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Allen v. Wilmington Trust, N.A.

United States District Court, D. Nevada

August 14, 2017




         Before the court is Defendants Wilmington Trust (“Wilmington”), Ocwen Loan Servicing, LLC (“Ocwen”), and Caliber Home Loans, Inc.'s (“Caliber) (together “Defendants”) motion to dismiss. ECF No. 5. Benjamin Allen and Rachel Flower (“Plaintiffs”) filed an opposition. ECF No. 10. Defendants submitted a reply. ECF No. 14. Also before the court is Defendants' Request for Judicial Notice (ECF No. 6) and Plaintiffs' Objections thereto (ECF No.9)

         I. Background

         This case involves the assignment of an interest in real property occupied by Plaintiffs. See ECF No. 1 at Ex. 2. The above-named Defendants are the current trustees of the interest in the property. Plaintiffs allege that 10 unnamed and unidentified individuals aided the Defendants in all or part of their actions. Plaintiffs assert that the original assignment and subsequent actions to foreclose on their property were done fraudulently and with the intent to unlawfully claim ownership of the subject real property. Id.

         On November 8, 2007, Plaintiffs executed a promissory note (“Note”) and deed of trust (“DOT”) in favor of Countrywide Bank, F.S.B. (“CW”) in the amount of $512, 000. ECF No. 6 at Ex. 2. The Note and DOT were secured by Plaintiffs' property at 1072 War Bonnet Way, Incline Village, Nevada (the “Property”). Id. Mortgage Electronic Registration System, Inc. (“MERS”) was the original-named beneficiary under the DOT. ECF No. 6 at Ex. 1. The DOT named MERS as the nominee of the trust, acting on behalf of the lender and the lender's successors and assigns, as well as the successors and assigns of MERS. Id. The DOT further provided that while MERS held only legal title to the interests, MERS retained the right to exercise any and all interests including the right to foreclose and sell the property and the right to take any action required of the lender. ECF No. 6 at Ex. 2.

         On January 11, 2008, CW entered into a merger agreement with Bank of America whereby Red Oak Merger Corp., a subsidiary of Bank of America, would merge with CW. ECF No. 1 at Ex. 2. The merged companies formed Country Wide Financial (“CWF”) and retained all of the remaining assets of CW. Id. Plaintiffs assert that the DOT did not transfer to CWF because it was “table-funded”[1] by a special purpose entity through a securitization process. Id.[2]

         In March 2014, MERS assigned the DOT to non-party Christiana Trust as trustee for ARLP Trust 4 (the “First Assignment”). ECF No. 6 at Ex. 3. MERS did so pursuant to its authority as nominee for CW, its successors, and its assigns. In April 2015, the DOT was then assigned by Christiana Trust to Wilmington (the “Second Assignment”). ECF No. 6 at Ex. 4. In June 2015, Western Progressive - Nevada, Inc. was substituted as trustee under the DOT by Wilmington. ECF No. 6 at Ex. 5. Plaintiffs subsequently defaulted on the terms of the DOT. ECF No. 6 at Ex. 6. As a result, on August 20, 2015, Wilmington recorded a Notice of Default and Election to Sell Real Property.[3] Id. In April 2016, Wilmington Trust assigned its interest in the DOT to U.S. Bank N.A., as trustee for LSF9 Master Participation Trust. ECF No. 6 at Ex. 7.

         Plaintiffs elected to mediate the foreclosure of the Property through the Nevada Foreclosure Mediation Program (“FMP”).[4] See ECF No. 6 at Ex. 10. At the FMP hearing on January 7, 2016, Defendants produced the original bank-endorsed promissory note along with certified copies of the original DOT and the subsequent assignments. Id. After the parties were unable to reach an agreement, the mediator found for Defendants. Id.

         After the FMP hearing, Plaintiffs filed a petition for judicial review with the Second Judicial District Court (the “state court”), challenging the mediator's decision allowing the lender to foreclose on the Property. Id. On September 30, 2016, the state court affirmed the mediator's decision. Id.

         Plaintiffs then filed a motion for reconsideration of the order of affirmance. See ECF No. 6 at Ex. 11. The state court denied the motion, holding that the Plaintiffs failed to demonstrate that the original decision was clearly erroneous and failed to present any new issues or evidence not previously considered by the state court. Id. The office of the FMP then issued a certificate allowing the foreclosure to proceed. ECF No. 6 at Ex. 12.

         U.S. Bank N.A., as trustee, substituted Summit Real Estate Services, Inc. as trustee of record for the DOT. ECF No. 6 at Ex. 8. Summit Real Estate, Inc. then recorded a Notice of Trustee's Sale on January 24, 2017, on behalf of Caliber, which is serving as Wilmington's new loan servicer. ECF No. 6 at Ex. 9. Plaintiffs have not appealed the order denying reconsideration or the order of affirmance to the Nevada Supreme Court. Instead, Plaintiffs filed this action in state court on February 10, 2017. ECF No. 1 at Ex. 2. The Defendants removed to this court on March 9, 2017. ECF No. 1.

         II. Legal Standard

         Defendants seek dismissal of Plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failing to state a claim upon which relief can be granted. See ECF No. 5. A court reviewing a motion to dismiss under 12(b)(6) accepts the facts alleged in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a 12(b)(6) motion, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed allegations, however, a pleading must be more than mere “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” Iqbal, 556 U.S. at 678 (quoting Bell Atlantic Corp. v. Towmbly, 550 U.S. 544, 555 (2007)). While the court does accept factual allegations as true, “bare assertions. . . amount[ing] to nothing more than a formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 556 U.S. at 679) (brackets in original) (internal quotation marks omitted). The court discounts these allegations because “they do nothing more than state a legal conclusion-even if that conclusion is cast in the form of a factual allegation.” Id.

         Furthermore, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A claim is facially plausible when the pleaded facts allow the court to draw a reasonable inference, based on judicial experience and common sense, that the defendant is liable for the alleged conduct. See Id. at 678-69. The standard asks for more than a mere possibility that a defendant has acted unlawfully. Id. at 678. Where a complaint pleads facts that are merely consistent with a theory of liability, “it stops short of the line between possibility and plausibility of entitlement to relief.” Id. Therefore, “for a complaint to survive a ...

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