United States District Court, E.D. California
ORDER GRANTING DEFENDANT'S REQUEST FOR JUDICIAL
NOTICE AND GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
L. Nunley, United States District Judge.
matter is before the Court pursuant to Defendant Seterus,
Inc.'s (“Defendant”) Motion to Dismiss. (ECF
No. 30.) Plaintiffs Kenneth and Bonnie Akins
(‘Plaintiffs”) oppose Defendant's motion.
(ECF No. 31.) Defendant filed a Reply. (ECF No. 32.) Having
carefully considered the briefing filed by both parties, the
Court hereby GRANTS in part and DENIES in part
Defendant's Motion to Dismiss.
Factual and Procedural Background
following allegations are taken from Plaintiffs' Second
Amended Complaint (“SAC”). (ECF No. 29.) In
September 2007, Plaintiffs obtained a mortgage to purchase
their home in Elk Grove, California. (See ECF No. 29
¶ 19.) In June 2009, Plaintiffs refinanced their
mortgage with Sierra Pacific Mortgage Company, Inc. (ECF No.
29 ¶ 20.) The promissory note (“Note”)
detailed the terms of Plaintiffs' refinanced mortgage,
including the interest rate for monthly payments, late fees,
and other related terms. (ECF No. 31 at 28-29.)
Plaintiffs state their monthly payments were between $2600
and $3000 a month. (ECF No. 29 ¶ 21.) On September 16,
2013, Plaintiffs made a mortgage payment in the amount of $5,
646.63 to Bank of America, N.A. (“BANA”).
(See ECF No. 29 ¶ 22.) Plaintiffs did not
specify that any of the $5, 646.63 payment in excess of their
September payment due was to be applied as principle, and
their September 2013 payment due was $2, 764.94.
(See ECF No. 29 ¶¶ 23, 29.) Plaintiffs
believed that the additional monies would go toward their
October mortgage payment. (See ECF No. 29 ¶
23.) BANA, however, allocated the first half of the payment
to the balance due for September 2013 and allocated the rest
to the total balance of principal owed. (See ECF No.
29 ¶ 29.) Section 4 of the Note on Plaintiffs'
mortgage includes terms on how prepayments are to be applied.
(ECF No. 29 ¶ 20; See also ECF No. 30 at 21.)
Plaintiffs argue that Section 4 requires that their monthly
payments be applied to their mortgage payments unless
otherwise directed. (See ECF No. 29 ¶¶ 20,
23, 29.) Because of the way BANA allocated the funds, the
October 2013 payment was never processed. (See ECF
No. 29 ¶¶ 23, 25, 29.) Thus, Plaintiffs' loan
was labeled as overdue when Plaintiffs did not make any
additional payments for October 2013. (See ECF No.
29 ¶¶ 27-29, 31.)
transferred Plaintiffs' loan to Defendant on December 1,
2013. (ECF No. 29 ¶ 24.) In January 2014, Plaintiffs
began paying Defendant as their new loan servicer. (ECF No.
29 ¶ 26.) Defendant began charging Plaintiffs late fees
and other charges due to BANA's allocation of money for
October. (ECF No. 29 ¶¶ 27-29.) Defendant informed
Plaintiffs they were behind on their mortgage payments.
(See ECF No. 29 ¶ 28.) Plaintiffs inquired as
to how they were behind on their payments. (ECF No. 29 ¶
28.) In response, Defendant sent a letter on June 16, 2014,
explaining that the loan was considered delinquent and
Defendant was applying Plaintiffs' more recent payments
to what Defendant considered to be prior outstanding
payments. (ECF No. 29 ¶¶ 28- 29.)
23, 2015, Defendant sent Plaintiffs another letter explaining
that the latter half of the September payment had been
applied to the balance of principle due and not to the
October monthly payment. (See ECF No. 29 ¶ 29.)
