,
WELLS FARGO BANK, N.A., et al., Defendants.




         Plaintiff Vernon Deck, who proceeds without counsel, initially filed this action on February 2, 2017, and requested leave to proceed in forma pauperis. (ECF Nos. 1, 2.)[1] In short, this is a mortgage foreclosure case in which plaintiff alleges various violations of the California Homeowner's Bill of Rights and the federal Fair Debt Collection Practices Act (“FDCPA”), and also brings claims for fraudulent misrepresentation, quiet title, and declaratory judgment. Plaintiff's claims are asserted against defendants Wells Fargo Bank, National Association, as Trustee for Option One Mortgage Loan Trust 2003-1, Asset-Backed Certificates, Series 2003-1 (the present owner of the loan); Ocwen Loan Servicing, LLC (the loan servicer from February 2013 until April 2017, when non-party Nationstar Mortgage apparently took over servicing of the loan), and Power Default Services, Inc. (the trustee under the deed of trust).

         Plaintiff's complaint is subject to screening in accordance with 28 U.S.C. § 1915. Pursuant to 28 U.S.C. § 1915, the court is directed to dismiss the case at any time if it determines that the allegation of poverty is untrue, or if the action is frivolous or malicious, fails to state a claim on which relief may be granted, or seeks monetary relief against an immune defendant.

         A federal court also has an independent duty to assess whether federal subject matter jurisdiction exists, whether or not the parties raise the issue. See United Investors Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 967 (9th Cir. 2004) (stating that “the district court had a duty to establish subject matter jurisdiction over the removed action sua sponte, whether the parties raised the issue or not”); accord Rains v. Criterion Sys., Inc., 80 F.3d 339, 342 (9th Cir. 1996). The court must sua sponte dismiss the case if, at any time, it determines that it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3). Because the question of standing is a threshold jurisdictional issue, federal courts have a duty to examine it. D'Lil v. Best Western Encina Lodge & Suites, 538 F.3d 1031, 1035 (9th Cir. 2008).

         After carefully reviewing plaintiff's complaint and conducting an evidentiary hearing on May 22, 2017, the court concludes that plaintiff lacks standing to bring his claims and/or that the claims fail to state a claim on which relief may be granted and are patently frivolous. Therefore, the court recommends that the action be dismissed with prejudice.


         In 1999, plaintiff, as an unmarried man, bought the subject real property located at 1124 Hawthorne Loop in Roseville, California, signing a note and deed of trust to obtain a mortgage loan. After plaintiff married Heather Summerby in December 2001, the loan was refinanced by virtue of the operative November 1, 2002 adjustable rate note for an amount of $306, 000.00 borrowed from Option One Mortgage Corporation, and Summerby was added to the title of the property. It is undisputed that both plaintiff and Summerby, as a married couple, executed the November 1, 2002 deed of trust and its associated documents, such as the adjustable rate rider. However, the parties dispute whether the note itself was signed only by Summerby, or by both plaintiff and Summerby, and thus whether plaintiff himself is an obligor on the note. In any event, plaintiff contends that he, and not Summerby, subsequently made the vast majority of payments on the loan. In November 2008, after plaintiff and Summerby had divorced, Summerby transferred her interest in the property to plaintiff by a quit claim deed. It is undisputed, at least for purposes of these proceedings, that solely Mr. Deck presently holds title to the property.

         According to defendants' evidentiary hearing brief, the loan went into default around October 2011, and as of July 14, 2016, the unpaid balance was $412, 527.74 with total arrearages of $150, 666.37. (See ECF No. 41 at 7.) However, in plaintiff's complaint and evidentiary hearing brief, plaintiff contended that he paid off the loan in April 2012, and is thus entitled to cancellation of the note and quiet title. (See ECF No. 1 at 26-27, 33-37; ECF No. 43 at 9.)[3]

         Although defendants have commenced foreclosure proceedings, a foreclosure sale has been postponed multiple times due to plaintiff's two prior state court lawsuits and bankruptcy case. On November 14, 2014, plaintiff filed a suit against defendants in the Placer County Superior Court (Case No. SCV0035443). (ECF No. 9-2.)[4] In the course of that case, plaintiff produced numerous documents in response to defendants' document requests and plaintiff's deposition was also taken. That case was ultimately voluntarily dismissed without prejudice in early 2016. Later in 2016, plaintiff filed another lawsuit against defendants in the Placer County Superior Court (Case No. SCV0037916). At a July 21, 2016 hearing in that case, the court denied plaintiff's request for a preliminary injunction, reasoning that plaintiff had not shown that he is a borrower on the note or that he has paid off the total outstanding amount on the loan. (ECF No. 9-4 at 4-8.)[5] After the preliminary injunction was denied, plaintiff filed a motion for reconsideration of the denial based on the alleged discovery of new evidence, which was ultimately denied. (Id. at 24-25.) The 2016 state court case remains active. Additionally, on July 25, 2016, plaintiff filed a bankruptcy petition in the United States Bankruptcy Court for the Eastern District of California, which remains active. (See Case No. 16-bk-24854.)

         Thereafter, on February 2, 2017, plaintiff filed the instant federal lawsuit. (ECF No. 1.)


         After the case was filed, the assigned district judge, Judge England, initially denied plaintiff's motion for a temporary restraining order (“TRO”), but subsequently granted plaintiff's amended motion for a TRO based on the allegations in plaintiff's submission to provide all parties an opportunity to be heard prior to any trustee's sale of the property. (ECF Nos. 3-7.) Along with the TRO, the court issued an order to show cause why a preliminary injunction should not issue. (ECF No. 7.) Defendants ultimately filed a response to the order to show cause, and plaintiff filed a reply brief. (ECF Nos. 9, 13.)

