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Cho v. Select Portfolio Servicing, Inc.

United States District Court, E.D. California

September 6, 2017

JUNG HYUN CHO, et al., Plaintiff,
v.
SELECT PORTFOLIO SERVICING, INC., et al., Defendant.

          FINDINGS AND RECOMMENDATIONS

          CAROLYN K. DELANEY UNITED STATES MAGISTRATE JUDGE

         Plaintiffs, who proceed pro se, commenced this action on May 22, 2017, alleging various claims related to two mortgages obtained in 2004 and subsequent foreclosure proceedings.[1] (ECF No. 1.) Defendants have filed numerous motions to dismiss and motions for more definite statement. (ECF Nos. 17, 19, 22, 23, 30, 32.) Plaintiffs have since filed numerous other motions. (ECF Nos. 43, 44, 47, 79.) These motions came on regularly for hearing on August 23, 2017 at 10:00 am. (ECF No 80.) Present at the hearing were pro se plaintiffs Jung Hyun Cho, Kyu Hwang Cho, and Eun Sook Cho; plaintiff Eui Hyun Cho did not appear. Present for defendants were Raymond Bangle for Solano County Tax Assessor (“Solano County”) and Joe Aguilar for Select Portfolio Servicing, Inc. (“SPS”) and Deutsche Bank National Trust Company (“Deutsche”). Appearing telephonically for defendants were Joel Spann for Bank of America (“BOA”), Jamie Ackerman for WMC Mortgage LLC (“WMC”), and Christine Howson for The Wolf Firm. Upon review of the documents in support and opposition, upon hearing the arguments of counsel, and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:

         I. BACKGROUND

         On September 14, 2004, plaintiff Jung Hyun Cho obtained two loans from WMC for $472, 000 and $118, 000, to acquire the property located at 681 Tuscany Court, Fairfield, California 94534.[2] (ECF No. 33 at 5-21, 23-33.) Notices of Default were recorded on September 11, 2009 (ECF No. 24 at 23-25), March 21, 2012 (ECF No. 24 at 29-32), and August 28, 2014 (ECF Nos. 24 at 36-39). On October 31, 2016, Deutsche purchased the property at 681 Tuscany Court through a trustee's sale. (See ECF Nos. 24 at 41-42; 33 at 43-45.)

         Deutsche subsequently filed an action for unlawful detainer against the Chos on April 6, 2017 in state court, based upon their failure to vacate the property after allegedly receiving a 90 day Notice to Quit. (Solano Cty. Super. Ct. FCM154163, Complaint.) On July 5, 2017, the Chos attempted to remove the case to federal court. (E.D. Cal.) 2:17-cv-01357-MCE-DB, Notice of Removal. However, United States District Judge Morrison C. England, Jr. remanded the matter to Solano County Superior Court for lack of federal subject matter jurisdiction. Id., Order dated July 11, 2017. After remand, on August 3, 2017, the Solano County Superior Court granted summary judgment in favor of Deutsche and against the Chos. (ECF No. 56-1.)

         Plaintiffs filed the complaint before this court on May 22, 2017. (ECF No. 1.) Liberally construed, plaintiffs' complaint appears to raise the following claims against defendants: (1) violation of plaintiffs' civil rights against discrimination in housing and unreasonable searches and seizures; (2) violation of the Racketeering Influenced and Corruption Organizations Act (“RICO”); (3) violation of the Home Affordable Modification Program (“HAMP”); (4) violations of the False Claims Act (FCA); (5) violation of California Civil Code § 2923.7; (6) wrongful foreclosure; (7) improperly assessing property tax; (8) unfair business practices; (9) breach of contract; (10) breach of fiduciary duty; (11) fraud; (12) undue influence; (13) negligence; (14) negligent infliction of emotional distress; (15) intentional infliction of emotional distress; (16) invasion of privacy; (17) vandalism/theft; and (18) trespass. (See Id. at 4-20.)

         By June 23, 2017, each defendant, except for Ronald Lee, had filed a motion to dismiss. (See ECF Nos. 17, 19, 23, 30, 32.) BOA had also filed a separate motion for a more definite statement. (ECF No. 22.) Plaintiffs subsequently filed a motion for judgment on the pleadings (ECF No. 43), a motion to strike (ECF No. 44), and a motion for preliminary injunction (ECF No. 47). Defendants filed various oppositions. (See ECF Nos. 52, 53, 54, 55, 57, 58, 59, 60.) Each of these motions was set for hearing on August 23, 2017 at 10:00 am.

