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King v. U.S. Bank Trust, N.A.

United States District Court, S.D. California

October 11, 2019




         This matter is before the Court on motions to dismiss and to expunge a notice of pendency of action recorded against the real property located at 584 Palomar Court, Encinitas, California 92024 (the “Property”) filed by Defendants U.S. Bank Trust, N.A., as trustee for LSF9 Master Participation Trust (“US Bank”) and Summit Management Company, LLC (“Summit”). Plaintiff has opposed the motions, and the Court deems them suitable for submission without oral argument. As discussed below, the motions are granted.

         I. Background

         On October 15, 2004, Plaintiff entered into a mortgage loan agreement with Countrywide Bank as lender consisting of a promissory note and deed of trust secured by the Property. [Doc. No. 1-2 at ¶ 8.] The trustee under the deed of trust was CTC Real Estate Services, and the beneficiary was Defendant Mortgage Electronic Registration Systems (“MERS”). [Id.]

         On October 20, 2009, a “Substitution of Trustee and Assignment of Deed of Trust” dated September 8, 2009 (the “September 2009 Assignment”), was recorded in the San Diego County Recorder's Office. [Id. at 58.] The document states that MERS substituted Recontrust Company, N.A., as trustee, and transferred to BAC Home Loans Servicing LP all beneficial interest under the deed of trust to the Property.[1] [Id. at 58, 60.]

         On July 21, 2016, an “Assignment of Deed of Trust” dated May 17, 2016, was recorded in the San Diego County Recorder's Office. [Id. at 62.] The document stated that Defendant Bank of America, N.A. (“BoA”), successor by merger to BAC Home Loans Servicing LP, assigned its rights under the deed of trust to the Property to U.S. Bank. [Id.] On July 25, 2016, a “Substitution of Trustee” dated July 21, 2016, that substituted Summit as trustee was recorded in the San Diego County Recorder's Office. [Doc. No. 4 at 43.][2]

         On October 21, 2016, a notice of trustee sale on the Property was recorded. [Doc. No. 1-2 at ¶ 18; Doc. No. 4 at 51.] On July 5, 2017, a foreclosure sale was held with Summit as trustee, and the Property was conveyed to U.S. Bank. [Doc. No. 1-2 at ¶ 19; Doc. No. 4 at 54.]

         Two years later, on July 9, 2019, Plaintiff filed a complaint in San Diego County Superior Court seeking to unwind the foreclosure sale, cancel the various assignments and substitutions recorded against the Property, and to quiet title to the Property. The complaint named U.S. Bank, Summit, BoA, and MERS as defendants. Summit and U.S. Bank removed the complaint to this court and on September 6, 2019, filed a motion to dismiss and a motion to expunge or require a bond for the notice of pendency of action that Plaintiff recorded after filing the complaint. These motions have been fully briefed. Meanwhile, on September 25, 2019, BoA and MERS filed their own motion to dismiss. The deadline for Plaintiff's opposition to that motion has yet to pass.

         II. Legal Standard for Motions to Dismiss

         The familiar standards on a motion to dismiss apply here. To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Nor is the Court “required to accept as true allegations that contradict exhibits attached to the Complaint or matters properly subject to judicial notice, or allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotation marks omitted).

         III. Discussion

         The complaint asserts five claims, each of which arise out of Plaintiff's apparent belief that the recorded assignments and substitutions of trustee on the Deed of Trust on the Property were invalid or void rendering the foreclosure sale wrongful and void. The five claims in the complaint are: (1) wrongful foreclosure against U.S. Bank and Summit; (2) quiet title against U.S. Bank; (3) cancelation of instruments against all defendants; (4) violation of California's unfair competition law (“UCL”) against all defendants; and (5) slander of title against all defendants. Each of Plaintiff's claims are predicated on her position that MERS lacked authority to assign the Deed of Trust to BAC Home Loans Servicing, meaning all subsequent assignments and substitutions were ineffectual and the beneficiary and trustee unchanged from the original Deed of Trust. Thus, according to Plaintiff, U.S. Bank and Summit had no interest in the Deed of Trust or promissory note and no right to foreclose on the Property. U.S. Bank and Summit each move to dismiss all claims against them for failure to state a claim.

         A. Wrongful Foreclosure

         “The elements of a wrongful foreclosure cause of action are: (1) The trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.” Sciarratta v. U.S. Bank Nat'l Assn., 247 Cal.App.4th 552, 561-62 ...

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