Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_18-cv-03443/USCOURTS-cand-5_18-cv-03443-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Petition to Quiet Title

---

Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

1

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MORTGAGE ELECTRONIC 

REGISTRATION SYSTEMS, INC.,

Plaintiff,

v.

GARY MERLE KOEPPEL, et al.,

Defendants.

Case No. 5:18-cv-03443-EJD 

ORDER GRANTING PLAINTIFF’S 

MOTION FOR JUDGMENT ON THE 

PLEADINGS; GRANTING COUNTERDEFENDANTS’ MOTION TO DISMISS

Re: Dkt. Nos. 41, 62, 70

Plaintiff Mortgage Electronic Registration Systems, Inc. (“MERS”) has moved for 

judgment on the pleadings. Counter-Defendants MERS, Nationstar Mortgage LLC, U.S. Bank, 

N.A. and Wells Fargo, N.A. have moved to dismiss to dismiss the third-party complaint filed by 

Defendants Gary Merle Koeppel and Emma K. Koeppel. Per Civil Local Rule 7-1(b), the Court 

took these motions under submission without oral argument. Having considered the Parties’ 

papers and the arguments therein, the Court GRANTS both motions.

I. BACKGROUND

A. Factual Background

This case concerns a property on Outlook Drive in Carmel, California (the “Property”). 

Complaint (“Compl.”) ¶ 11, Dkt. 1. Defendants are the record owners of the Property. Id. ¶ 12. 

On July 19, 2005, Defendants obtained a $1.335 million residential mortgage loan for the Property 

from now-defunct Central Pacific Mortgage (“CPM”) through a promissory note (the “Note”). Id.

¶ 37. The note was secured to the Property by a deed of trust (the “DOT”), which was recorded by 

the Monterey County Recorder on July 28, 2005. Id. Defendants signed the DOT and initialed 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 1 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

each page. Id. ¶ 48; see also Request for Judicial Notice (“RJN”), Ex. A, Dkt. 62-1. Pursuant to

the DOT, Defendants are the “Borrowers” and CPM is the “Lender.” RJN, Ex. A at 1. The DOT 

does not identify CPM or its successors or assigns as the beneficiary. Id. Instead, the DOT states 

that Plaintiff MERS, “a separate corporation that is acting solely as a nominee for Lender and 

Lender’s successors and assigns,” “is the beneficiary under this Security Instrument.” Id., Ex. 

A at 1, 2 (bold in the original). 

The DOT secures repayment of the loan and grants a power of sale over the Property. 

Specifically, it provides:

Borrower understands and agrees that MERS holds only legal title to 

the interests granted by Borrower in this Security Instrument, but, if 

necessary to comply with law or custom, MERS (as nominee for 

Lender and Lender’s successors and assigns) has the right: to exercise 

any or all of those interests, including, but not limited to, the right to 

foreclose and sell the Property; and to take any action required of 

Lender including, but not limited to, releasing and canceling this 

Security Instrument.

Id., Ex. A at 3. When the DOT was executed, Defendants agreed that the Note secured thereby 

could “be sold one or more times without prior notice to Borrower” and that “the covenants and 

agreements of this Security Instrument shall bind . . . and benefit the successors and assigns of 

Lender.” Id., Ex. A at 10, 11. 

On August 31, 2015, Defendants filed Koeppel et al. v. Central Pacific Mortgage Co., et 

al. in the Superior Court of the State of California, County of Monterey, to quiet title to the 

Property as to CPM and any unknown parties claiming an interest in or cloud upon the Property. 

RJN, Ex. B. Defendants wanted to eliminate the DOT and have “title to [the] Subject Property [] 

be Quieted” in their favor. Id., Ex. B ¶ 29. The action named CPM and “unknown persons or 

entities claiming an interest in the Property” as defendants. Plaintiff MERS was not named as a 

defendant. Id. Despite their failure to name MERS, Defendants alleged “that there is no current 

holder of any valid ‘DOT’ . . . and that no Party herein can establish that they are the valid current 

holder of any ‘DOT.’” Id., Ex. B ¶ 26. Defendants further asserted “none of the alleged Parties 

hereto claiming to hold or possess any ‘DOT’ herein can establish that they are entitled to, or 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 2 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

possess any Right, Interest, or Beneficial interest relative to any valid ‘DOT’ or the right to 

effectuate any enforcement as against . . . the Subject Property.” Id., Ex. B ¶ 27; see also id., Ex. 

B ¶ 29 (alleging that “title to the Subject Property is free and clear as to any securitization 

instrument, and or any secured interest”). 

Plaintiff did not appear to defend its security interest as it had no notice that Defendants 

had filed a quiet title action. On August 29, 2017, the state court entered a judgment quieting title 

in Defendants’ favor and ordered the DOT expunged. RJN, Ex. C. The state court entered 

judgment in favor of Defendants and against CPM and “all persons or entities unknown” claiming 

any interest in the Property adverse to Defendants’ title. RJN, Ex. C. On August 29, 2017, 

Defendants recorded the state court’s judgment in the official Records of Monterey County and 

immediately stopped making their mortgage payments. RJN, Ex. D. 

B. Procedural History

On June 11, 2018, Plaintiff filed its Complaint, which seeks an order voiding the state 

court’s quiet title judgment or, alternatively, an order declaring that the Quiet Title Action did not 

eliminate the Deed of Trust or MERS’s rights thereunder. Compl., ¶¶ 2, 4. On July 29, 2019,

Plaintiff filed a motion for judgment on the pleadings. MERS’ Notice of Motion and Motion for 

Judgment on the Pleadings (“Pleadings Mot.”), Dkt. 62. Defendants filed an opposition on August 

15, 2019. Memorandum of Points and Authorities in Support of Defendants’ Opposition 

(“Pleadings Opp.”), Dkt. 71. On August 27, 2019, Plaintiff filed a reply. MERS’ Reply in 

Support of Motion for Judgment on the Pleadings (“Pleadings Reply”), Dkt. 78. 

