Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-01189/USCOURTS-casd-3_16-cv-01189-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 33:1251 Federal Water Pollution Control Act (Clean Water Act)

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GLENDORA COURTYARD, LLC,

Plaintiff,

v.

BBVA COMPASS BANCSHARES INC., 

BBVA COMPASS, an Alabama banking 

corporation, d/b/a “BBVA COMPASS,” 

BEN HAYES RIGGS, and DOES 1-50,

Defendants.

Case No.: 16-cv-1189-JLS-KSC

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS PURSUANT 

TO FEDERAL RULE OF CIVIL 

PROCEDURE 12(b)(6)

(ECF No. 9)

Presently before the Court is Defendants BBVA Compass Bancshares, Inc. 

(“BBVA”), Compass Bank, doing business as “BBVA Compass” (“Compass”) and Ben 

Hayes Riggs’ (“Riggs”) (together, “Defendants”) Motion to Dismiss (“MTD”), (ECF No. 

9), Plaintiff’s Opposition to Defendants’ Motion to Dismiss Complaint (“Opp’n”), (ECF 

No. 10), and Defendants’ Reply in Support of Motion to Dismiss Plaintiff’s Complaint 

(“Reply”), (ECF No. 12). Also before the Court is Defendants’ Request for Judicial Notice 

in Support of Motion to Dismiss (“RJN”). (ECF No. 9-2.) Having considered the parties’ 

arguments and the law, the Court GRANTS both Defendants’ RJN and Defendants’ MTD.

/ / /

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BACKGROUND

This action concerns a commercial office complex located at 2200-2220 East Route 

66, Glendora, California 91740 (“Subject Property”). (Compl. 4, ECF No. 1.) In 2005, 

Plaintiff acquired interests in several parcels of the Subject Property, specifically 2200 and 

2220 East Route 66 Boulevard, Glendora, California 91740 (“Plaintiff’s Property”). (Id.)

Approximately nine years later, Compass extended a third party—Route 66 CPAs, LLC

(“Borrower”)—a loan (“Subject Loan”) to purchase the real property adjacent to Plaintiff’s 

Property and within the office complex at 2210 East Route 66, Glendora, California 91740

(“Borrower’s Property”). (Id.) The third-party Borrower is not a named party in this action, 

but has previously litigated aspects of this dispute. (See Compl.; MTD 4–5.) The Subject 

Loan is secured by a Deed of Trust (“DOT”) to Borrower’s Property. (Id. at 5.)

The Subject Property, which includes both Plaintiff’s Property and Borrower’s 

Property, is encumbered by a Declaration of Covenants, Conditions and Restrictions 

(“CC&Rs”). (Id. at 4.) The CC&Rs were recorded in 2003 and are binding on the Subject 

Property. (Id.) The CC&Rs detail various obligations and restrictions imposed on the 

owners of the Subject Property, and Plaintiff alleges the CC&Rs, among other things,

“require [Plaintiff] to maintain Compass’ property in compliance with all applicable federal 

and state laws, and [require] creation and maintenance of an accessible path of travel across 

[Plaintiff’s] property for the benefit of Compass.” (Id. at 5.)

Plaintiff alleges that the Subject Property “is profoundly in violation of the most 

basic and mandatory disability and environmental laws,” which is in breach of the 

CC&Rs.1(Id.) Plaintiff further alleges that Compass, as lender to Borrower, is subject to

 

1 Plaintiff more specifically explains that the current condition of the Subject Property is allegedly in 

breach of the CC&Rs because

Section 1.6 of the CC&Rs explicitly authorizes the Maintenance Director to unilaterally 

incur the “costs of any capital improvements . . . required under any Applicable 

Requirements.” Section 5.2 mandates the Maintenance Director fulfill these 

responsibilities, Section 5.3.1 gives the Maintenance Director “full right and authority to 

perform its obligations,” and Section 2.1.5 grants the Maintenance Director an easement 

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the CC&Rs, which provides that Plaintiff and its agents have “full right and authority” to 

cure these breaches. (Id.)

