Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00017/USCOURTS-casd-3_10-cv-00017-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 42:405 Fair Housing Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

HERMAN Q. CHRISTOPHER, et al.,

Plaintiffs,

CASE NO. 10CV17 DMS (CAB)

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS AND DEFENDANTS’

MOTION TO DISSOLVE

PRELIMINARY INJUNCTION

vs.

FIRST FRANKLIN FINANCIAL CORP., et

al.,

Defendants.

Pending before the Court are Defendants’ motions to dismiss and to strike portions of

Plaintiffs’ Second Amended Complaint (“SAC”). Defendants also move to dissolve the preliminary

injunction that was issued by the San Diego Superior Court prior to the matter being removed to this

Court. For the following reasons, the motions are granted.

I.

BACKGROUND

This matter arises out of Plaintiff Herman Q. Christopher’s home loan and subsequent

foreclosure of real property located in San Diego, California (the “Subject Property”). Plaintiffs are

Herman Q. Christopher and DBR Strategies, Inc. Defendants are First Franklin Financial Corporation

(“Franklin”), LaSalle Bank, N.A. (“LaSalle”), Merrill Lynch First Franklin Mortgage Loan Trust 2007-

4 (“Merrill Lynch”), and Bank of America.

Case 3:10-cv-00017-DMS-CAB Document 22 Filed 09/29/10 Page 1 of 7
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On or about April 20, 2007, Plaintiff Christopher obtained a loan from Defendant Franklin in

exchange for a deed of trust on the Subject Property. (SAC ¶¶ 13-14.) The deed of trust was recorded

on April 26, 2007. (Id. at Ex. C.) Christopher went into default on the loan on or about June 1, 2007.

(Id. at ¶ 15.) Christopher subsequently recorded a grant deed assigning all rights, title, and interest

to the Subject Property to Plaintiff DBR Strategies, Inc., effective on or about July 10, 2007. (Id. at

¶ 2.) On August 29, 2007, Franklin signed an Assignment of Deed of Trust naming LaSalle as the

assignee with a date of assignment of March 3, 2008. (Id. at ¶ 17, Ex. D.) On August 31, 2007,

Mortgage Electronic Registration Systems, Inc., as nominee for Franklin, signed an Assignment of

Deed of Trust naming Franklin as the assignee with a date of assignment of August 31, 2007. (Id. at

¶ 18, Ex. E.) Plaintiffs allege that these assignments of the deed of trust were out of order. (Id. at ¶

19.) On September 12, 2007, Defendants LaSalle and Merrill Lynch, along with Cal-Western

Reconveyance Corporation (“Cal-Western”), caused to be recorded a notice of default on the Subject

Property. (Id. at ¶ 20, Ex. F.) On February 1, 2008, Defendants recorded a Notice of Trustee’s Sale,

setting the sale date for February 20, 2008. (Id. at ¶ 22, Ex. G.) The Subject Property was sold at the

trustee’s sale to Defendants LaSalle and Merrill Lynch. (Id. at ¶ 23.) 

Plaintiffs’ original complaint was removed from state court on January 5, 2010. (Doc. 1.) On

February 5, 2010, Plaintiffs filed a First Amended Complaint which this Court subsequently dismissed

without prejudice. (Doc. 11.) Plaintiffsfiled the SAC on May 19, 2010. (Doc. 12.) The SAC asserts

six claims for relief: 1) to set aside sale; 2) to cancel trustee’s deed; 3) quiet title; 4) unjust enrichment;

5) declaratory relief; and 6) accounting. Defendants filed motions to dismiss and strike on June 7,

2010, and a motion to dissolve the preliminary injunction on June 23, 2010. (Docs. 13, 15.) Plaintiffs

filed an opposition to each motion and Defendants filed a reply to each. (Docs. 17-20.)

II.

LEGAL STANDARD

A party may move to dismiss a claim under Rule 12(b)(6) if the claimant fails to state a claim

upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The Federal Rules require a pleading to

include a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.

R. Civ. P. 8(a)(2). The Supreme Court, however, recently established a more stringent standard of

Case 3:10-cv-00017-DMS-CAB Document 22 Filed 09/29/10 Page 2 of 7
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review for pleadings in the context of 12(b)(6) motions to dismiss. See Ashcroft v. Iqbal, ___ U.S.

___, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion

to dismiss under this new standard, “a complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (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. (citing Twombly, 550 U.S. at 556). “Determining whether a complaintstates a plausible

claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its

judicial experience and common sense.” Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d

Cir. 2007)). In Iqbal, the Court began this task “by identifying the allegations in the complaint that

are not entitled to the assumption of truth.” Id. at 1951. It then considered “the factual allegations in

respondent’s complaint to determine if they plausibly suggest an entitlement to relief.” Id. 

