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Shum v. American Sterling Bank

United States District Court, District of Nevada

January 21, 2015

Philip H. Shum, Plaintiff,
American Sterling Bank; et al. Defendants.


Gloria M. Navarro, Chief Judge

Pending before the Court is the Motion to Dismiss, (ECF No. 6), filed by Defendants Federal Home Loan Mortgage Corporation (“FHLMC”) and Mortgage Electronic Registration Systems, Inc. (“MERS”). Pro se Plaintiff Philip H. Shum filed a Response, (ECF No. 9), to which Defendants replied, (ECF No. 10).


This case centers upon pro se Plaintiff Philip H. Shum’s allegations of mortgage fraud against Defendants American Sterling Bank, FHLMC, and MERS. (Compl., ECF No. 1-1). Plaintiff has a long litigious history with MERS, having filed two prior suits against it and various other entities in the District of Nevada, each involving similar claims. Shum v. Countrywide Home Loans, Inc., No. 2:11-cv-1932-GMN-RJJ, 2012 WL 4846150 (D. Nev. Oct. 10, 2012); Shum v. BAC Bank Home Loans, N.A, No. 2:13-cv-1890, (D. Nev. February 13, 2014). Both of these cases resulted in a final judgment in favor of the defendants as to all of Plaintiff’s claims.

The Complaint alleges that Plaintiff executed a promissory note and Deed of Trust on September 24, 2007, that was secured by the property identified as “Spring Valley Unit #10B, Plat Book 32, Page 84, Lot 21, Block 3, in the Official Records of the Recorder’s Office of Clark County, Nevada.” (Compl. 2:10-14). The Deed of Trust named Defendant American Sterling Bank as the lender. (Id.). Plaintiff alleges that following the execution of the loan documents, a “qualifying trust” was created for which the sponsor and trustee was Defendant FHLMC. (Id. at 2:19-23). Though it implies such, the Complaint does not actually assert that there is any relationship between FHLMC’s “qualifying trust” and the loan documents at issue.

Following these allegations, the Complaint lists various legal assertions regarding the transfer of promissory notes and deeds of trust, including, inter alia: “If the Deed of Trust and the Note are separated, foreclosure cannot legally occur”; “Once a loan has been securitized . . . the right to foreclose through the Deed of Trust is forever lost”; and “Once a Note is converted into a stock, or stock equivalent, it is not [sic] longer a Note.” (Id. at 3:3-4:17).

Based on these allegations, the Complaint sets forth claims for fraud and “specific performance.” (Id. at 4:18-5:11). As relief, Plaintiff seeks title to the disputed property as well as fees and costs. (Id. at 5:14-17).

In the instant Motion, Defendants argue that the fraud claim should be dismissed for failing to comply with Federal Rule of Civil Procedure 9 and that the “specific performance” claim should be dismissed because it cannot stand as an independent cause of action. (Mot. to Dism., ECF No. 6).


Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on which it rests, and although a court must take all factual allegations as true, legal conclusions couched as a factual allegation are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule 12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “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.” Id. This standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

If the court grants a motion to dismiss for failure to state a claim, leave to amend should be granted unless it is clear that the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the court should “freely” give leave to amend “when justice so requires, ” and in the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).


As an initial matter, in light of Plaintiff’s status as a pro se litigant, the Court has liberally construed his filings, holding them to standards less stringent than formal pleadings drafted by attorneys. See Erickson v. Pardus, 551 U.S. 89, 94 (2007).

Pursuant to Rule 9(b), claims of “fraud or mistake” must be alleged “with particularity.” Fed.R.Civ.P. 9(b). A complaint alleging fraud or mistake must include allegations of the time, place, and specific content of the alleged false representations as well as the identities of the parties involved. See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). “Rule 9(b) does not allow a complaint to merely lump multiple defendants together but requires plaintiffs to differentiate their allegations when suing more than one defendant and inform each ...

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