Tag Archives: Downstream Litigation

Missouri Court Dismisses Real Estate Settlement Procedures Act and Home Ownership Equity Protection Act Violation Claims Brought Against Nationstar Mortgage, LLC and MERS

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The court in deciding White v. CTX Mortg., LLC, 2013 U.S. Dist. LEXIS 146589 (W.D. Mo. 2013) ultimately granted the defendant’s motion to dismiss. The plaintiff’s complaint asserted that the chain of title had been broken. Consequently, “title was not clear enough” for CTX to foreclose on the property.

Plaintiffs raised eight claims: (1) “Predatory Lending”; (2) “Servicer Fraud”; (3) violations of the Home Ownership Equity Protection Act (“HOEPA”), 15 U.S.C. § 1639, et seq.; (4) violations  [5] of the Real Estate Settlement Procedures Act (“RESPA”), 15 U.S.C. § 2601, et seq.; (5) “Breach of Fiduciary Duty”; (6) “Identity Theft”; (7) Civil Rico; and (8) quiet title to real property.

For relief, plaintiffs requested economic damages; a declaratory judgment identifying the “owner” of the note and clarifying whether the deed was actually security for the loan; and injunctive relief conveying the property to plaintiffs or a judgment quieting title to plaintiffs’ property.

At the outset, the court made several general observations about the complaint. In each count, plaintiffs had substituted legal conclusions for facts. Subsequently, Nationstar and MERS argued that the court should dismiss all eight counts because they (1) failed to state a claim upon which relief can be granted, or (2) were barred by the applicable statute of limitations. Ultimately, the plaintiff’s claims were dismissed.

 

Nevada Court Dismisses TILA and Fraud Claims Brought Against Chase and MERS

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The court in deciding Leong v. JPMorgan Chase, 2013 U.S. Dist. LEXIS 144678 (D. Nev. 2013) ultimately granted the defendant’s motion to dismiss.

This action arose out of the foreclosure proceedings initiated against the property of the plaintiff Teresa Leong. Defendants Chase and MERS filed a motion to dismiss plaintiff’s action. Plaintiff alleged two causes of action, one of which was fraud: “wrongful use of a non existent co-borrower” and the other was “fraudulent documentation.” Plaintiff also requested, “to see her original documents, note and deed.”

After considering the plaintiff’s contentions, the court found that the plaintiff failed to allege that she was current on her mortgage payments or had otherwise satisfied the conditions and terms under the deed of trust. Accordingly, the court found that plaintiff failed to state a legally cognizable claim for wrongful foreclosure, and the action must be dismissed.

Plaintiff also insisted that defendant failed to provide the original note, plaintiff cited Nev. Rev. Stat. § 107.086(4). However, the court found that the defendants correctly point out that the plaintiff failed to cite to any authority that required defendants to produce the original note. As such, this cause of action was dismissed with prejudice.

Plaintiff lastly alleged that defendant failed to comply with the Federal Truth in Lending Act (“TILA”), codified at 15 U.S.C. § 1601 et seq. TILA contained many provisions concerning accurate and meaningful credit disclosures. However, the court found that the plaintiff’s complaint did not specify any particular provision with which defendant failed to comply. Accordingly, plaintiff provided only a conclusory statement as support for a vague TILA claim, and to the extent that this cause of action is alleged, it must be dismissed.

 

Nevada Court Dismisses Show-me-the-Note Action Brought Against Chase and MERS

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The court in Leong v. JPMorgan Chase, 2013 U.S. Dist. LEXIS 144678 (D. Nev. Oct. 7, 2013) granted defendants’ motion to dismiss.

This action arose out of the foreclosure proceedings initiated against the property of pro se Plaintiff Teresa Leong. Pending before the court was a motion to dismiss filed by defendants JPMorgan Chase Bank, N.A. (“Chase”) and Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively, “Defendants”). Plaintiff continued to request “to see my original documents Note and Deed.”

Plaintiff insisted that defendant failed to provide the original note. The court found that the only possibly relevant Nevada statute requiring the presentation of the original note or a certified copy is at a Foreclosure Mediation. Nev. Rev. Stat. § 107.086(4). Moreover, the court noted that it treats copies in the same way as it treats originals: “a duplicate is admissible to the same extent as an original.” Nev. Rev. Stat. § 52.245.

The court noted that the defendants correctly point out that plaintiff failed to cite to any authority that requires defendants to produce the original note, and defendants additionally provided non-binding legal authority to the contrary. As such, the court dismissed this cause of action with prejudice.

Michigan Court Finds Plaintiff’s Argument to Prevent Removal Lacked Merit

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The court in Ordway v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 145228 ( E.D. Mich. Oct. 8, 2013) granted defendants’ motion and denied plaintiff’s motion.

This was a case challenging foreclosure proceedings. Plaintiff named Bank of America, N.A. (BOA); Bank of New York Mellon (BNYM), as Trustee for the benefit of the CWABS Inc. Asset-Backed Certificates, Series 2007-9 (the Trust); and unknown holders of the trust as defendants.

