Corales v. Flagstar Bank, FSB
| Decision Date | 14 October 2011 |
| Docket Number | Case No. C10–1922JLR. |
| Citation | 822 F.Supp.2d 1102 |
| Parties | Bernard R. CORALES, et al., Plaintiffs, v. FLAGSTAR BANK, FSB, et al., Defendants. |
| Court | U.S. District Court — Western District of Washington |
OPINION TEXT STARTS HERE
Bernard R. Corales, Seattle, WA, pro se.
Maria Corales, Seattle, WA, pro se.
Fred B. Burnside, Matthew S. Sullivan, Davis Wright Tremaine, Seattle, WA, Michelle R. Riel, Routh Crabtree Olsen, Bellevue, WA, for Defendants.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Before the court are Defendants Flagstar Bank, FSB's (“Flagstar”) and Mortgage Electronic Registration System, Inc.'s (“MERS”) motion for summary judgment (Dkt. # 48) and Defendant Northwest Trustee Services, Inc.'s (“NWTS”) motion to dismiss the amended complaint with prejudice (Dkt. # 53). Having reviewed the motions, all papers filed in support and opposition thereto, and the applicable law, the court GRANTS Flagstar's and MERS's motion for summary judgment and also GRANTS NWTS's motion to dismiss.1
On May 21, 2008, Plaintiff Bernard R. Corales borrowed $240,000 by executing a note in favor of Axia Financial, LLC (“Axia”). Axia subsequently sold Plaintiffs' Note to Flagstar, endorsing the Note directly to Flagstar. .) Flagstar continues to hold the Note, and has since endorsed it in blank, rendering the Note bearer paper. ( Id. at 5.)
Plaintiffs Bernard R. Corales and Maria Corales secured the debt with a Deed of Trust on their property commonly described at 4092 Letitia Avenue, Seattle, Washington (“the Property”). The Deed of Trust names Joan H. Anderson, EVP on behalf of Flagstar, as the trustee and grants the trustee the power of sale in the event of default. ( Id.)
Although Axia was the lender, the parties agreed in the Deed of Trust to designate MERS as the beneficiary, “acting solely as nominee for Lender and Lender's successors and assigns.” ( Id.) The Deed of Trust states that “MERS holds only legal title to the interests granted” by the Deed of Trust, and that MERS “has the right to exercise any or all of those interests.” ( Id.) On or about April 30, 2010, MERS, as beneficiary under the Deed of Trust and nominee for Axia, executed an Assignment of the Deed of Trust (“Assignment”) transferring all beneficial interest in the Deed of Trust to Flagstar.
In February 2009, nine months after Mr. Corales signed the Note, Plaintiffs stopped making payments and defaulted on the Note. In March 2009, Mr. Corales sent a letter to his “Home Mortgage Lender” apologizing for not making his February 2009 mortgage payment. In the letter, he explains that he lost his job in October 2008, and has been unable to find a new one. ( Id.) After Plaintiffs' default, Flagstar initiated nonjudicial foreclosure proceedings. However, as described below, those proceedings have been continued due to this lawsuit and Plaintiffs' various bankruptcy filings.
On or about May 19, 2010, Flagstar executed an Appointment of Successor Trustee (“Appointment”) naming NWTS as Successor Trustee and vesting NWTS with all powers of the original trustee. On or about June 7, 2010, NWTS executed a Notice of Trustee Sale (“Notice”), which set a sale date for the Property of September 10, 2010. ( See id., Ex. D (attaching true and correct copy of the Notice).)
Plaintiffs filed this action on November 29, 2010. (Compl. (Dkt. # 1).) In early January 2011, Plaintiffs also filed a bankruptcy petition. ( See Not. of Bankr. (Dkt. # 10); In re: Bernard R. Corales, No. 11–10142–SJS (W.D.Wash.Bankr.), Chapter 13 Voluntary Petition (Dkt. # 1); Mot. to Dismiss at 3, Ex. F.) Plaintiffs voluntarily dismissed this Chapter 13 bankruptcy a few weeks later. ( See id.; Mem. Resp. to OSC (Dkt. # 13) ¶ 3.)
