Backdating assignments ??

16 May

Court denies Motion to Dismiss and holds backdated mortgage assignments may be invalid

On March 30, 2010, in the case of Ohlendorf v. Am. Home Mortg. Servicing, (2010 U.S. Dist. LEXIS 31098) on Defendants’ 12(B)(6) Motion, United States District Court for the Eastern District of California denied the motion to dismiss Plaintiffs wrongful foreclosure claim on grounds that the assignment of mortgage was backdated and thus may have been invalid.

“On or about June 23, 2009, defendant T.D. Service Company [(a foreclosure processing service)] filed a notice of default in Placer County, identifying Deutsche Bank as beneficiary and AHMSI as trustee. In an assignment of deed of trust dated July 15, 2009, MERS assigned the deed of trust to AHMSI. This assignment of deed of trust purports to be effective as of June 9, 2009. A second assignment of deed of trust was executed on the same date as the first, July 15, 2009, but the time mark placed on the second assignment of deed of trust by the Placer County Recorder indicates that it was recorded eleven seconds after the first. In this second assignment of deed of trust, AHMSI assigned the deed of trust to Deutsche. This assignment indicates that it was effective as of June 22, 2009. Both assignments were signed by Korell Harp. The assignment purportedly effective June 9, 2009, lists Harp as vice president of MERS and the assignment purportedly effective June 22, 2009, lists him as vice president of AHMSI. Six days later, on July 21, 2009, plaintiff recorded a notice of pendency of action with the Placer County Recorder. In a substitution of trustee recorded on July 29, 2009, Deutsche, as present beneficiary, substituted ADSI as trustee.”

The court stated that “while California law does not require beneficiaries to record assignments, see California Civil Code Section 2934, the process of recording assignments with backdated effective dates may be improper, and thereby taint the notice of default.”

Plaintiff’s argument was interpreted by the court to be that the backdated assignments were not valid or at least were not valid on June 23, 2009, when the notice of default was recorded. As such the court assumed Plaintiff argued that MERS remained the beneficiary on that date and therefore was the only party who could enforce the default.

Judge Lawrence K. Karlton invited Defendants to file a motion to dismiss as to plaintiff’s wrongful foreclosure claim insofar as it is premised on the backdated assignments of the mortgage. You can read the full Opinion here.

Ohlendorf v. Am. Home Mortg. Servicing

OPINION

ORDER

This case involves the foreclosure of plaintiff’s mortgage. His First Amended Complaint (“FAC”) names thirteen defendants and enumerates ten causes of action. Defendants American Home Mortgage Servicing, Inc. (“AHMSI”), AHMSI Default Services, Inc. (“ADSI”), Deutsche Bank National Trust Company (“Deutsche”), and Mortgage Electronic Registration Systems, Inc. (“MERS”) move to dismiss all claims against them, and in the alternative, for a more definite statement of plaintiff’s second and seventh causes of action. These defendants also move to expunge a Lis  [*2] Pendens recorded by plaintiff on the subject property and request an award of attorney fees. Defendant T.D. Service Company (“T.D.”) separately moves to dismiss all claims against it. The court concluded that oral argument was not necessary in this matter, and decides the motions on the papers. For the reasons stated below, the motions to dismiss are granted in part and denied in part, and the motion to expunge is denied. Because the court grants plaintiff leave to file an amended complaint, the alternative motion for a more definite statement is denied.

I. BACKGROUND

A. Refinance of Plaintiff’s Mortgage 1

1   These facts are taken from the allegations in the FAC unless otherwise specified. The allegations are taken as true for purposes of this motion only.

On or about February 1, 2007, plaintiff was approached by defendant Ken Jonobi (“Jonobi”) of defendant Juvon, who introduced plaintiff to defendant Anthony Alfano (“Alfano”), a loan officer employed by defendant Novo Mortgage (“Novo”). FAC P 24. Defendant Alfano approached plaintiff, representing himself as the loan officer for defendant Novo, and solicited refinancing of a loan currently secured by plaintiff’s residence in New Castle,  [*3] California. FAC P 25. Defendant Alfano advised plaintiff that Alfano could get plaintiff the “best deal” and “best interest rates” available on the market. FAC P 26.

