Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01399/USCOURTS-caed-2_14-cv-01399-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Injunctive &amp; Declaratory Relief

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

CHRISTOPHER MOENIG, 

Plaintiff, 

v. 

BANK OF AMERICA, N.A., et al., 

Defendants. 

No. 2:14-cv-01399-KJM-EFB 

ORDER 

 Defendants Bank of America, N.A. (BofA) and Mortgage Electronic Registration 

Systems, Inc. (MERS) (collectively, defendants) have filed a motion to dismiss. The court 

ordered the motion submitted without argument and now GRANTS the motion. 

I. BACKGROUND 

 On June 11, 2014, plaintiff filed a complaint seeking a declaration that defendants 

do not have the authority to foreclose on his home. Compl., ECF No. 1. The complaint alleges as 

follows: On May 1, 2003, Margarita Hernandez conveyed the land at 401 11th Street, 

Sacramento, to plaintiff. Id. ¶ 22. In 2008, plaintiff refinanced his home with Plaza Mortgage 

and signed a Note and Deed of Trust in favor of Plaza. Id. ¶¶ 8, 23, 25. The Note provides in 

part that the lender could transfer it. Id. ¶ 23. The Deed of Trust identified Plaza as the lender, 

Commonwealth Title Company as the Trustee and MERS as a nominee for the Lender and its 

assigns and the beneficiary under the Security Instrument. Id. ¶ 25. The Deed of Trust also 

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notified plaintiff that the Note, together with the security instrument, could be sold without prior 

notice to the borrower. Id. ¶ 27. 

 At some point, Plaza endorsed the Note to Countrywide Bank, FSB and in a letter 

dated February 21, 2008, told plaintiff the loan had been transferred to Countrywide, which was 

now the servicer on the loan. Id. ¶¶ 9-10. On July 1, 2008, BofA purchased Countrywide, id. ¶¶ 

16, 34-35, and subsequently BofA informed plaintiff it holds the Note on plaintiff’s property and 

is listed as the assignee in MERS’ records. Id. ¶ 11. BofA began to send loan statements to 

plaintiff in May 2009. Id. ¶¶ 17, 28. 

 In April and May 2013, plaintiff sent letters to BofA and MERS asking for copies 

of the loan documents. Id. ¶¶ 29-30. In May 2013, BofA sent a copy of the Note and Deed of 

Trust to plaintiff. The Note has an endorsement on the last page stating “PAY TO THE ORDER 

OF: COUNTRYWIDE BANK, FSB WITHOUT RECOURSE PLAZA HOME MORTGAGE, 

INC.” Id. ¶ 33. BofA purchased Countrywide in 2008. Id. ¶¶ 35-36. BofA notified plaintiff that 

it was the servicer for the loan, FNMA (Fannie Mae) owned the loan, and the assignment was 

recorded through MERS. Id. ¶¶ 36-37. 

 Plaintiff wrote to BofA in May 2013, asking for documents showing that BofA 

had been assigned the Note and Deed of Trust on the property so he could be sure payments were 

being made to the appropriate source. Id. ¶ 38. BofA declined to provide further written 

responses to the requests. Id. ¶ 40. 

 Plaintiff made all payments through July 1, 2013, but then notified BofA he 

would withhold further payments until BofA provided copies of documents showing it was the 

assignee of the Deed of Trust. Id. ¶¶ 18, 41. Neither BofA nor MERS has responded to 

plaintiff’s request for evidence of the assignment, id. ¶¶ 13-15, but BofA has threatened to 

foreclose on the property. Id. ¶ 19. 

 On August 15, 2013, Plaza Home Mortgage conveyed whatever interest it had in 

plaintiff’s property to plaintiff by a Quitclaim Deed, recorded in Sacramento on August 26, 2013. 

Id. ¶ 42. 

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 In a letter dated November 4, 2013, BofA told plaintiff it was the noteholder and 

had the right to foreclose. Id. ¶ 43. In December 2013, BofA sent plaintiff a Borrower Response 

Package, which included forms for a loan modification under the Home Affordable Modification 

Program (HAMP). Id. ¶ 45. 

