Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02385/USCOURTS-caed-2_09-cv-02385-2/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

----oo0oo----

PICHANDA POK and VANN PHOU,

Plaintiffs,

 v.

AMERICAN HOME MORTGAGE

SERVICING, INC., AMERICAN

BROKERS CONDUIT, POWER DEFAULT

SERVICES, INC., MORTGAGE

ELECTRONIC REGISTRATION

SYSTEMS, INC., INNOVIA

ESTATES, DESIREE FORD, JOSEPH

HAI DINH, and DOES 1 through

20, inclusive,

Defendants. /

NO. CIV. 2:09-2385 WBS EFB

MEMORANDUM AND ORDER RE:

MOTION TO DISMISS

----oo0oo----

Plaintiffs Pichanda Pok and Vann Phou filed this action

against defendants American Home Mortgage Servicing, Inc.

(“AHMSI”), American Brokers Conduit, Power Default Services, Inc.

(“Power Default”), Mortgage Electronic Registration Systems, Inc.

(“MERS”), Innovia Estates, Desiree Ford, and Joseph Hai Dinh

alleging various state and federal claims relating to a loan they

obtained to refinance their home in Stockton, California. AHMSI,

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1 Plaintiffs’ Opposition argues that MERS is not licensed

to conduct business in California. However, MERS is statutorily

exempted from the requirement to obtain a certificate of

qualification to conduct business in California. MERS registered

as a Delaware corporation, which is a foreign corporation under

California law. Cal. Corp. Code §§ 167, 171. MERS is not

required to obtain a certificate of qualification from the

Secretary of State because it does not “transact intrastate

business” within the meaning of the statute. See Lomboy v. SCME

Mortgage Bankers, No. C-091160 SC, 2009 WL 1457738, at *3 (N.D.

Cal. May 26, 2009).

2

Power Default, and MERS move to dismiss plaintiffs’ First Amended

Complaint (“FAC”) pursuant to Federal Rule of Civil Procedure

12(b)(6) for failure to state a claim upon which relief can be

granted.

I. Factual and Procedural Background

On September 12, 2006, plaintiffs obtained a loan from

American Brokers Conduit to refinance their home, located at

10022 Ornella Drive, Stockton, California. (FAC ¶¶ 6, 37.) This

loan was memorialized in a Promissory Note (“the Note”) secured

by a Deed of Trust on the property. (Id. ¶ 37.) Plaintiffs

claim that they were channeled into this allegedly unaffordable

loan through the conduct of their mortgage broker Ford, who

allegedly told plaintiffs they could only qualify for a “subprime” loan when in fact they qualified for a “prime” loan with

better terms. (Id. ¶¶ 29-31.) The Deed of Trust listed First

Alliance Title as trustee, American Brokers Conduit as lender,

and MERS as nominee and beneficiary for the lender and lender’s

successors and assigns. (Id. ¶¶ 37-38.) MERS facilitates the

transfer of mortgage interests by providing an electronic

tracking system for the mortgage interests registered in its

system.1 To do this, MERS is the beneficiary of record in a

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“nominee” capacity for the mortgage lender on all security

instruments in its system. (Id. ¶ 11.) 

Plaintiffs eventually defaulted on their loan, and a

Notice of Default and Election to Sell Under Deed of Trust was

filed in San Joaquin County by Power Default on February 26,

2009. (Id. ¶ 40.) On May 27, 2009, plaintiffs allegedly sent a

Qualified Written Request (“QWR”) under the Real Estate

Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, to

AHMSI that included a demand to rescind their loan under the

Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f. (Id. ¶

43.) On July 29, 2009, MERS, as nominee for Alliance Title,

allegedly substituted Power Default as trustee under the Deed of

Trust. (Id. ¶ 41.) On August 24, 2009, Power Default allegedly

noticed the trustee sale of the property. (Id. ¶ 42.) This

notice identified Power Default as the trustee under the Deed of

Trust. (Id.) 

In their FAC, plaintiffs assert ten causes of action

against seven defendants. AHMSI, Power Default, and MERS move to

dismiss only those causes of action alleged against them. 

Plaintiffs did not oppose the motion until January 14, 2010,

almost two weeks past the deadline for the submission of an

opposition pursuant to Local Rule 230(c). Although the court

will consider plaintiffs’ Opposition, the hearing date of January

19, 2010 is VACATED pursuant to Local Rule 230(c), and the court

will take defendants’ motion to dismiss under submission without

oral argument due to plaintiffs’ late filing. 

