ORDER AND FINDINGS AND RECOMMENDATIONS
KENDALL J. NEWMAN, Magistrate Judge.
Plaintiff Vernon Deck, who proceeds without counsel, initially filed this action on February 2, 2017, and requested leave to proceed in forma pauperis. (ECF Nos. 1, 2.)
Plaintiff's complaint is subject to screening in accordance with 28 U.S.C. § 1915. Pursuant to 28 U.S.C. § 1915, the court is directed to dismiss the case at any time if it determines that the allegation of poverty is untrue, or if the action is frivolous or malicious, fails to state a claim on which relief may be granted, or seeks monetary relief against an immune defendant.
A federal court also has an independent duty to assess whether federal subject matter jurisdiction exists, whether or not the parties raise the issue.
After carefully reviewing plaintiff's complaint and conducting an evidentiary hearing on May 22, 2017, the court concludes that plaintiff lacks standing to bring his claims and/or that the claims fail to state a claim on which relief may be granted and are patently frivolous. Therefore, the court recommends that the action be dismissed with prejudice.
In 1999, plaintiff, as an unmarried man, bought the subject real property located at 1124 Hawthorne Loop in Roseville, California, signing a note and deed of trust to obtain a mortgage loan. After plaintiff married Heather Summerby in December 2001, the loan was refinanced by virtue of the operative November 1, 2002 adjustable rate note for an amount of $306,000.00 borrowed from Option One Mortgage Corporation, and Summerby was added to the title of the property. It is undisputed that both plaintiff and Summerby, as a married couple, executed the November 1, 2002 deed of trust and its associated documents, such as the adjustable rate rider. However, the parties dispute whether the note itself was signed only by Summerby, or by both plaintiff and Summerby, and thus whether plaintiff himself is an obligor on the note. In any event, plaintiff contends that he, and not Summerby, subsequently made the vast majority of payments on the loan. In November 2008, after plaintiff and Summerby had divorced, Summerby transferred her interest in the property to plaintiff by a quit claim deed. It is undisputed, at least for purposes of these proceedings, that solely Mr. Deck presently holds title to the property.
According to defendants' evidentiary hearing brief, the loan went into default around October 2011, and as of July 14, 2016, the unpaid balance was $412,527.74 with total arrearages of $150,666.37. (
Although defendants have commenced foreclosure proceedings, a foreclosure sale has been postponed multiple times due to plaintiff's two prior state court lawsuits and bankruptcy case. On November 14, 2014, plaintiff filed a suit against defendants in the Placer County Superior Court (Case No. SCV0035443). (ECF No. 9-2.)
Thereafter, on February 2, 2017, plaintiff filed the instant federal lawsuit. (ECF No. 1.)
PROCEDURAL HISTORY OF THIS CASE
After the case was filed, the assigned district judge, Judge England, initially denied plaintiff's motion for a temporary restraining order ("TRO"), but subsequently granted plaintiff's amended motion for a TRO based on the allegations in plaintiff's submission to provide all parties an opportunity to be heard prior to any trustee's sale of the property. (ECF Nos. 3-7.) Along with the TRO, the court issued an order to show cause why a preliminary injunction should not issue. (ECF No. 7.) Defendants ultimately filed a response to the order to show cause, and plaintiff filed a reply brief. (ECF Nos. 9, 13.)
Subsequently, by minute order on February 22, 2017, and in a reasoned decision on February 27, 2017, the district judge denied plaintiff's request for a preliminary injunction. (ECF Nos. 15, 17.) The district judge observed:
(ECF No. 17 at 5.)
As such, on March 2, 2017, the undersigned issued an order to show cause why the action should not be dismissed for lack of standing, an impediment to the court's jurisdiction. (ECF No. 18.) On March 16, 2017, plaintiff filed a response to the order to show cause, and on March 24, 2017, defendants filed a reply to plaintiff's response. (ECF Nos. 23, 31.) After reviewing the parties' filings, the court found that making a determination regarding the issue of standing in this case required the court to resolve issues of credibility and/or disputed material facts, and that an evidentiary hearing was therefore necessary. (ECF No. 32.)
Consequently, on April 5, 2017, the court set an evidentiary hearing for May 22, 2017, strictly limited to the following two issues: (a) whether plaintiff signed the November 1, 2002 note and is thus a borrower for purposes of the loan at issue, or whether plaintiff has otherwise assumed the loan; and (b) regardless of whether plaintiff is a borrower or has assumed the loan, whether plaintiff has paid off the loan in its entirety. (ECF No. 35.)
At the May 22, 2017 evidentiary hearing, plaintiff appeared representing himself, and attorneys Gabriel Ozel and Robert Norman appeared on behalf of defendants. (ECF No. 45.) The court entertained the presentation of both documentary evidence
Based on the court's record, including the evidence developed at the evidentiary hearing, the court proceeds to address plaintiff's claims separately below.
