United States District Court, N.D. California
ORDER REGARDING MOTIONS TO DISMISS AND MOTION TO
STRIKE RE: ECF NOS. 60, 61, 62
TIGAR, United States District Judge
the Court are the Defendants' motions to dismiss and to
strike portions of the Plaintiff's second amended
complaint. ECF Nos. 60, 61, 62. The Court grants the motion
to dismiss Plaintiff's claim for injunctive relief, but
denies the motions to dismiss and motion to strike in all
putative class action, Plaintiff Bonnie Lynne Stromberg
asserts a California state law claim against two mortgage
lenders and a mortgage loan servicing company for failing to
reconvey a deed of trust on real property within thirty days
after repayment of her home loan. Second Amended Complaint
(“SAC”), ECF No. 58.
owns property at 2405 Ric Drive, Gilroy, California that was
encumbered by a ten-year home equity line of credit
(“the loan”) in the amount of $150, 000.
Id. ¶¶ 9, 18. Plaintiff obtained the loan
from Morgan Stanley Dean Witter Credit Corporation on March
2, 2005. Id. The loan was secured by a deed of trust
on her property, which Plaintiff executed in favor of Morgan
Stanley Dean Witter Credit Corporation as the beneficiary.
Id. ¶¶ 4, 18. The deed of trust was
recorded in the Santa Clara County Clerk-Recorder's
Office on April 11, 2005. Id.; ECF No. 61˗2 at
Stanley Home Loans serviced the loan from its inception in
March 2005 until April 30, 2012. Id. ¶ 21.
Effective May 1, 2012, Ocwen Loan Servicing, LLC
(“Ocwen”) became the loan servicer pursuant to a
pooling and servicing agreement. Id. ¶ 22.
Ocwen notified Plaintiff that it was the new loan servicer,
but “the notice did not identify the owner of the loan
or the beneficiary or assignee of the Deed of Trust.”
Id. ¶ 22.
December 12, 2014, pursuant to Plaintiff's request, Ocwen
provided a payoff statement for the loan, which stated that
the total amount then due was $19, 085.43, and that such
payoff needed to be made on or before January 9, 2015.”
Id. ¶ 23; see also ECF No. 58˗1,
Ex. 1. The payoff statement provides that, “[u]pon
receipt of the entire payoff amount, Ocwen will execute a
release and discharge for the Deed of Trust/Mortgage . . .
” Id. at 3.
January 5, 2015, Plaintiff paid Ocwen the total amount due
via wire transfer, thus satisfying all of her remaining
obligations under the loan. SAC, ECF No. 58 ¶ 26. On
January 7, 2015, Ocwen acknowledged that it received the wire
transfer on January 5, 2015, and informed Plaintiff that her
“account now reflects a principal balance of
$0.00.” Id. ¶ 27; ECF No. 58˗2, Ex.
2. Ocwen instructed Plaintiff to sign, notarize, and return
an attached form if she wished to close the account. ECF No.
58˗2, Ex. 2 at 2. On January 14, 2015, Plaintiff
executed and notarized the written request to close the
account. ECF No. 58˗3, Ex. 3.
sent Plaintiff another letter on February 18, 2015 in which
it again “acknowledged that Plaintiff's Loan had
been fully paid.” Id. ¶ 29; ECF No.
58˗4, Ex. 4. In the same letter, Ocwen stated the
following: “Ocwen will send the lien release document
to the county courthouse in which your property resides. Once
we receive confirmation that the release document has been
recorded, we will forward you that information for your
records. Depending on the state and county involved, this
final step can take up to six (6) months.” ECF No.
58˗4, Ex. 4 at 2. Ocwen informed Plaintiff that the
recordation of a “lien release document” would
“make it a matter of public record that Ocwen no
longer claims any interest in the above property with respect
to this loan.” Id.
the Defendants delivered the original note, deed of trust,
request for full reconveyance, or other necessary documents
for reconveyance to the trustee within thirty days of loan
satisfaction as required by California Civil Code §
2941(b). SAC, ECF No. 58 ¶¶ 33˗34. The trustee
did not execute a full reconveyance of the deed of trust to
Plaintiff until June 25, 2015, and this reconveyance was not
recorded by the Santa Clara County Recorder until July 1,
2015. ECF No. 61˗2 at 21. Plaintiff alleges that this
delay caused her to “suffer injury in the form of
slander of title, incurred costs, impaired credit and
incomplete and inaccurate public records respecting her
financial obligations and credit worthiness.” SAC, ECF
No. 58 ¶ 43.
alleges that “the ownership status of Defendants
vis-à-vis the Loan and Deed of Trust as of the date on
which the obligations arose under Cal. Civ. Code §
2941(b) is not easily ascertained” because the
Defendants “fail[ed] . . . to properly maintain a
record of transactions affecting the ownership of
Plaintiff's Loan and the Deed of Trust securing the
Loan.” Id. ¶ 36. Plaintiff alleges that
Defendant Morgan Stanley Private Bank, N.A. (“Morgan
Stanley”) acquired Plaintiff's loan in 2011 from
its predecessor, Morgan Stanley Credit Corporation, after a
corporate merger. Id. ¶¶ 11, 19˗20.
