Banares v. Wells Fargo Bank, N.A.

• Decision Date: 07 March 2014
• Docket Number: No. C-13-4896 EMC,C-13-4896 EMC
• Citation: Banares v. Wells Fargo Bank, N.A., No. C-13-4896 EMC (N.D. Cal. Mar 07, 2014)
• Court: U.S. District Court — Northern District of California
• Parties: MARIALUZ A. BANARES, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants.

MARIALUZ A. BANARES, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants.

No. C-13-4896 EMC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: March 7, 2014

ORDER GRANTING DEFENDANTS'

MOTION TO DISMISS

(Docket No. 5)

I. INTRODUCTION

Plaintiff, Marialuz A. Banares, filed a complaint ("Complaint") against Wells Fargo Bank, N.A. ("Wells Fargo") and HSBC Bank USA, N.A. ("HSBC") as Trustee for Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2007-8 (collectively, "Defendants"), alleging that Defendants unlawfully initiated foreclosure proceedings against Plaintiff. Plaintiff alleges ten causes of action against one or both Defendants: Violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., Wrongful Foreclosure, Quiet Title, Slander of Title, Fraud, Cancellation of Instruments, Violation of Cal. Civ. Code § 2934(a)(1)(A), Violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., Violation of Cal. Bus. & Profs. Code § 17200 et seq. ("UCL"), and Unjust Enrichment.

Currently pending before the Court is Defendants' motion to dismiss the complaint (the "Motion") pursuant to Federal Rules of Civil Procedure 12(b)(6). The Court GRANTS the Motion for the reasons set forth below.

II. FACTUAL AND PROCEDURAL BACKGROUND

On or about April 10, 2007, Plaintiff obtained a loan from Wells Fargo for $558,750 (the "Loan"). Complaint ("Compl.") ¶ 4; Exhibit to Complaint ("Exh") A. The Loan was recorded in a promissory note (the "Note") and was secured by a deed of trust (the "DOT") against real property in Hercules, California (the "Property"). Exh. A. Under the DOT, Wells Fargo was the lender, and Fidelity National Title Insurance Company was the trustee. Id. at 2.

Plaintiff alleges that Wells Fargo sold the Loan to Wells Fargo Asset Securities Corporation ("WFASC"). Compl. ¶ 11. Subsequently, on or before June 28, 2007, WFASC allegedly sold the Loan to HSBC Bank USA, as trustee for the Wells Fargo Securities Corporation Mortgage Pass-Through Certificates, Series 2007-8 trust (the "Series 2007-8 Trust" or "Trust"). Id. The "closing date" of the Series 2007-8 Trust was June 28, 2007. Id. The Pooling and Services Agreement ("PSA") governing the Trust prohibits assignments of loans to the Trust after the closing date, as well as assignments of loans that are in default. Compl. ¶ 14.

On March 26, 2013, Wells Fargo executed a Corporate Assignment of Deed of Trust ("Assignment"), assigning its beneficial interest under the DOT to HSBC Bank USA, as Trustee for the Series 2007-8 Trust. Compl. ¶ 15, Exh. C. On April 11, 2013, Wells Fargo, "as servicer and attorney-in-fact for HSBC Bank USA," executed a Substitution of Trustee ("Substitution"), substituting Quality Loan Service Corporation ("QLS") for Fidelity National Title Insurance Company as the trustee under the DOT. Compl. ¶ 18, Exh. D. On April 19, 2013, QLS executed a Notice of Default ("NOD"), stating that Plaintiff was in default by $27,756.14. Compl. ¶ 20, Exh. E. On October 1, 2013, QLS executed a Notice of Trustee's Sale ("NTS"), scheduling a sale of the Property for October 30, 2013. Exh. G. All of these documents - the Corporate Assignment of Deed of Trust, Substitution of Trustee, Notice of Default, and Notice of Trustee's Sale (collectively, "Documents") - were recorded with the Contra Costa County Recorder's Office. See Exhs. C, D, E, G.

Plaintiff filed a verified complaint on October 22, 2013, before the scheduled foreclosure sale. Plaintiff alleges that the assignments of the Loan - first from Wells Fargo to WFASC, then from WFASC to HSBC - were not effective because the Note was not endorsed and the DOT wasnot assigned on either assignment. Compl. ¶¶ 11-13. Proper endorsement of the Note and assignment of the DOT were required in order for the Series 2007-8 Trust to qualify for favorable tax treatment as a Real Estate Mortgage-Backed Securities Conduit ("REMIC") under the Internal Revenue Code. Compl. ¶¶ 8-9.

