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

 Hon. Daniel P. Collins, Bankruptcy Judge for the District 1

of Arizona, sitting by designation.

ORDERED PUBLISHED

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-12-1441-DKiCo

)

WILLIAM F. NORDEEN and CAROL ) Bk. No. 09-21273-LED

A. NORDEEN, )

) Adv. No. 11-01076-LED

Debtors. )

______________________________)

)

WILLIAM F. NORDEEN; CAROL A. )

NORDEEN, )

)

Appellants, )

)

v. ) O P I N I O N

)

BANK OF AMERICA, N.A., as ) 

successor by merger to BAC )

Home Loans Servicing, LP; )

RECONTRUST COMPANY, N.A., )

)

Appellees. )

______________________________)

Argued and Submitted on July 19, 2013

at Las Vegas, Nevada

Filed - August 9, 2013

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Bruce A. Markell, Bankruptcy Judge, Presiding

 

Appearances: Appellant Carol A. Nordeen argued pro se; 

David J. de Jesus, Esq. of Reed Smith LLP argued

for appellees Bank of America, N.A., and

ReconTrust Company, N.A.

 

Before: DUNN, KIRSCHER and COLLINS, Bankruptcy Judges. 1

FILED

AUG 09 2013

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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

 BAC Home Loans Servicing, LP merged with Bank of America, 2

N.A. in July 2011.

-2-

DUNN, Bankruptcy Judge:

The appellants William F. and Carol A. Nordeen (the

“Nordeens”) appeal the dismissal of their Second Amended

Complaint against BAC Home Loans Servicing, LP, fka Countrywide

Home Loans Servicing LP (“BAC”), and ReconTrust Company, N.A.

(“ReconTrust”), without leave to amend. Hereafter, BAC and

ReconTrust are referred to collectively as “appellees.” We 2

AFFIRM.

I. FACTUAL BACKGROUND

The following factual narrative is derived from factual

statements in the Nordeens’ Second Amended Complaint and the

exhibits thereto, and the bankruptcy court’s Memorandum Decision

Dismissing Complaint (“Memorandum Decision”) basing its

background discussion on facts alleged in the Second Amended

Complaint.

A. Loan History

On October 21, 2005, the Nordeens signed a promissory note

for $140,000 (the “Note”), payable to Countrywide Home Loans,

Inc. (“Countrywide”). The Note provides that: “[The Nordeens]

understand that [Countrywide] may transfer this Note. 

[Countrywide] or anyone who takes this Note by transfer and who

is entitled to receive payment under this Note is called the

‘Note Holder.’”

To secure their payment obligations under the Note, on
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-

October 21, 2005, the Nordeens also signed a deed of trust (the

“Trust Deed”) against their rental property in Surprise, Arizona

(the “Property”). ReconTrust is the trustee named in the Trust

Deed, under which the Nordeens “irrevocably grant[ed] and

convey[ed]” the Property “in trust, with power of sale.” The

named Trust Deed beneficiary was Mortgage Electronic Registration

Systems, Inc. (“MERS”), which was identified as “acting solely as

a nominee for [Countrywide] and [Countrywide’s] successors and

assigns.”

The Trust Deed expressly provides:

Borrower [the Nordeens] understands and agrees that

MERS holds only legal title to the interests granted by

Borrower in this Security Instrument, but, if necessary

to comply with law or custom, MERS (as nominee for

Lender [Countrywide] and Lender’s successors and

assigns) has the right: to exercise any or all of those

interests, including, but not limited to, releasing and

canceling this Security Instrument.

The Trust Deed further provides:

The Note or a partial interest in the Note (together

with this Security Instrument) can be sold one or more

times without prior notice to Borrower. A sale might

result in a change in the entity (known as the “Loan

Servicer”) that collects Periodic Payments due under

the Note and this Security Instrument and performs

other mortgage loan servicing obligations under the

Note, this Security Instrument, and Applicable Law. 

There also might be one or more changes of the Loan

Servicer unrelated to a sale of the Note. If there is

a change of the Loan Servicer, Borrower will be given

written notice of the change which will state the name

and address of the new Loan Servicer, the address to

which payments should be made and any other information

RESPA requires in connection with a notice of transfer

of servicing. If the Note is sold and thereafter the

Loan is serviced by a Loan Servicer other than the

purchaser of the Note, the mortgage loan servicing

obligations to Borrower will remain with the Loan

Servicer or be transferred to a successor Loan Servicer

and are not assumed by the Note purchaser unless

otherwise provided by the Note purchaser.

On October 30, 2005, the Note was sold to the CWALT 2005-
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

 For purposes of the Real Estate Settlement Procedures Act 3

(“RESPA”), 12 U.S.C. §§ 2601-2617, a “qualified written request”

consists of:

[W]ritten correspondence, other than notice on a

payment coupon or other payment medium supplied by the

[loan] servicer, that–

(i) includes, or otherwise enables the servicer to

identify, the name and account of the borrower; and 

(ii) includes a statement of the reasons for the belief

of the borrower, to the extent applicable, that the

account is in error or provides sufficient detail to

the servicer regarding other information sought by the

borrower.

12 U.S.C. § 2605(e)(1)(B).

-4-

73CB REMIC Trust (“CWALT”).

In December 2008, the Nordeens were unable to make their

monthly Note payment, apparently as a result of defaulting

tenants leaving the Property in such bad shape that significant,

costly repairs were required. The Nordeens contacted Countrywide

to see “if they could work anything out,” but Countrywide’s

representative “said they could do nothing.” On January 16,

2009, BAC mailed the Nordeens a notice of intent to accelerate

the Nordeens’ payment obligations under the Note. The Nordeens

have not made a payment on the Note obligation since December

2008.

On March 23, 2009, ReconTrust initiated foreclosure

proceedings with respect to the Property. On May 29, 2009, the

Nordeens sent what they characterized as a Qualified Written

Request under RESPA to BAC and ReconTrust. 3

ReconTrust initially responded to the Nordeens’ request for

information. In its response, ReconTrust apparently included
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

 Unless otherwise indicated, all chapter and section 4

references are to the federal Bankruptcy Code, 11 U.S.C. §§ 101-

1532, and all “Rule” references are to the Federal Rules of

Bankruptcy Procedure, Rules 1001-9037. The Federal Rules of

Civil Procedure are referred to as “Civil Rules.”

-5-

copies of the Note and Trust Deed and a payment history

corresponding to the Nordeens’ account. ReconTrust also

explained that, despite the Nordeens’ apparent assertions to the

contrary, the Note and Trust Deed remained enforceable as

written. Ultimately, in response to further communications from

the Nordeens over a number of months, BAC apparently advised the

Nordeens that payments on the Note were due and owing for

December 2008 through April 2010, and a foreclosure sale was

scheduled for May 18, 2010. No foreclosure sale of the Property

has occurred to date.

B. Bankruptcy Proceedings

On June 28, 2009, the Nordeens filed for protection under

chapter 13 of the Bankruptcy Code. On August 7, 2009, BAC filed 4

a proof of secured claim in the Nordeens’ bankruptcy case.

On March 3, 2011, the Nordeens, acting pro se, filed an

adversary proceeding complaint (“Initial Complaint”) against the

appellees. In the Initial Complaint, the Nordeens asserted

claims for declaratory relief, fraud, quiet title, and violations

of RESPA, the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-

1667f, and the Fair Debt Collection Practices Act (“FDCPA”), 15

U.S.C. §§ 1692-1692p. A prominent feature of the Initial

Complaint was the Nordeens’ theory (the “Securitization Theory”)

that the securitization of the Note and sale to CWALT constituted
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-

a “true sale” of the Note that vitiated its effectiveness as to

them and rendered the Trust Deed unenforceable as to the

Property. The Nordeens also argued that the appellees had

somehow fabricated the version of the Note that they were trying

to enforce against the Nordeens.