II. Discussion

On a motion to dismiss, the court must accept the

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allegations in the complaint as true and draw all reasonable

inferences in favor of the plaintiff. Scheuer v. Rhodes, 416

U.S. 232, 236 (1974), overruled on other grounds by Davis v.

Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322

(1972). To survive a motion to dismiss, a plaintiff needs to

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

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007). This “plausibility standard,” however, “asks

for more than a sheer possibility that a defendant has acted

unlawfully,” and where a complaint pleads facts that are “merely

consistent with” a defendant’s liability, it “stops short of the

line between possibility and plausibility.” Ashcroft v. Iqbal,

129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-

57).

In general a court may not consider items outside the

pleadings upon deciding a motion to dismiss, but may consider

items of which it can take judicial notice. Barron v. Reich, 13

F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial

notice of facts “not subject to reasonable dispute” because they

are either “(1) generally known within the territorial

jurisdiction of the trial court or (2) capable of accurate and

ready determination by resort to sources whose accuracy cannot

reasonably be questioned.” Fed. R. Evid. 201. 

In support of their motion to dismiss, AHMSI, Power

Default, and MERS submitted a Request for Judicial Notice of two

exhibits, a copy of the Deed of Trust, recorded in San Joaquin

County and a Notice of Trustee’s Sale, recorded in San Joaquin

County. (Docket No. 22.) Plaintiffs also submitted a Request

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for Judicial Notice of one unpublished article entitled

“Foreclosure, Subprime Mortgage Lending, and the Mortgage

Electronic Registration System.” The court will take judicial

notice of defendants’ exhibits, since they are matters of public

record whose accuracy cannot be questioned. See Lee v. City of

Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). However, the

court denies plaintiffs’ request, as the document in question is

an unpublished article expressing an individual opinion that can

be questioned.

A. California Rosenthal Fair Debt Collection Practices Act

Plaintiffs’ second cause of action alleges that

defendant AHMSI violated the Rosenthal Fair Debt Collection

Practices Act (“RFDCPA”), Cal. Civ. Code § 1788.2. The RFDCPA

prohibits a host of unfair and oppressive methods of collecting

debt, but to be liable under the RFDCPA a defendant must fall

under its definition of “debt collector.” Izenberg v. ETS Svcs.,

LLC, 589 F. Supp. 2d 1193, 1199 (C.D. Cal. 2008). A “debt

collector” under the RFDCPA is “any person who, in the ordinary

course of business, regularly, on behalf of himself or herself or

others, engages in debt collection.” Cal. Civ. Code § 1788.2(c)

(2008). 

Plaintiffs fail to allege facts that would support the

inference that AHMSI is a “debt collector” under the RFDCPA.

Instead, the FAC contains only a conclusory restatement of the

definition of “debt collector” under the RFDCPA, (FAC ¶ 77.), and

fails to allege other essential elements of the statute necessary

to establish liability as a “debt collector,” namely that the

deed of trust memorializes a “consumer credit transaction” and

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that the amount owed under the deed of trust is a “consumer debt”

according to the RFDCPA. See Cal. Civ. Code § 1788.2(b)-(f). 

Such broad allegations, without even identifying what part of the

RFDCPA AHMSI violated, are insufficient to survive a motion to

dismiss. See Rosal v. First Fed. Bank of Cal., No. 09-1276, 2009

WL 2136777, at * 18 (N.D. Cal. July 15, 2009). 

Additionally, foreclosure pursuant to a deed of trust

does not constitute debt collection under the RFDCPA. See

Izenberg, 589 F. Supp. 2d at 1199; see also Rosal, 2009 WL

2136777, at *18 (dismissing RFDCPA claim as to all defendants in

foreclosure case); Ricon v. Recontrust Co., No. 09-937, 2009 WL

2407396, at *4 (S.D. Cal. Aug. 4, 2009) (dismissing with

prejudice plaintiff's unfair debt collection claims in

foreclosure case); Pittman v. Barclays Capital Real Estate, Inc.,

No. 09-0241, 2009 WL 1108889, at *3 (S.D. Cal. Apr. 24, 2009)

(dismissing with prejudice plaintiff's Rosenthal Act claim in

foreclosure case because a “residential mortgage loan does not

qualify as a ‘debt’ under the statute”); Gallegos v. Recontrust

Co., No. 08-2245, 2009 WL 215406, at *3 (S.D. Cal. Jan. 28, 2009)

(dismissing RFDCPA claim in foreclosure case). Since residential

mortgage loans to not fall within the RFDCPA, the court must

grant AHMSI’s motion to dismiss plaintiffs’ cause of action for

violations of the RFDCPA.

