Glaser v. Nationstar Mortg., LLC
Decision Date | 09 May 2017 |
Docket Number | Case No. 16-cv-07245-LB |
Parties | FRANKLIN GLASER, et al., Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants. |
Court | U.S. District Court — Northern District of California |
The plaintiffs and borrowers, Franklin and Victoria Glaser, brought this mortgage-related case after their home was sold in foreclosure.1 They assert ten claims for relief against Nationstar Mortgage (the loan servicer), Mortgage Electronic Registration Systems (the original mortgage-trust beneficiary), U.S. Bank (the trustee), NBS Default Services (the foreclosing trustee), and Viet Nguyen (the third-party homebuyer).2 The defendants move to dismiss the Glasers' First Amended Complaint ("FAC") under Federal Rule of Civil Procedure 12(b)(6).3
The court can decide the matter without oral argument and vacates the May 18, 2017 hearing. Civil L.R. 7-1(b). The court grants in part the defendants' motion and dismisses many of the Glasers' claims. The court does, however, grant them leave to amend.
In December 2004, Franklin and Victoria Glaser got a $560,000 loan from America's Wholesale Lender.4 The loan was secured by a deed of trust on the Glasers' property in San Ramon, California.5 The deed of trust named as trustee CTC Real Estate Services and named as beneficiary (as nominee for America's Wholesale) Mortgage Electronic Registration Systems ("MERS").6
On January 11, 2011, MERS recorded an assignment of the deed of trust that transferred its interest to U.S. Bank as trustee for the Harborview 2005-1 Trust Fund.7 Ten months later, MERS recorded a second assignment of the deed of trust, again to U.S. Bank as trustee for the Harborview trust.8 And nearly two years after the second assignment, Bank of America recorded an assignment of the deed of trust to Nationstar.9 (The Glasers allege "that there is no evidence of [a] transfer to [Bank of America] recorded in the public record."10)
Several years later, in April 2016, NBS Default Services was substituted as trustee for U.S. Bank.11
The Glasers' mortgage was affordable, but Mr. Glaser had a stroke in March 2013 and "they found themselves behind in payments."12 So in 2014 the Glasers began loan-modification efforts with Nationstar.13 That year they submitted a loan-modification application that was denied because their "documents were not provided in writing."14 But they submitted a complete application, qualified for a three-month modification trial period, and then converted to a permanent modification.15 The Glasers made three payments during the trial period and another six payments after the modification became permanent.16 But the modification was not recorded and "Nationstar did not follow through with . . . [its] promise to permanently modify [the loan] in writing."17
In January 2016, a month after Mr. Glaser retired, the Glasers "submitted another complete" loan-modification application because of the change in their income.18 Nationstar acknowledged receipt of the application the next month.19 Nationstar denied the Glasers' application because (according to it and disputed by the Glasers) the application was ineligible under the Home Affordable Modification Program and the Glasers had a negative disposable income.20 In its denial letter, Nationstar appointed Silvia Ochoa-Araujo as the Glasers' single point of contact — the Glasers allege that this appointment was too late, that Ms. Ochoa-Araujo was never available, and that they never spoke to her.21
The Glasers disputed Nationstar's denial of their application "on the grounds that Mr. Glaser had retired in December 2015 and . . . he had started receiving Public Employee Retirement System payments."22 On Nationstar's advice, they submitted a new application (instead of appealing the denial) based on their changed financial circumstances.23 They submitted the new application before April 18, 2016, when NBS recorded a Notice of Default and Election to Sell.24
The Notice of Default "instruct[ed] [the Glasers] to contact Nationstar for foreclosure avoidance options" and "stated an amount in arrearage of $33,723.02."25 The Glasers assert that this amount is inaccurate because Nationstar "refused partial payments which should have been credited toward their loan."26
After NBS recorded the Notice of Default, in June 2016, Nationstar denied the Glasers' second loan-modification application because of a negative net present value ("NPV").27 Nationstar twice advised the Glasers that they could dispute the decision by providing "written evidence that one or more of the NPV input values [was] inaccurate."28 Nationstar also advised the Glasers about "the proper process for appealing the property value," which included (among other things) (1) the Glasers' alleged value of the home, along with documents to support that amount, and (2) if the NPV was found to be positive, a third-party appraisal.29 The Glasers disputed Nationstar's NPV calculation but they did not "provide a payment for another appraisal or[,] in the alternative, their own appraisal report."30
They also appealed Nationstar's calculation of their income.31 Nationstar had calculated the Glasers' monthly gross income to be $5,496.79.32 This included (1) $2,423.05 in Mr. Glaser's retirement income; (2) $2,623.74 in Mrs. Glaser's average wages;33 and (3) $450 in property rental income.34 The Glasers assert that the income calculation was inaccurate because it did not include Mr. Glaser's $868 monthly insurance payment.35 They also appear to allege that Nationstar failed to account for Mrs. Glaser's increased monthly salary.36
On September 10, 2016, in addition to appealing Nationstar's decision, the Glasers "submitted another written application."37 The Glasers allege that this September application included the $868 monthly insurance payments, but that income is not separately delineated in the application.38 Instead, the application reflected $5,344.14 in monthly gross wages, $2,423.05 in retirement income, and $600 in rental income for a total gross income of $8,367.19.39 Nationstar did not acknowledge receipt of the application.40
Two days after the Glasers submitted the September 2016 modification application, NBS recorded a Notice of Trustee's Sale.41 The Glasers "were in regular contact with Nationstar," though, "and were told their application including the $868 per month [insurance] income wasunder consideration and" the sale was stayed.42 The Glasers "relied on this representation" and did not seek bankruptcy or other emergency court protection.43 They instead wrote a letter to Nationstar again explaining the $868 monthly insurance income.44
A week after the Glasers wrote to Nationstar, on October 11, 2016, NBS conducted the trustee's sale.45 U.S. Bank (as trustee for the Harborview Trust) bought the property and later "attempted to transfer its interest to Viet Nguyen."46 U.S. Bank recorded a grant deed conveying the property to Ms. Nguyen.47
The Glasers challenge the trustee's sale (and the eventual transfer to Ms. Nguyen) because it "was initiated and conducted by parties with no lawful interest in" their deed of trust.48 They assert that chain of title in the deed of trust was broken when the lender "fail[ed] to transfer assets to the trust prior to the trust closing date" in violation of the trust's Pooling and Servicing Agreement ("PSA").49 They also assert that the chain of title was broken by the three recorded assignments (the first two from MERS to U.S. Bank and the third from Bank of America to Nationstar) and Bank of America's purchase of Countrywide.50
The Glasers therefore brought this case to challenge the foreclosure and assert ten claims for relief: (1) wrongful foreclosure; (2) promissory estoppel; (3) violation of California Civil Code section 2924.11; (4) violation of California Civil code section 2923.7; (5) violation of California Civil Code section 2923.55; (6) slander of title; (7) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962; (8) violation of the Fair Debt CollectionPractices Act ("FDCPA"), 15 U.S.C. § 1692; (9) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601; and (10) violation of the Real Estate Settlement Practices Act ("RESPA"), 12 U.S.C. § 2605.
MERS, U.S. Bank, and Nationstar move to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).51 NBS and Ms. Nguyen joined in the motion.52
Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of a "failure to state a claim upon which relief can be granted." A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).
A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief to give the defendant "fair notice" of what the claims are and the grounds upon which they rest. See Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not need detailed factual allegations, but "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a claim for relief above the speculative level . . . ." Twombly, 550 U.S. at 555 (internal citations omitted).
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