Plaintiff filed this action alleging claims for (1) incurable default; (2) breach of 

contract; and (3) declaratory relief. (See generally id.) Each seeks reimbursement from 

Defendants for the expenses incurred by Plaintiff in improving and abating the conditions 

that allegedly violate the CC&Rs. (See generally id.) Plaintiff asserts that Defendants, by 

virtue of the CC&Rs, have an easement over Plaintiff’s Property, which has the effect of 

(a) preventing disabled access to the Courtyard; (b) perpetuating a known hazardous 

condition; and (c) prohibiting or restricting compliance with a regulation or restriction on 

the use of water. (Id. at 7–8.) Plaintiff alleges that Defendants have “willfully caused (and 

continue to cause) such conditions, and are willfully obstructing necessary remedial 

measures,” and as a result, Compass is violating various state and federal laws. (Id. at 8.)

In response, Defendant filed the present MTD.

LEGAL STANDARD2

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 

generally referred to as a motion to dismiss. The Court evaluates whether a complaint states 

a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 

8(a), which requires a “short and plain statement of the claim showing that the pleader is 

 

over all three parcels to perform such obligations. “Applicable Requirements” is in turn 

defined by CC&Rs Section 1.1 as all controlling covenants and “Governmental 

Requirements.” Section 1.14 then defines “Governmental Requirements” very broadly, 

including all federal standards and local agency regulations such as those at issue here.

(Compl. 5, n.1, ECF No. 1.)

2 Plaintiff argues that a “court may not dismiss a complaint for failure to state a claim ‘unless it appears 

beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him 

to relief.’ ” (Opp’n 6 (quoting Conley v. Gibson, 355 U.S. 41, 45–46 (1957).) However, nearly ten years 

ago in the seminal case of Bell Atlantic Corp. v. Twombly, the United States Supreme Court expressly 

abrogated this exact aspect of the Conley standard. 550 U.S. 544, 560–62 (2007) (holding that the “no set 

of facts” language “has earned its retirement” and “is best forgotten as an incomplete, negative gloss on 

an accepted pleading standard”).

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entitled to relief.” Although Rule 8 “does not require ‘detailed factual allegations,’ . . . it 

[does] demand more than an unadorned, the-defendant-unlawfully-harmed-me 

accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to provide 

the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and 

a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.

at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A complaint will not suffice 

“if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Iqbal, 556 U.S. 

at 677 (citing Twombly, 550 U.S. at 557).

In order 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.’ ” Id. (quoting 

Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 

when the facts pled “allow the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 

556). That is not to say that the claim must be probable, but there must be “more than a 

sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent with’ 

a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting Twombly, 

550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” contained 

in the complaint. Id. This review requires context-specific analysis involving the Court’s 

“judicial experience and common sense.” Id. at 678 (citation omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, 

the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to 

relief.’ ” Id.

Where a complaint does not survive 12(b)(6) analysis, the Court will grant leave to 

amend unless it determines that no modified contention “consistent with the challenged 

pleading . . . [will] cure the deficiency.” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655,

658 (9th Cir. 1992) (quoting Schriber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 

1393, 1401 (9th Cir. 1986)).

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ANALYSIS

I. Request for Judicial Notice

Defendants’ Motion to Dismiss is accompanied by a Request for Judicial Notice. 

(See generally Defs.’ RJN, ECF No. 9-2.) Although within the context of a motion to 

dismiss under Federal Rule of Civil Procedure 12(b)(6), a Court generally may not consider 

matters outside of the pleadings, see Fed. R. Civ. P. 12(d), it is nonetheless “appropriate 

for the Court to take notice of ‘relevant facts obtained from the public record . . . .’ ” See 

Papasan, 478 U.S. at 298; see also Harris v. Cty. of Orange, 682 F.3d 1126, 1132–33 (9th 

Cir. 2012) (noting that a court may “take judicial notice of undisputed matters of public 

record” and that “documents not attached to a complaint may be considered if no party 

questions their authenticity and the complaint relies on those documents” (citing Lee v. 

