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Silas v. Argent Mortgage Co., LLC

United States District Court, E.D. California

July 21, 2017

RODRICK J. SILAS, Plaintiff,
v.
ARGENT MORTGAGE COMPANY, LLC ITS SUCCESSORS AND/OR ASSIGNS; and DOES 1-25, Inclusive, Defendants.

          MEMORANDUM DECISION AND ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND GRANTING INTERVENOR DEEFENDANT'S MOTION TO DISMISS AND MOTION TO EXPUNGE LIS PENDENS (ECF Nos. 4, 5, 6, 13)

          LAWRENCE J. O'NEILL UNITED STATES CHIEF DISTRICT JUDGE

         I. INTRODUCTION

         Pro se Plaintiff Rodrick Silas (“Plaintiff” or “Silas”) brings this action against Defendant Argent Mortgage Company, LLC, Its Successors And/Or Assigns (“Argent”) and Does 1 through 50, and intervenor Defendant U.S. Bank (“US Bank” or “Intervenor Defendant”). Plaintiff alleges violations of the Federal Truth in Lending Act (“TILA”), and brings causes of action for quiet title, cancellation of instrument, and declaratory relief related to real property at 5914 Summer Country Drive, Bakersfield, CA 93313 (“Subject Property”).

         This action stems from Plaintiff's unsuccessful attempts to halt foreclosure on the Subject Property. Now before the Court is Intervenor Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) & (6) (ECF No. 4), Intervenor Defendant's Motion to Expunge Lis Pendens (ECF No. 5), and Plaintiff's motion for remand (ECF No. 13). Venue is proper in this Court and this matter is suitable for disposition without oral argument. See Local Rule 230(g).

         II. BACKGROUND

         1. Plaintiff's Loan

         On August 8, 2006, Plaintiff executed a promissory note, in favor of Argent Mortgage, secured by the Subject Property through a Deed of Trust recorded on August 16, 2006. (FAC Ex. A.) On August 14, 2012, an Assignment of Deed of Trust was recorded indicating that Argent assigned all beneficial interest under the Deed of Trust to U.S. Bank. (FAC Ex. B.) A Notice of Default and Election to Sell Under Deed of Trust was recorded the same day, as Plaintiff was $55, 987.58 in arrears at the time. (Request for Judicial Notice (“RJN”) Ex. 1.)[1] On December 7, 2012, National Default Servicing Corporation was substituted in as Trustee. (RJN Ex. 2.) On December 21, 2012, a Notice of Trustee's Sale was recorded. (RJN Ex. 3.)

         2. Initial State Court Action and Rescission

         On April 1, 2014, Plaintiff filed a complaint for quiet title and wrongful foreclosure against U.S. Bank in Kern County Superior Court (“Initial State Court Action”). (RJN Ex. 4.) In an amended complaint in the same action, Plaintiff alleged that U.S. Bank had no ownership interest in Plaintiff's loan, that the Note and Deed of Trust had been separated, that the security instrument was not assigned to the Trust or pool prior to its closing date, and that the substitution of trustee was invalid under Civil Code § 2934(a)(1)(A). (RJN Ex. 5.) Plaintiff requested quiet title, cancellation of the recorded Assignment of Deed of Trust, and a judicial declaration that title was vested in Plaintiff. (Id.)

         On February 25, 2015, U.S. Bank filed a demurrer on the grounds that the amended complaint failed to state a claim for relief, arguing that the assignment was valid under state law and that the loan had been properly transferred to U.S. Bank. (RJN Ex. 6.) The state court sustained U.S. Bank's demurrer without leave to amend and entered judgment of dismissal with prejudice in favor of U.S. Bank in April of 2015. (RJN Exs. 7-9.)

         On July 6, 2015, Plaintiff allegedly mailed a Notice of Rescission to the loan servicer, Select Portfolio Servicing, Inc. (“SPS”). (ECF No. 1 at 21.)

         3. Initiation of the Instant Action

         Plaintiff filed a complaint in the instant action on October 9, 2015, in the Kern County Superior Court against Argent, the original lender, regarding the subject property (“Instant Action”). (ECF No. 1 at 5 (Docket).) Plaintiff's January 7, 2016 amended complaint alleged violations of TILA, and requested quiet title, cancellation of instruments, and declaratory relief. (First Amended Complaint (“FAC”).) Plaintiff recorded a Notice of Pendency of Action related to the Instant Action on March 18, 2016. (RJN Ex. 10.)