On July 12, 2019, Defendants filed their Answer and asserted a Third-Party Complaint

against Counter-Defendants MERS, Nationstar Mortgage LLC, CPM, Lehman Brothers Holdings, 

Inc., Structured Asset Securities Corporation, U.S. Bank, N.A., and Wells Fargo Bank, N.A.1

Answer to Complaint (“Answer”), Dkt. 54; Counter Claims (“Counter-Compl.”), Dkt. 54. 

1 Counter-Defendants Lehman Brothers Holdings, Inc. and Structured Asset Securities Corp. were 

voluntarily dismissed on August 19, 2019. See Dkt Nos. 74, 75. 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 3 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Defendants assert seven causes of action in their Third-Party Complaint: intentional 

misrepresentation, conspiracy to commit forgery, cancellation of instruments, violation of RICO, 

violation of California Business and Professional Code, unjust enrichment, and quiet title. On 

August 15, 2019, Counter-Defendants filed a motion to dismiss Defendants’ counterclaims. 

Counter-Defendants Motion to Dismiss Third-Party Complaint (“MTD Mot.”), Dkt. 70. 

Defendants (or in this case Counter-Plaintiffs) filed an opposition on September 5, 2019. CounterClaimants’ Opposition to Counter-Defendants’ Motion to Dismiss (“MTD Opp.”), Dkt. 83. On 

September 19, 2019, Counter-Defendants filed their reply. Counter-Defendants’ Reply in Support 

of Motion to Dismiss (“MTD Reply”), Dkt. 84.

II. LEGAL STANDARD

A. Motion for Judgment on the Pleadings

A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is a 

“means to challenge the sufficiency of the complaint after an answer has been filed.” New.Net, 

Inc. v. Lavasoft, 356 F.Supp.2d 1090, 1115 (C.D. Cal.2004). The standard is functionally 

identical to a motion to dismiss. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th 

Cir. 1989). On a Rule 12(c) motion, disputed material facts preclude judgment. Hal Roach 

Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542, 1550 (9th Cir.1990) (“Judgment on 

the pleadings is proper when the moving party clearly establishes on the face of the pleadings that 

no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of 

law.”). In deciding such a motion, the Court may consider the pleadings, documents incorporated 

by reference in the pleadings, and matters of judicial notice. Heliotrope Gen., Inc. v. Ford Motor 

Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999) (“When considering a motion for judgment on the 

pleadings, this court may consider facts that ‘are contained in materials of which the court may 

take judicial notice.’” (citation omitted)).2

2 Plaintiff requests that this Court take judicial notice of the DOT, Defendants’ quiet title 

complaint, the state court’s quiet title judgment, and a copy of the judgment recorded with the 

Monterey County Official Records Office. RJN at 2. Generally, district courts may not consider 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 4 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

B. Motion to Dismiss

To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to “state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (discussing Federal Rule of Civil Procedure 8(a)(2)). 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. The requirement that the 

court “accept as true” all allegations in the complaint is “inapplicable to legal conclusions.” Id. If 

there are two alternative explanations, one advanced by the defendant and the other advanced by 

the plaintiff, both of which are plausible, the “plaintiff’s complaint survives a motion to dismiss 

under Rule 12(b)(6).” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Dismissal can be based 

on “the lack of a 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). 

Additionally, the Court need not accept as true allegations that contradict facts which may be 

judicially noticed by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 

2001).

III. DISCUSSION

Plaintiff MERS brings two motions: one for judgment on the pleadings and another to 

dismiss Defendants’ counter claims. The Court addresses each motion in turn.

A. Plaintiff’s Motion for Judgment on the Pleadings

Plaintiff’s requests for relief are based on their contention that, under California law, they 

were entitled to be named in Defendants’ quiet title action. See Compl. ¶¶ 2–5. Two other federal 

material outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6) 

of the Federal Rules of Civil Procedure. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). 

Courts may, however, take notice of documents pursuant to Federal Rule of Evidence 201. Khoja, 

899 F.3d 988, 998 (9th Cir. 2018). Rule 201 permits a court to take judicial notice of an 

adjudicative fact “not subject to reasonable dispute,” that is “generally known” or “can be 

accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” 

Fed. R. Evid. 201(b). A court may take judicial notice of matters of public record. Khoja, 899 

F.3d at 999. The Exhibits that Plaintiff requests the Court notice are matters of public record and 

thus Plaintiff’s request for judicial notice is GRANTED.

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 5 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

courts have agreed with Plaintiff’s position. Indeed, as the Court observed in its June 2019 order 

denying Defendants’ motion to dismiss, this case is very similar to two Central District of 

California cases: MERS v. Robinson, 45 F. Supp. 3d 1207 (C.D. Cal. 2014) and MERS v. Johnston

(“Johnston I”), 2016 WL 7339873 (C.D. Cal. Dec. 14, 2016). See Order Denying Motion to 

Dismiss; Denying Motion for Sanctions, Dkt. 50. Notably, Defendants make no attempt to 

distinguish or even discuss these cases. See Hopkins v. Women’s Div., Gen. Bd. of Glob. 

