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Kristin Cordero v. America's Wholesale Lender Aka

October 15, 2012




The Court has before it two motions to dismiss, the first filed on March 14, 2012, by Defendant Fidelity National Title Insurance Company ("Fidelity") and the second filed on March 15, 2012, by Defendants Bank of America, N.A., MERS, ReconTrust, Fannie Mae and Freddie Mac (collectively, the "Bank Defendants").*fn1 Accompanying Fidelity's motion was a motion for judicial notice. (Dkt. 9.) Plaintiff Kristin Cordero, who is appearing pro se in this matter, did not file a response to the motions.*fn2 On July 17, 2012, well after the April 9, 2012, response deadline, Cordero filed a Notice of Intent to File Response, (Dkt. 18), indicating she intended to respond and would do so in the future. The Court, however, denied Cordero's request. (Dkt. 21.)

The motions are 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. For the reasons discussed below, the Court will grant Defendants' motions to dismiss and the motion to take judicial notice.*fn3


On March 8, 2006, Plaintiff Kristin Cordero ("Cordero") and Joaquin Cordero borrowed $256,000 from America's Wholesale Lender to purchase a residence located at 4515 N. Chelmsford Avenue, in Boise, Idaho (the "Property"). The Loan was evidenced by a promissory note (the "Note") in the principal amount of $256,000. To secure repayment of the Note, Mr. and Mrs. Cordero executed a Deed of Trust on March 9, 2006, encumbering the Property for the benefit of America's Wholesale Lender. The Deed of Trust was recorded in the records of Ada County on March 14, 2006, as Instrument Number 106039042. The Deed of Trust designates MERS as the beneficiary, as nominee on behalf of the original Lender and its successors and assigns. Further, the Deed of Trust expressly provides MERS with the authority to exercise all of the Lender's, and its successors and assigns, rights under the Deed of Trust. Fidelity was named as the trustee of the Deed of Trust. The Complaint admits that America's Wholesale Lender is now known as Bank of America.

Cordero admits that in January 2009, she began "missing mortgage payments" and defaulted on the Note. On March 2, 2009, Cordero obtained a Decree of Divorce in the Ada County District Court for the Fourth Judicial District of Idaho, Case No. CV DR 0819730 (the "Divorce Decree"). The Divorce Decree states that the Property is to be awarded to Cordero, "subject to the 1st lien on the property." Additionally, the Divorce Decree states that Cordero is to pay the "1st Mortgage $245,000 to Countrywide Home Loans." On May 1, 2009, ReconTrust, the successor trustee, sent Plaintiff a Notice of Default, which was recorded on May 6, 2009, in the Ada County, Idaho records as Instrument Number 109051491. On May 19, 2009, ReconTrust sent Cordero a Notice of Trustee's Sale notifying her that a foreclosure sale would take place on September 28, 2009. Cordero alleges that on April 30, 2009, she was notified by Bank of America and ReconTrust of the September 28, 2009 foreclosure sale.

The Complaint alleges Bank of America, on June 17, 2009, provided Cordero with a forbearance program, whereby she would pay only 50% of her Loan payments for a six-month period. Cordero made monthly payments under the forbearance program between July and December of 2009. In or about November of 2009 and August of 2010, the Complaint asserts Bank of America offered Cordero two different loan modifications, both of which she rejected. On or about January 25, 2011, Bank of America transferred its interest in the Property to Fannie Mae. The Assignment was recorded on or about January 31, 2011, in the records of Ada County under Instrument Number 584735. On or about April 12, 2011, ReconTrust sent Cordero another notice of sale stating that the Property would be sold on August 12, 2011.

On May 6, 2011, Plaintiff filed a petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Idaho, In re Cordero, Case No. 11-01376-TLM. In Plaintiff's bankruptcy schedules, Cordero admits that Bank of America is an undisputed, first position creditor of the Property with a fully secured claim of $245,323.60. (Schedules A, D). Further, Cordero's Statement of Intention indicates she intends to "surrender" the Property to Creditor Bank of America. On August 15, 2011, the Bankruptcy Court granted Cordero a discharge under 11 U.S.C. § 727. On or about October 28, 2011, Plaintiff filed her Complaint in the District Court of the Fourth Judicial District of Idaho, and Defendants removed the matter to this Court on February 29, 2012.