City of L.A., 250 F.3d 668, 688, 689 (9th Cir. 2001))). 

Defendants move the Court to take judicial notice of seven exhibits in support of 

their MTD: (A) the Note and Deed of Trust recorded in the Official Records of the County 

Recorder’s Office of Los Angeles County, California; (B) the Covenants, Codes, and 

Restrictions of the commercial office complex located at 2200-2200 East Route 66, 

Glendora, California 91740 recorded in the Official Records of the County Recorder’s 

Office of Los Angeles County, California; (C) the Electronic Docket from the matter styled 

Route 66 CPAS v. Glendora Courtyard, Case No. KC063544, Superior Court of California, 

Los Angeles County, Eastern Division; (D) the Electronic Docket from the matter styled 

Route 66 CPAS v. Glendora Courtyard, Case No. KC066584, Superior Court of California, 

Los Angeles County, Eastern Division; (E) the Electronic Docket from the matter styled 

Glendora Courtyard v. Route 66 CPAS, Union Bank, et. al., Case No. BC543482, Superior 

Court of California, Los Angeles County; (F) the Electronic Docket from the matter styled 

Glendora Courtyard LLC v. City of Glendora et. al., Case No. 2:15-cv-04665-SVW-JEM, 

United States District Court for the Central District of California, Western Division; and 

(G) the Electronic Docket from the matter styled Glendora Courtyard LLC v. City of

/ / /

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Glendora et. al., Case No. 3:15-cv-00844-MMA-MDD, United States District Court for 

the Southern District of California. (See generally RJN, ECF No. 9-2.)

Plaintiff only opposes Defendants’ requests with respect to Exhibit (A), the Note and 

Deed of Trust. (Pl.’s Opp’n to Defs.’ Mot. to Dismiss (“MTD Opp’n”) 18, ECF No. 10.)

Plaintiff argues that the request is “defective” because Defendants selectively omitted the 

“ ‘Assignment of Rents,’ among other parts of their transaction, such as the crossreferenced ‘Master Agreement’ and personal guarantees.” (Id.) However, Plaintiff fails to 

supply the allegedly missing documents or provide any support for its belief that these 

documents are necessary to Plaintiff’s Complaint. (See id.) Given the foregoing, and 

because the Note and Deed of Trust is central to Plaintiff’s Complaint and appears to be 

legitimately obtained from the public record,

3

the Court will take judicial notice of the Note 

and Deed of Trust.

Accordingly, the Court GRANTS Defendants’ requests for judicial notice.

II. Motion to Dismiss

Plaintiff asserts three claims for relief: (1) Incurable Default; (2) Breach of Contract; 

and (3) Declaratory Relief. (See Compl., ECF No. 1.) Defendants advance several grounds 

for dismissing Plaintiff’s Complaint under Fed. R. Civ. P. 12(b)(6)–(7). Specifically, 

Defendants argue (A) the CC&Rs bar the instant action and do not impose obligations on 

Defendants; (B) Plaintiff lacks standing to contest the Subject Loan’s validity; (C) 

Plaintiff’s declaratory relief claim fails as a matter of law; (D) Plaintiff’s incurable default 

claim is not actionable; and (E) Plaintiff fails to join an indispensable party. (See Defs.’ 

Mem. in Supp. of Mot. to Dismiss (“MTD Support”), ECF No. 9-1.) Because Defendants’ 

argument that the CC&Rs do not impose obligations on Defendants has the potential to 

dispose of all Plaintiff’s causes of action, the Court addresses this argument first.

/ / /

 

3

See Ex. A to Defs.’ RJN, ECF No. 9-2 at 3. The Note and Deed of Trust displays the “County of Los 

Angeles California” emblem and states that the document was “Recorded/Filed in Official Records” 

within the Recorder’s Office of Los Angeles County, California on Oct. 17, 2014 at 8:00 A.M.

