Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-00985/USCOURTS-caed-2_09-cv-00985-5/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

AHMED RAZAWI and DANIELA No. 2:09-cv-00985-MCE-JFM

RAZAWI,

Plaintiffs,

v. MEMORANDUM AND ORDER

FEDERAL DEPOSIT INSURANCE

CORPORATION AS RECEIVER FOR

DOWNEY SAVINGS AND LOAN

ASSOCIATION, F.A.; CENTRAL

MORTGAGE COMPANY; MTC

FINANCIAL, INC. DBA TRUSTEE

CORPS; MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.;

COMMUNITY ONE FINANCIAL & REAL

ESTATE; JAMAL AKBAR; CHRIS

COLON; ALEX BURHAN and DOES 1-

20 INCLUSIVE, 

Defendants.

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Case 2:09-cv-00985-TLN-JFM Document 50 Filed 01/14/10 Page 1 of 7
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 Because oral argument will not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

 The factual assertions in this section are based on the 2

allegations in Plaintiffs’ Complaint unless otherwise specified.

2

Presently before the Court is a Motion by MTC Financial,

Inc. doing business as Trustee Corps (“Defendant”) to Dismiss the

Second Amended Complaint of Plaintiffs Ahmed and Daniela Razawi

(“Plaintiffs”) for failure to state a claim upon which relief may

be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).1

For the reasons set forth below, Defendant’s Motion to Dismiss is

granted.

BACKGROUND2

On December 9, 2005, Plaintiffs secured a $520,00 mortgage

loan from Downey Savings and Loan (“Downey”). At the time of the

execution of the loan, DSL Service Company was named as Trustee. 

On November 15, 2006, Downey assigned the Deed and Promissory

Note to Mortgage Electronic Registration Systems, who in

April 30, 2008 assigned the Deed to Central Mortgaging Company. 

On October 1, 2008 Central Mortgaging Company substituted

Defendant as trustee under the Deed. 

As of October 2, 2008, Plaintiffs were in default in the

amount of $27,835.56. On January 29, 2009, Defendant executed a

Notice of Trustee's Sale, and on March 18, 2009 Defendant

foreclosed and sold the property. 

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3

Plaintiffs now allege a litany of state and federal law

violations in connection with the foreclosure. Defendant

previously sought to dismiss the claims alleged against it by

filing a Motion to Dismiss Plaintiffs’ First Amended Complaint. 

On September 9, 2009, this Court granted Defendant’s Motion to

Dismiss as to all claims with leave to amend. 

Plaintiff thereafter filed a Second Amended Complaint.

STANDARD

On a motion to dismiss for failure to state a claim under

Rule 12(b)(6), all allegations of material fact must be accepted

as true and construed in the light most favorable to the

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,

337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and

plain statement of the claim showing that the pleader is entitled

to relief” in order to “give the defendant fair notice of what

the...claim is and the grounds upon which it rests.” Bell Atl.

Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007) (quoting Conley v.

Gibson, 355 U.S. 41, 47 (1957)). While a complaint attacked by a

Rule 12(b)(6) motion to dismiss does not need detailed factual

allegations, a plaintiff’s obligation to provide the “grounds” of

his “entitlement to relief” requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do. Id. at 1964-65 (internal citations

and quotations omitted). Factual allegations must be enough to

raise a right to relief above the speculative level. 

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Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and

Procedure § 1216, pp. 235-36 (3d ed. 2004) (“The pleading must

contain something more...than...a statement of facts that merely

creates a suspicion [of] a legally cognizable right of action”)). 

“Rule 8(a)(2)...requires a ‘showing,’ rather than a blanket

assertion of entitlement to relief. Without some factual

allegation in the complaint, it is hard to see how a claimant

could satisfy the requirements of providing not only ‘fair

notice’ of the nature of the claim, but also ‘grounds’ on which

the claim rests.” Twombly, 550 U.S. 556 n.3. A pleading must

contain “only enough facts to state a claim to relief that is

plausible on its face.” Id. at 570. If the “plaintiffs...have

not nudged their claims across the line from conceivable to

plausible, their complaint must be dismissed.” Id. 

