Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-02178/USCOURTS-caed-2_13-cv-02178-0/pdf.json

Parties Involved:
Deutsche Bank National Trust Company
Defendant
Mortgage Electronic Registration Systems, Inc.
Defendant
Ocwen Loan Servicing, LLC
Defendant
Quality Loan Service Corporation
Defendant
Amos G. Snell
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

AMOS G. SNELL,

Plaintiff,

v.

DEUTSCHE BANK NATIONAL TRUST 

COMPANY, et. al.,

Defendant.

No. 2:13-cv-02178-MCE-DAD 

ORDER AND MEMORANDUM

Through this action, Plaintiff Amos G. Snell (“Plaintiff”) seeks relief from Deutsche 

Bank National Trust Company (“Deutsche Bank”), as Trustee for GSAMP Trust 2005-

WMCI (“the Trust”); Ocwen Loan Servicing, LLC (“Ocwen”); Quality Loan Service 

Corporation (“Quality Loan”); and Mortgage Electronic Registration Systems, Inc.

(“MERS”) (collectively, “Defendants”). Specifically, Plaintiff alleges the following claims: 

(1) Breach of Express Agreement; (2) Breach of Implied Agreement; (3) violations of the 

Truth in Lending Act (“TILA”), 15 U.S.C. § 1601; (4) violations of the Racketeer 

Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962; (5) violations of 

the Fair Debt Collection Practices Act (“FDCPA”),15 U.S.C. § 1692; (6) violations of 

California Civil Business and Professions Code 17200 (“the Unfair Business Practices 

Act”); (7) Slander of Title; and (8) Wrongful Foreclosure. Complaint, Oct. 18, 2013, ECF 

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No. 1. On Nov. 12, 2013, Defendants Deutsche Bank, MERS, and Ocwen filed an 

Answer. Answer, Nov. 12, 2013, ECF No. 6. Presently before the Court is Defendant 

Quality Loan’s Motion to Dismiss for failure to state a claim upon which relief can be 

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

1

 Mot., Nov. 13, 2013, ECF 

No. 7. Plaintiff filed a timely opposition. Opp’n, Dec. 5, 2013, ECF No. 9.

2

 For the 

reasons set forth below, Defendant Quality Loan’s Motion, ECF No. 7, is GRANTED with 

leave to amend.

3

BACKGROUND4

On June 14, 2005, Plaintiff obtained a loan and recorded a Deed of Trust against 

the real property located at 2808 Olivewood Lane in Vallejo, California (“Subject 

Property”). According to Plaintiff, WMC Mortgage Corp. (“WMC”) was the original lender 

and MERS was named as the beneficiary. In 2007, WMC ceased doing business.

In April 2008, Quality Loan, as an agent of Deutsche Bank, Trustee for the Trust, 

recorded a Notice of Default beginning the foreclosure process. Plaintiff objects to this 

action because although Quality Loan recorded the Notice of Default in April 2008, 

Deutsche Bank did not file a Substitution of Trustee naming Quality Loan Service as 

Trustee until the following month.

 1

All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless 

otherwise noted.

2

Because oral argument would not be of material assistance, the Court ordered this matter 

submitted on the briefs. E.D. Cal. Local R. 230(g). Therefore, Plaintiff’s request for Telephonic 

Appearance, Request, Dec. 12, 2013, ECF No. 14, is DENIED as moot. 

3 Because the other Defendants in this action, Deutsche Bank, MERS, and Ocwen filed an Answer 

to Plaintiff’s Complaint, ECF No. 6, the Court does not address whether of the arguments made in Quality 

Loan’s Motion may apply equally to all Defendants, as the Court may only sua sponte dismiss those 

Defendants who have not appeared and challenged the pleadings. See Abagninin v. AMVAC Chem. 

Corp., 545 F.3d 733, 742-43 (9th Cir. 2008). Through their Answer, Defendants Deutsche Bank, MERS, 

and Ocwen appeared in this action. None of these Defendants joined Quality Loan’s Motion. Therefore, 

through this Order, the Court only dismisses Plaintiff’s claims against Defendant Quality Loan.

4

The following recitation of facts is taken, sometimes verbatim, from Plaintiff’s Complaint. See

Compl., Nov. 18, 2013, ECF No. 1.

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 On May 12, 2008, an Assignment of Deed of Trust was recorded in which MERS 

conveyed the beneficial interest in Plaintiff’s Deed of Trust to Deutsche Bank, as Trustee 

for the Trust. This assignment of all beneficial interest to Deutsche Bank as Trustee was 

done pursuant to a Pooling and Servicing Agreement (“PSA”) dated as of September 1, 

2005. On May 21, 2008, Deutsche Bank filed a Substitution of Trustee naming Quality 

Loan as Trustee.

The gravamen of Plaintiff's Complaint is that Defendants failed to comply with the 

terms of the PSA for the trust into which Plaintiff's note was transferred. Specifically, 

Plaintiff alleges that a “consequence of late-recording [the Assignment of Deed of Trust] 

is that all those loans are not assets of the Trust, including Plaintiff’s Deed of Trust.” 

Compl. ¶ 59. Therefore, Plaintiff asserts that the foreclosure of Plaintiff’s property was 

wrongful.

