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Hansen v. Western Progressive LLC

United States District Court, E.D. California

June 22, 2017

DAN HANSEN, Plaintiff,
v.
WESTERN PROGRESSIVE, LLC, and OCWEN LOAN SERVICING, LLC, Defendants.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND JR., UNITED STATES DISTRICT JUDGE.

         Through the present lawsuit, Plaintiff Dan Hansen (“Plaintiff”) seeks to prevent Defendants Western Progressive LLC (“Western”) and Ocwen Loan Servicing (“Ocwen”) from foreclosing on his residence located at 913 Baker Hill Way, Rocklin, California (“Property”). Plaintiff alleges that Defendants have not adequately demonstrated their right to foreclose on the Property. To that end, he asserts a federal claim for violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., as well as state law causes of action for violation of the Homeowner's Bill of Rights, California Civil Code § 2924.17, and for breach of contract and negligent misrepresentation. Presently before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint, brought pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted.[1] For the reasons set forth below, Defendants' Motion is GRANTED and Plaintiff's First Amended Complaint is DISMISSED without leave to amend.[2]

         BACKGROUND

         Plaintiff purchased the Property with a mortgage loan in the amount of $576, 000.00 obtained from WMC Mortgage Corp. (“WMC”). Defs.' Request for Judicial Notice (“RJN”), Ex. A.[3] On June 5, 2006, a Deed of Trust was recorded listing Westwood Associates as the trustee and the Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary. Id.

         On January 25, 2009, MERS recorded an Assignment of Plaintiff's Deed of Trust which transferred WMC's beneficial interest in the Deed of Trust to the Bank of New York Mellon f/k/a/ the Bank of New York (“Mellon”) as trustee for the holders of the GE-WMC Asset-Backed Pass Through Certificates, Series 2006-1. Id. at Ex. B. Thereafter, in 2009, Mellon recorded a Substitution of Trustee appointing Quality Loan Service Corporation as Trustee of Plaintiff's Deed of Trust. Five years later, in 2014, Mellon recorded another Substitution of Trustee in favor of Defendant Western. Defendant Ocwen's sole involvement in the handling of Plaintiff's loan stems from its role as Mellon's loan servicer.

         Western recorded a Notice of Default on the Property on October 14, 2014, which indicated Plaintiff's arrears totaled $77, 976.87 as of October 1 of that year. Thereafter, on June 22, 2015, a Notice of Trustee's Sale was recorded, also by Western, which reported Plaintiff's total unpaid balance on the mortgage as $615, 845.08. Id. at Ex. H. According to that Notice, the sale of the Property was scheduled for July 23, 2015.

         Plaintiff filed the instant lawsuit in this Court on July 6, 2015, arguing that Defendants have not demonstrated their right to foreclose. By Stipulation and Order filed August 19, 2015, the parties agreed to stay their legal proceedings, including the pending foreclosure, until November 13, 2015. Defendants filed a Motion to Dismiss, pursuant to Rule 12(b)(6), for failure to state a claim upon which relief can be granted on November 23, 2015, which this Court GRANTED with leave to amend on August 10, 2016. Plaintiffs filed the First Amended Complaint on August 29, 2016, and Defendants filed the present Motion on September 15, 2016. There is no indication that foreclosure proceedings against the Property have resumed.

         STANDARD

         On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief' in order 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) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations. However, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. (internal citations and quotations omitted). A court is not required to accept as true a “legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the pleading must contain something more than “a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”)).

         Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only ‘fair notice' of the nature of the claim, but also ‘grounds' on which the claim rests.” Id. (citing Wright & Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.'” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be “freely given” where there is no “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Not all of these factors merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“Leave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility . . . .”)).

         ANALYSIS

         Plaintiff made superficial amendments in the First Amended Complaint which failed to address the insufficiencies of the initial Complaint's allegations. While Plaintiff claims Defendants lack the authority to foreclose on the Property, he makes no factual showing for this allegation and thus fails to meet his burden of proof. Even if Plaintiff had met his burden, Plaintiff lacks standing to challenge Defendants' right to foreclose. Regardless of whether the subsequent transfers of Plaintiff's Deed of Trust were invalid or not, Plaintiff was not the injured party of these faulty assignments and his obligations under the note are unaffected. Since Plaintiff fails to rectify the deficiencies pointed out in the Order granting Defendants' first Motion to Dismiss (ECF No. 26), this Court finds its previous ruling to be equally applicable to the motion presently before the Court.

         The crux of Plaintiff's argument in the First Amended Complaint continues to be that Defendants lacked any authority to institute nonjudicial foreclosure proceedings under California law. According to Plaintiff, this is because his mortgage was transferred without a valid assignment from the original lender, WMC, to Mellon. Plaintiff alleges that the transfer, as initiated by MERS, was ineffective because Mellon has failed to show it paid valuable consideration for Plaintiff's debt allegation in the first place. Pl.'s Am. Compl., ¶ 3. Plaintiff alternatively argues that even if Mellon was indeed a bona fide beneficiary of his mortgage obligation, Plaintiff must be considered an intended beneficiary of the Pooling and Servicing Agreement (“PSA”) under which Mellon, as a Real Estate Mortgage Investment Conduit trust, securitized Plaintiff's loan. Id. at ΒΆ 5. Plaintiff then contends that the trust is the only putative ...


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