Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-00241/USCOURTS-casd-3_09-cv-00241-1/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 15:1692 Fair Debt Collection Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

The court notes the absence from the case of a possible indispensable plaintiff, Sarah Denise

Combs, named as a joint tenant on the Deed of Trust. (MTD, Exh. 3.)

- 1 - 09cv0241

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JEFFREY ALLEN PITTMAN,

Plaintiff,

CASE NO. 09 CV 0241 JM (AJB)

ORDER:

1) GRANTING MOTION TO

DISMISS (Doc. No. 3) and

2) DENYING MOTION FOR

PRELIMINARY INJUNCTION

(Doc. No. 9)

vs.

BARCLAYS CAPITAL REAL ESTATE,

INC. d/b/a HOMEQ SERVICING

CORPORATION,

Defendant.

On January 5, 2009, Plaintiff Jeffrey Allen Pittman1

 (“Plaintiff”) initiated an action in San

Diego Superior Court, North County Division, alleging violations of California Commercial Code §

3301, California Civil Code §§ 2924, 1708, and 1788, et seq. (“Rosenthal Act”), and California

Business and Professions Code § 17200 (Unfair Competition Law). (Doc. No. 1, Exh. A (“Compl.”)

at 2.) On February 10, 2009, Defendant Barclays Capital Real Estate Inc. d/b/a Homeq Servicing

(“HomEq”), removed the case to federal court. (Doc. No. 1.) 

Pending before the court are two motions: 1) HomEq’s motion to dismiss the Complaint under

Rule 12(b)(6) of the Federal Rules of Civil Procedure (Doc. No. 3, “MTD”); and 2) Plaintiff’s motion

for a preliminary injunction to enjoin any foreclosure sale of his property (Doc. No. 9, “MPI”). Each

party opposes the motion filed by the other. Pursuant to Civ.L.R. 7.1(d), the matters were taken under

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 - 09cv0241

submission by the court without oral argument on April 17, 2009. For the reasons set forth below, the

court GRANTS HomEq’s motion to dismiss and DENIES Plaintiff’s motion for a preliminary

injunction.

//

I. BACKGROUND

On November 18, 2005, Plaintiff obtained a home mortgage loan from lender

HomeLoanAdvisors.Com with which he purchased the subject property. (Compl. ¶ 18.) Plaintiff’s

promise to pay the Adjustable Rate Note was secured by a Deed of Trust on the property. (Compl.

¶ 55, Exh. A; MTD, Exh. 3.) Plaintiff later defaulted on the loan, leading to the initiation of

foreclosure proceedings. (Compl. ¶¶ 28, 47, 49, 84, Exhs. C and E.) During a status conference

before the court on February 27, 2009, HomEq represented that no foreclosure sale would take place

until Plaintiff’s motion for preliminary injunction was decided by the court.

In his first cause of action, Plaintiff argues HomEq does not have the authority to enforce the

Note through foreclosure proceedings and requests declaratory and injunctive relief. Next, Plaintiff

alleges HomEq committed a “tort-in-se” by breaching a statutory duty allegedly imposed by Cal. Civil

Code § 2923.6(a) when it refused to accept his loan modification demand. Plaintiff claims this

conduct also violated Cal. Civ. Code § 1708 and California’s Unfair Competition Law (UCL), Cal.

Bus. Prof. Code § 17200 et seq. Plaintiff asserts his fifth cause of action under the Rosenthal Fair

Debt Collection Practices Act, Cal. Civ. Code § 1788.17. Plaintiff seeks injunctive relief, damages,

attorneys’ fees and costs, and rescission. 

//

II. MOTION TO DISMISS

 A. Legal Standards 

A motion to dismiss under Rule 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 plaintiff, 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,

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

To this end, the court may consider the Adjustable Rate Note, Notice of Default, Assignment

of Deed of Trust, and Notice of Trustee’s Sale attached to Plaintiff’s Complaint. (Compl., Exhs. A,

C-E.) The court may also consider the Deed of Trust and Substitution of Trustee submitted by HomEq

and grants the Request for Judicial Notice for these documents. (MTD, Exhs. 3 and 9; Doc. No. 4.)

- 3 - 09cv0241

the complaint’s “factual allegations must be enough to raise a right to relief above the speculative

level....” U.S. v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981); Bell Atlantic Corp. v. Twombly,

127 S.Ct. 1955, 1965 (2007) (allegations must provide “plausible grounds to infer” that plaintiff is

entitled to relief). 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). In testing the complaint’s legal adequacy, the court

may consider material properly submitted as part of the complaint or subject to judicial notice. Swartz

v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). Furthermore, under the “incorporation by

reference” doctrine, the court may consider documents “whose contents are alleged in a complaint and

whose authenticity no party questions, but which are not physically attached to the [plaintiff’s]

pleading.” Janas v. McCracken (In re Silicon Graphics Inc. Sec. Litig.), 183 F.3d 970, 986 (9th Cir.