In a loan brokered by Alfano, plaintiff then borrowed $ 450,000, the loan being secured by a deed of trust on his residence. FAC P 28. Alfano advised plaintiff that he could get a fixed rate loan, but the loan sold to him had a variable rate which subsequently adjusted. Id. At the time of the loan, plaintiff’s Fair Isaac Corporation (“FICO”) score, which is used to determine the type of loans for which a borrower is qualified, should have classified him as a “prime” borrower, but Alfano classified plaintiff as a “sub-prime” borrower without disclosing other loan program options. FAC P 29. Plaintiff was advised by Alfano that if the loan became unaffordable, Alfano would refinance it into an affordable loan. FAC P 31. Plaintiff was not given a copy of any loan documents prior to closing, and at closing plaintiff was given only a few minutes to sign the documents and, as a result, could not review them. FAC P 32. Plaintiff did not receive required documents and disclosures at the origination of his refinancing loan, including  [*4] the Truth in Lending Act (“TILA”) disclosures and the required number of copies of the notice of right to cancel. FAC P 43. This new loan was completed on or about May 16, 2007.

The deed of trust identified Old Republic Title Company as trustee, defendant American Brokers Conduit as lender, and defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for the lender and beneficiary. FAC PP 34-35. MERS’s conduct is governed by “Terms and Conditions” which provide that:

MERS shall serve as mortgagee of record with respect to all such mortgage loans solely as a nominee, in an administrative capacity, for the beneficial owner or owners thereof from time to time. MERS shall have no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage loans. MERS agrees not to assert any rights (other than rights specified in the Governing Documents) with respect to such mortgage loans or mortgaged properties. References herein to “mortgage(s)” and “mortgagee of record” shall include deed(s) of trust and beneficiary under a deed of trust and any other form of  [*5] security instrument under applicable state law.

FAC P 10. MERS was not licensed to do business in California and was not registered with the state at the inception of the loan. FAC P 35.

On or about April 17, 2009, a letter was mailed to defendant AHMSI which plaintiff alleges was a qualified written request (“QWR”) under the Real Estate Settlement Procedures Act (“RESPA”), identifying the loan, stating reasons that plaintiff believed the account was in error, requesting specific information from defendant, and demanding to rescind the loan under the Truth in Lending Act (“TILA”). FAC P 36. Plaintiff alleges that AHMSI never properly responded to this request. Id.

B. Events Subsequent to Refinance of Plaintiff’s Loan

On or about June 23, 2009, defendant T.D. filed a notice of default in Placer County, identifying Deutsche as beneficiary and AHMSI as trustee. FAC P 46. In an assignment of deed of trust dated July 15, 2009, MERS assigned the deed of trust to AHMSI. Defendants’ Request for Judicial Notice in Support of Motion to Dismiss Plaintiff’s First Amended Complaint and Motion to Expunge Notice of Pendency of Action (“Defs.’ RFJN”) Ex. 4. This assignment of deed of trust purports to  [*6] be effective as of June 9, 2009. Id. A second assignment of deed of trust was executed on the same date as the first, July 15, 2009, but the time mark placed on the second assignment of deed of trust by the Placer County Recorder indicates that it was recorded eleven seconds after the first. Defs.’ RFJN Exs. 4-5. In this second assignment of deed of trust, AHMSI assigned the deed of trust to Deutsche. Defs.’ RFJN Ex. 5. This assignment indicates that it was effective as of June 22, 2009. Id. Both assignments were signed by Korell Harp. The assignment purportedly effective June 9, 2009, lists Harp as vice president of MERS and the assignment purportedly effective June 22, 2009, lists him as vice president of AHMSI. Defs.’ RFJN Exs. 4-5. Six days later, on July 21, 2009, plaintiff recorded a notice of pendency of action with the Placer County Recorder. Defs.’ RFJN Ex. 6. In a substitution of trustee recorded on July 29, 2009, Deutsche, as present beneficiary, substituted ADSI as trustee. Defs.’ RFJN Ex. 7.