And Morgan Stanley was listed as the beneficiary on the deed
of trust at the time the Plaintiff satisfied her loan in
January 2015. Id. ¶ 38. However, both Morgan
Stanley and its Co-Defendant RBS Citizens, N.A.
(“Citizens”) “maintain that, at some point
after the origination of the Loan, Citizens acquired
‘Investor Rights' in the Loan . . . pursuant to a
[purchase agreement] between [Morgan Stanley Credit
Corporation] and Citizens dated March 1, 2006.”
Id. ¶ 37. Accordingly, Plaintiff alleges
“that Citizens in fact acquired an ownership interest
in the Loan prior to the date on which the Loan was
satisfied, although no assignment of the Deed of Trust was
executed or recorded in connection with the Purchase
Agreement until many years later and more than 30 days after
the Loan was satisfied.” Id. In fact, Morgan
Stanley did not execute an assignment of the deed of trust to
Citizens until June 2, 2015, and that assignment was not
recorded with the Santa Clara County Clerk Recorder until
July 1, 2015. Id. ¶ 38; ECF No. 61˗2 at
also alleges that, “[a]lthough Defendant Ocwen was not
the lender on Plaintiff's Loan or an investor to whom the
Deed of Trust was formally assigned, . . . Ocwen acquired an
interest in the Loan at some point, which it continued to
possess at the time that the obligations under [California
law] arose and as to which it thereafter acted for its own
advantage or benefit.” SAC, ECF No. 58 ¶ 40.
Plaintiff further alleges that, “even if it was not the
beneficiary or assignee of the Loan or Deed of Trust, Ocwen
had and has an independent responsibility for complying with
Section 2941(b) . . .” Id. ¶ 41.
filed her complaint in California state court on September 4,
2015. ECF No. 1-1. She asserts a single cause of action under
California Civil Code § 2941(b) against all three
Defendants. SAC, ECF No. 58 ¶¶ 60˗63. She
seeks declaratory and injunctive relief, statutory damages in
the amount of $500 per violation, and reasonable
attorney's fees. SAC, ECF No. 58 at 17˗18. Ocwen
subsequently removed the action federal court. ECF No.
Court has jurisdiction over the action under the Class Action
Fairness Act of 2005 (“CAFA”) because Plaintiff
asserts this action on behalf of more than one hundred
putative class members; the parties are diverse; and the
aggregate amount in controversy exceeds $5 million. 28 U.S.C.
three Defendants move to dismiss Plaintiff's second
amended complaint under Rule 12(b)(1) and/or Rule 12(b)(6).
ECF No. 60, 61, 62. In the event the Court does not dismiss
Plaintiff's complaint in its entirety, Ocwen moves to
strike Plaintiff's request for attorneys' fees,
costs, pre- and post-judgment interest, and injunctive relief
under Rule 12(f). ECF No. 61.
Request for Judicial Notice
to Federal Rule of Evidence 201(b), “[t]he court may
judicially notice a fact that is not subject to reasonable
dispute because it: (1) is generally known within the trial
court's territorial jurisdiction; or (2) can be
accurately and readily determined from sources whose accuracy
cannot reasonably be questioned.” The Court may also
“consider materials incorporated into the complaint,
” where “the complaint necessarily relies upon a
document or the contents of the document are alleged in a
complaint, the document's authenticity is not in question
and there are no disputed issues as to the document's
relevance.” Coto Settlement v. Eisenberg, 593
F.3d 1031, 1038 (9th Cir. 2010). The Court “must take
judicial notice if a party requests it and the court is
supplied with the necessary information.” Fed.R.Evid.
to Ocwen's request, the Court takes judicial notice of
the following documents associated with Plaintiffs loan and
deed of trust:
• April 11, 2005 deed of trust identifying Morgan
Stanley Dean Witter Credit Corporation as beneficiary
• July 1, 2015 corporate assignment of deed of trust
from Morgan Stanley to Citizens
• July 1, 2015 substitution of T.D. Service Company as
• July 1, 2015 full reconveyance of the deed of trust to
ECF No. 61˗2. Each of these documents was publicly
recorded by the Santa Clara County Record's Office. As
such, they are public records that are properly subject to
judicial notice. Allen v. United Fin. Mortg. Corp.,
660 F.Supp.2d 1089, 1093 (N.D. Cal. 2009) (taking judicial
notice of recorded instruments that affect the parties'
property interests). Plaintiff does not object to the
accuracy of these documents, which are incorporated into her
complaint. The Court may take judicial notice of these
documents without converting the motions to dismiss into
motions for summary judgment. Thomas v. Walt Disney
Co., 337 F. App'x 694, 695 (9th Cir. 2009) (quoting
Mack v. South Bay Beer Distribs., Inc., 798 F.2d
1279, 1282 (9th Cir. 1986)).
Motion to Dismiss for Lack of Subject Matter
moves to dismiss Plaintiffs second amended complaint under
Rule 12(b)(1) for lack of subject matter jurisdiction on
standing and mootness grounds. ECF ...