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Birkland v. Silver State Financial Services

August 25, 2010


The opinion of the court was delivered by: Kent J. Dawson United States District Judge


Currently before the Court is Defendant Countrywide Home Loans, Inc. ("CHL"), ReconTrust Company ("ReconTrust"), and Mortgage Electronic Registration Systems, Inc.'s ("MERS") ("referred to collectively herein as "Defendants") Motion to Dismiss (#8).*fn1 Plaintiff filed a Response in Opposition (#14), to which Defendants filed a Reply (#17).


Plaintiff Cindy Birkland ("Birkland") executed promissory notes and deeds of trust for property located at 7460 Mulgrave Court, Las Vegas, Nevada 891113, in November, 2005. Specifically, in order to complete the purchase of said property, Plaintiff took out two mortgages from Silver State Financial in the amounts of $264,000 and $66,000 respectively, and secured the loans with two deeds of trust naming Silver State Financial Services ("Silver State") as lender, Fidelity National Title as trustee, and MERS as beneficiary and nominee for lender.*fn2 (Complaint at 4.) CHL took over servicing of the loans shortly after their origination. (#8 at 2.)

It is undisputed that Plaintiff stopped making regular payments on her loans in June, 2008. As a result, a Notice of Default and Election to Sell was recorded on December 9, 2008. ReconTrust substituted as trustee on December 11, 2008, and when Plaintiff failed to cure her deficiency, Notices of Trustee Sale were recorded on May 26, 2009 and December 17, 2009, respectively. To date, although Plaintiff has not tendered the amounts necessary to cure her deficiency, no foreclosure sale has occurred.

Plaintiff filed her Complaint in state court on December 16, 2009, alleging five causes of action for (1) quiet title; (2) lack of standing of trustee; (3) breach of contract; (4) fraud; and (5) lack of standing for foreclosure. Defendants removed the action to federal court on January 11, 2010, claiming federal diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendants subsequently filed the current Motion to Dismiss, averring that Plaintiff's Complaint fails to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). Specifically, Defendants aver that Plaintiff cannot sue for quiet title because she admits that she encumbered the property and has not made her required mortgage payments. Additionally, Defendants aver that they have standing to initiate foreclosure proceedings as said right is clearly disclosed in the Deed of Trust, and that Plaintiff has failed to identify any term of the promissory notes or deeds of trust that were breached. Defendants additionally aver that Plaintiff's fraud claims are not pled with sufficient particularity as required by Rule 9(b).

II. Legal Standard

Pursuant to Fed. R. Civ. P. 12(b)(6), a court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." A properly pled complaint must provide "a short plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (internal citation omitted).

In Iqbal, the Supreme Court recently clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the Court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949. Second, the Court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged-but not shown-that the pleader is entitled to relief." Id. (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, plaintiff's complaint must be dismissed. Twombly, 550 U.S. at 570.

III. Analysis

Plaintiff avers, in her Complaint and Opposition, that the securitization conversion of her mortgage cannot be given effect without her prior consent, and that the "securitization of the mortgage constitutes a conversion of the asset rendering it null, void and unenforceable." (#14 at 4.) Plaintiff bases each of her claims upon this argument, claiming that the securitization-or placement of her note/loan on the secondary market-makes it impossible to identify which parties have purchased an interest in the note, and thus, that the deed of trust "is split from the note and is unenforceable." (#14 at 9.) Plaintiff is incorrect.

A. Quiet Title

As stated above, Defendants argue that Plaintiff cannot sue for quiet title because she admits that she encumbered the property, has not made her required mortgage payments, and thus does not come to the Court with clean hands.

"A quiet title action requests a judicial determination of all adverse claims to disputed property." 65 Am. Jur 2d. Quieting Title and Determination of Adverse Claims § 1. In Nevada, [a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to him, for the purpose of determining such adverse claim." NRS § 40.010. The burden of proof in a quiet title action, rests with the plaintiff to prove good title in himself. See Breliant v. Preferred Equities Corp., 918 P.2d 314, 318 (Nev. 1996). Specifically, when an adverse claim exists, the party seeking to have another party's ...

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