II. STANDARD

A. Standard for a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss

A Fed. R. Civ. P. 12(b).(6) motion challenges a complaint’s compliance with the pleading requirements provided  [*7] by the Federal Rules. In general, these requirements are provided by Fed. R. Civ. P. 8, although claims that “sound[] in” fraud or mistake must meet the requirements provided by Fed. R. Civ. P. 9(b). Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-04 (9th Cir. 2003).

1. Dismissal of Claims Governed by Fed. R. Civ. P. 8

Under Fed. R. Civ. P. 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The complaint must give defendant “fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, at 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (internal quotation and modification omitted).

To meet this requirement, the complaint must be supported by factual allegations. Ashcroft v. Iqbal,     U.S.    , 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009). “While legal conclusions can provide the framework of a complaint,” neither legal conclusions nor conclusory statements are themselves sufficient, and such statements are not entitled to a presumption of truth. Id. at 1949-50. Iqbal and Twombly therefore prescribe a two step process for evaluation of motions to dismiss. The court first identifies the non-conclusory factual allegations,  [*8] and the court then determines whether these allegations, taken as true and construed in the light most favorable to the plaintiffs, “plausibly give rise to an entitlement to relief.” Id.; Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007).

“Plausibility,” as it is used in Twombly and Iqbal, does not refer to the likelihood that a pleader will succeed in proving the allegations. Instead, it refers to whether the non-conclusory factual allegations, when assumed to be true, “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

2. Dismissal of Claims Governed by Fed. R. Civ. P. 9(b)

A Rule 12..(b)..(6) motion to dismiss may also challenge a complaint’s compliance with Fed. R. Civ. P. 9(b). See Vess, 317 F.3d at 1107.  [*9] This rule provides that “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” These circumstances include the “time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). “In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, ‘identif[y] the role of [each] defendant[] in the alleged fraudulent scheme.’” Id. at 765 (quoting Moore v. Kayport Package Express, 885 F.2d 531, 541 (9th Cir. 1989)). Claims subject to Rule 9(b) must also satisfy the ordinary requirements of Rule 8.

B. Standard for Motion for a More Definite Statement

“If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading.” Fed. R. Civ. P. 12(e).  [*10] “The situations in which a Rule 12(e) motion is appropriate are very limited.” 5A Wright and Miller, Federal Practice and Procedure § 1377 (1990). Furthermore, absent special circumstances, a Rule 12(e) motion cannot be used to require the pleader to set forth “the statutory or constitutional basis for his claim, only the facts underlying it.” McCalden v. California Library Ass’n, 955 F.2d 1214, 1223 (9th Cir. 1990). However, “even though a complaint is not defective for failure to designate the statute or other provision of law violated, the judge may in his discretion . . . require such detail as may be appropriate in the particular case.” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996).

C. Standard for Motion to Expunge Notice of Pendency of Action (Lis Pendens)

A lis pendens is a “recorded document giving constructive notice that an action has been filed affecting title or right to possession of the real property described in the notice.” Urez Corp. v. Superior Court, 190 Cal. App. 3d 1141, 1144, 235 Cal. Rptr. 837 (1987). Once filed, a lis pendens prevents the transfer of that real property until the lis pendens is expunged or the litigation is resolved. BGJ Assoc., LLC v. Superior Court of Los Angeles, 75 Cal. App. 4th 952, 966-67, 89 Cal. Rptr. 2d 693 (1999).

A  [*11] court must expunge a lis pendens without bond if the court makes any of these findings: (1) plaintiff’s complaint does not contain a “real property claim,” which is defined as one affecting title or possession of specific real property, Cal. Code. Civ. Pro. § 405.4; (2) plaintiff “has not established by a preponderance of the evidence the probably validity of a real property claim,” where probably validity requires a showing that it is more likely than not that the plaintiff will obtain a judgment against the defendant on the claim, id. §§ 405.3, 405.32; or (3) there was a defect in service or filing, id. § 405.32. See Castaneda v. Saxon Mortgage Servs., Inc., No. 2:09- 01124 WBS DAD, 2010 U.S. Dist. LEXIS 17235, 2010 WL 726903, *8 (E.D. Cal. Feb 26, 2010).

