(PS) Nelson Rogers v. Washington Mutual Bank, F.A.

• Court: District Court, E.D. California
• Decided: February 9, 2022
• Docket: 2:21-cv-02151
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MARY ALICE NELSON ROGERS, et. al., No. 2:21-cv-2151-JAM-KJN (PS) 12 Plaintiffs, FINDINGS AND RECOMMENDATIONS; ANCILLARY ORDER 13 v. (ECF Nos. 6, 12, 14, 20.) 14 WASHINGTON MUTUAL BANK, et al., 15 Defendants. 16 17 On October 18, 2021, plaintiffs filed a complaint in California Superior Court alleging 18 claims against defendants Washington Mutual Bank, Schools Financial Credit Union, JP Morgan 19 Chase Bank, and Quality Loan Services Corp. (ECF No. 1-1 at 198-224.) Defendant Chase 20 removed to this court and moved to dismiss.1 (ECF Nos. 1, 6.) Plaintiff moved to remand the 21 case, which defendants opposed. (ECF Nos. 14, 17, 23.) Shortly after, defendants Quality and 22 SFCU entered and moved to dismiss. (ECF Nos. 14, 20.) Multiple parties requested judicial 23 notice of certain documents, and plaintiff filed a motion to strike defendants’ affirmative 24 defenses. (ECF Nos. 7, 11, 21, 25, 26.) 25 For the reasons set forth below, the undersigned recommends: (I) denying plaintiffs’ 26 motion to remand; and (II) dismissing the complaint with prejudice against all parties. 27 1 Plaintiffs proceed in this action without assistance of counsel; thus, this case is before the 28 undersigned pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 302(c)(21). See L.R. 304. 1 BACKGROUND2 2 Plaintiff previously resided at a house located in Sacramento County. (ECF No. 1-1 at 3 201 ¶ 2.) In 2007, plaintiff secured a home equity line of credit on the house with defendant 4 Washington Mutual Bank (“WaMu”). (Id. at ¶ 3.) In 2008, WaMu was taken into receivership 5 by the FDIC and later purchased by defendant JP Morgan Chase. (Id.; see also ECF No. 7-2, the 6 “Purchase and Assumption Agreement” between the FDIC and Chase.) Chase notified plaintiff 7 of this fact in 2009, and plaintiff began making mortgage payments to Chase at that time. (ECF 8 No. 1-1 at 201 ¶ 3.) In 2017, plaintiff secured another loan on the house from defendant Schools 9 Financial Credit Union. (ECF No. 1-1 at 203 ¶ 7; ECF No. 21 at 5-9.) 10 In June 2019, plaintiff ceased paying Chase on the loan. (See ECF No. 7-4.) In January 11 2020, Chase appointed defendant Quality as the foreclosure trustee, who recorded a notice of 12 default and election to sell with the Sacramento County Recorder’s Office. (ECF No. 1-1 at 203- 13 04 ¶ 10; ECF No. 12-2 at Exs. 3 & 4.) Quality recorded the notice of trustee sale in September 14 2021, sold the home to defendant Chase in October, and delivered notice of the latter to plaintiff 15 in December. (Id. at Exs. 5 & 6.; see also ECF No. 11 at ¶¶ 1-5, plaintiff’s affidavit.) 16

17 2 Those facts ascertainable from the complaint are included in this background section, and are construed in the light most favorable to plaintiff—the non-moving party. Faulkner v. ADT Sec. 18 Servs., 706 F.3d 1017, 1019 (9th Cir. 2013). However, the court is not required to accept as true 19 “conclusory [factual] allegations that are contradicted by documents referred to in the complaint,” or “legal conclusions merely because they are cast in the form of factual allegations.” Paulsen v. 20 CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). Additionally, when reviewing a motion to dismiss, courts are permitted to consider 21 undisputed facts contained in judicially-noticeable documents without converting the motion to one of summary judgment. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“A 22 court may [] consider certain material—documents attached to the complaint, documents 23 incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment.”); see also Marder v. Lopez, 450 F.3d 24 445, 448 (9th Cir. 2006) (judicial notice proper for exhibits “on which the [c]omplaint necessarily relies.”). Here, the parties have provided a number of exhibits that are judicially noticeable, and 25 so the court will rely upon these documents in these findings and recommendations. See Fed. R. Evid. 201. The documents include recorded notices related to the loan, Chase’s purchase of 26 WaMu, and information related to the foreclosure proceedings. See, e.g., Gamboa v. Tr. Corps, 27 2009 WL 656285, at *3 (N.D. Cal. Mar. 12, 2009) (taking judicial notice of recorded documents related to a foreclosure sale, including grant deed and deed of trust, as they were “part of the 28 public record and are easily verifiable.”). 1 Procedural Posture for 2:21-cv-21513 2 In October, 2021, plaintiff filed the instant complaint in California Superior Court. In 3 November, and prior to service, Chase removed to this court, moved to dismiss, and requested 4 judicial notice. (ECF Nos. 1, 6, 7.) In December, plaintiff moved to remand and requested 5 judicial notice. (ECF Nos. 11, 14.) Thereafter, Quality moved to dismiss and requested judicial 6 notice. (ECF Nos. 12 and 12-2.) In January, 2022, Chase opposed remand. (ECF No. 17.) 7 SFCU moved to dismiss (set for a March 1, 2022 hearing), requested judicial notice, and joined 8 Chase’s remand opposition. (ECF Nos. 20, 21, 23.) Plaintiff replied, seeking to strike defendant 9 Chase’s affirmative defenses under the guise of a motion for judicial notice. (ECF Nos. 25, 26.) 10 The court heard the motions to remand and dismiss alongside another of plaintiff’s cases 11 at a January 25, 2022 hearing. (See ECF No. 27.) 12 DISCUSSION 13 I. Defendant Chase’s Removal and Plaintiff’s Motion to Remand 14 Plaintiff seeks remand, appearing to argue Chase’s notice of removal was defective and 15 the court lacks subject matter jurisdiction. (See, generally, ECF No. 14.) Chase opposes, arguing 16 that the complaint attempts to state federal causes of action, as well as the fact that Chase and 17 plaintiff are completely diverse and the other defendants are nominal and fraudulently joined. 18 Chase argues any procedural defects are cured by Quality and SFCU’s post-removal consent. 19 The undersigned finds it has subject matter jurisdiction under either 28 U.S.C. Sections 20 1331, 1332, Chase’s removal was proper, and consent to removal from Quality and SFCU was 21 not required. 22 //// 23 3 Plaintiff also filed an action against defendants Chase and Quality (among others) in this court, 24 each of whom moved to dismiss in late 2019. (See 2:21-cv-1908-JAM-KJN.) For judicial economy, the undersigned heard this case alongside the 21-cv-1908 case, but issued a separate set 25 of findings and recommendations for each, as the district judge had not consolidated or otherwise related the two actions. (See Id. at ECF No. 30.) Further, the court notes the docket in 2:21-cv- 26 1809-JAM-AC, wherein plaintiff brought various constitutional claims against Donna Allred of 27 the Sacramento County Recorder’s Office. The magistrate judge in the 21-cv-1809 case screened plaintiff’s complaint pursuant to 28 U.S.C. § 1915, provided her with two opportunities to amend, 28 and ultimately recommended the claims be dismissed with prejudice for failure to state a claim. 1 Legal Standard – Removal and Remand 2 Under the removal statute, a defendant may remove a case to federal court if the plaintiff 3 could have filed the action in federal court initially. 28 U.S.C. § 1441(a); Ethridge v. Harbor 4 House Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988). The party seeking removal bears the 5 burden of establishing federal jurisdiction. Id. A notice of removal is to contain a short and plain 6 statement of the grounds for removal. 28 U.S.C. § 1446(a). Removal is to be noticed “within 30 7 days of receipt of the initial pleading,” or, in cases of diversity jurisdiction, within “one year after 8 commencement of the action.” 28 U.S.C. § 1446(b), (c). 