On June 6, 2011, the appellees moved to dismiss the Initial

Complaint with prejudice under Civil Rule 12(b)(6). After a

hearing on the motion on July 26, 2011 (“July 26th Hearing”), the

bankruptcy court granted the motion to dismiss in part but

granted the Nordeens leave to amend their complaint. At the

July 26th Hearing, after hearing argument from the parties, the

bankruptcy court rejected the Nordeens’ Securitization Theory but

granted the Nordeens leave to amend their claim for declaratory

relief “so you can sort out who’s got what note.” The Nordeens’

other claims were dismissed without leave to amend. On August 8,

2011, the bankruptcy court entered its order on the appellees’

motion to dismiss the Initial Complaint, providing that

“Defendants’ Motion is GRANTED; IT IS FURTHER ORDERED that the

Plaintiffs shall have leave until August 26, 2011 to file an

amended complaint to assert a declaratory relief action; . . . .”

On August 8, 2011, the Nordeens moved for reconsideration of

the bankruptcy court’s order on appellees’ motion to dismiss and

filed a “disapproval to order on motion to dismiss that attorneys

have done for the court.” The Nordeens further filed a first

amended complaint (“First Amended Complaint”) on August 26, 2011.

The bankruptcy court held a hearing on September 13, 2011

(“September 13th Hearing”), to consider outstanding issues

between the parties, including the Nordeens’ motion for
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

 The Racketeer Influenced and Corrupt Organizations Act 5

(“RICO”), 18 U.S.C. §§ 1961-1968.

-7-

reconsideration of the prior dismissal order. At the September

13th Hearing, the bankruptcy court reiterated to the Nordeens

that claims based on their Securitization Theory were not viable. 

They could replead a more limited declaratory relief claim based

upon their allegations that the appellees were trying to collect

on the wrong Note. However, if the Nordeens wanted to assert

additional claims for relief, they would need to file a motion to

amend their complaint. But, the bankruptcy court cautioned, “You

[the Nordeens] can’t bring back the causes of action I’ve already

dismissed.” Ultimately, the bankruptcy court granted the

Nordeens leave to file a second amended complaint.

The bankruptcy court entered an order denying the Nordeens’

motion for reconsideration of the order on appellees’ original

motion to dismiss (the “Reconsideration Order”) on September 21,

2011. In the Reconsideration Order, the bankruptcy court granted

the Nordeens until October 11, 2011 to file their second amended

complaint but further ordered that “no further leave to file

additional amended complaints shall be granted.”

On October 11, 2011, the Nordeens filed their second amended

complaint (“Second Amended Complaint”). In the Second Amended

Complaint, the Nordeens again focused on their Securitization

Theory, asserting claims under that umbrella for declaratory

relief, fraud, perjury, “material facts as to contracts,

securities, and as to pleading, and practice,” “federal laws UCC3 [and] UCC-9,” “possible collusion, RICO Act and possible 5
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

-8-

counterfeiting,” and “housing laws.”

The appellees filed an answer to the Second Amended

Complaint on November 8, 2011. Following substantial discovery,

on May 8, 2012, the appellees moved for judgment on the pleadings

(“Pleadings Judgment Motion”) under Civil Rule 12(c). The

Nordeens filed an opposition to the Pleadings Judgment Motion on

May 29, 2012, to which the appellees replied on June 5, 2012.

The bankruptcy court heard the Pleadings Judgment Motion on

June 12, 2012 (“June 12th Hearing”). At the June 12th Hearing,

after hearing argument from the parties, the bankruptcy court

took the Pleadings Judgment Motion under advisement. On

August 10, 2012, the bankruptcy court issued its Memorandum

Decision. On the same date, for the reasons stated in the

Memorandum Decision, the bankruptcy court entered an order

dismissing the Second Amended Complaint with prejudice. The

Nordeens filed a timely Notice of Appeal on August 23, 2012.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 1334 and 157(b)(1) and (b)(2)(B), (K) and (O). We have

jurisdiction under 28 U.S.C. § 158.

III. STANDARDS OF REVIEW

We review a bankruptcy court’s decision to grant a motion to

dismiss an adversary complaint on the pleadings de novo. Henry

A. v. Willden, 678 F.3d 991, 998 (9th Cir. 2012); Movsesian v.

Victoria Versicherung AG, 670 F.3d 1067, 1071 (9th Cir. 2012) (en

banc). De novo means that we examine a matter anew, as if no

decision previously had been rendered, giving no deference to the

bankruptcy court’s prior determinations. Dawson v. Marshall, 561
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

 The following twelve issues are distilled down from the 6

nineteen issues stated over five pages in the Nordeens’ opening

brief.

-9-

F.3d 930, 933 (9th Cir. 2009). “We accept as true all well

pleaded facts in the complaint and construe them in the light

most favorable to the nonmoving party.” Henry A. v. Willden, 678

F.3d at 998 (citation omitted).

We review the bankruptcy court’s decision to dismiss an

adversary complaint without leave to amend for an abuse of

discretion. Id. A bankruptcy court abuses its discretion only

if it applies the wrong legal standard or if its factual findings

are illogical, implausible or without support in the evidentiary

record before it. TrafficSchool.com, Inc. v. Edriver Inc., 653

F.3d 820, 832 (9th Cir. 2011).

We may affirm the bankruptcy court’s decisions on any

grounds supported by the record. Shanks v. Dressel, 540 F.3d

1082, 1086 (9th Cir. 2008).

IV. ISSUES6

1. Did the bankruptcy court err in applying an incorrect

legal standard to its review of the Second Amended Complaint in

granting the Pleadings Judgment Motion?

2. Did the bankruptcy court err in considering the

Pleadings Judgment Motion and granting it after the appellees had

answered the Second Amended Complaint and the parties were

preparing for trial on September 24, 2012?

3. Did the bankruptcy court err in rejecting the Nordeens’

Securitization Theory?

4. Did the bankruptcy court err in dismissing the Nordeens’
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

-10-

claim for declaratory relief based on the appellees’ alleged

fabrication of the Note?

5. Did the bankruptcy court err in dismissing the Nordeens’

fraud claims?

6. Did the bankruptcy court err in dismissing the Nordeens’

perjury claims?

7. Did the bankruptcy court err in dismissing the Nordeens’

UCC claims?

8. Did the bankruptcy court err in dismissing the Nordeens’

RICO claims?

9. Did the bankruptcy court err in dismissing the Nordeens’

TILA claims?

10. Did the bankruptcy court err in dismissing the

Nordeens’ RESPA claims?

11. Did the bankruptcy court err in dismissing the

Nordeens’ FDCPA claims?

12. Did the bankruptcy court err in dismissing the Second

Amended Complaint with prejudice?

V. DISCUSSION

1) Standards for consideration of a motion to dismiss

As the bankruptcy court noted in the Memorandum Decision, it

“evaluates motions for judgment on the pleadings under Rule

7012(b), which incorporates Civil Rule 12(c).” Rule 7012(b)

(Civil Rule 12(b)-(i) apply in adversary proceedings in

bankruptcy). Where the defense of failure to state a claim upon

which relief can be granted is raised in a Civil Rule 12(c)

motion, the legal test applied is the same as if the defense had

been raised earlier in a motion to dismiss under Civil Rule
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

-11-

12(b)(6). McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810

(9th Cir. 1988).