Ministries, 238 F. Supp. 2d 174, 178 (“[W]hen a plaintiff files an opposition to a motion to 

dismiss addressing only certain arguments raised by the defendant, a court may treat those 

arguments that the plaintiff failed to address as conceded.”); Conservation Force v. Salazar, 677 

F. Supp. 2d 1203, 1211 (N.D. Cal. 2009) (“Where plaintiffs fail to provide a defense for a claim in 

opposition, the claim is deemed waived.”). 

1. Plaintiffs Were Entitled to Be Named in the Quiet Title Action

As in Robinson, “[a]t the heart of this dispute lies the following question, largely 

dispositive of the present motion: on the facts as Plaintiffs plead them, were Defendants required 

by California's quiet title statutes to name MERS as a defendant in the quiet title action?” 45 F. 

Supp. 3d at 1210. If yes, then the state court quiet title action must be set aside as invalid. 

A plaintiff in a quiet title action must “name as defendants in the action the persons having 

adverse claims to the title of the plaintiff against which a determination is sought.” Cal. Civ. Proc. 

Code § 762.010. The plaintiff must name persons “having adverse claims that are of record or 

known to the plaintiff or reasonably apparent from an inspection of the property.” Id.

§ 762.060(b). “Claim” refers to a “legal or equitable right, title, estate, lien, or interest in property 

or cloud upon title.” Id. § 760.010; see also id. law revision commission comments to 1980 

addition (stating that the term “claim” is intended in its broadest possible sense). 

Here, it is undisputed that the DOT was recorded and known to Defendants at the time they 

filed their quiet title action. See Answer at 2 (admitting ¶ 37 of the Complaint). The DOT 

identifies MERS as “the beneficiary under this Security Instrument.” RJN, Ex. A at 1, 2. It also 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 6 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

provides that MERS has the right to exercise any or all interests granted under the DOT, 

“including, but not limited to, the right to foreclose and sell the Property.” Id. at 3.

Based on this information, courts have consistently held that Plaintiff has some adverse 

“claim” against Defendants’ title. See e.g., Robinson, 45 F. Supp at 1211 (basing holding that 

MERS had “adverse claim” on an identical DOT); see also id. (“In fact, when considering deeds 

of trust materially identical to the one at issue here, courts applying California law have regularly 

held that they authorize MERS to foreclose and sell the subject property.”) (collecting cases)); 

Johnston I, 2016 WL 7339873, at *2–4 (holding that MERS, pursuant to an identical DOT, had an 

adverse claim), aff’d mem., MERS v. Johnston, 749 F. App’x 601, 602 (9th Cir. 2019) (“The 

district court did not err in concluding as a matter of law that Johnston obtained the quiet title 

judgment in violation of MERS’s rights under section 762.010 of the California Code of Civil 

Procedure, and granting summary judgment to Plaintiffs.”). 

Indeed, Defendants admit that Plaintiff has an adverse claim. See Counter-Compl. ¶ 1 

(admitting that Plaintiff “claimed [an] ownership interest in the debt, and Note”); id. ¶ 108 

(“Counter-Defendant MERS claims an interest in the Subject Property through the deed of trust as 

set forth and incorporated herein . . . .”). Defendants’ concession that Plaintiff has an ownership 

interest in the Property is damning—it is an admission that Plaintiff should have been named as a 

defendant in the state court quiet title action. See Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859 (9th 

Cir. 1995) (“[A] statement in a complaint may serve as a judicial admission.”); Am. Title Ins. Co. 

v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988) (“Judicial admissions are formal admissions 

in the pleadings which have the effect of withdrawing a fact from issue and dispensing wholly 

with the need for proof of the fact.” (citation and quotation marks omitted)). There is thus no 

doubt that Plaintiff’s adverse claim was known to Defendants. See Pleadings Reply at 5 (“A duly 

recorded document gives constructive notice of the document’s contents.” (citing 5 Miller & Starr, 

Cal. Real Estate (4th ed. 2011) § 10:67)). Defendants were therefore required to name MERS as a 

defendant in the quiet title action and their failure to do so renders the quiet title default judgment 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 7 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

null and void. Cal. Civ. Proc. Code §§ 762.010, 762.060(b). 

Against this conclusion, Defendants present a number of recycled and previously-rejected 

arguments to show that disputed material facts preclude judgment on the pleadings. Specifically, 

Defendants argue that the Court must resolve whether MERS is: (1) a nominee, i.e. an agent of the 

lender, in which case it has no protected interest or (2) the lender’s beneficiary, in which case it 

must establish that it has a separate agency agreement with the now-defunct CPM or its successor 

or assigns. Pleadings Opp. at 2–3. Defendants contend that these questions must be answered in 

the negative. In other words, in Defendants’ view, the Court should find that MERS: (1) was not a 

“true” beneficiary of the DOT at the time the 2015 quiet title action was filed; (2) “has not 

established” that it has any tangible interest other than being a nominal beneficiary and thus has no 

protected property right; and (3) is a nominee without a protected interest. Id. at 2, 9, 11. Based 

on this, Defendants argue that Plaintiff had no adverse claim to the DOT. But see Robinson, 45 F. 

Supp. 3d at 1211 (rejecting the defendants’ arguments that MERS was not the true beneficiary, 

that the language in the deed of trust was contradictory, and that MERS held only a nominal 

beneficial status because “it [could] hardly be disputed that by [the DOT’s] provisions MERS 

made some adverse ‘claim’ against Defendants’ title”).3

Defendants’ recycled arguments suffer from two flaws. First, California courts have 

routinely upheld MERS’ role as designated beneficiary under deeds of trust. See e.g., Fontenot v. 