Notwithstanding the allegation that the assignments were ineffective, Plaintiff also alleges that Wells Fargo sold the Loan to WFASC, and WFASC sold the Loan to HSBC. Compl. ¶ 11. The Complaint provides an webpage link to the "Free Writing Prospectus" filed with the Securities Exchange Commission, which identifies the Loan as one of the loans in the Trust. Compl. ¶ 6. Attached to the Complaint is also an "ABSNET" screenshot showing the Loan as one in the Trust. Id.

According to Plaintiff, Wells Fargo's beneficial interest in the DOT was extinguished in 2007 when it sold the Loan to the Series 2007-8 Trust. Compl. ¶ 17. As a consequence, the Assignment of March 2013 was allegedly fraudulent and void, since Wells Fargo had no beneficial interest to assign. Compl. ¶ 17. Also, the Assignment was allegedly fraudulent because, pursuant to the PSA, no loan could be assigned to the Series 2007-8 Trust after the Trust closed in 2007, let alone a loan in default. Compl. ¶ 16. Because the validity of the Substitution, NOD, and NTS all depend on the validity of the Assignment, Plaintiff alleges these are also fraudulent and void. Compl. ¶¶ 19, 20, 24. Although Wells Fargo was the mortgage servicer when Plaintiff obtained the Loan, Plaintiff alleges it was no longer the servicer after selling the Loan to the Trust. Compl. ¶ 20.

On or about July 23, 2013, Plaintiff mailed to Wells Fargo a Qualified Written Request for information concerning the servicing of the Loan. Compl. ¶ 22. Plaintiff did not receive any response. Id.

III. DISCUSSION

A. Legal Standard

Under Federal Rules of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In considering such a motion, a courtmust take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although "conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Courts "are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint." Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th Cir. 1998).

While "a complaint need not contain detailed factual allegations . . . it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Id. "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, 129 S. Ct. 1937, 1949 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id.

B. Request for Judicial Notice

Defendants request judicial notice of the following documents in support of their Motion: the DOT, Assignment, Substitution, NOD, and NTS. Docket No. 6. All of these have been recorded with the Contra Costa County Recorders Office. All of these documents were attached to the Complaint. See Exhs. A, C, D, E, G.

Plaintiff opposes Defendants' request for judicial notice, requesting the Court to judicially notice these documents "for the limited purpose of establishing that these documents were recorded in the land records of Contra Costa County on the dates stamped by the Recorder's Office." Docket No. 10-1. In particular, Plaintiff objects to the documents being used to establish that Defendants were lawful beneficiaries or that Wells Fargo had the authority to collect payments.

"[A] court may take judicial notice of 'matters of public record.'" Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (quoting Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986)). At the same time, "a court may not take judicial notice of a fact that is 'subject to reasonable dispute'" even if the fact is stated in the public record. Id. at 689-90 (quoting Fed. R. Evid. 201(b)).

The documents are a matter of public record, since they have been recorded with the Contra Costa County Recorders Office. This order relies on the documents' legal effects and inferences warranted from these effects, but not on facts in the documents that Plaintiff disputes. Thus, the Court GRANTS Defendants' request for judicial notice.

C. Plaintiff's Central Allegations

Except for the alleged violation of RESPA, all of the causes of action rely on one or more of three central allegations: (1) the 2007 assignment of the Loan to the Series 2007-8 Trust was ineffective; (2) Wells Fargo's beneficiary interest in the Loan was extinguished in 2007 when it sold the Loan to the Series 2007-8; and (3) Wells Fargo was no longer the mortgage servicer after it sold the Loan to the Series 2007-8 Trust. The Court addresses each in turn.

1. Plaintiff Lacks Standing to Challenge the Effectiveness of the 2007 Assignments

Plaintiff asserts that the assignments from Wells Fargo to WFASC and from WFASC to the Series 2007-8 Trust were ineffective because the assignments lacked the proper endorsement of the Note and assignment of the DOT that were required by the "binding trust agreements" for the Trust to continue qualifying as a REMIC under the Tax Code. Compl. ¶¶ 9-12. The Trust had been formed with an election to be a REMIC. Compl. ¶ 8. The Court first notes that this assertion is inconsistent with Plaintiff's allegation that the loan was in fact sold to the Series 2007-8 Trust (thus rendering the 2013 Assignment fraudulent since Wells Fargo no longer had a beneficial interest to assign). This inconsistent allegation alone warrants dismissal of...