Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-02874/USCOURTS-casd-3_11-cv-02874-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

RAMIA SABHERWAL; DONALD T. H. 

SMITH, as individuals, 

Plaintiffs, 

vs. 

THE BANK OF NEW YORK MELLON, 

For the Certificate holders ofCWALT, 

Inc., Alternative Loan Trust 2005-62, 

Mortgage Pass-Through Certificates 

2005-62 formerly known as the Bank of 

New York; BANK OF AMERICA, N.A.; 

RECONSTRUCT COMPANY, N.A.; 

MORTGAGE ELECTRONIC 

REGISTRATION SYSTEMS, INC.; 

OCWEN LOAN SERVICING, LLC; 

REAL TIME RESOLUTIONS; DOES 1 

through 10 inclusive, 

Defendants. 

CASE NO. 1lcv2874 WQH-BGS 

ORDER 

HAYES, Judge: 

The matters before the Court are the following Motions to Dismiss: (1) Motion to 

Dismiss Complaint for Failure to State a Claim Upon Which Relief Can be Granted filed by 

Bank of New York Mellon ("BNYM"), Bank of America, N.A. ("BANA"), ReconTrust 

Company, N.A. ("ReconTrust"), and Mortgage Electronic Registration Systems, Inc. 

("MERS") (ECF No. 32); (2) Motion to Dismiss Plaintiffs' First Amended Complaint Pursuant 

to Fed. R. Civ. P. 12(b)(6) filed by OcwenLoan Servicing, LLC ("Ocwen") (ECFNo. 29); (3) 

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Motion to Dismiss Plaintiffs First Amended Complaint for Failure to State a Claim for Relief 

filed by Real Time Resolutions ('~Real Time") (ECF No. 35); and (4) Amended Motion to 

Dismiss Plaintiffs' First Amended Complaint filed by Select Portfolio Servicing Inc. ("SPS") 

(ECF No. 46). 

BACKGROUND 

On December 8, 2011, this case was removed from the Superior Court of California, 

San Diego, to the Federal District Court, Southern District of California. (ECF No.1). On 

April 10, 2012, the Court granted Defendants' Motions to Dismiss. (ECF No. 17). On July 

18,2012, the Court granted Plaintiffs' Motion for Leave to File the First Amended Complaint. 

(ECF No. 26). 

On July 24, 2012, Plaintiffs Ramia Sabherwal and Donald T.H. Smith filed a First 

Amended Complaint. (ECF No. 27). In the First Amended Complaint, Plaintiffs allege the 

following causes ofaction against Defendants: (1) declaratory relief; (2) negligence; (3) quasicontract; (4) violation ofthe Real Estate Settlement Procedures Act (against Defendant BANA 

and Doe Defendants); (5) violation ofdebt collection practices; (6) violation ofthe California 

Business and Professions Code; (7) accounting; and (8) extortion. (ECF No. 27). 

On August 9,2012, Defendant Ocwen filed a Motion to Dismiss. (ECF No. 29). On 

August 24, 2012, Plaintiffs filed an opposition to Defendant's motion. (ECF No. 39). On 

August 28,2012 Defendant Ocwen filed a reply. (ECF No. 42). 

On August 10, 2012, Defendants BANA, BNYM, MERS and ReconTrust filed a 

Motion to Dismiss. (ECF No. 32). On August 24, 2012, Plaintiffs filed an opposition to 

Defendants' motion. (ECF No.3 8). On August 31,2012, Defendants BANA, BNYM, MERS 

and ReconTrust filed a reply. (ECF No. 44). 

On August 13,2012, Defendant Real Time filed a Motion to Dismiss. (ECF No. 35). 

On August 28,2012, Plaintiffs filed an opposition to Defendant's motion. (ECF No. 43). No 

reply was filed. 

On September 6,2012, Defendant SPS filed a Motion to Dismiss (ECF No. 45). On 

September 7, 2012, Defendant SPS filed an Amended Motion to Dismiss. (ECF No. 46). On 

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October 16,2012, Plaintiffs filed an opposition to Defendant's amended motion. (ECF No. 

52). On October 25,2012, Defendant SPS filed a reply. (ECF No. 54). 

' STANDARD OF REVIEW 

Federal Rule ofCivil Procedure 12(b)(6) permits dismissal for "failure to state a claim 

upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 

8(a) provides: "A pleading that states a claim for relief must contain ... a short and plain 

statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). 