Nevertheless, “[a] well-pleaded complaint may proceed even if it

strikes a savvy judge that actual proof of those facts is

improbable, and ‘that a recovery is very remote and unlikely.’”

Id. at 556.

When a claim for fraud is raised, Federal Rule of Civil

Procedure 9(b) provides that “a party must state with

particularity the circumstances constituting fraud.” “A pleading

is sufficient under Rule 9(b) if it identifies the circumstances

constituting fraud so that the defendant can prepare an adequate

answer from the allegations.” Neubronner v. Milken, 6 F.3d 666,

671-672 (9th Cir. 1993) (internal quotations and citations

omitted). “The complaint must specify such facts as the times,

dates, places, benefits received, and other details of the

alleged fraudulent activity.” Id. at 672.

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A court granting a motion to dismiss a complaint must then

decide whether to grant leave to amend. A court should “freely

give” leave to amend when there is no “undue delay, bad faith[,]

dilatory motive on the part of the movant,...undue prejudice to

the opposing party by virtue of...the amendment, [or] futility of

the amendment....” Fed. R. Civ. P. 15(a); Foman v. Davis, 371

U.S. 178, 182 (1962). Generally, leave to amend is denied only

when it is clear the deficiencies of the complaint cannot be

cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957

F.2d 655, 658 (9th Cir. 1992).

ANALYSIS

As this Court noted in its order granting Defendant’s Motion

to Dismiss Plaintiffs’ First Amended Complaint, Plaintiffs’

claims against Defendant as trustee are based on two legal

theories. First, Plaintiffs allege that Defendant, along with

the other named defendants in this case, were all conspirators in

what should be deemed an unlawful secondary market that sells and

purchases mortgage-backed debt. As such, Plaintiffs allege that

Defendant should be liable because it benefitted from the

mortgage loans bought, traded, and foreclosed upon in this

scheme. Moreover, Plaintiffs argue Defendant should be liable

for foreclosing on Plaintiffs’ property pursuant to what it

allegedly knew to be an unlawful deed of trust. 

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6

Second, Plaintiffs argue in the alternative that Defendant is a

“third-party stranger” to their mortgage loan because it does not

hold the promissory note and that it became trustee in a unlawful

series of transfers. As a result, Plaintiffs argue that

Defendant has no legal rights regarding the property, and that

they breached the law imposed on trustees by assuming the role of

trustee after being improperly substituted.

In its prior Order, after a review of Plaintiffs’ legal

theories, this Court summarily dismissed Plaintiffs’ arguments

and granted Defendant’s Motion to Dismiss. The Court rejected

Plaintiffs’ attempt to hold Defendant liable for the behavior of

the mortgage industry as whole, held that the Defendant did in

fact have legal rights to foreclose on the property, and rejected

the notion that Defendant owed any duty, in contract or tort, to

Plaintiff.

The Second Amended Complaint that is currently before this

Court fails to correct any of the shortcomings this Court

previously admonished. It reasserts its attack on the mortgage

industry and again asserts that the Defendant should be liable

for its role in this scheme or for the fact that it does not hold

the promissory note. Rather than present additional facts, it

challenges the rational of the Court’s prior ruling and attempts

to persuade the court to reinterpret the law in their favor.

However the Court is not so persuaded, nor will it waste

time repeating the law and analysis underlying its prior ruling.

Plaintiffs’ arguments still fall short of legal remedy, and

their Second Amended Complaint still falls short of the pleading

requirements.

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 CONCLUSION

For the reasons set forth above, Defendant’s Motion to

Dismiss Plaintiffs’ Complaint (Docket No. 37) is GRANTED. As

this is Plaintiffs’ Second Amended Complaint, leave to amend will

not be accorded as it is apparent that amendment would not remedy

the errors of Plaintiffs’ claims.

IT IS SO ORDERED.

Dated: January 12, 2010

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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