ORDER AND FINDINGS AND RECOMMENDATIONS
CAROLYN K. DELANEY, Magistrate Judge.
Defendants' request for judicial notice (ECF No. 6), motion to dismiss (ECF No. 4), and motion to strike (ECF No. 5) came on regularly for hearing on May 31, 2017. Pro se plaintiff Fred Kaping appeared on behalf of himself. James Lee appeared telephonically for defendant Barrett Daffin Frappier Treder & Weiss, LLP ("BDFTW"). Leigh Curran appeared telephonically for defendant Wells Fargo Bank, N.A. ("Wells Fargo"). Upon consideration of the arguments made, review of the documents in support and opposition and good cause appearing therefore, THE COURT FINDS AS FOLLOWS:
Relevant Background 1
On August 27, 2007, plaintiff executed a secured promissory note and Deed of Trust for $633,000.00, secured by the property located at 1365 Shadow Rock Ct., Auburn, CA 95602. The Deed of Trust was recorded in the Placer County Recorder's Office on September 5, 2007 by World Savings Banks, F.S.B. ("World"). By plaintiff's own admission, Wells Fargo notified him through the U.S. mail that it "was the recipient of the Mortgage by a `successor-in-interest' claim under [World]." (ECF No. 1 at 27.) BDFTW, as the appointed trustee under the Deed of Trust, recorded a Notice of Default on March 11, 2016 and a Notice of Trustee's Sale on July 11, 2016. Plaintiff acknowledged before this court on May 31, 2017 that he has not tendered the balance of the Deed of Trust.
On February 17, 2017, plaintiff filed a complaint in Placer County Superior Court, alleging various federal and state causes of action for: (1) violation of the Fair Debt Collection Practices Act; (2) violation of the Truth in Lending Act; (3) violation of the California Rosenthal Act; (4) violation of the California unfair competition law; (5) cancellation of instruments under California law; (6) negligence; (7) slander of title; and (8) quiet title. Each claim is based upon the theory that the original Deed of Trust is void because it was the product of an illegal "table-funded" loan,
Defendants filed a notice of removal on March 31, 2017. (ECF No. 1.) On April 4, 2017, defendant Wells Fargo filed the motions currently before the court. (ECF Nos. 4-6.) Plaintiff opposed each motion. (ECF No. 8.) Defendant BDFTW joined in each motion. (ECF Nos. 10, 11.) Wells Fargo replied to plaintiff's opposition. (ECF No. 13).
Defendants' Request for Judicial Notice
In connection to their motion to dismiss, defendants request judicial notice of various documents. (ECF No. 6, Exs. 1-6.) In ruling on a motion to dismiss pursuant to Rule 12(b), the court "may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice."
A. Exhibits 1 and 2
Exhibit 1 is a copy of plaintiff's Adjustable Rate Mortgage Note, dated August 27, 2007. Exhibit 2 is a copy of the Deed of Trust from the same date. Plaintiff argues that he "disputes the facts contained within the instruments, and their legal meaning" and that defendants have failed to provide "any authenticity for the veracity in which the documents were created." (ECF No. 8 at 24.) However, he does not claim that Exhibit 1 or 2 are not true copies of his Mortgage Note or Deed of Trust. Nor does he point to any specific errors in the documents. Importantly, nothing in Exhibit 1 or 2 contradicts anything in plaintiff's complaint or opposition memorandum. Moreover, the Mortgage Note and Deed of Trust are public records and easily verifiable.
Judicial notice of Exhibits 1 and 2 is appropriate, because they are central to plaintiff's complaint and are not subject to reasonable dispute.
B. Exhibits 3 through 6
Defendants also request judicial notice of documents evidencing Wells Fargo as the successor in interest to World. Specifically, a certificate of corporate existence issued by the Office of Thrift Supervision ("OTS") regarding World (Exhibit 3); a letter authorizing a name change from World to Wachovia on OTS letterhead (Exhibit 4); an official certification of the Comptroller of Currency confirming Wachovia's conversion to a national bank and merger with and into Wells Fargo (Exhibit 5); and a printout from the website of the Federal Deposit Insurance Corporation, showing the history of World and its transition to Wells Fargo (Exhibit 6). This court has previously taken notice of the same documents in Exhibits 3 through 5 and the fact that Wells Fargo is World's successor by merger.