Dismissal under Rule 12(b)( 6) is appropriate where the complaint lacks a cognizable legal 

theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police 

Dep't, 901 F .2d 696, 699 (9th Cir. 1990). 

To sufficiently state a claim for relief and survive a Rule 12(b)( 6) motion, a complaint 

"does not need detailed factual allegations" but the "[f1actual allegations must be enough to 

raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 

555 (2007). "[A] plaintiffs obligation to provide the 'grounds' ofhis 'entitle[ment] to relief 

requires more than labels and conclusions, and a formulaic recitation ofthe elements ofa cause 

of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2». 

When considering a motion to dismiss, a court must accept as true all "well-pleaded 

factual allegations." Ashcroftv. Iqbal, 556 U.S. 662,129 S. Ct. 1937, 1950 (2009). However, 

a court is not "required to accept as true allegations that are merely conclusory, unwarranted 

deductions offact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 

979,988 (9th Cir. 2001); see, e.g., Doe Iv. Wal-Mart Stores, Inc., 572 F.3d 677,683 (9th Cir. 

2009) ("Plaintiffs' general statement that Wal-Mart exercised control over their day-to-day 

employment is a conclusion, not a factual allegation stated with any specificity. We need not 

accept Plaintiffs' unwarranted conclusion in reviewing a motion to dismiss."). "Generally, a 

district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)( 6) 

motion. However, material which is properly submitted as part of the complaint may be 

considered." Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542, 1555 

(9th Cir. 1990) (citations omitted), 

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"In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual 

content, and reasonable inferenceslfrom that content, must be,plausibly suggestive of a claim 

entitling the plaintiff to relief." Moss v. US. Secret Service, 572 F .3d 962, 969 (9~h Cir. 2009) 

(quotations omitted). 

ALLEGATIONS OF FIRST AMENDED COMPLAINT 

This lawsuit involves three separate parcels of real property, each encumbered by two 

"Promissory Notes and Deeds ofTrust." (ECF No. 27 at 5). Plaintiffs allege that on or about 

August 18, 2005, two Notes and Deeds of Trust were executed by Plaintiffs in favor of 

Steward Financial, Inc. for the property located at 7891 Laurelridge Road, San Diego, 

California 92120. (ECF No. 27 at 5). Plaintiffs allege that on or about November 3, 2005, two 

Notes and Deeds of Trust were executed by Plaintiffs in favor of Countrywide Home Loans, 

Inc. for the property located at 1390 Vegas Valley Drive, Apt. 38, Las Vegas, Nevada 89169. 

(ECF No. 27 at 6). Plaintiffs allege that on or about December 19, 2005, two Notes and Deeds 

ofTrust were executed by Plaintiffs in favor ofCountrywide Home Loans, Inc. for the property 

located at 9616 Gunsmith Drive, Las Vegas, Nevada 89123. (ECF No. 27 at 6). Documents 

attached to the First Amended Complaint identifY Defendant IVIERS as nominee and 

beneficiary for each oftheproperties at issue. (ECF No. 27-2 at 3; ECF No. 27-3 at3; ECF No. 

27-5 at 3). 

Plaintiffs allege that Defendant MERS is nominee and beneficiary of the Deeds of 

Trust. (ECF No. 27 at 10-12). Plaintiffs allege that Defendant BNYM is an assignee and 

Trustee of Plaintiffs' Deeds of Trust. (ECF No. 27 at 3). Plaintiffs allege that Defendant 

BANA is an authorized agent ofDefendant BNYM and mortgage servicer ofPlaintiffs Notes 

and Deeds of Trust. (ECF No. 27 at 3, 16). Plaintiffs allege that Defendants ReconTrust, 

Dcwen, Real Time, SPS "acted as the agent[s] of the other Defendants." (ECF No. 27 at 7). 

Plaintiffs allege that Defendants "served to threaten the Plaintiffs with loss of their 

property through the use ofCalifornia's non-judicial foreclosure statutes." (ECF No. 27 at 38­

39). Plaintiffs allege that Defendant BNYM as Trustee never acquired any "legal, equitable, 

and pecuniary interest in Plaintiffs' Notes and Mortgages" because "a 'true sale' never took 

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place due to the failure ofthe defendants to follow the basic legal requirements for the transfer 

of a negotiable instrument." (ECF No. 27 at 9). Plaintiffs allege that Defendant BNYM has 

"'no right to collect mortgage payments, demand mortgage payments, or report derogatorily 

against Plaintiffs' credit" because BNYM has no interest as Plaintiffs' creditor. (ECF No. 27 

at 9). Plaintiffs "dispute the amounts owed and seek the Court's assistance in determining" 

who holds the Notes and Deeds ofTrust to the three properties and whCiher Defendants have 

any legal right to collect Plaintiffs' debt. (ECF No. 27 at 10). 

