Wise v. Wells Fargo Bank, N.A.

• Decision Date: 23 March 2012
• Docket Number: Case No. CV 11–8586 CBM (PJWx).
• Citation: 850 F.Supp.2d 1047
• Parties: Margaret S. WISE, an individual, Plaintiff, v. WELLS FARGO BANK, N.A.; U.S. Bank, N.A. as Trustee for Citigroup Mortgage Loan Trust, Inc., Mortgage Pass–Through Certificates, Series 2006–AR9; and Does 1–10, inclusive, Defendants.
• Court: U.S. District Court — Central District of California

850 F.Supp.2d 1047

Margaret S. WISE, an individual, Plaintiff,

v.WELLS FARGO BANK, N.A.; U.S. Bank, N.A. as Trustee for Citigroup Mortgage Loan Trust, Inc., Mortgage Pass–Through Certificates, Series 2006–AR9; and Does 1–10, inclusive, Defendants.

Case No. CV 11–8586 CBM (PJWx).

United States District Court, C.D. California.

March 23, 2012.

Deborah P. Gutierrez, Gordon Flint Dickson, Michael Eugene Thompson, Prosper Law Group LLP, Los Angeles, CA, for Plaintiff.

Jarlath M. Curran, II, Severson and Werson APC, Irvine, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

CONSUELO B. MARSHALL, District Judge.

The matter before the Court is Defendants' Motion to Dismiss First Amended Complaint. [Docket No. 14.]

I. JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1343; 15 U.S.C. §§ 1692, 1641(g); 12 U.S.C. § 2605; and 42 U.S.C. § 1983. This Court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. This Court also has diversity jurisdiction pursuant to 28 U.S.C. § 1332.

II. FACTUAL AND PROCEDURAL BACKGROUND

On or about June 21, 2006, Plaintiff Margaret Wise (“Plaintiff”) purchased real property located at 2009 Ernest Avenue, Redondo Beach, California 90278 (the “Property”) and obtained a $940,000 mortgage loan (the “Loan”) from Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) (First Amended Complaint (“FAC”), ¶¶ 1, 15; Ex. A.) Plaintiff alleges that Wells Fargo's interest in the Loan was never properly assigned to U.S. Bank National Association, as Trustee for Citigroup Mortgage Loan Trust, Inc., Mortgage Pass–Through Certificates, Series 2006–AR9 (“U.S. Bank”). (FAC ¶¶ 19–23.) Defendants executed and recorded an allegedly “fabricated” Assignment of Deed and Trust on or around August 16, 2011. (FAC ¶ 26, Exh. D.) Plaintiff timely paid her mortgage payments “until 2008” and was then denied a loan modification. (FAC ¶ 18.) A notice of default was executed on August 5, 2011 and recorded on August 10, 2011 (Defendants' Request for Judicial Notice, Ex. D; FAC ¶ 30.)

Plaintiff filed a complaint on October 17, 2011 alleging seven federal and state causes of action seeking not less than $5,000,000 in damages, punitive damages, an order enjoining Defendants from continuing the foreclosure process, a declaratory judgment finding that Defendants have no legally cognizable rights as to Plaintiff, the Property, or the Loan, an order compelling Defendants to disgorge all amounts wrongfully taken from Plaintiff plus interest, costs, and fees. [Docket No. 1.] Defendants filed a motion to dismiss on November 14, 2011. [Docket No. 9.] Prior to filing an opposition, Plaintiff filed a First Amended Complaint on December 5, 2011 removing an erroneously named defendant and adding four new causes of action. [Docket No. 12.] Defendants filed this pending motion on December 19, 2011 (“Motion”). [Docket No. 14.] An opposition and reply were timely filed. [Docket Nos. 15, 16.]

III. STANDARD OF LAW

Pursuant to Federal Rule of Civil Procedure 12(b)(6), failure to state a claim upon which relief can be granted is grounds for dismissal of the complaint. “To survive a motion to dismiss, a 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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although the Court must accept the factual allegations in the complaint as true, the Court must not accept the legal conclusions in the complaint as true. Iqbal, 129 S.Ct. at 1949. Accordingly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” ( Id.) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” ( Id.)

IV. DISCUSSION

Plaintiff's primary contention in her FAC is that the Defendants are not Plaintiff's true creditors and have no legal, equitable, or pecuniary right in the debt obligation in the Loan. Specifically, Plaintiff argues that the originating lender sold the debt obligation, but that it is unknown to whom it was sold. (Plaintiff's Opposition to Defendants' Motion to Dismiss First Amended Complaint [“Opp'n”] at 1:21–24.) Plaintiff contends that the Note and Deed of Trust were never validly assigned to U.S. Bank because there was not compliance with the operative U.S. Bank Pooling and Servicing Agreement (“PSA”), and that the Note and Deed of Trust are therefore not part of U.S. Bank's trust res. (FAC ¶¶ 17, 23–24.) Defendants' Motion seeks to dismiss all of Plaintiff's causes of action.