Plaintiff fails to address this court's prior judicial notice of these same documents. He only makes the same general claim that he disputes these documents and that they are not properly authenticated. ECF No. 8. As this court has previously taken judicial notice of these exact documents, judicial notice of Exhibits 3 through 5 is appropriate.
Exhibit 6, on the other hand, is a purported printout from the Internet that does not include any official letterhead or other designation, such as a URL web address, that would tend to self-authenticate its veracity. Since its veracity is subject to reasonable dispute, judicial notice of Exhibit 6 is not appropriate.
Defendants' Motion to Dismiss
A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint.
In considering a motion to dismiss for failure to state a claim, the court accepts all of the facts alleged in the complaint as true and construes them in the light most favorable to the plaintiff.
A. Plaintiff's Legal Conclusions
Plaintiff's arguments rest upon two fatally erroneous legal conclusions that he attempts to present as factual allegations: (1) that World improperly table-funded his original loan in violation of Cal. Bus. & Prof. Code § 10234, which thereby rendered the Deed of Trust void as an illegal contract, and (2) that World failed to record its assignment of the Deed of Trust to Wells Fargo. (ECF No 1.)
Cal. Bus. & Prof. Code § 10234 (Table-Funding)
Regardless of whether World engaged in table-funding as alleged, as a federal bank, World was not subject to Cal. Bus. & Prof. Code § 10234. By its plain language, this statute only applies to real estate licensees.
Federal banks are excluded from this definition of "real estate licensee" and the requirements of §10234.
Before its merger into Wells Fargo, World was a federal savings bank. (
Assignment of the Deed of Trust
Plaintiff also alleges that World failed to record its assignment of the Deed of Trust to Wells Fargo, and that, therefore, defendants had no authority to foreclose on the property. (ECF No. 1.) It is clear, however, that World was not required to assign the Deed of Trust to Wells Fargo. As this court has previously acknowledged, Wells Fargo is World's successor by merger and stands in the shoes of World.
Furthermore, plaintiff's Mortgage Note and Deed of Trust provide that the "successors and/or assignees" of World (i.e. Wells Fargo) have the authority to foreclose upon the property. (ECF No. 6, Exs. 1, 2.) Moreover, plaintiff admits that Wells Fargo notified him through the U.S. mail that it "was the recipient of the Mortgage by a `successor-in-interest' claim under [World]." (ECF No. 1 at 27.) Therefore, no assignment of the Deed of Trust was necessary.
B. Plaintiff's Claims for Relief
Plaintiff brings eight claims for relief, based upon his erroneous legal conclusions. As a result, he has failed to state any claims that are plausible on their face. Additionally, since plaintiff's claims are based upon a fundamental misapprehension of the applicable law, there are no additional facts that he could allege that would cure his pleading defects.
Fair Debt Collection Practices Act ("FDCPA");
Plaintiff alleges that defendants' actions—recording the Notice of Default and attempting to initiate non-judicial foreclosure—violate the FDCPA, 15 U.S.C. § 1692 et seq. (ECF No. 1.) However, as the successor in interest to World, Wells Fargo is deemed to be the originator of plaintiff's debt and is exempt from the FDCPA.
Truth in Lending Act
Plaintiff alleges that defendants violated 15 U.S.C. § 1641(g) of the Truth in Lending Act by failing to notify him within 30 days that his loan was transferred. (ECF No. 1.) However, as explained, Wells Fargo is the successor in interest to this loan—there was no transfer of interest. Additionally, plaintiff admits that he was provided with a statement by Wells Fargo indicating that it was the successor in interest to the loan. (ECF No. 1.) Therefore, plaintiff has "failed `state a claim to relief that is plausible on its face'" under the Truth in Lending Act.
Furthermore, any claim brought under § 1641(g) must be brought within one year of the alleged violation.
