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Hall v. Ocwen Loan Servicing, LLC

United States District Court, D. Idaho

November 7, 2014

ANNETTE HALL and BYRON HALL, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC; FREDDIE MAC MULTICLASS CERTIFICATES SERVICE 3071; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; NORTHWEST TRUSTEE SERVICES, INC.; and JOHN DOES 1-5, Defendants.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

INTRODUCTION

The Court has before it a motion to dismiss filed by all the defendants except Northwest Trustee Services Inc. The motion is fully briefed and at issue. For the reasons expressed below, the Court will grant the motion conditionally, and dismiss this case against the moving defendants unless plaintiffs file a motion to amend their complaint within 14 days from the date of this decision. In addition, as explained more fully below, the Court will dismiss defendant Northwest Trustee Services Inc. unless plaintiffs can make a showing that Northwest should be maintained as a defendant in this case.

BACKGROUND

The Halls are years behind on their house payments but allege that the defendants have no right to foreclose. They claim that the defendants split the deed of trust from the promissory note and thus lost all right to collect the money they loaned to the Halls. Resolution of their claims requires examining their loan transaction.

On October 25, 2005, Byron and Annette Hall borrowed $220, 410.00 from GMAC Bank to purchase a home in Rigby, Idaho, which is located in Jefferson County. The note was secured by a deed of trust, naming the Halls as the grantors, GMAC Bank as the lender, and Alliance Title as trustee. Additionally, the deed of trust named defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as beneficiary, acting solely as nominee for GMAC Bank.[1]

In the following years, several events occurred. First, MERS assigned the deed of trust to GMAC Mortgage, LLC. GMAC Mortgage appears to be distinct from GMAC Bank. Second, GMAC Mortgage substituted Northwest in place of Alliance Title as trustee. Third, GMAC Mortgage assigned the deed of trust to Ocwen. Finally, because the Halls had defaulted on their loan, Northwest began foreclosure proceedings on behalf of Ocwen.

The Halls responded by filing this lawsuit seeking to stop the foreclosure and have their promissory note and deed of trust declared invalid. The defendants have filed motions to dismiss under Rule 12(b)(6) alleging that the Halls have failed to state a cognizable claim because the foreclosure is proper as a matter of law.

LEGAL STANDARD

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) (internal quotation marks omitted). 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.

The Supreme Court identified two "working principles" that underlie Twombly in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the court need not accept as true legal conclusions that are couched as factual allegations. Id. Rule 8 does not "unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 678-79. Second, to survive a motion to dismiss, a complaint must state a plausible claim for relief. 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.

ANALYSIS

Counts One & Three

Counts One and Three allege that the defendants slandered the Hall's title by recording documents falsely asserting they had an interest in the property. More specifically, they allege that the assignment of the deed of trust - first, from MERS to GMAC Mortgage and, second, from GMAC Mortgage to Ocwen - independently from the note split the deed of trust from the note and rendered the deed of trust a nullity. Thus, under the Halls' theory, when MERS recorded the assignment to GMAC Mortgage, and when GMAC Mortgage ...


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