A. Whether an Actual Controversy Exists Between the Parties

Defendants argue that Plaintiff's first cause of action, for declaratory judgment, fails as a matter of law because there is no actual, present controversy between the parties. (Motion at 2:17–3:2.) Defendants make three relevant arguments for this position: that Plaintiff's challenge to U.S. Bank's authority is improper, that Plaintiffs theory of improper loan securitization or loan pooling fails, and that the claims are barred by the doctrine of tender.

1. Declaratory Relief Cause of Action: Whether Plaintiff May Challenge U.S. Bank's Authority in Court

Defendants first argue that it is improper to challenge U.S. Bank in court because California Civil Code Sections 2924 through 2024k “provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” (Motion at 3:4–7, quoting Moeller v. Lien, 25 Cal.App.4th 822, 830, 30 Cal.Rptr.2d 777 (1994).) In Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149, 121 Cal.Rptr.3d 819 (2011), the California Court of Appeal held that a Plaintiff does not have a right to bring a lawsuit to determine a nominee's authorization to proceed with nonjudicial foreclosure on behalf of a noteholder. Id. at 1155, 121 Cal.Rptr.3d 819.

Defendants' reliance on Gomes is misguided, however, because here the issue is whether the wrong entity had initiated foreclosure whereas in Gomes it was whether the company selling the property in the nonjudicial foreclosure sale was authorized to do so by the owner of the promissory note. (Opp'n at 11:21–14:3.) This case is a challenge to the principal's authority to foreclose rather than to whether an agent had the authorization of its principal to initiate foreclosure. The Gomes court specifically distinguished itself from Ohlendorf v. American Home Mortgage Servicing, 279 F.R.D. 575 (E.D.Cal.2010) in which “the plaintiff alleged wrongful foreclosure on the grounds that assignments of the deed of trust had been improperly backdated, and thus the wrong party had initiated the foreclosure process.” Gomes, 192 Cal.App.4th at 1155, 121 Cal.Rptr.3d 819.Ohlendorf notes that a plaintiff has a viable claim for wrongful foreclosure if it is alleged that defendants “are not the proper parties to foreclose.” Ohlendorf, 279 F.R.D. at 582–83, 2010 WL 8533800, at *8. This case is closer to Ohlendorf than Gomes, and the Court denies Defendants' Motion as to this argument.

2. Whether Plaintiffs Theory of Improper Loan Securitization or Loan Pooling Fails as a Matter of Law.

Defendants next argue that Plaintiff's loan securitization and loan pooling theories fail as a matter of law. (Motion at 4:15–6:17.) Defendants' arguments are made under the assumption that Plaintiff is challenging what would be a typical mortgage-based securitization and transfer into a loan pool and that these typical transfers are proper. But the FAC insteadalleges that Defendants attempted and failed to conduct a typical securitization and transfer. Plaintiff states in opposition: “Plaintiff does not dispute that her Loan would have been legitimately securitized into the Citigroup Trust had Defendants followed the terms of the PSA and New York trust law.” (Opp'n at 9:23–26.) Plaintiff alleges that “the attempted securitization failed because of multiple violations of [Citigroup Trust's Pooling and Servicing Agreement or “PSA”] and New York Trust law.” ( Id. at 10:1–3.) Defendants' arguments are not directly on point to the allegations in the FAC. The FAC alleges a fairly unique set of facts here sufficient to state a claim for declaratory judgment. The Court denies Defendants' Motion as to this argument.

3. Whether the Claims Are Barred by the Doctrine of Tender.

Defendants argue that Plaintiff's claims are barred because she has failed to allege tender. (Motion at 7:9–8:14.) Generally, “a mortgagor cannot quiet his title against the mortgagee without paying the debt secured.” Shimpones v. Stickney, 219 Cal. 637, 649, 28 P.2d 673 (1934). “If the offeror ‘is without the money necessary to make the offer good and knows it’ the tender is without legal force or effect.” Anaya v. Advisors Lending Grp., 2009 WL 2424037, at *10 (E.D.Cal. Aug. 5, 2009) (quoting Karlsen v. Am. Sav. & Loan Ass'n, 15 Cal.App.3d 112, 118, 92 Cal.Rptr. 851 (1971)).

Defendants argue that Plaintiff has failed to allege her financial ability to tender the amounts necessary to support her claims. (Mot. at 8:12–14.) Plaintiff responds with a legal argument that she is not required to allege tender because the tender requirement does not apply when a plaintiff challenges the beneficial interest held by the defendant rather than the procedural sufficiency of the foreclosure itself. See Vogan v. Wells Fargo Bank, N.A., No. 2:11–cv–02098–JAMOKJN, 2011 WL 5826016, *7–8 (E.D.Cal. Nov. 17, 2011); Foulkrod v. Wells Fargo Financial California Inc., No. CV 11–732–GHK (AJWx) (CD.Cal. May 31, 2011) (“... requiring plaintiff to tender the amount due on his loan at this...