In reviewing the bankruptcy court’s dismissal of the Second

Amended Complaint, we start from the proposition that complaints

prepared by pro se parties must be construed liberally, and we

have a duty to ensure that “pro se litigants do not lose their

right to a hearing on the merits of their claim due to ignorance

of technical procedural requirements.” Balistreri v. Pacifica

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

the Supreme Court in Estelle v. Gamble, 429 U.S. 97, 106 (1976):

As the Court unanimously held in Haines v. Kerner, 404

U.S. 519 (1972), a pro se complaint, “however

inartfully pleaded,” must be held to “less stringent

standards than formal pleadings drafted by lawyers” and

can only be dismissed for failure to state a claim if

it appears “‘beyond doubt that the plaintiff can prove

no set of facts in support of his claim which would

entitle him to relief.’” (Citations omitted.)

However, no matter how a complaint is worded, ultimately it must

state a legally cognizable claim entitling the claimant to some

relief in order to survive a motion to dismiss. See id. at 107

(“Even applying these liberal standards, however, Gamble’s claims

against Dr. Gray, both in his capacity as treating physician and

as medical director of the Corrections Department, are not

cognizable under § 1983.”).

Civil Rule 8 sets forth general rules for pleading in

federal court litigation. “The pleading provisions in the Civil

Rules are intended to provide parties with adequate notice of the

opposing party’s claims or defenses.” Charlie Y., Inc. v. Carey

(In re Carey), 446 B.R. 384, 391 (9th Cir. BAP 2011). Civil Rule

8(a)(2), applicable in adversary proceedings in bankruptcy under
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

-12-

Rule 7008, provides that a claim for relief must contain “a short

and plain statement of the claim showing that the pleader is

entitled to relief.”

The factual allegations in a complaint “must be enough to

raise a right to relief above the speculative level,” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007), and must be

sufficient to “state a claim to relief that is plausible on its

face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell

Atl. Corp. v. Twombly, 550 U.S. at 570. “A claim has facial

plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. at 678. The bankruptcy court explicitly

recognized the application of these standards to its

consideration of the Pleadings Judgment Motion. See Memorandum

Decision, at pp. 6-7. It also recognized, however, that although

it was required to “take all the factual allegations in the

complaint as true, we are not bound to accept as true a legal

conclusion couched as a factual allegation.” Papasan v. Allain,

478 U.S. 265, 286 (1986). Bell Atl. Corp. v. Twombly, 550 U.S.

at 555 (A claim for relief “requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do.”).

The bankruptcy court clearly applied the correct legal

standards to its consideration of the Pleadings Judgment Motion. 

The Nordeens complain in the statement of issues in their Opening

Brief that the bankruptcy court treated all of their factual

allegations as “nothing more than labels and conclusions and mere
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

-13-

conclusory statements or legal characterizations cast in the form

of factual allegations.” Appellants’ Opening Brief, at 1. Yet,

nowhere in their Opening Brief do the Nordeens cite one example

of where the bankruptcy court erred in so characterizing their

factual allegations as legal conclusions. We perceive no such

error in the bankruptcy court’s consideration of the Nordeens’

factual allegations in its analysis set forth in the Memorandum

Decision.

2) Timing of the bankruptcy court’s consideration of the

Pleadings Judgment Motion

Although their argument as to the timing of the bankruptcy

court’s consideration of the Pleadings Judgment Motion is less

than clear (see Appellants’ Opening Brief, at 1 and 11-12), the

Nordeens appear to argue that the bankruptcy court erred in

considering the Pleadings Judgment Motion after 1) all of the

pleadings had been settled, 2) the parties had agreed on a

scheduling plan and had engaged in substantial discovery, and 3)

September 24, 2012 had been set as the trial date. In essence,

the argument is, after all that had been accomplished in the

adversary proceeding, the bankruptcy court should have tried it

rather than dismissing it in response to the Pleadings Judgment

Motion.

Civil Rule 12(c) provides that, “After the pleadings are

closed–but early enough not to delay trial–a party may move for

judgment on the pleadings.” (Emphasis added.) We emphasize that

under Civil Rule 12(c), it was not for the bankruptcy court to

raise the issue of the appropriateness of granting judgment on

the pleadings sua sponte. Under the rule, the bankruptcy court
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

-14-

could not consider such a motion until brought by an interested

party, in this case, the appellees. The bankruptcy court did not

consider the Pleadings Judgment Motion until after it was filed,

the Nordeens had an opportunity to respond, and the bankruptcy

court heard argument at the June 12th Hearing. The bankruptcy

court’s decision to grant the Pleadings Judgment Motion with

prejudice did not “delay” the trial. Rather it avoided a trial

that the bankruptcy court determined was unwarranted because the

Nordeens had failed to state a claim upon which relief could be

granted. Based on this record, we conclude that the bankruptcy

court did not err in acting consistently with the provisions of

Civil Rule 12(c).

3) The bankruptcy court did not err in rejecting the Nordeens’

Securitization Theory.

As early as the July 26th Hearing, the bankruptcy court

advised the Nordeens that their Securitization Theory was not

viable and dismissed the Nordeens’ claims based on the

Securitization Theory. Yet, in every iteration of their

complaint filed since then, including the Second Amended

Complaint that the bankruptcy court ultimately dismissed with

prejudice, the Nordeens have extensively repeated their

Securitization Theory allegations in the service of their

ultimate objectives: “[The Nordeens] want to restraint [sic] all

parties from ever going after [the Nordeens] again and to declare

this contract [the Note and the Trust Deed] void.” Appellants’

Opening Brief, at 10. “[The Nordeens] want to prevent all

parties from ever attempting to foreclose on us again.” 

Appellants’ Opening Brief, at 30.
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

-15-

The bankruptcy court did not err in rejecting and in

dismissing the Nordeens’ claims based on their Securitization

Theory, and its rulings are consistent with repeated

determinations of the district courts sitting in Nevada and

Arizona and elsewhere in the Ninth Circuit. See, e.g., Albritton

v. Tiffany & Bosco, P.A., 2013 WL 3153848, at *8 (D. Ariz.

June 19, 2013); Hagos v. MTC Financial, Inc., 2013 WL 1292703 (D.

Nev. March 29, 2013); Joson v. Bank of Am., NA, 2013 WL 1249714

(D. Nev. March 22, 2013); Banks v. Freddie Mac, 2013 WL 1182685

(D. Nev. March 20, 2013); Lowry v. EMC Mortg. Corp., 2013 WL

841326 (D. Ariz. March 6, 2013); Reyes v. GMAC Mortg. LLC, 2011

WL 1322775, at *2, *3 (D. Nev. April 5, 2011) and cases cited

therein:

[F]ive of plaintiffs’ claims are based on the idea that

securitization inherently changes the “existing legal

relationship between the parties to the extent that the

original parties cease to occupy the roles they did at

the closing.” . . . This argument has been rejected in

this district, because the securitization of a loan

does not in fact alter or affect the legal

beneficiary’s standing to enforce the deed of trust.

Joyner v. Bank of Am. Home Loans, 2010 WL 2953969, at *1, *5, *6

(D. Nev. July 26, 2010):

Each of these ideas [based on the Securitization

Theory] has been addressed on multiple occasions by

this Court, weighed and found wanting.

. . .

This Court rejects the notion, as it has previously,

that “transfer of a promissory note causes prior

security instruments to auto-nullify unless

reexecuted.” (Citation omitted.)

