Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00409/USCOURTS-casd-3_11-cv-00409-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

HERMILO TELLEZ, an individual,

Plaintiff,

v.

JP MORGAN CHASE BANK, as

successor in interest for WASHINGTON

MUTUAL SAVINGS BANK;

QUALITY LOAN SERVICE

CORPORATION, a California

corporation;

FEDERAL HOME LOAN MORTGAGE

CORPORATION, form and jurisdiction

unknown; and

DOES 1 THROUGH 100 INCLUSIVE,

Defendants.

CASE NO. 11-CV-409-JM (CAB)

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS WITHOUT LEAVE TO

AMEND

Doc. No. 13

Plaintiff brought the instant suit based on a loan obtained in 2006 and secured by a

Deed of Trust encumbering certain real property, and the subsequent foreclosure proceedings

instituted against him. In his First Amended Complaint, Plaintiff lists seventeen individual

causes of action and seeks relief in the form of invalidation of the underlying loan, restoration

of his ownership interest in the property, damages, and injunctive relief. (Doc. No. 11, “FAC.”)

Defendants Federal Home Loan Mortgage Corporation (“FHLMC”) and JP Morgan Chase

Bank, N.A. (“Chase”) now bring a motion to dismiss the Complaint. (Doc. No. 11.)

Case 3:11-cv-00409-JM-CAB Document 16 Filed 08/24/11 Page 1 of 5
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- 2 - 11-CV-409-JM (CAB)

Pursuant to CivLR 7.1(d)(1), the court determines this matter is appropriate for

resolution without oral argument. For the reasons set forth below, the court hereby GRANTS

Defendants’ motion.

I. BACKGROUND

Plaintiff Hermilo Tellez is an individual residing in San Diego County and the alleged

owner of a parcel of real property located at 331 Camino Redondo, San Marcos, California

92069 (the “Property”). (FAC ¶ 2.) On or around December 12, 2006, Plaintiff obtained a fiveyear loan from Washington Mutual Savings Bank (“Washington Mutual”) secured by a Deed

of Trust encumbering the Property. (Id. ¶ 15.) The Deed of Trust named Washington Mutual

as the lender, and California Reconveyance Company as the trustee. (Id. ¶ 28; Doc. No. 13-2,

Defendants’ Request for Judicial Notice (“RJN”), Exh. 1.) Plaintiff’s loan was subsequently

acquired, along with other assets, from Washington Mutual by Defendant Chase. (Complaint

¶ 18; RJN at Exh. 2.) 

A Notice of Default executed on December 17, 2008 and recorded on December 18,

2008 showed that Plaintiff owed $10,898.27 in past-due payments, costs, and expenses. (RJN

at Exh. 3.) The following month, a Substitution of Trustee was executed, substituting

Defendant Quality Loan Service Corp. (“Quality”) in place of the previous trustee. (Id. at Exh.

7.) A Notice of Trustee’s Sale was then executed on March 19, 2009. (Id. at Exh. 4.) The

Property was ultimately sold by Quality at a public auction on August 4, 2009, which sale was

reflected in a Trustee’s Deed Upon Sale executed on August 13, 2009. (Id. at Exh. 8.) 

On April 8, 2009, in the midst of the foreclosure proceedings described above, Plaintiff

filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Southern

District of California. (Id. at Exh. 5, Doc. No. 1.) This matter was subsequently converted to

a Chapter 7 case by Plaintiff on April 24, 2009. (Id. at Doc. No. 14.) The case was ultimately

dismissed by the bankruptcy court based on Plaintiff’s failure to appear at and testify before

a First Meeting of Creditors. (Id. at Doc. No. 42.)

On January 25, 2011, Plaintiff filed the instant action in San Diego Superior Court,

naming as defendants Chase, Quality, and FHLMC. (Doc. No.1, Exh. A.) According to

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 It should be noted that Plaintiff’s opposition to Chase and FHLMC’s motion to

dismiss includes a “Notice of Opposition” referencing a different case in the Central District.

However, because the main body of the opposition is correctly captioned and substantively

addresses the matter at hand, it will be construed as properly filed for purposes of this motion.

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Plaintiff, he was improperly induced to enter into the loan agreement based on various acts of

deception and trickery by Washington Mutual. (See FAC ¶¶ 17-28.) Plaintiff now seeks to

invalidate the loan and reclaim title to the Property. 

Chase and FHLMC removed the action to federal court on February 28, 2011, citing

federal jurisdiction under 12 U.S.C. § 1452(f). (Doc. No. 1.) Both defendants then filed a

motion to dismiss, which was granted on the grounds that Plaintiff was not the real party in

interest in the case, his cause of action having been ceded to the bankruptcy estate. (Doc.

