United States District Court, D. Oregon
OPINION AND ORDER
MICHAEL H. SIMON, District Judge.
Plaintiffs, appearing pro se, allege in their First Amended Complaint seven claims for relief against eleven Defendants. Before the Court are three separate motions to dismiss filed by Defendants. For the reasons stated below, all three motions to dismiss are GRANTED, as is Defendants' request for judicial notice. Plaintiffs may file a Second Amended Complaint not later than 21 days from the date of this Opinion and Order. If Plaintiffs choose timely to file a Second Amended Complaint but fail to cure the deficiencies identified below, the Court will dismiss this case with prejudice and without leave to file a third amended complaint.
A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
A complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr, 652 F.3d at 1216. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
A court also must liberally construe the filings of a pro se plaintiff and afford the plaintiff the benefit of any reasonable doubt. Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010). "A pro se litigant must be given leave to amend his or her complaint unless it is absolutely clear that the deficiencies of the complaint could not be cured by amendment.'" Karim-Panahi v. Los Angeles Police Dep't, 839 F.2d 621, 623 (9th Cir. 1988) (quoting Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987), superseded on other grounds by statute as stated in Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000)). Under Federal Rule of Civil Procedure 8(a)(2), however, every complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." This standard "does not require detailed factual allegations, '" but does demand "more than an unadorned, the defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555).
This lawsuit arises from a state court proceeding involving a contested judicial foreclosure and a claim to enforce a settlement agreement to enter a judgment of judicial foreclosure. The action concerns real property located at 17013 Northwest Johnson Road, Hillsboro, Oregon (the "Property"). In 2006, Plaintiff David Lorenz borrowed $640, 000 from Decision One Mortgage Company (the "Loan"). Plaintiff David Lorenz signed and delivered a promissory note in the amount of $640, 000 (the "Note"). As part of the same transaction, Plaintiff David Lorenz signed a Deed of Trust securing the Property, dated February 21, 2006, and recorded on February 28, 2006, under Recorder No. 2006-036838 ("Deed of Trust"). Plaintiff Cindy Lorenz did not sign either the Note or the Deed of Trust.
Approximately one year after obtaining the Loan, on or about February 26, 2007, Plaintiff David Lorenz, the then-owner of the Property, filed a Chapter 7 bankruptcy case in which he identified and admitted the Loan in his bankruptcy schedules and admitted that Defendant Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2006-HE4 ("DBNTC"), through its servicer, Defendant Wells Fargo Bank, NA d/b/a America's Servicing Company, held a lien to secure the Loan on the Property. Plaintiff David Lorenz was discharged from any personal liability on the Loan, and no payments have been made on the Loan since January 2010.
When DBNTC sought to commence a nonjudicial foreclosure after Plaintiff David Lorenz's default, Plaintiff David Lorenz filed a lawsuit admitting that he entered into the Loan, but claiming that the nonjudicial foreclosure was illegal because the Deed of Trust involved Defendant Mortgage Electronic Registration Systems, Inc. This suit was dismissed by stipulation after DBNTC voluntarily agreed to rescind the sale and pursue an action for judicial foreclosure.
DBNTC then filed an action in Multnomah County Circuit Court (the "State Court"), captioned as Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2006-HE4, its successors in interest and/or assigns v. David B. Lorenz, Cindy K. Lorenz, et al., Case No. 1112-16883 (the "State Court Case"). In the State Court Case, DBNTC sought to foreclose its Deed of Trust securing the $640, 000 loan made to Plaintiff David Lorenz in February 2006. Although Plaintiff Cindy Lorenz was never a party to the loan and never signed the loan documents, Plaintiff Cindy Lorenz litigated against the judicial foreclosure, first as an "occupant" of the Property and then as an alleged owner of the Property (with ownership claimed through a quitclaim deed from Plaintiff David Lorenz recorded in April 2013). DBNTC asserts that it had previously recorded a Notice of Lis Pendens on June 15, 2012, which under Or. Rev. Stat. § 93.740(2) voided the "quitclaim deed, " according to DBTNC.
During the State Court Case, DBNTC on the one hand, and Plaintiffs, and their adult son and daughter-in-law, Cody and Christy Walton (who were also occupants of the Property at that time), entered into a settlement agreement, under which Plaintiffs (the Lorenzes) and the Waltons agreed to stipulate to a judgment of foreclosure and vacate the Property by August 25, 2013. According to DBNTC, Plaintiffs and the Waltons then breached the settlement agreement, resulting in DBNTC amending its complaint and including a claim to enforce the settlement agreement against Plaintiffs and the Waltons.
After hearing motions for summary judgment by DBNTC and considering opposition filings and argument by Plaintiffs, the State Court issued detailed written decisions on August 28 and 30, 2013. The State Court granted DBNTC's motions for summary judgment to foreclose its trust deed and separately to enforce the settlement agreement. The State Court found DBNTC was entitled to foreclose its trust deed and that Plaintiffs and the other defendants had breached the settlement agreement. The State Court also found that Plaintiffs twice made untruthful representations to the State Court that they had produced all documents and emails sent to them by their former attorney, which emails contradicted Plaintiffs' claim that they did not agree to the settlement. In the August 2013 order enforcing the settlement agreement, the State Court ordered Plaintiffs and the Waltons to vacate the Property no later than November 1, 2013. Neither Plaintiffs nor the Waltons obeyed the State Court's order, although the Waltons have since vacated the property.
After these summary judgment orders in the State Court Case, Plaintiffs filed separate bankruptcy cases, which were ultimately dismissed by the Bankruptcy Court for failure to pay filing fees (Plaintiff David Lorenz) and failure to submit a confirmable plan among other things (Plaintiff Cindy Lorenz). After dismissal of the two bankruptcy cases, the State Court entered a final general judgment against David and Cindy Lorenz (as defendants in the State Court Case) on July 28, 2014 (the "General Judgment"). On the morning ...