         Meanwhile, on August 11, 2017, plaintiffs filed a motion for emergency temporary restraining order and preliminary injunction, to prevent defendants from enforcing the August 3, 2017 state court order granting summary judgment against the Chos. (See ECF No. 61.) On August 15, 2017, the court denied plaintiffs' motion without prejudice, as procedurally defective. (See ECF No. 70.) The court also ordered plaintiffs to show cause why this case should not be dismissed due to lack of subject matter jurisdiction. (Id. at 5.) On August 22, 2017, plaintiffs moved for reconsideration of the order and order to show cause. (ECF No. 79.)

         On August 23, 2017, all of the pending motions were heard before the undersigned. (ECF No. 80.) During the hearing, plaintiffs admitted that they have vacated the property at 681 Tuscany Court, as a result of the state court unlawful detainer judgment. (Solano Cty. Super. Ct. FCM154163.) Speaking on behalf of plaintiffs, Kyu Hwang Cho asserted that, if granted leave to amend their complaint, plaintiffs can state claims under federal question subject matter jurisdiction.

         For the foregoing reasons, the undersigned recommends defendants' motions to dismiss be GRANTED; plaintiffs' complaint be DISMISSED WITHOUT LEAVE TO AMEND; and plaintiffs' remaining motions be DENIED AS MOOT.

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 12(b)(1) allows a defendant to raise the defense, by motion, that the court lacks jurisdiction over the subject matter of an entire action or of specific claims alleged in the action. A federal court 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).

         A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F.Supp.2d 1104, 1109 (E.D. Cal. 2009). Under the “notice pleading” standard of the Federal Rules of Civil Procedure, a plaintiff's complaint must provide, in part, a “short and plain statement” of plaintiff's claims showing entitlement to relief. Fed.R.Civ.P. 8(a)(2); see also Paulsen v. CNF, Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         In considering a motion to dismiss for failure to state a claim, the court accepts all of the well-pled factual allegations in the complaint as true and construes them in the light most favorable to the plaintiff. Corrie v. Caterpillar, Inc., 503 F.3d 974, 977 (9th Cir. 2007). The court is “not, however, required to accept as true conclusory allegations that are contradicted by documents referred to in the complaint, and [the court does] not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Paulsen, 559 F.3d at 1071.

         III. DISCUSSION

         A. Jurisdictional Threshold

         The federal courts are courts of limited jurisdiction. See U.S. Const. art. III, § 2, cl. 1. In the absence of a basis for federal jurisdiction, plaintiffs' claims cannot proceed in this venue.

         1. Standing

         “Lack of standing deprives this court of Article III jurisdiction.” Ctr. for Biological Diversity v. Mattis, No. 15-15695, 2017 WL 3585638, at *6 (9th Cir. Aug. 21, 2017) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04 (1998)). 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).

         Plaintiffs have the burden of establishing Article III standing. Colwell v. Dep't of Health and Human Servs., 558 F.3d 1112, 1121 (9th Cir.2009). To meet that burden, they “must establish ‘the irreducible constitutional minimum of standing, ' consisting of three elements: injury in fact, causation, and a likelihood that a favorable decision will redress the plaintiff's alleged injury.” Lopez v. Candaele, 630 F.3d 775, 785 (9th Cir. 2010) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). To establish an injury in fact, they must show that they have suffered “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560.

         Generally, “[a] person who is not a party to a contract does not have standing either to seek its enforcement or to bring tort claims based on the contractual relationship.” Ambers v. Wells Fargo Bank, N.A., 2014 WL 883752, at *4 (N.D. Cal. Mar. 3, 2014) (citing Mega Life & Health Ins. Co. v.Super. Ct., 172 Cal.App.4th 1522, 1528-32 (Cal.Ct.App. 2009)). As a result, courts have found that persons who are not parties to mortgage loans lack standing to bring foreclosure related claims such as: civil RICO claims, negligent misrepresentation, fraud, wrongful foreclosures, quiet title, and injunctive relief. See Green v. Central Mortgage Co., 2015 WL 5157479, at *4 (N.D. Cal. Sept. 2, 2015) (collecting case authorities).

         Here, Jung Hyun Cho is the only plaintiff listed as a borrower on the mortgages at the heart of plaintiffs' complaint. (See ECF No. 33 at 5-21, 23-33.) Plaintiffs Kyu Hwang Cho, Eun Sook Cho, and Eui Hyun Cho are not parties to these mortgages. (Id.) Therefore, at a minimum, Kyu Hwang Cho, Eun Sook Cho, and Eui Hyun Cho lack standing to bring claims two through six, and eight through thirteen-RICO violations; HAMP violations; FCA violations; violation of California Civil Code ยง 2923.7; wrongful foreclosure; unfair business practices; breach of contract; breach of ...


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