The complaint asserts multiple claims, as follows:

Count I Declaratory Relief that the foreclosure violated MCL 600.3204(1) and (3); Count II Declaratory Relief that the foreclosure violated MCL 600.3204(4), 600.3205a, and 600.3205c; Count III Breach of Contract; Count IV Intentional Fraud; Count V Constructive Fraud; Count VI Tortious Interference with Contractual Relations; Count VII Civil Conspiracy; Count VIII Michigan’s Regulation of Collection Practices Act; and Count IX: Accounting.

BOA and BNYM removed the case to federal court on the grounds of diversity jurisdiction under 28 U.S.C. § 1332. Before the court was the plaintiff’s motion to remand and defendants’ motion to supplement the notice of removal. The court denied plaintiff’s motion and granted defendants’ motion.

Plaintiff contended that removal was improper because (1) the unknown Trust holders did not consent to removal; (2) defendants did not attach the TRO with the removal papers; and (3) defendants had not established that diversity jurisdiction exists because they have not stated in their removal papers the citizenship of the unknown trust holders. The court found that the plaintiff’s arguments lack merit.

California Court Dismisses Action Brought Against MERS and Aurora Loan Services for Wrongfully Initiated Foreclosure Proceedings

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The court in Morgan v. Aurora Loan Servs., LLC, 2013 U.S. Dist. LEXIS 145623 (C.D. Cal. 2013) granted defendants’ motion to dismiss plaintiff’s claims. The court concluded that the “allegation of other facts consistent with the challenged pleading could not possibly cure the deficiencies” of either the first or third through tenth claims, thus the court dismissed these claims with prejudice.

Plaintiff Cherie J. Morgan filed this action against Aurora Loan Services, LLC (“Aurora”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Does 1-100, inclusive (collectively, “defendants”).

Plaintiff principally complained that defendants wrongfully initiated foreclosure proceedings against her property and that a subsequent trustee’s sale was invalid because defendants lacked any interest in the property. Plaintiff’s claim asserted the following claims for relief: (1) lack of standing; (2) breach of written contract; (3) intentional misrepresentation; (4) negligent misrepresentation; (5) cancellation of instruments; (6) quiet title; (7) promissory estoppel; (8) breach of implied covenant of good faith and fair dealing; (9) premature and unlawful filing of notice of default; and (10) unfair business practices under Cal. Bus. & Prof. Code §§ 17200 et seq. (“UCL”).

Defendants moved to dismiss plaintiff’s SAC. Plaintiff opposed the motion, but after considering the parties’ arguments, the court granted defendant’s motion to dismiss.

 

 

Tennessee Court Finds Allegation of Fraud Was Pled With Sufficient Particularity Pursuant to Tenn. R. Civ. P. 12.03

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The court in deciding Zhong v. Quality Loan Serv. Corp., 2013 U.S. Dist. LEXIS 145916 (W.D. Wash. 2013) reversed the lower court’s ruling dismissing the mortgagor’s intentional misrepresentation claim on the pleadings pursuant to Tenn. R. Civ. P. 12.03.

Plaintiff defaulted on her mortgage and defendants advised plaintiff of their plan to foreclose. Plaintiff subsequently sought an injunction and a declaratory judgment. The trial court entered a temporary restraining order preventing foreclosure, which it dissolved after granting defendants’ motion for judgment on the pleadings. Plaintiff appeals the trial court’s grant of defendants’ motion for judgment on the pleadings.

This court ruled that the lower court erred in dismissing the mortgagor’s intentional misrepresentation claim on the pleadings pursuant to Tenn. R. Civ. P. 12.03 because her allegation of fraud stemming from an intentional misrepresentation were pleaded with sufficient particularity.

Moreover, because the amended complaint alleged particular intentional misrepresentations of a material fact, that signatories possessed authority to execute the deed of trust, as well as the mortgagor’s detrimental reliance upon such, the claim satisfied the heightened requirements of Tenn. R. Civ. P. 9.02. Further, this court found that the mortgagor’s claim was not correctly dismissed based upon the statute of limitations, Tenn. Code Ann. § 28-3-105, because it was at least plausible that the mortgagor was unable to discover the alleged intentional misrepresentation until the mortgagees commenced foreclosure against her.

Washington Court Rejects Split-the-Note Theory

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The court in Zhong v. Quality Loan Serv. Corp., 2013 U.S. Dist. LEXIS 145916 (W.D. Wash. 2013) granted defendant’s motion to dismiss.

In her complaint, plaintiff alleged ten causes of action in connection with the initiation of the non-judicial foreclosure of her property.

Specifically, she brought claims for (1) wrongful foreclosure under the Washington Deed of Trust Act (“DTA”), RCW 61.24, (2) violation of Washington’s Consumer Protection Act (“CPA”), (3) negligence and breach of the duty of good faith and fair dealing, (4) a request for injunctive relief, (5) a request for declaratory judgment, (6) cloud of title, (7) quiet title, (8) predatory lending, (9) emotional distress, and (10) unjust enrichment. Defendants removed the case to federal court, and now move to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.

The defendants filed a motion to dismiss, this motion was granted. The court found that the plaintiff’s arguments failed as the court found that the plaintiff simply rehashed well-worn arguments that courts have repeatedly rejected.