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A. The CC&Rs with Respect to Defendants

The threshold issue is whether the obligations and restrictions set out in the CC&Rs

apply to Defendants; i.e., if the obligations and restrictions in the CC&Rs do not apply to 

Defendants, Plaintiff’s Complaint must be dismissed because all of Plaintiff’s causes of 

action rely on this theory. The Court concludes that the CC&Rs do not impose the relevant 

obligations and restrictions on Defendants. 

Plaintiff’s primary cause of action for breach of contract relies on Defendants’ 

alleged breach of the CC&Rs. Plaintiff argues that the CC&Rs are “primary and superior 

over any mortgage,” and by virtue of Defendants extending Borrower a loan to acquire a 

property encumbered by the CC&Rs, Defendants are “involuntarily joined” with Plaintiff. 

(Compl. 4–5, ECF No. 1.) Plaintiff further alleges that the CC&Rs are subordinated by 

Compass’s mortgage, meaning that the “covenanted ownership interests” of the CC&Rs 

are “superior to [Compass’s] security interests” under the mortgage. (Id.) Conversely, 

Defendants argue that the CC&Rs do not impose obligations on Defendants—who are 

“Mortgagees” rather than “Owners” under the CC&Rs—and therefore Defendants are “not 

responsible for any costs associated with maintenance [of] the Subject Property.” (MTD 

Support 6, ECF No. 9-1.) The Court first determines Compass’s appropriate classification 

under the CC&Rs, and then discusses Compass’s corresponding obligations under the 

CC&Rs given such classification.

(i) Whether Compass Is a “Mortgagee” or An “Owner” Under the 

CC&Rs

A written contract must be “interpreted with reference to the whole, with preference 

given to reasonable interpretations. Contract terms are to be given their ordinary meaning 

. . . [and] [w]henever possible, the plain language of the contract should be considered 

first.” Flores v. Am. Seafoods Co., 335 F.3d 904, 910 (9th Cir. 2003) (quoting Klamath 

Water Users Prot. Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999)). The Court 

concludes that under both the CC&Rs and the ordinary meaning of the words contained 

therein, Compass is a “Mortgagee” and not an “Owner.”

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Turning first to the CC&Rs itself, Section 1.22 defines “Mortgage” as “any first or 

second mortgage, or first or second deed of trust encumbering the interest, whether fee or 

leasehold, of an Owner in a Parcel and, to the extent applicable, a ‘sale and leaseback’ or 

‘assignment and subleaseback’ transaction.” (RJN Ex. B, ECF No. 9-3 at 27.) Section 1.23 

defines a “Mortgagee” as “a mortgagee or beneficiary under a Mortgage and to the extent 

applicable, a fee owner or lessor or sublessor of any Parcel which is the subject of a lease 

under which any Owner becomes a lessee in a ‘sale and leaseback’ or ‘assignment and 

subleaseback’ transaction.” (Id.) Section 1.25 separately defines an “Owner” as “the fee 

simple owner of a Parcel or Parcels, and all successor fee simple owners to all or any 

portion of the Project and their successors in interest as herein provided.” (Id.) Under these 

two definitions and under their respective plain meanings,

4 Defendants qualify as 

“Mortgagees” and not “Owners” because, as explained supra, Compass lent Borrower 

money to purchase 2210 East Route 66 and in turn, Borrower executed the DOT as security 

for the loan. As demonstrated in the DOT, Compass is the Beneficiary—therefore placing

Compass squarely within the definition of “Mortgagee” in the CC&Rs. (See RJN Ex. A, 

ECF No. 9-3 at 4.)