. . .

Plaintiff has not tendered the amount owed on the loan. 

Rather, he argues that [Bank of America] received the

full amount of the loan when it securitized the loan

and therefore Plaintiff has no further obligations

under the loan. This argument is completely without

merit.
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

-16-

Das v. JPMorgan Chase Bank, N.A., 2012 WL 1658718, at *1 (D.

Ariz. May 11, 2012); Kuc v. Bank of Am., NA, 2012 WL 1268126,

at *3 (D. Ariz. April 16, 2012) (“[T]he theory that

securitization renders the Deed of Trust unenforceable has been

repeatedly rejected.”); White v. Indymac Bank, FSB, 2012 WL

966638, at *6 (D. Haw. March 20, 2012) (“The argument that

parties lose their interest in a loan when it is assigned to a

securitization trust or REMIC has been rejected by numerous

courts.”); Washburn v. Bank of Am., N.A., 2011 WL 7053617, at *5

(D. Idaho Oct. 21, 2011) (“This is not a new battlefield. 

Several courts have rejected various theories that

‘securitization of a loan somehow diminishes the underlying power

of sale that can be exercised upon a trustor’s breach.’”

(citations omitted)); Lane v. Vitek Real Estate Indus. Group, 713

F. Supp. 2d 1092, 1099 (E.D. Cal. 2010) (“The argument that

parties lose their interest in a loan when it is assigned to a

trust pool has also been rejected by many district courts.”). 

The Nordeens cite no contrary authority from court decisions.

The definition of a “security” in the Securities Exchange

Act of 1934 is very broad and includes promissory notes. See 15

U.S.C. § 78c(a)(10); Marine Bank v. Weaver, 455 U.S. 551, 555 &

n.3 (1982). However, until fairly recently, most promissory

notes, including notes secured by mortgages on homes, were not

considered to be securities. See, e.g., Reves v. Ernst & Young,

494 U.S. 56, 65 (1990), citing Exchange Nat’l Bank of Chi. v.

Touche Ross & Co., 544 F.2d 1126, 1138 (2d Cir. 1976). Now, when

a vast market has been established for mortgage-backed

securities, that view seems quaint.
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

-17-

However, home loan borrowers are not purchasing an

investment when they enter into a loan agreement to purchase or

refinance a home. When they sign a promissory note and mortgage

or trust deed secured by their real property, they are entering

into a contract for a loan transaction on fixed terms, and any

“upside” or investment incentive to enter into the transaction is

based on a prospective increase in the value of the subject real

property. Accordingly, the borrower’s loan contract (the Note

and Trust Deed in this appeal) is distinct and separate from any

securities transaction in the “secondary market” encompassing

assignment of the contract. The Note in this case documents this

distinction in its provisions that, “[The Nordeens] understand

that [Countrywide] may transfer this Note. [Countrywide] or

anyone else who takes this Note by transfer and who is entitled

to receive payments under this Note is called the ‘Note Holder.’” 

Likewise, the Trust Deed provides that, “The Note or a partial

interest in the Note (together with this Security Instrument) can

be sold one or more times without prior notice to Borrower.” 

(Emphasis added.) This distinction between the “loan” contract

and the “securitization” contract has been recognized by the

courts that have rejected the Securitization Theory. See, e.g.,

Reyes v. GMAC Mortg. LLC, 2011 WL 1322775, at *3:

Since the securitization “merely creates a ‘separate

contract, distinct from [plaintiffs’] debt

obligations’” under the note and does not change the

relationship of the parties in any way, plaintiffs’

claims arising out of the securitization fail. 

Commonwealth Prop. Advocates, LLC v. First Horizon Home

Loan Corp., . . . 2010 WL 4788209, at *4 (D. Utah Nov.

16, 2010) . . . (quoting Larota-Florez v. Goldman Sachs

Mortgage Co., 719 F. Supp. 2d 636, 642 (E.D. Va. 2010). 

Further, as plaintiffs consented to the securitization

in the agreement by explicitly agreeing that they
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

-18-

“understand that the [l]ender may transfer this

[n]ote,” their assertion that they did not consent also

fails. See Suss v. JP Morgan Chase Bank, N.A., . . .

[2010] WL 2733097, *6 . . . (D. Md. 2010) (court

rejected plaintiff’s argument that he did not consent

to securitization because the note contained such

consent). (Emphasis added.)

As long as a borrower in such circumstances makes all of the

scheduled promissory note payments to a loan servicer, the

contract functions seamlessly (at least theoretically), and the

borrower may never know (or have any reason to know) who ends up

owning the note. The problem arises, as in this case, when a

borrower faces difficulties making loan payments and needs to

enter into constructive negotiations with the lender to

restructure the loan to make it work for both parties. As the

Nordeens discovered, to their increasing frustration and anguish

over time, it is difficult to make contact with decision makers

for a securitized loan, and the reaction of loan servicer

representatives in our experience often has been exactly the

response the Nordeens received to their pleas: “We can do

nothing.” Foreclosure ensues.

Various attempts to amend the Bankruptcy Code to give

bankruptcy courts the authority to modify mortgage or trust deed

secured loans to reflect the reality of declining real property

values have been made, without success to date. That leaves

parties, like the Nordeens, in the situation where they often

have no legal remedy to the perceived ills and unfairness

resulting from the securitization of their Note and Trust Deed. 

While we are sympathetic to the Nordeens’ plight, we agree with

the bankruptcy court that claims based on the Nordeens’

Securitization Theory are not viable in this case. As bankruptcy
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

-19-

courts, unfortunately, we have no general authority to require

lenders or loan servicers to behave reasonably.

Contrary to the Nordeens’ assertion that the bankruptcy

court violated their rights to due process by not allowing them

to present securitization-based claims (see Appellants’ Opening

Brief, at 2, 22-23), the bankruptcy court properly dismissed

their Securitization Theory arguments that did not assert a

legally cognizable claim. The bankruptcy court clearly told the

Nordeens at an early stage in the proceedings that their

Securitization Theory claims were not viable and dismissed them,

but the Nordeens kept pleading them anyway.

4) The Nordeens’ further claims for declaratory relief based on

alleged fabrications of the Note are not viable.

At the July 26th Hearing and the September 13th Hearing, the

bankruptcy court considered and allowed the Nordeens to amend and

restate their claim for declaratory relief based on their

expressed concerns as to whom they owed an obligation to pay and

issues as to alleged fabrication of the Note. As noted by the

bankruptcy court in the Memorandum Decision, at p. 8:

Declaratory relief is appropriate “(1) when the

judgment will serve a useful purpose in clarifying and

settling the legal relations in issue, and (2) when it

will terminate and afford relief from the uncertainty,

insecurity, and controversy giving rise to the

proceeding.” McGraw-Edison Co. v. Preformed Line

Products, Co., 362 F.2d 339, 342 (9th Cir. 1966)

(citation and internal quotation marks omitted).

The problem for the Nordeens is that ultimately, shorn of

the permeating Securitization Theory claims that we previously

have concluded are not viable, the declaratory relief claim

stated in the Second Amended Complaint has no substance. Aside
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

-20-

from questions relating to who is entitled to enforce the Trust

Deed obligations, discussed infra, the Nordeens rely on

allegations that the appellees have produced a “false and

fabricated” Note. Helpfully, the Nordeens attached as Exhibit O

to the Second Amended Complaint a “Certified Copy of the Note

that [the Nordeens] closed with [and signed] on October 21, 2005

and took . . . home with them” (the “Genuine Note”), and as

Exhibit P to the Second Amended Complaint “the fabricated copy of

[the Nordeens’] Note that has been presented in this court as the

‘original’ and as a ‘copy’” (the “Bogus Note”).

