Loesel v. Cooper

• Court: District Court, D. Nevada
• Decided: October 17, 2019
• Docket: 2:19-cv-01447
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 DAVID LOESEL, Case No. 2:19-cv-01447-RFB-VCF

8 Plaintiff, ORDER

9 v.

10 COOPER NATIONAL DEFAULT SERVICING CORPORATION 11 PREMIER MORTGAGE SERVICES OF WASHINGTON HSBC BANK USA 12 NATIONAL ASSOCIATION MORTGAGE ELECTRONIC 13 REGISTRATION SYSTEMS

14 Defendant(s).

15 16 I. INTRODUCTION 17 Before the Court are Plaintiff David Loesel’s (“Plaintiff”) Motion for a Temporary 18 Restraining Order (ECF No. 4), Plaintiff’s Motion for a Preliminary Injunction (ECF No. 5), and 19 Defendants Cooper, HSBC Bank USA National Association, Mortgage Electronic Registration 20 Systems’s (“Defendants”) Motion to Dismiss (ECF No. 7). For the following reasons, the Court 21 grants Defendants’ motion and denies the other motions. 22 23 II. PROCEDURAL BACKGROUND 24 Plaintiff David Loesel filed his complaint in this matter on August 19, 2019, with the 25 following causes of action asserted against Defendants: 1) lack of standing to foreclose; 2) fraud 26 in the concealment; 3) fraud in the inducement; 4) intentional infliction of emotional distress; 5) 27 quiet title; 6) slander of title; 7) declaratory relief; 8) violations of TILA/HOEPA (Truth in Lending 28 Act, 15 U.S.C. §§ 1601 – 1667f); 9) Violations of REPSA (Real Estate Settlement Procedures Act, 1 12 U.S.C. §§ 2601 – 2617); and 10) rescission. ECF No.1 On September 3, 2019, Defendants 2 Cooper, HSBC Bank USA National Association, and Mortgage Electronic Registration Systems 3 (“Defendants”) moved to dismiss the complaint. ECF No. 7. Defendants also filed a response in 4 opposition to Plaintiff’s Motions for a Temporary Restraining Order and Preliminary Injunction 5 on that same date. ECF No. 8. Plaintiff filed an opposition on September 18, 2019. ECF No. 12. 6 Defendants replied on September 24, 2019. ECF No. 13. Plaintiff filed a notice of lis pendens on 7 October 1, 2019. 8 III. FACTUAL ALLEGATIONS 9 Plaintiff alleges the following: On or around October 31, 2006, Plaintiff, a disabled military 10 veteran, purchased property located at 3305 Perching Bird Lane, North Las Vegas, Nevada 89084 11 (“Subject Property”). Plaintiff purchased this property through a loan with non-party 12 MORTGAGEIT. The note was secured by a First Mortgage/Trust Deed on the Property in favor 13 of MORTGAGEIT. The original beneficiary and nominee under the Mortgage/Deed of Trust was 14 MERS. A Notice of Default was filed on the property on October 8, 2018 and now Defendants 15 (Plaintiff does not specify which defendant in his complaint) wish to foreclose on the property. 16 Plaintiff maintains that his loan was not properly assigned and/or transferred to Defendants in 17 accordance with the Pooling and Servicing Agreement (“PSA”) to which his loan was subject after 18 it was securitized and transferred to a Real Estate Mortgage Investment Conduit (“REMIC”) Trust, 19 which Plaintiff alleges requires that there be a complete and unbroken chain of transfers/ 20 assignments. Plaintiff also alleges that there is a pending case in the Eighth Judicial District Court 21 appealing an eviction order with the Las Vegas Justice Court. There is also a pending foreclosure 22 sale, the date of which Plaintiff does not specify in his complaint. Plaintiff now seeks a temporary 23 restraining order, preliminary injunction, and permanent injunction to enjoin any foreclosure 24 proceedings and a declaration by this Court that any sale of the Subject Property is unlawful. 