United States District Court, D. Oregon, Medford Division
PAMELA K. STATON, Plaintiff,
BANK OF AMERICA (BAC) HOME LOANS SERVICING, LP, MORTGAGE ELECTRONIC REGISTRATION, SYSTEMS (MERS), RECONTRUST COMPANY, NA, a subsidiary of BAC NA, Defendants.
OWEN M. PANNER, District Judge.
This matter comes before the Court on Defendants' Renewed Motion to Dismiss Third Amended Complaint (#107). Defendants' motion is GRANTED. This case is DISMISSED with prejudice.
In November 2005, Plaintiff took out a loan for $735, 000 from Countrywide Home Loan, Inc. (Countrywide), secured by a Note and Deed of Trust. Under the terms of the Deed of Trust, Countrywide served as the originating lender, Fidelity National Title Insurance served as trustee, and Defendant Mortgage Electronic Registration, Systems, Inc. (MERS) served as beneficiary "solely as a nominee for Lender and Lender's successors and assigns." The Deed of Trust also provided for the appointment of a loan servicer, who was entitled to collect payments and enforce the terms of the loan. At some point, Defendant Bank of America (BAC) became the loan servicer.
In September 2009, Plaintiff ceased making payments on her loan. In January 2010, Defendant ReconTrust, as successor trustee, recorded a Notice of Default and Election to Sell the Property (NODES), which was later rescinded. In November 2010, ReconTrust recorded a second NODES, which was-again rescinded. A third NODES was retarded in May 2011. The third NODES has also been rescinded and Defendants' counsel certifies that they will make no further attempt to non-judicially foreclose the Deed of Trust. Rather, Defendants represent that they intend to proceed with a judicial foreclosure.
Plaintiff initially filed this action in Lane County Circuit Court in 2010. Following the filing of Plaintiff's First Amended Complaint, Defendants removed to federal court and filed a motion to dismiss. In a detailed opinion (#38), Judge Aiken granted in part and denied in part. On September 26, 2011, Plaintiff filed a Second Amended Complaint. Defendants again moved to dismiss. On May 5, 2012, Judge Aiken issued an Order (#75) staying the motion to dismiss with regard to some of Plaintiff's claims pending the Oregon Supreme Court's ruling on certified questions. Judge Aiken dismissed the remaining claims.
Plaintiff filed her Third Amended Complaint (TAC) on June 29, 2012. Defendants again moved to dismiss. Judge Aiken stayed the entire case pending the Oregon Supreme Court's decision on certified questions (#98). On June 6, 2013, the Oregon Supreme Court issued its decision on the certified questions in Brandrup v. ReconTrust, NA , 353 Or. 668 (2013). The case was subsequently transferred to this Court and the stay lifted. Defendants have renewed their motion to dismiss the TAC.
Where the plaintiff "fail[s] to state a claim upon which relief can be granted, " the court must dismiss the action. Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007). For the purpose of the motion to dismiss, the complaint is liberally construed in favor of the plaintiff and its allegations are taken as true. Rosen v. Walters , 719 F.2d.1422, 1424 (9th Cir. 1983). However, bare assertions that amount to nothing more than a "formulaic recitation of the elements" of a claim "are conclusory and not entitled to be assumed true." Ashcroft v. Iqbal , 556 U.S. 662, 680-81 (2009). Rather, to state a plausible claim for relief, the complaint "must contain sufficient allegations of underlying facts" to support its legal conclusions. Starr v. Baca , 652 F.3d 1202, 1216; reh'g en banc denied, 659 F.3d 850 (9th Cir. 2011).
Plaintiff's Third Amended Complaint asserts claims for declaratory judgment, fraud, negligent misrepresentation, breach of contract, trespass, violations of the Fair Debt Collection Practices Act, violations of the Oregon Trust Deed Act, quiet title, and to remove cloud on title.
A. Plaintiff's First Claim
Plaintiff's first claim is for declaratory judgment. Plaintiff alleges that Defendants' attempted non-judicial foreclosure was unlawful. Plaintiff also alleges that her loan was improperly securitized, in part because Defendants are alleged to have failed to comply with the terms of their Pooling and Servicing Agreement (PSA), and that, as a consequence, her' loan is now an unsecured obligation. Plaintiff requests that the Court enjoin Defendants from acting as trustees or appointing successor trustees. Plaintiff also seeks a declaration that the attempted non-judicial foreclosure is improper. Defendants argue that because they have certified that they do not intend to resurrect the non-judicial foreclosure, this claim is now moot.