The differences between the Genuine Note and the Bogus Note

are detailed by the Nordeens as follows: 1) In the upper left

hand corner of the first page of the Genuine Note, it states

“Prepared by MARGARITA RUIZ;” the Bogus Note states “Prepared by

REMEDIOS BROWN.” 2) The Nordeens assert that their initials are

“different” and in different places on the two note exhibits. 

3) The “supposed signatures” on the Bogus Note “are not the

same.” 4) The color of ink on the Bogus Note, presented as the

original Note at the July 26th Hearing, is a “strange light

blue.” 5) There are orange highlighter marks under the

signatures and initials on the Bogus Note. 6) The

“Certification” on the Bogus Note is allegedly different from the

“Certification” on the Genuine Note, as appearing to be “in a

different place and appear[ing] to be signed by a different

person.” (Actually, the only “certification” on Exhibit O that

we see is the “true copy” certification on page one of Exhibit O. 

No such certification appears on Exhibit P.) 7) Finally,

“[t]here are other variations with completely different barcodes
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

-21-

and redactions and punch holes that could indicate multiple

pledges or sales of this mis-represented [sic] fabricated Note

but none that are the [Nordeens’] Certified copy from closing.” 

Second Amended Complaint, ¶ 96-97, pp. 26-28; Exhibits O and P.

Conspicuously absent from the Nordeens’ allegations in the

Second Amended Complaint is any allegation that the terms of the

Genuine Note and the Bogus Note are different in any respect. In

addition, although the Nordeens cannot quite bring themselves to

state that they signed the Note in their description of the

Genuine Note, they admitted earlier in the Second Amended

Complaint that they signed the Note. See Second Amended

Complaint, ¶ 15, p. 6. The Nordeens further do not deny that the

initials and the signatures on the Genuine Note are theirs. At

the July 26th Hearing, counsel for the appellees addressed the

differences between copies of the Note as follows:

From what I can tell from looking at those notes, the

major differentiations were things that happen when you

copy notes that have been highlighted, when you copy

notes where redactions have taken place, when notes get

copied and placed in binders, and hole punches get put

through the notes.

I was hoping to put all of that to rest by

bringing the original note with me today, and . . . .

July 26th, 2011 Hr’g Tr., at 29:7-13.

However, whatever explanation applies with respect to the

alleged discrepancies between the Genuine Note and the Bogus Note

noted by the Nordeens is beside the point in this appeal. What

is important is the substance of the alleged differences, and as

a bottom line matter, the Nordeens’ allegations about different

Notes make no substantive difference. See, e.g., Donaldson v.

BAC Home Loans Servicing, L.P., 813 F. Supp. 2d 885, 894 (M.D.
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

 NRS § 104-3309, entitled “Enforcement of lost, destroyed 7

or stolen instrument,” provides in relevant part as follows:

1. A person not in possession of an instrument is

entitled to enforce the instrument if:

(a) The person seeking to enforce the instrument:

(1) Was entitled to enforce the instrument when

loss of possession occurred; or

(2) Has directly or indirectly acquired ownership

of the instrument from a person who was entitled to

enforce the instrument when loss of possession

occurred;

. . .

2. A person seeking enforcement of an instrument under

subsection 1 must prove the terms of the instrument and

his or her right to enforce the instrument. If that

proof is made, NRS 104.3308 applies to the case as if

the person seeking enforcement had produced the

instrument. . . .

Arizona law does not apply with respect to the Nordeens’

declaratory relief claim based on the appellees’ alleged

fabrication of the Note. See n.7 infra. However, in any event,

(continued...)

-22-

Tenn. 2011) (“Plaintiff claims that the fact that [d]efendant is

able to produce multiple copies of the alleged original documents

‘with different markings, endorsements, bar codes, signatures,

and etc.’ is evidence that it does not possess any of the

original documents. . . . The Court finds this argument to be

meritless.”).

Section 3-309 of the Uniform Commercial Code provides for

enforcement of “lost, destroyed or stolen” promissory notes by a

person not in possession of the original promissory note when the

subject person was entitled to enforce the note when the loss

occurred, and the terms of the note can be proved. See Nevada

Revised Statutes (“NRS”) § 104.3309.7
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

(...continued) 7

Arizona Uniform Commercial Code law with respect to enforcement

of “lost, destroyed or stolen” instruments is essentially the

same as Nevada’s. See Arizona Revised Statutes (“A.R.S.”)

§ 47-3309.

-23-

Even if the original Note were lost, a point not conceded by

the appellees, no proof of the terms of the Note is required

because there is no difference in terms between the Genuine Note

and the Bogus Note. As to the right to enforce, the Nordeens’

allegations in that regard arise from their Securitization Theory

that we previously have determined to be nonviable. The Nordeens

do not challenge the form of the endorsement in blank on the

alleged Bogus Note. While the Note was transferred at an early

stage from Countrywide to CWALT, the record reflects that the

Nordeens have always dealt with BAC, formerly known as

Countrywide Home Loans Servicing LP, as their loan servicer, and

ReconTrust has always served as the named trustee in the Trust

Deed. In their opening brief, the Nordeens concede that BAC has

operated as their loan servicer. Appellants’ Opening Brief, at

16.

The bankruptcy court raised a red herring when it gave as

one of the bases for its dismissal of the declaratory judgment

claim “the absence of any allegation [by the Nordeens] that they

have placed funds into a segregated account in anticipation of

the day when the proper payee is revealed,” but it did not err in

concluding that the motivation of the Nordeens was to invalidate

the Note so that any obligations reflected in the terms of the

Note are unenforceable. See Memorandum Decision, at pp. 8-9. 
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

 The Nordeens reside in Nevada. They signed the Note and 8

Trust Deed in Nevada. BAC sent the Nordeens their monthly

billing statements and the notices of foreclosure on the Property

to the Nordeens’ residence in Nevada. The Nordeens further filed

their bankruptcy case and the subject adversary proceeding in

Nevada. In these circumstances, the bankruptcy court properly

applied Nevada law, as the law of the forum, to the Nordeens’

nonbankruptcy state law claims that do not relate specifically to

rights to foreclose with respect to the Property. See, e.g.,

Hanna v. Plumer, 380 U.S. 460, 465 (1965) (“[F]ederal courts are

to apply state substantive law and federal procedural law.”);

Vacation Vill., Inc. v. Clark Cnty., Nev., 497 F.3d 902, 914 (9th

Cir. 2007); Vess v. Ciba-Geigy Corp. USA, 317 F.3d at 1103 (“[A]

federal court will examine state law to determine whether the

elements of fraud have been pled sufficiently to state a cause of

action . . . .”); Rubenstein v. Ball Bros., Inc. (In re New

(continued...)

-24-

The Nordeens have admitted as much. See Appellants’ Opening

Brief at 10. However, the claim for declaratory relief in the

Second Amended Complaint is inadequate to accomplish that

objective, and the bankruptcy court did not err in dismissing it.

5) Fraud

While, as we have emphasized above, we construe pro se

pleadings liberally, Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir.

2010), Civil Rule 9(b), applicable in this adversary proceeding

under Rule 7009, requires that, “In alleging fraud or mistake, a

party must state with particularity the circumstances

constituting fraud or mistake.” Vess v. Ciba-Geigy Corp. USA,

317 F.3d 1097, 1103 (9th Cir. 2003) (“It is established law, in

this circuit and elsewhere, that [Civil] Rule 9(b)’s

particularity requirement applies to state-law causes of

action.”).