Wells Fargo, N.A., 129 Cal. Rptr. 3d 467, 481 (Ct. App. 2011) (“Contrary to plaintiff's assertion, 

the deed of trust did not designate MERS as both beneficiary of the deed of trust and nominee for 

the beneficiary; rather, it states that MERS is the beneficiary, acting as a nominee for the lender.”), 

disapproved of on other grounds by Yvanova v. New Century Morg. Corp., 365 P.3d 845, 859 n.13 

(Cal. 2016) (disapproving of Fontenot to the extent it held borrowers lacked standing to challenge 

an assignment of the deed of trust as void). 

Likewise, MERS’ authority to act under the DOT continues regardless of whether the 

3 Notably, the DOT at issue in Robinson is identical to the DOT in this case. 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 8 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

original lender or successor or assign files bankruptcy or ceases operation. See Ghuman v. Wells 

Fargo Bank, N.A., 989 F. Supp. 2d 994, 1001 (E.D. Cal. 2013) (“[T]he fact Lender became 

defunct did not strip MERS’ authority to act under the Deed of Trust.”). This is because MERS is 

authorized to foreclose and sell the Property, which is a recognized “claim” under section 762.010 

of the California Code of Civil Procedure. See Pantoja v. Countrywide Home Loans, Inc., 640 F. 

Supp. 2d 1177, 1189–90 (N.D. Cal. 2009) (rejecting the plaintiff’s argument that MERS, as 

nominee of the lender and the beneficiary, had no legal or beneficial interest in the promissory 

note and thus could not foreclose on the property because the plaintiff “granted MERS the right to 

foreclose in his contract”); see also id. at 1190 & n.15 (collecting cases and noting that “courts 

have been clear” that MERS can conduct “foreclose process when granted the power” by a sale 

provision). Since Defendants granted Plaintiff the right to foreclose their contract, his argument 

that MERS lacks a “tangible interest” is meritless. 

Second, Defendants’ arguments are subsidiary to the main issue. All this Court must 

decide is whether Plaintiff has an “adverse claim” such that it should have been named a defendant 

in Defendants’ state court quiet title action. Pursuant to Exhibit A, which the Court took judicial 

notice of, see supra n.3, it is irrefutable that Defendants had constructive notice that Plaintiff 

claimed an interest in the Property. See 5 Miller & Starr, Cal. Real Estate (4th ed. 2011) § 10:67

(stating that a duly recorded document provides notice of the document’s contents). Thus, 

contrary to Defendants’ contention, the Court need not wade into issues like whether MERS was 

bound by CPM’s suspension, whether the Note was sold or remains with CPM, whether MERS 

can sell or foreclose the Property, whether MERS is a “true” beneficiary or just a nominee, 

whether MERS has an agency agreement with CPM; or whether MERS has a protected interest in 

the Property. See Pleadings Opp. at 6–14. 

Pursuant to the DOT, Defendants gave Plaintiff the right to foreclose or sell the Property. 

Plaintiff’s name appeared through the DOT and Plaintiff was labeled as the beneficiary under 

[the] Security Instrument.” RJN, Ex. A at 1, 2 (bold in the original). Thus, there can be no 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 9 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

doubt that Plaintiff had and “claimed” a right “adverse” to Defendants. See Cal. Civ. Proc. Code 

§ 762.060. Whether or not this adverse interest would have survived the quiet title action is a 

different inquiry entirely. See Robinson, 45 F. Supp. at 1212 (“[I]t would make little sense to 

excuse Defendants’ failure to include MERS in the quiet title action on the grounds that 

Defendants dispute the validity of the interests asserted by MERS in the Deed of Trust—settling 

such disputes is exactly the point of a quiet title action.”). Accordingly, because Plaintiff claimed 

an adverse interest, plaintiff was legally obligated to name Plaintiff as a defendant in the state 

court quiet title action. See Cal. Civ. Proc. Code § 762.060.

Finally, to the extent Defendants rely on MERS v. Ditto, 488 S.W.3d 265 (Tenn. 2015) as 

support, this case is immaterial. See Pleadings Opp. at 11. In Ditto, the Tennessee Supreme Court 

held that MERS, in its capacity as nominee for a lender and the lender’s assigns, did not have a 

sufficiently protected property interest under a deed of trust to trigger federal due process 

concerns. The case provided no guidance on the interpretation of California’s quiet title statutes. 

Ditto is thus not helpful as it expressly distinguished itself from the instant case. 

2. Defendants’ Answer and Affirmative Defenses Are Insufficient to Prevent 

Judgment on the Pleadings in Favor of Plaintiff 

Defendants argue that their affirmative defenses prevent judgment. The Court addresses 

these affirmative defenses in turn.

a. Ninth Affirmative Defense—Lack of Standing 

The Court has already held that Plaintiff has standing to bring this action. See Order 

Denying Motion to Dismiss; Denying Motion for Sanctions at 6–7. This is the law of the case. 

See Richardson v. United States, 841 F.2d 993, 996 (9th Cir. 1988) (“Under the ‘law of the case’

doctrine, a court is ordinarily precluded from reexamining an issue previously decided by the same 

court . . . .”). The Court declines to reassess its earlier ruling. This affirmative defense thus does 

not preclude judgment on the pleadings. 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 10 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

b. Second, Fourth, and Fifth Affirmative Defenses—Comparative 

Negligence, Contributory Negligence, and Failure to Mitigate

In their motion, Plaintiff cited to a number of authorities that establish that the affirmative 

defenses “comparative negligence” and “contributory negligence” are inapplicable without an 

underlying negligence claim. Pleadings Mot. at 20 (citing Ingram v. Pac. Gas & Elec. Co., 2014 

WL 295829, at *3 (N.D. Cal. Jan. 27, 2014) (“PG&E does not point to any authority, nor is the 

Court aware of any, for the proposition that contributory or comparative negligence applies in the 

employment discrimination context in the absence of a negligence claim.”); Legacy v. Wells Fargo 

Bank, N.A., 2016 WL 2622953, at *8 (S.D. Cal. May. 9, 2016) (“Defendant does not point to any 

authority, nor is the Court aware of any, for the proposition that contributory or comparative 

negligence applies in a CITA action in the absence of a negligence claim”); Mayfield v. Cty. of 

Merced, 2015 WL 791309, at *7 (E.D. Cal. Feb. 25, 2015) (“The Court is only aware of cases that 

do not allow comparative negligence to be asserted as an affirmative defense when negligence is 

not alleged in the complaint.”). 