Plaintiffs allege the following causes ofaction against Defendants: (1) declaratory relief 

against all defendants to determine whether BNYM or BANA "have a secured or unsecured 

legal, equitable, or pecuniary interest in the lien"; (2) negligence against all Defendants for 

failing to "exercise reasonable care" by taking action against Plaintiffs without "legal 

authority"; (3) quasi-contract and restitution against all Defendants for "accepting monthly 

mortgage payments from Plaintiffs which it did not have the legal authority to collect"; (4) 

violation of 12 U.S.C. § 2605, Real Estate Settlement Procedures Act ("RESPA"), against 

BANA and Doe Defendants for not providing "proofofvalidity and assignment ofdebts"; (5) 

violation of 15 U.S.C. § 1692, debt collection practices, against all Defendants for "falsely 

represent[ing] the status ofthe debt" and "attempt[ing] to collect on the promissory notes under 

false pretenses"; (6) violation of California Business and Professions Code against all 

Defendants for "executing and recording false and misleading documents" without legal 

authority, "demanding and accepting payments for debts that were non-existent," "reporting 

payments as late to credit bureaus without the legal right or authority to do so," and "acting as 

a beneficiary without the legal authority to do so"; (7) accounting against all Defendants in 

order to "properly account for payments made by Plaintiffs"; and, (8) extortion against all 

Defendants for "falsely asserting a right to collect payments on behalfofthe Defendants under 

a false claim ofright to payment due under the subject Mortgage [ s] and Deed[s] ofTrust" and 

the "direct and real threat ofuse ofthe non-judicial foreclosure process to force the Plaintiffs 

to voluntarily make the payments as demanded or risk a non-judicial foreclosure." (ECF No. 

27 at 28-39). 

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RULING OF THE COURT 

A. Motion to Dismiss Complaint for Failure to State a Clai;m Upon Which Relief Can be 

Granted filed by BNYM, DANA, ReconTrust, and MERS (ECF No. 32). 

First Cause of Action for Declaratory ReHef 

Defendants contend that Plaintiffs' cause ofaction for declaratory relief fails as a matter 

of law because "declaratory relief is a form of relief, not an independent cause of action." 

(ECF No. 32-1 at 15). Plaintiffs seek to have the Court declare the parties' rights and 

obligations and determine whether Defendants' claims against Plaintiffs are enforceable and 

secured by a "right, title or interest in Plaintiffs' [p]roperty." (ECF No. 27 at 29). Plaintiffs 

allege that they will be denied the opportunity to identify Plaintiffs' true creditor/lender, 

conduct discovery, and discover the true amounts still owed on Plaintiffs' debt without this 

declaration. (ECF No. 27 at 29). 

A claim for declaratory relief is "unnecessary where an adequate remedy exists under 

some other cause ofaction." Mangindin v. Washington Mutual Bank, 637 F. Supp. 2d 700, 707 

(N.D. Cal. 2009). The remedy Plaintiffs seek through declaratory reliefis available through 

the other causes ofaction that Plaintiffs allege in the Complaint. As a result, a separate claim 

for declaratory relief is unnecessary and improper. The Court concludes that Plaintiffs' First 

Amended Complaint fails to state a claim for declaratory relief against Defendants. 

Second Cause of Action for Negligence 

Defendants contend the Court should dismiss the second claim for negligence on the 

grounds that no duty ofcare is owed to Plaintiffs. (ECF No. 32-1 at 16-17). Defendants assert 

that there is no fiduciary relationship between a borrow and lender. (ECF No. 32-1 at 17.) 

Defendants contend that "where a lender is merely acting in the capacity ofa lender ofmoney, 

there is no action for negligence." (ECF No. 32-1 at 17 (citation omitted)). Defendants assert 

that "Plaintiffs merely allege that Defendants did what any lender would do when dealing with 

a delinquent borrower; they attempted to collect their debt or foreclose on the property." (ECF 

No. 32-1 at 18). Plaintiffs respond that Defendants owe a duty of care because of the 

unconventional nature of the Defendants' role as lender. (ECF No. 38 at 24). 