Subsequently, between October 31, 2008, and February 15, 2012, five notices of 

Trustee’s Sale were recorded in the Solano County Recorder’s Office. The Subject 

Property was sold in October 2012 and Quality Loan Service filed a Trustee’s Deed 

Upon Sale conveying title of the property to Deutsche Bank, as Trustee, for the Trust. 

On April 11, 2013, a Grant Deed was recorded which purported to convey title from 

Deutsche Bank to Next Generation Capital, LLC.

Based on the above facts, on October 18, 2013, Plaintiff filed a Complaint alleging 

violations of federal and state law. See ECF No. 1. On November 13, 2013, Defendant 

Quality Loan filed a motion to dismiss. Mot., Nov. 13, 2013, ECF No. 7. Defendant 

Quality Loan also filed a request for judicial notice in support of its motion to dismiss. 

Request, Nov. 13, 2013, ECF No. 8.5

 5 Defendant Quality Loan filed a Request for Judicial Notice of fifteen publicly recorded or filed 

documents related to the non-judicial foreclosure process on the Subject Property and court dockets 

related showing Plaintiff’s bankruptcy filings. See ECF No. 7-2 (exhibits A through O). Exhibits A through 

G and L are records of the Solano County Recorder. Exhibits H through K and M through O are copies of 

the dockets of Plaintiff’s bankruptcy filings. Plaintiff opposes the motion to the extent that it asks the Court 

to accept the contents of the documents as true. Objections, Dec. 5, 2013, ECF No. 10. The documents 

submitted by Quality Loan for Judicial Notice are not relevant to this Court’s determination of whether or 

not Quality Loan’s Motion to Dismiss under Rule 12(b)(6) is proper and accordingly, Defendant's request 

for judicial notice is DENIED as moot.

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STANDARD

On a motion to dismiss for failure to state a claim under Federal Rule of Civil 

Procedure 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, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 

47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 

detailed factual allegations. However, “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. (internal citations and 

quotations omitted). A court is not required to accept as true a “legal conclusion 

couched as a factual allegation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) 

(quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a 

right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles 

Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) 

(stating that the pleading must contain something more than “a statement of facts that 

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

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

assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (internal citations and 

quotations omitted). Thus, “[w]ithout 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.” Id. (citing 5 Charles 

Alan Wright & Arthur R. Miller, supra, at § 1202). 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 

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complaint must be dismissed.” Id. However, “[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 (quoting Scheuer v. Rhodes, 416 U.S. 

232, 236 (1974)).

A court granting a motion to dismiss a complaint must then decide whether to 

grant leave to amend. Leave to amend should be “freely given” where there is no 

“undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 

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

amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 

Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 

be considered when deciding whether to grant leave to amend). Not all of these factors 

merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 

carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 

185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 

“the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 

Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 

1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 

1989) (“Leave need not be granted where the amendment of the complaint . . . 

constitutes an exercise in futility . . . .”)).

ANALYSIS

Plaintiff alleges three claims based on federal law; the remaining five claims are 

based on state law. See Compl. Defendant Quality Loan moves to dismiss all of 

Plaintiff’s claims against it under Rule 12(b)(6) because the Complaint “contains nothing 

more than legal conclusions that are unsupported factually and each claim fails to plead 

the necessary elements to establish each asserted cause of action.” Mot. at 2. Each of 

Plaintiff’s claims are discussed in turn, below.

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A. Wrongful Foreclosure

Plaintiff contends that Defendants lacked the legal power to foreclose the Subject 

Property. Plaintiff contends that “[i]f Defendants are permitted to rely on the invalid 

Assignment of Deed of Trust, Substitution of Trustee, and Trustee’s Deep Upon Sale to 

remove Plaintiff from possession, Plaintiff will wrongfully lose his home.” Compl. ¶ 49. 

Plaintiff’s claim arises from its contention that the Notice of Default, Notice of Sale, and 

Assignment were all wrongful because “the purported foreclosing beneficiary, Defendant 

Deutsche Bank, was not the true beneficiary at the time of the Trustee’s sale on October 

17, 2012 or [at the time of] the issuance of Trustee’s Deed of Sale on October 24, 2012.” 

Compl. ¶ 41. Plaintiff also alleges that Quality Loan was not the “true Trustee under the 

Deed of Trust.” Id. ¶ 44. Specifically, Plaintiff contends that the Assignment to 

Defendant Deutsche Bank is invalid and that Quality Loan therefore lacked the authority 

to commence the foreclosure on behalf of Deutsche Bank. 

Under California law, “[t]he elements of an equitable cause of action to set aside 

a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or 

willfully oppressive sale of real property pursuant to a power of sale in a mortgage or 

deed of trust; (2) the party attacking the sale (usually but not always the trustor or 

mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor 

challenges the sale, the trustor or mortgagor tendered the amount of the secured 

indebtedness or was excused from tendering.” Lona v. Citibank, N.A., 202 Cal. App. 4th 

89, 104 (2011). “Justifications for setting aside a trustee's sale . . . which satisfy the first 

element, include the trustee's or the beneficiary's failure to comply with the statutory 

procedural requirements for the notice or conduct of the sale.” Id. at 104. “Other 

grounds include proof that: (1) the trustee did not have the power to foreclose, (2) the 

trustor was not in default, no breach had occurred, or the lender had waived the breach, 

or (3) the deed of trust was void.” Id.

