United States District Court, D. Oregon, Eugene Division
OPINION AND ORDER
Aiken United States District Judge
Cristina Woodard brings this action challenging the
foreclosure sale of real property in La Pine, Oregon,
following the judicial foreclosure of the property.
Defendants are the Bank of New York Mellon fka The Bank of
New York, as Trustee for the Certificateholders of the CWABS,
Inc., Asset-Backed Certificates, Series 2006-26
("BNYM"), Specialized Loan Servicing, LLC
("SLS"), and Malcom Cisneros, A Law Corporation
("MC"). Defendants move to dismiss the Complaint.
For the following reasons, Defendants' BNYM and SLS's
motion is GRANTED and MC's motion is GRANTED in part and
DENIED in part.
2006, plaintiff executed a Note for $220, 000 secured by a
Deed of Trust on real property located in La Pine, Oregon.
Compl. Ex 3. Plaintiff defaulted on the loan, and in
April 2014 BNYM filed a foreclosure action on the Note and
Deed of Trust in state court, No. 14CV0239FC, (the
"Foreclosure Action"). See Foreclosure Action
Docket, Doc. 18 Ex A. SLS was servicing the loan for BNYM at
the time, and MC is the law firm that initiated the
Foreclosure Action on behalf of BNYM.
was personally served with the Complaint in the foreclosure
action in April 2014, received mail service of a Motion for
Default in May 2014, and mail service of a Motion for
Judgment of Default in November 2015. Doc. 18 Ex C, D, F. She
failed to appear in the action and was defaulted. The court
entered a General Judgment of Foreclosure on November 25,
2015. See Foreclosure Action Docket, Doc. 18 Ex A; General
Judgment of Foreclosure, Doc. 18, Ex. G. The Sheriffs Return
Writ of Execution filed the foreclosure action states that
Plaintiff was served by mail with the Notice of Sale in June
2018. Doc. 18 Ex. H. The judgment was executed and the
property sold to BNYM on August 2, 2018. Id.
filed this action in December 2018, asserting claims for a
declaratory judgment (claim 1); unjust enrichment, fraud, and
conversion (claim 2); violations of the Fair Debt Collection
Practice Act ("FDCPA"), 15 U.S.C. §1692 et
seq., (claim 3); conversion (claim 4); and breach of
good faith and duties of care (claim 5). Plaintiff alleges
that she sent letters, beginning in April 2018, and made
phone calls in an attempt to work out a loan modification and
determine whether BNYM and SLS had the right to foreclose on
the loan, but never received a response. She also alleges
that she did not receive notice of the foreclosure sale.
Plaintiff asserts that the foreclosure sale was illegal
because she did not receive notice of the sale and that
defendants had no standing to initiate foreclosure under the
Uniform Commercial Code and FDCPA.
Motion to Dismiss for Lack of Subject Matter Jurisdiction
Under Rule 12(b)(1)
to dismiss for lack of subject matter jurisdiction under
Federal Rule of Civil Procedure 12(b)(1) "can attack the
substance of a complaint's jurisdictional allegations
despite their formal sufficiency, and in so doing rely on
affidavits or any other evidence properly before the
court." St. Clair v. City of Chico, 880 F.2d
199, 201 (9th Cir. 1989). The court "accept[s] as true
the factual allegations in the complaint." Terbush
v. United States, 516 F.3d 1125, 1128 (9th Cir. 2008).
Motion to Dismiss for Improper Service Under Rule
12(b)(5) provides that a defendant may move to dismiss an
action for insufficient service of process. Fed.R.Civ.P.