1999) (internal quotation marks omitted).2

 B. Analysis

1. Lack of Standing to Enforce the Note

In his first cause of action, Plaintiff argue HomEq lacks standing to proceed to foreclosure

because it has no enforceable rights in the Note. (Compl. ¶ 71.) In particular, Plaintiff alleges HomEq

is absent from the Note’s chain of title and has not otherwise shown it is a “holder” or “nonholder in

possession” of the instrument as required by Cal. Comm. Code § 3301. Because HomEq arguably

lacks standing to foreclose, Plaintiff contends any actions taken under the statutes governing

nonjudicial foreclosures, Cal. Civ. Code § 2924 et seq., were unlawful. (Compl. ¶ 70.)

Plaintiff’s contentions are, in fact, correct, but they actually work in HomEq’s favor. As

Plaintiff notes, HomEq is neither the beneficiary nor the trustee. HomEq is merely the loan servicer

and has no beneficial interest in the Note. However, at no point in any of his submissions does

Plaintiff allege that HomEq, on its own behalf or as an agent to purported beneficiary Deutsche Bank,

has taken any action whatsoever to effect foreclosure on the property. Rather, only foreclosure trustee

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Plaintiff argues the assignment is invalid because it assigned the Deed of Trust without the

Note. (Opp’n to MTD at 4.) However, the Assignment clearly transfers “all beneficial under that

certain Deed of Trust...together with the Promissory Note secured by said Deed of Trust and also all

rights accrued or to accrue under said Deed of Trust.” (Compl., Exh. D.)

4

The court observes Plaintiff had an opportunity to contest Deutsche Bank’s and HomEq’s

standing rights during his Chapter 7 Bankruptcy proceedings, during which the parties won an

uncontested motion for relief from the automatic stay. (MTD, Exh. 8.) Although the court does not

decide the issue, Plaintiff’s acquiescence could be construed to have preclusive effect.

- 4 - 09cv0241

Old Republic Default Management Services (“Old Republic”) has taken such action; Old Republic

recorded both the Notice of Default and Notice of Trustee’s Sale. (Compl., Exhs. C, E.) While

Plaintiff is right that HomEq does not have any enforceable rights in the Note, Plaintiff has failed to

show HomEq has made any attempt to enforce the obligation. Plaintiff’s lack of standing claim is

properly brought against Deutsche Bank and Old Republic and, based on the record before the court,

fails to state a claim against HomEq.

As to the chain of title, HomEq contends Plaintiff, in his capacity as principal of the original

beneficiary, HomeLoanAdvisors.Com, transferred an interest in the Deed of Trust and the Note to

New Century Mortgage Corporation by Allonge. (Doc. No. 16 at 2, Exh. D.) The Allonge is undated

and it appears neither it nor any assignment to New Century was never recorded. Thereafter, New

Century assigned its interest to Deutsche Bank National Trust Company (“Deutsche Bank”).3

 (MTD,

Exh. 3.) Plaintiff argues the Allonge was ineffective as an endorsement to New Century, and thus,

it is unclear at this point who, including Plaintiff’s company, holds the right to enforce the Note.4

(Doc. No. 18 at 2.) Regardless of whether Deutsche Bank is properly authorized to foreclose on the

property, Plaintiff’s claim against HomEq fails for the simple reason that Plaintiff has not alleged

HomEq is either effecting foreclosure or has claimed a right to do so.

Based on this claim, Plaintiff seeks a declaration that the Note and Deed of Trust are invalid

and injunctive relief to enjoin any foreclosure sale. HomEq has no interest in either document and

thus, there are no respective interests to declare. HomEq’s motion to dismiss the declaratory relief

claim is therefore granted. The court notes Plaintiff made a separate motion for preliminary injunction

which is addressed in Section III, below.

2. “Tort-in-Se” for Violation of Cal. Civ. Code § 2923.6

Plaintiff argues HomEq violated Cal. Civ. Code § 2923.6 when it did not accept the modified

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

The court observes Plaintiff’s argument that his loan is part of a loan pool is in direct

contradiction to his argument that Deutsche Bank “as Trustee under Pooling and Servicing Agreement

dated as of April 1, 2006 Morgan Stanley ABS Capital I Inc. Trust 2006-NC3 Mortgage Pass-through

Certificates, Series 2006 NC3” lacks standing to foreclose on the property.

- 5 - 09cv0241

loan payment terms he proposed. (Compl. ¶ 96.) Plaintiff asserts HomEq’s violation of a statutory

duty constitutes a “tort-in-se.” (Compl. ¶ 100.)