 In January 2014, plaintiff again asked BofA to document its legal status as 

“noteholder.” Id. ¶ 47. BofA replied that Fannie Mae, the investor, owned the loan. Id. ¶ 48. In 

May 26, 2014, plaintiff’s counsel sent an e-mail to Fannie Mae asking for the date Fannie Mae 

purchased the promissory note and copies of documents showing the transfer of the note to 

Fannie Mae. Id. ¶ 49. Fannie Mae did not provide the requested information. Id. ¶ 50. 

 The complaint is comprised of three claims: (1) declaratory judgment; (2) breach 

of the implied covenant of good faith and fair dealing; and (3) injunctive relief. 

II. STANDARDS FOR A MOTION TO DISMISS 

 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to 

dismiss a complaint for “failure to state a claim upon which relief can be granted.” A court may 

dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts alleged 

under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1990). 

 Although a complaint need contain only “a short and plain statement of the claim 

showing that the pleader is entitled to relief,” FED. R. CIV. P. 8(a)(2), in order to survive a motion 

to dismiss this short and plain statement “must contain sufficient factual matter . . . to ‘state a 

claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something 

more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or “‘labels and 

conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Id. (quoting 

Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss 

for failure to state a claim is a “context-specific task that requires the reviewing court to draw on 

its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on the 

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interplay between the factual allegations of the complaint and the dispositive issues of law in the 

action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). 

 In making this context-specific evaluation, this court must construe the complaint 

in the light most favorable to the plaintiff and accept as true the factual allegations of the 

complaint. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). This rule does not apply to “‘a legal 

conclusion couched as a factual allegation,’” Papasan v. Allain, 478 U.S. 265, 286 (1986) quoted 

in Twombly, 550 U.S. at 555, nor to “allegations that contradict matters properly subject to 

judicial notice” or to material attached to or incorporated by reference into the complaint. 

Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court’s 

consideration of documents attached to a complaint or incorporated by reference or matter of 

judicial notice will not convert a motion to dismiss into a motion for summary judgment. United 

States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 

1480, 1484 (9th Cir. 1995); compare Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 

980 (9th Cir. 2002) (noting that even though court may look beyond pleadings on motion to 

dismiss, generally court is limited to face of the complaint on 12(b)(6) motion). 

III. REQUEST FOR JUDICIAL NOTICE 

 Defendants ask the court to take judicial notice of a Deed of Trust and Assignment 

of the Deed of Trust, both recorded in Sacramento County. Defs.’ Req. for Judicial Notice, ECF 

No. 8 at 3-4, and plaintiff asks the court to take judicial notice of a Quitclaim Deed, also recorded 

in Sacramento County. Pl.’s Req. for Judicial Notice, ECF No. 11 at 1-2. Neither side opposes 

the other’s request. 

 A court may take judicial notice of matters of public record. Lee v. City of 

Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). These documents were recorded in the 

Sacramento County Recorder’s Office and their accuracy may be readily determined. Fed. R. 

Evid. 201(b)(2). The requests are granted. 

 The first document is a Deed of Trust recorded on February 14, 2008, for 401 11th

Street and 1104 D Street (the property) Sacramento, listing Christopher Moenig as the borrower, 

Plaza Home Mortgage Inc. as the lender, Commonwealth Land Title Company as the Trustee, and 

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MERS “as a nominee for the Lender and the Lender’s successors and assigns” and the 

“beneficiary under this Security Instrument.” ECF No. 8 at 6-7, 8. The Deed provides that the 

Note or a partial interest in the Note, together with the Deed of Trust, “can be sold one or more 

times without prior notice to the Borrower. A sale might result in a change of the entity (known 

as the ‘Loan Servicer’) that collects . . . payments due under the Note . . . and performs other 

mortgage loan servicing obligations under this Note . . . .” Id. at 16. It further notifies the 

borrower that if the Note is sold, the servicing obligations will not be assumed by the purchaser 

unless otherwise provided by the purchaser. Id. at 17. 

 The second document is a quitclaim deed, recorded August 26, 2013, effecting 

Plaza Home Mortgage’s quitclaiming the property to Moenig. ECF No. 11 at 4. A box on the 

face of the deed notes there is no documentary transfer tax because the “consideration is less than 

$100.” Id. 

 The third document is an Assignment of the Deed of Trust, recorded on 

October 13, 2013, from MERS to BofA. ECF No. 8 at 26. 