25 IV. LEGAL STANDARD 26 a. Motion to Dismiss 27 In order to state a claim upon which relief can be granted, a pleading must contain “a short 28 and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 1 8(a)(2). In ruling on a motion to dismiss for failure to state a claim, “[a]ll well-pleaded allegations 2 of material fact in the complaint are accepted as true and are construed in the light most favorable 3 to the non-moving party.” Faulkner v. ADT Security Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 4 2013). To survive a motion to dismiss, a complaint must contain “sufficient factual matter, 5 accepted as true, to state a claim to relief that is plausible on its face,” meaning that the court can 6 reasonably infer “that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 7 U.S. 662, 678 (2009) (citation and internal quotation marks omitted). A pro se complaint “ however 8 inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by 9 lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). 10 b. Temporary Restraining Orders and Preliminary Injunctions 11 A temporary restraining order (TRO) may be issued without notice to the adverse party 12 only if the moving party: (1) provides a sworn statement clearly demonstrating “that immediate 13 and irreparable injury, loss, or damage will result to the movant before the adverse party can be 14 heard in opposition,” and (2) sets forth the efforts made to notify the opposing party and why 15 notice should not be required. Fed. R. Civ. P. 65(b)(1). TROs issued without notice “are no doubt 16 necessary in certain circumstances, but under federal law they should be restricted to serving their 17 underlying purpose of preserving the status quo and preventing irreparable harm just so long as is 18 necessary to hold a hearing, and no longer.” Reno Air Racing Ass'n v. McCord, 452 F.3d 1126, 19 1131 (9th Cir. 2006) (quoting Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 439 20 (1974)). 21 The analysis for a temporary restraining order is “substantially identical” to that of a 22 preliminary injunction. Stuhlbarg Intern. Sales Co, Inc. v. John D. Brush & Co., Inc., 240 F.3d 23 832, 839 n.7 (9th Cir. 2001). 24 A preliminary injunction is “an extraordinary remedy that may only be awarded upon a 25 clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 26 555 U.S. 7, 22 (2008). To obtain a preliminary injunction, a plaintiff must establish four elements: 27 “(1) a likelihood of success on the merits, (2) that the plaintiff will likely suffer irreparable harm 28 in the absence of preliminary relief, (3) that the balance of equities tips in its favor, and (4) that 1 the public interest favors an injunction.” Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 758 2 F.3d 1069, 1071 (9th Cir. 2014) (citing Winter, 555 U.S. 7, 20 (2008)). A preliminary injunction 3 may also issue under the “serious questions” test. Alliance for the Wild Rockies v. Cottrell, 632 4 F.3d 1127, 1134 (9th Cir. 2011) (affirming the continued viability of this doctrine post-Winter). 5 According to this test, a plaintiff can obtain a preliminary injunction by demonstrating “that serious 6 questions going to the merits were raised and the balance of hardships tips sharply in the plaintiff's 7 favor,” in addition to the other Winter elements. Id. at 1134 – 35(citation omitted). 8 c. Supplemental Jurisdiction 9 When a federal district court has original jurisdiction over a claim, it may exercise 10 supplemental jurisdiction over “all other claims that are so related to the claims . . . within such 11 original jurisdiction that they form part of the same case or controversy under Article III of the 12 United States Constitution.” 28 U.S.C. § 1367(a). However, district courts may decline to exercise 13 supplemental jurisdiction over such claims if 1) the claim raises a novel or complex issue of State 14 law; 2) the [state law] claim substantially predominates over the claim or claims over which the 15 district court has original jurisdiction; 3) the district court has dismissed all claims over which it 16 has original jurisdiction, or 4) in exceptional circumstances, there are other compelling reasons for 17 declining jurisdiction. 28 U.S.C. § 1367(c)(1) – (c)(4). 