Ohlendorf v. American Brokers Conduit
| Decision Date | 05 March 2012 |
| Docket Number | NO. CIV. S-11-293 LKK/EFB,CIV. S-11-293 LKK/EFB |
| Court | U.S. District Court — Eastern District of California |
| Parties | CRAIG OHLENDORF, Plaintiff, v. AMERICAN BROKERS CONDUIT, et al., Defendants. |
This case arises from the foreclosure of Plaintiff's property located at 795 Quartz Mine Road in Newcastle, California. Plaintiff Craig Ohlendorf has filed suit against ten named defendants based on thirteen causes of action, which include violations of the Homeowners Equity Protection Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, and the Fair Credit Reporting Act.
Before the court are motions to dismiss Plaintiff's complaint, filed by the following Defendants: (1) American Home Mortgage Servicing, Inc. ("AHMSI"), Power Default Services, Inc. ("PDSI"),and Deutsche Bank National Trust Company ("Deutsche"), ECF No. 12; (2) LSI Title Company ("LSI"), ECF No. 15; and (3) T.D. Service Company ("T.D."), ECF No. 37.1 Plaintiff has filed oppositions to each motion to dismiss. Pl's Opp'ns, ECF Nos. 19, 28, 42. The court concluded that oral argument was not necessary in this matter, and decides the motions on the papers. See E.D. Cal. Local Rule 78-230(g).
On July 29, 2009, Plaintiff Craig Ohlendorf filed an action in this court arising from the foreclosure of Plaintiff's property at 795 Quartz Mine Road, in New Castle, California. See No. CIV. 2:09-cv-02081, ECF No. 1 (Pl's Compl.). Plaintiff's Complaint named a number of defendants, including American Home Mortgage Servicing, American Brokers Conduit, AHMSI Default Services, Inc., and Mortgage Electronic Registration Systems, Inc., and was based on causes of action arising under the Truth in Lending Act ("TILA"), the Real Estate Settlement Procedures Act ("RESPA"), and various state statutes and common law theories. Id. at 1.
Defendants American Home Mortgage Servicing, AHMSI Default Services, Inc., and Mortgage Electronic Registration Systems, Inc. filed a motion to dismiss Plaintiff's Complaint. Id., ECF No. 9 (Defs' Mot.). In response, Plaintiff filed an amended complaint which, amongst other changes, added Deutsche Bank National Trust Company as a defendant. Id., ECF No. 17 (Pl's Am. Compl.).
Defendants filed a motion to dismiss Plaintiff's First Amended Complaint, id., ECF No. 21 (Defs' Mot.), which this court granted in part and denied in part, id., ECF No. 43 (Order).
On April 28, 2010, Plaintiff filed a second amended complaint, in which he abandoned his federal claims. Id., ECF No. 44 (Pl's Sec. Am. Compl.). The court then dismissed Plaintiff's Second Amended Complaint for lack of subject matter jurisdiction. Id., ECF No. 53 (Order).
Plaintiff is facing the loss of his home through foreclosure initiated and advanced by Defendants. See 2:11-cv-00293, Pl's Compl., ECF No. 2, at 4, ¶ 20.
The foreclosure being challenged in this action is based upon a Deed of Trust and a Note in the mortgage that "was flawed at the date of origination of the loan." Id. at ¶ 21. Specifically,unbeknownst to the Plaintiff, the loan papers he signed "were processed with an inflated appraisal and inflated income," "without his consent or knowledge of the terms and conditions of the contract." Id. at 7, ¶ 29.
Plaintiff "called the purported lender/servicer of the subject mortgage to advise [them of] his financial situation and to request assistance in the form of a repayment plan or other modification relief," but "the purported lender/servicer failed, refused and/or neglected to work with Plaintiff in any reasonable way to avoid foreclosure during the time of his financial difficulties" or "to disclose to Plaintiff what options were available to the Plaintiff, to avoid foreclosure." Id. at 15, ¶¶ 45-46, 48. "Instead, the purported lender/servicer secretly was transferring the Deed of Trust and . . . has attempted to foreclose, without notice to Plaintiff." Id. at ¶ 47.
"Defendant" also failed "to evaluate the particular circumstances surrounding Plaintiff's claimed default; failed to evaluate Plaintiff or the subject property; failed to determine Plaintiff's capacity to pay the monthly payment or a modified payment amount; failed to ascertain the reason for Plaintiff's claimed default, or the extent of Plaintiff's interest in keeping the Subject Property"; "failed, refused and/or neglected to give . . . Plaintiff the opportunity to cooperate in resolving the debt"; and "purposefully deceived Plaintiff that the Mortgage modification was proceeding as planned." Id. at 15-16, ¶¶ 50-52.