III.

DISCUSSION

Plaintiffs contend that there was a mis-assignment ofthe deed oftrust, that the promissory note

and the deed of trust were not properly assigned together, and that Defendants violated a pooling and

service agreement. Plaintiffs further contend that Defendants have been unjustly enriched by receipt

of payments from an insurance policy and that an accounting of the remaining balance owed to

Defendants is necessary. Plaintiffs assert that the SAC contains sufficient facts and allegations to put

Defendants on notice of the claims against them. In contrast, Defendants contend that Plaintiffs have

failed to allege tender, that neither a recording of the assignment of the deed of trust nor possession

of the promissory note was necessary for the foreclosure to occur, and that the allegations regarding

the pooling and service agreement are inadequately pled. Defendants further contend that Plaintiffs

allege no facts supporting an accounting claim, that Plaintiffs’ claim for unjust enrichment does not

allege an inadequate remedy at law, and that Plaintiffs have failed to allege facts supporting their claim

that any enrichment of Defendants was in fact unjust. 

Assuming that all factual allegations contained in the SAC are true and construing them in the

light most favorable to Plaintiffs, the SAC does not provide sufficient notice to Defendants to enable

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Defendants to respond to Plaintiffs’ claims and fails to state “a claim for relief that is plausible on its

face.” “Threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 555). Furthermore,

as Plaintiffs have had ample opportunity to adequately plead claims against Defendants, leave to

amend will not be granted. Accordingly, the Court dismisses Plaintiffs’ SAC with prejudice.

Nevertheless, the Court addresses Defendants’ arguments as to each individual claim. 

A. Challenges to the Non-Judicial Foreclosure Proceeding 

Defendants contend that Plaintiffs’ First, Second, Third, and Fifth claims to set aside the sale,

to cancel the trustee’s deed, to quiet title, and for declaratory relief, respectively, all of which seek to

challenge the non-judicial foreclosure proceeding, fail because Plaintiffs have failed to allege tender.

“A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a

voidable sale under a deed of trust.” Karlsen v. Am. Sav. & Loan Ass’n., 15 Cal. App. 3d 112, 117

(1971). Although Plaintiffs have alleged they are “willing and able to tender any amounts to the real

and true owners of the original promissory note upon proof that the note is in the lawful possession

of the true . . . owners and upon any credits paid by insurance in the event of a default,” such

conditional allegation is insufficient to support a claim for relief challenging a non-judicial foreclosure

sale. (SAC ¶ 48.) For an offer of tender to be valid, it must be unconditional. Karlsen, 15 Cal. App.

3d at 118-20. Although the requirement of tender may be waived “where it would be inequitable to

exact such offer of the party complaining of the sale,” Plaintiffs have failed to allege facts in the SAC

showing that requiring tender in the instant action would be inequitable. Humboldt Sav. Bank v.

McCleverty, 161 Cal. 285, 291 (1911) (citation omitted). Accordingly, Plaintiffs’ failure to allege

unconditional tender is fatal to their claims seeking to challenge the non-judicial foreclosure

proceeding. Despite this, the Court briefly addresses the allegations made by Plaintiffs in support of

such claims. 

Plaintiffs allege in the SAC that Defendants had no authority to foreclose on the Subject

Property because none of Defendants is in possession of the original promissory note underlying the

loan at issue. (SAC ¶¶ 24, 26.) However, in the case of a non-judicial foreclosure sale pursuant to a

power of sale contained in a deed of trust, no party needs to physically possess the promissory note

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In support of their motion to dismiss, Defendants requested that the Court take judicial

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notice of 1) this Court’s prior Order granting Defendants’ motion to dismiss Plaintiffs’ First Amended

Complaint in the present action, dated April 30, 2010, and 2) the Substitution of Trustee recorded in

the San Diego County Recorder’s office on January 22, 2008. As these documents are matters of

public record subject to judicial notice under Federal Rule of Evidence 201, Defendants’ request for

judicial notice is granted. 

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for the foreclosure to occur. See Cal. Civ. Code § 2924(a)(1); see also Harrington v. Home Capital

Funding, Inc., No. 08cv1579 BTM (RBB), 2009 WL 514254, at * 4 (S.D. Cal. Mar. 2, 2009) (“There

is no requirement that the original note be in possession of or produced by the party filing the notice

of default or giving the notice of sale.”). To the extent Plaintiffs allege that the deed of trust and

promissory note were not properly assigned or transferred together, the assignments attached as

exhibits to the SAC by Plaintiffs indicate that each assignment was for both the deed of trust and the

note. (SAC Ex. D, Ex. E.) 

