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Diaz v. Nationstar Mortgage LLC

United States District Court, S.D. California

February 27, 2018

MARIA ANTONIA DIAZ, Plaintiff,
v.
NATIONSTAR MORTGAGE LLC; and CLEAR RECON CORP., Defendants.

          ORDER GRANTING DEFENDANT NATIONSTAR MORTGAGE LLC'S MOTION TO DISMISS; AND [DOC. NO. 4] GRANTING IN PART AND DENYING AS MOOT IN PART DEFENDANT NATIONSTAR MORTGAGE LLC'S REQUEST FOR JUDICIAL NOTICE [DOC. NO. 4-4]

          HON. MICHAEL M. ANELLO UNITED STATES DISTRICT JUDGE

         Plaintiff Maria Diaz (“Plaintiff”) filed a Complaint against Defendants Nationstar Mortgage LLC (“Nationstar”) and Clear Recon Corp. in the Superior Court for the County of San Diego alleging five causes of action for: (1) violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692f(6); (2) violations of §§ 1692 et seq. of the FDCPA; (3) violations of California Civil Code § 2934(a)(1)(A); (4) cancellation of instruments; and (5) violations of California's Unfair Competition Law (“UCL”). See Doc. No. 1-2 (hereinafter “Complaint”). On August 9, 2017, Defendants removed the action to this Court. See Doc. No. 1. Nationstar moves to dismiss Plaintiff's Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. No. 4. Plaintiff filed an opposition to Nationstar's motion, to which Nationstar replied. See Doc. Nos. 5, 7. The Court found the matter suitable for determination on the papers and without oral argument pursuant to Civil Local Rule 7.1.d.1. See Doc. No. 9. For the reasons set forth below, the Court GRANTS Nationstar's motion to dismiss.

         Background [1]

         On June 30, 2003, Plaintiff obtained a loan from Home Equity Mortgage in the amount of two hundred seventy-six thousand and five hundred dollars ($276, 500.00) to purchase the real property located at 1010 Beechglen Dr., Chula Vista, California, 91910. Complaint at 2, 15.[2] The loan was secured by a deed of trust. Complaint at 15; Doc. No. 12 at 43. Home Equity Mortgage recorded the Deed of Trust and Promissory Note with the San Diego Recorder's office. Complaint at 15. In May 2010, Plaintiff fell behind on her payments. Complaint at 16. In May 2011, former servicer, Bank of America, executed and recorded a Notice of Default on Plaintiff's property. Complaint at 17; Doc. No. 12 at 66.

         In July 2011, Mortgage Electronic Registration Systems, Inc. executed a Corporation Assignment of Deed of Trust assigning all beneficial interest to The Bank of New York Mellon FKA The Bank of New York as Trustee for the Certificateholders of CWMBS, Inc., The Alternative Loan Trust 2003-20CB Mortgage Pass-Through Certificates, Series 2003-51 (“BONY as Trustee of the 2003-20CB Trust”). Complaint at 17; Doc. No. 12 at 70. Plaintiff alleges the Corporation Assignment of Deed of Trust “conveyed no interest to the alleged debt because it was executed by one without authority, ” “executed outside of the four corners of the agreement that governs the 2003- 20CB Trust, ” and “assigned when the debt was in default.” Complaint at 17. On March 21, 2013, Plaintiff filed for Chapter 7 bankruptcy. See Doc. No. 4-1 (hereinafter “RJN”), Exh. 10. The Bankruptcy Court discharged Plaintiff's debt on June 26, 2013. RJN, Exh. 12.

         In May 2015, another Assignment of Deed of Trust assigned all beneficial interest to BONY as Trustee of the 2003-20CB Trust. Complaint at 17; Doc. No. 12 at 71. As with the first Corporation Assignment of Deed of Trust, Plaintiff alleges the assignment “did not convey any interest to BONY as Trustee of the 2003-20CB Trust because it was executed by one without authority, executed outside of the four corners of the agreement that governs the 2003-20CB Trust, and assigned when the debt was in default.” Complaint at 17.

