Carlson v. Wells Fargo Bank, N.A.

• Decision Date: 30 April 2015
• Docket Number: CASE NO. C15-0109JLR
• Court: U.S. District Court — Western District of Washington
• Parties: LUTHER N. CARLSON, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants.

LUTHER N. CARLSON, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants.

CASE NO. C15-0109JLR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

April 30, 2015

ORDER GRANTING DEFENDANTS WELLS FARGO AND FREDDIE MAC'S MOTION TO DISMISS AND DENYING PLAINTIFF'S MOTION TO AMEND

I. INTRODUCTION

Before the court are two motions: (1) a motion by Defendants Wells Fargo Bank, N.A. ("Wells Fargo") and Federal Home Loan Mortgage Corporation ("Freddie Mac") to dismiss Plaintiff Luther N. Carlson's claims against them (Defs.' Mot. (Dkt. # 7)), and (2) a motion by Mr. Carlson for leave to file a second amended complaint ("SAC") (Pl.'s Mot. (Dkt. # 13)). The court has considered both motions, the parties' submissions filed in support of and opposition thereto, the balance of the record, and the applicable law. Being fully advised, the court GRANTS Defendants' motion and DENIES Mr. Carlson'smotion. Accordingly, the court DISMISSES all of Mr. Carlson's claims against Defendants Wells Fargo and Freddie Mac WITH PREJUDICE.

II. BACKGROUND

The facts underpinning this action appear to have arisen when Mr. Carlson signed a promissory note on January 29, 2010, for a loan from Wells Fargo in the amount of $369,653.00.¹ (See Request for Judicial Notice ("RFJN") (Dkt # 8) Ex. 1 ("Note").) The loan was secured by a deed of trust on property located at 31036 NE 116th Street, Carnation, Washington, 98014. (See RFJN Ex. 2 ("Deed of Trust").) The Deed of Trust listed Luther N. Carlson and Kari L. Carlson as borrowers, Wells Fargo as the lender, and Northwest Trustee Services, LLC ("NWTS") as the trustee. (See id. at 3-4.) By October 2011, the Carlsons had defaulted on the loan, and NWTS issued a notice of trustee's sale to be held on February 3, 2012. (See RFJN Ex. 3 ("2011 Notice").) Mr. Carlson filed a complaint and temporary restraining order against Wells Fargo and NWTS in King County Superior Court for the State of Washington on February 1, 2012 ("2012 Case"). Carlson v. Wells Fargo Bank N.A., No. 12-2-04140-7SEA (King Cnty. Super. Ct. Feb. 1, 2012). (See RFJN Ex. 4.)

In the 2012 Case, Mr. Carlson asked the state court to halt the trustee's sale. (RFJN Ex. 4.) He made a series of allegations including the following: (1) NWTS failed to fulfill its obligations of good faith (see RFJN Ex. 4, at 4-5); (2) Wells Fargo was not the proper beneficiary of the trust because it did not hold the promissory note (id. at 4-7); (3) both Wells Fargo and NWTS committed "intentional and express violations of RCW 61.24.040, which will result[] in the Property being wrongfully foreclosed on [sic] based on an improper foreclosure procedure which has been initiated" (id. at 8); and (4) both NWTS and Wells Fargo committed "multiple violations of 15 U.S.C. [§] 6101; Consumer Protection Act; Truth in Lending Act; Fraud; and Fiduciary Duty" (id.). The state court dismissed all of the Carlsons' claims against NWTS with prejudice on July 6, 2012, under Washington Rule of Civil Procedure 12(b)(6). (See RFJN Ex. 5.) On October 12, 2012, the state court likewise dismissed all claims against Wells Fargo with prejudice. (See RFJN Ex. 6.)

After the dismissal of the 2012 Case, NWTS issued a second Notice of Trustee's Sale ("2013 Notice") which was recorded by the county auditor on October 8, 2013. (See RFJN Ex. 7.) The Notice stated that the Carlsons were $92,136.79 in arrears on the loan, and announced that NWTS would sell the property at 10:00 a.m. on February 14, 2014. (See id. at 3.) The first page of the Notice urged the Carlsons (in boldface, all-capital letters) to "contact a housing counselor or an attorney licensed in Washington now" to get help, and provided information about how to seek assistance. (Id. at 2-3.) The notice also contained the following statement:

Anyone having any objection to the sale on any grounds whatsoever will be afforded an opportunity to be heard as to those objections if they bring a lawsuit to restrain the sale pursuant to RCW 61.24.130. Failure to bring a lawsuit may result in a waiver of any proper grounds for invalidating the Trustee's sale.

(Id. at 5.)

Mr. Carlson did not bring an action to halt the February 14, 2014, sale of the property, and Wells Fargo purchased the property at the sale with a high bid of $343,547.00. (RFJN Ex. 8, at 3.) At Wells Fargo's instruction, NWTS then issued a trustee's deed to Freddie Mac on February 14, 2014. (Id.)