No. 9.) However, the court granted Plaintiff leave to seek participation of the trustee and re-file

his action thereafter. (Id. at p.6.) Plaintiff subsequently filed his First Amended Complaint on

May 27, 2011. Chase and FHLMC now once again move to dismiss. (Doc. No. 13.) Plaintiff

opposes Defendants’ motion.1

 (Doc. No. 14.)

II. LEGAL STANDARD

A motion to dismiss under FED. R. CIV. P. 12(b)(6) challenges the legal sufficiency of

the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the

motion, the court must construe the pleadings in the light most favorable to the non-moving

party, accepting as true all material allegations in the complaint and any reasonable inferences

drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). While Rule

12(b)(6) dismissal is proper only in “extraordinary” cases, United States v. Redwood City, 640

F.2d 963, 966 (9th Cir. 1981), the complaint’s “[f]actual 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). The court should grant 12(b)(6) relief only if the complaint lacks either a “cognizable

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

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

III. DISCUSSION

As mentioned above, this court previously dismissed this case after finding that Plaintiff

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was not the proper party to bring the action absent a showing that the action was exempt from

the bankruptcy proceedings or abandoned by the bankruptcy trustee. Leave to amend was

granted on the condition that Plaintiff seek the trustee’s participation in his suit. However, the

FAC does not include any joinder in the action by the trustee; instead, Plaintiff has merely

amended his complaint to include the allegation that, because the instant suit was not filed until

a year and a half after the dismissal of his bankruptcy case, “any issue as to the real party in

interest in this case is moot.” (FAC ¶ 35.)

Chase and FHLMC argue that this allegation is insufficient to cure the defect

recognized in the original complaint because the trustee cannot be said to have abandoned

Plaintiff’s causes of action where the suit or potential suit was not listed among Plaintiff’s

assets when he filed for bankruptcy. (Doc. No. 13-1 p.6.) Plaintiff does not deny that he did

not list the instant litigation in the schedule of property filed as part of his bankruptcy

proceedings. Nevertheless, he claims that his causes of action against Defendants have reverted

to him by abandonment under 11 U.S.C. § 554(c), which provides that property “not otherwise

administered at the time of the closing of a [bankruptcy] case is abandoned to the debtor.”

(Doc. No. 14 p.6.) However, as Plaintiff also apparently acknowledges, this section only

applies to scheduled property. See § 554(c) (referring only to “any property scheduled under

section 521(a)(1)”). Indeed, as the Ninth Circuit has held, 

abandonment results only when the trustee knows of the existence of the

property, so that, at the least, an intent to disclaim can be inferred. When the

bankrupt fails to list an asset, he cannot claim abandonment because the trustee

has had no opportunity to pursue the claim.

Stein v. United Artists Corp., 691 F.2d 885, 891 (9th Cir. 1982); see also In re Pace, 146 B.R.

562, 564 (“Abandonment pursuant to § 554(c) requires that the property to be abandoned is

properly scheduled under § 521(l).”). Thus, as the public records demonstrate that Plaintiff did

not schedule this or any other causes of action in his bankruptcy filings (RJN at Exh. 6), and

Plaintiff makes no other argument that the bankruptcy trustee was otherwise aware of the

potential for this litigation, the trustee clearly did not abandon this suit, and the case remains

the property of the bankruptcy estate. See 11 U.S.C. § 554(d). Therefore, for purposes of this

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action, Plaintiff has failed to prove he is the real party in interest, and all claims against Chase

and FHLMC must be dismissed.

IV. CONCLUSION

For the foregoing reasons, the court hereby GRANTS Defendants Chase and FHLMC’s

motion to dismiss. Because Plaintiff has already had an opportunity to seek the trustee’s

participation in this suit and has declined to do so, no leave to amend is granted.

In addition, the sole remaining defendant in this action, Quality, has filed a Declaration

of Nonmonetary Status pursuant to CAL. CIV. CODE § 2624l(a), which has not been opposed.

(Doc. No. 5.) Therefore, although Quality is not required to participate in this action, it

continues to be bound by the judgment of this court. CAL. CIV. CODE § 2624l(d). All causes

of action having been dismissed against Chase and FHLMC, this case is also dismissed as to

Quality. The Clerk of the Court is ordered to close the case file.

IT IS SO ORDERED.

DATED: August 24, 2011

 Hon. Jeffrey T. Miller

 United States District Judge

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