Aguirre v. Cal-Western Reconveyance Corp.
| Decision Date | 30 January 2012 |
| Docket Number | Case No. CV 11-6911 CAS (AGRx) |
| Court | U.S. District Court — Central District of California |
| Parties | CLAUDIO AGUIRRE v. CAL-WESTERN RECONVEYANCE CORPORATION; ET AL. |
Attorneys Present for Defendants: Jason Short
Proceedings: DEFENDANTS' MOTION TO DISMISS (filed 11/9/2011)
On August 22, 2011, pro se plaintiff Claudio Aguirre ("plaintiff" or "Aguirre") filed the instant action against Cal-Western Reconveyance Corporation ("Cal-Western"); Aurora Loan Services, Inc. ("Aurora"); Mortgage Electronic Recording Systems ("MERS"); Joe Krasovic ("Krasovic"); Shannon K. Mottola ("Mottola"); Rhonda Rorie ("Rorie"); and DOES 1-10, inclusive (collectively "defendants"). On August 29, 2011, plaintiff, as a matter of course, filed a first amended complaint ("FAC"). Aurora and MERS, joined by Cal-Western, Krasovic, Mottola, and Rorie, filed a motion to dismiss the FAC on October 12, 2011, which the Court granted on November 7, 2011, with leave to amend. See Dkt. No. 22.
Aguirre thereafter filed a second amended complaint ("SAC") on December 6, 2011. The SAC advances ten claims for relief, styled as: (1) violation of Fed. R. Civ. P. 17, (2) violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692f, 1692g ("FDCPA"), (3) violation of the Real Estate Settlement Practices Act, 12 U.S.C. §§ 2605, 2607 ("RESPA"), (4) violation of the California Rosenthal Act, Cal. Civ. Code §§ 1788 et seq. ("Rosenthal Act"), (5) violation of the Racketeering and Corrupt Influenced Organizations Act, 18 U.S.C. §§ 1961 et seq. ("RICO"), (6) declaratory relief, (7) violation of the Truth in Lending Act 15 U.S.C. § 1641 et seq. ("TILA"), (8) quiet title,(9) various fraud claims, including mail fraud, 18 U.S.C. § 1341, and (10) violations of Cal. Civ. Code §§ 2920 et seq.1
On December 28, 2011, Aurora and MERS filed a motion to dismiss the SAC, and Cal-Western, Krasovic, Mottola and Rorie joined in the motion. Aguirre opposed the motion on January 9, 2012, and defendants replied on January 13, 2012. After carefully considering the arguments set forth by both parties, the Court finds and concludes as follows.
On July 12, 2005, plaintiff executed a promissory note in the amount of $244,000 from GN Mortgage, LLC ("GN Mortgage"), secured by a deed of trust (the "deed") on real property located at 18740 Vista Del Canon Unit E #79, Newhall, California, 91321 (the "property"). SAC ¶ 6, 18, Exh. A. The deed names MERS as beneficiary and 6700 Corporation as trustee. Id., Exh. A.
On April 8, 2009, MERS employee Krasovic substituted Cal-Western as trustee under the deed. See id., Exh. C. Around the same time, plaintiff defaulted on his loan, and on April 21, 2009, a notice of default was recorded in the Los Angeles County Recorder's Office. Id., Exh. D. On the same day, MERS assigned "all beneficial interests" under the deed to Aurora. Id., Exh. B.
On April 7, 2010, plaintiff executed a grant deed conveying the property to the Vista Trust which was recorded in the Los Angeles County Recorder's Office on August 9, 2010. Def. RJN, Exh. D. The grant deed lists plaintiff as trustee of the Vista Trust. Id. On November 30, 2011, plaintiff, as trustee, executed another grant deed , conveying a 5 percent interest to three individuals each and retaining 85 percent for the Vista Trust. Id., Exh. G. This grant deed was recorded in the Los Angeles County Recorder's Office on the same day. Id.
Plaintiff was unable to cure the delinquency. As a result, Cal-Western recorded a Notice of Trustee's Sale of the property on July, 12, 2011, and plaintiff responded by filing the instant action. Id., Exh. F. Specifically, plaintiff alleges that Cal-Western lacks standing to foreclose on his property because it is not the named trustee and the substitution of trustees was not made according to the terms of the deed and violated the statute of frauds. Id. ¶¶ 17, 21 (citing Cal. Civ. Code § 2932.5). Plaintiff also avers that defendants cannot foreclose because they do not physically possess the note. Id. ¶ 18. Further, according to plaintiff, Cal-Western and the other defendants have committed fraud by initiating foreclosure proceedings with "fabricated, forged documents." Id. ¶ 19, 28, 115. The gravamen of plaintiff's allegations is that defendants initiated non-judicial foreclosure without standing to do so.
Many of plaintiff's allegations rely on a document titled "Mortgage Document Examination & Investigation Report" prepared on plaintiff's behalf by "Charles J. Horner & Associates, Forensic Document Examiners." Id., Exh. E. The report suggests violations of various laws committed by defendants.2 See generally id.
II. LEGAL STANDARD
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[F]actual allegations must be enough to raise a right to relief above the speculative level." Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all material allegations in the complaint, as well as all reasonable inferences to be drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be read in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). However, Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950 (2009); Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) () (citing Twombly and Iqbal); Sprewell, 266 F.3d at 988; W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950.
Furthermore, unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont'lCorp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev'd on other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the complaint and matters that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
For all of these reasons, it is only under extraordinary circumstances that dismissal is proper under Rule 12(b)(6). United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir. 1981).
As a general rule, leave to amend a complaint which has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).
Federal Rule of Civil Procedure 9(b) requires that the circumstances constituting a claim for fraud be pled with particularity. Federal Rule of Civil Procedure 9(b) applies not just where a complaint specifically alleges fraud as an essential element of a claim, but also where the claim is "grounded in fraud" or "[sounds] in fraud." Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097, 1103-04 (9th Cir. 2003). A claim is said to be "grounded in fraud" or "'sounds in fraud'" where a plaintiff alleges that defendant engaged in fraudulent conduct and relies on solely on that conduct to prove a claim. Id. "In that event, . . . the pleading of that claim as a whole must satisfy the particularity requirement of [Fed. R. Civ. P.] 9(b)." Id. However, where a plaintiff alleges claims grounded in fraudulent and non fraudulent conduct, only the allegations of fraud are subject to heightened pleading requirements. Id. at 1104.
A pleading is sufficient under Fed. R. Civ. P. 9(b) if it "[identifies] the circumstances constituting fraud so that the defendant can prepare an adequate answerfrom the allegations." Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir. 1973). This requires that a false statement must be alleged, and that "circumstances indicating falseness" must be set forth. In re GlenFed Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994). Thus, "[a]verments of fraud must be accompanied by the who, what, when,...
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