Claims under the California Homeowner's Bill of Rights
Only borrowers have standing to assert claims for violation of the California Homeowner's Bill of Rights.
At the evidentiary hearing, plaintiff did not present any evidence that he had assumed the loan. Instead, plaintiff emphatically claimed that he had signed the note at the loan's origination on November 1, 2002, offering into evidence a version of the note bearing his signature. (Pl's Ex. 12.) Plaintiff acknowledged his prior testimony from the state court deposition, in which he effectively conceded that he did not sign the note, but testified that he subsequently discovered a version of the note bearing his signature. Plaintiff essentially contends that defendants fabricated the version of the note with only Summerby's signature, and deceived him at his state court deposition by showing him the allegedly fabricated note. According to plaintiff, his subsequent discovery of the note with his signature backs up his contention that he had been a borrower on the loan since its origination. For the reasons discussed below, the court finds plaintiff's testimony, as well as his "discovered" version of the note, not credible.
As an initial matter, with respect to plaintiff's version of the note, the document itself raises significant concerns. Although Summerby's signature appears on a signature line above her printed name, plaintiff's name is curiously not printed below his signature. (Tr. 121-22; Pl's Ex. 12.) This at least plausibly suggests that the note was prepared by the lender contemplating a signature by Summerby only, and not by plaintiff. However, plaintiff's version of the note is even more troubling in light of plaintiff's own testimony that Summerby had already executed the note before plaintiff arrived to sign the escrow documents, and that plaintiff then signed the original note on the same page that already contained Summerby's original signature. (Tr. at 33-34, 118.) At the hearing, defendants produced what credibly appeared to be the original wet ink November 1, 2002 note, which the court and plaintiff examined, and a color copy of which was introduced as Defendants' Exhibit 1. (Tr. 106-10; Defs' Ex. 1.) That note contained only Summerby's signature, with no signature by plaintiff, and the allonge attached to the note identified the "borrowers" as "Heather Summerby." (Def's Ex. 1.) Upon further questioning, plaintiff could not explain, beyond mere speculation, how the original wet ink note could only contain Summerby's signature when plaintiff testified that he had put his signature on the same page of the original note as Summerby's original signature. (Tr. 118-21.)
Furthermore, the circumstances of plaintiff's "discovery" of his version of the note are highly suspect. In the 2014 state court action, plaintiff, then represented by counsel, produced about 2000 pages of documents in response to document requests, including copies of the note signed only by Summerby, after plaintiff and his attorneys purportedly did an exhaustive search of plaintiff's files. (Tr. 43-44, 95-96, 98-103, 117; Defs' Ex. 23.) Also, plaintiff's own handwritten notes indicated that although some of the loan documents in his possession, such as the deed of trust and adjustable rate rider, were signed by both plaintiff and Summerby, the loan application and note were signed only by Summerby. (Tr. 96-98, 117; Defs' Ex. 22.) Then, at some point in 2016, plaintiff allegedly "discovered" a version of the note bearing his signature. (Tr. 41.) Even though he testified that he found that copy in subpoenaed documents that had been in his possession since 2006, plaintiff was unable to articulate why it was not produced in discovery in the 2014 state court action. (Tr. 41-46.) Tellingly, this alleged "discovery" in 2016 took place after the state court in the 2016 action denied plaintiff's request for a preliminary injunction, precisely because it found that plaintiff was not a borrower on the note.
Additionally, plaintiff himself in numerous communications appeared to acknowledge that he was not a signatory to the November 1, 2002 note:
At the hearing, plaintiff suggested that those prior concessions were only made because defendants purportedly misled him by claiming that he did not sign the note, especially since he could not locate the version with his signature until 2016. However, the court also finds that testimony not believable. Even if plaintiff could not locate a copy of the note with his signature until 2016, he was present at escrow and obviously knows whether or not he signed the note. If he indeed signed the note, one would have expected plaintiff to clearly and directly insist as much in communications with the lender; not make concessions to the contrary, as he did in the several communications cited above. (Tr. 70-75, 78-82, 87-90.)
In any event, evidence introduced at the evidentiary hearing reveals a potentially convincing explanation for why plaintiff was not on the note. It is undisputed that plaintiff's original loan obtained in 1999 was put in foreclosure status at the time of the refinancing on November 1, 2002. (Tr. 61-62, 135-38; Pl's Ex. 7.)
(Defs' Ex. 5; Tr. 66-67;
Moreover, at the hearing, plaintiff himself offered a December 3, 2015 declaration by Summerby, wherein she states that she was the only person who signed the note and continues to be the only person liable for the loan. (Tr. 151-52; Pl's Ex. 20.) Defendants also introduced another declaration by Summerby, dated May 14, 2017, again affirming that she was the only person who signed the note and continues to be the only person liable for the loan. (Defs' Ex. 34.)