Furthermore, the Deed of Trust and Note in the mortgage uponwhich the foreclosure action is premised was transferred in such a manner that it "is no longer held by the same entity or party" and "[t]he foreclosing entity filing the foreclosure . . . has no pecuniary interest in the mortgage loan . . . has no firsthand knowledge of the loan, [and] no authority to testify or file affidavits as to the validity of the loan documents or the existence of the loan." Id. at 4-5, ¶ 21.3
Plaintiff alleges that "[o]n or about May 16, 2007, Plaintiff executed a written deed of trust and security instrument, with Conduit as the lender and Old Republic as the trustee," and that the "deed of trust and security has never been transferred from Conduit, to the foreclosing entity, Power Default or TD Servicing." Id. at 9, ¶ 37. Instead, the deed of trust was "transferred to an unknown entity" at "the time of execution in May 2007, or was transferred to other unnamed entities and . . . the parties claiming a right or beneficial interest in the Deed of Trust" have no legitimate claims thereon. Id.
Plaintiff also alleges that Defendant American Brokers Conduit ("Conduit"), the original "'lender' on the Deed of Trust," was "not the actual lender or source of the monies that funded the loan," but instead, "[t]he money to fund the loan came from investors." Id. at 4, ¶ 21. Conduit "acted merely as a broker for the purpose of obtaining Plaintiff's signature on loan documents and . . .[was] never the lender or owner of the beneficial interest in the Deed of Trust or the obligation purportedly secured thereby." Id.
Plaintiff alleges that "[t]he true originators of the loan immediately and simultaneously securitized . . . the note through the means of conversion of an Article III negotiable Instrument (U.C.C.) into Article IX (U.C.C.) non-negotiable paper." Id. at 5, ¶ 17.
Plaintiff further alleges that "[t]he obligations reflected by the Note have been satisfied in whole or in part because the investors who furnish the funding for these loans have been paid to the degree that extinguishments of the debts has occurred," but Defendants "continue to cloud the title and illegally collect payments and attempt to foreclose upon the property . . . when they do not have lawful right to foreclose." Id. at ¶ 18.
Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") was "named as . . . beneficiary on the Deed of Trust," but "[t]he mortgage loan assigned to MERS . . . is, at most, an unsecured debt," which can only be collected by "unknown parties [who] have not come forward in this case." Id. at 4-6, ¶ 21, 19.
Certain employees of Defendant Power Default Services, Inc., formally known as AHMSI Default Services, Inc. ("Power Default") "executed and notarized forged documents as to the ownership of the loan." Id. at 6, ¶ 20. Power Default are "special Corporate Trustees with limited ministerial duties," which "do not include any remedial actions as they relate to the assets of the [Real Estate Mortgage Investment Conduit ("REMIC")] Trust." Id. at 6, ¶21. "The [REMIC] Trust participants have executed Trust Agreements, under oath, with the Security Exchange Commission ('SEC'), and the Internal Revenue Service ('IRS'), as mortgage asset 'pass-through' entities wherein they can never own or manage the mortgage loan assets in the REMIC Trust." Id.
According to Plaintiff, the "[c]hain of [m]ortgage assignment is broken as the assignees in the chain of title were never the mortgagee of record under a Mortgage Assignment and have absolutely no legal tie to the investors in the Trust." Id. at 9, ¶ 35.
That is, "[e]very mortgage in the Trust should have been publicly recorded in Placer County where the property is located," but "[n]o such recording exists in the Placer County records." Id. at ¶ 22.4 "The Promissory Note was never conveyed pursuant to the Trust mandates and the mortgages were never conveyed or recorded pursuant to the proper chain of custody and Assignment within the Trust Agreement(s)." Id.
Plaintiff further alleges that Defendants "fraudulently recorded" Plaintiff's mortgage loan "on or about July 20, 2009, in an attempt to transfer a Mortgage Assignment into a REMIC after that REMIC's 'cut off' and 'closing dates'," as "listed in the prospectus." Id. at 7, ¶ 26, 27. That is, "[t]he assignment of Plaintiff's mortgage was signed and notarized many years after the actual date of the 'loan' and the date listed with the SEC and IRSas the 'Closing' of the REMIC." Id. at 9, ¶ 36.
Furthermore, Plaintiff "was never informed" that his "'loan' was actually the proceeds from the sale of securities." Id. at 8, ¶ 30.
Plaintiff specifically alleges the following deficiencies in the chain of title: (1) on June 17, 2009, Defendant Old Republic Title Company ("Old Republic") was substituted as trustee by AHMSI Default, but that substitution of trustee was not filed with the recorder's office; and (2) "no notarized declaration of compliance" was filed in support of the "Notice of Default and Election to Sell Under Deed of Trust," which was filed on June 23, 2009, and was signed by an "illegible signature," by "Karlyn Gleaves, Authorized Agent, without stating any corporate signatory capacity," and "by LSI, a purported 'agent' of TD Service, which purports to be an agent 'for the beneficiary' who is unnamed." Id. at 10-14, ¶ 39, 40.
Plaintiff further alleges that...
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