9 Federal courts are courts of limited jurisdiction, and so the statute is strictly construed 10 against removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). District courts have 11 federal question jurisdiction over “all civil actions that arise under the Constitution, laws, or 12 treaties of the United States.” 28 U.S.C. § 1331; see also Republican Party of Guam v. Gutierrez, 13 277 F.3d 1086, 1088-89 (9th Cir. 2002) (“A case ‘arises under’ federal law either where federal 14 law creates the cause of action or where the vindication of a right under state law necessarily 15 turn[s] on some construction of federal law.”). District courts also have jurisdiction to hear 16 disputes based on state law where the amount in controversy exceeds $75,000 and there is 17 complete diversity between the parties. 28 U.S.C. § 1332; see also GranCare, LLC v. Thrower by 18 & through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (“Complete diversity means that each plaintiff 19 is of a different citizenship from each defendant.”). 20 Filing a motion to remand is the proper way to challenge removal. Moore-Thomas v. 21 Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). While a district court may remand a 22 case for lack of subject-matter jurisdiction at any time, a court may only remand a case based on 23 defect in removal procedure upon the timely filing of a motion to remand. 28 U.S.C. § 1447(c). 24 Analysis 25 Here, defendant Chase’s notice of removal references 28 U.S.C. Section 1331. (See ECF 26 No. 1 at 3.) The core of plaintiff’s complaint appears to be a quiet title action and related request 27 for injunction. (See ECF No. 1-1 at 200.) However, the complaint explicitly discusses “false 28 debt collection” and Chase’s failure to “validate the debt” pursuant to the Fair Debt Collections 1 Practices Act (15 U.S.C. 1692 et seq.). (See Id. at 203, 208, 215, 217.) Plaintiff stated at the 2 hearing she intended to include reference to the FDCPA as information related to her case. A 3 liberal interpretation of the complaint indicates plaintiff is attempting to assert claims under 4 federal law. See Hebbe v. Pliler, 627 F.3d 338, 342, n.7 (9th Cir. 2010) (noting that pro se 5 pleadings are to be liberally construed). The presence of, at a minimum the FDCPA claim, 6 provides the court with jurisdiction under 28 U.S.C. Section 1331. See Caterpillar, Inc. v. 7 Williams, 482 U.S. 386, 392 (1987); Provincial Gov’t of Marinduque, 582 F.3d 1083 at 1091; see 8 also Green v. All. Title, 2010 U.S. Dist. LEXIS 92203, at *6-8 (E.D. Cal. Sep. 2, 2010) (finding 9 removal to be proper based on plaintiff’s claim under the FDCPA, and exercising supplemental 10 jurisdiction over plaintiff’s state law claims under 28 U.S.C. Section 1367). 11 However, even assuming for the sake of argument plaintiff did not intend to state an 12 FDCPA claim, Chase’s notice of removal also references 28 U.S.C. section 1332. (See ECF No. 13 1 at 4-6.) The complaint repeatedly references a mortgage agreement, and it is clear from the 14 judicially noticeable documents that the amount in controversy is over $75,000. (See ECF No. 1- 15 1 at 201 ¶ 12 (discussing an amount in controversy of $139,167.69); ECF No. 7-4 at 3 (noting an 16 alleged obligation of $120,000).) Further, Chase argues that it and plaintiff are completely 17 diverse, with the former being at home in Ohio and the latter in California. (See, generally, ECF 18 No. 1 at ¶¶ 10-12; ECF No. 1-1 at 201 ¶ 2). Under these facts, Chase’s removal was proper under 19 28 U.S.C. Section 1332. 20 Plaintiff points out that she has named two other defendants, Quality and SFCU, who are 21 both alleged to be citizens of California. If true, this would indicate the court would lack 22 diversity jurisdiction. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (diversity removal 23 requires complete diversity, meaning that each plaintiff must be of a different citizenship from 24 each defendant). However, in determining whether there is complete diversity, district courts 25 may disregard the citizenship of a non-diverse defendant who is nominal or has been fraudulently 26 joined. Grancare, 889 F.3d at 548 (citing Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 27 152 (1914)). 28 /// 1 Here, and as discussed below, defendants correctly note that Quality and SFCU have no 2 bearing on this dispute. Quality is merely a nominal defendant, as it was the trustee selected by 3 Chase to record notices and conduct the foreclosure sale. See Prudential Real Estate Affiliates, 4 Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000) (“The paradigmatic nominal defendant 5 is a trustee, agent, or depositary . . . [who is] joined purely as a means of facilitating collection.”). 6 Further, Quality and SFCU appear to have been fraudulently joined, as Quality has no interest in 7 the property, and SFCU took no action against the property when Chase noted the default and 8 decided to move the foreclosure proceedings forward. See Hunter v. Philip Morris USA, 582 9 F.3d 1039, 1044 (9th Cir. 2009) (noting that fraudulent joinder may be established by an 10 “inability of the plaintiff to establish a cause of action against the non-diverse party in state 11 court.”). Thus, the diversity analysis for removal purposes remains between plaintiff and 12 Chase—the real party to the controversy in plaintiff’s quiet title action. As such, even assuming 13 for the sake of argument plaintiff amended in order to omit the federal claims, the court also finds 14 complete diversity exists under Section 1332. GranCare, 889 F.3d at 548. 15 Finally, to the extent plaintiff challenges the method and timing of defendant Chase’s 16 removal to this court, the undersigned finds there to be no issues requiring remand. Under 28 17 U.S.C. section 1446(b)(1), a defendant’s 30 day window to remove a case to federal court does 18 not begin to run until “formal service” has been effected. Murphy Bros. v. Michetti Pipe 19 Stringing, Inc., 526 U.S. 344, 347-48 (1999). Here, Chase removed to this court on November 20 19, 2021, prior to it having been served by plaintiff in the state court action. (ECF No. 1.) 21 Further, as nominal/fraudulently joined parties, there was no need for Chase to obtain consent 22 from Quality or SFCU. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 n.1 (9th Cir. 1988) 23 (noting that all defendants in a state action must join in the petition for removal, except for 24 nominal, unknown or fraudulently joined parties). 25 Thus, the undersigned finds removal was proper under 28 U.S.C. Section 1441, either due 26 to the presence of a federal question or to complete diversity of the parties and amount exceeding 27 $75,000. 28 /// 1 II. Defendants’ Motions to Dismiss 2 Defendants Chase, Quality, and SFCU4 each moved to dismiss the claims asserted against 3 them, generally relying on Federal Rule of Civil Procedure 12(b)(6) to argue the complaint fails 4 to state plausible facts on which relief may be granted. (See ECF Nos. 6, 12, 20.) Plaintiff did 5 not formally oppose these motions, as she argued any substantive rulings on the merits of her case 6 were for the state court to decide after remand (a position the undersigned has rejected). (ECF 7 No. 14 at 9.) However, even assuming plaintiff’s filings constitutes general opposition to 8 dismissal, the court finds defendants’ motions well taken, and recommends dismissal of all claims 9 against all defendants with prejudice. 10 Legal Standards – Failure to State a Claim 11 A motion to dismiss brought under Rule 12(b)(6) challenges the sufficiency of the 12 pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 13 1109 (E.D. Cal. 2009). Under Rule 12(b)(6), a claim may be dismissed because of the plaintiff’s 14 failure to state a claim upon which relief can be granted. This generally encompasses two 15 scenarios: where the complaint lacks a cognizable legal theory, or where it lacks “sufficient 16 factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 17 Iqbal, 556 U.S. 662, 678 (2009); Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015). 