Plaintiffs maintain that Defendant failed to review the terms
of Section 4 to ensure that their payments were properly
applied. (See ECF No. 29 ¶ 30.) Plaintiffs also
maintain that Defendant did not make any effort to remedy the
misapplied payment to help bring the account current. (ECF
No. 29 ¶ 30.)
allege that in the Fall of 2015, Defendant stopped taking
Plaintiffs' mortgage checks and did not credit payments
to their account. (ECF No. 29 ¶ 32.) Plaintiffs also
maintain that Defendant reported Plaintiffs to credit
reporting agencies which damaged their credit rating. (ECF
No. 29 ¶ 33.) Because Defendant had reported late and
missing payments, including payments they refused to accept,
Plaintiffs' credit scores dropped significantly.
(See ECF No. 29 ¶ 35.) Plaintiffs were denied a
car loan entirely when they attempted to purchase a new
vehicle; Plaintiffs allege they were forced to instead select
a used car on a loan with an interest rate significantly
above market. (See ECF No. 29 ¶ 36.)
filed suit against Defendant on July 15, 2016, and filed the
instant SAC on January 5, 2018. (ECF Nos. 1, 29.) Plaintiffs
seek damages, attorneys' fees, and injunctive relief
preventing Defendant from selling or otherwise transferring
title to Plaintiffs' home. (See ECF No. 29 at
Request for Judicial Notice
conjunction with Defendant's motion to dismiss, Defendant
requests that the Court take judicial notice of the
following: (1) Plaintiffs' Deed of Trust; (2) the
Corporation Assignment of the Deed of Trust; (3) the
Substitution of Trustee; (4) a Notice of Default and Election
to Sell under Deed of Trust; (5) a Notice of Utility Lien,
and (6) an Order Granting in Part Defendant's Motion to
Dismiss. (See ECF No. 30-1 at 2-3.) The first five
of these documents were publicly recorded in the Official
Records of Sacramento County. (See ECF No. 30-1 at
2-3.) The sixth document, the Order Granting in Part
Defendant's Motion to Dismiss, was issued by this Court.
(ECF No. 30-1 at 3.)
shall take judicial notice if requested by a party and
supplied with the necessary information. See Fed. R.
Evid. 201(c). “The court may judicially notice a fact
that is not subject to reasonable dispute because it: (1) is
generally known within the trial court's territorial
jurisdiction; or (2) can be accurately and readily determined
from sources whose accuracy cannot reasonably be
questioned.” Fed.R.Evid. 201(b).
the documents Defendant requests be judicially noticed are
capable of accurate and ready determination because the
documents have been filed in the Official Records of
Sacramento County; the sixth document, the Order Granting in
Part Defendant's Motion to Dismiss, is capable of
accurate and ready determination because it was issued by
this Court. See, e.g., W. Fed. Sav. & Loan
Ass'n v. Heflin Corp., 797 F.Supp. 790, 792 (N.D.
Cal. 1992) (judicially noticing certain documents contained
in the public records of the Santa Clara County Recorder).
Accordingly, Defendant's requests for judicial notice are
Standard of Law
motion to dismiss for failure to state a claim under Rule
12(b)(6) tests the legal sufficiency of a complaint.
Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).
Federal Rule of Civil Procedure 8(a) requires that a pleading
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
Under notice pleading in federal court, the complaint must
“give the defendant fair notice of what the claim . . .
is and the grounds upon which it rests.” Bell
Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotations omitted). “This simplified notice pleading
standard relies on liberal discovery rules and summary
judgment motions to define disputed facts and issues and to
dispose of unmeritorious claims.” Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 512 (2002).
motion to dismiss, the factual allegations of the complaint
must be accepted as true. Cruz v. Beto, 405 U.S.
319, 322 (1972). A court is bound to give plaintiff the
benefit of every reasonable inference to be drawn from the
“well-pleaded” allegations of the complaint.
Retail Clerks Int'l Ass'n v. Schermerhorn,
373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege
“"specific facts' beyond those necessary to
state his claim and the grounds showing entitlement to
relief.” Twombly, 550 U.S. at 570. “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the ...