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 SmithBarney, 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 Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether plaintiff will prevail but whether she "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.Breach of Fiduciary Duty Claims (Counts One and Two)

Cordero's first cause of action alleges that Fidelity and the Bank Defendants breached their fiduciary duties owed to Cordero by "refusing to cooperate with Plaintiff's efforts" at a loan modification. Cordero alleges that she received advice from the Bank Defendants regarding the loan modification and relied on it, and Defendants' actions created a fiduciary or "quasi-fiduciary" relationship between these parties. Her second cause of action avers that Fidelity or ReconTrust, or both, owed a duty toward Cordero to insure that the "Deed of Trust does not get split from the Note and . . . securitized," and that the "alleged trustee(s) breached this duty by continuing the sale when Plaintiff was still in the modification process." Cordero further alleges that all Defendants breached their fiduciary duties by failing to enjoin the trustee's sale. Defendants move to dismiss Cordero's claim for breach of fiduciary duty on the basis that no fiduciary relationship exists between Plaintiff and any Defendant. The Court agrees.

"[T]o establish a claim for breach of fiduciary duty, a plaintiff must establish that defendants owed plaintiff a fiduciary duty and that the fiduciary duty was breached." Bushi v. Sage Health Care, PLLC, 203 P.3d 694, 699 (2009) (citation and marks omitted); see also Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880--881 (9th Cir.2007) (applying Nevada law).

First, with respect to ReconTrust, there is no duty under the Idaho Trust Deeds Act or the Deed of Trust for the trustee to stop a foreclosure upon request of a borrower who is attempting to obtain a loan modification. Sykes v. Mrtg. Electronic Reg. Sys., Inc., No. 1:11--cv--377--BLW, 2012 WL 914922 *5 (D. Idaho Mar. 15, 2012);*fn5 see also Gaitan v. Mrtg. Electronic Reg. Sys., 2009 WL 3244729, at * 12 (C.D.Cal. Oct.5, 2009) (finding that "[a] foreclosure trustee has no fiduciary duty to the borrower, since a trustee in a non-judicial foreclosure is 'not a true trustee with fiduciary duties, but rather a common agent for the trustor and beneficiary.'"). Cordero's claim for breach of fiduciary duty against ReconTrust fails, therefore, to state a claim upon which relief may be granted.

As to Cordero's remaining fiduciary duty claims against Fidelity and the Bank Defendants, Cordero has not established the existence of a fiduciary relationship. It is generally true that "[a] fiduciary relationship does not depend upon some technical relation created by or defined in law, [and] exists in cases where there has been a special confidence imposed in another who, in equity and good conscience, is bound to act in good faith and with due regard to the interest in one reposing the confidence." Jones v. Runft, Leroy, Coffin & Mathews, Chtd., 873 P.2d 861, 868 (Idaho 1994) (quoting Stearns v. Williams, 240 P.2d 833, 840--41(Idaho 1952)). However, "[t]he facts and circumstances must indicate that the one reposing the trust has foundation for his belief that the one giving advice or presenting arguments is acting not in his own behalf, but in the interests of the other party." High Valley Concrete, LLC v. Sargent, 234 P.3d 747, 752 (Idaho 2010) (citing Idaho First Nat. Bank v. Bliss Valley Foods, Inc., 824 P.2d 841, 853 (1991)).

A review of Cordero's Complaint reveals that she makes no allegations supporting a foundation to believe that the Bank Defendants were acting in Cordero's interests and not on their own behalf, or that of the lender or the loan servicer. Moreover, the Complaint contains no factual allegations demonstrating anything beyond a conventional borrower-lender relationship. As such, Cordero fails to allege any facts supporting more than an arms-length, commercial relationship between a borrower and the servicing entity or lender for the loan in which no fiduciary obligations arise. See Wade Baker & Sons Farms v. Corp. of Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints, 42 P.3d 715, 721 (Idaho Ct. App. 2002) ("no fiduciary duty ordinarily arises between parties to an arm's length business transaction"). See also Headwaters Const. Co. v. National City Mortg. Co., 720 F.Supp.2d 1182, 1192 (D. Idaho, 2010) ("[I]t cannot be said that a lender owes a duty of care to a borrower/third party when its involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.").

As to Fidelity, it was not the trustee at the time of foreclosure, and therefore did not owe Cordero any duty related to the foreclosure proceedings. Moreover, Cordero alleges no facts that Fidelity owed or breached any duty prior to ReconTrust's appointment as successor trustee.

The Court finds that Cordero's allegations specific to her breach of fiduciary duty claims are not supported by a recognized duty that may be extended to and breached by either Fidelity or the Bank Defendants. Absent such a duty, the Defendants' ...

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