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Plaintiffs allege that Defendants owe a duty to exercise reasonable care "to follow 

California law with regard to enfon;ement ofmonetary obligations, and to refrain from taking 

or failing to take any action against Plaintiffs that they did not have the legal auth,ority to do." 

(ECF No. 27 at 30). Plaintiffs allege that Defendants BANA and BNYM"breached that duty 

when they failed to follow the guidelines ... requiring the transfer ofthe Notes and Deeds of 

Trust." (ECF No. 27 at 31). 

"The existence ofa legal duty to use reasonable care in a particular factual situation is 

a question oflaw for the court to decide." Vasquez v. Residential Invs., Inc., 118 Cal. App. 4th 

269,278 (2004). An entity listed as the nominee and beneficiary under the Deed ofTrust has 

the authority to assign its beneficial interest to another party. See Castenada v. Saxon 

Mortgage Services, 687 F. Supp. 2d 1191, 1198 (E.D. Cal. 2009). "[T]he servicer ofthe loan 

... does not owe a duty to the borrowers of the loans it services." Id. A financial institution 

does not owe a borrower a duty of care when the institution plays a conventional role as a 

lender in the loan transaction. See Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 

1089, 1093 (1991). 

Plaintiffs' First Amended Complaint fails to allege facts that would support a 

characterization ofDefendants' role in the loan transaction as other than conventional lenders 

and/or servicers, and as such, Defendants owe no duty of care to Plaintiffs. The Court 

concludes that the Plaintiffs fail to state a claim for negligence against Defendants. 

Third. Fifth, Sixth, Seventh, and Eighth Cause ofAction 

Plaintiffs' third cause ofaction for quasi contract, fifth cause ofaction for violation of 

FDCP A, sixth cause of action for violation of California Business and Professions Code 

Section 17200, seventh cause ofaction for accounting, and eighth cause ofaction for extortion 

are each founded on Plaintiffs' claim that the Defendants did not acquire a valid interest in the 

properties during the subsequent assignments of the deeds and lack the authority to enforce 

collection of payment or initiate foreclosure proceedings. In support of the third cause of 

action for quasi -contract, Plaintiffs allege Defendants BNYM and BANA knowingly accepted 

and retained payments without legal authority but with knowledge that Defendants BNYM and 

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BANA "did not acquire an interest in Plaintiffs' Note." (ECF No. 27 at 31). In support ofthe 

fifth cause ofaction for violation of 15 U.S.C. § 1692, the Fair Debt Collection Practices Act 

("FDCPA"), Plaintiffs allege Defendants BNYM and BANA falsely represented ,the debt was 

owed to Defendant BNYM "when, in fact, such an assignment had not been accomplished" 

and attempted to collect the de~t based on the false pretense that Defendant BNYM "was 

assigned Plaintiffs' debt when in fact it was not." (ECF No. 27 at 34). Insupport ofthe sixth 

cause of action for violation of California Business and Professions Code Section 17200, 

Plaintiffs allege Defendants engaged in unlawful, unfair and fraudulent business conduct by 

recording the alleged fraudulent Assignment ofthe Deed ofTrust ("Assignment") in violation 

ofCal. Penal Code Section 532(t)(a)( 4), "failing to disclose the principal for which documents 

were being executed and recorded in violation ofCal. Civ. Code section 1095," and acting as 

beneficiary without legal authority. (ECF No. 27 at 35). In support of the seventh cause of 

action for accounting, Plaintiffs allege Defendants BNYM and BANA were not actually owed 

mortgage payments paid to them "as a result ofthe aforementioned fraudulent conduct." (ECF 

No. 27 at 37). In support of the eighth cause of action for extortion, Plaintiffs allege 

Defendants BNYM and BANA undertook "multiple and ongoing overt acts" to obtain 

Plaintiffs' money related to the "false claim of ownership of subject mortgage note" and also 

caused delivery and communication of"extensive writings and telephone calls falsely asserting 

a right to collect payments on behalf of the Defendants under a false claim of a right to 

payments due under the subject Mortgage and Deed ofTrust." (ECF No. 27 at 38). 