         4. Federal Court Action and Foreclosure Sale

         A Notice of Trustee's Sale was recorded on December 16, 2016, setting a sale date of January 11, 2017. (RJN Ex. 11.) On January 4, 2017, Plaintiff filed a complaint in this district against SPS and U.S. Bank (“Federal Court Action”). The case was assigned to Judge Drodz, who denied Plaintiff's motion for a temporary restraining order halting the foreclosure sale. (RJN Ex. 13.) A foreclosure sale occurred on January 11, 2017, and the subject property reverted to the U.S. Bank as evidenced by a recorded Trustee's Deed Upon Sale. (RJN Ex. 14.)

         In its amended complaint in the Federal Court Action, Plaintiff alleged violations of TILA, rescission of mortgage under TILA, declaratory relief, quiet title, and cancellation of instruments. (RJN Ex. 15.) On March 17, 2017, SPS and U.S. Bank filed a motion to dismiss the Federal Court Action (RJN Ex. 16.) On May 19, 2017, the court filed an order granting the motion to dismiss, concluding that the majority of Plaintiff's claims were barred by res judicata and that Plaintiff's TILA claims were time-barred. (RJN Ex. 17.) Silas v. Select Portfolio Servicing, Inc., No. 1:17-CV-00012-DAD-JLT, 2017 WL 2214937, at *4 (E.D. Cal. May 19, 2017) (“Silas I”). In its decision, the Court held that Plaintiff's non-TILA claims were barred by claim preclusion because the claims related to the same primary right previously litigated to final judgment in the Initial State Court Action. Id. at *4-5. With respect to Plaintiff's TILA claims, the Court held that they were time-barred since rescission was only available for three years after consummation of the loan agreement and the time limit was not subject to equitable tolling. Id. at 5-6. A judgment of dismissal was entered the same day. (RJN Ex. 18.)

         5. US Bank's Intervention in and Removal of the Instant Action

         While the motion to dismiss the Federal Court Action was pending, U.S. Bank moved to intervene in the Instant Action on March 29, 2016. (ECF No. 1 at 178.) The motion to intervene was granted by the state court on May 12, 2017. (ECF No. 1 at 2.) On May 18, 2017, one day after the district court dismissed the Federal Court Action, Defendant filed a Notice of Removal pursuant to 28 U.S.C. § 1441 and the case was removed to this Court. (ECF No. 1.)

         On May 25, 2017, Intervenor Defendant filed a motion to dismiss the Instant Action for lack of jurisdiction and a motion to expunge lis pendens. (ECF Nos. 4, 5.) Intervenor Defendant also filed a simultaneous request for judicial notice. (ECF. No. 6.) On June 9, 2017, Plaintiff filed an opposition to Defendant's motion to dismiss (ECF No. 8), motion to expunge lis pendens (ECF No. 7) and request for judicial notice (ECF No. 9). Intervenor Defendant filed replies to all three motions on June 15, 2017. (ECF Nos. 10, 11, 12.)

         On June 15, 2017, Plaintiff filed a motion for remand. (ECF No. 13). Intervenor Defendant opposed the motion. (ECF No. 16.) To date, Plaintiff has not submitted a reply. All pending motions are ripe for review.

         III. MOTION FOR REMAND

         Because “determination of the remand issue will facilitate litigation in the appropriate forum, ” and because “judicial economy will be best served by addressing the remand issue, ” the Court first considers the motion for remand. Smith v. Mail Boxes, Etc., 191 F.Supp.2d 1155, 1157 (E.D. Cal. 2002) (internal quotation marks and citations omitted). A state-court defendant may remove a case from state to federal court if the federal courts would have original jurisdiction over the case. 28 U.S.C. § 1441(a). To accomplish this task, the removing defendant files a notice of removal in the federal district court in the district and division within which the state court action was pending. 28 U.S.C. § 1446(a). The notice must contain “a short and plain statement of the grounds for removal”-in this case relying on this Court's federal question jurisdiction over Plaintiff's TILA claims, see 28 U.S.C. § 1331, together with a copy of “all process, pleadings, and orders” served previously on the removing defendant. 28 U.S.C. § 1446(a). The plaintiff may then challenge the removal on the basis that the requirements for subject-matter jurisdiction have not been met.