B. Negligence

To prove a cause of action for negligence, a plaintiff

must show “(1) a legal duty to use reasonable care; (2) breach of

that duty, and (3) proximate [or legal] cause between the breach

and (4) the plaintiff’s injury.” Mendoza v. City of Los Angeles,

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66 Cal. App. 4th 1333, 1339 (1998) (citation omitted). “The

existence of a legal duty to use reasonable care in a particular

factual situation is a question of law for the court to decide.” 

Vasquez v. Residential Invs., Inc., 118 Cal. App. 4th 269, 278

(2004). 

Plaintiffs allege that MERS owed them a duty to 

“perform its administrative function recording,[sic] maintaining,

and transferring documents as it relates to [p]laintiffs’ loan in

a manner not to cause [p]laintiffs harm.” (FAC ¶ 89.) 

Plaintiffs further contend that MERS breached this duty when “it

failed to receive, maintain or transfer the negotiable instrument

related to [p]laintiffs’ loan, and authorized others to collect

payments on [p]laintiffs’ mortgage and commence foreclosure

proceedings.” (Id.) Plaintiffs cite no authority for the

proposition that MERS owed a duty to not cause plaintiff harm in

its capacity the nominal beneficiary for the loan. Absent

contrary authority, a pleading of an assumption of duty by MERS,

or a special relationship, plaintiffs cannot establish MERS owed

a duty of care. See Hardy v. Indymac Fed. Bank, --- F.R.D. ---,

No. CV F 09-935 LJO SMS, 2009 WL 2985446, at *7 (E.D. Cal. Sept.

15, 2009); Bentham v. Aurora Loan Servs., No. C-09-2059 SC, 2009

WL 2880232, at *2-3 (N.D. Cal. Sept. 1, 2009). As the listed

nominee and beneficiary under the Deed of Trust, MERS had

authority to assign its beneficial interest to another party.

See Cal. Civ. Code § 1934 (“Any assignment of a mortgage and any

assignment of the beneficial interest under a deed of trust may

be recorded, and from the time the same is filed for record

operates as constructive notice of the contents thereof to all

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persons.”); Bentham, 2009 WL 2880232 at *3. 

Additionally, the FAC alleges that AHMSI owed

plaintiffs a duty of care that was breached when ASMI “took

payments to which they were not entitled, charged fees they were

not entitled to charge, and wrongfully made or otherwise

authorized negative reporting of [p]laintiffs’ creditworthiness

to various credit bureaus.” (FAC ¶ 88.) However, loan servicers

do not owe a duty to the borrowers of the loans they service. 

See Watts v. Decision One Mortg. Co., No. 09-43 2009 U.S. Dist.

LEXIS 59694 (S.D. Cal. July 13, 2009); Marks v. Ocwen Loan

Servicing, No. 07-2133, 2009 WL 975792, at *7 (N.D. Cal. Apr. 10,

2009) (“[A] loan servicer does not owe a fiduciary duty to a

borrower beyond the duties set forth in the loan contract.”)

Plaintiffs have alleged that AHMSI was the servicer of their loan

(FAC ¶ 8.) and accordingly cannot demonstrate that AHMSI owed

plaintiffs a duty of care outside of the terms of the loan

contract.

Power Default is not so much as mentioned by name in

plaintiffs’ negligence claim. Power Default should not be forced

to guess how their conduct was allegedly negligent. See

Associated Gen. Contractors of Cal., Inc. v. Cal. State Council

of Carpenters, 459 U.S. 519, 526 (1983); Gauvin v. Trombatore,

682 F. Supp. 1067, 1071 (N.D. Cal. 1988). The FAC fails to state

that MERS, AHMSI, or Power Default have breached a cognizable

legal duty, and accordingly the court will grant defendants’

motions to dismiss plaintiffs’ cause of action for negligence

against MERS, AHMSI, and Power Default. 

C. Real Estate Settlement Procedures Act 

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RESPA requires that borrowers must be provided certain

disclosures relating to the mortgage loan settlement process. 