IV. ANALYSIS 

 Defendants argue plaintiff does not have standing to challenge any foreclosure 

because he has not tendered the amount due on the mortgage and that he does not otherwise have 

standing to challenge defendants’ authority to foreclose. Mot., ECF No. 7 at 8-11. They also 

argue plaintiff’s claims are conclusory and in some cases demonstrably false. Id. at 8, 12. Finally 

they argue there is no actual controversy because there is no requirement BofA present evidence 

of its authority to foreclose and also no breach of the implied covenant of good faith and fair 

dealing for the same reason. 

 Plaintiff maintains he is not alleging wrongful foreclosure but rather that BofA 

does not have the Deed of Trust on the property, which is a prerequisite to beginning the 

foreclosure process. Opp’n, ECF No. 10 at 2. He argues seeking declaratory and injunctive relief 

is an appropriate response to BofA’s threat to initiate foreclosure proceedings. Id. He quotes 

something, perhaps from MERS’s website but not specifically attributed, suggesting that MERS 

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is “merely a private tracking system” for its members and that no interest in the deeds of trust are 

transferred in its system. Id. at 3. 

 A. Tender 

 Tender is required only when a foreclosure sale already has occurred and the 

plaintiff alleges irregularities in the foreclosure sale procedure. Ohlendorf v. Am. Home Mortg. 

Servicing, 279 F.R.D. 575, 580 (E. D. Cal. 2010) (tender is required only when plaintiff seeks to 

set aside a foreclosure sale); Nugent v. Fed. Home Loan Mortg. Corp., No. CIV. S–09–2081 

LKK/EFB, 2013 WL 1326425, at *7 (E. D. Cal. Mar.29, 2013) (same). Because the foreclosure 

here has not yet occurred, plaintiff is not required to tender the amount of the indebtedness. 

 B. Challenge to BofA’s Authority to Foreclose; Declaratory Relief 

 Under 28 U.S.C. § 2201, a court may “declare the rights and other legal relations” 

of the parties to an actual controversy. “The Declaratory Judgment Act gives the Court the 

authority to declare the rights and legal relations of interested parties, but not a duty to do so.” 

Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 533 (9th Cir. 2008). When the relief sought 

“will neither serve a useful purpose in clarifying and settling the legal relations in issue nor 

terminate proceedings and afford relief from uncertainty and controversy faced by the parties,” a 

court need not grant declaratory relief. United States v. Washington, 759 F.2d 1353, 1357 (9th 

Cir. 1985). 

 In Gomes v. Countrywide Home Loans, Inc., a California Court of Appeal held that 

California Civil Code § 2924(a)(1) does not “provide for a judicial action to determine whether 

the entity initiating the foreclosure is indeed authorized . . .” and said any “right to bring a lawsuit 

to determine a nominee’s authorization to proceed with foreclosure on behalf of the noteholder 

would fundamentally undermine the nonjudicial nature of the process . . . .” 192 Cal. App. 4th 

1149, 1155 (2011). In reaching its result, the court relied on California’s “‘comprehensive 

framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale 

contained in a deed of trust.’” Id. (quoting Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994)); 

see also Rieger v. Wells Fargo Nat’l Ass’n, No. 3:13-0749-JSC, 2013 WL 1748045, at *8 (N.D. 

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Cal. Apr. 23, 2013) (relying on Gomes to reject the claim that a homeowner was entitled to 

demand proof of the authority to foreclose). 

 Plaintiff contends that Gomes and the many cases relying on it do not apply 

because, unlike the parties in Gomes, he has proof in the form of the quitclaim deed that MERS 

lost its status as nominee when Plaza quitclaimed its interest. ECF No. 10 at 11-13. In addition, 

he contends MERS’s purported assignment in 2013 shows BofA lacked any interest when he 

asked for its authority. Id. at 11. He also argues that provisions of the Homeowner’s Bill of 

Rights (HBOR), effective January 1, 2013, give him the authority to demand BofA provide a 

copy of any assignment of the Deed of Trust supporting the right to foreclose. Id. at 12-13; see

Cal. Civ. Code § 2923.55(b)(1)(B)(ii) (providing that a servicer may not record a notice of default 

until it has, among other things, sent a notice that the borrower may request “a copy of any 

assignment . . . of the borrower’s mortgage or deed of trust required to demonstrate the right of 

the mortgage servicer to foreclose.” ). As there is no allegation that BofA has recorded a notice 

of default, plaintiff has not alleged a violation of this provision. 

