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Eddy v. Federal Home Loan Mortgage Corp.

United States District Court, E.D. California

September 11, 2019

FEDERAL HOME LOAN MORTGAGE CORPORATION As Trustee for Freddie Mac MultiClass Certificates Series 3450; BANK OF AMERICA CORPORATION As Parent to Bank of America, M.A., as Successor in Interest By Merger with Countrywide Bank, FSB; SERVICE LINK, LLC; MICHAEL M. BAKER, Esq.; Does 1-5, Defendants.



         This case is before the court on defendants Federal Home Loan Mortgage Corporation (“FHLMC”), Bank of America Corporation (“Bof A”), and Michael Baker's (“Baker”) motions to dismiss plaintiffs' complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6).[1] ECF Nos. 4 & 11. Also pending is plaintiffs' request to file documents electronically (ECF No. 25) and the court's November 5, 2018 order directing the plaintiffs to show cause why sanctions should not be imposed for their failure to timely respond to defendant Baker's motion to dismiss (ECF No. 22). For the following reasons, the order to show cause is discharged, plaintiffs' request to file documents electronically is denied, and it is recommended that defendants' motions to dismiss be granted.[2]

         I. Order to Show Cause

         Baker noticed his motion to dismiss for hearing on November 7, 2018. ECF No. 11. In violation of Local Rule 230, plaintiffs failed to timely file either an opposition or statement of non-opposition to that motion. See E.D. Cal. L.R. 230(c) (requiring an opposition or statement of non-opposition to be filed not less than 14 days prior to the hearing). Accordingly, the hearing was continued and the plaintiffs were ordered to ordered to show cause why sanctions should not be imposed for their failure to timely file a responsive pleading. ECF No. 22. Plaintiffs were also ordered to file an opposition or statement of non-opposition to the motion. Id.

         In response, plaintiffs explain that they mailed their opposition to the court on September 28, 2018, but they are not sure why it was not received. ECF No. 24. The docket reflects that the court received plaintiffs' opposition on November 13, 2018, ten days after the order to show cause issued. ECF No. 23. Given that an opposition to Baker's motion has been filed, and in light of plaintiffs' representation, the order to show cause is discharged and no sanctions are imposed.

         II. Plaintiffs' Request to File Documents Electronically

         Plaintiffs request permission to electronically file documents with the court. ECF No. 25. Local Rule 133 requires pro se parties to file and serve paper documents unless the assigned district judge or magistrate judge grants permission to file electronically. E.D. Cal. L.R. 133(a), (b)(2). Here, plaintiffs have demonstrated an ability to file documents conventionally, and there are no circumstances warranting a deviation from the local rule. Accordingly, the request for permission to file electronically is denied.

         III. Defendants' Motions to Dismiss

         A. Factual Background

         The complaint alleges that in 2003 plaintiffs purchased a home located at 125 Crowley Lake Dr., Mammoth Lake, California. Compl. (ECF No. 1) ¶ 11. In 2008, they decided to refinance their home loan with Countywide Bank FSB based on “assurances that the loan would be a low interest, fixed rate loan.” Id. ¶ 12. Plaintiffs received a new loan in the amount of $417, 000, which was secured by a deed of trust (“DOT”). Defs. FHLMC & Bof A's Req. Judicial Notice (ECF No. 5), Ex. A.[3] In 2012, Countrywide assigned its interest in the DOT to Bof A. Id. at Ex. B. Two years later, plaintiffs received a loan modification from Bof A. Id. at Ex. C. On January 26, 2016, a Notice of Default was recorded with the Mono County Recorder's Office. Id. at Ex. D. The notice indicates that plaintiffs were behind on their payments in the amount of $22, 994.34. Id. On May 13, 2016, a Notice of Trustee's Sale was recorded. Id. at Ex. E. Shortly thereafter, Bof A assigned its interest in the deed of trust to defendant FHLMC. Id. at Ex. F. A Trustee's Deed Upon Sale reflects that the property was sold on December 22, 2016. Id. at Ex. G.