(ii) Mortgagee Rights Under the CC&Rs

Having determined that Compass is defined as a “Mortgagee” under the CC&Rs, the 

Court now turns to the sections that apply to “Mortgagees.” First, Section 11.6.1, which

lays out the Mortgagee Protection, states that the CC&Rs “shall be superior and senior to 

any lien placed upon any Parcel including the lien of any Mortgage,” however,

/ / /

/ / /

/ / /

 

4 The plain meaning of “mortgagee” is “[o]ne to whom property is mortgaged; the mortgage creditor, or 

lender.” BLACK’S LAW DICTIONARY (10th ed. 2014). The plain meaning of “owner” is “[s]omeone who 

has the right to possess, use, and convey something; a person in whom one or more interests are vested.” 

Id.

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all of the covenants, restrictions, easements, conditions, provisions and 

agreements contained in this Declaration shall be binding upon and effective 

against any person (including the Mortgagee under any Mortgage and a 

purchaser upon the foreclosure of any Mortgage) who acquires title to any 

Parcel, or any portion of any Parcel, by foreclosure, trustee’s sale, deed in lieu 

of foreclosure or otherwise.

Id. at 45 (emphasis added). Defendants argue in their MTD that they “did not acquire title 

to the Subject Party through either a foreclosure or purchase,” as Section 11.6.1 requires,

and therefore Defendants are not bound by the obligations within the CC&Rs. (MTD 

Support 8:9–11, ECF No. 9-1.) Plaintiff in its Opposition neither acknowledges nor 

opposes this statement. (See generally MTD Opp’n, ECF No. 10.)

Next, Defendants point out that Section 11.6.2 states that “[a]ny Mortgagee under a 

Mortgage shall have the right, but not the obligation, at any time prior to the termination 

of this Declaration, and without payment of any penalty, to do any act or thing required of 

the Owner of the Parcel.” (RJN Ex. B, ECF No. 9-3 at 45 (emphasis added).) In response, 

Plaintiff argues that Section 11.6.2’s lack of obligation-imposing language is “completely 

defeated by” Section 2.2 of the CC&Rs “which expressly imposes the ‘cannot 

unreasonably withhold consent’ standard of care onto Defendants—a duty owed to 

Plaintiff.” (MTD Opp’n 16, ECF No. 10.) Section 2.2 states that

No Owner or Permittee shall have the right to make changes with respect to 

Improvements located in the Common Area or the configuration of such 

Common Area without obtaining the consent of all of the other Owner(s) and 

their respective Mortgagees, if any, which consent shall not be unreasonably 

withheld.

(RJN Ex. B, ECF No. 9-3 at 31.) Plaintiff asserts that this Section both imposes a duty of 

care on Defendants which is owed to all Owners and “is the tool used by Defendants and 

their agents to keep the property in violation of the ADA.” (MTD Opp’n 17, ECF No. 10.)

However, Plaintiff offers no facts in support of its contention that Defendants are using 

Section 2.2 to violate the ADA. And even if Section 2.2 imposed a duty of care on 

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Defendants, Plaintiff does not allege in its Complaint that Defendants ever breached that 

duty of care by unreasonably withholding consent from Plaintiff or any other Owner. (See 

generally Compl., ECF No. 1.)

Finally, Section 11.6.3 of the CC&Rs sets forth procedures for Owners and 

Mortgagees in the event of a default. (RJN Ex. B, ECF No. 9-3 at 46.) Specifically, the 

Section states that “this Declaration shall be enforceable against a party whose title is 

acquired by foreclosure, trustee’s sale, voluntary conveyance, assumption or otherwise.” 

(Id.) Defendants assert that because they did not acquire title to the Subject Property 

through either a foreclosure or a purchase, the CC&Rs are not enforceable against them as 

Mortgagees. (MTD Support 8:9–11, ECF No. 9-1.) Plaintiff does not directly dispute the 

assertion that Defendants did not acquire title to the Subject Property, and instead argues

that “a defendant’s ownership interest is not a criterion for property liability in California—

as even a trespasser can be liable for creation of a nuisance.” (MTD Opp’n 22, ECF No. 10 

(emphasis removed).) But Plaintiff does not allege a cause of action for nuisance in its 

Complaint; therefore this argument is inapplicable here. (See Compl., ECF No.1.)