Plaintiff bases his wrongful foreclosure claim on the late transfer to the trust on 

the grounds that it violated the PSA for the Trust. Plaintiff argues that because of the 

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wrongful late transfer to the trust, Defendants relied on the invalid Assignment of Deed 

of Trust, Substitution of Trustee, and Trustee’s Deep Upon Sale to remove Plaintiff from 

possession. In response, Defendant Quality Loan asserts that Plaintiff lacks standing to 

challenge any alleged violations of the PSA.

Plaintiff urges this Court to impose a literal interpretation of New York Trust Law 

Estates, Powers and Trusts § 7-2.4 which was relied upon in Glaski v. Bank of America, 

218 Cal. App. 4th 1079 (2013), and find that acts in contravention of a trust are void and 

not merely voidable. Plaintiff further asserts that the late assignment should be 

considered void instead of voidable under the ultra vires doctrine imposed on borrowers. 

To support these contentions, Plaintiff relies heavily on Glaski, which recently held that a 

borrower has standing to challenge the assignment of a loan to a securitized trust, even 

if the borrower was not a party to or a beneficiary of the assignment agreement. See

218 Cal. App. 4th at 1094-96.

However, in direct conflict with Glaski, a different California Court of Appeal held 

that as “an unrelated third party to the alleged securitization, and any other subsequent 

transfers of the beneficial interest under [a] promissory note, [a plaintiff] lacks standing to 

enforce any agreements, including the investment trust's pooling and servicing 

agreement, relating to such transactions. Furthermore, even if any subsequent transfers 

of the promissory note were invalid, [plaintiff] is not the victim of such invalid transfers 

because [his] obligations under the note remained unchanged.” Jenkins v. JP Morgan 

Chase Bank, N.A., 216 Cal. App. 4th 497, 515 (2013). Thus, under Jenkins, Plaintiff 

would not have standing to challenge the assignment agreement because he did not 

allege that he was a party to or a beneficiary of the agreement.

Although the Glaski court noted its disagreement with courts that have come to an 

opposite conclusion regarding the question of standing, as Quality Loan notes in its 

briefing, the Glaski court did not mention or distinguish Jenkins. See generally 218 Cal. 

App. 4th 1079. Defendant Quality Loan urges this Court to follow the Jenkins decision 

and find that Plaintiff lacks standing to challenge the securitization of his loan. 

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Numerous courts have subsequently expressed their disagreement with Glaski

and have continued to follow the Jenkins approach. In Newman v. Bank of New York 

Mellon, 1:12-CV-1629 AWI, 2013 WL 5603316 at *3 n.2 (E.D. Cal. Oct. 11, 2013), the 

court noted that “no courts have yet followed Glaski and Glaski is in a clear minority on 

the issue. Until either the California Supreme Court, the Ninth Circuit, or other appellate 

courts follow Glaski, this Court will continue to follow the majority rule.” Thus, the court 

concluded that “[a]ny claims that are based on violation of the PSA are not viable.” Id. at 

*3 (citing pre-Glaski authority including Jenkins).

Another district court recently noted that “the majority of courts, including many 

judges in this district and circuit, as well as other California courts, have disagreed with 

[the Glaski] decision and its conclusion.” Maxwell v. Deutsche Bank Nat'l Trust Co., 

13CV03957WHOWHO, 2013 WL 6072109 at *2 (N.D. Cal. Nov. 18, 2013) (citing 

Dahnken v. Wells Fargo Bank, N.A., No. 13–cv–2838–PJH, 2013 WL 5979356, at * 2 

(N.D. Cal. Nov. 8, 2013); Almutarreb v. Bank of New York Trust Co., No. 12–cv–3061–

EMC, 2012 WL 4371410 (N.D.Cal. Sept. 24, 2012)); Subramani v. Wells Fargo Bank 

N.A., No. 13–cv–1605–SC, 2013 WL 5913789 at *3 (N.D. Cal. Oct. 31, 2013) (rejecting 

Glaski and holding that plaintiffs who are not parties to PSAs lack standing to challenge 

that aspect of the securitization process's validity).

This Court adopts the majority position that “plaintiffs lack standing to challenge 

noncompliance with a PSA in securitization unless they are parties to the PSA or third 

party beneficiaries of the PSA.” Dahnken, 2013 WL 5979356 at *2 (internal citations 

omitted). Until either the California Supreme Court, the Ninth Circuit, or other appellate 

courts follow Glaski or address the discrepancy between Glaski and Jenkins, this Court 

will continue to follow the Jenkins rule. Therefore, Plaintiff’s claims based on alleged 

violation of the PSA are not viable. See e.g., Newman, 2013 WL 5603316 at *3. 

Moreover, Plaintiff does not allege that he is a party to the PSA. See Phong Tran v. 

Bank of America, N.A., No. 12–4507 PSG, 2013 WL 2368048 at *2–3 (N.D.Cal. May 29, 

2013) (dismissing Plaintiff's breach of PSA claims without leave to amend because 

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Plaintiff did not allege that he is a party to the PSA, only that he was harmed by 

Defendants' alleged violation of the PSA).