18 When a court considers whether a complaint states a claim upon which relief may be 19 granted, all well-pleaded factual allegations must be accepted as true, Erickson v. Pardus, 551 20 U.S. 89, 94 (2007), and the complaint must be construed in the light most favorable to the non- 21 moving party. Corrie v. Caterpillar, Inc., 503 F.3d 974, 977 (9th Cir. 2007). The court is not, 22 however, required to accept as true “conclusory [factual] allegations that are contradicted by 23

24 4 SFCU’s motion to dismiss was filed later and set for a hearing on March 1, 2022. (See ECF No. 20.) However, the undersigned finds the claims against SFCU suffer from the same infirmities as 25 against Chase and Quality. Therefore, SFCU’s motion is taken up alongside the others in these findings and recommendations. See Silverton v. Dep’t of Treasury, 644 F.2d 1341, 1345 (9th Cir. 26 1981) (allowing for dismissal of claims against additional defendants where the claims and 27 positions align with moving defendants’); Local Rule 230(g) (allowing for the court to take motions under submission without a hearing if determined that the matter may be submitted upon 28 the record and briefs without need for additional argument). 1 documents referred to in the complaint,” or “legal conclusions merely because they are cast in the 2 form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). Thus, to 3 avoid dismissal for failure to state a claim, a complaint must contain more than “naked 4 assertions,” “labels and conclusions,” or “a formulaic recitation of the elements of a cause of 5 action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). Simply, the complaint “must 6 contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 7 face.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). Plausibility means pleading 8 “factual content that allows the court to draw the reasonable inference that the defendant is liable 9 for the misconduct alleged.” Id. 10 Pro se pleadings are to be liberally construed. Hebbe v. Pliler, 627 F.3d 338, 342, n.7 (9th 11 Cir. 2010) (liberal construction appropriate even post-Iqbal). Prior to dismissal, the court is to tell 12 the plaintiff of deficiencies in the complaint and give the plaintiff an opportunity to cure them––if 13 it appears at all possible the defects can be corrected. See Lopez v. Smith, 203 F.3d 1122, 1130- 14 31 (9th Cir. 2000). However, if amendment would be futile, no leave to amend need be given. 15 Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996). 16 Analysis 17 Here, the complaint first attempts to state an action for quiet title against all defendants. 18 (ECF No. 1-1 at 200-15.) However, the basic fact remains that in order for plaintiff to be able to 19 assert a quiet title claim, she must have paid her mortgage. Aguilar v. Bocci, 39 Cal.App.3d 475, 20 477 (1974) (for a mortgagor to quiet title to a property encumbered by a debt, he or she must first 21 pay that debt); Shimpones v. Stickney, 219 Cal. 637, 649 (1934) (“It is settled in California that a 22 mortgagor cannot quiet his title against the mortgagee without paying the debt secured.”). 23 Despite the significant amount of boilerplate, legalese, and other irrelevant information detailed 24 in the complaint, nowhere does the complaint allege this fact. (See, generally, ECF No. 1-1 at 25 200-215.) Conversely, the judicially noticeable documents demonstrate plaintiff stopped paying 26 Chase in 2019, was notified of the default and election to sell, and is no longer the owner of the 27 residence. (See ECF No. 7-4; ECF No. 12-2 at Exs. 3, 4, 5 & 6.) Thus, her quiet title claim 28 against Chase (much less against the foreclosure trustee Quality and secondary lienholder SFCU) 1 cannot stand. See, e.g., Santos v. Ocwen Loan Servicing, LLC, 2017 WL 24869, *6 (N.D. Cal. 2 Jan. 3, 2017) (dismissing quiet title claim against mortgagor without leave to amend because 3 plaintiff had not paid the debt) (citing Aguilar, 39 Cal.App.3d at 477). 