III. ANALYSIS

A. Failure to Allege Ability to Make Tender

Defendants AHMSI, ADSI, Deutsche, and MERS argue that all of plaintiff’ claims are barred by plaintiff’s failure to allege his ability to tender the loan proceeds. Defendants assert that Abdallah v. United Savings Bank, 43 Cal. App. 4th 1101, 51 Cal. Rptr. 2d 286 (1996), requires a valid tender of payment to bring any claim that arises from a foreclosure sale. Abdallah, however, merely requires an allegation to tender for “any  [*12] cause of action for irregularity in the [foreclosure] sale procedure.” Id. at 1109. Here, plaintiff asserts no causes of action that rely on any irregularity in the foreclosure sale itself. Indeed, the only claim addressed by the motions that may concern irregularity in the foreclosure itself is the wrongful foreclosure claim, which the court rejects below. Accordingly, the court concludes that plaintiff need not allege tender, and defendants’ motion is denied on this ground.

B. Fraud

Plaintiff brings a claim for fraud against all defendants. The elements of a claim for intentional misrepresentation under California law are (1) misrepresentation (a false representation, concealment or nondisclosure), (2) knowledge of falsity, (3) intent to defraud (to induce reliance), (4) justifiable reliance, and (5) resulting damage. Agosta v. Astor, 120 Cal. App. 4th 596, 603, 15 Cal. Rptr. 3d 565 (2004). Claims for fraud are subject to a heightened pleading requirement under Fed. R. Civ. P. 9(b), as discussed above. 2

2   Defendants also argue that California law requires a pleading of fraud against a corporation to be even more particular. However, as plaintiff points out, and defendants do not contest, pleading standards  [*13] are a procedural requirement and while federal courts are to apply state substantive law to state law claims, they must always apply federal procedural law. Hanna v. Plumer, 380 U.S. 460, 465, 85 S. Ct. 1136, 14 L. Ed. 2d 8 (1965).

The FAC’s allegations in support of the claim for fraud as to moving defendants are that:

Defendant [AHMSI] misrepresented to Plaintiff that [AHMSI] has the right to collect monies from Plaintiff on its behalf or on behalf of others when Defendant [AHMSI] has no legal right to collect such moneys. [P] . . . Defendant MERS misrepresented to Plaintiff on the Deed of Trust that it is a qualified beneficiary with the ability to assign or transfer the Deed of Trust and/or Note and/or substitute trustees under the Deed of Trust. Further, Defendant MERS misrepresented that it followed the applicable legal requirements to transfer the Note and Deed of Trust to subsequent beneficiaries. [P] . . . Defendants T.D., [ADSI], and Deutsche misrepresented to Plaintiff that Defendants T.D., AHMSI, and Deutsche were entitled to enforce the security interest and has the right to institute a non-judicial foreclosure proceeding under the Deed of Trust when Defendant T.D. filed a Notice of Default on June 23,  [*14] 2009. . . .

FAC PP 110-12. As to plaintiff’s claims against AHMSI and MERS, plaintiff failed to plead the time, place or identities of the parties of the misrepresentation. Accordingly, the fraud claim is dismissed as to these defendants. Further, as to defendant Deutsche, plaintiff has not alleged any misrepresentation made by these defendants, but rather relies on alleged misrepresentations made by another defendant concerning them. A claim for fraud requires that plaintiff plead that the defendant made a misrepresentation. As such, here, where plaintiff alleges no statements by defendants ADSI and Deutsche, plaintiff has not pled a claim against them, and thus, the fraud claims against them are likewise dismissed. Plaintiff’s claim against T.D., while pleading the time and place of the alleged misrepresentation, nonetheless fails to allege the identity of the parties to the alleged misrepresentation, mainly who made the statement(s) on behalf of T.D. The court further notes, as described below, that to the extent that plaintiff’s claim relies on defendants’ possession of the note prior to foreclosure, this court recently decided that California law does not impose a requirement of  [*15] production or possession of the note prior to foreclosure, and sees no reason to depart from this reasoning. Champlaie v. BAC Home Loans Serv., No. S-09-1316 LKK/DAD, 2009 U.S. Dist. LEXIS 102285, 2009 WL 3429622, at *12-14 (E.D. Cal. Oct. 22, 2009). Thus, plaintiff’s fraud claim is dismissed without prejudice as to all moving defendants.

