Edwards v. Aurora Loan Serv. LLC, 2:10-cv-00092 LKK KJN PS
| Decision Date | 29 April 2011 |
| Docket Number | No. 2:10-cv-00092 LKK KJN PS,2:10-cv-00092 LKK KJN PS |
| Court | U.S. District Court — Eastern District of California |
| Parties | CHIEU EDWARDS, Plaintiff, v. AURORA LOAN SERVICES, LLC; and DOES 1-50, Defendants. |
Presently before this court is defendant's motion to dismiss plaintiff's complaint (Dkt. No. 30-1), a request for judicial notice ("RJN") in support thereof (RJN, Dkt. No. 30-2), defendant's motion to expunge lis pendens (Dkt. No. 32-2), and request for judicial notice in support thereof (Dkt. No. 32-3). Defendant's motion for an order expunging the lis pendens also seeks an award of costs and attorneys' fees in the amount of $1,250. (Dkt. No. 32-1 at 12-13.) Plaintiff opposed these motions in a single written opposition. (Oppo., Dkt. No. 41.) The undersigned has fully considered the parties' briefs and the entire record in this case and, for the reasons stated below, recommends that defendant's motion to dismiss be granted. The undersigned also recommends that the motion to expunge lis pendens be granted, but recommends that the accompanying request for attorneys' fees be denied.
Plaintiff Chieu Edwards ("Edwards" or the "plaintiff"), proceeding without counsel in this action, filed a complaint in San Joaquin County Superior Court on December 24, 2009. (Dkt. No. 2-2.)1 On January 12, 2010, defendant Aurora Loan Services, LLC ("Aurora" or "defendant") filed a notice of removal pursuant to 28 U.S.C. §§ 1331, 1367, 1441 and 1446. (Dkt. No. 2.)
Defendant filed a motion to dismiss plaintiff's complaint. (Dkt. No. 8.) The undersigned granted the motion, but gave plaintiff leave to amend her pleading to correct for various defects. (Dkt. No. 28.) Those defects included a failure to clearly allege how defendant might have violated the law, and reliance upon a legally questionable theory that an alleged "Bonded Promissory Note" served as legal tender fully satisfying plaintiff's loan debt. (Id.)
On August 4, 2010, plaintiff filed a First Amended Complaint (the "FAC"). (FAC, Dkt. No. 29.) On August 17, 2010, defendant filed the pending motion to dismiss the FAC. (Dkt. No. 30.) Defendant filed the pending motion to expunge lis pendens and for costs and attorneys' fees that same day. (Dkt. No. 32.)
Plaintiff appears to have copied large segments of text and pasted them into her FAC, making the FAC's factual allegations unclear. The FAC's inclusion of pages of argument and lengthy discussions of the history of banking in the United States obscures the few factual allegations within the pleading. Nonetheless, it appears the FAC attempts to assert five formal claims for relief, which sometimes include other claims within their supporting paragraphs. These claims are: (1) "Denial of Constitutional Substantive Rights of Due Process" (which, as pleaded, appears to include a claim for alleged wrongful foreclosure (FAC at 7)); (2) "Bank Fraud" (which, as pleaded, appears to include claims for alleged violations of the Truth inLending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA") based on an alleged non-disclosure); (3) "Willful Misrepresentation, Non-Disclosure, and Withholding of Material Facts and Documentation"; (4) "Failure to Name Real Party of Interest"; and (5) "TILA Violations." (FAC at 6, 9, 13, 14, 19.) These claims arise from an alleged loan secured by real property in Lathrop, California (the "subject property"), and the ultimate foreclosure and trustee's sale of that property.
While the FAC's factual allegations are not straightforward and are often buried within conclusions and legal arguments, it is apparent that the FAC alleges that plaintiff "submitted a signed application for a home loan and received the proceeds from said alleged loan on or about March 30, 2006[,] the date of recording a Deed of Trust signed by" plaintiff. (FAC at 4-5.) Later, the foreclosure process was initiated and defendant sold the subject property through a trustee's sale. (Id. at 5.) The FAC alleges that, prior to the trustee's sale, defendant did not place "into any court record" any evidence of "actual cost they allegedly paid for their interest in the subject loan transfer or the subject private land and house." (Id. at 5.) The FAC also alleges that "defendant QUALITY LOAN SERVICE CORPORATION, as so-called named Trustee of the Deed of Trust and participant in the alleged Trustee Sale" failed to issue a "receipt as evidence of satisfaction of all claims against the subject property."2 (Id. at 10.) Plaintiff alleges that defendant could not properly foreclose without a "judicial determination of the status of said Defendant as the owner of the subject property in a Court and by way of a Quiet Titleaction" (id. at 7 (citing California Civil Code § 2924)), and the FAC seeks to "set aside foreclosure" and "discharge of the original fraudulent loan," along with seeking $2,610,000.00 in damages. (Id. at 1-2, 11.)