Additionally, plaintiff offered the July 28, 2016 letter of notary Michelle Barnes, which states:
(Pl's Ex. 5.) At the hearing, Ms. Barnes testified that plaintiff came to her office, asked her to write the letter, and specifically requested her to add the second full paragraph; she felt pressured into writing the letter, because plaintiff was taking up her work time. (Tr. 203-12.)
Finally, in addition to the specific evidence discussed above, the court generally found plaintiff's demeanor and testimony at the hearing to be less than credible. On several occasions, plaintiff could not adequately explain his rationale or actions, and instead feigned confusion or resorted to frivolous contentions. By way of example, when asked whether he recognized Summerby's signature (which appears as "HSummerby") on defendants' copy of the wet ink note (Defs' Ex. 1), plaintiff indicated: "I don't know. Maybe it's Henry Summerby or Harry Summerby or Helen Summerby." (Tr. 147.) He then nonetheless conceded that he was married to Summerby for an extended period of time and believed it was her signature. (
Consequently, in light of the above, the court finds plaintiff's testimony, and his alleged 2016 "discovery" of a note that he purportedly signed in 2002 not credible. The court is not insensitive to the fact that a pro se litigant may have been confused by the nature of the refinancing and his status as a borrower, especially given the references to "borrower" found in some of the escrow documents that plaintiff signed and the fact that plaintiff himself had been making most of the payments on the loan. However, plaintiff does not come to this court as a good faith pro se plaintiff who merely misunderstood a loan transaction. The court finds that plaintiff was well aware of his non-borrower status and standing problems from the state court litigation, and then entirely crossed the line by essentially perjuring himself and creating a fraudulent document to attempt to overcome his standing problems. Such conduct is offensive to this court and our system of justice, and may even subject plaintiff to criminal liability, an issue as to which the court makes no decision here.
Therefore, the court finds that plaintiff did not sign the November 1, 2002 note at the loan's origination, is not a borrower for purposes of the loan at issue, and thus has failed to show by a preponderance of the evidence that he has standing to bring his claims under the California Homeowner's Bill of Rights.
Claim for Fraudulent Misrepresentation
In support of his fraudulent misrepresentation claim, plaintiff primarily alleges that, in July 2012, he was contacted by an individual named Nanlab, an agent of Wells Fargo, who told plaintiff that if he ceased making payments on the loan for 90 days, the bank would lower his monthly payment. Plaintiff allegedly followed those instructions, but then learned in November 2013 that the bank had no record of any such arrangements and that foreclosure proceedings were underway. Additionally, plaintiff appears to allege fraud with respect to the origination of the loan leading him to believe that he was a borrower on the loan, and that defendants fraudulently failed to cancel the note after it was purportedly paid off in April 2012. (
To bring a fraud claim against defendants based on alleged misrepresentations made in the course of foreclosure proceedings, plaintiff must show that he is a borrower on the loan.
Moreover, even if plaintiff had standing, his fraudulent misrepresentation claim would be barred by the applicable three-year statute of limitations.
Therefore, plaintiff lacks standing to bring his fraudulent misrepresentation claim, and even if he had standing, the claim is barred by the applicable statute of limitations.
Claims for Quiet Title and Declaratory Judgment
By virtue of his quiet title and declaratory judgment claims, plaintiff essentially seeks a declaration that the note has been paid and is therefore cancelled, and that title to the property is vested in plaintiff without any further encumbrances. (ECF No. 1 at 27.)
Even setting aside any issues with respect to plaintiff's standing, plaintiff's claims for quiet title and declaratory judgment are not viable, because he has not shown by a preponderance of the evidence that he paid off the note in full.
Therefore, even assuming arguendo that plaintiff had standing to bring claims for quiet title and declaratory judgment, such claims are not viable and plainly frivolous.
Fair Debt Collection Practices Act Claim
Plaintiff's claim under the FDCPA itself contains no specific factual allegations, but merely incorporates by reference the entire complaint regarding the making of the loan and defendants' attempted foreclosure on the property. (ECF No. 1 at 28.) As an initial matter, plaintiff does not allege any facts suggesting that defendants are debt collectors for purposes of the FDCPA. But even if he did, "the law is well-settled . . . that creditors, mortgagors, and mortgage servicing companies are not debt collectors and are statutorily exempt from liability under the [FDCPA]."
For the reasons discussed above, the court finds that all of plaintiff's claims are subject to dismissal, because plaintiff lacks standing to bring those claims and/or they are patently frivolous. Therefore, the court finds that granting leave to amend in this case would be futile.
Accordingly, IT IS HEREBY RECOMMENDED that:
In light of those recommendations, IT IS ALSO HEREBY ORDERED that all pleading, discovery, and motion practice in this case are STAYED pending resolution of these findings and recommendations. With the exception of objections to the findings and recommendations and non-frivolous motions for emergency relief, the court will not entertain or respond to motions and other filings until the findings and recommendations are resolved.
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) days after being served with these findings and recommendations, any party
IT IS SO ORDERED AND RECOMMENDED.