Because Plaintiff does not have standing to challenge Defendant Quality Loan’s 

alleged noncompliance with the PSA, Plaintiff’s claim against Quality Loan for wrongful 

foreclosure is DISMISSED without prejudice.6

B. Breach of Express Agreement and Breach of Implied Agreement

Plaintiff's Third and Fourth Causes of Action for breach of express agreement and 

breach of implied agreement against Quality Loans fail because they are similarly 

premised on and derived from the alleged late transfer to the trust in violation of the 

PSA. See Compl., ¶ 51 (alleging that “Plaintiff was damaged as a direct and proximate 

result of [Quality Loan Service’s breach] of the Deed of Trust and [PSA]”); see also

Opp’n, at 18 (claiming that “Defendants are also in breach of the [PSA] for the 

securitized trust”). Plaintiff's allegations for breach of implied agreement also appear to 

be restated claims for breach of PSAs. See Compl., ¶¶ 68-72. As discussed above, 

Plaintiff’s claims based on alleged violation of the PSA are not viable.

Moreover, to state a cause of action for breach of contract against Quality Loan

specifically, Plaintiff must allege the existence of a contractual relationship between 

Plaintiff and Quality Loan that was breached. See, e.g., Reinhardt v. Gemini Motor 

Transp., 879 F. Supp. 2d 1138, 1143 (E.D. Cal. 2012) (internal citations omitted) (“To be 

entitled to damages for breach of contract, a plaintiff must plead and prove the following 

elements: (1) the existence of a contract, (2) plaintiff's performance or excuse for 

nonperformance, (3) defendant's breach, and (4) resulting damage to the plaintiff.”). 

Plaintiff’s allegations are merely “legal conclusion[s] couched as . . . factual 

allegation[s].” Iqbal, 129 S. Ct. at 1950 (quoting Twombly, 550 U.S. at 555). Plaintiff’s 

 6

In addition, the Court notes that, in this case, unlike Glaski, where the court applied a New York 

Statute, Plaintiff does not argue that New York law applies. See Glaski, 218 Cal. App. 4th at 1097 (noting 

that it “read the New York statute literally”). Although Plaintiff states in his Opposition that he “has alleged, 

or may amend to do so if leave is granted that the trust here was created under New York Trust Law”, 

Opp’n at 16, Plaintiff’s Complaint does not allege that the trust was created under New York Trust Law or 

assert that New York Trust Law should govern. Further, Plaintiff admits that he “does not yet have a copy” 

of the PSA. See id. at 18.

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allegations do not “raise a right to relief above the speculative level.” Twombly, 550 U.S. 

at 555. Further, Plaintiff fails to sufficiently allege that he has performed his obligations 

under the Deed of Trust or that he is excused from doing so. Specifically, Plaintiff failed 

to plead that he is not in default on his loan. See, e.g., Compl. at 13; Opp’n at 18 

(arguing that “due to the break in the chain of title, Plaintiff was never in default to the

true beneficial interest holder”) (emphasis added); Patel v. Mortgage Elec. Registration 

Sys., Inc., 4:13-CV-1874 KAW, 2013 WL 4029277 at *5 (N.D. Cal. Aug. 6, 2013) (noting 

that “[t]o state a claim for breach of contract, Plaintiffs must also show that they 

performed or were excused from performing their obligations under the contract”). 

Thus, Plaintiff’s claims against Quality Loan for breach of express agreement and 

breach of implied agreement are thus DISMISSED without prejudice.

C. Slander of Title

Plaintiff alleges that Quality Loan is liable for slander of title. Specifically, Plaintiff 

alleges that Quality Loan’s “recording of [Notices of Trustee’s sale, Notices of Default, 

and Substitution of Trustees] was false, knowingly wrongful, without justification, in 

violation of statute, unprivileged, and caused doubt to be placed on Plaintiff’s title to the 

property.” Compl. ¶ 34. Plaintiff alleges that Quality Loan knew its filings were false 

because the documents were not filed in a timely manner and therefore were not legally 

valid. See, e.g., id. ¶ 21-25.

“Slander of title is a tortious injury to property resulting from unprivileged, false, 

malicious publication of disparaging statements regarding the title to property owned by 

plaintiff, to plaintiff's damage.” Southcott v. Pioneer Title Co., 203 Cal. App. 2d 673, 676 

(1962). 

Slander or disparagement of title occurs when a person, 

without a privilege to do so, publishes a false statement that 

disparages title to property and causes the owner thereof 

some special pecuniary loss or damage. The elements of the 

tort are (1) a publication, (2) without privilege or justification, 

(3) falsity, and (4) direct pecuniary loss. If the publication is 

reasonably understood to cast doubt upon the existence or 

extent of another's interest in land, it is disparaging to the 

latter's title. The main thrust of the cause of action is 

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protection from injury to the salability of property, which is 

ordinarily indicated by the loss of a particular sale, impaired 

marketability or depreciation in value. 

Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC, 205 Cal. App. 4th 999, 

1030 (2012), as modified on denial of reh'g (May 30, 2012), review denied (July 18, 

2012) (internal citations omitted).

