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Garcia-Pena v. MTC Financial Inc.

United States District Court, D. Nevada

October 10, 2017

RIGOVALDO GARCIA-PENA, Plaintiff,
v.
MTC FINANCIAL, INC. et al., Defendants.

          ORDER

          ROBERT C. JONES UNITED STATES DISTRICT JUDGE.

         This is a foreclosure case involving a single property. Pending before the Court is Defendant MTC Financial Inc. dba Trustee Corps' (hereinafter "Trustee Corps") Motion to Dismiss. (Mot. Dismiss, ECF No. 11.) For the reasons given herein, the Court grants the motion.

         I. FACTS AND PROCEDURAL BACKGROUND

         In January 2008, Plaintiff Rigovaldo Garcia-Pena ("Plaintiff) purchased real property at 872 Tanager Street #26, Incline Village, NV 89451 (the "Property"), giving the lender a promissory note for $171, 000 secured by a deed of trust ("DOT"). (Deed of Trust, ECF No, 1-1 at 27.) The lender on the DOT was Countrywide Bank, FSB, and the trustee was ReconTrust Company, The Mortgage Electronic Registration System, Inc, ("MERS") was named as the beneficiary under the DOT and was granted authority to act "as a nominee for Lender and Lender's successors and assigns." (This same stock language has been used by MERS in countless deeds of trust over the years and has been analyzed by this Court numerous times.)

         By an instrument recorded on September 1, 2010, MERS assigned its beneficial interest in the DOT to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP ("BAC"), (Assignment, ECF No. 1-1 at 48.) Then by an instrument recorded on November 11, 2014, Bank of America, NA. ("BANA"), as successor by merger to BAC, assigned the DOT and promissory note to Green Tree Servicing, LLC ("Green Tree"). (Assignment, ECF No. 1-1 at 56.) On January 5, 2015, a substitution of trustee was recorded under which Trustee Corps was substituted as trustee under the DOT. (Substitution, ECF No. 12-5.) On August 4, 2015, Defendant Ditech Financial, LLC ("Ditech") merged with Green Tree and Ditech became the surviving entity. (Compl. ¶ 48, ECF No. 1-1 at 12.) Ditech is the current record holder of the DOT and the note.

         On December 13, 2016, Trustee Corps recorded a notice of default ("NOD") and election to sell the Property, due to Plaintiffs failure to make his mortgage payments, (Notice of Default, ECF No. 12-6.) On April 18, 2017, Trustee Corps recorded a notice of trustee's sale ("NOS"). (Notice of Sale, ECF No. 12-7.) Plaintiff then filed this case in the Second Judicial District Court of the State of Nevada, Washoe County, on May 10, The complaint includes six causes of action against both defendants: (1) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq.; (2) cancellation of instruments; (3) wrongful foreclosure; (4) slander of title; (5) breach of executory accord; (6) declaratory judgment.

         Trustee Corps now moves the Court to dismiss the claims alleged against it under Federal Rule of Civil Procedure 12(b)(6).

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 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." Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency, See N. Star Int'l v. Ariz. Corp, Comm 'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl, Corp, v, Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir, 2001).

         A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation "plausible, " not just "possible." Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) ("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."). That is, under the modern interpretation of Rule 8(a), a plaintiff must not only specify or imply a cognizable cause of action (Conley review), but also must allege the facts of his case so that the court can determine whether the plaintiff has any basis for relief under the cause of action he has specified or implied, assuming the facts are as he alleges (Twombly-Iqbal review).

         "Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss, " Hal Roach Studios, Inc. v, Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted), Similarly, "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss" without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of' matters of public record."[1] Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Arpin v, Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).

         III. ANALYSIS

         The crux of Plaintiff s position in filing this lawsuit is that Green Tree-Ditech's predecessor-in-interest-never actually obtained a beneficial interest in the DOT, and. thus did not have legal authority to substitute Trustee Corps in the place of ReconTrust Company, According to Plaintiff, Ditech is not the current beneficiary under the note and DOT, and Trustee Corps is not the current trustee. Therefore, Ditech's attempt to foreclose on the Property is wrongful, as is Trustee Corps' recordation of the NOD and NOS. Plaintiffs arguments center on the acquisition of Countrywide Financial by BANA in 2008. However, the arguments fail as a matter of law.

         Plaintiff first alleges that the lender Countrywide Bank, FSB no longer held the note at the time of the merger, because the DOT had previously been "table-funded by a [Special Purpose Entity] through the securitization process." (Compl. ¶ 23.) "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." Reyes v. GMAC Mortg. LLC, No. 2; 11- cv-100, 2011 WL 1322775, at *2 (D. Nev. Apr. 5, 2011) (Mahan, J.) (collecting cases). Rather, the securitization or Plaintiffs loan "merely create[d] a separate contract, ...


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