See 12 U.S.C. § 2601. Section 2605 of RESPA relates to the

disclosures and communications required regarding the servicing

of mortgage loans, and provides that loan servicers have a duty

to respond to QWRs from borrowers asking for information relating

to the servicing of their loan. See 12 U.S.C. § 2605(e). Under

RESPA lenders of federally related mortgage loans must disclose

whether servicing of a loan may be assigned, sold or transferred

to loan applicants. 12 U.S.C. § 2605(a). Additionally,

borrowers may send QWRs under RESPA to loan servicers for

information relating to the servicing of their loan. 12 U.S.C. §

26055(e)(1). Loan servicers have 60 days after the receipt of a

QWR to respond to the borrower inquiry. 12 U.S.C. § 2605(e)(2). 

Plaintiffs have alleged sufficient facts to indicate

that they sent AHMSI a valid QWR under RESPA. Specifically,

plaintiffs allege that they sent AHMSI a QWR on May 27, 2009,

which identified plaintiffs’ name, loan number, and stated the

reasons they believed their account was in error. (FAC ¶¶ 43,

96.) This information is all that is required to submit a valid

QWR under RESPA. See 12 U.S.C. § 2605(e)(1)(B). Plaintiffs have

also indicated the specific provisions of RESPA they believe

AHMSI violated. (See id. ¶¶ 96, 98-100.) These averments are

sufficient to put AHMSI on notice of the wrongs it allegedly

committed, and therefore are sufficient at this preliminary

stage. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d

1097, 1103 (9th Cir. 2008). 

Plaintiff must, however, allege actual harm to survive

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2 Defendants’ argument that plaintiff must allege the

ability to tender the proceeds of the loan to sustain their RESPA

claim is incorrect, because plaintiffs only request damages for

their RESPA claim and do not ask for equitable relief or that the

court set aside the foreclosure sale. See Yamamoto v. Bank of

N.Y., 329 F. 3d 1167, 1170 (9th Cir. 2003); Arnolds Mgmt. Corp.

v. Eischen, 158 Cal. App. 3d 575, 578-79 (1984). While

plaintiffs’ other equitable claims may require a showing of

tender, their RESPA claim is solely based in law. 

10

a motion to dismiss.2 Section 2605(f) imposes liability on

servicers that violate RESPA and fail to make the required

disclosures. 12 U.S.C. § 2605(f). Although this section does

not explicitly make a showing of damages part of the pleading

standard, “a number of courts have read the statute as requiring

a showing of pecuniary damages in order to state a claim.” Allen

v. United Financial Mortg. Corp., 2009 WL 2984170, at *5 (N.D.

Cal. Sept. 15, 2009). For example, in Hutchinson v. Del. Sav.

Bank FSB, the court stated that “alleging a breach of RESPA

duties alone does not state a claim under RESPA. Plaintiff must,

at a minimum, also allege that the breach resulted in actual

damages.” 410 F. Supp. 2d 374, 383 (D.N.J. 2006). This pleading

requirement has the effect of limiting the cause of action to

circumstances in which plaintiffs can show that a failure to

respond or give notice has caused them actual harm. See Singh v.

Wash. Mut. Bank, No. 09-2771, 2009 U.S. Dist. LEXIS 73315, *16,

2009 WL 2588885 (N.D. Cal. Aug. 19, 2009) (dismissing RESPA claim

because, “[i]n particular, plaintiffs have failed to allege any

facts in support of their conclusory allegation that as a result

of defendants’ failure to respond, defendants are liable for

actual damages, costs, and attorney fees”) (quotation marks and

citation omitted). Courts, however, “have interpreted this

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requirement liberally.” Yulaeva v. Greenpoint Mortg. Funding,

Inc., No. 09-1504, 2009 WL 2990393, at *15 (E.D. Cal. Sept. 9,

2009) (Karlton, J.). For example, in Hutchinson, plaintiffs were

able to plead such a loss by claiming that they had suffered

negative credit ratings as a result of violations of RESPA, 410

F. Supp. 2d at 383, and in Yulaeva, plaintiffs pled pecuniary

loss by alleging that they were “required to pay a referral fee

that was prohibited under RESPA.” No. 09-1504, 2009 WL 2990393,

at *15. 

Plaintiffs have not offered any facts to support that

AHMSI’s failure to respond to their QWR resulted in pecuniary

damages. The closest plaintiffs get to alleging any harm is

stating that they “have suffered and continue to suffer damages

and costs of suit.” (FAC ¶ 101.) Even under a liberal pleading

standard for harm, this level of generality fails. Accordingly,

the court must grant defendant’s motion to dismiss this claim.