To support each ofthese causes ofaction that rely on the allegation that Defendants lack 

the authority to collect payment and foreclose, Plaintiffs allege: (1) "none ofthe Defendants 

were or are present holders in due course of Plaintiffs' notes such that they can enforce 

Plaintiffs' obligations;" (2) MERS "could not grant, assign or transfer any true or pecuniary 

beneficial interest in Plaintiffs' Notes and Mortgages;" (3) "[D]efendants cannot claim any 

legal or equitable right, title, or interest in [P]laintiffs' Notes and Mortgages since [BNYM] 

cannot take any action which is not authorized by the Securitization agreements that created 

and govern the CL T;" and (4) MERS fraudulently executed the Assignment and Substitution 

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ofTrustee documents for the property at 7891 Laurelridge Road because the "signature of T. 

Sevillano, as it appears on both documents, is not a true signature of said individual and is 

fraudulent." (ECF No. 27 at 14-19). 

Defendants contend the Plaintiffs' causes ofaction in the First Amended Complaint are 

"conditioned on the unsupported and irrelevant conclusion that Defendants do not possess a 

valid legal interest in these mortgage notes." (ECF No. 32-1 at 7). Defendants assert the 

documents attached to the First Amended Complaint show that Defendants have a right to 

foreclose. (ECF No. 44 at 2). Defendants contend that Plaintiffs' claim are "subject to 

dismissal because Defendants are not required under California law to own or possess a 

mortgage note before proceeding with foreclosure." (ECF No. 32-1 at 10). Defendants 

contend that "a foreclosing party does not have to validate its legal interest in a mortgage note, 

so long as the designated beneficiary or its nominee initiates foreclosure." (ECF No. 32-1 at 

11 ). Defendants contend that the documents attached to the First Amended Complaint 

"expressly state [ ] ... that MERS was the beneficiary" and grant MERS "'the right to foreclose 

and sell the property.'" (ECF No. 32-1 at 12-13 (quoting ECF No. 27-1 at 14». Defendants 

contend that "Plaintiffs further agreed that MERS could transfer and assign the Deed ofTrust 

to others." (ECF No. 32-1 at 13 (citing ECF No. 27-1 at 14». Defendants contend that 

Plaintiffs allegation of""securitization ofthe loan has no impact on its enforceability" because 

"[i]t is well-established in California that securitization and pooling of a mortgage note does 

not impact its legal status or enforceability." (ECF No. 32-1 at 14 (citation omitted». 

Defendants contend that "Plaintiffs lack standing to attack the validity of the assignment." 

(ECF No. 32-1 at 13). Defendants contend that Plaintiffs' allegations that the Assignment for 

the property at 7891 Laurelridge Road was fraudulent because the person who executed the 

Assignment "lacked the authority to execute the Assignment on behalf of MERS are 

unsupported and wholly conclusory." (ECF No. 32-1 at 13). 

Authority to Enforce Debt Obligations and Foreclose for all Properties 

Documents attached to the First Amended Complaint show Plaintiffs expressly agreed 

that Defendant MERS has the authority to initiate foreclosure proceedings. The Deed ofTrust 

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for the property located at 7891 Laurelridge Road expressly identifies "Beneficiary, MERS as 

nominee for Lender and Lender's successors and assigns." (ECF No. 27-2 at 2). Each Deed 

of Trust for the two Las Vegas properties expressly states that MERS is thebeI}eficiary and 

is "acting solely as nominee for [Lender] and its successors and assigns." (ECF No. 27-4 at 3; 

ECFNo. 27-5 at 3). "Thetrustee~ mortgagee, or beneficiary, or any oftheir authorized agents" 

may file a notice ofdefault. See Cal. Civ. Code § 2924(a)(I). Each Deed ofTrust for each of 

the three properties at issue expressly states that "MERS (as nominee for lender and lender's 

successors and assigns) has the right to foreclose and sell the property." (ECF No. 27-2 at 3; 

ECF No. 27-4 at 4; ECF No. 27-5 at 6.) As beneficiary and designated "nominee" for the 

"Lender" and Lender's "successors and assigns" pursuant to each Deed of Trust, "MERS is 

an authorized agent of the lender and has the authority to initiate the foreclosure proceedings 

and file a Notice ofDefault." See, e.g., Bascos v. Federal Home Loan Mortg. Corp. 2011 WL 

3157063, at *4 (C.D.Cai. 2011). By executing the Deeds ofTrust, Plaintiffs explicitly agreed 

that MERS has the authority to foreclose and the assignment of the note "does not affect 

MERS' authority to foreclose." ld. There are no facts alleged in the First Amended Complaint 

that would support the conclusory allegation that Defendants lack the authority to enforce 

Plaintiffs' debt obligations and foreclose. Plaintiffs fail to state a claim plausibly suggestive 

of an entitlement to relief. 

