Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Monteforte v. Bank of New York Mellon Trust Co.

United States District Court, E.D. California

September 7, 2017

LAWRENCE P. MONTEFORTE, MICHELLE R. MONTEFORTE, EN K. CU, and SEN VAN NGUYEN, Plaintiffs,
v.
THE BANK OF NEW YORK MELLON TRUST COMPANY NA formerly known as THE BANK OF NEW YORK TRUST COMPANY NA as successor in interest to JP MORGAN CHASE BANK NA as trustee for MASTER ADJUSTABLE RATE MORTGAGES TRUST 2005-1, MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2005-1; WELLS FARGO BANK, NA; CLEAR RECON CORP.; and DOES 1 through 100 inclusive, Defendants.

          MEMORANDUM AND ORDER RE: MOTION TO DISMISS FIRST AMENDED COMPLAINT

          WILLIAM B.SHUBB UNITED STATES DISTRICT JUDGE

         Plaintiffs Lawrence Monteforte, Michelle Monteforte, En Cu, and Sen Nguyen (collectively “plaintiffs”) brought this action against defendants the Bank of New York Mellon Trust Company (“Bank of New York”), Wells Fargo Bank, and Clear Recon Corp. (collectively “defendants”) based on defendants' initiation of foreclosure proceedings against them. (Notice of Removal Ex. A, Compl. (Docket No. 1).) After the court dismissed plaintiff's original Complaint, plaintiffs filed their First Amended Complaint asserting a single claim for “Cancellation of Instruments” under California Civil Code §§ 3412-3415, based on essentially the same facts as the original Complaint. Presently before the court is defendants' Motion to Dismiss Plaintiffs' First Amended Complaint. (Docket No. 31.)

         I. Factual and Procedural Background

         In November 2004, plaintiffs Nguyen and Cu[1] recorded a Deed of Trust in favor of National City Mortgage for real property located in Stockton, California. (FAC ¶¶ 2, 7, 13.) Plaintiffs allege that shortly after the Deed of Trust was recorded, National City Mortgage attempted to sell its interest in the Deed of Trust to JP Morgan Chase Bank NA (“Chase”) pursuant to a Pooling and Servicing Agreement (“Pooling Agreement”).[2] (Id. ¶ 14.) The Bank of New York, which is successor to Chase's interest in the Deed of Trust, initiated foreclosure proceedings on the Deed of Trust in 2014 through its foreclosure representative, Clear Recon. (Id. ¶¶ 14, 20-21.) Plaintiffs do not allege that they are not in default on the Deed of Trust, and do not allege that the property has been sold.

         Plaintiffs allege that transfer of the Deed of Trust from National City Mortgage to Chase, and by extension the Bank of New York, never took place because 1) National City Mortgage did not deliver certain documents to Chase within ninety days after execution of the Pooling Agreement, as the Pooling Agreement required, and 2) no assignment of the Deed of Trust to the pool was recorded until May 22, 2014, almost ten years after the Pooling Agreement's transfer deadline had passed. (Id. ¶¶ 16-19.) Thus, in their view, the attempted transfer is void under the Pooling Agreement, and the initiation of foreclosure proceedings against them is unlawful because the Bank of New York does not hold any beneficial interest in the Deed of Trust. (Id. ¶¶ 22-23.)

         II. Legal Standard

         On a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must accept the allegations in the pleadings as true and draw all reasonable inferences in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, ” Twombly, 550 U.S. at 555 (citation omitted), and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         III. Discussion

         Upon review of pleadings, the court finds that dismissal of plaintiffs' First Amended Complaint is appropriate on three independent bases.

         First, plaintiffs do not have standing to challenge an assignment before a foreclosure sale has occurred. In Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919 (2016), the California Supreme Court held that a borrower has standing to challenge an assignment of a deed of trust as void, [3] at least where a foreclosure sale has occurred. Id. at 941 (“When a property has been sold at a trustee's sale at the direction of an entity with no legal authority to do so, the borrower has suffered a cognizable injury.”). However, the Yvanova court expressed no opinion as to whether a borrower has standing to challenge an assignment before a foreclosure sale has occurred. The California Court of Appeal in Saterbak v. JPMorgan Chase Bank, N.A., 245 Cal.App.4th 808, 815 (4th Dist. 2016), explained that Yvanova “is expressly limited to the post-foreclosure context, ” and held that post-Yvanova, borrowers have no standing to preemptively challenge a wrongful foreclosure based on an alleged defect in an assignment. As no foreclosure sale has occurred on the property at issue in this case, dismissal is appropriate on that basis.

         Second, plaintiffs have no standing to challenge the assignment because they are not parties to the assignment. As explained by Saterbak, “Yvanova recognizes borrower standing only where the defect in the assignment renders the assignment void, rather than voidable, ” and “Yvanova expressly offers no opinion as to whether, under New York law, an untimely assignment to a securitized trust made after the trust's closing date is void or merely voidable.” Id. Where a transaction is merely voidable, only the parties to the transaction may challenge any defects in the transaction. Yvanova, 62 Cal.4th at 936.

         Under New York law, an act in violation of a trust agreement renders an assignment not void, but voidable. See Rajamin v. Deutsche Bank Nat'l Tr. Co., 757 F.3d 79, 87-90 (2d Cir. 2014) (holding that “any failure to comply with the terms of the PSAs” did not render the acquisition of plaintiffs' mortgages void because, among other things, under New York law, unauthorized acts by trustees are not void but voidable); In Re Turner, 859 F.3d 1145 (9th Cir. 2017) (affirming dismissal of wrongful foreclosure claim challenging assignment of deed of trust because any failure to comply with pooling agreement's deadline rendered transfer voidable but not void, applying New York and California law and citing Rajamin and Saterbak); Saterbak, 245 Cal.App.4th at 815 (under New York law, untimely assignment to a securitized trust made after trust's closing date was merely void, and thus borrower had no standing to challenge assignment, citing Rajamin).[4] Accordingly, plaintiffs in this case, who are not parties to the assignment, have no standing to challenge the assignment and subsequent foreclosure based on any alleged defects in the assignment. Thus, dismissal is appropriate on this second basis.

         Third, plaintiffs' cancellation of instruments claim fails because they have not properly alleged that the assignment caused them the requisite injury under the statute. A borrower seeking to cancel an assignment under California Civil Code § 3412 must allege that the assignment could cause that borrower serious injury.[5] As explained by Saterbak, an assignment causes no serious injury if a borrower's obligations remained unchanged after the assignment, even if she faces the possibility of losing her home or harm to her credit based on a subsequent foreclosure, as that harm is caused by her default, not the assignment. 245 Cal.App.4th at 818-20. Here, plaintiffs cannot and have not alleged serious injury under Section 3412, because their ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.