Aside from defendant's alleged failure to involve a court prior to foreclosure, the FAC also alleges that the foreclosure process and trustee's sale were improper for a separate reason: plaintiff's alleged tender of loan repayment to defendant, which allegedly satisfied her obligations under her loan prior to foreclosure. Specifically, the FAC alleges that "[o]n or about November 6, 2009[,] under the terms of a private agreement between Plaintiff and a third party, a Bonded Promissory Note was conveyed by said third party" to defendant, that defendant received that Bonded Promissory Note (the "BPN") on June 8, 2008, and that because defendant "failed to return" such bonded promissory note to plaintiff, plaintiff's obligations for the "above referenced loan" were "fully satisfied." (Id. at 6.)
While the allegations are unclear, the FAC also appears to suggest that plaintiff's alleged loan was funded by monies defendants created "out of thin air," and that defendant's failure to inform her of this alleged source of her loan funds effectively voids the loan agreement and amounts to a "non-disclosure contrary to the requirements of the federal Truth in Lending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA")...." (Id. at 10-13.)
The FAC also alleges that defendant's foreclosure was done with a "lack of constitutional due process of law." (Id. at 7.) While the allegations are again unclear, the FAC also appears to allege that defendant is a corporation existing under the laws of the State of California, that "[s]uch State of California and all corporate subdivisions thereof, which is inclusive of all Defendants herein, are considered and act as Federal corporations..." and as a "federal corporation," defendant allegedly can be liable for depriving plaintiff of "her Rights under Due Process" of law to free enjoyment of land. (Id. at 15.)
Finally, perhaps overlooking the fact that plaintiff herself crafted the pleading and is charged with naming the defendants, the FAC also rather confusingly discusses the "real partyin interest" that "should have been named as defendants" (id. at 17-18) and lists "the City of London Corporation, The House of Windsor, The Vatican or other unnamed and unrevealed parties." (Id. at 17.)
In its pending motion, defendant again seeks to dismiss the FAC for failure to state a claim.3 Defendant makes several arguments challenging the sufficiency of the FAC. First, defendant argues that the facts, as pleaded, do not demonstrate that plaintiff is entitled to relief. Defendant avers that: (1) plaintiff fails to plead a valid "tender" of her debt because, as a matter of law, the form of payment allegedly tendered by plaintiff — the BPN — is not an acceptable form of payment and thus that the Deed of Trust was properly foreclosed upon; and (2) as a matter of law, nonjudicial foreclosure proceedings need not be preceded by judicial determinations of note ownership. Defendant also argues that plaintiff failed to plead facts supporting claims for fraud and violation of the TILA. Defendant argues that plaintiff has not pleaded facts sufficient to show entitlement to the over $2 million in damages she alleges, and that the FAC fails to comply with minimal pleading standards. (Dkt. No. 30-1.)
Defendant confirms that plaintiff borrowed $597,400.00 under a promissory note to purchase a home located in Lathrop, California. (RJN, Exh. A.) Defendant contends that in 2008, plaintiff breached her promise to repay the indebtedness.4 (Id.) Nonjudicial foreclosure proceedings commenced, and the subject property was sold at public auction on July 29, 2009. (RJN, Exh. E.) On December 17, 2009, a Trustee's Deed Upon Sale was recorded in favor of defendant in the San Joaquin County Recorder's Office. (Id.)
Along with dismissal of the action, defendant also seeks an order of this court expunging a lis pendens plaintiff placed on the subject real property. (Dkt. No. 32.) From thedocuments attached to defendant's request for judicial notice in support of the motion to expunge (Dkt. No. 32-3), it appears that plaintiff recorded the lis pendens with the San Joaquin County Recorder's office on October 30, 2009. (Dkt. No. 32-3, Exh. F (a Notice of Pendency of Action recorded October 30, 2009).) Plaintiff stated in the lis pendens that the amount at issue was $2,610,000.00 and that she sought to impose an equitable lien over the real property. (Id.) Defendant seeks attorneys' fees and costs in the amount of $1,250.00 (Dkt. No. 32-2 at 2), which may be recovered by a party prevailing on an expungement motion where a lis pendens was recorded without "substantial justification." (Dkt. No. 32-1 at 12.)
In her opposition to defendant's motions, plaintiff echoes the allegation in her FAC that because defendant did not inform her that it created money "out of thin air," this failure to inform signifies that there was "no Consideration" and thus "no CONTRACT" for her loan. (Oppo., Dkt. No. 41 at 2.) Plaintiff also contends that the entity who foreclosed on her home...
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