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Johnson v. Caliber Home Loans, Inc.

United States District Court, C.D. California

September 6, 2019

Stephen H. Johnson et al.
v.
Caliber Home Loans, Inc. et al.

          Present: The Honorable PERCY ANDERSON, UNITED STATES DISTRICT JUDGE

          CIVIL MINUTES - GENERAL

         Proceedings: IN CHAMBERS - COURT ORDER

         Before the Court are a (1) Motion to Dismiss Case filed by defendants Caliber Home Loans, Inc. and U.S. Bank Trust, N.A., as Trustee For LSF9 Master Participation Trust (“Defendants”) (Docket No. 9); (2) Motion for Order Declaring Plaintiffs as Vexatious Litigants filed by Defendants (Docket No. 11); and a (3) Motion to Remand Case filed by plaintiffs Stephen H. Johnson and Paula A. Johnson (“Plaintiffs”) (Docket No. 16). Plaintiffs filed an Opposition to Motion to Dismiss (Docket No. 18), and Defendants filed a Reply (Docket No. 22). Defendants filed an Opposition to Motion to Remand (Docket No. 17), and Plaintiffs filed a Reply (Docket No. 20). Plaintiffs filed an Opposition to Motion for Order Declaring Plaintiffs as Vexatious Litigants (Docket No. 19), and Defendants filed a Reply (Docket No. 23). The parties also filed Requests for Judicial Notice with their briefing. (Docket Nos. 10, 12, and 21.) Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds this matter appropriate for decision without oral argument. The hearing scheduled for September 9, 2019 is vacated, and the matter taken off calendar.

         For the reasons stated below, the Court denies Plaintiffs' Motion to Remand, grants Defendants' Motion to Dismiss without leave to amend, and denies Defendants' Motion for Order Declaring Plaintiffs as Vexatious Litigants. The Court also grants Defendants' Request for Judicial Notice in Support of Motion to Dismiss (Docket No. 10), denies Defendants' Request for Judicial Notice in Support of Motion for Order Declaring Plaintiffs as Vexatious Litigants (Docket No. 12), and denies Plaintiffs' Request for Judicial Notice in Support of Opposition to Motion to Dismiss and Motion to Remand (Docket No. 21).

         I. Factual Background

         On November 21, 2006, Ruth M. Bass-Wallace obtained a $780, 000.00 mortgage loan from Washington Mutual Bank, FA (“Washington Mutual”), which was secured by a Deed of Trust on property located at 10578 Deer Canyon Drive, Rancho Cucamonga, CA 91737 (the “Property”). (See Docket No. 1 (Notice of Removal), Ex. 1 (“Compl.”) at Ex. A (Adjustable Rate Note); see also Docket No. 10 (Request for Judicial Notice in Support of Defendants' Motion to Dismiss, hereinafter “RJN”), Ex. 1 (Deed of Trust).) The Deed of Trust specifies Washington Mutual as the “Lender” and Ms. Wallace as the sole “Borrower.” (RJN, Ex. 1.) Defendant U.S. Bank Trust, N.A. acquired Washington Mutual's beneficial interest under the Deed of Trust through a series of assignments. (Compl. at Exs. D, E.) On September 4, 2005, Ms. Wallace executed a Grant Deed granting the Property to herself and Plaintiffs as joint tenants. (Id. at Ex. B.) Ms. Wallace passed away on December 10, 2007. (Id. at Ex. C.) Plaintiffs made payments owed under the Deed of Trust, which were accepted by Defendants or their predecessors-in-interest. (Id. at 8-9.) However, payments owed pursuant to the Deed of Trust eventually fell into arrears, and became due on December 1, 2011. (Id. at Ex. G.) Due to contractual delinquency of the loan, the property was referred to foreclosure on March 29, 2012. (Id. at Ex. F.) A Notice of Default was recorded against the Property on June 12, 2012. See Order Dismissing Case Without Leave to Amend, Stephen H. Johnson, et al. v. Caliber Home Loans, Inc., et al. (“Johnson I”), No. 16-CV-2136 PA (GJSx) (C.D. Cal. May 9, 2017), ECF No. 24 at 2. A Notice of Trustee's Sale was recorded on October 7, 2015. Id.