18 When determining whether state law claims substantially predominate, the Court may 19 consider the scope of the state and federal issues, the terms of proof required by each type of claim, 20 the comprehensiveness of the remedies, and the ability to dismiss the state claims without 21 prejudice. United Mine Workers v. Gibbs, 383 U.S. 715, 726–27 (1996). A court may find that 22 state law claims predominate “where ‘a state claim constitutes the real body of a case, to which 23 the federal claim is only an appendage’—only where permitting litigation of all claims in the 24 district court can accurately be described as allowing a federal tail to wag what is in substance a 25 state dog.” De Ascencio v. Tyson Foods, Inc., 342 F.3d 301, 309 (3d Cir. 2003) (internal citations 26 omitted). 27 28 V. DISCUSSION 1 Construing Plaintiff’s documents liberally as the Court is required to, the Court finds that 2 Plaintiff has failed to plead factual allegations sufficient to support any of his federal claims, which 3 are the basis of the Court’s subject matter jurisdiction in this case, and thus grants Defendants’ 4 motion to dismiss. Because the Court grants Defendants’ motion to dismiss, it also denies 5 Plaintiff’s motions for a temporary restraining order and a preliminary injunction, as Plaintiff 6 cannot demonstrate a likelihood of success on the merits of his claims. 7 The Court proceeds to examine each federal claim in turn. 8 a. Violations of TILA and HOEPA 9 Plaintiff alleges that Defendants violated the Truth in Lending Act (TILA) and the Home 10 Ownership and Equity Protection Act (HOEPA). Truth in Lending Act, 15 U.S.C. §§ 1601 – 1666j; 11 Home Ownership and Equity Protection Act, 15 U.S.C. § 1639. 12 Congress passed the TILA in 1966. As Congress itself states in its congressional findings, 13 the purpose of the Act was to “assure a meaningful disclosure of credit terms so that the consumer 14 will be able to compare more readily the various credit terms available to him and avoid the 15 uninformed use of credit.” 15 U.S.C. § 1601. In 1994, Congress amended the TILA and passed the 16 HOEPA. Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1639. HOEPA was 17 passed with the intent to protect vulnerable consumers from predatory mortgage lending practices. 18 See S. Rep. No. 103-69, at 28 (1993) (referring to “the damage that can be caused by unscrupulous 19 creditors making High Cost Mortgages”). HOEPA, among other things, prohibits or restricts 20 disadvantageous prepayment penalties and balloon payments, as well as other certain acts or 21 practices. 15 U.S.C. § 1639. 22 A party may allege TILA violations if they can show that there were required consumer 23 disclosures that they did not receive. 15 U.S.C § 1640(a). In most cases, there is a one-year statute 24 of limitation for TILA disclosure violations. 15 U.S.C. § 1640(e). 25 In order to assert a HOEPA violation, a party must show that their loan is covered by 26 HOEPA. 15 U.S.C. § 1602(b)(b). The HOEPA requires loans to meet three triggers in order to fall 27 under the special protections of the law. 15 U.S.C. § 1602(b)(b). The first trigger is based on the 28 annual percentage rate of the loan, the second on the total amount of points and fees charged, and 1 the third on the timing and amount of prepayment penalties built into the loan term. 15 U.S.C. § 2 1602(b)(b). When any of these triggers are met, HOEPA protections are invoked. 3 Plaintiff alleges that Defendants have violated HOEPA/TILA specifically by: 4 failing to provide Plaintiff with accurate material disclosures required under 5 TILA/HOEPA and not taking into account the intent of the State Legislature in approving 6 this statute which was to fully inform home buyers of the pros and cons of adjustable rate mortgages in a language (both written and spoken) that they can understand and 7 comprehend; and advise [sic] them to compare similar loan products with other lenders. It also requires the lender to offer other loan products that might be more advantageous for 8 the borrower under the same qualifying matrix. 