Matthews v. Caliber Home Loans
| Decision Date | 31 January 2020 |
| Docket Number | No. 2:19-cv-2463-KJM-KJN PS,2:19-cv-2463-KJM-KJN PS |
| Parties | DESMAL S. MATTHEWS, Plaintiff, v. CALIBER HOME LOANS., et al. Defendants. |
| Court | U.S. District Court — Eastern District of California |
FINDINGS AND RECOMMENDATIONS AND ORDER ON DEFENDANTS' MOTION TO DISMISS AND PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
Plaintiff alleges multiple fraud-type claims under California law concerning his home and residential mortgage.1 (ECF No. 9.) Defendants have moved dismiss all claims with prejudice, and Plaintiff has moved for a preliminary injunction to halt the upcoming trustee sale. (ECF Nos. 13, 16.) Given the impending deadlines and interconnected nature of these motions, the Court now takes each under submission without oral argument, pursuant to Local Rule 230(g). For the reasons discussed below, the Court recommends:
On January 11, 2005, Plaintiff borrowed $385,000 from Paul Financial, LLC, secured by a deed of trust recorded against the Property at 10758 Westerly Dr. in Mather, California. (ECF No. 9 at ¶¶ 7, 9.) The deed listed Plaintiff and his wife as the borrowers and Paul Financial as the lender. (Id. at ¶ 9B; ECF No. 9-1 at pp. 37-38.) In April 2009, a notice of default was recorded, indicating that Plaintiff was approximately $17,000 in arrears on the mortgage. (ECF No. 14 at p. 42.) Plaintiff received a Chapter 7 discharge in 2011, and his two subsequent bankruptcies were dismissed on procedural grounds. (See ECF No. 14 at pp. 46-52; 54-61.)
Between 2011 and 2015, the loan was assigned multiple times, ending with an assignment in December 2015 that named Defendant U.S. Bank as trustee for the "LSF9 Trust" and Caliber Home Loans as the lender. (ECF No. 9 at ¶¶ 9B-9E; ECF No. 14 at pp. 32-40.) On August 25, 2017, a second notice of default was recorded, indicating Plaintiff was approximately $294,000 in arrears. (Id. at pp. 63-66.) Plaintiff's subsequent fourth and fifth bankruptcy actions were dismissed on procedural grounds. (See ECF No. 14 at pp. 71-74.) On November 22, 2019, a notice of trustee sale was recorded, indicating an arrears of approximately $745,000. (Id. at pp. 80-81.) The trustee sale is set for March 3, 2020. (ECF No. 16 at p. 15.)
In December of 2019, Plaintiff filed a Complaint in California state court against Caliber Loans and U.S. Bank (as trustee for the LSF9 Trust), alleging the following claims under California law: "Forged Altered and Stolen Note"; "Fraud in the Factum"; Violations of Cal. Civ. Code § 2924(a)(6) and Cal. Bus. Code § 17200; Quiet Title; Slander of Title; Cancellation of Instruments; and Declaratory Relief. (ECF No. 1-1.) On January 6, 2020, Plaintiff filed a substantially-similar First Amended Complaint ("1AC"), reasserting the above claims and adding a claim for "Breach of Fiduciary Responsibility of Securities Intermediary." (ECF No. 9.)
Defendants filed a motion to dismiss all claims with prejudice, setting it for a February 13, 2020 hearing. (ECF No. 13.) Plaintiff opposed, and also filed a motion for preliminary injunction, setting the latter for a February 20, 2020 hearing. (ECF Nos. 19, 16.)
Defendants contend that, among other reasons, Plaintiff's 1AC fails because:
The heart of Plaintiff's arguments concern the 2005 loan documents as between him and Paul Financial. Plaintiff argues that these documents are missing terms (as he remembers them), that the signatures in these documents are not his, and that he (and not Paul Financial) was the true lender of his own loan. Thus, Plaintiff claims Defendants are relying on forged documents, do not hold a beneficial interest in the Property, violated securities law, and otherwise have no right to foreclose. Plaintiff also argues he is excused from the tender rule, and any statute of limitations should be tolled due to concealment. (ECF Nos. 9, 19.) Further, Plaintiff contends that since he is likely to succeed on his claims, Defendants should be enjoined from selling his home at a March 3 trustee sale. (ECF No. 16.)
Rule 8(a)3 requires that a pleading be "(1) a short and plain statement of the grounds for the court's jurisdiction4 . . . ; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief."
A motion to dismiss brought pursuant to Rule 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1109 (E.D. Cal. 2009). Under Rule 12(b)(6), a claim may be dismissed because of the plaintiff's failure to state a claim upon which relief can be granted. This dismissal generally encompasses two scenarios: where the complaint lacks a cognizable legal theory, or where it lacks "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); Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015).
When a court considers whether a complaint states a claim upon which relief may be granted, all well-pleaded factual allegations must be accepted as true, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and the complaint must be construed in the light most favorable to the non-moving party, Corrie v. Caterpillar, Inc., 503 F.3d 974, 977 (9th Cir. 2007). The court is not, however, required to accept as true "conclusory [factual] allegations that are contradicted by documents referred to in the complaint," or "legal conclusions merely because they are cast in the form of factual allegations." Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). Thus, to avoid dismissal for failure to state a claim, a complaint must contain more than "naked assertions," "labels and conclusions," or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). Simply, the 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) (citing Twombly, 550 U.S. at 570). Plausibility means pleading "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
Pro se pleadings are to be liberally construed. Hebbe v. Pliler, 627 F.3d 338, 342 & fn. 7 (9th Cir. 2010) (). Prior to dismissal, the court is to tell the plaintiff of deficiencies in the complaint and give the plaintiff an opportunity to cure them—if it appears at all possible the defects can be corrected. See Lopez v. Smith, 203 F.3d 1122, 1130-31 (9th Cir. 2000). However, if amendment would be futile, no leave to amend need be given. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996).
Defendants' dismissal arguments are multifaceted: some are blanket assertions regarding all of Plaintiff's claims (tender, judicial estoppel), others are applicable to a group of claims (statute of limitations on the fraud claims), while others are specific to a particular cause of action. For economy, the Court addresses the issues dispositive of Plaintiff's claims.
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Plaintiff's first cause of action is labeled "forged, altered, and/or stolen note." However, as Defendants correctly aver, "there is no recognized civil cause of action for forgery." Kraif v. Guez, 2010 WL 11598067, at *2 (C.D. Cal. Aug. 11, 2010); see also Wutzke v. Bill Reid Painting Serv., Inc., 151 Cal. App. 3d 36, 41 (1984) (); Vlasich v. Fishback, 2007 WL 2572111 (E.D. Cal. Sept. 5, 2007) ().
Insomuch as Plaintiff intends his first cause of action to allege a claim for fraud, alongside his second cause of action (see ECF No. 9 at ¶¶ 14-23, 27), the Court finds numerous issues with these liberally-construed claims.5 Primarily, because the claims sound in fraud, the Court finds them barred by the applicable statute of limitations—three years. Cal. Civ. Code § 338(d). Plaintiff appears to claim that he believed the 2005 loan agreement was for Paul Financial to lend Plaintiff money to put...
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