With respect to Quality Loan, Plaintiff alleges that Quality Loan is liable based on 

the recording of three false documents: a Notice of Default, a Substitution of Trustee, a 

Notice of Sale. See Compl. ¶ ¶ 25, 29, 30. Defendant Quality Loan asserts that the 

litigation privilege protects its conduct, and therefore Plaintiff cannot state a prima facie 

claim for slander of title. Quality Loan also asserts that Plaintiff failed to plead the 

necessary elements to establish slander of title. See Mot. at 4, 7-8, 11-13.

Quality Loan is correct that California’s “statutory nonjudicial foreclosure 

procedures are privileged communications” and are therefore included within the socalled “litigation privilege.” Kachlon v. Markowitz, 168 Cal. App. 4th 316, 335 (2008) 

(referring to the procedures for nonjudicial foreclosures as codified in California Civil 

Code section 2920 through 2933.5 and referring to section 2924 which notes that “[t]he 

mailing, publication, and delivery of notices as required by this section . . . shall 

constitute privileged communications pursuant to Section 47”); see Cal. Civ. Code 

§ 2924. However, Quality Loan suggests that nonjudicial foreclosure proceedings are 

protected by an absolute privilege rather than a qualified privilege, and cites to Kachlon 

for the proposition that the only exception is based on the tort of malicious prosecution. 

See Mot. at 13 (citing Kachlon, 168 Cal. App. 4th at 336).

Defendant is incorrect. After a long discussion, Kachlon concludes that “the 

protection granted to nonjudicial foreclosure by the 1996 amendment is the qualified 

common interest privilege of section 47, subdivision (c)(1).” 168 Cal. App. 4th at 341; 

see Permito v. Wells Fargo Bank, N.A., C-12-00545 YGR, 2012 WL 1380322 at *8 (N.D. 

Cal. Apr. 20, 2012) (“Absent factual allegations of malice, a trustee's performance of the 

statutory procedures in a nonjudicial foreclosure is subject to the qualified, commonCase 2:13-cv-02178-DAD Document 17 Filed 01/29/14 Page 11 of 20
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interest privilege of California Civil Code § 47(c)(1).”). “Any statutorily required mailings, 

publication, and delivery of notices in connection with a non-judicial foreclosure, and the 

performance of any statutory procedures by a trustee and beneficiary, are privileged 

communications under the qualified, common-interest privilege of [California Civil Code] 

Section 47, subdivision (c)(1).” Ismail v. Wells Fargo Bank, N.A., 2:12-CV-01653-MCE, 

2013 WL 930611 (E.D. Cal. Mar. 8, 2013) on reconsideration, 2:12-CV-01653-MCE-CK, 

2013 WL 4516122 (E.D. Cal. Aug. 23, 2013) (citing Kachlon, 168 Cal.App.4th at 333). 

As such, Defendant is protected by a qualified privilege when it publishes and delivers 

any notices in the foreclosure of a property, and in performing any statutory foreclosure 

procedures.

To qualify for the common interest privilege, a communication must be made 

“without malice, to a person interested therein, . . . by one who is also interested.” Cal. 

Civ. Code § 47(c). “For this purpose, malice is defined as actual malice, meaning that 

the publication was motivated by hatred or ill will towards the plaintiff or by a showing 

that the defendant lacked reasonable grounds for belief in the truth of the publication and 

therefore acted in reckless disregard of the plaintiff's rights.” Kachlon, 168 Cal. App. 4th 

at 336 (internal citations omitted). 

Here, Plaintiff attempts to allege that Defendant Quality Loan acted with malice. 

For example, in his Complaint, Plaintiff states: “Defendant Quality Loan therefore acted 

with malice and a disregard for the truth when it filed the Notice of Default, despite 

knowing no entity was validly the beneficiary at the time of the Notice of Default.” 

Compl. ¶ 25. Plaintiff also alleges that “Defendant Quality Loan Service acted with 

malice and a reckless disregard for the truth by recording five Notices of Trustee’s Sale 

when it knowingly did not have the requisite legal authority to notice a valid trustee’s 

sale.” Id. ¶ 31. Malice requires “that ‘the publication was motivated by hatred or ill will 

towards the plaintiff or by showing that the defendant lacked reasonable grounds for 

belief in the truth of the publication and therefore acted in reckless disregard of the 

plaintiff’s rights.’” Kachlon, 168 Cal. App. 4th at 336 (citing Sanborn v. Chronicle Pub. 

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Co., 18 Cal. 3d 406, 413 (1976)). Plaintiff’s Opposition further explains that “Defendants 

Quality and Ocwen . . . acted with malice by relying on the false Substitution of Trustee, 

to record the false Notice of Trustee’s Sale.” Opp’n at 11. 

However, Plaintiff’s allegations are merely “legal conclusion[s] couched as . . . 

factual allegation[s].” Iqbal, 129 S. Ct. at 1950 (quoting Twombly, 550 U.S. at 555). 