On February 10, 2011, Flagstar moved for summary judgment on all of Plaintiffs' claims. (1st SJ Mot. (Dkt. # 14).) On February 25, 2011, NWTS executed an Amended Notice of Trustee's Sale (“Amended Notice”), which set a sale date for the Property of April 15, 2011. On April 4, 2011, more than a month after the parties had completed briefing on Flagstar's motion for summary judgment, Plaintiffs asked the court to dismiss their claims so they could re-file them in bankruptcy court. (Not. of Vol. Dismissal (Dkt. # 29).)
On April 26, 2011, 2011 WL 1584284, the court denied Plaintiffs' motion for voluntary dismissal, affording them instead the opportunity to “amend their complaint to bring it into compliance with the Federal Rules of Civil Procedure and appropriate Supreme Court precedents.” (Order (Dkt. # 36) at 6.) The court also struck Flagstar's pending motion for summary judgment without prejudice to re-filing if appropriate following the filing of Plaintiffs' amended complaint. ( Id.) Significantly, the court also stated that it appeared “that Plaintiffs [we]re attempting to use the federal courts as a tool to improperly delay adjudication of issues ... before the court.” ( Id. at 5.)
In the meantime, however, on April 13, 2011, just two days before the scheduled nonjudicial foreclosure sale of the Property, Plaintiffs again filed for Chapter 13 bankruptcy. ( See Mot. to Dismiss at 3, Ex. G; In re: Bernard R. Corales, No. 11–14237–TWD (W.D.Wash.Bankr.), Chapter 13 Voluntary Petition (Dkt. # 1).) On June 9, 2011, the bankruptcy court dismissed the petition for failure to file the required schedules.
On May 5, 2011, Plaintiffs filed a “Verified Amended Complaint” seeking fundamentally different relief than their original complaint. In this verified amended complaint, Plaintiffs state on penalty of perjury that “[o]n or about May 21, 2011, Plaintiff executed a Note and Deed of Trust for the sum of $240.000 in favor of [Axia].” ( Id. ¶ 23 (underlining in original).) In addition, Plaintiffs also admit that “[t]he Deed of Trust names Defendant MERS as ‘nominee’ and as a ‘beneficiary’.” ( Id.)
On June 7, 2011, Mr. Corales filed an “Emergency Affidavit.” (Corales Aff. (Dkt. # 45).) In the affidavit, in direct contravention to his sworn statement in the verified amended complaint, Mr. Corales states that he “dispute[s] the authenticity of the purported Note ..., [and] dispute[s] that the purported Note bears [his] signature ....” ( Id. ¶ 11.) In contravention to his March 2009 letter to Flagstar, he also denies that he defaulted on the Note. ( Id.)
On June 16, 2011, Flagstar filed its second motion for summary judgment seeking dismissal of all of Plaintiffs' claims contained within its verified amended complaint. (2nd SJ Mot. (Dkt. # 48).) On July 7, 2011, NWTS filed a motion to dismiss with prejudice Plaintiffs' claims against it. (Mot. to Dismiss (Dkt. # 53).) On July 21, Plaintiffs filed a motion to amend their amended complaint. (Mot. to Amend (Dkt. # 59).) The court denied Plaintiffs' motion to amend on October 11, 2011. (Oct. 11, 2011 Order (Dkt. # 74).) The court now considers Flagstar's and MERS's motion for summary judgment and NWTS's motion to dismiss Plaintiffs' claims with prejudice.
NWTS has brought a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) with regard to the claims Plaintiffs have alleged against it in their amended verified complaint. (Mot. to Dismiss at 1.) When considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in the light most favorable to the non-moving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005). The court must accept all well-pleaded allegations of material fact as true and draw all reasonable inferences in favor of the plaintiff. See Wyler Summit P'ship v. Turner Broad. Sys., 135 F.3d 658, 661 (9th Cir.1998). “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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see 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, 129 S.Ct. at 1949. 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).2
Flagstar and MERS have moved for summary judgment of all claims against them in Plaintiffs' verified amended complaint. ( See 2nd SJ Mot.) Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Galen v. Cnty. of LA., 477 F.3d 652, 658 (9th Cir.2007). The moving party bears the initial burden of showing there is no genuine issue of material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If the...
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