Opinion
Case No. 3:19-cv-01590-JR
06-30-2020
KAMBIZ and HOMA MORADI, husband and wife, Plaintiffs, v. RECONTRUST COMPANY, NA; BANK OF AMERICA, NA; and THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWMBS, INC., CHL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-15, Defendants.
FINDINGS AND RECOMMENDATION :
Pro se plaintiffs Kambiz and Homa Moradi bring this action against ReconTrust Company, NA ("ReconTrust"), Bank of America, NA ("BoA"), and the Bank of New York Mellon ("BNYM"). Defendants now move to dismiss plaintiffs' amended complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons stated below, defendants' motion should be granted and this case should be dismissed.
BACKGROUND
In June 2007, Ms. Moradi took out a loan from Countrywide Home Loans, Inc., dba America's Wholesale Lender, in the amount of $643,000 to purchase a residential property located in Tigard, Oregon. Am. Compl. ¶ 3.1 (doc. 43); Kambiz v. ReconTrust Co., N.A, 2019 WL 8953359, *1 (D. Or. Dec. 9, 2019), adopted by 2020 WL 1286207 (D. Or. Mar. 18, 2020). To secure this transaction, plaintiffs executed a promissory note ("Note") and a deed of trust ("DOT"). Id. The DOT listed America's Wholesale Lender as the lender, Fidelity National Title as the trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary "solely as a nominee for Lender and Lender's successors and assigns." Am. Compl. ¶ 3.2 (doc. 43); Kambiz, 2019 WL 8953359 at *1.
On July 1, 2008, BoA acquired Countrywide Home Loans, Inc. through a merger with BoA's wholly-owned subsidiary, Red Oak Merger Corporation. Am. Compl. ¶ 3.3 (doc. 43); Kambiz, 2019 WL 8953359 at *1.
Beginning in October 2008, plaintiffs defaulted on their obligations under the Note. Kambiz, 2019 WL 8953359 at *1. On March 13, 2009, MERS appointed ReconTrust as successor trustee under the DOT. Id.; Am. Compl. ¶ 3.5 (doc. 43). On November 18, 2009, MERS, acting as beneficiary, purported to assign its rights in the Note and DOT to BAC Home Loan Servicing LP, formerly known as Countrywide Home Loans Servicing LP. Kambiz, 2019 WL 8953359 at *1. On August 10, 2011, BoA, as successor by merger to BAC Home Loan Servicing LP, assigned the Note and DOT to BNYM. Id.
On January 6, 2012, ReconTrust conducted a foreclosure on behalf of BNYM and sold plaintiffs' property at public auction. Id.; Am. Compl. ¶¶ 3.11, 3.21-22, 3.31 (doc. 43). On January 20, 2012, ReconTrust executed and recorded the Trustee's Deed. Kambiz, 2019 WL 8953359 at *1.
On February 17, 2012, plaintiffs were served with a summons and complaint for forcible entry and unlawful detainer ("FED"). Id. A FED hearing was held on March 19, 2012. Id. at *2; Am. Compl. ¶ 3.25 (doc. 43). At that hearing, a stipulated judgment was entered wherein the parties agreed that plaintiffs would pay past due rents and vacate the property by May 3, 2012; plaintiffs did not waive their right to challenge the underlying foreclosure in a subsequent legal action. Kambiz, 2019 WL 8953359 at *2.
In January 2017, plaintiffs filed their first lawsuit against defendants regarding the 2012 foreclosure ("First Moradi Lawsuit"), alleging a claim under Oregon's Unlawful Trade Practices Act, as well as common law fraud. See generally Kambiz v. ReconTrust Co., N.A., 2017 WL 5615167, *2 (D. Or. Nov. 21, 2017), aff'd, 730 Fed. Appx. 504 (9th Cir. 2018). In July 2017, the Court granted defendants' Rule 12(b)(6) motion on statute of limitations grounds but afforded plaintiffs leave to replead. Id. at *3. Plaintiffs filed their amended complaint in August 2017. Id. In November 2017, the Court dismissed the First Moradi Lawsuit with prejudice on the basis that plaintiffs' claims were time-barred, finding that plaintiffs' claims accrued no later than March 19, 2012, the date of the FED hearing. Id. at *5. In July 2018, the Ninth Circuit Court of Appeals affirmed.
In August 2019, plaintiffs filed the present action, again challenging the 2012 foreclosure. Specifically, plaintiffs alleged statutory claims under Oregon's Uniform Commercial Code and Trust Deed Act ("OTDA"), as well as common law claims for breach of contract and invasion of privacy. See generally Compl. (doc. 1-2).
In October 2019, defendants moved to dismiss plaintiffs' complaint, arguing that their claims were barred by claim preclusion, issue preclusion, and the statute of limitations. Plaintiffs opposed defendants' motion on the basis that "MERS ceased to be the nominee-beneficiary of the Deed" due to the "July 2008 merger" of BoA/Red Oak Merger Corporation and Countrywide Home Loans, Inc. Kambiz, 2019 WL 8953359 at *2. Essentially, plaintiffs maintained that MERS' lack of authority to make assignments during the foreclosure process rendered "the January 2012 foreclosure void, such that the statute of limitations and doctrines of issue and claim preclusion [did] not apply." Id.