Authority of MERS to Assign for All Properties 

Plaintiffs allege Defendant MERS is "merely an electronic registration system and is 

not a true pecuniary beneficiary. Therefore, it could not grant, assign, or transfer any true or 

pecuniary beneficial interest in Plaintiffs' Notes and Mortgages." (ECF No. 27 at 18). Based 

on the Deeds of Trust executed for each of the properties and attached to the complaint, 

MERS, as nominee for lender and beneficiary of a Deed of Trust, may assign its beneficial 

interestto another party and substitute the trustee. (ECF No. 27-2 at 3; ECFNo. 27-4 at4; ECF 

No. 27-5 at 6). See Cal. Civ. Code § 2934(a) (authorizes a beneficiary under a deed of trust 

to substitute the trustee); see also Bascos v. Federal Home Loan Mortg. Corp., 2011 WL 

3157063, at *5 (C.D. Cal. 2011) (citing Madridv. Banko/America Corp., 2011 WL 2729429, 

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at *3 (S.D. Cal. July 13,2011); Castanedav. Saxon Mortg. Services, Inc., 687 F.Supp.2d 1191, 

1198 (E.D. Cal. 2009); Hensley v. Banko/New York Mellon, 2011 WL 2118810, at *3 (E.D. 

Cal. May 27,2011); Edwards v. Aurora Loan Services, LLC, 20 II WL 1668926, at *20 (E.D. . . Cal. May 2,2011); Lawther v. Onewest Bank, 2010 WL 4936797, at *6 (N.D. Cal. Nov. 30, 

2010) (quotations omitted»; Lane v. Vitek Real Estate Indus. Group, 713 F. Supp. 2d 1092, 

1099 (E.D.Cal. 2010). There are no facts alleged in the First Amended Complaint that would 

support the conclusory allegation that Defendant MERS lacks the authority to assign its 

beneficial interest. Plaintiffs fail to state a claim plausibly suggestive of an entitlement to 

relief. 

Securitization ofNotes for All Properties 

Plaintiffs allege that "the failure to deposit Plaintiffs' Notes" into the Trust before the 

closing date constituted a failure to properly "securitize" the notes and mortgages and that, as 

a consequence, Defendants are unable to claim a legal right to the notes and mortgages because 

Defendant BNYM "cannot take any action which is not authorized by the Securitization 

agreement." (ECFNo. 27 at 15). Plaintiffs are not investors ofthe loan trust and lack standing 

to "challenge the validity of the securitization of the loan." Bascos v. Federal Home Loan 

Mortg. Corp., 2011 WL 3157063, at *6 (C.D.Cai. 2011). 

To the extent that Plaintiffs allege that securitization ofthe loan detrimentally impacted 

its legal status and enforceability, this allegation falls outside the comprehensive framework 

that governs nonjudicial foreclosure proceedings in California. See Cal. Civ. Code § 2924 et 

seq.; Gomesv. Countrywide Home Loans, Inc., 192 Ca1. App.4th 1149, 1154 (2011); see also 

Bascos v. Federal Home Loan Mortg. Corp., 2011 WL3157063, at *6 (C.D. Cal. 20 l1)(citing 

Lane v. Vitek Real Estate Indus. Group, 713 F. Supp. 2d 1092, 1099 (E.D. Cal. 2010); Benham 

v. Aurora Loan Services, 2009 WL 2880232 at *3 (N.D. Cal. 2009) (quotations omitted». 

Plaintiffs lack standing to challenge the validity ofthe securitization process for the notes and 

mortgages. 

III 

III 

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Fraudulent Assignment for Property at 7891 Laurelridge Road 

Plaintiffs allege that the Assignment for the property at 7891 Laurelridge Road was 

fraudulently executed and "created for the purpose offacilitating and aidingang abetting the 

illegal, deceptive, and unlawful collection of Plaintiffs' mortgage payments, as well as 

engaging in other debt collection activities." (ECF No. 27 at 21). To support their allegation 

that the Assignment was fraudulently executed, Plaintiffs allege th.at the signature of T. 