Given the foregoing, the Court concludes Defendants did not owe any affirmative 

duty under which Plaintiff’s breach of contract action could lie.

(iii) Maintenance of Common Areas Under the CC&Rs

In further support of its breach of contract cause of action, Plaintiff alleges that the

current condition of the Courtyard5is in violation of the CC&Rs and argues that Defendants

have consented to allow Plaintiff and its agent “full right and authority” to cure the 

breaches. (Id. at 5.) Accordingly, Plaintiff appears to claim that Defendants must 

compensate Plaintiff for curing those breaches. (See id.) However, Section 5 of the CC&Rs 

provides that a person designated as the “Maintenance Director” will be responsible for all 

maintenance and repairs of the Common Area, and Section 6.2.3 states that the cost of such 

 

5 See Compl. 5, ECF No. 1 (“There is no dispute about the legal status of the Courtyard: it is profoundly in violation of the 

most basic and mandatory disability and environmental laws. In this regard, the Courtyard has multiple serious hazardous 

structural conditions that cause pollution to the Municipal Separate Storm Sewer System and prevent disability access.”)

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maintenance “shall be allocated among the Owners.” (RJN Ex. B, ECF No. 9-3 at 34, 36.)

And ultimately, because Defendants are classified as “Mortgagees” and not “Owners” 

under the CC&Rs, Defendants are neither responsible for the maintenance of the common 

areas, nor responsible for payment to the Maintenance Director. Accordingly, Defendants 

did not breach the CC&Rs and therefore Plaintiff’s cause of action for breach of contract 

fails. 

B. Plaintiff’s Standing with Respect to the Subject Loan

Although Plaintiff does not state a specific cause of action attacking the validity of 

the Subject Loan between Compass and Borrower, Plaintiff attempts to do so in its 

Complaint by alleging that the Subject Loan “was illegal at inception” because, among 

other reasons, Compass “possessed actual knowledge of the hazards and illegal 

conditions.” (Compl. 6, ECF No. 1.) Additionally, in its Opposition, Plaintiff asserts that 

the Complaint “specifically alleges that the Defendants had full knowledge of the illegal 

condition of the property, yet nevertheless subordinated themselves to controlling CC&Rs, 

and in the process entered into a conspiracy to violate federal law in violation of numerous 

federal laws, such as the ADA.” (MTD Opp’n 7-8, ECF No. 10.) However, “conspiracy” 

is similarly not alleged anywhere in the Complaint. (See generally Compl., ECF No. 1.)

Defendants argue that even if the Subject Loan was invalid, Plaintiff may not make 

this claim because Plaintiff is neither a party, nor a third-party beneficiary to the Subject 

Loan and therefore lacks standing to challenge the contract. (MTD 9:11–13, ECF No, 9-

1.) In its Opposition, Plaintiff claims it has five reasons why Plaintiff can enforce the Deed 

of Trust against Compass, but only lists four, none of which are persuasive. (See MTD 

Opp’n 23–25, ECF No. 10.) Plaintiff asserts it can enforce the Deed of Trust because (1) 

Defendants took the property with actual “knowledge and intent to continue to force 

Plaintiff into maintaining an illegal, unsafe and inaccessible property[;]” (2) Defendants 

took the property with constructive knowledge of “everything else[;]” (3) the Subject Loan 

pertains to Plaintiff’s parcel; and (4) Plaintiff owns an easement over Defendants’ parcel. 

(Id.) Plaintiff offers no case law in support of any of its arguments. 

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A plaintiff lacks standing to challenge a contract if he is not a party to the contract, 

or if the principal contract was not made “expressly for the benefit of the plaintiff.” Luis v. 

Orcutt Town Water Co., 204 Cal. App. 2d 433, 441 (1962) (quoting Cal. Civ. Code § 1559). 

A third party does not have a cause of action even if she “may have suffered detriment by 

reason of the nonperformance of the contract.” Id. at 441–42.