Under Nevada law, applicable in construing the Nordeens’ 8
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

(...continued) 8

England Fish Co.), 749 F.2d 1277, 1280-81 (9th Cir. 1984) (“In

deciding questions of state law, a bankruptcy court should apply

the law that a court of the forum state would apply.”) (emphasis

added); Gen. Motors Corp. v. Eighth Jud. Dist. Ct. of Nev., 122

Nev. 466, 473-74, 134 P.3d 111, 116 (Nev. 2006).

-25-

fraud claim, the Nordeens bear the burden of proof to establish

each of four elements:

(1) a false representation made by the defendant;

(2) defendant’s knowledge or belief that its

representation was false or that defendant has an

insufficient basis of information for making the

representation; (3) defendant intended to induce

plaintiff to act or refrain from acting upon the

misrepresentation; and (4) damage to the plaintiff as a

result of relying on the misrepresentation.

Barmettler v. Reno Air, Inc., 114 Nev. 441, 446-47, 956 P.2d

1382, 1386 (Nev. 1998). An omission to state a material fact

“which a party is bound in good faith to disclose is equivalent

to a false representation, since it constitutes an indirect

representation that such fact does not exist.” Nelson v. Heer,

123 Nev. 217, 225, 163 P.3d 420, 426 (Nev. 2007) (internal

quotation marks omitted). “Where an essential element of a claim

for relief is absent, the facts, disputed or otherwise, as to

other elements are rendered immaterial,” and summary adjudication

is appropriate. Bulbman, Inc. v. Nev. Bell, 108 Nev. 105, 111,

825 P.2d 588, 592 (Nev. 1992).

The Nordeens’ allegations in support of their fraud claim

reference various communications raising questions as to who was

the Note Holder and who were the beneficiary and trustee under

the Trust Deed. The alleged communications were made at various

times in 2009 and 2010. Whatever confusion may have resulted
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

-26-

from the alleged communications, the Nordeens cannot have relied

on any of the alleged communications on October 21, 2005, when

they signed the Note and Trust Deed. And since they ceased

making payments on the Note obligation in December 2008, they can

assert no damages from the alleged communications. They have not

alleged that any of the payments they made on the Note obligation

prior to December 2008 were misapplied. Accordingly, the

Nordeens cannot assert either that the allegedly fraudulent

communications from the appellees induced actual reliance on

their parts or that damages resulted therefrom, essential

elements of a fraud claim under Nevada law.

The Nordeens argue that the bankruptcy court erred in

applying Nevada law rather than federal law in considering their

fraud claim. We disagree. See authorities cited in n.7 supra. 

However, even if federal law applied, it would not help the

Nordeens.

The federal standard for fraud is a five-element test:

1) misrepresentation, fraudulent omission or deceptive conduct by

the offending party; 2) knowledge of the falsity or deceptiveness

of the statement or conduct; 3) an intent to deceive;

4) justifiable reliance by the claimant on such statement or

conduct; and 5) damage to the claimant proximately caused by

claimant’s reliance on such statement or conduct. Ghomeshi v.

Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir. 2010); Oney

v. Weinberg (In re Weinberg), 410 B.R. 19, 35 (9th Cir. BAP

2009). The claimant bears the burden of proof on each of those

five elements.

The Nordeens face the same irremediable impediments to
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

 18 U.S.C. § 152 provides in relevant part: 9

A person who –

. . .

(3) knowingly and fraudulently makes a false

declaration, certificate, verification or

statement under penalty of perjury as permitted

under section 1746 of title 28, in or in relation

to any case under title 11;

(4) knowingly and fraudulently presents any

false claim for proof against the estate of a

debtor, or uses any such claim in any case

under title 11, in a personal capacity or as

or through an agent, proxy, or attorney;

. . .

shall be fined under this title, imprisoned not more

than 5 years, or both.

-27-

stating plausible claims of reliance and proximate causation of

damages under the federal fraud standard as they do under the

Nevada state law fraud standard. Accordingly, the Nordeens’

fraud claim was properly dismissed.

6) Perjury

The Nordeens allege that appellees committed perjury by

filing a proof of claim in the Nordeens’ bankruptcy case stating

that BAC is a secured creditor. However, no civil claim for

perjury is recognized under Nevada law. See, e.g., Jordan v.

State ex rel. Dep’t of Motor Vehicles & Public Safety, 121 Nev.

44, 68 n.51, 110 P.3d 30, 47 n.51 (Nev. 2005), overruled on other

grounds, Buzz Stew, LLC v. City of N. Las Vegas, 124 Nev. 224,

228 n.6, 181 P.3d 670, 672 n.6 (Nev. 2008). Any alleged perjury

committed in the filing of a claim in a bankruptcy case is

subject to criminal sanctions under 18 U.S.C. § 152, not to any 9

private right of action by the Nordeens. Accordingly, the
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

-28-

bankruptcy court did not err in dismissing the Nordeens’ perjury

claim.

7) UCC claims

The Nordeens’ Fifth Cause of Action is confusing to say the

least. First, the claim is titled, “Federal Laws UCC-3 UCC-9.” 

“UCC” refers to the Uniform Commercial Code, which is a model

uniform act designed to harmonize the laws of sales and certain

other commercial transactions among the fifty states. It has

been adopted, with variations, by all of the states but has not

been adopted as federal law by Congress. See, e.g., Bank of Am.

Nat’l Trust & Sav. Ass’n v. United States, 552 F.2d 302, 303 n.1

(9th Cir. 1977); O’Neill v. United States, 50 F.3d 677, 684 (9th

Cir. 1995) (“The Uniform Commercial Code is a source of federal

common law and may be relied upon in interpreting a contract to

which the federal government is a party.” (Emphasis added.)).

In their Fifth Cause of Action, the Nordeens complain about

various alleged misrepresentations made by the appellees “through

the U.S. Mails” and presentation of the Bogus Note to the

Nordeens, all following the sale of the Note to CWALT. See

Second Amended Complaint, ¶ 167-70, p. 44. In light of those

allegations, the Nordeens ask that the bankruptcy court void the

Note and Trust Deed and enjoin the appellees from ever attempting

to foreclose on the Property.

If the Nordeens’ “UCC” claim can be interpreted as a state

law Uniform Commercial Code claim, Arizona law applies. The

Property is located in Arizona, and Arizona law applies to

foreclosures on Arizona property. See Vasquez v. Saxon Mortg.,

Inc. (In re Vasquez), 228 Ariz. 357, 359-60, 266 P.3d 1053, 1055-
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

-29-

56 (Ariz. 2011) (en banc). However, under Arizona law, the

Nordeens’ UCC claim fails as a matter of law.

As recently concluded by the Ninth Circuit:

The Arizona Supreme Court has definitively rejected the

Zadroznys’ argument that a trustee must comply with UCC

provisions to pursue foreclosure proceedings. In

Hogan, the Arizona Supreme Court explained that “[t]he

UCC does not govern liens on real property. The trust

deed statutes do not require compliance with the UCC

before a trustee commences a nonjudicial foreclosure.” 

Hogan [v. Washington Mutual Bank, N.A.], 277 P.3d

[781,] 783 [(Ariz. 2012) (en banc), as amended]

(citations omitted).

Zadrozny v. Bank of N.Y. Mellon, __ F.3d __, 2013 WL 3242528, at

*6 (9th Cir. June 28, 2013).