Section § 2923.6 provides, “any duty servicers may have to maximize net present value under

their pooling and servicing agreements is owed to all parties in a loan pool...and that a servicer acts

in the best interests of all parties” by modifying a defaulted loan to recover a greater amount than it

would through foreclosure. Plaintiff engages in a lengthy discussion regarding the state legislature’s

intent that the statute help curb the wave of foreclosures and concludes the statute was meant to assist

borrowers. (Doc. No. 18 at 8-9.) However, even assuming Plaintiff’s analysis is correct, the cited

statute clearly addresses this concern by creating a duty between a loan servicer and a loan pool

member. The statute in no way confers standing on a borrower to contest a breach of that duty.

Despite Plaintiff’s assertion to the contrary, he personally is not a member of a loan pool, nor has he

alleged he is a party to any “pooling and servicing agreement” which might trigger the statute.5

Because HomEq, as the loan servicer, owes Plaintiff no statutory duty, Plaintiff fails to state a claim

for a “tort-in-se.” Therefore, the court grants HomEq’s motion to dismiss on this claim. 

3. Violation of Cal. Civ. Code § 1708

Plaintiff alleges HomEq’s conduct violated Cal. Civ. Code § 1708 which provides, “Every

person is bound, without contract, to abstain from injuring the person or property of another, or

infringing upon any of his or her rights.” Although it is unclear from the Complaint, it appears

Plaintiff’s claim is premised on the alleged violation of Cal. Civ. Code § 2923.6. (MTD Opp’n at 9.)

As Plaintiff fails to state a claim for the underlying violation, he cannot maintain a derivative claim

based thereon. Consequently, the court grants HomEq’s motion to dismiss on this claim.

4. Violation of California’s Unfair Competition Law

Plaintiff’s claim for violation of California’s UCL is based on HomEq’s purported violations

of Cal. Comm. Code § 3301 and Cal. Civ. Code §§ 1708, 2923.6, and 2924. (MTD Opp’n at 10.) The

court has addressed each of these underlying claims in the preceding sections and found them lacking.

Plaintiff’s predicate claims are therefore insufficient to support this derivative claim. Thus, HomEq’s

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 - 09cv0241

motion to dismiss is granted on the UCL claim.

5. Violation of California’s Rosenthal Act

Plaintiff alleges HomEq violated the Rosenthal Act, Cal. Civ. Code § 1788.17, in particular

the sections incorporating standards set forth in 15 U.S.C. §§ 1692f(1) and (6). However, as HomEq

observes, Plaintiff’s claims are wholly unsupported by relevant factual allegations and are subject to

dismissal on this basis alone. Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994)

(“the court is not required to accept legal conclusions cast in the form of factual allegations”). On a

more basic level, even if Plaintiff had pled relevant facts, he fails to state a claim under the Rosenthal

Act because a residential mortgage loan does not qualify as a “debt” under the statute. The Rosenthal

Act protects consumers from debt collection practices for “consumer debts,” created through

transactions in which “property, services or money is acquired on credit...primarily for personal,

family, or household purposes.” Cal. Civ. Code § 1788.2(e)-(f). Thus, foreclosing on a deed of trust

does not invoke the statutory protections. Additionally, as discussed above, Plaintiff has not alleged

HomEq itself has taken any action in the foreclosure proceedings. Plaintiff fails to state a claim under

the Rosenthal Act and Homeq’s motion to dismiss is granted.

//

III. MOTION FOR PRELIMINARY INJUNCTION

Plaintiff’s motion for preliminary injunction raises the same issues as his Complaint. Plaintiff

bears the burden of showing: (1) a combination of probable success and the possibility of irreparable

harm, or (2) serious questions and the balance of hardship tips in his favor. Arcamuzi v. Continental

Air Lines, Inc., 819 F.2d 935, 937 (9th Cir. 1987). Under either formulation, Plaintiff must

demonstrate a “fair chance of success on the merits" and a "significant threat of irreparable injury.”

Id. As the discussion above outlines, Plaintiff has failed to demonstrate a likelihood of success on the

merits and is not entitled to injunctive relief against HomEq.

//

IV. CONCLUSION

For the reasons set forth above, the court GRANTS HomEq’s motion to dismiss. (Doc. No.

3.) In particular, Plaintiff’s claim for violation of Cal. Comm. Code § 3301 and the Unfair

Competition Law claim based thereon are DISMISSED without prejudice. Plaintiff’s tort-in-se claim

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 - 09cv0241

for violation of Cal. Civ. Code § 2923.6 and the Unfair Competition Law claim based thereon, his

claim under Cal. Civ. Code § 1708, and his Rosenthal Act claim are DISMISSED with prejudice.

Plaintiff’s motion for preliminary injunction against HomEq is DENIED. (Doc. No. 9.) 

IT IS SO ORDERED.

DATED: April 24, 2009

 Hon. Jeffrey T. Miller

 United States District Judge

Case 3:09-cv-00241-JM-AJB Document 21 Filed 04/24/09 Page 7 of 7