In December 2019, the Court found plaintiffs' complaint deficient in two respects and recommended that defendants' motion be granted. First, consistent with the First Moradi Lawsuit's rulings, the Court resolved that "any claims relating to the wrongfulness of the January 2012 foreclosure . . . accrued no later than March 19, 2012," and were thus time-barred by the applicable statutes of limitations. Id. at *3 (citations omitted). Second, the Court explained that plaintiffs' claims failed at the pleadings level due to their October 2008 default on the Note and failure to allege facts indicating that the party who purchased the property in 2012 (or at any point thereafter) was not bona fide. Id. at *3-5 (citations omitted).
During the objections process, plaintiffs pivoted and argued for the first time that the FED judgment was void under Wolf v. GMAC Mortg., LLC, 276 Or.App. 541, 548, 370 P.3d 1254 (2016). Pls.' Clarification of Objs. 2-5 (doc. 33). In adopting the Court's recommendation in full, Judge Simon denoted that "[p]laintiffs do not challenge the FED court's personal jurisdiction or subject matter jurisdiction," and expressly distinguished Wolf. Kambiz, 2020 WL 1286207 at *1-2. Judge Simon nonetheless found that dismissal with prejudice was inappropriate. Id. at *2.
Plaintiffs thereafter sought reconsideration of Judge Simon's order because "research conclusively establishes that [they] were wrong to concede the jurisdiction issue; and that this Court's finding that the 2012 FED court had jurisdiction to decide the unlawful detainer action is clearly erroneous." Pls.' Mot. Recons. 4 (doc. 41). In April 2020, Judge Simon granted in part and denied in part plaintiffs' motion for reconsideration as follows:
The Court DENIES Plaintiffs' request that the Court: (1) rescind the Order; (2) vacate the 2012 FED judgment; (3) require title to the property be restored to Plaintiffs; or (4) order Defendants to pay Plaintiffs the value of the property plus interest. The Court, however, GRANTS Plaintiffs' alternative request that Plaintiffs' 14-day period to file an amended complaint begin today, April 3, 2020. If Plaintiffs believe that they can cure the deficiencies identified in Magistrate Judge Russo's Findings and Recommendations, which were adopted by the Court, Plaintiffs may attempt to do so by filing their amended complaint not later than April 17, 2020. The Court does not anticipate granting any further extensions.Order (Apr. 3, 2020) (doc. 42).
On April 21, 2020, without first seeking or obtaining an extension of time, plaintiffs lodged their amended complaint alleging a single declaratory judgment claim under Or. Rev. Stat. § 28.010. As relief, plaintiffs request that "the Court declare the January 6, 2012[,] trustee's sale void ab initio and order that restitution be awarded to Plaintiffs in an amount equal to the value of the Property of January 6, 2012, with statutory interest from that date." Am. Compl. ¶ 4.2 (doc. 43). On June 3, 2020, defendants filed the present motion. On June 19, 2020, three days after the deadline lapsed, plaintiffs opposed defendants' motion.
On June 29, 2020, plaintiffs submitted an "Amended Response," which is substantively identical to their initial opposition. Although the Court has thoroughly reviewed plaintiffs' amended filing, it does not alter the outcome of this case. This is especially true considering that "a court may not look beyond the complaint to a plaintiff's moving papers" in evaluating the sufficiency of pleadings. Schneider v. Cal. Dep't of Corr., 151 F.3d 1194, 1197 n.1 (9th Cir. 1998).
STANDARD
Where the plaintiff "fails to state a claim upon which relief can be granted," the court must dismiss the action. Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). For the purposes for the motion to dismiss, the complaint is liberally construed in favor of the plaintiff and its allegations are taken as true. Rosen v. Walters, 719 F.2d 1422, 1424 (9th Cir. 1983). Regardless, bare assertions that amount to nothing more than a "formulaic recitation of the elements" of a claim "are conclusory and not entitled to be assumed true." Ashcroft v. Iqbal, 556 U.S. 662, 680-81 (2009). Rather, to state a plausible claim for relief, the complaint "must contain sufficient allegations of underlying facts" to support its legal conclusions. Starr v. Bacca, 652 F.3d 1202, 1216 (9th Cir. 2011).
Pro se pleadings are held to a less stringent standard than those drafted by lawyers. See, e.g., Haines v. Kerner, 404 U.S. 519, 520 (1972). The court, in many circumstances, instructs the pro se litigant regarding deficiencies in the complaint and grants leave to amend. Eldridge v. Block, 832 F.2d 1132, 1136 (9th Cir. 1987). Nevertheless, a pro se plaintiff's claims may be dismissed without leave to amend where it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him or her to relief. Barrett v. Belleque, 544 F.3d 1060, 1061-62 (9th Cir. 2008).