Sevillano, as it appears on both the Substitution ofTrustee and the Assignment, is a fraudulent 

signature and the Assignment was "executed after the closing date ofthe trust." (ECF No. 27 

at 14). Plaintiffs allege that T. Sevillano is not and was never appointed Assistant Secretary 

of MERS but rather is "an individual who simply signs thousands of property record 

documents without any legal or corporate authority." (ECF No. 27 at 20-21). Plaintiffs allege, 

as a result, Defendants are "fraudulently enforcing a debt obligation in which they have no 

pecuniary, equitable or legal interest" because Plaintiffs' Note was "not properly negotiated, 

endorsed and transferred." (ECF No. 27 at 22-23). 

Plaintiffs assert that there was "no valid or actual assignment" of the debt. (ECF No. 

38 at 25). Plaintiffs' allegations of fraudulent assignment lack sufficient facts to support a 

cognizable legal theory that the assignment was fraudulently executed. See Balistreri v. 

Pacifica Police Dep't, 901 F.2d 696,699 (9th Cir. 1990). Plaintiffs' allegations offraudulent 

assignment, regarding the fraudulent role and signature ofT. Sevillano and untimely execution 

of the Assignment after the closing date of the trust, are conc1usory and lack necessary 

supporting factual allegations. 

Conclusion 

The Court concludes that Plaintiffs' First Amended Complaint fails to state a claim 

against Defendants for quasi-contract, violation of FDCPA, violation of California Business 

and Professions Code Section 17200, accounting, and extortion. 

Fourth Cause ofAction for Violation ofRESPA against Defendant BANA 

Defendant BANA contends that Plaintiffs "fail to allege pecuniary damages" and 

"neglect to show a causal connection between the alleged RESP A violations and any purported 

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damage." (ECF No. 32-1 at 19). Defendant BANA asserts that Plaintiffs "state in a 

conclusory fashion that' [t ]he actua\pecuniary damages include, but are not limited to, the over 

calculation and overpayment' ofinterest ... costs associated with removing the cloud on ... [the] , 

Property title, and attorneys' fees and costs. '" (ECF No. 32-1 at 19). Defendant BANA 

contends that this does not demonstrate a causal connection between DefendanC s alleged 

failure to answer the Qualified Written Request and the damages. Defendants contend that 

MERS is not subject to RESP A because MERS does not originate loans. 

In their fourth cause of action for violation ofRESPA, 12 U.S.C. § 2605, Plaintiffs 

allege Defendant BANA, after receiving Plaintiffs' Qualified Written Request, failed "to make 

appropriate corrections in the account ofthe borrower, including crediting ofany late charges 

or penalties, and transmit to the borrower a written confirmation ofthe correction." (ECF No. 

27 at 33). Plaintiffs allege that Defendant BANA failed "to protect Plaintiffs' credit rating 

upon receipt of Plaintiffs' QWR by furnishing adverse information regarding payments to 

credit reporting agencies as defined in § 603 ofthe Fair Credit Reporting Act, 15[] U.S.c. § 

1681(a)." (ECF No. 27 at 33). 

"Ifany servicer ofa federally related mortgage loan receives a qualified written request 

from the borrower (or an agent of the borrower) for information relating to the servicing of 

such loan, the servicer shall provide a written response acknowledging receipt of the 

correspondence within 20 days ... unless the action requested is taken within such period." 12 

U.S.c. § 2605(e)(I)(A). A qualified written request is "a written correspondence, ... that- (i) 

includes, or otherwise enables the servicer to identity, the name and account ofthe borrower; 

and (ii) includes a statement of the reasons for the belief of the borrower, to the extent 

applicable, that the account is in error or provides sufficient detail to the servicer regarding 

other information sought by the borrower." 12 U.S.C. § 2605(e)(I)(B). When a loan servicer 

receives a qualified written request, it must either correct the borrower's account or, after 

conducting an investigation, provide the borrower with a written explanation of: (1) why the 

servicer believes the account is correct; or (2) why the requested information is unavailable. 

See 12 U.S.c. § 2605(e)(2). 

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"Not all requests that relate to the loan are related to the servicing of the loan." 

