Watson v. Bank of Am., N.A.
| Decision Date | 07 November 2016 |
| Docket Number | CASE NO. 16cv513-GPC(MDD) |
| Court | U.S. District Court — Southern District of California |
| Parties | CHARLOTTE C. WATSON, an individual, and CHARLOTTE C. WATSON, as Trustee of the CHARLOTTE WATSON TRUST dated November 5, 2003, Plaintiffs, v. BANK OF AMERICA, N.A., a business entity form unknown; CALIBER HOME LOANS, INC, a business entity form unknown; MTC FINANCIAL, INC. a business entity form unknown; and U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, a business entity form unknown; U.S. BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE OF THE GMACM HOME EQUITY LOAN TRUST 2006-HE4, a business entity form unknown; and DOES 1-100, inclusive, Defendants. |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS BANA, U.S. BANK AND CALIBER'S MOTIONS TO DISMISS
Before the Court are Defendants1 Bank of America, N.A. ("BANA"), and U.S.Bank National Association, as Indenture Trustee of the GMACM Home Equity Loan Trust 2006-HE4's ("U.S. Bank") motion to dismiss the second amended complaint, (Dkt. No. 26), and Defendant Caliber Home Loans, Inc.'s ("Caliber") motion to dismiss the second amended complaint. (Dkt. No. 27.) Oppositions were filed on September 16, 2016. (Dkt. Nos. 29, 30.) Replies were filed on September 27 and 29, 2016. (Dkt. Nos. 31, 32.) The motions are submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1). Based on the reasoning below, the Court GRANTS in part and DENIES in part Defendants' motions to dismiss.
On February 29, 2016, the case was removed to this Court from the San Diego Superior Court. (Dkt. No. 1.) A first amended complaint was filed on March 21, 2016. (Dkt. No. 8, FAC.) On June 30, 2016, the Court granted in part and denied in part Defendants' motions to dismiss. (Dkt. No. 23.) On July 29, 2016, Plaintiffs Charlotte C. Watson, and Charlotte C. Watson, as Trustee of the Charlotte C. Watson Trust dated November 5, 2003 ("Plaintiffs") filed a second amended complaint ("SAC"). (Dkt. No. 25.) The SAC alleges the following causes of action:
(Id.) Plaintiffs allege that all defendants are "servicers", "master servicers" and/or "sub-servicers." (Id. ¶ 16.)
The SAC alleges that around May 24, 2005, Plaintiffs obtained a first lien mortgage loan in the amount of $500,000 (the "Loan") from GMAC Mortgage Corporation, ("GMAC") secured by the real property ("Property") located at 3207 S. Bonita Street, Spring Valley, CA 91977 through a Deed of Trust, ("DOT 1") recorded on June 1, 2005 with the San Diego County Recorder's Office. (Dkt. No. 25, SAC ¶ 42.) Plaintiffs also executed a Deed of Trust and Assignment of Rents relating to a Home Equity Line of Credit of up to $94,000.00, from GMAC, secured by the same Property through a Deed of Trust ("DOT 2"), recorded on June 1, 2005. (Id. ¶ 43.)
On or about February 16, 2012, an Assignment ("Assignment 1") of DOT 1 was recorded with the San Diego County Recorder's Office, purporting to assign the beneficial interest under DOT 1 to BANA. (Id. ¶ 45.) On or about February 12, 2014, a Substitution of Trustee was recorded with the San Diego County Recorder's Office, purporting to substitute MTC Financial, Inc. ("MTC") as the Trustee of DOT 1. (Id. ¶ 44.) This substitution was purportedly executed by BANA. (Id.) However, Plaintiffs allege that BANA did not have any authority under DOT 1 to substitute MTC as Trustee of DOT 1 because Assignment 1 was recorded four days after the Substitution of Trustee.2 (Id.) As such, the document is void and lacks any legal effect. (Id.)
On or about February 14, 2014, Defendant MTC recorded a Notice of Default ("NOD") against the Property followed by two subsequent recordation of Notices of Trustee Sales ("NTS") on May 29, 2014 and September 16, 2014, respectively. (Id. ¶ 46.) Plaintiffs allege that the attempted substitution of MTC as Trustee of DOT 1 was done without any authority because it was recorded four days after the Substitution of Trustee was recorded, and that the NOD and NTSs are thus void. (Id.)