Defendants never address these cases. See Conservation Force, 677 F. Supp. 2d at 1211 

(“Where plaintiffs fail to provide a defense for a claim in opposition, the claim is deemed 

waived.”). Instead, Defendants argue that they failed to name Plaintiff in the quiet title action 

because Plaintiff “encourages lenders to conceal themselves by limiting record transfers to its 

private records that are not available to the general public.” Pleadings Opp. at 15. Even while this 

may be true, some underlying negligence claim is required. See id.; see also Compl. ¶¶ 79–107 

(seeking declaratory judgment that quiet title is void and that it violated due process). Because no 

such negligence claim exists in this action, the affirmative defenses “comparative negligence” and 

“contributory negligence” do not preclude judgment on the pleadings. See Hal Roach Studios, 

Inc., 896 F.2d at 1550.

Likewise, Defendants’ “failure to mitigate” defense fails. In their Fifth Affirmative 

Defense, Defendants contend that “Plaintiffs [sic] failed to exercise reasonable care and diligence 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 11 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

to mitigate any damages sustained by reason for Defendants’ acts. Therefore, any damages 

awarded to Plaintiff shall be limited to the damages Plaintiffs [sic] would have sustained had it 

mitigated its damages.” Answer ¶ 5. But Plaintiff does not seek any money damages and thus 

mitigation is not necessary. See, ALLTEL Info. Servs., Inc. v. F.D.I.C., 194 F.3d 1036, 1044 (9th 

Cir. 1999). This affirmative defense thus does not preclude judgment on the pleadings.

c. Sixth Affirmative Defense—Estoppel

Defendants argue that Plaintiff is estopped from bringing this action because by concealing 

the sale of the Loan and leaving CPM on the public records as the lender of record, Plaintiff 

caused the quiet title action. Pleadings Opp. at 15. “The essence of an estoppel is that the party to 

be estopped has by false language or conduct led another to do that which he [or she] would not 

otherwise have done and as a result thereof that he [or she] has suffered injury.” Steinhart v. Cty.

of L.A., 223 P.3d 57, 69 (Cal. 2010) (citation and quotation marks omitted).

Estoppel requires some type of misleading communication. For instance, in this setting, 

Defendants would need to allege that Plaintiff told or otherwise misled Defendants into believing 

that MERS did not need to be named in the quiet title action. Defendants do not allege this. This 

affirmative defense thus does not preclude judgment on the pleadings.

d. Seventh Affirmative Defense—Unclean Hands

“The unclean hands doctrine bars recovery by a plaintiff (1) whose behavior is tainted by 

inequity or bad faith (2) that occurred in acquiring the right he now asserts.” Ample Bright Dev., 

Ltd. v. Comis Int’l, 913 F.Supp.2d 925, 940 (C.D. Cal. 2012). Defendants argue that Plaintiff 

knew the DOT was outdated and knew that the DOT deceptively named MERS a “beneficiary.” 

Pleadings Opp. at 15–17. Defendants also argue that unclean hands bars recovery because the 

MERS System is designed to keep transfers of the Loan concealed from public view. Id.

Even while that may be true, Defendants’ statutory obligation to name Plaintiff in the quiet 

title action existed independent of any conduct by MERS. See Jay Bharat Developers, Inc. v. 

Minidis, 84 Cal. Rptr. 3d 267, 274 (Ct. App. 2008) (“The misconduct that brings the unclean 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 12 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

hands doctrine into play must relate directly to the cause at issue . . . .” (citation and quotation 

marks omitted)). Plaintiff’s alleged bad acts have no bearing on answering the question at issue, 

did Defendants need to name Plaintiff in the state court quiet title action? For these reasons, this

affirmative defense does not preclude judgment on the pleadings. 

e. Third and Eighth Affirmative Defenses—No Injury or Damages and 

Failure of Consideration

The Court has already rejected the argument that MERS did not suffer any damages. See 

Order Denying Motion to Dismiss; Denying Motion for Sanctions at 6–7 (holding that Defendant 

suffered an “injury in fact”). This is the law of the case. See Richardson, 841 F.2d at 996 (“Under 

the ‘law of the case’ doctrine, a court is ordinarily precluded from reexamining an issue previously 

decided by the same court . . . .”). The Court declines to reassess its earlier ruling. 

Defendants contend in their third affirmative defense that “there was no consideration 

given in exchange for the amount Plaintiffs claim to be owed by these Answering Defendants. If 

money is owed it is for a lower amount than is being claimed in Plaintiff’s complaint.” Answer 

¶ 3. Plaintiff does not seek money damages. Plaintiff seeks equitable relief to set aside the default 

judgment in the state quiet title action. Thus, failure of consideration does not prevent judgment 

on the pleadings.

f. Remaining Affirmative Defenses4

Plaintiff has established that the remaining affirmative defenses of no reliance, good faith, 

lack of scienter, assumption of risk, performance of duties, failure to join necessary and 

indispensable parties, laches, and collateral estoppel are inapplicable. Defendants either do not 

respond to the authority cited in Plaintiff’s motion or fail to meaningfully address Plaintiff’s 

arguments.5 See Conservation Force, 677 F. Supp. 2d at 1211 (“Where plaintiffs fail to provide a 

4 Many of these affirmative defenses are borderline frivolous. For instance, defenses like 

assumption of the risk and lack of scienter are plainly inapplicable to Plaintiff’s alleged claims. 

