Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-02982/USCOURTS-casd-3_11-cv-02982-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MARIE V. BROCKWAY and THE MARIE

V. BROCKWAY 2006 TRUST DATED

5/22/06,

Plaintiff,

CASE NO. 11cv2982 JM(BGS)

ORDER GRANTING MOTION TO

DISMISS; DENYING LEAVE TO

AMEND

vs.

JP MORGAN CHASE BANK; WELLS

FARGO BANK, as Trustee for the Certificate

holders of Structured Asset Mortgage

Investments II, Inc. Bear Sterns, Mortgage

Funding Trust 2007-AR4 Mortgage PassThrough Certificates, Series 2007-AR4 by

EMC Mortgage Corporation as attorney in

fact;

Defendants.

Defendants JP Morgan Chase Bank (“Chase”) and Wells Fargo Bank (“Wells Fargo”), as

Trustee for the Certificate holders of Structured Asset Mortgage Investments II, Inc. Bear Sterns,

Mortgage Funding Trust 2007-AR4 Mortgage Pass-Through Certificates, Series 2007-AR4 by EMC

Mortgage Corporation as attorney in fact, move, pursuant to Rule 12(b)(6) of the Federal Rules of

Civil Procedure, to dismiss the Second Amended Complaint (“SAC”) for failure to state a claim. 

Plaintiffs Marie V. Brockway and the Marie V. Brockway 2006 Trust Dated 5/22/06 (collectively

“Brockway” or “Plaintiff”) oppose the motion. Pursuant to Local Rule 7.1(d)(1), this matter is

appropriate for decision without oral argument. For the reasons set forth below, the court grants the

motion to dismiss and denies leave to amend. The Clerk of Court is instructed to close the file.

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BACKGROUND

On November 5, 2011, Plaintiff commenced this mortgage-related action in the Superior Court

of the State of California for the County of San Diego and, on December 21, 2011, Defendants timely

removed this diversity action. On February 17, 2012 and on July 9, 2012 the court granted in part and

denied in part the earlier motions to dismiss and granted Plaintiff leave to amend. (Ct. Dkt. 8, 14). 

The SAC alleges four causes of action: (1) Declaratory Relief, (2) Demand for Accounting, (3) Quiet

Title, and (4) Injunctive Relief. 

Plaintiff’s claims arise from a residential loan transaction entered into on February 20, 2007

with now defunct Drexel Lending Group (“Drexel”). (SAC ¶12). Plaintiff obtained a 30 year ARM

in the amount of $540,000 and a second mortgage in the amount of $100,000. Id. In broad brush,

Plaintiff alleges that employees or agents of Drexel “deliberately, purposefully and with intent to

deceive” completed the loan application on her behalf and overstated her income. (SAC ¶13). 

Without sufficient income to continue to make payments on the loan, Plaintiff fell behind in her

payments and sought a loan modification. Plaintiff alleges that she wants to retain possession of the 1

home “and does not understand, since she does qualify for a loan modification, why wouldn’t they

consider a permanent loan restructure on this property.” (SAC ¶21). In conclusory fashion, Plaintiff

alleges that Wells Fargo is the successor-in-interest to Drexel and, consequently, incurs all such

liability for Drexel. (SAC ¶31). 

Chase comes forward with the following judicially noticeable documents. On February 20,

2007 Plaintiff entered into a loan transaction with Drexel for the purchase of the subject home. 

Plaintiff executed a promissory note and deed of trust (“Deed”) in favor of Drexel as the lender. The

Deed names Mortgage Electronic Registrations Systems, Inc., (“MERS”) as beneficiary and nominee

of the lender, Drexel. On March 20, 2009 MERS recorded as assignment of Deed to Wells Fargo and,

on April 2, 2009 MERS recorded another assignment of Deed to Citibank. (Request for Judicial

Notice). 

/ / /

The court takes judicial of the two Notices of Default recorded against Plaintiff’s property 1

on December 16, 2010 and October 10, 2011. (Defendants’ Request for Judicial Notice, Exh. F, G).

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DISCUSSION

Legal Standards

Federal Rule of Civil Procedure 12(b)(6) dismissal is proper only in "extraordinary" cases.

