Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-cv-00378/USCOURTS-cand-5_15-cv-00378-0/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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Case No. 15-cv-00378-PSG

ORDER GRANTING MOTION TO DISMISS FIRST AMENDED COMPLAINT

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LINDA BRYER,

Plaintiff,

v.

U.S. BANK NATIONAL ASSOCIATION, 

et al.,

Defendants.

Case No. 15-cv-00378-PSG

ORDER GRANTING MOTION TO 

DISMISS FIRST AMENDED 

COMPLAINT

(Re: Docket No. 47, 49, 55)

This mortgage foreclosure action arises out of a loan to Plaintiff Linda Bryer from First 

Magnus Financial Corporation, a company that no longer exists.1 Now, Bryer claims, entities that 

have no right to foreclose on her property are trying to do so.

2

 Defendants U.S. Bank National 

Association and Select Portfolio Servicing, Inc., two of those entities, move to dismiss Bryer’s 

first amended complaint.

3 Bryer opposes the motion.4

 Defendants’ motion is GRANTED, but 

with partial leave to amend.

I.

Bryer has owned a piece of real property in Capitola, California since 1994.5 In 2006, she

 

1

See Docket No. 42 at ¶¶ 14, 16.

2

See id. at ¶¶ 22-36.

3

See Docket No. 47. Defendant ALAW moves to join the motion to dismiss and provides its own 

independent grounds for dismissal. See Docket Nos. 49, 55. The motions for joinder are 

GRANTED. The court does not reach the defenses particular to ALAW.

4

See Docket No. 53.

5

See Docket No. 42 at ¶ 6.

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Case No. 15-cv-00378-PSG

ORDER GRANTING MOTION TO DISMISS FIRST AMENDED COMPLAINT

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obtained a loan of $596,000 from First Magnus, securing the loan with a deed of trust on the 

Capitola property.6 The deed of trust also named Mortgage Electronic Registration Systems, Inc.

as the “nominee for Lender and Lender’s successors and assigns” and First American Title 

Company as the “Trustee.”7 Less than two years later, First Magnus went under.8

The mortgage apparently remained in limbo until 2011. On May 25 of that year, however, 

an assignment of the deed of trust purported to transfer “all beneficial interest under” the deed of 

trust from First American Title to U.S. Bank.9 Colleen Irby, an Assistant Secretary at MERS, 

signed the document.10 Another document executed on the same day by Irby “substitute[d] 

California Reconveyance Company . . . as Trustee.”11 On June 2, CRC recorded the assignment

and the substitution with the Santa Cruz County Recorder’s Office—along with a notice of default 

signed by a CRC employee.

12

Bryer identifies several problems with this course of conduct. First, she disputes the 

validity of the assignment. By 2011, First Magnus was defunct, and Bryer alleges that MERS had 

no authority to assign the deed of trust on First Magnus’ behalf.13 Second, Bryer argues that the 

notice of default also was invalid. She cites various procedural defects and claims that CRC never 

had authority from First Magnus to initiate foreclosure.14 Citing these problems, Bryer’s operative 

 

6

See id. at ¶¶ 2, 6, 14; id., Ex. A (deed of trust); id., Ex. B (promissory note). 

7

Id., Ex. A at 2; see id. at ¶ 15.

8

See id. at ¶¶ 16-17, 22.

9

Id., Ex. C; see id. at ¶ 18.

10 See id., Ex. C.

11 Id., Ex. D.

12 See id. at ¶¶ 18, 20; id., Exs. C-E.

13 See id. at ¶¶ 22-26.

14 See id. at ¶¶ 27-37.

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Case No. 15-cv-00378-PSG

ORDER GRANTING MOTION TO DISMISS FIRST AMENDED COMPLAINT

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complaint raises seven causes of action based in California law and against all Defendants: (1) 

cancellation of the assignment, the substitution and the notice of default under Cal. Civ. Code 

§ 3412; (2) unfair competition under Cal. Bus. & Prof. Code § 17200; (3) procedural failures in 

the foreclosure process in violation of Cal. Civ. Code § 2924(a)(6) and (f); (4) declaratory relief 

against all Defendants; (5) failure to verify foreclosure documents for accuracy, in violation of 

Cal. Civ. Code § 2924.17; (6) failure to satisfy the foreclosure due diligence requirements of Cal. 

Civ. Code § 2923.5 and (7) quiet title.15

II.

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. The parties further 

consented to the jurisdiction of the undersigned magistrate judge under 28 U.S.C. § 636(c) and 

Fed. R. Civ. P. 72(a).

III.

A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.”16 When a plaintiff fails to proffer “enough facts to state a claim to 

relief that is plausible on its face,” the complaint may be dismissed for failure to state a claim upon 

which relief may be granted.17 A claim is facially plausible “when the pleaded factual content 

allows the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.”18 Under Fed. R. Civ. P. 12(b)(6), “dismissal can be based on the lack of a cognizable 

legal theory or the absence of sufficient facts alleged under a cognizable legal theory.”19 

Dismissal with prejudice and without leave to amend is appropriate if it is clear that the complaint 

 

15 See id. at ¶¶ 38-91.

16 Fed. R. Civ. P. 8(a)(2).

17 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

18 Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). 