         Plaintiffs subsequently filed this action against defendants Baker, FHLMC, Bof A, and Service Link, LLC, alleging claims under the Real Estate Settlement Procedures Act (“RESPA”) and Truth in Lending Act (“TILA”), as well as state law claims for breach of contract, wrongful foreclosure, quiet title, fraudulent concealment, and violation of the Homeowner Bill of Rights (“HBOR”).[4] ECF No. 1 at 17-33. The crux of plaintiffs' complaint is that defendants were not authorized to conduct foreclosure proceedings under the DOT for several reasons. They claim that the DOT was never properly executed because a notary was not present at the time they signed it. Id. ¶¶ 31-33. They further allege that the assignments of the DOT were invalid because the promissory note had previously been split from the DOT and securitized. Id. ¶¶ 39-41. Plaintiffs also claim that the entity that conducted the trustee's sale was not the trustee under the DOT. Id. ¶¶ 113-115. Plaintiffs also allege that Bof A failed to properly credit their payments, which resulted in the loan being in default. Id. ¶¶ 97, 102. Lastly, plaintiffs claim that defendants failed to respond to their request for information and to evaluate them for a loan modification. Id. at 27-33.

         Defendants Baker, Bof A, and FHLMC now move to dismiss plaintiffs' complaint for failure to state a claim under Rule 12(b)(6). ECF Nos. 4 & 11.

         B. Rule 12(b)(6)'s Standards

         A complaint may be dismissed for “failure to state a claim upon which relief may be granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss for failure to state a claim, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plausibility standard is not akin to a “probability requirement, ” but it requires more than a sheer possibility that a defendant has acted unlawfully. Iqbal, 556 U.S. at 678.

         Dismissal under Rule 12(b)(6) may be based on either: (1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal theory. Chubb Custom Ins. Co., 710 F.3d at 956. Dismissal also is appropriate if the complaint alleges a fact that necessarily defeats the claim. Franklin v. Murphy, 745 F.2d 1221, 1228-1229 (9th Cir. 1984).

         Pro se pleadings are held to a less-stringent standard than those drafted by lawyers. Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). However, the Court need not accept as true unreasonable inferences or conclusory legal allegations cast in the form of factual allegations. See Ileto v. Glock Inc., 349 F.3d 1191, 1200 (9th Cir. 2003) (citing Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)).

         For purposes of dismissal under Rule 12(b)(6), the court generally considers only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice, and construes all well-pleaded material factual allegations in the light most favorable to the nonmoving party. Chubb Custom Ins. Co. v. Space Sys./Loral, Inc., 710 F.3d 946, 956 (9th Cir. 2013); Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012).

         C. Defendant Baker's Motion

         Defendant Baker argues that the claims against him are barred by the doctrine of res judicata. ECF No. 11-1 at 5-7. Alternatively, he further argues that the complaint fails to sufficiently allege a claim against him. Id. at 7-9.

         Federal courts “are required to give state court judgments the preclusive effect they would be given by another court of that state.” Brodheim v. Cry, 584 F.3d 1262, 1268 (9th Cir. 2009) (citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 84 (1984)). In dealing with the judgment of a state court, federal courts must look to the preclusion rules of the relevant state to determine whether a decision is preclusive. Miofsky v. Superior Court of California, 703 F.2d 332, 336 (9th Cir. 1983). In California, res judicata, or claim preclusion, bars a second lawsuit between the same parties on the same cause of action. People v. Barragan, 32 Cal.4th 236, 252 (2004). Collateral estoppel, or issue preclusion, bars the relitigation of issues that were actually litigated and determined in the first action. Id. at 252-53. The elements for applying either claim preclusion or issue preclusion to a second action are the same: “(1) A claim or issue raised in the present action is identical to a claim or issue ...

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