5 Defendants offered no response to Plaintiff’s no reliance, lack of scienter, assumption of the risk, 

performance of duties, failure to join necessary and indispensable parties, laches, and collateral 

estoppel arguments. These defenses are thus waived. Conservation Force, 677 F. Supp. 2d at 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 13 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

defense for a claim in opposition, the claim is deemed waived.”). Several of these defenses the 

Court addressed in its earlier Order denying Defendants’ motion to dismiss. See Order Denying 

Motion to Dismiss; Denying Motion for Sanctions at 8. For these reasons, these affirmative 

defenses do not preclude judgment on the pleadings. 

Accordingly, because Plaintiff has “clearly establishe[d] on the face of the pleadings that 

no material issue of fact remains to be resolved,” “it is entitled to judgment as a matter of law.” 

Hal Roach Studios, Inc., 896 F.2d at 1550. The Court thus GRANTS Plaintiff’s motion for 

judgment on the pleadings. 

B. Counter-Defendants’ Motion to Dismiss 

Defendants’ (hereinafter “Third-Party Plaintiffs”) Third-Party Complaint seeks (1) 

declaratory relief against Counter-Defendants and (2) to quiet title to the Property against the 

adverse claims of Counter-Defendants. Counter-Compl. at 25–26. They raise seven causes of 

action: (1) Intentional Misrepresentation; (2) Conspiracy to Commit Forgery; (3) Cancellation of 

Instruments; (4) violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 

18 U.S.C. §§ 1961(1)(A) and (B); (5) violations of the California Business and Professions Code 

section 17200 (“UCL”); (6) Unjust Enrichment; and (7) to Quiet Title. Each of these claims is 

built on the premise that: (1) Counter-Defendant MERS cannot be the beneficiary under the DOT 

and (2) Counter-Defendants forged the Note. See id. ¶¶ 2–3. For example, Counter-Plaintiffs use 

these premises as follows:

1. First Cause of Action—Intentional Misrepresentation: alleging that CounterDefendants U.S. Bank and Nationstar “intentionally created a forged copy of the Note” and 

that Counter-Defendant MERS “falsely stated that it is the ‘beneficiary’ though it knows 

that it does not nor has ever held legal, pecuniary or equitable interest in the debt.” Id.

¶¶ 39, 45. 

2. Second Cause of Action—Conspiracy to Commit Forgery: alleging that Counter1211.

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 14 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Defendants U.S. Bank and Nationstar “do not and have not held the original Note” and 

“conspire[d] to create and put into circulation the forged Note to support Nationstar’s false 

claim.” Id. ¶¶ 52, 58.

3. Third Cause of Action—Cancelation of Instrument: alleging that Counter-Defendants 

will continue to use the “forged Note” and thus that the Court should cancel the 

instrument. Id. ¶¶ 61–65. 

4. Fourth Cause of Action—RICO Violation: alleging that Counter-Defendants entered 

into agreements with each other to create “false instruments” to create a “legal right to 

demand and enforce payments on the Subject Note and DOT.” Id. ¶ 69; see also id. ¶ 75 

(alleging that Counter-Defendants conspired to “secure payments through the use of false 

instruments”). 

5. Fifth Cause of Action—Violation of Unfair and Deceptive Business Practices: alleging 

that Counter-Defendant MERS acted unfairly and deceptively by “purportedly continu[ing] 

to be the beneficiary regardless [of] who holds the debt,” see id. ¶ 82(a) and that CounterDefendants U.S. Bank and Nationstar “use and rely upon forged Notes,” see id. ¶ 82(b). 

6. Sixth Cause of Action—Unjust Enrichment: alleging that Counter-Defendants 

Nationstar and Wells Fargo “relie[d] upon a forged Note as the basis for stating it has 

rights to collect payments on behalf of Wells Fargo” and have collected “$672,000.00” as a 

result. Id. ¶¶ 101–04.

7. Seventh Cause of Action—Quiet Title: alleging that Counter-Plaintiffs’ claim to the 

Property is superior to Counter-Defendants because Counter-Defendant MERS “has no 

actual valid, legal, equitable or pecuniary interest in the debt or deed of trust” and that the 

other Counter-Defendants have no interest or right to the payments on the debt or standing 

to claim rights to the payments as the underlying contracts presented by CounterDefendants are “forgeries and void.” Id. ¶¶ 106–20.

Counter-Defendants argue in their motion to dismiss that because MERS remains the 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 15 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

16

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

beneficiary under the DOT and the Note is not forged, Counter-Plaintiffs’ claims should be 

dismissed. MTD Mot. at 5–8. The Court agrees.

1. Counter-Defendant MERS’ Beneficiary Status 

Counter-Plaintiffs argue that Counter-Defendants have conspired to use deceptive 

language in the DOT to promote the “false illusion” that MERS is a beneficiary of the DOT. 