D. Fraud

In California, the essential elements of a claim for

fraud are “(a) a misrepresentation (false representation,

concealment, or nondisclosure); (b) knowledge of falsity (or

‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d)

justifiable reliance; and (e) resulting damage.” In re Estate of

Young, 160 Cal. App. 4th 62, 79 (2008). Under the heightened

pleading requirements for claims of fraud under Federal Rule of

Civil Procedure 9(b), “a party must state with particularity the

circumstances constituting the fraud.” Fed. R. Civ. P. 9(b). 

The plaintiffs must include the “who, what, when, where, and how”

of the fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106

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(9th Cir. 2003) (citation omitted); Decker v. Glenfed, Inc., 42

F.3d 1541, 1548 (9th Cir. 1994). Additionally, “[w]here multiple

defendants are asked to respond to allegations of fraud, the

complaint must inform each defendant of his alleged participation

in the fraud.” Ricon v. Recontrust Co., No. 09-937, 2009 WL

2407396, at *3 (S.D. Cal. Aug. 4, 2009) (quoting DiVittorio v.

Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir. 1987)).

Plaintiffs’ fraud allegations do not even come close to

surviving a motion to dismiss. The FAC alleges that AHMSI

“mistrepresented to [p]laintiffs that [it] has the right to

collect monies from [p]laintiffs . . . .” (FAC ¶ 118.)

Plaintiffs also allege that MERS “misrepresented to [p]laintiffs

on the Deed of Trust that it is a qualified beneficiary with the

ability to assign or transfer the Deed of Trust and/or the Note .

. . [and] that it followed the applicable legal requirements to

transfer the Note and Deed of Trust . . . .” (FAC ¶ 119.) 

Plaintiffs further allege that Power Default “misrepresented to

[p]laintiffs that [it] was entitled to enforce the security

interest and has the right to institute a non-judicial

foreclosure proceeding . . . .” (Id. ¶ 120.) Plaintiffs go on

to simply state the remaining elements of a cause of action for

fraud. (See id. ¶¶ 121-125.) 

Even though plaintiffs reincorporate their earlier

allegations into this cause of action, plaintiffs do not identify

when the alleged misrepresentations by AHMSI or Power Default

were made, who made them on behalf of MERS, AHMSI, or Power

Default, or why they were false. In fact, plaintiffs’

allegations against Power Default simply sound like an attempt by

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plaintiffs to force Power Default to “produce the Note” to have

the right to foreclose on the property. However, under

California law, there is no requirement for the production of the

original note to initiate a non-judicial foreclosure. Kamp v.

Aurora Loan Servs., No. SACV 09-00844-CJC(RNBx), 2009 WL 3177636,

at *4 (C.D. Cal. Oct. 1, 2009); Oliver v. Countrywide Home Loans,

Inc., No. CIV S-0-1381 FCD GGH, 2009 WL 3122573, at *3 (E.D. Cal.

Sept. 29, 2009) (citing Alvara v. Aurora Loan Servs., No. C-0-

1512 SC, 2009 WL 1689640, at *6 (N.D. Cal. Jun. 16, 2009));

Putkkuri v. Recontrust Co., No. 08cv1919 WQH (AJB), 2009 WL

32567, at *2 (S.D. Cal. Jan. 5, 2009). Accordingly, plaintiffs

have failed to plead any fraudulent representations by AHMSI,

MERS, or Trustee Corps with sufficient particularity.

Plaintiffs also do not state how MERS’s alleged

misrepresentation of its rights as a beneficiary on the Note,

AHMSI’s claim that it had the right to collect money from

plaintiffs, or Power Default’s representations of its ability to

foreclose on the property harmed them. Instead plaintiffs make

the conclusory statement that they “were harmed and suffered

damages.” (FAC ¶ 125.) At the pleading stage, the complaint

“must show a cause and effect relationship between the fraud and

damages sought; otherwise no cause of action is stated.” Small

v. Fritz Cos., 30 Cal. 4th 167, 202 (2003) (quotations omitted). 

Without such information it is impossible for the court to

determine whether plaintiffs alleged damages “were otherwise

inevitable or due to unrelated causes.” Goehring v. Chapman

Univ., 121 Cal. App. 4th 353, 365 (2004). Without pleading facts

to explain this causal connection, plaintiffs’ cause of action

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must fail. See Iqbal, 129 S. Ct at 1949. Accordingly, the court

will grant AHMSI, MERS, and Power Default’s motion to dismiss

plaintiffs’ fraud claim. 