Plaintiff’s allegations do not “raise a right to relief above the speculative level.” Twombly, 

550 U.S. at 555. For example, Plaintiff does not allege how Quality Loan “knowingly did 

not have the requisite legal authority to notice a valid trustee’s sale” and therefore lacked 

reasonable grounds for belief in the truth of the publication. Moreover, Plaintiff fails to

allege sufficient facts to show that Quality Loan specifically, as opposed to the other 

Defendants, knew that the Substitution of Trustee was false. Therefore, Plaintiff’s

allegations are insufficient “to demonstrate that [Quality Loan] did not have a qualified 

privilege to” file Notices of Default. Ismail v. Wells Fargo Bank, N.A., No. 2:12-cv-01653-

MCE-CKD, 2013 WL 930611 at *7 (E.D. Cal. Mar. 8, 2013); cf. Albano v. Cal-W. 

Reconveyance Corp., 4:12-CV-4018 KAW, 2012 WL 5389922 at *9 (N.D. Cal. Nov. 5, 

2012) (holding that an allegation that the recording of a notice of default was sufficient 

to defeat the motion to dismiss because the plaintiff pled in detail and with specificity that 

defendants fraudulently created the necessary documents). Therefore, Plaintiff has 

failed to demonstrate that Defendant Quality Loan did not have a qualified privilege to 

publish and deliver foreclosure notices.

In addition, to the extent Plaintiff’s slander of title claim against Quality Loan is 

based on and derived from the theory that Defendants lacked authority under the deed 

of trust because of PSA violations, their claim fails for the reasons described above. See

Ogilvie v. Select Portfolio Servicing, 12-CV-001654-DMR, 2012 WL 4891583 at *4 (N.D. 

Cal. Oct. 12, 2012) (rejecting a plaintiff’s slander of title claim to the extent that it was 

based on the theory that the defendants allegedly failed to comply with the terms of the 

PSA).7

 7

Further, the Court notes that Plaintiff does not appear to contest that he was in default or that his 

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 Therefore, Plaintiff’s claims against Quality Loan for slander of title are 

DISMISSED without prejudice.

D. TILA

Plaintiff alleges that Defendant Quality Loan violated TILA by failing to provide 

Plaintiff with accurate material disclosures. Specifically, Plaintiff alleges that Defendants 

failed to comply with the “Liability of Assignee” section of TILA which requires that when 

an entity purchases or is assigned the beneficial interest in a loan on a property, it must 

notify the borrower in writing within thirty days of when the loan is transferred. See

Compl. at 20-23. In response, Defendant Quality Loan contends that a Trustee such as 

itself has no beneficial interest in the Deed of Trust. Mot. at 18. Plaintiff acknowledges 

that “[a]lthough Quality Loan Services, as alleged Trustee, would generally not be 

subjected to TILA, under California law . . . Plaintiff alleges upon information and belief 

that Quality Loan Services is a party in privity to the [PSA] under the law of agency” and

can therefore be held liable. Compl. ¶ 87.

Under California law, the trustee of a deed of trust has no beneficial interest in the 

mortgage associated with the deed of trust. Heritage Oaks Partners v. First Am. Title 

Ins. Co., 155 Cal. App.4th 339, 345 (2007).

The trustee under a deed of trust is not a true trustee, and 

owes no fiduciary obligations; [it] merely acts as a common 

agent for the trustor and beneficiary of the deed of trust. [The 

 property was being foreclosed at the time that Defendant Quality Loan filed the Notices of Default. Plaintiff 

only contests the circumstances surrounding his default. See, e.g., Compl. at 13; Opp’n at 18 (arguing 

that “due to the break in the chain of title, Plaintiff was never in default to the true beneficial interest 

holder”). Thus, even if the Notice of Default, Notice of Sale, and Substitution of Trustee contained false or 

mistaken information, as alleged by Plaintiff, the recordation of these documents could not have damaged 

the Plaintiff. See Ismail v. Wells Fargo Bank, N.A., 2:12-CV-01653-MCE, 2013 WL 930611 at *7 (E.D. 

Cal. Mar. 8, 2013) on reconsideration, 2:12-CV-01653-MCE-CK, 2013 WL 4516122 (E.D. Cal. Aug. 23, 

2013) (“Additionally, Plaintiffs are in default under the Deed of Trust. . . . Even if the Notice of Default and 

Notice of Sale contained false or mistaken information concerning the identity of the beneficiary, the 

recordation of these documents could not have damaged the Plaintiffs.”); see e.g., Sexton v. IndyMac 

Bank FSB, No. 3:11–cv–437, 2011 WL 4809640, at *5 (D.Nev. Oct. 7, 2011); Ramos v. Mortg. Elec. 

Registrations Sys., Inc., No. 2:08–CV–1089, 2009 WL 5651132, at *4 (D.Nev. Mar. 5, 2009) (dismissing 

slander of title claim where Plaintiffs failed to dispute that they were in default on their loan, nor was it false 

that the property was to be sold at a trustee's sale); Wensley v. First Nat. Bank of Nevada, 874 F. Supp. 

2d 957, 968 (D. Nev. 2012) (“In filing the Notice of Default, Defendants stated that Plaintiff was in breach 

of the loan agreement due to nonpayment. Plaintiff does not dispute that she is in fact in default. Because 

the statement is not false, Defendants cannot be liable for slander of title.”). 

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trustee's] only duties are: (1) upon default to undertake the 

steps necessary to foreclose the deed of trust; or (2) upon 

satisfaction of the secured debt to reconvey the deed of trust. 