         District courts have “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Determination of federal question jurisdiction “is governed by the ‘well-pleaded complaint rule, ' which provides that federal jurisdiction exists only when a federal question is presented on the face of plaintiff's properly pleaded complaint.” Caterpillar, 482 U.S. at 392. To invoke federal question jurisdiction, a complaint must establish “either that (1) federal law creates the cause of action or that (2) plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.” Williston Basin Interstate Pipeline Co. v. An Exclusive Gas Storage & Easement, 524 F.3d 1090, 1100 (9th Cir. 2008).

         Plaintiff does not contest that this Court has subject matter jurisdiction over his TILA claims. Rather, Plaintiff contends that remand is proper because (1) Intervenor Defendant's removal was not timely, and (2) Intervenor Defendant does not have standing to remove the case. Plaintiff's argument is flawed on both counts. (ECF No. 13.)

         First, Plaintiff argues that the thirty-day window for Intervenor Defendant to remove the case did not run from the order granting intervention, but rather from the time when defendant was served with the summons and complaint. Plaintiff notes that Intervenor Defendant was not ever served with the summons and complaint. (ECF No. 13 at 6.)

         Section 1446(b)(1) provides: “The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based . . . .” Where multiple defendants are served with the complaint at different times, the Ninth Circuit has held that “each defendant is entitled to thirty days to exercise his removal rights after being served.” Destfino v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011) (“There is no reason to lock an earlier-served defendant out of the federal forum, if he later chooses to consent.”). In other words, a later-served defendant may, with consent of an earlier served defendant, remove a case to federal court even if the earlier served defendant has missed the thirty-day window to do so. Id. (concluding that the later-served rule prevents “binding later-served defendants to decisions made before they were joined”).

         “Intervenors may file notices of removal if they are properly aligned as defendants . . . .” 14C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3730 (4th online ed. 2014). Intervenor Defendant became “properly aligned” as a defendant when the Kern County Superior Court granted their motion to intervene on May 12, 2017. See Kirkbride v. Cont'l Cas. Co., 933 F.2d 729, 733 (9th Cir. 1991) (30-day period began to run when intervenor was made a party to the case); Tucker v. Equifirst Corp., 57 F.Supp.3d 1347, 1349 (S.D. Ala. 2014) (“Once its motion to intervene was granted, U.S. Bank was properly aligned as a defendant to the original complaint. . . . Thus, if the case was then removable, the 30-day period began to run when the motion to intervene was granted.”). Intervenor Defendant's thirty-day window to remove began to run when the state court granted its motion to intervene on May 12, 2017. Intervenor Defendant removed this case within thirty days of becoming a defendant in the case, on May 25, 2017. Defendant Argent, the only other named defendant in the action, consented to the filing of the notice of removal. (ECF No. 1 at 2.) Therefore, removal of this case to federal court was timely.

         Second, Plaintiff contends that Intervenor Defendant lacks standing to remove the case because U.S. Bank is a “debt collector” within the meaning of the Fair Debt Collections Practices Act (“FDCPA”) and therefore has no pecuniary or equitable interest in the alleged debt obligation on Plaintiff's property. (ECF No. 13 at 7-8.) Plaintiff also appears to question the state court's decision to allow U.S. Bank to intervene, arguing that they have no “direct or immediate interest in the action.” (ECF No. 13 at 9.) As Intervenor Defendant points out in its opposition, U.S. Bank is not a debt collector within the meaning of the FDCPA. ECF No. 16 at 2. As the Supreme Court recently concluded in a case concerning an entity that purchased loans in default for its own account, “[i]ndividuals and entities who regularly purchase debts originated by someone else and then seek to collect those debts for their own account are not ‘debt collectors' subject to the FDCPA.” Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017). U.S. Bank was likewise assigned all beneficial interest in the subject property under the Deed of Trust on August 14, 2012. U.S. Bank owned the loan which was secured by the property, and it now owns the property after the non-judicial foreclosure sale. U.S. Bank is not a debt collector within the meaning of the FDCPA.

         Moreover, as the purchaser of Plaintiff's mortgage debt, which is the subject of Plaintiff's Complaint, Intervenor Defendant is a real party in interest with standing to remove this case. The state court properly granted U.S. Bank's motion to intervene because U.S. Bank clearly has an “interest relating to the property or ...


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