E. Wrongful Foreclosure

Plaintiffs’ FAC purports to state a claim for “wrongful

foreclosure” against AHMSI and Power Default. Plaintiffs have

failed to produce any common law rule or authority providing for

a claim of “wrongful foreclosure” at law. See Fortaleza v. PNC

Fin. Servs. Group, Inc., --- F.Supp.2d ---, No. C 09-2004 PJH,

2009 WL 2246212, at *11 (N.D. Cal. July 27, 2009). Wrongful

foreclosure is an action in equity, where a plaintiff seeks to

set aside a foreclosure sale. See Abdallah v. United Sav. Bank,

43 Cal. App. 4th 1101, 1009 (1996); Karlsen v. Am. Sav. & Loan

Ass’n, 15 Cal. App. 3d 112, 117 (1971). 

Plaintiffs attempt to base this claim first on

California Commercial Code section 3301, alleging that Trustee

Corps was not in possession of the Note, and is not a

beneficiary, assignee or employee of the entity in possession of

the note, and is therefore not a “person entitled to enforce” the

security interest on the property in accordance with section

3301. (FAC ¶ 156.) However, section 3301 reflects California’s

adoption of the Uniform Commercial Code, and does not govern nonjudicial foreclosures, which is governed by California Civil Code

section 2924. See Gaitan v. Mortgage Elec. Registration Sys.,

No. EDCV 09-1009 VAP (MANx), 2009 WL 3244729, at *10 (C.D. Cal.

Oct. 5, 2009). “The comprehensive statutory framework

established to govern nonjudicial foreclosure sales is intended

to be exhaustive.” Moeller v. Lien, 25 Cal. App. 4th 822, 834

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(1994). As previously mentioned, there is no requirement for the

production of the original Note to initiate a non-judicial

foreclosure in California. Kamp, No. SACV 09-00844-CJC(RNBx),

2009 WL 3177636, at *4; Oliver, No. CIV S-0-1381 FCD GGH, 2009 WL

3122573, at *3; Putkkuri, No. 08cv1919 WQH (AJB), 2009 WL 32567,

at *2. Therefore, plaintiff cannot assert a claim based on

Trustee Corps’s failure to comply with an inapplicable commercial

code when defendants are not required to “produce the Note”

according to California law.

Plaintiffs also base their wrongful foreclosure action

on the basis of California Civil Code section 2923.5, arguing

that the Notice of Default and Notice of Trustee sale were

defective because Trustee Corps did not have the right to

foreclose on their property. (FAC ¶ 159.) However, this is just

a reiteration of plaintiffs’ argument that defendants must

“produce the Note” to foreclose on their property. As such, this

claim is deficient as a matter of law. Accordingly, the court

will grant AHMSI and Power Default’s motion to dismiss

plaintiffs’ wrongful foreclosure claim.

F. California’s UCL

California’s UCL prohibits “any unlawful, unfair, or

fraudulent business act or practice.” Cal-Tech Commc’ns, Inc. v.

L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). This cause

of action is generally derivative of some other illegal conduct

or fraud committed by a defendant, and “[a] plaintiff must state

with reasonable particularity the facts supporting the statutory

elements of the violation.” Khoury v. Maly’s of Cal., Inc., 14

Cal. App. 4th 612, 619 (1993).

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Plaintiffs’ claim under the UCL is vague and

conclusory, simply alleging that the claims plead against MERS,

Power Default, and AHMSI earlier in the complaint demonstrate

that defendants engaged in “unlawful, unfair, and/or fraudulent

business practices . . . .” (FAC ¶¶ 130, 132-33.) Plaintiffs do

not identify a single specific practice of MERS, AHMSI, or Power

Default that they find to be “unfair” or “deceptive” in their

cause of action. The court has already indicated it will dismiss

plaintiffs’ other causes of action against MERS, AHMSI, and Power

Default for failure to state a claim. Since plaintiffs have

failed to state a claim on any of these grounds, and because

these grounds appear to be the sole basis for plaintiffs’ UCL

claim, plaintiffs by necessity have failed to state a claim

against the instant defendants under the UCL. Accordingly, the

court will grant MERS, AHMSI, and Power Default’s motion to

dismiss plaintiffs’ UCL cause of action.

IT IS THEREFORE ORDERED that AHMSI, MERS, and Power

Default’s motion to dismiss plaintiffs’ First Amended Complaint

against AHMSI, MERS, and Power Default be, and the same hereby

is, GRANTED.

Plaintiffs have twenty days from the date of this Order

to file an amended complaint, if they can do so consistent with

this Order.

DATED: February 2, 2010

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