 Defendants reply that Plaza quitclaimed its interest in the property, not in the Note 

or Deed of Trust, because as the lender rather than the beneficiary under the Deed of Trust, it had 

no legal interest to quitclaim to plaintiff. Reply, ECF No. 16 at 3. It says the lien on the property 

is enforceable by the holder of the beneficial interest, which was MERS and subsequently BofA. 

Id. at 4. 

 As plaintiff notes, Gomes and the cases that follow it say that trustors are not 

allowed to delay the nonjudicial foreclosure process “by pursuing preemptive judicial actions 

challenging the authority of a foreclosing ‘beneficiary’ or beneficiary’s ‘agent.’ Such an action is 

‘preemptive’ if the plaintiff alleges no ‘specific factual x’ for the claim that the foreclosure was 

not initiated by the correct person.” Siliga v. Mortg. Electronic Registration Sys., 219 Cal. App. 

4th 75, 82 (2013) (quoting Jenkins v. JPMorgan Chase Bank N.A., 216 Cal. App. 4th 497, 512 

(2013)). Nothing in the record in this case shows that foreclosure proceedings have begun, so it is 

unclear that the Gomes line of cases applies. In addition, plaintiff has alleged a “specific factual 

x”—the quitclaim deed from Plaza—in support of his claim. 

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 “[A] quitclaim deed . . . effect[s] a transfer of ‘all the right and title of the 

grantor.’” City of Manhattan Beach v. Superior Ct., 13 Cal. 4th 232, 239 (1996) (quoting 

Sullivan v. Davis, 4 Cal. 291, 292 (1854)). Neither side has cited any law examining the issue 

raised by plaintiff, but one commentator has said, “[a] quitclaim conveys all of the grantor’s right, 

title, and interest in the property. The lien of a mortgage or deed of trust is an ‘interest’ in the real 

property collateral and a ‘right’ to recover the debt from the collateral. Therefore, it appears to 

follow that a quitclaim deed of the collateral from the beneficiary to the trustor accomplishes a 

release or reconveyance of the lien of the mortgage or deed of trust.” Miller & Starr, California 

Real Estate (3d ed. 2011) § 10:140 (footnotes omitted). 

 “Ordinarily, the owner of a promissory note secured by a deed of trust is 

designated as the beneficiary of the deed of trust. Under the MERS System, however, MERS is 

designated as the beneficiary in deeds of trust, acting as “nominee” for the lender, and granted the 

authority to exercise legal rights of the lender.” Fontenot v. Wells Fargo Bank, N.A., 198 Cal. 

App. 4th 256, 267 (2011) (citation omitted). The court in Fontenot rejected the claim that the 

designation of MERS as both beneficiary and nominee was problematical: “There is nothing 

inconsistent in MERS’s being designated both as the beneficiary and as a nominee, i.e., agent, for 

the lender. The legal implication of the designation is that MERS may exercise the rights and 

obligations of a beneficiary of the deed of trust, a role ordinarily afforded the lender, but it will 

exercise those rights and obligations only as an agent for the lender, not for its own interests.” Id. 

at 273. In this case plaintiff alleges in essence that once Plaza quitclaimed its interest, MERS 

could no longer exercise the rights of the beneficiary on behalf of the lender. However, the 

complaint also alleges that sometime before Plaza quitclaimed its interest to plaintiff, it endorsed 

the Note to Countrywide Bank FSB. ECF No. 1 ¶ 33. Plaintiff alleges the endorsement does not 

comply with California Civil Code § 2210, but this is a legal conclusion this court is not required 

to accept. It also is nonsensical, as the section defines terms used in provisions relating to space 

flight liability and immunity. Plaintiff will be given leave to amend this section of the complaint 

if he is able to do so consonant with Federal Rule of Civil Procedure 11. 

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 C. Injunctive Relief 

 Injunctive relief is an extraordinary remedy that may only be awarded upon a clear 

showing that the moving party is entitled to such relief; it is never ordered as of right. Winter v. 

Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). “To seek injunctive relief, a plaintiff must 

show that he is under threat of suffering ‘injury in fact’ that is concrete and particularized; the 

threat must be actual and imminent, not conjectural or hypothetical; it must be fairly traceable to 

the challenged action of the defendant; and it must be likely that a favorable judicial decision will 

prevent or redress the injury.” Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). To 

secure injunctive relief, plaintiff must show “‘an injury that is actual or imminent, not conjectural 

or hypothetical. In the context of injunctive relief, the plaintiff must demonstrate a real or 

immediate threat of an irreparable injury.’” Hangarter v. Provident Life & Acc. Ins. Co., 

373 F.3d 998, 1021 (9th Cir. 2004) (emphasis in original) (quoting Clark v. City of Lakewood, 

259 F.3d 996, 1007 (9th Cir. 2001)). 

 Plaintiff has alleged that BofA has threatened foreclosure, but has not pleaded or 

otherwise shown that it has recorded a Notice of Default or that foreclosure is imminent. He has 

not shown he is entitled to injunctive relief. He will be given an opportunity to amend this 

portion of his complaint if he is able. 

 D. Breach of the Implied Covenant of Good Faith 

 “Every contract imposes upon each party a duty of good faith and fair dealing in 

its performance and its enforcement.” Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 

2 Cal. 4th 342, 371 (1992) (citing Restatement (Second) of Contracts § 205 (1981)). The goals 

and written terms of a contract determine the conduct that would be considered a breach of the 

duty of good faith and fair dealing. Id. at 373. “In essence, the covenant is implied as a 

supplement to the express contractual covenants, to prevent a contracting party from engaging in 

conduct which (while not technically transgressing the express covenants) frustrates the other 

party’s rights to the benefits of the contract.” Lingad v. Indymac Fed. Bank, 682 F. Supp. 2d 

1142, 1154 (E. D. Cal. 2010) (citing McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th 784, 799 

(2008)) (emphasis in original). A party alleging a breach of the implied covenant must identify a 

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relationship between the defendant’s wrongful conduct and the express terms or underlying 

purpose of the contract. Carma Developers, 2 Cal. 4th at 373. 

 In his complaint, plaintiff alleges that the Note and Deed of Trust “do not contain 

an express provision pursuant to which Moenig is not entitled to receive documentation from 

Plaza’s assignees evidencing that their status as such is based on valid assignments.” ECF No. 1 

¶ 63. He relies on California Civil Code § 1655, which provides that “[s]tipulations which are 

necessary to make a contract reasonable . . . are implied” to assert that “an implied provision . . . 

requiring B of A to prove that it holds a valid assignment is in keeping with Moenig’s reasonable 

expectations . . . .” Id. ¶ 68. 

 Defendants argue that the loan documents and California law allow foreclosure to 

be initiated upon default and in light of plaintiff’s admitted default, the initiation of foreclosure 

cannot breach the implied covenant of good faith. ECF No. 7 at 14. Plaintiff counters that “it 

stands to reason” that the deed would contain an implied covenant requiring BofA to document its 

authority to foreclose and “certainly” has an implied covenant not to pursue a wrongful 

foreclosure. ECF No. 10 at 14-15. In reply, defendants point to the allegations in the complaint 

that BofA provided material to plaintiff on four different occasions and says this satisfies 

whatever obligation it had. ECF No. 16 at 6. 

 Plaintiff has not identified an express provision of the contract to which his claim 

of implied covenant attaches but rather relies on circumlocution. Because he has not identified an 

express provision or even the underlying purpose giving rise to his claim of an implied covenant, 

his argument fails. Similarly, plaintiff suggests that a term requiring BofA to provide 

documentation must be implied because he believes it would be reasonable, but has provided no 

authority supporting his claim. Finally, “the underlying purposes of the promissory note and deed 

of trust are (1) that [plaintiff] shall be able to use the loaned funds on the terms and at the interest 

rate specified in the promissory note, and (2) that [the bank] shall have the security provided by 

the deed of trust.” Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 529 (2013). 

Plaintiff has neither explained nor cited authority explaining how these purposes give rise to an 

implied covenant not to foreclose wrongfully. This claim is dismissed without leave to amend. 

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 As the court is granting the motion to dismiss, it denies the motion for a more 

definite statement as moot. 

 IT IS THEREFORE ORDERED that: 

 1. Defendants’ motion to dismiss, ECF No. 7, is granted as set forth above; and 

 2. Plaintiff’s amended complaint, limited to his claims for declaratory and 

injunctive relief, is due within twenty one days of the date of this order. 

DATED: October 22, 2014. 

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