According to the SAC, on or about June 17, 2015, another Assignment ("Assignment 2") of DOT 1 was recorded in the San Diego County Recorder's Office, purporting to assign the beneficial interest under DOT 1 from BANA to U.S. Bank Trust, as Trustee for the LSF9 Trust. Assignment 2 was purportedly executed by Caliber as BANA's attorney in fact; however, there is no relationship between Caliber with either BANA or LSF9. Plaintiffs allege Assignment 2 is void. (Id. ¶ 47.)
The SAC alleges that the Assignment ("Assignment 3") of DOT 2 which was recorded with the San Diego County Recorder's Office on or about July 24, 2014, and purports to assign the beneficial interest under DOT 2 from Mortgage Electronic Registration Systems, Inc. ("MERS") to U.S. Bank, is void because U.S. Bank and MERS were not beneficiaries of DOT 2 at the time of the assignment. (Id. ¶ 48.) Plaintiffs assert that the loan secured by DOT 2 was removed from the GMACM HLOC Trust in 2011, following a Chapter 11 bankruptcy filing in the United States Bankruptcy Court for the Southern District of New York, Case No. 12-12020 and pursuant to an Asset Purchase Agreement where Lone Star U.S. Acquisitions, LLC, purchased, as a part of a transaction, certain assets which were secured by DOT 2. (Id. ¶ 49.) This directly contradicts the purported assignment by MERS to U.S. Bank. (Id.) Plaintiffs assert that Assignment 3 is void because of the bankruptcy. (Id.)
In 2010, Plaintiffs suffered a financial hardship and sought foreclosure assistance but BANA repeatedly denied Plaintiffs' requests while concurrently attempting to foreclose on the Property. (Id. ¶ 50.) In late 2012, Plaintiffs sent a Qualified Written Request, ("QWR") pursuant to 12 U.S.C. § 2605 (e) of RESPA, and a Notice of Right to Cancel pursuant to 15 U.S.C. § 1601 of ("TILA") but BANA failed to acknowledge or respond to them. (Id. ¶¶ 51-54.) Around July 2014, Plaintiffs again attempted to obtain a loan modification from BANA but the request was summarily denied in August 2014. (Id. ¶ 55.)
On or about October 7, 2014, Plaintiffs again sought a loan modification providing BANA with notice along with supporting documentation of Plaintiffs'material change in financial circumstance. (Id. ¶ 56.) In response, BANA canceled the Trustee sale of the Property and within two (2) weeks offered Plaintiffs a trial modification which they accepted by tendering the required monthly payments. (Id.) In consideration for performance under the terms of the Trial Payment Plan and tendering three (3) consecutive monthly payments of $2,591.22, BANA would offer Plaintiffs a permanent loan modification. (Id.) Prior to offering Plaintiffs a fair and affordable Permanent Modification, which included the fees and charges which artificially inflated the Principal Balance of the loan, BANA caused the servicing of the loan purportedly secured by DOT 1 to Caliber on May 16, 2015. (Id. ¶ 57.)
The servicing of the loan was transferred to Caliber and Plaintiffs allege they were deprived of receiving the Permanent Modification they were qualified and entitled to receive. (Id.) Plaintiffs also allege that any offer of a permanent modification by BANA is void, because the principal balance of Plaintiffs' loan was artificially inflated by assessing unauthorized and/or unlawful fees. (Id.)
While awaiting a decision from BANA regarding a Permanent Modification, Plaintiffs sent several Requests for Information ("RFI") and Notice of Errors ("NOE") to BANA and Caliber, pursuant to Regulations X and Z, as amended through RESPA and TILA. (Id. ¶ 58.)
BANA moves to dismiss the first, third, fifth, sixth and seventh causes of action against it and U.S. Bank moves to dismiss the third, fourth, fifth, sixth and seventh causes of action. (Dkt. No. 26.) Caliber moves to dismiss the first, third, fifth, sixth and seventh causes of action.3 (Dkt. No. 27.)
Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal underRule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir. 1990). Under Rule 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "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." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "In sum, for a complaint to survive a motion to dismiss,...
To continue reading
Request your trial