Consistent with this view, California courts have refused to 

impose duties on the trustee other than those imposed by 

statute or specified in the deed of trust.”

Id. (internal citations omitted). “Due to the limited duties and lack of beneficial interest 

assigned to the trustee of a deed of trust, federal courts in California hold that TILA does 

not apply to the trustee of a deed of trust.” Vogan v. Wells Fargo Bank, N.A., 2:11-CV02098-JAM, 2011 WL 5826016 at *4 (E.D. Cal. Nov. 17, 2011) (citing Guerrero v. Citi 

Residential Lending, Inc., No. CV F 08–1878 LJO GSA, 2009 WL 926973 at *4 (E.D.

Cal. Apr.3, 2009) (holding that TILA does not apply to the trustee of a deed of trust and 

explaining that the limited role of such a trustee under California law precludes TILA 

liability)).

Plaintiff cites Vogan, 2011 WL 5826016 at *3-5, for the proposition that a trustee 

may nevertheless be subject to TILA in certain circumstances. However, Vogan

distinguishes between a trustee of a mortgage backed security and a trustee of a deed 

of trust. Id. At issue in Vogan was whether U.S. Bank, the trustee of a mortgage backed 

security, could be liable for a TILA violation. Id. The Vogan court found that the “trustee 

of a deed of trust is exempt from TILA because of its limited role under California law, 

but there is no analogous reason to exempt other types of trustees from TILA's 

provisions”, such as the trustee of a mortgage backed security. Id. at *4. Here, 

Defendant Quality Loan acted as a trustee of a deed of trust and therefore is precluded 

from TILA liability under California law.

8

Plaintiff thus fails to state a TILA claim against Quality Loan for which relief may 

be granted, and Plaintiff’s TILA claim against Quality Loan is DISMISSED without 

prejudice.

///

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Plaintiff also relies on the theory of agency and privity as to why Quality Loan is liable for a 

violation of TILA, even though it served as trustee of a deed of trust. Plaintiff cites no case law to support 

this theory and the Court is unaware of any authority supporting this theory or demonstrating that this 

theory overcomes existing law which states that TILA does not apply to the trustee of a deed of trust.

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E. RICO

Next, Plaintiff alleges that Defendants “conspired together to violate 18 U.S.C. 

§ 1962(d), by committing fraud and utilizing the US Mail and the internet. The 

Defendants agreed upon the same criminal objective to wit: the theft of real property 

through illegal foreclosure liens. Each conspirator is responsible for the action of the 

others and the results of the conspiracy as a whole.” Compl. at 29. Specifically, Plaintiff 

alleges that “[b]y engaging in a pattern of racketeering activity, specifically ‘mail or wire 

fraud,’ the Defendants subject to this Count participated in a criminal enterprise affecting 

interstate commerce.” Id.

“To allege a violation of the mail fraud statute, it is necessary to show that (1) the 

defendants formed a scheme or artifice to defraud; (2) the defendants used the United 

States mails or caused a use of the United States mails in furtherance of the scheme; 

and (3) the defendants did so with the specific intent to deceive or defraud.” Schreiber 

Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1399-1400 (9th Cir. 1986). 

In addition, Rule 9(b) requires that “[i]n alleging fraud . . . a party must state with 

particularity the circumstances constituting fraud. . . .” In alleging fraud, a complaint 

must “specify such facts as the times, dates, places, benefits received, and other details 

of the alleged fraudulent activity.” Neubronner v. Milken, 6 F.3d 666, 671-72 (9th Cir. 

1993); see Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 

1999) (citing 5 Charles Alan Wright and Arthur R. Miller, Federal Practice and 

Procedure: Civil § 1297, at 590 (2d ed. 1990)) (noting that in asserting a claim for fraud, 

a complaint must allege the “time, place, and contents of the false representations, as 

well as the identity of the person making the misrepresentation and what he obtained 

thereby.”).

Here, Plaintiff’s Complaint contains general allegations of mail fraud, but fails to 

satisfy the heightened pleading requirement of Rule 9(b) with respect to Defendant 

Quality Loan. For example, vague statements such as “Defendants were aware of the 

misrepresentations and profited from them” do not meet Rule 9(b)’s heightened 

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standard. See Compl. ¶ 118. To survive a motion to dismiss, Plaintiff must allege facts 

with respect to Defendant Quality Loan such as the times, dates, places, benefits 

received, the identity of the person making the misrepresentation, and other details of 

the alleged fraudulent activity. See Neubronner, 6 F.3d at 671-72; Harrison, 176 F.3d at 

784; Fed. R. Civ. P. 9(b). 

Accordingly, Plaintiff’s RICO claim is DISMISSED with leave to amend.

