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Scott Ohlsen and Barbara Ohlsen v. Bank of America

August 10, 2012

SCOTT OHLSEN AND BARBARA OHLSEN,
PLAINTIFFS,
v.
BANK OF AMERICA, N.A. AS SUCCESSOR TO COUNTRYWIDE HOME LOANS, INC., A
DELAWARE CORPORATION; MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., A DELAWARE CORPORATION; RECONTRUST COMPANY, N.A., A CORPORATION OF UNKNOWN ORIGIN AND A WHOLLY-OWNED SUBSIDIARY OF BANK OF AMERICA, N.A.; BANK OF NEW YORK MELLON FKA
THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CWMBS INC., CHL AND MORTGAGE PASS-THROUGH TRUST 2004-J5, A CORPORATION; AND DOES 1-10 AS INDIVIDUALS OR ENTITIES WITH AN INTEREST IN THE PROPERTY COMMONLY KNOWN AS: 12987 SANDY DRIVE, DONNELLY, IDAHO, 83615,
DEFENDANTS.



The opinion of the court was delivered by: Honorable Ronald E. Bush U. S. Magistrate Judge

MEMORANDUM DECISION AND ORDER RE: DEFENDANTS' MOTION TO TAKE JUDICIAL NOTICE (Docket No. 13) DEFENDANTS' MOTION FOR JUDICIAL NOTICE IN SUPPORT OF REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS (Docket No. 20) RE: REPORT AND RECOMMENDATION DISMISS (Docket No. 12) DEFENDANTS' MOTION TO

Now pending before the Court are Defendants' (1) Motion to Dismiss (Docket No. 12), (2) related Motion to Take Judicial Notice (Docket No. 13), and (3) Motion for Judicial Notice in Support of Reply Memorandum in Support of Motion to Dismiss (Docket No. 20). Having carefully reviewed the record, participated in oral argument, and otherwise being fully advised, the Court hereby enters a Memorandum Decision and Order as to Defendants' Motion for Judicial Notice (Docket No. 13) and Defendants' Motion for Judicial Notice in Support of Reply Memorandum in Support of Motion to Dismiss (Docket No. 20); the Court also hereby enters a Report and Recommendation as to Defendants' Motion to Dismiss (Docket No. 12).

I. BACKGROUND

Plaintiffs allege that, on or about April 28, 2004, they financed the purchase of real property located at 12987 Sandy Drive, Donnelly, Idaho 83615 (the "Property"), memorialized in a promissory not (the "Note") and secured by a Deed of Trust. See Pls.' Compl., ¶¶ 1, 9-11 at pp. 2-3 (Docket No. 1).*fn1 The Deed of Trust names America's Wholesale Lender as the lender (a d/b/a for Countrywide Home Loans, Inc. ("Countrywide") and later acquired by Bank of America ("BOFA"), according to Plaintiffs (see id. at ¶¶ 9-10 & 12 at p. 3)), Fidelity National Title Insurance Company ("Fidelity") as the trustee, and the Mortgage Electronic Registration Systems, Inc. ("MERS") as the nominee of the beneficiary. See Ex. B to Dina Aff. (Docket No. 13, Att. 1).

After defaulting on their mortgage payments, Plaintiffs received a Notice of Default on or around April 19, 2011. See Pls.' Compl., ¶ 13 at pp. 3-4; see also Ex. A to Compl. (Docket No. 1, Att. 1). As of the date of the Notice of Default, Plaintiffs had not made any payments since June 1, 2010 and were $47,017.84 in arrears. See Ex. A to Compl. (Docket No. 1, Att. 1).

Also on or around April 19, 2011, the beneficial interest in the Note and Deed of Trust was assigned from MERS to The Bank of New York Mellon, FKA The Bank of New York, as Trustee for the Certificate Holders of CWABS, Inc., CHL Mortgage Pass-Through Trust 2004-J5, Mortgage Pass-Through Certificates, Series 2004-J5 ("BONY Mellon"). See Pls.' Compl, ¶ 22 at p. 5 (Docket No. 1) (incorrectly alleging that Deed of Trust was assigned to BOFA); see also Ex. C to Compl. (Docket No. 1, Att. 3). On that date, BONY Mellon then appointed ReconTrust Company, N.A. ("ReconTrust") as successor trustee in place of Fidelity. See Pls.' Compl., ¶ 25, p. 6 (Docket No. 1); see also Ex. D to Compl. (Docket No. 1, Att. 4).

On August 2, 2011, Plaintiffs initiated the instant action, bringing a single claim to quiet title to the property, requesting that the Court (1) require certain Defendants to produce the original Note in Court; (2) determine the Defendants' interest in the Property; and (3) award Plaintiffs their costs and attorneys' fees. See Pls.' Compl., ¶¶ 1-4 at p. 10 (Docket No. 1). Generally, Plaintiffs contend that Defendants lacked the authority to foreclose on the Property, owing to failures within the securitization process. Defendants now move to dismiss under FRCP 12(b)(6).

II. REPORT

Though at times difficult to clearly discern*fn2 (in their Complaint, opposition to Defendants' Motion to Dismiss, and during oral argument), Plaintiffs seem to argue that the securitization of their mortgage clouded title to the Property. More particularly, Plaintiffs allege that MERS did not have any valid interest in the Deed of Trust and, thus, without any authority to assign its interest, BONY Mellon did not have the authority to appoint ReconTrust as successor trustee or to court out a non-judicial foreclosure sale. See Pls.' Compl. ¶¶ 18-25 at pp. 5-6 (Docket No. 1). Plaintiffs also point to other alleged irregularities that they believe "cast serious doubt on the legitimacy and legal effectiveness of the pre-foreclosure documents." See id. at ¶ 38 at p. 9 (referring to Pls.' Compl., ¶¶ 31-37 at pp. 7-9). Plaintiffs filed this action "to determine the interests of BONY Mellon, BOFA, MERS, and ReconTrust." See id. at ¶ 39 at p. 9. Plaintiffs also request that Defendants be required to produce the original Note. See id. at ¶ 26 at p. 6, ¶ 1 at p. 10.

A. Legal Standard for Motions to Dismiss

FRCP 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." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by an FRCP 12(b)(6) motion to dismiss "does not need detailed factual allegations," it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. 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." Id. at 570. 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. at 556. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. at 557.

In a more recent case, the Supreme Court identified two "working principles" that underlie the decision in Twombly. See Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. See id. "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 678-79. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. at 679. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

Providing too much in the complaint may also be fatal to a plaintiff. Dismissal may be appropriate when the plaintiff has included sufficient allegations disclosing some absolute defense or bar to recovery. See Weisbuch v. County of L.A., 119 F.3d 778, 783, n.1 (9th Cir. 1997) (stating that "[i]f the pleadings establish facts compelling a decision one way, that is as good as if depositions and other . . . evidence on summary judgment establishes the identical facts.").

A dismissal without leave to amend is improper unless it is beyond doubt that the complaint "could not be saved by any amendment." Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009) (issued two months after Iqbal).*fn3 The Ninth Circuit has held that "in dismissals for failure to state a claim, a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether the plaintiff will prevail but ...


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