9 Pl.’s Compl. at ¶ 136, ECF No. 1 10 Plaintiff fails to indicate which specific TILA disclosures he did not receive, and at what 11 point in time he failed to receive them. Plaintiff also fails to specify which defendants did not 12 provide necessary TILA documents, as the liability of each defendant will vary depending on 13 whether that defendant is the lender, mortgage servicer, or assignee of the original note. See e.g., 14 15 U.S.C. § 1641(f) (servicers are generally not liable for TILA violations unless they were the 15 owner of the original debt obligation). Plaintiff also does not specify or allege any facts that 16 indicate that his loan triggered the HOEPA disclosure requirements. He does not allege or specify 17 1) the annual percentage rate of the loan; 2) amount of points or fees charged, or 3) the timing and 18 amount of any prepayment penalties. Indeed, Plaintiff does not even state the full amount of the 19 loan in his complaint, TRO, or his preliminary injunction motion. Construing Plaintiff’s documents 20 liberally as the law requires, Plaintiff has not alleged facts sufficient to state either a TILA or 21 HOEPA claim. Further, as Defendants argue in their motion to dismiss, to the extent that the 22 alleged failures to disclose occurred when Plaintiff first originated his loan with MortgageIt, such 23 claims would be time-barred under 15 U.S.C. § 1640(e), as well over a year has passed since 24 Plaintiff originated his loan in 2006. For all these reasons, the Court finds that Plaintiff does not 25 have a cognizable HOEPA/TILA claim and does not have any likelihood of success on the merits 26 of this claim. 27 / / / 28 1 b. Violation of RESPA 2 Plaintiff also alleges that Defendants violated the Real Estate Settlement Procedures Act 3 (RESPA) (12 U.S.C. § 2601 et seq). “Congress enacted RESPA in 1974 to protect home buyers 4 from inflated prices in the home purchasing process. It sought to increase the supply of information 5 available to mortgage consumers about the cost of home loans . . . and to eliminate abusive 6 practices such as kickbacks, referral fees, and unearned fees.” Schuetz v. Banc One Mortg. Corp., 7 292 F.3d 1004, 1009 (9th Cir. 2002). Plaintiff alleges that Defendants violated the RESPA 8 “because the payments between the Defendants were misleading and designed to create a 9 windfall.” Pl.’s Compl. at 24, ECF No. 1. He further explains that “[t]he interest and income that 10 Defendants have gained is disproportionate to the situation . . . due directly to Defendant’s failure 11 to disclose that they will gain a financial benefit while Plaintiff suffer[sic] financially as a result 12 of the loan product sold to Plaintiff.” Id. Plaintiff does not specify which provisions of RESPA he 13 is referring to, but construing his complaint liberally as is required, the Court infers that Plaintiff 14 could be referring to the provision of RESPA that forbids 1) exchange of fees or kickbacks in 15 consideration for referrals to a real estate settlement service or 2) payments or receipt of charges 16 for rendering real estate settlement service for services that were not actually performed. 12 U.S.C. 17 §§ 2607(a), (b). The facts that Plaintiff has alleged do not support a cognizable claim under either 18 of these prongs. The facts also do not support cognizable RESPA violations for 1) charging fees 19 for preparation of truth-in-lending, uniform settlement, or escrow account statements, or 2) 20 requiring advance deposits in escrow accounts—the only remaining RESPA provisions the Court 21 finds that Plaintiff could be referring to. 12 U.S.C. §§ 2609 – 610. Furthermore, to the extent that 22 any of these alleged kickbacks or violations occurred in 2006 when the loan was originated, they 23 would be time-barred under 12 U.S.C. § 2614, which provides either a three or one year statute of 24 limitation depending on the nature of the violation. 12 U.S.C. § 2614. For this reason the Court 25 finds that Plaintiff does not have a cognizable RESPA claim and does not have any likelihood of 26 success on the merits of this claim. 