F. FDCPA

Plaintiff’s next claim alleges violations of the FDCPA. The FDCPA prohibits “debt 

collector[s]” from making false or misleading representations and from engaging in 

various abusive and unfair practices. 15 U.S.C. § 1692. Plaintiff alleges that 

Defendants engaged in “illegal debt collection activities.” Compl. at 23. Specifically, 

Plaintiff alleged that “Defendants [including Quality Loan] . . . violated the FDCPA 

because they ‘regularly collects (sic) or attempts to collect, directly or indirectly, debts 

owed or due or asserted to be owed or due another.’ . . . Defendants hold themselves 

out to have interests in Plaintiff’s Loan and Deed of Trust, yet both Assignments of the 

Deed of Trust was (sic) recorded after the closing date of [the Trust] and therefore, 

Deutsche Bank could not direct its attorney in fact, [Ocwen], successor in interest to 

Litton Loan Servicing LLP, to make a substitute of Trustee in favor of Quality Loan 

Service.” Compl. at 23. Plaintiff also alleges that all Defendants, including Quality Loan, 

are debt collectors within the meaning of the FDCPA, 15 USC § 1692. Compl. at 23.

 Defendant Quality Loan moves to dismiss Plaintiff’s FDCPA claim on the 

grounds that Quality Loan is not a debt collector within the meaning of the FDCPA, and 

Quality Loan’s act of foreclosing on a property pursuant to a deed of trust is not the 

collection of a debt within the meaning of the FDCPA. 

The FDCPA was enacted “to eliminate abusive debt collection practices by debt 

collectors, to insure that those debt collectors who refrain from using abusive debt 

collection practices are not competitively disadvantaged, and to promote consistent 

State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). 

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To effectuate this purpose, the FDCPA “prohibits a ‘debt collector’ from making false or 

misleading representations and from engaging in various abusive and unfair practices.

To be held liable for violation of the FDCPA, a defendant must—as a threshold 

requirement—fall within the Act's definition of ‘debt collector.’” Izenberg v. ETS Servs., 

LLC, 589 F. Supp. 2d 1193, 1198-99 (C.D. Cal. 2008) (citing Heintz v. Jenkins, 514 U.S. 

291, 294 (1995); Romine v. Diversified Collection Servs., 155 F.3d 1142, 1146 (9th Cir. 

1998)).

Under the FDCPA, a debt collector is “any person who uses any instrumentality of 

interstate commerce or the mails in any business the principal purpose of which is the 

collection of any debts, or who regularly collects or attempts to collect, directly or 

indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. 

§ 1692a(6). “While the Ninth Circuit has not specifically addressed whether mortgagees 

and their assignees are ‘debt collectors’ under the FDCPA, courts within this Circuit,” 

including this one, “have recognized that a debt collector does not include the 

consumer’s creditors, a mortgage servicing company, or an assignee of a debt, as long 

as the debt was not in default at the time it was assigned.” Brashears v. Bank of Am. 

Home Loans, No. CV 12-6760 FMO (JCGx), 2013 WL 5741832 at *4 (C.D. Cal. Oct. 22, 

2013) (listing numerous cases from Central, Northern, Southern, and Eastern Districts of 

California); Tina v. Countrywide Home Loans, Inc., 2008 WL 4790906 at *7 n.2 (S.D. 

Cal. Oct. 30, 2008) (holding that “Countrywide is not a ‘debt collector’ as defined under 

the FDCPA” because “the . . . FDCPA defines ‘debt collector” as one who collects 

consumer debts owed to another. Countrywide's conduct was directed to collecting its 

own debts.”).

Accordingly, Plaintiff has failed to allege that Quality Loan is a “debt collector” 

within the meaning of the FDCPA, and therefore has failed to state a claim for relief 

under that statute. Quality Loan’s motion to dismiss this cause of action is therefore 

GRANTED with leave to amend.

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G. California Civil Code 17200

Finally, Plaintiff alleges that Defendants are also liable for violations of Section 

17200 of the California Business and Professions Code. Section 17200 of the California 

Business and Professions Code provides a private cause of action for unlawful, unfair, 

and fraudulent business acts or practices. Cal. Bus. & Prof. Code § 17200. Plaintiff 

admits that this claim “is sufficiently stated as a derivative cause of action and [that] 

Plaintiff’s ability to pursue this cause of action depends on the success or failure of their 

substantive causes of action.” Opp’n at 18. For example, Plaintiff states that Quality 

Loan’s violation of TILA constitutes the necessary predicate violation for a section 17200 

claim. See Compl. ¶ 76.

Plaintiff’s section 17200 claims “rise and fall with the substantive causes of action 

already discussed.” Tamburri v. Suntrust Mortgage, Inc., C-11-2899 EMC, 2011 WL 

6294472 at *18 (N.D. Cal. Dec. 15, 2011). As there is no longer any underlying cause of 

actions against Quality Loan to support Plaintiff’s claim under section 17200 of the 

California Business and Professions Code, this cause of action is DISMISSED without 

prejudice.

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CONCLUSION

For the reasons set forth above, IT IS HEREBY ORDERED THAT:

1. Defendant Quality Loan’s Motion to Dismiss, ECF No. 7, is GRANTED with 

leave to amend. and 

2. Plaintiff’s Request for Telephonic Appearance, ECF No. 14, is DENIED as 

moot.

Not later than thirty (30) days following the date this Memorandum and Order is 

electronically filed, Plaintiff may (but is not required to) file an amended complaint. If no 

amended complaint is filed within said thirty (30) day period, without further notice to the 

parties, the causes of action against Quality Loan dismissed by virtue of this 

Memorandum and Order will be dismissed with prejudice.

IT IS SO ORDERED.

Dated: January 27, 2014

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