         II. Procedural History

         A. Johnson I

         Appearing pro se, Plaintiffs filed their first lawsuit against Defendants regarding the Property in the U.S. District Court for the Central District of California on October 17, 2016 (“Johnson I”). See Complaint, No. 16-CV-2136 PA (GJSx), (C.D. Cal. Oct. 17, 2019), ECF No. 1. In their First Amended Complaint, Plaintiffs alleged that “Defendants are third-party strangers to their mortgage loan and have no ownership interest entitling them to collect payment or declare a default or attempt to foreclose.” (RJN, Ex. 2 at 2.) They claimed that “Defendants have resorted to misrepresenting to Plaintiffs[] and to the Court that they have authority to collect Plaintiffs' obligation and that they have the right to take Plaintiffs' Property away.” Id. Plaintiffs asserted claims for: (1) declaratory relief under 28 U.S.C. §§ 2201, 2202; (2) quiet title relating to violation of the Federal Truth in Lending Act (“TILA”); (3) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692, et seq.; (4) violation of TILA, 15 U.S.C. § 1641(g); (5) violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605; (6) violation of the California Homeowner Bill of Rights (“HBOR”), Cal. Civ. Code §§ 2924.17, 2924(a)(6); (7) breach of contract; (8) breach of the implied covenant of good faith & fair dealing; (9) wrongful foreclosure; and (10) violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq. Id. at 1. Their requested relief included a “judicial declaration . . . that the title to subject ‘Property' is vested in Plaintiff alone and that Defendants and each of them be declared to have no interest either Legal or Equitable, right, estate, or lien in subject ‘Property', and that the Defendants, their Agents or Assigns, be forever enjoined from asserting estate, right, title or interest to subject ‘Property.'” Id. at 41.

         This Court dismissed the case without leave to amend. (RJN, Ex. 3.) The Court determined that Plaintiffs were not approved, in writing, by the Lender or Lender's successors in interest, and Plaintiffs therefore never acquired a valid interest under the Deed of Trust. (Id., Ex. 3 at 5.) The Grant Deed failed to evidence Defendants' or any other Lender's written approval of Plaintiffs as Wallace's successors in interest, and so Plaintiffs lacked standing to assert any causes of action that arose from the Deed of Trust. (Id. at 6.) In addition, the Court concluded that Plaintiffs failed to plausibly allege a claim for quiet title because Wallace's Grant Deed was subject to the conditions imposed by the Deed of Trust, and Plaintiffs never acquired a valid interest under the Deed of Trust. (Id. at 7.) The Court also concluded that Plaintiffs' wrongful foreclosure claim was premature because neither the operative First Amended Complaint nor Plaintiffs' Opposition asserted that a foreclosure sale had occurred. (Id. at 7-8.) The Court also concluded Plaintiffs' claim for declaratory relief was derivative of their other claims, so it was dismissed without leave to amend. (Id. at 8 (internal quotations omitted).) The Court issued a Judgment of Dismissal. (RJN, Ex. 4.) Plaintiffs were not granted leave to amend. (Id.)[1]/

         B. Current Lawsuit

         Plaintiffs filed a second lawsuit against Defendants in the San Bernardino County Superior Court on June 26, 2019. (Compl. at 1.) This action involves the same Property at 10578 Deer Canyon Drive, Rancho Cucamonga, CA 91737. (Id. at 4.) Here again Plaintiffs allege that “Defendants are attempting to collect a debt that is not due or owed to them.” (Id. at 3; see also id. at 11.) Plaintiffs assert claims for: (1) violations of the California Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788, et seq.; (2) violation of Cal. Civ. Code § 2936; (3) violation of Cal. Civ. Code § 366.2; and (4) cancellation of instruments. (Id. at 13-18.) Like in Johnson I, Plaintiffs seek “a declaratory judgment finding that Defendants do not have any legally cognizable rights as to Plaintiff[s], the Property, Plaintiff[s'] alleged debt, tendered to and executed by Plaintiff.” (Id. at 18.) Defendants filed a Notice of Removal based on diversity jurisdiction, 28 U.S.C. § 1332, on July 26, 2019. (Docket No. 1.) Defendants then filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that Plaintiffs fail to state a claim upon which relief can be granted. (Docket No. 9 at 2.) Defendants also filed a Motion for Order Declaring Plaintiffs as Vexatious Litigants. (Docket No. 11.) Plaintiffs filed a Motion to Remand the case to California state court. (Docket No. 16.)

         III. Legal Standards

         A. ...


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