27 c. Rescission Under TILA Claim 28 Plaintiff’s final federal claim includes a request of rescission of the loan subsequent to the 1 rescission provision of the TILA. 15 U.S.C. § 1635. Section 1635 allows a consumer to rescind a 2 consumer credit transaction in which a non-purchase lien or security interest is placed on the 3 consumer’s principal dwelling within three business days following the consummation of the 4 transaction or after the delivery of the required TILA disclosures and rescission forms, whichever 5 is later. 15 U.S.C. § 1635. However the TILA is also clear that “residential mortgage transactions” 6 do not fall under this category. The TILA defines “residential mortgage transactions” as 7 transactions “in which a mortgage, deed of trust, purchase money security interest arising under 8 an installment sales contract, or equivalent consensual security interest is created or retained 9 against the consumer’s dwelling to finance the acquisition or initial construction of such dwelling.” 10 15 U.S.C. § 1602(x). The Court finds that the loan described by Plaintiff falls within the 11 “residential mortgage transaction” category, because it was a loan secured by a deed of trust to 12 finance the acquisition of the consumer’s dwelling, and so Plaintiff has no rescission rights. The 13 Court thus finds that Plaintiff cannot be granted relief on his TILA rescission claim and has no 14 likelihood of success on the merits of it. 15 d. Supplemental Jurisdiction Over Plaintiff’s State Law Claims 16 The Court is sympathetic to Plaintiff’s plight—losing one’s home in foreclosure is a terrible 17 ordeal. However, this case is clearly one in which the “federal tail wags behind the state dog.” De 18 Ascencio v. Tyson Foods, Inc., 342 F.3d 301, 309 (3d Cir. 2003) (internal citations omitted). 19 Plaintiff brought this case in federal court seeking an injunction or temporary restraining order to 20 prevent foreclosure on his home, but in his complaint Plaintiff brings ten causes of action, only 21 three of which allege violations or seek remedies grounded in federal law. As the Court has already 22 discussed, Plaintiff has failed to plead any federal claims in his complaint for which relief may be 23 granted, and is unlikely to succeed on the merits of any of his federal claims. The sheer number 24 of state law claims that Plaintiff brings leads the Court to conclude that these claims predominate 25 the case, and thus the Court declines to exercise supplemental jurisdiction over Plaintiff’s state law 26 claims and dismisses those claims as well. 28 U.S.C. § 1367(c)(3) (stating that a district court “may 27 decline to exercise supplemental jurisdiction” if “it has dismissed all claims over which it has 28 original jurisdiction.”). See also Sanford v. MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010) (upholding a district court’s decision not to exercise supplemental jurisdiction over state law claims after dismissing federal claims). 3 Because the Court declines to exercise supplemental jurisdiction of Plaintiffs claims, there 4) is no longer a pending lawsuit to support the lis pendens that Plaintiff filed. Nev. Rev. Stat. § 5 14.010; Rabino v. Asset Foreclosure Servs., Inc., No. 2:14-cv-00735-APG-NJK, 2015 WL 1186518 (D. Nev. Mar. 16, 2015) (ordering cancellation of lis pendens where court declined to 7 | exercise supplemental jurisdiction over state law claims). Accordingly, the Court orders that the 8 | lis pendens in this case be expunged. 9 VI. CONCLUSION 10 IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (ECF No. 7) is 11. | GRANTED. Plaintiff's complaint is dismissed with prejudice. 12 IT IS FURTHER ORDERED that Plaintiff's Motion for a Temporary Restraining Order 13 | (ECF No. 4), and Plaintiff's Motion for a Preliminary Injunction, (ECF No. 5) are DENIED. 14 IT IS FURTHER ORDERED that the lis pendens in this case (ECF No. 15) is expunged. 15 The Clerk of the Court is instructed to close the case. 16 17 DATED: October 17, 2019. 18 < < 19 RICHARD F. BOULWARE, II 0 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28

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