19 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

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could not be saved by amendment.20

At this stage of the case, the court must accept all material allegations in the complaint as 

true and construe them in the light most favorable to the non-moving party.21 The court’s review 

is limited to the face of the complaint, materials incorporated into the complaint by reference and 

matters of which the court may take judicial notice.22 However, the court need not accept as true 

allegations that are conclusory, unwarranted deductions of fact or unreasonable inferences.23

As a preliminary matter, Defendants request judicial notice of several notices of trustee’s 

sale.

24

 The court may take judicial notice of a “fact that is not subject to reasonable dispute 

because it is generally known” or “can be accurately and readily determined from sources whose 

accuracy cannot reasonably be questioned.”25 Because Bryer disputes the legal effects of these 

documents,26 the court will take judicial notice only of the fact that these documents were recorded 

in the public record.

First, many of Bryer’s allegations rest on the allegedly invalid assignment of the deed of 

trust.27 But in fact, California law allowed MERS to assign the deed of trust even after First 

Magnus went out of business. Herrera v. Federal National Mortgage Ass’n is directly apposite.28 

 

20 See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

21 See Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008).

22 See id.

23 See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see also Twombly, 

550 U.S. at 561 (holding that “a wholly conclusory statement of [a] claim” will not survive a 

motion to dismiss).

24 See Docket No. 48.

25 Fed. R. Evid. 201(b).

26 See Docket No. 53-1.

27 See Docket No. 42 at ¶¶ 22-26.

28 See 205 Cal. App. 4th 1495 (2012).

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In that case, the lender named on the plaintiffs’ deed of trust had dissolved, but the California 

Court of Appeal held that MERS nevertheless had the right to assign the deed of trust.29 And, 

contrary to Bryer’s assertion, the Herrera court explicitly rejected plaintiffs’ argument that 

“MERS lacked authority to assign the [deed of trust].”30 Here, as in Herrera, the deed of trust 

specifically granted MERS the right “to exercise any or all of” the lender’s interests.31 This 

included the authority to assign the note.32 As a matter of law, the assignment was valid.

Second, Bryer also alleges that the notice of default is void because CRC, the foreclosing 

party, was not authorized to initiate foreclosure and failed to comply with other statutory 

requirements.

33

 A notice of default may only be entered by “the holder of the beneficial interest 

. . . , the original trustee or the substituted trustee under the deed of trust, or the designated agent 

of the holder of the beneficial interest.”34 State law requires a notice of default to contain, among 

other things, a statement identifying the deed of trust and the trustor, a statement explaining the 

breach and information about how to cure the breach.35 The notice also must include a declaration 

stating that the declarant has contacted the borrower to explain the situation or that the declarant 

 

29 See id. at 1501-07.

30 Id. at 1505.

31 Docket No. 42, Ex. A at 3; see Herrera, 205 Cal. App. 4th at 1506 (“[T]he DOT stated MERS 

held all the rights of the lender, including the right to foreclose.”); Ogilvie v. Select Portfolio 

Servicing, Case No. 12-cv-01654, 2012 WL 4891583, at *3 (N.D. Cal. Oct. 12, 2012) (analyzing 

identical language in a deed of trust and reaching the same result).

32 See Herrera, 205 Cal. App. 4th at 1498 (“MERS, as nominal beneficiary, has the power to 

assign its interest under a deed of trust.”); see also Lam v. JPMorgan Chase Bank NA, 605 F. 

App’x 600, 603 (9th Cir. 2015) (citing Herrera, 205 Cal. App. 4th at 1498) (holding that MERS 

had the authority to assign a deed of trust).

33 See Docket No. 42 at ¶¶ 27-36.

34 Cal. Civ. Code § 2924(a)(6).

35 See id. § 2924(a)(1).

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has tried with due diligence to make that contact.36

The foreclosure satisfied all of these statutory requirements. The first of the three

documents recorded on June 2, 2011 assigned the beneficial interest in the deed of trust to U.S. 

Bank.37 As above, the deed of trust gave MERS the power to take this action under Herrera. In 

the second document, a representative of U.S. Bank named CRC as the new trustee of Bryer’s 

deed of trust.

38

 As the successor in interest of the beneficiary under the trust deed, U.S. Bank had 

the statutory authority to effect the substitution.39 And in the third document, CRC entered the 

notice of default.40 As “the substituted trustee under the deed of trust,” state law authorized CRC 

to initiate the foreclosure.41 As for the notice of default itself, the document as recorded included 

all of the necessary information.

