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Patrice H. Showell, Scott D. Showell v. Bac Home

September 17, 2012

PATRICE H. SHOWELL, SCOTT D. SHOWELL,
PLAINTIFFS,
v.
BAC HOME LOANS SERVICING, LP, FKA COUNTRYWIDE HOME LOANS SERVICING, LP; FIDELITY NATIONAL TITLE INSURANCE; AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., AKA MERS,
DEFENDANTS.



MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendants' Motion to Dismiss (Dkt. 6) and Plaintiffs' Motion to Amend Complaint (Dkt. 13). The parties have briefed the motions and they are now ripe for the Court's consideration. Having reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and the record. Accordingly, in the interest of avoiding delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motions will be decided on the record before this Court without oral argument. Dist. Idaho L. Rule 7.1(d).

For the reasons discussed below, the Court will grant Defendants' motion to dismiss and deny Plaintiffs' motion to amend the complaint.

BACKGROUND*fn1

Plaintiffs allege that on or about July 23, 2003, they financed their purchase of real property located at 474 South 5400 West, Malad City, Idaho (the Property) with a loan obtained from America's Wholesale Lender, which loan was memorialized in a promissory note (the "Note") and a Deed of Trust to the Property. (Am. Compl. at ¶¶ 3-4, Dkt. 1-4.) The Deed of Trust names America's Wholesale Lender as the Lender, Fidelity National Title ("Fidelity") as Trustee, Mortgage Electronic Systems, Inc. ("MERS") as beneficiary, and Plaintiffs as the borrowers. (Am. Compl. Ex A, Dkt. 1-4.)

The Deed of Trust expressly states on page one that MERS "is acting solely as nominee for Lender and Lender's successors and assigns," and is the "beneficiary under this Security Instrument." Further, the Deed of Trust reiterates on page two that MERS is "[t]he beneficiary of this Security Instrument . . . (solely as nominee for Lender and Lender's Successors and assigns)." And on page three, "Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument." MERS, "as the nominee for the Lender and Lender's successors and assigns . . . has the right to . . . take any action required of Lender, including, but not limited to, releasing and canceling this Security Instrument." But, the Security Instrument "secures to Lender (i) the repayment of the Loan . . . and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note." Trustee was granted, "in trust, with the power of sale," the Property.

The Deed of Trust indicates that "[t]he Note, or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower." (Am. Compl. Ex. A Dkt. 1-4.) In that event, Plaintiffs would be notified where to send their payments, which would be received by a "Loan Servicer." Upon an event of default, Lender could invoke the power of sale, and "cause Trustee to execute written notice of the occurrence of an event of default and of Lender's election to cause the Property to be sold."

Plaintiffs stopped making loan payments on the Property in April of 2010. (Application, Ex. A Dkt. 1-3.) By August 27, 2010, the amount outstanding was $8,471.43. (Id.) Defendants chose to invoke the power of sale to realize on the security in satisfaction of the debt. MERS on August 27, 2010, executed a Corporation Assignment of Deed of Trust assigning its interest under the Deed of Trust to BAC Home Loans Servicing, LP, fka Countrywide home Loans Servicing, LP, which was recorded in the public real property records of Oneida County, Idaho, on September 1, 2010, as Instrument No. 146068. BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP, ("BAC") later appointed ReconTrust as the successor trustee on August 27, 2010, and the Appointment of Successor Trustee was recorded in the public real property records of Oneida County, Idaho, on September 1, 2010, as Instrument No. 146069. ReconTrust caused the Notice of Default to be recorded in the public real property records of Oneida County, Idaho, on September 1, 2010, as Instrument No. 146070. Finally, the Affidavit of Service by Mail was recorded in the public real property records of Oneida County, Idaho, on July 22, 2010, as Instrument No. 147125.

A foreclosure sale has not yet taken place. Plaintiffs filed their Complaint on September 15, 2011, which was later amended on September 27, 2011, alleging the following causes of action: (1) failure to maintain and produce the note; (2) quiet title; and (3) unjust enrichment.

ANALYSIS

1.Standard of Review

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." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule 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 United States Supreme Court identified two "working principles" that underlie Twombly. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. 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 1950. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. "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." Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The United States Court of Appeals for 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 Service, Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether plaintiff will prevail but whether he "is entitled to offer evidence to support the claims." See Hydrick v. Hunter, 466 F.3d 676, 685 (9th Cir. 2006).

Under Rule 12(b)(6), the Court may consider matters that are subject to judicial notice. Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court may take judicial notice "of the records of state agencies and other undisputed matters of public record" without transforming the motions to dismiss into motions for summary judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 (9th Cir. 2004). The Court may also examine documents referred to in the complaint, although not attached thereto, without transforming the motion to dismiss into a motion for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

2.Plaintiffs' Due Process Claims

Plaintiffs argue that non-judicial foreclosure violates their due process rights if they cannot be heard as to the potential invalidity of the trust deed relied upon to initiate foreclosure. Further, Plaintiffs contend that noncompliance with the Deed of Trust Act renders any sale invalid.

The cases Plaintiffs cite to support their due process theory are inapposite. Roos v. Belcher, 321 P.2d 210 (Idaho 1958), simply held that the inability of a grantor of a deed of trust to redeem when a sale is made by a trustee under a deed of trust "is not a denial of due process." Rather, the only process that is due is adherence to the notice requirements and the requirements of Idaho Code ยง 45-1506. Roos, 321 P.2d at 212 --213. The court in Roos found that the notice and recording requirements of the statute satisfied the constitutional requirements of due process. Id. The remainder of the cases Plaintiffs cite involve allegations of inadequate notice brought after the foreclosure sale had ...


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