Counter-Compl. ¶ 3. Defendants argue that because MERS is an electronic database that has no 

equitable, pecuniary or legal interest in the debt, MERS is not a beneficiary as defined by 

California law. Id. This theory, however, has been squarely rejected. Indeed, it is well-settled, 

that MERS can be a beneficiary under the DOT even if it neither holds, owns, nor receives 

payments from the Note. See Germon v. BAC Home Loan Servicing, L.P., 2011 WL 719591, at 

*2 (S.D. Cal. Feb. 22, 2011) (holding that language allowing MERS to foreclose or sell property 

gives MERS the power to initiate foreclosure, regardless of whether it is an economic 

beneficiary); see also Dancy v. Aurora Loan Servs., LLC, 2010 WL 11639682, at *3 (N.D. Cal. 

Nov. 2, 2010) (“[W]hether or not MERS owned the note or was entitled to any payments 

thereunder does not obviate the fact that the deed of trust designated MERS as a 

beneficiary . . . .”). 

Counter-Plaintiffs next argue that, because CPM is a suspended corporation, MERS is 

incapacitated and is “suspended from acting” under the DOT. MTD Opp. at 11, 14. This is 

wrong—pursuant to California law, Counter-Defendant MERS may still act as CPM’s nominee or 

agent even though CPM went out of business. See Ghuman v. Wells Fargo Bank, N.A., 989 

F.Supp.2d 994, 1002 (E.D. Cal. 2013). In other words, CPM’s dissolution has no bearing on 

MERS ability to act under the DOT. For instance, in Ghuman, MERS assigned the deed of trust to 

Deutsche Bank after the original lender became defunct. Id. The Ghuman court allowed this 

assignment to stand because ““MERS has broad power to act as nominee of a lender.” Id. Much 

as in Ghuman, Counter-Plaintiffs “have provided no authority and the Court’s research reveals no 

authority to suggest this power is affected when a lender becomes defunct.” Id.; see also In re 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 16 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

17

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Cedano, 470 B.R. 522, 531 (9th Cir. B.A.P. 2012) (noting that MERS acts as “the beneficiary of 

record” regardless of who the beneficial interest is assigned to); Newman v. Bank of N.Y. Mellon, 

2017 WL 4325772, at *6 (E.D. Cal. Sep. 29, 2017) (“That DOMC may have ceased doing 

business or become defunct does not affect MERS’s ability to assign the deed of trust as nominee, 

even if the successor is not identified in the assignment.”). 

Similarly, the alleged “securitization of a loan does not in fact alter or affect the legal 

beneficiary’s standing to enforce the deed of trust.” Reyes v. GMAC Mortg. LLC, 2011 WL 

1322775, at *2 (D. Nev. Apr. 5, 2011). Thus, Counter-Plaintiffs reliance on California Civil Code 

Section 2315, Cleveland v. Gore Bros., Inc., 58 P.2d 931 (Cal. Ct. App. 1936), and Hall v. 

Citizens National Trust & Savings Bank of Los Angeles, 128 P.2d 545 (Cal. Ct. App. 1942) is 

misplaced. It is irrelevant whether the “loan has been sold.” MTD Opp. at 11. The terms of the 

DOT expressly provided MERS with the right to exercise any or all of the Lender’s, or the 

Lender’s successors and assigns’ rights, including the right to sell or foreclose the property. RJN, 

Ex. A at 3; see also supra (holding that Plaintiff MERS is a beneficiary under the DOT). 

For this same reason, Counter-Plaintiffs’ reliance on California Revenue & Tax Code 

Sections 23301, 23302, and 23305 is misplaced. Those sections address a suspended 

corporation’s ability to sell, transfer, or exchange real property. But, as established, CPM’s 

suspension has no bearing on MERS. Thus, Counter-Plaintiffs’ first contention that MERS cannot 

be a beneficiary is rejected.

2. The Forgery Accusation

Counter-Plaintiffs also argue that the Note held by Counter-Defendant Nationstar is a

“forgery” because it is a copy. Counter-Compl., ¶¶ 30, 39–41, 58–59, 64, 82(b), 102. Based on 

this falsity, Counter-Plaintiffs argue that Counter-Defendants’ claimed interests to the Property are 

invalid and that Counter-Defendant Nationstar has no right to mortgage payments. This argument, 

however, is not legally supported.

Under California law, there is no requirement that a foreclosing party produce the original 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 17 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

18

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

note in order to prove their authority to foreclose. Bouyer v. Countrywide Bank, FSB, 2009 WL 

8652921, at *9 (N.D. Cal. June 25, 2009) (“The rules that govern non-judicial foreclosure of a 

deed of trust are set forth in California Civil Code § 2924, et seq. . . . Nowhere in § 2924, et seq. is 

there any requirement that the person initiating foreclosure have physical possession of the note.”); 

Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1035 (N.D. Cal. 2010) (holding that an

“original copy of [a] note in ‘wet ink’” is not required); Gamboa v. Trustee Corps., 2009 WL 

656285, at *4 (N.D. Cal. Mar. 12, 2009) (“[T]he statutory framework governing non-judicial 

foreclosures contains no requirement that the lender produce the original note to initiate the 

foreclosure process.”). Hence, even if the Note that Counter-Plaintiffs inspected was a copy 

(Counter-Defendants maintain it is not a copy), that is of no consequence. The party initiating the 

foreclosure need not have physical possession of the Note. See Debrunner v. Deutsche Bank Nat’l 

Trust Co., 138 Cal. Rptr. 3d 830, 835 (Ct. App. 2012) (“[T]he procedures to be followed in a 

nonjudicial foreclosure . . . do not require that the note be in the possession of the party initiating 

the foreclosure.” (collecting cases)). 

In response, Counter-Plaintiffs argue that this is not just another “show-me-the-note” case. 

MTD Opp. at 11. Counter-Plaintiffs contend that this case is “not about foreclosure” at all. 