         In December 2016, Defendant Clear Recon Corp. executed and recorded a Notice of Default on Plaintiff's property. Complaint at 18; Doc. No. 12 at 73. Plaintiff alleges Clear Recon Corp. is not “either the original trustee, duly appointed substituted trustee[, ] or agent of the holder of the beneficial interest under” the 2003 Deed of Trust. Complaint at 18.

         In April 2017, Clear Recon Corp. recorded a Notice of Trustee's Sale. Complaint at 19; Doc. No. 12 at 78. On June 7, 2017, Plaintiff was notified that the debt ownership was transferred to NRZ Pass-Through Trust IV c/o Citibank. Complaint at 18; Doc. No 12 at 77. In May 2017, Specialized Loan Servicing, LLC, who acquired the debt, informed Plaintiff that it would transfer the debt servicing to Nationstar. Complaint at 16. On June 27, 2017, Nationstar notified Plaintiff that it acquired the servicing of Plaintiff's debt effective June 16, 2017. Complaint at 16; Doc. No 12 at 61. On July 14, 2017, Plaintiff filed for Chapter 13 bankruptcy. RJN, Exh. 13. The Bankruptcy Court dismissed the case without prejudice on July 31, 2017. RJN, Exh. 14.

         Plaintiff alleges that Nationstar now attempts to proceed with a non-judicial foreclosure, prohibited by the FDCPA. Complaint at 13, 16. Additionally, “since acquiring the servicing of the alleged debt, ” Nationstar “has been harassing Plaintiff by attempting to collect a debt” and “engag[ing] in other unlawful collection practices[.]” Complaint at 16, 22.

         Based upon these allegations, Plaintiff commenced the instant action against Defendants on July 21, 2017 alleging: (1) violations of Section 1692f(6) of the FDCPA; (2) violations of Sections 1692 et seq. of the FDCPA; (3) violations of California Civil Code § 2934a(1)(A); (4) cancellation of instruments; and (5) violations of the UCL. See Complaint at 20-29.

         Legal Standards

         A. Request for Judicial Notice

         Generally, a district court's review on a 12(b)(6) motion to dismiss is “limited to the complaint.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled on other grounds by Galbraith v. Cnty. Of Santa Clara, 307 F.3d 1119, 1125-26 (9th Cir. 2002) (quoting Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993)). However, “a court may take judicial notice of matters of public record, ” id. at 689 (internal quotations omitted), and of “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, ” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith, 307 F.3d at 1125-26; see also Fed. R. Evid. 201. “A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b); see also Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986) (citing Sears, Roebuck & Co. v. Metropolitan Engravers, Ltd., 245 F.2d 67, 70 (9th Cir. 1956)).

         B. Rule 12(b)(6)

         A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is plausible on its face.” Fed.R.Civ.P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plausibility standard thus demands more than a formulaic recitation of the elements of a cause of action, or naked assertions devoid of further factual enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint “must contain allegations of underlying facts sufficient to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

         In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The court need not take legal conclusions as true merely because they are cast in the form of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

         In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). “A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment.” Id.; see also Lee, 250 F.3d at 688. “However, [courts] are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint.” Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th Cir. 1998). Where dismissal is appropriate, a court should grant leave to amend unless the plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).

         Discussion

         A. Nationstar's Request for Judicial Notice

         Nationstar requests the Court take judicial notice of various documents in support of its motion to dismiss. See RJN. Plaintiff filed an opposition to Nationstar's request for judicial notice, arguing that the “proffered documents are disputed and constitute[] inadmissible hearsay.” Doc. No. 6 at 3. Specifically, Nationstar requests the Court take judicial notice of the following fourteen (14) documents:

1. Exhibit 1 - Deed of Trust, recorded on July 7, 2003;
2. Exhibit 2 - Assignment of Deed of Trust, recorded on October 20, 2003;
3. Exhibit 3 - Notice of Default and Election to Sell Under Deed of Trust, recorded on May 23, 2011;
4. Exhibit 4 - Substitution of Trustee, recorded on July 5, 2011;
5. Exhibit 5 - Corporation of Assignment of Deed of Trust, recorded ...

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