         Subsequently, by minute order on February 22, 2017, and in a reasoned decision on February 27, 2017, the district judge denied plaintiff's request for a preliminary injunction. (ECF Nos. 15, 17.) The district judge observed:

Specifically, the thrust of Plaintiff's claims are that Defendants have improperly initiated foreclosure proceedings, but Plaintiff has failed to establish that he is a “borrower” under the loan and therefore has failed to show that he has standing to bring the present lawsuit. Due to his lack of standing, Plaintiff cannot show that he is reasonably likely to succeed on the merits, nor can he even raise serious questions as to the merits, of any of his claims.

(ECF No. 17 at 5.)[6]

         As such, on March 2, 2017, the undersigned issued an order to show cause why the action should not be dismissed for lack of standing, an impediment to the court's jurisdiction. (ECF No.18.) On March 16, 2017, plaintiff filed a response to the order to show cause, and on March 24, 2017, defendants filed a reply to plaintiff's response. (ECF Nos. 23, 31.) After reviewing the parties' filings, the court found that making a determination regarding the issue of standing in this case required the court to resolve issues of credibility and/or disputed material facts, and that an evidentiary hearing was therefore necessary. (ECF No. 32.) See, e.g., Hohlbein v. Hospitality Ventures LLC, 248 Fed. App'x 804, 806 n.2 (9th Cir. Sep. 20, 2007) (unpublished); Cholakyan v. Mercedes-Benz USA, LLC, 2012 WL 12861143, at *24 (C.D. Cal. Jan. 12, 2012). More specifically, plaintiff produced a copy of the note with his signature on it, whereas the version offered by defendants only bore Summerby's signature. The parties also appeared to dispute whether the loan was in default or paid off.

         Consequently, on April 5, 2017, the court set an evidentiary hearing for May 22, 2017, strictly limited to the following two issues: (a) whether plaintiff signed the November 1, 2002 note and is thus a borrower for purposes of the loan at issue, or whether plaintiff has otherwise assumed the loan; and (b) regardless of whether plaintiff is a borrower or has assumed the loan, whether plaintiff has paid off the loan in its entirety. (ECF No. 35.)[7] Subsequently, the parties filed a joint list of witnesses and exhibits (ECF No. 42), along with pre-hearing briefs. (ECF Nos. 41, 43.)

         At the May 22, 2017 evidentiary hearing, plaintiff appeared representing himself, and attorneys Gabriel Ozel and Robert Norman appeared on behalf of defendants. (ECF No. 45.) The court entertained the presentation of both documentary evidence[8] and live witness testimony, [9] as discussed below. (Id.; see also Transcript of Evidentiary Hearing, ECF No. 48 [“Tr.”].)[10]


         Based on the court's record, including the evidence developed at the evidentiary hearing, the court proceeds to address plaintiff's claims separately below.

         Claims under the California Homeowner's Bill of Rights

          Only borrowers have standing to assert claims for violation of the California

         Homeowner's Bill of Rights. See Green v. Central Mortgage Co., 2015 WL 5157479, at *4 (N.D. Cal. Sept. 2, 2015) (collecting case authorities). Therefore, to demonstrate that he is an obligor on the loan and thus has standing to prosecute such claims, plaintiff has the burden to show by a preponderance of the evidence that he either (a) signed the November 1, 2002 note at the loan's origination, or (b) subsequently assumed the loan. See In re Exxon Valdez, 270 F.3d 1215, 1232 (9th Cir. 2001) (“The standard of proof generally applied in federal civil cases is preponderance of evidence.”); Holbein, 248 Fed. App'x at 806 (“We note, however, that because the evidentiary burden to demonstrate standing remains on [the plaintiff], the district court may revisit the issue of standing in an evidentiary hearing….”).

         At the evidentiary hearing, plaintiff did not present any evidence that he had assumed the loan. Instead, plaintiff emphatically claimed that he had signed the note at the loan's origination on November 1, 2002, offering into evidence a version of the note bearing his signature. (Pl's Ex. 12.) Plaintiff acknowledged his prior testimony from the state court deposition, in which he effectively conceded that he did not sign the note, but testified that he subsequently discovered a version of the note bearing his signature. Plaintiff essentially contends that defendants fabricated the version of the note with only Summerby's signature, and deceived him at his state court deposition by showing him the allegedly fabricated note. According to plaintiff, his subsequent discovery of the note with his signature backs up his contention that he had been a borrower on the loan since its origination. For the reasons discussed below, the court finds plaintiff's testimony, as well as his “discovered” version of the note, not credible.

         As an initial matter, with respect to plaintiff's version of the note, the document itself raises significant concerns. Although Summerby's signature appears on a signature line above her printed name, plaintiff's name is curiously not printed below his signature. (Tr. 121-22; Pl's Ex. 12.) This at least plausibly suggests that the note was prepared by the lender contemplating a signature by Summerby only, and not by plaintiff. However, plaintiff's version of the note is even more troubling in light of plaintiff's own testimony that Summerby had already executed the note before plaintiff arrived to sign the escrow documents, and that plaintiff then signed the original note on the same page that already contained Summerby's original signature. (Tr. at 33-34, 118.) At the hearing, defendants produced what credibly appeared to be the original wet ink November 1, 2002 note, which the court and plaintiff examined, and a color copy of which was introduced as Defendants' Exhibit 1. (Tr. 106-10; Defs' Ex. 1.) That note contained only Summerby's signature, with no signature by plaintiff, and the allonge attached to the note identified the “borrowers” as “Heather ...

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