Tag Archives: motion to dismiss

Eastern District of California Court Dismisses Plaintiff’s Claims of Federal Statutory Violations, Unlawful Foreclosure, Fraud, Equitable Estoppel & Accounting

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The United States District Court for the Eastern District of California in deciding Herrejon v. Ocwen Loan Servicing, LLC, 2013 U.S. Dist. LEXIS 157126 (E.D. Cal. Nov. 1, 2013) dismissed the plaintiff’s complaint as it failed to allege cognizable claims. The plaintiff’s complaint purported to allege claims for federal statutory violations, unlawful foreclosure, fraud, equitable estoppel and accounting.

reporting authorized accounts

The plaintiffs (Ricardo G. Herrejon and Rosa E. Navarro-Herrejon) filed this action, which challenged the foreclosure of their property. The plaintiffs also sought to enjoin a November 4, 2013 property foreclosure sale. Plaintiffs’ complaint accused defendants of “unlawful foreclosure.” However, the court dismissed the plaintiff’s action in the absence of viable claims, the court also denied plaintiffs’ requested injunctive relief, and entered judgment on dismissal of plaintiffs’ claims.

Central District of California Court Finds Plaintiff Lacks Standing as There Was No “Injury in Fact”

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The United States District Court for the Central District of California in deciding Ellis v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 157173 (C.D. Cal. Oct. 28, 2013) concluded that plaintiff did not have standing to challenge defendants’ initiating foreclosure proceedings.

Plaintiff brought a complaint with a litany of claims. The claims included (1) dissemination of false advertising pursuant to 15 U.S.C. § 52; (2) violation of the Fair Debt Collection Practices Act (“FDCPA“), 15 U.S.C. § 1692 et seq.; (3) violation of the Real Estate Settlement Procedures Act (“RESPA“), [2] 12 U.S.C. § 2601 et seq.; (4) violation of California Civil Code §§ 2923.5 et seq., 2924 et seq., 2932.5, and 1095; (5) violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq.; (6) false advertising pursuant to Cal. Bus. & Prof. Code § 17500; and (7) Quiet Title.

On September 12, 2013, MERS filed a motion to dismiss. The court, as an initial matter, noted that plaintiff failed to explain how she had been injured by defendants’ conduct. The court also noted that the previous foreclosures were rescinded, and plaintiff did not allege a pending foreclosure proceeding. Thus, to have standing to bring her claims, the court noted, “the plaintiff must have suffered an ‘injury in fact.'” Accordingly, the court dismissed the plaintiff’s claims granting the defendant’s motion.

Eastern District of California Found That MERS Was Not Required to Register to do Business in California

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The United States District Court, Eastern District of California, in deciding Bogdan v. Countrywide Home Loans, 09-1055 (E.D. Cal. 2010), found that MERS was not required to register to do business in California.

The Eastern District of California, after considering the plaintiff’s contentions, also dismissed the plaintiff’s fraud and unfair competition claims against MERS.

Eastern District of California Dismisses Plaintiff’s Wrongful Foreclosure Claims Due to Plaintiffs’ Lack of Tender

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The United States District Court, Eastern District of California in deciding the case of Small v. Mortgage Electronic Registration Systems, Inc., et al., No. 2:09-CV-0458 (E. D. Cal., 2010), concluded that dismissing the plaintiff’s wrongful foreclosure claims due to lack of tender by the plaintiffs was appropriate.

Plaintiffs filed their foreclosure action, naming three entities and two individuals as defendants, and alleged causes of action for unlawful foreclosure and unlawful eviction.

Defendants sought dismissal of plaintiffs’ complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that plaintiffs failed to state any cognizable claim. After considering the plaintiff’s claims, the court dismissed them due to lack of tender by the plaintiff.

California Eastern District Court Notes There is no Requirement for the Production of the Original Note to Initiate a Non-Judicial Foreclosure Sale Under California Law

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The California Eastern District Court in Castaneda et al v. Saxon Mortgage Services, Inc. et al., No. 2:2009cv01124 (E.D. Cal. 2010) dismissed the plaintiff’s claim alleging wrongful foreclosure due to foreclosing party’s lack of note.

Plaintiffs Cesar and Suzzanne Castaneda filed this action against defendants Saxon Mortgage Services, Inc., plaintiffs’ action purported to state a claim for “wrongful foreclosure” against Saxon. Plaintiffs attempted to base this claim on California Commercial Code section 3301, alleging that Saxon was not in possession of the note, was not a beneficiary, assignee or employee of the entity in possession of the note, and was therefore not a “person entitled to enforce” the security interest on the property in accordance with section 3301. (SAC ¶¶ 187-89.)

The court however found that section 3301 did not govern non-judicial foreclosures, which is governed by California Civil Code section 2924.Further, the court noted there is no requirement for the production of the original note to initiate a non-judicial foreclosure sale under California law.

Rating Agency 1st Amendment Defense Weakened, Again

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Federal District Judge O’Toole (D. Mass.) issued an Opinion and Order in Federal Home Loan Bank of Boston v. Ally Financial Inc. et al., No. 11-10952 (Sept. 30, 2013)  relating to the potential liability of S&P and Moody’s (the Rating Agency Defendants) for their ratings. The case “arises from the purchase of private label mortgage-backed securities” (PLMBS) by the plaintiff, FHLB Boston. (1)  FHLB Boston alleges that the rating agency defendants knew that their ratings “were inaccurate and based on flawed models, and that their conduct gives rise to” a claim for fraud as well as other causes of action. (1) The Rating Agency Defendants sought to have the claims dismissed for failure to state a claim. The Court rejected this as to the fraud claim:

The Rating Agency Defendants’ argument that their ratings are non-actionable opinions is unconvincing. As discussed in Abu Dhabi I, “[a]n opinion may still be actionable if the speaker does not genuinely and reasonably believe it or if it is without basis in fact.” 651 F. Supp. 2d at 176 (internal citations omitted). Here the Bank has pled with sufficient particularity that the Rating Agency Defendants issued ratings that they did not genuinely or reasonably believe. For example, the Amended Complaint alleges that the Rating Agency Defendants diluted their own standards and carried out their ratings procedures in an intentionally lax manner as to PLMBS while maintaining higher standards in other contexts. The Bank has also sufficiently pled scienter, alleging that the Rating Agency Defendants competed for business by artificially inflating ratings, as they were only paid if they provided high ratings. (4)

Rating agencies were able to avoid liability for decades, claiming that their ratings were like min-editorials that were protected by the First Amendment. A number of recent cases reject that defense in a variety of contexts (See here, here and here for instance). It is unclear what will happen when these cases are appealed, but for now it appears that a number of courts have identified situations where an opinion can be more than an opinion — it can amount to actionable fraud.

Court Holds That Mortgagor Lacks Standing to Challenge the Propriety of Mortgage Assignments Under Rhode Island Law

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The Rhode Island magistrate judge in Cosajay v. Mortgage Electronic Registration Systems, Inc., C.A. No. 10-442-M (D.R.I. June 23, 2011) issued “Reports and Recommendations,” holding that according to Rhode Island law a mortgagor “lacks standing to challenge the propriety of mortgage assignments and the effect those assignments, if any, could have on the underlying obligation.”

The Plaintiff challenged the validity of the assignments on multiple grounds, including MERS’ authority to execute the assignment. The magistrate however determined that under Rhode Island law, only parties to a contract may seek to have rights declared under a contract.