To the extent that the Nordeens’ Fifth Cause of Action

relies on their Securitization Theory, we reject it for the

reasons previously stated. To the extent that it reiterates

their fraud and fabricated note claims, we likewise reject it for

reasons previously stated. We discern nothing more of substance

in the Nordeens’ Fifth Cause of Action and conclude that the

bankruptcy court properly dismissed it.

8) RICO claims

RICO makes it unlawful “for any person employed by or

associated with any enterprise engaged in, or the activities of

which affect, interstate or foreign commerce, to conduct or

participate, directly or indirectly, in the conduct of such

enterprise’s affairs through a pattern of racketeering activity

or collection of unlawful debt.” 18 U.S.C. § 1962(c). To plead

a claim for relief under 18 U.S.C. § 1962(c), a plaintiff must

assert “(1) conduct (2) of an enterprise (3) through a pattern

(4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co.,
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

-30-

473 U.S. 479, 496 (1985); Odom v. Microsoft Corp., 486 F.3d 541,

547 (9th Cir. 2007) (en banc).

For purposes of this appeal, we focus on the two elements of

“a pattern” and “racketeering activity.” A “pattern” “requires

at least two acts of racketeering activity.” 18 U.S.C.

§ 1961(5). “Racketeering activity” encompasses “any act

indictable under several provisions of Title 18 of the United

States Code, and includes the predicate acts of mail fraud, wire

fraud and obstruction of justice.” Turner v. Cook, 362 F.3d

1219, 1229 (9th Cir. 2004). A claimant may seek civil relief for

any RICO violation(s) resulting in injury to his or her business

or property. 18 U.S.C. § 1964(c).

To have standing under civil RICO, [a claimant] is

required to show that the racketeering activity was

both a but-for cause and a proximate cause of his

injury. See Holmes v. Sec. Investor Prot. Corp., 503

U.S. 258, 268 . . . (1992). Proximate causation for

RICO purposes requires “some direct relation between

the injury asserted and the injurious conduct alleged.” 

Id.

Rezner v. Bayerische Hypo-Und Vereinsbank AG, 630 F.3d 866, 873

(9th Cir. 2010). Chaset v. Fleer/Skybox Int’l, LP, 300 F.3d

1083, 1086 (9th Cir. 2002) (“First, a civil RICO plaintiff must

show that his injury was proximately caused by the [prohibited]

conduct. Second, the plaintiff must show that he has suffered a

concrete financial loss.”), quoting Fireman’s Fund Ins. Co. v.

Stites, 258 F.3d 1016, 1021 (9th Cir. 2001).

The Nordeens’ Sixth Cause of Action, titled “Possible

Collusion, RICO Act and Possible Counterfeiting,” falls far short

of those standards. First, the Nordeens allege in conclusory

fashion that “collusion or racketeering acts may have occurred.” 
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

-31-

(Emphasis added.) Second, the Nordeens do not allege any

“concrete financial loss” to them or their property resulting

from what the appellees may have done. The Nordeens embellish

their claim with further fulminations against the appellees in

light of their Securitization Theory. In their Opening Brief,

the Nordeens’ argument in support of their RICO claim is that

“the [appellees] brought an active security into the court room

and proffered it as [the Nordeens’] original Note. You cannot

use a security as a Note when it is an active security.” 

Appellants’ Opening Brief, at 29. In short, the Nordeens do not

state a civil RICO claim that is remotely plausible, and their

Sixth Cause of Action was appropriately dismissed.

9) Truth in Lending

The purpose of TILA is “to assure a meaningful disclosure of

credit terms so that the consumer will be able to compare more

readily the various credit terms available to him and avoid the

uninformed use of credit, and to protect the consumer against

inaccurate and unfair credit billing and credit card practices.” 

15 U.S.C. § 1601(a). “Accordingly, [TILA] requires creditors to

provide borrowers with clear and accurate disclosures of terms

dealing with things like finance charges, annual percentage rates

of interest, and the borrower’s rights.” Beach v. Ocwen Fed.

Bank, 523 U.S. 410, 412 (1998).

While the Nordeens’ claims do not appear to fit the TILA

model, they ultimately are precluded by applicable statutes of

limitations. The general limitations period that applies with

respect to TILA claims is “one year from the date of the

occurrence of the violation.” 15 U.S.C. § 1640(e). The Nordeens
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

-32-

did not initiate their adversary proceeding against the appellees

until March 3, 2011. The Nordeens signed the Note and Trust Deed

on October 21, 2005, more than five years earlier. The sale of

the Note to CWALT occurred on October 30, 2005. If the TILA

limitations period runs from October 2005, the one-year TILA

limitations period ran years ago.

There is authority for the proposition that the TILA statute

of limitations can be equitably tolled until the borrower has

actual notice of the claimed TILA violation. See, e.g., King v.

California, 784 F.2d 910, 914-15 (9th Cir. 1986). However, the

Nordeens did not assert equitable tolling of the TILA limitations

period in the Second Amended Complaint, and in any event, the

Nordeens assert that they learned of the alleged “TRUE SALE” of

their Note and Trust Deed “on January 16, 2009 and even more

clearly on September 8, 2009,” well over one year before they

filed the Initial Complaint. Their TILA claim was not filed

within the general TILA one-year statute of limitations.

To the extent that the Nordeens’ TILA claim could be

interpreted as a claim for rescission, a longer period of

limitations applies. Under 15 U.S.C. § 1635(f), “An obligor’s

right of rescission shall expire three years after the date of

consummation of the transaction or upon the sale of the property,

whichever occurs first, notwithstanding the fact that the

information and forms required under this section or any other

disclosures required under this part have not been delivered to

the obligor . . . .” The Supreme Court has held that “[15

U.S.C.] § 1635(f) completely extinguishes the right of rescission

at the end of the 3-year period.” Beach v. Ocwen Fed. Bank, 523
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

-33-

U.S. at 412.

The Ninth Circuit has held that an obligor’s rescission

under TILA is conditioned on the obligor repaying any amounts

advanced by the lender. See, e.g., Yamamoto v. Bank of N.Y., 329

F.3d 1167, 1171 (9th Cir. 2003), cert. denied, 540 U.S. 1149

(2004); LaGrone v. Johnson, 534 F.2d 1360, 1362 (9th Cir. 1976). 

The Nordeens do not offer to repay any outstanding balance of the

loan evidenced by the Note for purposes of implementing a

rescission anywhere in the Second Amended Complaint, but even if

they did, the three-year limitations period to exercise a right

of rescission under TILA ran in 2008, before the Nordeens ceased

making Note payments and years before they filed the Initial

Complaint. The bankruptcy court did not err in dismissing the

Nordeens’ TILA claim as barred by applicable statutes of

limitations.

10) RESPA

RESPA was designed to change the settlement process for the

financing of purchases of residential real estate, resulting

(1) in more effective advance disclosure to home buyers

and sellers of settlement costs;

(2) in the elimination of kickbacks or referral fees

that tend to increase unnecessarily the costs of

certain settlement services;

(3) in a reduction in the amounts home buyers are

required to place in escrow accounts established to

insure the payment of real estate taxes and insurance;

and

(4) in significant reform and modernization of local

recordkeeping of land title information.