Rather, “it is about who is the beneficial holder entitled to the payments.” Id. As support, 

Counter-Plaintiffs rely on the Uniform Commercial Code (“UCC”) and argue that because the 

Note is a negotiable instrument, it can only be enforced by the note holder. Id.

Counter-Plaintiffs are correct that the UCC governs negotiable instruments. The UCC, 

however, does not govern nonjudicial foreclosure under deeds of trust. See Debrunner, 138 Cal. 

Rptr. 3d at 835 (“Plaintiff’s reliance on the California Uniform Commercial Code provisions 

pertaining to negotiable instruments is misplaced. The comprehensive statutory framework 

established [in sections 2924 to 2924k] to govern nonjudicial foreclosure sales is intended to be 

exhaustive.” (alteration in original) (citation and quotation marks omitted)); see also I.E. Assocs. 

v. Safeco Title Ins. Co., 702 P.2d 596, 598 (Cal. 1985) (“The statutory provisions regulating the 

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 18 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

19

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

nonjudicial foreclosure of deeds of trust are contained in sections 2924–2924i. These provisions 

cover every aspect of exercise of the power of sale contained in a deed of trust.” (emphasis 

added)); Farahani v. Cal-Western Reconveyance Corp., 2009 WL 1309732, at *2 (N.D. Cal. May 

8, 2009) (“The case law cited by Plaintiff that purportedly applies the California Commercial 

Code to transfer of a deed is inapposite, as none of the cases cited involves foreclosure of 

residential property.”). While a “nonjudicial foreclosure” is not centrally at issue, this action 

essentially focuses on Counter-Defendants’ right to foreclose. Thus, this case is about foreclosure. 

Cf. MTD Opp. at 11, 13. Accordingly, the UCC is inapplicable and there is no requirement that 

Counter-Defendants possess the original note.6 Thus, Counter-Plaintiffs’ second contention that 

the Note is forged is rejected.

3. Counter-Plaintiffs’ Entitlement to Notice of the Transfer of the Note

Counter-Plaintiffs last argue that they are not required to tender payment until they receive 

“official notice” of the assignment of the debt. Id. at 10. 15 U.S.C. § 1641(g) requires borrowers 

to be informed when their creditor changes. 15 U.S.C. § 1640(e) provides that “any action under 

this section may be brought in any United States district court, or in any other court of competent 

jurisdiction, within one year of the date of the occurrence of the violation.” 

Here, Counter-Plaintiffs argue that either their debt was (1) never transferred from CPM 

(and thus that the debt died with CPM) or (2) transferred to Lehman Brothers in 2005. See MTD 

Opp. at 11. Under the first scenario, § 1641(g) would not apply because there was no transfer to 

another creditor. And, under the second, § 1640(e) would bar recovery because the one-year 

limitations expired over ten years ago. Even if delayed discovery applies, the claim would still be 

barred. According to the Third-Party Complaint, prior to filing, Counter-Plaintiffs hired an 

investigator to identify their creditor in 2015. Counter-Compl. ¶ 19 (alleging that Counter6 Having determined that Counter-Defendant MERS maintains its beneficiary status and that the 

Note is not forged, Counter-Plaintiffs’ claims fail. See supra (analyzing how Counter-Plaintiffs’ 

counter claims are built on the Court holding that MERS is not a beneficiary and that the Note is 

forged). Because it is unnecessary, the Court declines to wade into the specifics of CounterPlaintiffs’ counter claims.

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 19 of 20
Case No.: 5:18-cv-03443-EJD

ORDER GRANTING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS; 

GRANTING COUNTER-DEFENDANTS’ MOTION TO DISMISS

20

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Plaintiffs hired an investigator prior to filing their 2015 state-court quiet title action); see also 

April Enters., Inc., v. KTTV, 147 Cal. App. 3d 805, 833 (1983) (“The discovery rule . . . . permits 

delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue.” 

(emphasis added)). Thus, Counter-Plaintiffs knew by at least 2015, that the debt was transferred 

to Lehman Brothers in 2005. Counter-Plaintiffs failed to file their action by 2016 and thus any 

claim under 15 U.S.C. § 1641(g) is time-barred. Accordingly, Counter-Plaintiffs’ contention that 

they are not required to tender payment until they receive “official notice” of the assignment of the 

debt fails. 

IV. CONCLUSION

For the foregoing reasons, Plaintiff’s motion for judgment on the pleadings is GRANTED. 

Accordingly, the Court GRANTS Plaintiff’s request for a declaratory judgment ordering that the 

Quiet Title is null and void and ordering that Defendants hold the Property subject to the Deed of 

Trust and requiring the removal and cancellation of the Quiet Title Judgment and Notice of Lis 

Pendens from the land records. See MERS v. Robinson, 2015 WL 993319, at *9 (C.D. Cal. Feb. 

27, 2015). Counter-Defendants’ motion to dismiss is also GRANTED. The Court declines to 

allow Counter-Plaintiffs leave to amend as amendment would be futile since the underlying legal 

contentions supporting Counter-Plaintiffs’ counter-claims are erroneous. See Reddy v. Litton 

Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990) (“It is not an abuse of discretion to deny leave to 

amend when any proposed amendment would be futile.”). Plaintiff’s motion to strike portions of 

Defendants’ expert reports is MOOT. The Clerk shall close the file and a judgment in favor of 

Plaintiff and Counter-Defendants shall follow. 

IT IS SO ORDERED.

Dated: March 13, 2020

______________________________________

EDWARD J. DAVILA

United States District Judge

Case 5:18-cv-03443-EJD Document 103 Filed 03/13/20 Page 20 of 20