The constitutional authority of federal courts extends only to actual cases and controversies. U.S. Const. art. III, § 2, cl. 1; see Iron Arrow Honor Soc'y v. Heckler , 464 U.S. 67, 70 (1983). A case or controversy requires that "an actual, ongoing controversy exist at all stages of federal court proceedings." Pitts v. Terrible Herbst, Inc. , 653 F.3d 1081, 1086 (9th Cir. 2011). Federal courts lack jurisdiction over moot cases. Iron Arrow , 464 U.S. at 70. If events subsequent to the filing of the case resolve the parties' dispute, the case must be dismissed. Pitts , 653 F.3d at 1087.
When a non-judicial foreclosure sale is rescinded, "any claims premised on the non-judicial foreclosure are rendered moot." Vettrus v. Bank of America, NA, No. 6:12-cv-074-AA, 2012 WL 5462914 at *4 (D. Or. November 6, 2012)(quoting Thomas v. OneWest Bank, FSB, No. 10-cv-6234-AA, 2012 WL 2049462 (D. Or. June 4, 2012). There is no cause of action under Oregon law for the tort of wrongful attempted foreclosure. Hartley v. Fed. Nat'l Mortg. Ass'n, No. 6:11-cv-6374-TC, 2012 WL 775679 at *3 (D. Or. Mar. 5, 2012).
The remedies of judicial and non-judicial foreclosure are mutually exclusive. Vettrus, 2012 WL 5462914 at *4. A defendant's representation to the court that it intends to pursue a judicial foreclosure could bar the resurrection of a previously rescinded non-judicial foreclosure by judicial estoppel. See Durham v. Bank of New York Mellon, No. 1:12-cv-00273-PA, 2012 WL 2529188 at *2 (D. Or. June 28, 2012).
In this case, Defendants have rescinded their non-judicial foreclosure and Defendants' counsel have certified to the Court that they intend to pursue a judicial foreclosure in state court. Following the established practice of courts in this District, I conclude that this claim is now moot.
Plaintiff argues that it is legal error to dismiss a claim for declaratory relief for failure to state a claim under the Oregon adoption of the Uniform Declaratory Judgment Act, ORS 28.010 et seq. Plaintiff's argument is not well taken, however. Oregon's declaratory judgment statute does not confer jurisdiction for this Court to issue advisory opinions on moot issues. See Durham, 2012 WL 2529188 at *3.
Additionally, it is well settled that a plaintiff lacks standing to enforce the terms of a PSA where she is neither a party to, nor a third party beneficiary of, that agreement. Oliver v. Delta Financial Liquidating Trust, No. 6:12-cv-00869-AA, 2012 WL 3704954 at *4 (D. Or. Aug. 27, 2012); Graham v. ReconTrust Co., NA, No. 3:11-cv-11339-BR , 2012 WL 1035712 at *4 (D. Or. Mar. 27, 2012); Branson v. ReconTrust Co., NA, No. 3:11cv-1526, 2012 WL 1473395 at *3 (D. Or. April 26, 2012). Accordingly, to the extent that this claim is premised upon Defendants' alleged failure to comply with the terms of the PSA, Plaintiff also lacks standing.
Plaintiff's first claim for declaratory judgment is DISMISSED.
B. Plaintiff's Second Claim
Plaintiff's second claim is for fraud. This claim alleges thirteen separate counts of fraud, although two of the counts are labeled as "Count 12."
In order to state a claim for fraud under Oregon law, a plaintiff must plead the following elements: 1) a representation; 2) its falsity; 3) its materiality; 4) the speakers knowledge of its falsity or ignorance of its truth; 5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; 6) the hearer's ignorance of its falsity; 7) her reliance on its truth; 8) her right to rely thereon; and 9) her consequent and proximate injury. Webb v. Clark , 274 Or. 387, 391 (1976).
Under Fed. R. Civ. P 9(b), fraud is subject to heightened pleading standards. WPP Luxembourg Gamma Three Sarl v. Spot Runner Inc. , 655 F.3d 1039, 1047 (9th Cir. 2011). "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b).
1. Count One
Plaintiff's first count appears to allege that Defendants securitized the loan and lack the power to foreclose. Plaintiff debatably alleges a representation in the form of the NODES, but fails ...