12 U.S.C. § 2601(b).

RESPA requires loan servicers to provide borrowers with

information concerning any transfers of loan servicing. See 12

U.S.C. § 2605(a)-(d). RESPA further requires that loan servicers
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

-34-

respond to borrower inquiries requesting “information relating to

the servicing of such loan[s].” 12 U.S.C. § 2605(e)(1)(A). Such

inquiries are submitted in the form of a “qualified written

request.” A qualified written request must contain information

that will allow the loan servicer to identify the name and

account of the borrower and “includes a statement of the reasons

for the belief of the borrower . . . that the account is in error

or provides sufficient detail to the [loan] servicer regarding

other information sought by the borrower.” 12 U.S.C.

§ 2605(e)(1)(B). Accordingly, RESPA concerns and encompasses

issues with respect to costs and services related to the closing

of home loans and loan servicer accounting for the borrower’s

loan payments and escrow charges.

Nothing in the Nordeens’ Seventh Cause of Action (covering

their claims under RESPA, TILA and the FDCPA) alleges how either

of the appellees purportedly violated any provision of RESPA. 

Reading the Second Amended Complaint very broadly, the bankruptcy

court interpreted the Nordeens’ RESPA claim as a further

iteration of their “challenge [to] the validity of their loan,”

i.e., the Note and Trust Deed, rather than as complaining about

the economics of the settlement or servicing arrangements for

their loan. We consider that interpretation as giving the

Nordeens the benefit of a liberal interpretation of their Second

Amended Complaint, and we see no error by the bankruptcy court in

dismissing the Nordeens’ RESPA claim based on that

interpretation. See, e.g., Consumer Solutions REO, LLC v.

Hillery, 658 F. Supp. 2d 1002, 1014 (N.D. Cal. 2009) (RESPA claim

dismissed without leave to amend where the borrower disputed the
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

-35-

validity of the loan rather than any aspect of its servicing);

MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900-01 (N.D. Ill.

2000).

11) FDCPA

Under the FDCPA, “A debt collector may not use any false,

deceptive, or misleading representation or means in connection

with the collection of any debt.” 15 U.S.C. § 1692e (emphasis

added). Under the FDCPA, the term “debt collector” generally is

defined as,

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).

The bankruptcy court dismissed the Nordeens’ FDCPA claim

because the appellees were not “debt collectors” subject to

liability under the FDCPA for the following reasons: BAC is the

servicer of the Nordeens’ loan, and as such, BAC is not subject

to liability under the FDCPA. As Trustee under the Trust Deed,

ReconTrust likewise is not subject to liability under the FDCPA,

as foreclosing on real property under a deed of trust is not an

act to collect a debt, as contemplated under the FDCPA. See

Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or.

2002) (“Foreclosing on a trust deed is distinct from the

collection of the obligation to pay money” and is “not an attempt

to collect funds from the debtor.”).

The bankruptcy court’s decision is supported by the recent

published opinion of the Ninth Circuit in Schlegel v. Wells Fargo
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

-36-

Bank, NA, ___ F.3d ___, 2013 WL 3336727 (9th Cir. July 3, 2013). 

In Schlegel, the plaintiffs sued Wells Fargo Bank, NA (“Wells

Fargo”), the assignee of the promissory note and trust deed

secured by their residence property, for alleged violations of

the FDCPA and the Equal Credit Opportunity Act (“ECOA”). The

district court had dismissed both claims for failure to state a

claim upon which relief could be granted. Id., at *1, *2. The

Ninth Circuit reversed the district court’s dismissal of the

Schlegels’ ECOA claim but affirmed the dismissal of the FDCPA

claim because Wells Fargo did not fit the definition of a “debt

collector” under the FDCPA.

The complaint fails to provide any factual basis from

which we could plausibly infer that the principal

purpose of Wells Fargo’s business is debt collection. 

Rather, the complaint’s factual matter, viewed in the

light most favorable to the Schlegels, establishes only

that debt collection is some part of Wells Fargo’s

business, which is insufficient to state a claim under

the FDCPA. See Dougherty [v. City of Covina,] 654 F.3d

[892,] 900-01 [(9th Cir. 2011)].

Id., at *3 (emphasis added).

Since the bankruptcy court’s decision to dismiss the

Nordeens’ FDCPA claim is entirely consistent with the Ninth

Circuit’s analysis and conclusion that the FDCPA claim in

Schlegel was appropriately dismissed, we perceive no error.

12) Dismissal without leave to amend

In this case, the Nordeens had three bites at the apple

before the bankruptcy court dismissed their Second Amended

Complaint with prejudice. The appellees filed a motion to

dismiss the Initial Complaint, which the bankruptcy court

granted. However, at the July 26th Hearing on the motion to

dismiss, the bankruptcy court listened carefully to the Nordeens’
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

-37-

arguments and took great pains to explain to them what claims in

their Initial Complaint were not viable and what claims might be

plausibly stated. Then, in its order, the bankruptcy court

granted the Nordeens leave to file an amended complaint for

declaratory relief. Thereafter, the Nordeens filed a motion to

reconsider the dismissal order and filed a First Amended

Complaint that reiterated extensively the same Securitization

Theory claims that the bankruptcy court had advised them at the

July 26th Hearing were not viable. The bankruptcy court sorted

through the issues between the parties at the September 13th

Hearing, reiterating to the Nordeens that their Securitization

Theory claims did not work but granting them leave to file a

further amended complaint seeking declaratory relief and possibly

asserting further claims. In its order denying the Nordeens

motion for reconsideration, the bankruptcy court expressly

authorized the Nordeens to file a second amended complaint but

warned that “no further leave to file additional amended

complaints shall be granted.” The Nordeens filed their Second

Amended Complaint, again based primarily on their Securitization

Theory claims. The bankruptcy court ultimately dismissed the

Second Amended Complaint with prejudice in response to the

Pleadings Judgment Motion.

The Ninth Circuit addressed the standards for dismissing a

complaint without leave to amend in its recent published opinion

in Zadrozny v. Bank of N.Y. Mellon, __ F.3d __, 2013 WL 3242528,

at *8 (9th Cir. June 28, 2013):

Because the Zadroznys’ claims . . . are factually and

legally implausible, denial of leave to amend lay

within the district court’s discretion. See Mirmehdi
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

-38-

v. United States, 689 F.3d 975, 985 (9th Cir. 2012)

(“[A] party is not entitled to an opportunity to amend

his complaint if any potential amendment would be

futile. . . .”), as amended (citation omitted). This

is particularly true as the Zadroznys had a prior

opportunity to amend their complaint. See Cafasso,

United States ex rel. v. Gen. Dynamics C4 Sys., Inc.,

637 F.3d 1047, 1058 (9th Cir. 2011) (“The district

court’s discretion to deny leave to amend is

particularly broad where plaintiff has previously

amended the complaint.”) (citation and alteration

omitted). (Emphasis added.)

Under this standard, we conclude that the bankruptcy court did

not err in dismissing the Nordeens’ Second Amended Complaint with

prejudice. It is our perception that the bankruptcy court bent

over backwards at several substantive hearings concerning the

Nordeens’ various complaints to explain to them what would work

to state a plausible claim in a complaint that could be tried. 

Despite the bankruptcy court’s best efforts, the Nordeens

insisted throughout on filing complaints that shed much heat but

little light on their potential claims and ultimately did not

state any plausible claims under applicable law and pleading

standards in a federal court. In light of the Nordeens’ failures

to state a plausible claim for relief through three prolix

efforts after receiving substantial guidance from the bankruptcy

court, we agree with the bankruptcy court that giving them a

further opportunity to amend their complaint would be futile. 

The Second Amended Complaint was properly dismissed without leave

to amend.

VI. CONCLUSION

Based on the foregoing analysis of the issues raised in this

appeal under applicable law, we AFFIRM.