4 As for any claim under the Fair Debt Collection Practices Act, the law is clear that 5 “[r]esidential mortgage loans fall outside of [the FDCPA’s purview], and the act of foreclosing on 6 a residential loan is outside the definition of debt collection.” See, e.g., Fuentes v. Duetsche 7 Bank, 2009 WL 1971610, at *3 (S.D. Cal. July 8, 2009) (dismissing FDCPA claim for ‘failing to 8 validate debt’ against residential mortgager because the “FDCPA only applies to consumer debts 9 or transactions[, and] residential mortgage loans fall outside of this definition.”); see also Vien- 10 Phuong Thi Ho v. ReconTrust Co., NA, 858 F.3d 568, 574 (9th Cir. 2017) (finding foreclosure 11 trustee not a “debt collector” subject to damages under the Fair Debt Collection Practices Act); 12 Hatch v. Collins, 225 Cal.App.3d 1104, 275 (1990) (a trustee “does not stand in a fiduciary 13 relationship” to either the beneficiary or the creditor). Thus, to the extent the complaint attempts 14 to state an FDCPA claim against each defendant, it is also subject to dismissal. 15 Ordinarily, the court is to tell the plaintiff of deficiencies in the complaint and give the 16 plaintiff an opportunity to cure them––if it appears at all possible the defects can be corrected. 17 See Lopez, 203 F.3d 1130-31. However, it is clear that based on the state of the law, amendment 18 would be futile. Thus, the undersigned recommends no leave to amend be given. Cahill, 80 F.3d 19 at 339. 20 Finally, the court notes plaintiff’s two most recent filings, captioned “motion for judicial 21 notice.” (ECF Nos. 25, 26.) Upon reviewing the filings, it appears plaintiff is attempting to move 22 to strike Chase’s affirmative defenses. However, these were filed January 18th and 19th, and set 23 for a hearing date of January 25, 2022. To the extent these filings are actual motions, they are 24 denied as deficient under Local Rule 230(b) (requiring any motions to be set for a hearing at least 25 28 days from the date of the filing). 26 /// 27 /// 28 /// 1 ORDER 2 Given these recommendations, it is HEREBY ORDERED that: 3 1. Plaintiffs filings at ECF No. 25 and 26, to the extent they are motions to strike, are 4 DENIED WITHOUT PREJUDICE as improperly noticed; 5 2. The hearing on SFCU’s motion, currently set for March 1, 2022 (ECF No. 20), is 6 VACATED, and the matter is taken under submission per Local Rule 230(g); and 7 3. The initial scheduling conference set for May 24, 2022 (ECF No. 5) is VACATED. 8 RECOMMENDATIONS 9 For the reasons stated above, it is HEREBY RECOMMENDED that: 10 1. Plaintiff's Motion to Remand (ECF No. 14) be DENIED; 1] 2. Defendants’ Motions to Dismiss (ECF No. 6, 12, 20) be GRANTED; 12 3. Plaintiff's complaint be DISMISSED WITH PREJUDICE; and 13 4. The Clerk of the Court be directed to CLOSE this case. 14 These findings and recommendations are submitted to the United States District Judge 15 || assigned to the case, under the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) days 16 || after being served with these findings and recommendations, any party may file written 17 || objections with the court and serve a copy on all parties. Such a document should be captioned 18 || “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 19 || shall be served on all parties and filed with the court within fourteen (14) days after service of the 20 || objections. The parties are advised that failure to file objections within the specified time may 21 || waive the right to appeal the District Court’s order. Turmer v. Duncan, 158 F.3d 449, 455 (9th 22 | Cir. 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 23 || Dated: February 9, 2022 4 Foci) Aharon 25 KENDALL J. NE nels. 2151 UNITED STATES MAGISTRATE JUDGE 26 27 28 10