Williamsv. Wells Fargo, N.A., No) C 10-00399,2010 WL 1463521, at *3 (N.D. Cal. April 13, 

2010). A loan servicer only'has a duty to respond ifthe information request is rttlated to loan 

servicing. Id.; see also Champlaie v. BAC Home Loans Servicing, LP, 706 F. Supp. 2d 1029, 

1043 (E.D. Cal. 2009). Ifa 10aI?- servicer fails to comply with the provisions of 12 U.S.C. § 

2605, a borrower is entitled to "any actual damages to the borrower as a result ofthe failure" 

and "any additional damages, as the court may allow, in the case of a pattern or practice of 

noncompliance with the requirements of [12 U.S.C. § 2605]." 12 U.S.C. § 2605(f)(1). 

"Numerous courts have read Section 2605 as requiring a showing ofpecuniary damages 

to state a claim." Molina v. Washington Mutual Bank, No. 09-CV-00894-IEG (AJB), 2010 

WL 431439 at *7 (S.D. Cal. Jan. 29, 2010). "This pleading requirement has the effect of 

limiting the cause of action to circumstances in which plaintiff can show that a failure to 

respond or give notice has caused them actual harm." Shepherd v. Am. Home Mortg. Services, 

Inc., Case No. Civ. 2:09-1916 WBS GGH, 2009 WL 4505925 at * 3 (E.D. Cal. Nov. 20,2009) 

(citation omitted). A plaintiff is entitled to recover for the loss that relates to the RESP A 

violation, not for all losses related to foreclosure activity. See Lal v. American Home 

Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010) ("[T]he loss alleged must be 

related to the RESPA violation itself."); Torres v. Wells Fargo Home Mortg., Inc., No. C 

10-04761 CW, 2011 WL 11506 at *8 (N.D. CaL Jan. 4, 2011)("The plaintiffmust also allege 

a causal relationship between the alleged damages and the RESPA violation."). 

Plaintiffs allege they have been harmed by overpayment of interest, costs of repairing 

Plaintiffs' credit, and costs associated with restoring good title to the properties. However, 

Plaintiffs fail to allege sufficient facts to show a causal connection between the RESP A 

violation and the alleged pecuniary damages. Plaintiffs allege that the damages are "a direct 

and proximate result ofthe violations ofRESPA" but do not allege any facts in support ofthis 

conclusion. (ECF No. 27 at 33). The Court concludes that Plaintiffs have not alleged 

sufficient facts to support a cause of action for violation of RESPA. 

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B. Motion to Dismiss Plaintiffs' First Amended Complaint Pursuant to Fed. R. Civ. P. 

12(b)(6) filed by Ocwen (ECF ~o. 29); Motion to Dismiss Plaintiffs First Amended 

Complaint for Failure to State a Claim for Relief filed by Real Tillie (ECF No. 35); and 

Amended Motion to Dismiss Plaintiffs' First Amended Complaint filed by SPS (ECF No. 

46). 

Plaintiffs allege that "each Defendant committed the acts, caused or directed others to 

commit the acts alleged." (ECF No. 27 at 7). Plaintiffs allege that "some or all of the 

Defendants acted as the agent of the other Defendants." (ECF No. 27 at 7). Plaintiffs allege· 

Defendants Ocwen, Real Time, and SPS are the actors and agents of the other Defendants. 

Plaintiffs fail to allege any facts regarding Defendants MERS, ReconTrust, Ocwen, Real Time, 

and SPS that would "raise a right to relief above the speculative level." Bell At!. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007). The Court concludes the Plaintiffs fail to allege sufficient 

facts to demonstrate that they are entitled to relief against these Defendants. See Fed. R. Civ. 

P. 8(a)(2). 

CONCLUSION 

IT IS HEREBY ORDERED that: (I) Motion to Dismiss First Amended Complaint for 

Failure to State a Claim Upon Which Relief Can be Granted filed by BNYM, BANA, 

ReconTrust, and MERS (ECF No. 32) is GRANTED; (2) Motion to Dismiss Plaintiffs' First 

Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Ocwen (ECF No. 29) is 

GRANTED; (3) Motion to Dismiss Plaintiffs First Amended Complaint for Failure to State 

a Claim for Relief filed by Real Time (ECF No. 35); and Amended Motion to Dismiss 

Plaintiffs' First Amended Complaint filed by SPS (ECF No. 46) is GRANTED. The First 

Amended Complaint is dismissed without prejudice. 

Plaintiffs may file a motion for leave to file an amended complaint, accompanied by the 

proposed second amended complaint, within thirty days from the date of this order. If no 

motion is filed, the case will be closed. 

DATED: -4$~'-li.L,.~I_

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