DISCUSSION
Defendants assert that dismissal with prejudice is warranted because the amended complaint "represents [plaintiffs'] fourth attempt to challenge the 2012 foreclosure sale of their property," and "this Court and the Ninth Circuit have issued a total of five written decisions finding that Oregon statutes of limitations barred Plaintiffs' claims . . . as a matter of law." Defs.' Mot. Dismiss 2 (doc. 49). Additionally, defendants argue that, although plaintiffs "now allege that the FED court did lack jurisdiction," they fail to include any new facts to support the timeliness of their claims. Id. at 6.
Plaintiffs, in contrast, contend "they have never litigated" the validity of the "non-trustee's sale" or, by extension, the FED court's subject matter jurisdiction. Pls.' Am. Resp. to Mot. Dismiss 9-11 (doc. 55-1). According to plaintiffs, there is also "no timeliness requirement regarding a void judgment challenge," such that the statute of limitations is inapplicable. Id. at 8-9.
Despite plaintiffs' assertions to the contrary, the amended complaint encompasses allegations and issues that have already been resolved by this Court. Specifically, the amended complaint continues to allege that defects in the foreclosure process invalidated both the January 2012 non-judicial foreclosure sale and March 2012 FED hearing. See, e.g., Am. Compl. ¶¶ 3.2-3.26 (doc. 43). While plaintiffs did not employ the term "non-trustee's sale" in their original complaint or the First Moradi Lawsuit, their claims plainly emanated from the fact that ReconTrust, "the purported successor trustee[,] had no legal authority to sell the Property on January 6, 2012." Compl. ¶¶ 1.3, 3.20, 3.33 (doc. 1-2); Kambiz, 2019 WL 8953359 at *2-4; see also Pls.' Am. Resp. to Mot. Dismiss 10 (doc. 55-1) (plaintiffs acknowledging that Judge Simon's "Order did inform [them] that the lack of a trustee to conduct the sale and to issue the trustee's deed was not sufficient to invalidate the FED action"). Further, in ruling on their objections and motion for reconsideration, Judge Simon explicitly considered, but rejected, plaintiffs' arguments concerning both Wolf and the FED court's lack of jurisdiction. Kambiz, 2020 WL 1286207 at *1-2; Order (Apr. 3, 2020) (doc. 42).
Plaintiffs therefore have not provided any basis for the Court to diverge from its prior ruling concerning the accrual date or timeliness of their claims associated with the January 2012 foreclosure. Moreover, as this Court previously explained, plaintiffs defaulted on the Note and DOT in October 2008, such that "the true beneficiary - i.e. the lender - was still legally entitled to foreclose." Kambiz, 2019 WL 8953359 at *4; see also Theiss v. CitiMortg., Inc., 2013 WL 4516764, *3 (D. Or. Aug. 23, 2013) ("[t]here is no dispute that the Deed of Trust entitles the beneficiary [or the holder of the promissory note] to foreclose on the property in the event of default," and there "there is no obligation for Defendants to record assignments of the Deed of Trust that occur by operation of law").
As is true in the present case, declaratory judgment claims are typically contingent upon the violation of some underlying right afforded by statute or at common law. See Am. Compl. ¶ 3.41 (doc. 43) ("[s]ince neither ORS 86.782(6)(a) nor any other provision of the OTDA authorized the purchaser at the January 6, 2012[,] sale to commence a FED action, the purchaser's commencement of the FED action violated the OTDA and, therefore, was void ab initio"). As such, declaratory judgment claims "are subject to the statute of limitations that applies to the underlying claim." Puri v. Khalsa, 788 Fed.Appx. 563, 564 (9th Cir. 2019) (citing Doyle v. City of Medford, 271 Or.App. 458, 464-65, 351 P.3d 768 (2015)). --------
As a result, the relief plaintiffs request is simply not available, even accepting that MERS lacked authority to assign the DOT. Compare Pls.' Am. Resp. to Mot. Dismiss 12-13 (doc. 55-1) (plaintiffs clarifying that they "[s]eek to prevail on the strength of their superior title to the property"), with Barker v. JP Morgan Chase Bank, 2016 WL 3647329, *6-7 (D. Or. July 7, 2016), aff'd, 743 Fed.Appx. 850 (9th Cir. 2018) (wrongful foreclosure or quiet title claims premised on the purported strength of the borrower's title fail absent allegations establishing that "the subject loan has been satisfied or that plaintiff is ready, willing and able to tender the full amount on the loan") (citation and internal quotations omitted).
In sum, the amended complaint fails to cure the pleading deficiencies previously identified by this Court. While plaintiffs opposed defendants' motion (albeit belatedly), they do not identify any additional facts in their possession that would potentially state a plausible claim for relief based on the 2012 foreclosure. Accordingly, the Court recommends that plaintiffs' amended complaint be dismissed be with prejudice.
RECOMMENDATION
For the foregoing reasons, defendants' Motion to Dismiss (doc. 49) should be granted and judgment should be prepared dismissing this case.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.
DATED this 30th day of June, 2020.
/s/ Jolie A. Russo
Jolie A. Russo
United States Magistrate Judge