Casault v. Fed. Nat'l Mortg. Ass'n

• Decision Date: 26 November 2012
• Docket Number: Case No. CV 11–10520–DOC(RNBx).
• Citation: 915 F.Supp.2d 1113
• Parties: Tom CASAULT et al. v. FEDERAL NATIONAL MORTGAGE ASSOCIATION et al.
• Court: U.S. District Court — Central District of California

915 F.Supp.2d 1113

Tom CASAULT et al.

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION et al.

Case No. CV 11–10520–DOC(RNBx).

United States District Court, C.D. California.

Nov. 26, 2012.

Khinh Voury Yam, Khinh V. Yam Law Offices, Long Beach, CA, Todd Steven Dion, Law Office of Todd S. Dion, Cranston, RI, for Tom Casault et al.

Peter Obstler, Zachary J. Alinder, Bingham Mccutchen LLP, Peter J. Van Zandt, LeClairryan LLP, San Francisco, CA, Steven A. Ellis, Goodwin Procter LLP, Rosina Maria Hernandez, Ballard Spahr LLP, Los Angeles, CA, Frederick Benjamin Burnside, Seattle, WA, for Federal National Mortgage Association et al.

ORDER: (1) GRANTING SERVICER DEFENDANTS' MOTION TO DISMISS IN PART WITH PREJUDICE AND IN PART WITHOUT PREJUDICE; AND (2) GRANTING TRUSTEE DEFENDANTS' MOTION TO DISMISS WITH PREJUDICE.

DAVID O. CARTER, District Judge.

Before the Court are two motions to dismiss Plaintiffs' Second Amended Complaint: (1) Servicer Defendants' Motion to Dismiss; and (2) Trustee Defendants' Motion to Dismiss. After reviewing the motions,oppositions, and replies, the Court: (1) GRANTS Servicer Defendants' Motion to Dismiss and DISMISSES IN PART WITHOUT PREJUDICE AND IN PART WITH PREJUDICE; and (2) GRANTS Trustee Defendants' Motion to Dismiss WITH PREJUDICE.¹

I. Introduction

Plaintiffs filed a Second Amended Complaint (“SAC”) against Servicer Defendants and Trustee Defendants on behalf of themselves, as well as seeking to represent other similarly situated individuals, for claims that concern the mortgage loan modification and foreclosure process.²

a. Procedural History

The complaint was originally filed on December 20, 2011. The case was transferred to the Southern Division of the Central District of California due to related case number SACV 11–1345 filed on September 6, 2011 listing many of the same plaintiffs and defendants. Case number SA CV 11–1345 was voluntarily dismissed in favor of the present case. On January 17, 2012, Plaintiffs filed a First Amended Complaint (“FAC”). (Dkt. 7.) On March 9, 2012, the case was transferred to this Court.

On April 4, 2012, Plaintiffs filed a Motion for Transfer and Consolidation of Case to the District of Massachusetts. (Dkt. 67.) The case was stayed pending the outcome of the Multi District Panel (“MDL Panel”) decision regarding the transfer of the case. On June 11, 2012, the MDL Panel denied transfer. (Dkt. 76.) This Court gave Plaintiffs leave to file a Second Amended Complaint.

b. The SAC and Motions to Dismiss

On July 25, 2012, Plaintiffs filed the SAC. (Dkt. 81.) The SAC includes three categories of claims: (1) claims against Loan Originator Defendants; (2) claims against Loan Servicer Defendants; and (3) claims against Trustee Defendants. SAC at 5–6. On September 17, 2012, Plaintiffs dismissed claims against the Loan Originator Defendants by stipulation. Originator Defs. Stip. (Dkt. 112.)

The claims against Loan Servicer Defendants are based on Plaintiffs' allegations that the Servicer Defendants' offers and conduct regarding loan modifications were fraudulent and violated state laws. SAC at 6. The Servicer Defendants identified are: OneWest Bank, FSB; BAC Home Loan Servicing, LP; Ocwen Loan Servicing, LLC; Wells Fargo Bank, N.A.; Chase Home Finance, LLC; Rushmore Loan Management Services; and Citi Mortgage, Inc.³

The claims against Trustee Defendants are based on Plaintiffs' allegations that their properties were foreclosed upon when their loans were not in default. SAC at 6. The SAC identified Aurora Loan Services, LLC, Wells Fargo Bank, N.A., U.S. Bank, N.A., Bank of America, N.A., Bank of New York Mellon, and La Salle Bank, N.A. as well as Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) in their roles as trustees as the Trustee Defendants. The allegations of improper foreclosure also implicate Servicer Defendants.⁴ Any claims against Servicer Defendants regarding their involvement with foreclosures and their interactions with the Trustee Defendants are addressed with the claims against the Trustee Defendants.

On August 24, 2012, Defendants filed a Motion to Dismiss claims against Servicer Defendants pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.⁵ Servicer Defs.' Mot. (Dkt. 93). On September 14, 2012, Plaintiffs filed an Opposition to the Servicer Defendants' Motion. Opp. (Dkt. 107). Servicer Defendants filed a Reply on September 24, 2012. Rep. (Dkt. 119).

On August 24, 2012, Defendants filed a Motion to Dismiss claims against Trustee Defendants pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Trustee Defs.' Mot. (Dkt. 101). On September 14, 2012, Plaintiffs filed an Opposition to the Servicer Defendants' Motion. Opp. (Dkt. 108). Servicer Defendants filed a Reply on September 24, 2012. Rep. (Dkt. 121).

The Court will address both Motions in this Order and will provide additional factual information as necessary.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). On a motion to dismiss, this court accepts as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008). The court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.1994); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). Under the incorporation by reference doctrine, the court 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 pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds by307 F.3d 1119, 1121 (9th Cir.2002).

A motion to dismiss under Rule 12(b)(6) can not be granted based upon an affirmative defense unless that “defense raises no disputed issues of fact.” Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir.1984). For example, a motion to dismiss may be granted based on an affirmative defense where the allegations in a complaint are contradicted by matters properly subject to judicial notice. Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010). In addition, a motion to dismiss may be granted based upon an affirmative defense where the complaint's allegations, with all inferences drawn in Plaintiff's favor, nonetheless show that the affirmative defense “is apparent on the face of the complaint.” See Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th Cir.2010).

Additionally, Federal Rule of Evidence 201 allows the court to take judicial notice of certain items without converting the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.1994). The court may take judicial notice of facts “not subject to reasonable dispute” because they are either: “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201; see also Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir.2001) (noting that the court may take judicial notice of undisputed “matters of public record”), overruled on other grounds by307 F.3d 1119, 1125–26 (9th Cir.2002). The court may disregard allegations in a complaint that are contradicted by matters properly subject to judicial notice. Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010).

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir.2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given “when justice so requires.” This policy is applied with “extreme liberality.” Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990).

Federal Rule of Civil Procedure 9(b) states that an allegation of “fraud or mistake must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). The “circumstances” required by Rule 9(b) are the “who, what, when, where, and how” of the fraudulent activity. Vess v. Ciba—Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.2003); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993) ( “[Rule 9(b) requires] the times, dates, places, benefits received, and other details of the alleged fraudulent activity.”). In addition, the allegation “must set forth what is false or misleading about a statement, and why it is false.” Vess, 317 F.3d at 1106 (quoting In re GlenFed, Inc. Secs. Litig., 42 F.3d 1541, 1548 (9th Cir.1994)). Rule 9(...