Plaintiffs also allege that there is a discrepancy in the dates of the assignments of the deed of

trust that renders the assignment invalid. (SAC ¶ 19.) “[California] Civil Code sections 2924 through

2924k provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale

pursuant to a power of sale contained in a deed of trust.” Moeller v. Lien, 25 Cal. App. 4th 822, 830

(1994). Nothing in this comprehensive framework requires the assignment of a deed of trust to be

recorded in order for a non-judicial foreclosure to occur. Rather, “an agent for the mortgagee or

beneficiary, an agent of the named trustee, anyperson designated in an executed substitution of trustee,

or an agent of that substituted trustee” constitutes a “person authorized to record the notice of default

or the notice of sale”. Cal. Civ. Code § 2924b(b)(4). On September 10, 2007, a Substitution of

Trustee was executed namingCal-Western as the trustee under the subject deed of trust. Cal-Western 1

was thus authorized to subsequently record the notice of default and the notice of trustee’s sale and

to proceed with the non-judicial foreclosure proceeding.

Plaintiffs further allege that Defendants have violated a pooling and service agreement. (SAC

¶¶ 27-30.) Plaintiffs’allegations, however, fail to identify the terms of the agreement or how such

alleged violations would entitle Plaintiffs to relief. Accordingly, the allegations regarding the pooling

and service agreement are insufficient to support a plausible claim for relief. 

For each of the above-stated reasons, Plaintiffs have failed to establish that there is a present

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and actual controversy between the parties meriting declaratory relief. 

B. Unjust Enrichment

Plaintiffs’ Fourth claim for relief alleges that “[p]ayments to the defendants under any

insurance policy upon default in payments by the plaintiffs and reacquisition of the SUBJECT

PROPERTY constitute an unjust enrichment to defendants because defendants have been partially or

fully compensated for their losses.” (SAC ¶ 52.) The Court construes Plaintiffs’ purported claim for

unjust enrichment as an attempt to plead a claim for relief giving rise to a right of restitution. A party

is required to make restitution “if he or she is unjustly enriched at the expense of another. A person

is enriched if the person receives a benefit at another’s expense.” McBride v. Boughton, 123 Cal. App.

4th 379, 389 (2004)(citations and quotations omitted). Plaintiffs have failed to adequately plead facts

showing that any enrichment of Defendants pursuant to an insurance policy was unjust.

C. Accounting

Plaintiffs’ Sixth claim for relief seeks an accounting as to all Defendants because “[t]he amount

of money still owed to defendants LASALLE, BANK OF AMERICA, MERRILL LYNCH is unknown

to plaintiffs and cannot be determined without an accounting.” (SAC ¶ 61.) An accounting may be

sought “where a fiduciary relationship exists between the parties” or “where . . . the accounts are so

complicated that an ordinary legal action demanding a fixed sum is impracticable.” 5 Witkin, Cal.

Proc. 5th (2008) Pleading, § 819. “A suit for an accounting will not lie where it appears from the

complaint that none is necessary or that there is an adequate remedy at law.” St. James Church of

Christ Holiness v. Super. Ct. of L.A. County, 135 Cal. App. 2d 352, 359 (1955). 

Plaintiffs seek an accounting of “payments received in satisfaction of the promissory note”

based on the belief that Defendants “have been partially or fully compensated by insurance upon the

first default.” (SAC ¶ 62.) Plaintiffs allege that “[a]ll defendants are agents, employees and other

fiduciaries of each other as set forth” in the SAC. (SAC ¶ 11.) However, Plaintiffs fail to further

plead facts that sufficiently support the assertion that a fiduciary relationship exists between the

Defendants. Additionally, although Plaintiffs’ Opposition to Defendants’ Motion to Dismiss claims

that the complex nature of the securitization process warrants an accounting, the SAC itself fails to

allege that the accounting is so complicated that an ordinary legal action demanding a fixed sum is

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impracticable. Accordingly, it appears from the SAC that no accounting is necessary. 

IV.

CONCLUSION

For the reasons stated above, Defendants’ motion to dismiss is granted. Plaintiffs have had

ample opportunity to properly plead a case and have failed to do so. Therefore, Plaintiffs’ Second

Amended Complaint is dismissed with prejudice. Defendants’ motion to strike is denied as moot.

Finally, in light of the Court’s decision, Defendants’ motion to dissolve the preliminary injunction is

granted.

IT IS SO ORDERED.

DATED: September 29, 2010

HON. DANA M. SABRAW

United States District Judge

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