12(b)(5). "A federal court does not have jurisdiction
over a defendant unless the defendant has been served
properly under Fed.R.Civ.P. A." Direct Mail
Specialists, Inc. v. Eclat Computerized Techs., Inc.,
840 F.2d 685, 688 (9th Cir. 1988). "Rule 4 is a flexible
rule that should be liberally construed so long as a party
receives sufficient notice of the complaint." United
Food & Commercial Workers Union v. Alpha Beta Co.,
736 F.2d 1371, 1382 (9th Cir. 1984). But "without
substantial compliance with Rule 4, neither actual notice nor
simply naming the defendant in the complaint will provide
personal jurisdiction." Direct Mail
Specialists, 840 F.2d at 688 (internal quotation marks
service of process is challenged, "[i]t is plaintiffs
burden to establish the validity of service of process."
Roller v. Herrera, No. 3:18-CV-00057-HZ, 2018 WL
2946395, at *2 (D. Or. June 11, 2018). The court may consider
evidence outside the pleadings in resolving a Rule 12(b)(5)
motion. See Lachick v. McMonagle, No. CIV. A.
97-7369, 1998 WL 800325, at *2 (E.D. Pa. Nov. 16, 1998)
("Factual contentions regarding the manner in which
service was executed may be made through affidavits,
depositions, and oral testimony.").
court concludes that service was improper, "[t]he choice
between dismissal and quashing service of process is in the
district court's discretion." Stevens v. Sec.
Pac. Nat'l Bank, 538 F.2d 1387, 1389 (9th Cir.
1976). "Service will ordinarily be quashed and the
action preserved where 'there is a reasonable prospect
that plaintiff ultimately will be able to serve defendant
properly."' Roller, 2018 WL 2946395, at *2
(quoting Bravo v. Cty. of San Diego, No. C 12-06460
JSP, 2014 WL 555195, at * 1 (N.D. Cal. Feb. 10, 2014)). The
district court also has the discretion to extend the time for
service outside of the 90-day period provided for in Rule 4.
Id. (citing Fed.R.Civ.P. 4(m)).
Motion to Dismiss for Failure to State a Claim Under Rule
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 u. 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 all material facts alleged in the complaint
as true 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). However, the court need not
accept unsupported conclusory allegations as truthful.
Hololen v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.
turning to the motions to dismiss, the Court will summarize
plaintiffs five claims for relief.
first claim, "Declaratory Judgment-Standing,"
asserts that defendants had no standing or right to initiate
or hold the foreclosure sale, and appears to argue that
defendant had no standing because they were not the Lender or
acting on the Lender's behalf and, therefore had "no
economic or beneficial interest in any Note, mortgage, or
deed of trust." Plaintiff also asserts that "[e]ven
if one of the listed Defendants can claim to be the
'Lender/ . . . Defendant no longer owns or has full
dominion over Plaintiffs Note." Compl. at ¶ 55.
Finally, plaintiff appears to assert that any transfers of
the loan were invalid. Plaintiff asks for a declaratory
judgment identifying the "lawful holder of the Note and
proper beneficiary/Owner under the Deed of Trust."
Id. at ¶ 64. Plaintiff also "asks the
Court to unwind the judicial foreclosure sale until the
Defendant can substantiate that it has the right to enforce
the operative security instruments in this case."
second claim, "Unjust Enrichment and Fraud and
Conversion," alleges that because defendants lacked
authority or the right to enforce the note or deed of trust,
they were unjustly enriched through the foreclosure and
purchase of the property. Plaintiff also alleges that,
through the foreclosure sale, defendants converted the
property "for [their] improper and unlawful
benefit." Id. at ¶ 66.
If and [sic] it is a strong possibility that
Defendant cannot show its right to enforce said Note and Deed
of trust then the actions is more than fraudulent in this
case and depending on discovery there are these claims and
other claims that would illuminate a plan and motivation and
a scheme on part of the Defendants to operate and attempt to
collect assets THAT IT HAS NO LEGAL RIGHT TO COLLECT OR
Id. at ¶ 68 (emphasis in original).
third claim, "Violation of Fair Debt Collection
Practices Act," alleges that SLS and MC engaged in
unfair debt collection practices by foreclosing without
proper legal authority and ...