42

 It also was accompanied by the required declaration from 

JPMorgan, an agent of the beneficiary, stating that JPMorgan exercised due diligence but failed to 

contact Bryer to discuss her financial status and options.43

Third, Bryer further fails to allege that she has suffered prejudice from any defects in the 

 

36 See id. § 2923.55(c).

37 See Docket No. 42, Ex. C.

38 See Docket No. 42, Ex. D. In her complaint, Bryer observes that Colleen Irby signed both 

documents on behalf of different entities, but Bryer offers no basis for her allegation that Irby 

lacked the authority to do so. See Docket No. 42 at ¶¶ 18-19, 67.

39 See Cal. Civ. Code § 2934a(a)(1) (“The trustee under a trust deed . . . may be substituted by the 

recording . . . of a substitution executed and acknowledged by . . . the beneficiaries under the trust 

deed, or their successors in interest.”). Bryer points out that the deed of trust reserves to First 

Magnus the right to “appoint a successor trustee . . . by an instrument executed and acknowledged 

by [First Magnus].” Docket No. 42, Ex. A at 13. But MERS—on which the same document 

conferred the right to exercise any of First Magnus’ interests, see id. at 3—named U.S. Bank as 

the successor to First Magnus’ rights. See Docket No. 42, Ex. C.

40 See Docket No. 42, Ex. E.

41 Cal. Civ. Code § 2924(a)(6).

42 See Cal. Civ. Code § 2924(a)(1); Docket No. 42, Ex. E at 1-2.

43 See Cal. Civ. Code § 2923.55(c); Docket No. 42, Ex. E at 3.

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foreclosure process. “[A] suit for wrongful foreclosure has generally been required to demonstrate 

the alleged imperfection in the foreclosure process was prejudicial to the plaintiff’s interests.”

44

 

The question is not whether the foreclosure harms Bryer; of course it does. The law, however, 

requires more. The operative inquiry is whether the wrongs that Bryer alleges “chang[ed] her 

obligations under the note,” “interfered in any manner with her payment of the note” or otherwise 

affected her position as a borrower.45 In short, Bryer must allege “that the foreclosure would have 

been averted but for the alleged deficiencies in the foreclosure process.”46 But Bryer only claims, 

in conclusory terms, that “payments equal to or more than the required amount were made on a 

monthly basis when the [notice of default] was recorded”47 and that she “denies the allegations 

contained in the [notice of default] including owing to JPMorgan $27,752.64 as of May 25, 

2011.”48 Even taking these bare-bones assertions as true, Bryer still fails to show prejudice. She 

does not allege that CRC—or First Magnus, the original lender—would never have foreclosed on 

her property if it had followed the proper procedures.49 That omission is fatal to her claims.

As a result, none of Bryer’s causes of action can survive. Her first, second, fourth and 

seventh claims—for cancellation of instruments, unfair competition, declaratory judgment and 

quiet title50—depend on her flawed argument that the recorded assignment and substitutions were 

 

44 Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 272 (2011).

45 Id.

46 Rockridge Trust v. Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1147 (N.D. Cal. 2013) (citing 

Natividad v. Wells Fargo Bank, N.A., Case No. 12-cv-03646, 2013 WL 2299601, at *16 (N.D. 

Cal. May 24, 2013)).

47 Docket No. 42 at ¶ 29.

48 Id. at ¶ 83.

49 Also, the steadily increasing balances in the notices of sale suggest that Bryer may have stopped 

paying her mortgage at some point after 2011. See Docket No. 48, Exs. G-J. Although the court 

does not assume the truth of these representations, Bryer’s complaint does not allege otherwise.

50 See Docket No. 42 at ¶¶ 38-58, 63-70, 84-91.

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void. For the reasons above, those claims are dismissed. Furthermore, because it has become 

clear that those claims cannot be saved by amendment, leave to amend those claims is denied.

51

 

Bryer’s remaining claims—for violations of Sections 2924f(b)(3), 2924.17 and 2923.5 of the 

California Civil Code52—fail as well because Bryer has not alleged prejudice. However, the court 

is not yet convinced that further amendment would be futile.53 The court therefore grants Bryer 

leave to amend only these claims.

IV.

Defendants’ motion to dismiss is GRANTED. Leave to amend also is GRANTED, but 

only with respect to Bryer’s third, fifth and sixth claims. Any amended complaint must be filed 

within 21 days.

SO ORDERED.

Dated: December 22, 2015

_________________________________

PAUL S. GREWAL

United States Magistrate Judge

 

51 See Eminence Capital, 316 F.3d at 1052 (“Dismissal with prejudice and without leave to amend

is not appropriate unless it is clear . . . that the complaint could not be saved by amendment.”).

52 See Docket No. 42 at ¶¶ 62, 71-83. Bryer’s third cause of action also raises a claim under Cal. 

Civ. Code § 2924(a)(6). See id. at ¶¶ 59-61. That portion is dismissed with prejudice because it 

too depends on the argument foreclosed by Herrera.

53 See Eminence Capital, 316 F.3d at 1052 (quoting Owens v. Kaiser Found. Health Plan, Inc., 

244 F.3d 708, 712 (9th Cir. 2001)) (requiring district courts to apply “with extreme liberality” the 

policy of freely granting at least some leave to amend). 

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