United States v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981). Courts should grant 12(b)(6) relief

only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a

cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). Courts

should dismiss a complaint for failure to state a claim when the factual allegations are insufficient “to

raise a right to relief above the speculative level.” Bell Atlantic Corp v. Twombly, 550 U.S. 544, 555

(2007) (the complaint’s allegations must “plausibly suggest[]” that the pleader is entitled to relief);

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (under Rule 8(a), well-pleaded facts must do more than permit

the court to infer the mere possibility of misconduct). “The plausibility standard is not akin to a

‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted

unlawfully.” Id. at 678. Thus, “threadbare recitals of the elements of a cause of action, supported by

mere conclusory statements, do not suffice.” Id. The defect must appear on the face of the complaint

itself. Thus, courts may not consider extraneous material in testing its legal adequacy. Levine v.

Diamanthuset, Inc., 950 F.2d 1478, 1482 (9th Cir. 1991). The courts may, however, consider material

properly submitted as part of the complaint. Hal Roach Studios, Inc. v. Richard Feiner and Co., 896

F.2d 1542, 1555 n.19 (9th Cir. 1989). 

Finally, courts must construe the complaint in the light most favorable to the plaintiff. Concha

v. London, 62 F.3d 1493, 1500 (9th Cir. 1995), cert. dismissed, 116 S. Ct. 1710 (1996). Accordingly,

courts must accept as true all material allegations in the complaint, as well as reasonable inferences

to be drawn from them. Holden v. Hagopian, 978 F.2d 1115, 1118 (9th Cir. 1992). However,

conclusory allegations of law and unwarranted inferences are insufficient to defeat a Rule 12(b)(6)

motion. In Re Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996).

The Motion to Dismiss 

At the heart of Plaintiff’s complaint is the allegation that Drexel misrepresented Plaintiff’s

income on the loan application in order to qualify for the February 20, 2007 loan. (SAC ¶13). As

previously addressed by Defendants and the court, a successor in interest is generally not liable for the

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debts and liabilities of the assignor. Fisher v. Allis-CHalmers Corp. Product Liability Trust, 95

Cal.App.4th 1182, 1188 (2002). A successor in interest is not liable for the torts of an assignor unless

“(1) there is an express or implied agreement of assumption, (2) the transaction amounts to a

consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation

of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping

liability for the seller’s debts.” Id.

The SAC simply alleges that Wells Fargo “expressly or impliedly agreed to assume all of

DREXEL’s liabilities under the Deed of Trust.” (SAC ¶28). As noted in Iqbal, “threadbare recitals

of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to state

a claim. 556 U.S. at 678. Such conclusory allegations do “not unlock the doors of discovery for a

plaintiff armed with nothing more than conclusions.” Id. at 678-79. While an allegation that

Defendants either “expressly or implied agreed to assume all of DREXEL’s liabilities” raises the

possibility of assumption of liabilities, it does not show that Plaintiff is entitled to relief under

Fed.R.Civ.P. 8(a)(2). In light of Plaintiff’s failure to support the legal conclusion with any factual

context in any of her three complaints, the court grants the motion to dismiss this claim with prejudice

because Plaintiff fails to set forth sufficient allegations to depart from the general rule that a successor

in interest is not liable for the torts of an assignor.2

Finally, as all of Plaintiff’s claims (declaratory relief, demand for accounting, quiet title and

injunctive relief) flow from the conduct of the original lender, (SAC ¶12-15), the court dismisses all

claims. 

Leave to Amend

Plaintiff requests leave to amend the complaint. The court denies Plaintiff leave to amend. 

The court has informed Plaintiff of the deficiencies with her complaint on two prior occasions, (Ct.

Dkt. 8, 14), yet the SAC fairs no better. In her request for leave to amend, Plaintiff fails to identify

any potential circumstances under which she can state a claim. Seen in this light, the court denies the

motion for leave to amend as there appears to be no circumstances under which Plaintiff may state a

The court notes that it informed Plaintiff in its July 9, 2012 order that the failure to state a 2

claim in the SAC would likely result in the dismissal of the complaint with prejudice. (Ct. Dkt. 14). 

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claim for successor liability. 

In sum, the court grants the motion to dismiss with prejudice and without leave to amend. The

Clerk of Court is instructed to close the file. 

IT IS SO ORDERED.

DATED: October 15, 2012

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties

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