The Carlsons refused to vacate the property after the trustee's sale, and on April 22, 2014, Freddie Mac filed a complaint for unlawful detainer in King County Superior Court. Fed. Home Loan Mortg. Corp. v. Carlson, No. 14-2-11372-2KNT (King Cnty. Super. Ct. Apr. 22, 2014) ("Eviction Case"). (See Second Request for Judicial Notice ("2d RFJN") (Dkt. # 16) Ex. 3.) On June 4, 2014, the King County Superior Court issued a writ of restitution in the Eviction Case and ordered the sheriff to put Freddie Mac in possession of the property. (See 2d RFJN Ex. 5 at 3-4.) Mr. and Ms. Carlson appealed the decision. (See 2d RFJN Ex. 6.)

While the Eviction Case was still pending, Mr. and Ms. Carlson filed this action in King County Superior Court against Freddie Mac on May 30, 2014. (See Verification of State Court Records (Dkt. # 6) Ex. 1 at 6-52.) The Original Complaint listed both Luther N. Carlson and Kari L. Carlson as plaintiffs, and included only Freddie Mac and "Does 1-50" as defendants. (Id. at 6.) Mr. Carlson then filed a First Amended Complaint ("FAC") on June 16, 2014, dropping Kari L. Carlson as plaintiff and adding Wells Fargo,"The Mortgage Fighter," Darren Brown, and Pete Wagner, as co-defendants with Freddie Mac. (See Notice of Removal (Dkt. # 1) Ex. A at 2.)

The FAC alleges ten causes of action: (1) declaratory relief, which is pled twice (FAC at ¶¶ 17-22, 120-25); (2) fraud, which is pled twice (id. at ¶¶ 23-147, 126-50); (3) "Tortious Violation of Statute" (id. at ¶¶ 151-58); (4) "reformation" (id. at ¶¶ 159-70); (5) "quiet title and set aside foreclosure" (id. at ¶¶ 171-75); (6) "Violation of Business and Professions Code Section 17200" (id. at ¶¶ 1576-81); (7) "Violation of Washington Civil Code 2923.6" (id. at ¶¶ 182-94); (8) "Violation Of § 1788.17 Of The RFDCPA" (id. at ¶¶ 195-200); (9) "Violation of Civil Code TITLE 61" (id. at ¶¶ 201-12); and (10) injunctive relief (id. at ¶¶ 213-17).²

Freddie Mac removed the action to this court based under 28 U.S.C. § 1442 and 12 U.S.C. § 1452(f). Freddie Mac and Wells Fargo have moved to dismiss Mr. Carlson's complaint, arguing that all of his claims against them are barred by res judicata (claim preclusion), and that some are also barred by waiver, expired statutes of limitation, failure to state a claim, and the Merrill doctrine.³ (See generally Defs.' Mot. (Dkt. # 7).) Mr. Carlson has filed a response in opposition to Wells Fargo and Freddie Mac's motion(Pl.'s Resp. (Dkt. # 12)), and has also requested leave to file a Second Amended Complaint (Pl.'s Mot. (Dkt. # 13)). The court will address both motions together.

III. ANALYSIS

A. Standards

Wells Fargo and Freddie Mac ask this court to dismiss Mr. Carlson's complaint under Federal Rule of Civil Procedure 12(b)(6) because res judicata precludes all of his claims against them.⁴ "To survive a motion to dismiss, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). "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." Iqbal, 556 U.S. at 663.

Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). Further, dismissal is proper when an insuperable legal obstacle bars plaintiff's claims. See Jones v. Block, 549 U.S. 199, 215 (2007) ("If the allegations . . . show that relief is barred by theapplicable statute of limitations, the complaint is subject to dismissal for failure to state a claim."); Morales v. City of L.A., 214 F.3d 1151, 1153 (9th Cir. 2000).

The Ninth Circuit has summarized the governing standard as follows: "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) (internal quotation marks omitted). The court concludes that the doctrine of res judicata bars Mr. Carlson's claims against Wells Fargo and Freddie Mac, and accordingly grants defendants' motion to dismiss. (Defs.' Mot.)

B. Request for Judicial Notice

Defendants Wells Fargo and Freddie Mac ask the court to take judicial notice several documents that are pertinent to the decision in this case, such as the Note, the Deeds of Trust, the Notices, and the state-court filings and orders in the 2012 Case and the 2014 Eviction Case. (See generally RFJN; 2d RFJN.) "Generally, on a 12(b)(6) motion, the District Court should consider only the pleadings." Shaver v. Operating Engineers Local 428 Pension Trust Fund, 332 F.3d 1198, 1201 (9th Cir. 2003). The court, however, "may also consider documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading." Northstar Fin. Advisors Inc. v. Schwab Investments, 779 F.3d 1036, 1043 (9th Cir. 2015) (alteration in original) (quoting Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)). Courts sometimes refer to this as the doctrine of "incorporation by reference." Id.

Additionally, when considering a ...