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Nguyen v. Specialized Loan Servicing LLC

United States District Court, D. Oregon

August 24, 2018

HOA VAN NGUYEN, Plaintiff,

          Jeffrey A. Long, Oregon Consumer Law Center, Attorneys for Plaintiff.

          David J. Elkanich and Nellie Q. Barnard, Holland & Knight LLP, Attorneys for Defendants SLS and BNYM.

          John M. Thomas, McCarthy & Holthus, Attorneys for Defendant Quality.


          Michael H. Simon United States District Judge.

         On March 6, 2018, Plaintiff, Hoa Van Nguyen, brought this lawsuit in Multnomah County Circuit Court against Defendants Specialized Loan Servicing LLC (“SLS”), Quality Loan Service Corporation of Washington (“Quality”), and The Bank of New York Mellon (“BNYM”). Plaintiff alleges various state statutory and common law claims arising from Defendants' threatened non-judicial foreclosure of Plaintiff's home. On Plaintiff's motion, the state court issued a preliminary injunction, enjoining Defendants from proceeding with their scheduled non-judicial foreclosure. Defendants timely removed the lawsuit to federal court. Defendant SLS and BNYM now move to dismiss for failure to state a claim and to dissolve the preliminary injunction. For the reasons that follow, the motion to dismiss is granted without prejudice, and Plaintiff has leave to file an amended complaint within two weeks. The motion to dissolve the preliminary injunction is denied without prejudice and with leave to renew, if appropriate, after Plaintiff timely files an 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 plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “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.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted)


         In 2005, Plaintiff borrowed approximately $416, 000 from Aegis Wholesale Corporation (“Aegis”) under a forty-year adjustable rate loan, secured by Plaintiff's home. The Deed of Trust (“DOT”) identifies Aegis as the “lender, ” Land America Lawyers Title as the “Trustee, ” and Mortgage Electronic Registration Systems (“MERS”) as the “beneficiary.” SLS is the current servicer of Plaintiff's loan.

         Multnomah County property records reflect a 2009 “Assignment of Deed of Trust” showing that MERS, as the purported “beneficiary, ” assigned to BNYM “all beneficial interest under” the DOT. The property records also reflect a May 5, 2017 “Corrective Assignment of Deed of Trust, ” showing that MERS, as the purported “designated nominee for Aegis, ” assigned the DOT to BNYM. The 2017 Corrective Assignment appears to “[c]orrect the assignor on the Assignment of Deed of Trust” recorded in 2009, and it specifically describes Aegis as the beneficiary of the DOT and MERS as Aegis's designated nominee. The property records further reflect an October 20, 2017 “Appointment of Successor Trustee, ” in which BNYM appointed Quality as successor Trustee of the DOT.

         On or about October 24, 2017, [1] SLS recorded a Notice of Default and Election to Sell and sent to Plaintiff a Trustee's Notice of Sale, advising that Quality had scheduled a sale of Plaintiff's home on behalf of the beneficiary, BNYM. On November 22, 2017, Plaintiff's counsel sent Quality a letter requesting that the non-judicial sale be cancelled. Quality's counsel responded on December 8, 2017, denying the request.

         On January 30, 2018, Plaintiff sent a Notice of Error to SLS for improperly initiating a non-judicial foreclosure, arguing that BNYM was not the lawful beneficiary under the DOT and could not, therefore, initiate a non-judicial foreclosure. On February 7, SLS sent a letter to Plaintiff acknowledging receipt of the Notice of Error, but adding that it was not sent to the “designated address for such inquiries.” On February 16, Plaintiff submitted a loss mitigation application to SLS. On February 21, SLS sent a letter to Plaintiff responding to the loss mitigation application. In that letter, SLS stated that the non-judicial foreclosure sale was scheduled for March 8, 2018, and ...

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