Here, Plaintiff is not a party to the Deed of Trust. The parties to the Deed of Trust 

are Borrower, Defendant Compass, and Defendant Ben Riggs. (See RJN Ex. A, ECF No. 

9-3 at 4 (“THIS DEED OF TRUST is . . . executed among [Borrower] . . . ; Compass Bank

. . . ; and Ben Hayes Riggs . . . .”).) Additionally, there is no evidence the DOT was made 

expressly for the benefit of Plaintiff. Plaintiff argues that the DOT “expressly pertains to 

Plaintiff’s property[,]” but does not specify how or where in the DOT Plaintiff’s property 

is referenced. (MTD Opp’n 24, ECF No. 10 (emphasis removed).) And even crediting 

Plaintiff’s argument that the DOT pertained to Plaintiff’s property would not give Plaintiff 

standing to challenge or enforce the DOT—there is no indication that the DOT was made 

expressly for the benefit of Plaintiff.

In sum, because neither was Plaintiff a party to the DOT, nor was the DOT created 

for the express benefit of Plaintiff, Plaintiff lacks standing to challenge the validity of the 

DOT.

C. “Incurable Default” as a Cause of Action

Plaintiff states an alleged cause of action for “incurable default.” (See Compl., ECF 

No. 1.) A court may dismiss a cause of action if it fails to state a cognizable legal theory. 

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

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

under a cognizable legal theory.”).

Plaintiff argues that “Compass’ use of corrupt governmental officials, and informed 

financing of a property where known illegal conduct ongoing [sic], violates numerous 

federal statutes as pled in the Complaint[,]” and “[t]hat is why the default is labeled as an

‘incurable default’—not as a novel cause of action, but rather a statement of indisputable 

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fact of Compass’ violation of federal law.” (MTD Opp’n 28, ECF No. 10 (emphasis 

original).) Whatever Plaintiff means by this statement, it is insufficient to overcome the 

simple fact that “incurable default” is not a cognizable legal theory, and therefore is not a 

claim on which relief can be granted. And even if it were, it would nevertheless fail because 

it is duplicative of Plaintiff’s “breach of contract” cause of action. E.g., Roy v. Cty. of L.A., 

CV 12-09012-BRO (FFMx), 2015 WL 12582637, at *6 (C.D. Cal. 2015) (dismissing 

plaintiffs’ duplicative cause of action because it was “unnecessary for Plaintiffs to maintain 

both causes of action”). Accordingly, Plaintiff’s cause of action for “incurable default” 

necessarily fails. 

D. Declaratory Relief Claim

Plaintiff’s final cause of action is for declaratory relief. Plaintiff requests 

“declaratory relief ordering the immediate and overdue repairs to the property so that it 

may legally be brought into compliance with federal law.” (Compl. 9, ECF No. 1.)

Defendants argue that Plaintiff’s declaratory relief claim fails as a matter of law because it 

is duplicative of Plaintiff’s other claims. (See MTD 9-10, ECF No. 9-1.) Plaintiff nowhere 

in its Opposition addresses Defendants’ arguments. (See generally MTD Opp’n, ECF No. 

10.)

A court in a diversity jurisdiction action analyzing a declaratory relief claim applies 

federal law. Pinel v. Aurora Loan Servs. LLC, 814 F. Supp. 2d 930, 945 (N.D. Cal. 2011)

(“The propriety of granting declaratory relief in a diversity jurisdiction action, however, 

presents a procedural question, to which the court applies federal law.”). A district court

cannot grant declaratory relief unless there is an “actual controversy” within the meaning 

of the Declaratory Judgment Act. See 28 U.S.C. § 2201 (“In a case of actual controversy 

within its jurisdiction . . . any court of the United States, upon the filing of an appropriate 

pleading, may declare the rights and other legal relations of any interested party seeking 

such declaration, whether or not further relief is or could be sought.”); see also Md. Cas. 

Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 272 (1941) (“[T]he District Court is without 

power to grant declaratory relief unless [an actual] a controversy exists.”). Courts deny

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requests for declaratory relief when it is duplicative of other claims because “[a] claim for 

declaratory relief is unnecessary where an adequate remedy exists under some other cause 

of action.” Mangindin v. Wash. Mut. Bank, 637 F. Supp. 2d 700, 707–08 (N.D. Cal. 2009)

(finding plaintiff’s declaratory relief claim duplicative and unnecessary because it was

“entirely commensurate with the relief sought through [plaintiff’s] other causes of action”); 

see also Permpoon v. Wells Fargo Bank Nat’l Ass’n, No. 09-CV-01140-H (BLM), 2009 

WL 3214321, at *5 (S.D. Cal. 2009) (finding plaintiffs’ declaratory relief claim

“duplicative and unnecessary” because the relief sought was the same as plaintiffs’ other 

causes of action); see also Kimball v. Flagstar Bank F.S.B., 881 F. Supp. 2d 1209, 1220 

(S.D. Cal. 2012) (dismissing plaintiffs’ claim for declaratory relief because it was “based 

upon the same allegations supporting their other causes of action”).

Here, Defendants are correct that Plaintiff’s declaratory relief claim is duplicative of 

Plaintiff’s other claims. Specifically, Plaintiff requests a declaration “ordering the 

immediate and overdue repairs to the property so that it may legally be brought into 

compliance with federal law.” (Compl. 9, ECF No. 1.) This claim is based on the same 

allegations supporting Plaintiff’s other causes of action, specifically, that Defendants have 

a duty to maintain and repair the Subject Property. However, as explained above, supra 

Section II.A, Defendants do not have a duty to maintain and repair the Subject Property as 

“Mortgagees” under the CC&Rs. Furthermore, because the other causes of action fail to 

state a claim, Plaintiff has not demonstrated the requisite “substantial controversy” for 

declaratory judgment. See Chan v. Chancelor, 09-CV-1839 AJB (CAB), 2011 WL 

5914263, at *6 (S.D. Cal. 2011) (dismissing plaintiffs’ declaratory relief claim because the 

other causes of action failed to state a claim and because the claim was duplicative of the 

other claims and therefore unnecessary).

Accordingly, Plaintiff’s cause of action for declaratory relief fails.

/ / /

/ / /

/ / /

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E. Plaintiff’s Failure to Join Borrower

Finally, Defendants argue that Plaintiff failed to join an indispensable party under 

Fed. R. Civ. P. 19(a). However, because the Court above determined that Plaintiff’s causes 

of action should be dismissed the Court does not reach this argument.

CONCLUSION

Because the CC&Rs do not impose the obligations on Defendants that form the basis 

of Plaintiff’s Complaint, and because all of Plaintiff’s claims rely at least in part on the 

theory that the Defendants breached these alleged obligations, all of Plaintiff’s claims are

therefore DISMISSED WITHOUT PREJUDICE.

6 Although the Court entertains serious 

doubts that Plaintiff will be able to sufficiently amend its Complaint to state a valid cause 

of action, Plaintiff is nonetheless granted leave to amend.

7 Polich v. Burlington N. Inc., 942 

F.2d 1467, 1472 (9th Cir. 1991) (“Dismissal without leave to amend is improper unless it 

is clear, upon de novo review, that the complaint could not be saved by any amendment.” 

(citing Kelson v. City of Springfield, 767 F.2d 651, 653 (9th Cir. 1985))). Plaintiff SHALL 

FILE an amended Complaint, if any, on or before fourteen days from the date on which 

this Order is electronically docketed.

IT IS SO ORDERED.

Dated: March 13, 2017

 

6 To the extent Plaintiff does, in fact, attempt to assert a cause of action for “incurable default,” such claim 

is DISMISSED WITH PREJUDICE. (See supra Section II.C.)

7 For example, in its Opposition Plaintiff states for the first time allegations of conspiracy and negligence. 

(See MTD Opp’n 21, 23, ECF No. 10.)

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