California Rosenthal Act
Plaintiff's claim under the California Rosenthal Act ("RFDCPA") is the same as his claim under the FDCPA. (ECF No. 1.) The RFDCPA mirrors the FDCPA, "their intentions were the same and exclusive, and, as such, a loan servicer is not a debt collector under these acts."
California Unfair Competition
Plaintiff alleges that defendants violated Cal. Bus. & Prof. Code § 17200 by (1) engaging in illegal table-funding in violation of Cal. Bus. & Prof. Code § 10234 in 2007 and (2) by recording a void Deed of Trust in 2007 in violation of Cal. Pen. Code §§ 115.5 and 532 et. seq. (ECF No. 1.) Actions under § 17200 "shall be commenced within four years after the cause of action accrued." Cal. Bus. & Prof. Code § 17208. Also, "[a] defendant cannot be liable under § 17200 for committing `unlawful business practices' without having violated another law."
Here, each of the alleged underlying violations occurred in 2007, but plaintiff did not bring any action until nearly ten years later. As such, this claim is barred by the statute of limitations.
Cancellation of Instrument
Plaintiff argues that this court should exercise its equitable powers to confirm that the lack of written assignment of the Deed of Trust to Wells Fargo has left defendants with no valid interest in the property. (ECF No. 1.) However, as explained above, there was no need for an assignment because Wells Fargo is World's successor in interest. Further, despite plaintiff's legal conclusion that the Deed of Trust is void, there is no basis for this claim since defendants did not violate Cal. Bus. & Prof. Code § 10234, as explained.
Moreover, while the plaintiff requests the court use its equitable powers, he has failed to demonstrate that he too has done equity because he has failed to allege that he has tendered the balance of the mortgage note. It is a well-accepted maxim that "he who seeks equity must do equity."
"The elements of a cause of action for negligence are (1) a legal duty to use reasonable care, (2) breach of that duty, and (3) proximate [or legal] cause between the breach and (4) the plaintiff's injury."
Under California law, however, "as a general rule, a financial institution
Moreover, plaintiff has not alleged that he suffered any damages as a result of defendants' actions. He does not allege that their actions caused him to default on his loan. Rather, his argument relies on the allegation that the 2007 Deed of Trust was void when recorded. As demonstrated, this allegation is based upon an erroneous legal conclusion. However, even assuming that the Deed of Trust was void, plaintiff has continued to enjoy the use and ownership of this property since 2007. Plaintiff has experienced a windfall rather than suffer damages. Plaintiff failed to state a plausible claim to relief for negligence because defendants did not owe him any duty nor did they cause him any damages. Further, plaintiff could not state a plausible claim if he were granted leave to amend since he cannot plausibly allege that defendants owed him any duty beyond their conventional role as money lender.
Slander of Title
Plaintiff alleges that defendants slandered his title by filing the initial 2007 Deed of Trust, which was void. (ECF No 1.) He also alleges that the Notice of Default similarly slandered his title because the mortgage was not properly assigned to Wells Fargo. (ECF No 1.) As it has been explained, these arguments are based upon erroneous legal conclusions.
Additionally, to prevail on a slander of title claim, plaintiff must allege damages, which have been defined as the "loss caused by the impairment of vendibility and the cost of clearing the title."
Plaintiff also seeks to quiet title to his property. (ECF No. 1.) This claim is also premised on plaintiff's table-funding theory. Moreover, quiet title is a claim in equity and plaintiff has failed to do equity. A full tender of the indebtedness is a prerequisite to a quiet title claim.
Defendants' Motion to Strike
Defendants have also moved to strike various portions of plaintiff's complaint connected with "exemplary/punitive damages allegations and prayers." (ECF No. 5 at 2.) Because plaintiff has failed to state any claims to relief that are plausible on their face, it is unnecessary to consider the motion to strike on its merits.
Accordingly, IT IS HEREBY ORDERED that:
Furthermore, IT IS HEREBY RECOMMENDED that:
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 may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served on all parties and filed with the court within fourteen (14) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order.