C. Real Estate Settlement Procedures Act

Plaintiff argues that AHMSI has violated the Real Estate Settlement Procedures Act (RESPA) by failing to meet its disclosure requirements and failing to respond to a QWR. FAC PP 90-91. Defendant AHMSI argues that plaintiff has failed to attach the alleged QWR or to allege its full contents and that any QWR must inquire as to the account balance and relate to servicing of the loan, while plaintiff’s alleged QWR was nothing more than a request for documents. 12 U.S.C. 2605(e)(1) defines a QWR as written correspondence that identifies the name and account of the borrower and includes a statement of reasons the borrower believes the account is in error or provides sufficient detail regarding other information sought. Here, plaintiff alleges that its communication with AHMSI identified plaintiff’s name and loan number and included a statement  [*16] of reasons for plaintiff’s belief that the loan was in error. FAC P 91. This is a sufficient allegation of a violation of 12 U.S.C. 2605(e). Further, a plaintiff need not attach a QWR to a complaint to plead a violation of RESPA for failure to respond to a QWR.

AHSMI also argues that plaintiff must factually demonstrate that written correspondence inquired as to the status of his account balance and related to servicing of the loan, citing MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885 (N.D. Ill. 2000). This case held that allegations of a forged deed and irregularity with respect to recording did not relate to servicing as it is defined in 12 U.S.C. Section 2605(i)(3), and that only servicers are required to respond to a QWR under 12 U.S.C. Section 2605(e)(1)(A). Morequity, 118 F. Supp. 2d at 901. Section 2605(i)(3) defines servicing as the “receiving [of] any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in section 2609 of this title, and making [of] the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms  [*17] of the loan.”

AHMSI does not contend that it is not a servicer but rather argues that the purported QWR here did not relate to servicing because it was merely a request for documents. However, 12 U.S.C. Section 2605(e)(1)(A) requires only that a QWR be received by a servicer, enable the servicer to identify the name and account of the borrower, and include a statement of reasons for the borrower’s belief that the account is in error or provide sufficient detail regarding other information sought. Here, plaintiff allegedly stated reasons for believing the account was in error and AHMSI does not contest that it was the servicer of plaintiff’s loan, distinguishing this case from MorEquity. Accordingly, plaintiff has stated a claim against AHMSI for violation of RESPA in failing to respond to a QWR.

Plaintiff also alleges that AHMSI violated RESPA by failing to provide notice to plaintiff of the assignment, sale, or transfer of servicing rights to plaintiff’s loan. FAC P 89. Notice by the transferor to the borrower is required by 12 U.S.C. Section 2605(b). AHMSI counters that plaintiff has failed to allege that servicing rights were actually transferred, that plaintiff is not even certain  [*18] which defendant was actually servicer at any given time, and plaintiff’s allegations that AHMSI is responsible for responding to a QWR creates an inference that plaintiff believes it is responsible for servicing (and therefore did not transfer servicing rights). However, moving defendants themselves ask this court to take judicial notice of an assignment of deed of trust in which AHMSI purports to assign the deed of trust to Deutsche. Defs.’ RFJN ex. 5. This document is judicially noticeable as a public record. Thus, despite plaintiff’s uncertainty about who held servicing rights when, AHMSI cannot both ask us to take judicial notice of a transfer of their rights and contend that a claim that they failed to give requisite notice pursuant to said transfer is non-cognizable.

Accordingly, the motion to dismiss plaintiff’s RESPA claim with respect to AHMSI is denied.

D. Violations of California’s Rosenthal Fair Debt Collection Practices Act

California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”) prohibits creditors and debt collectors from, among other things, making false, deceptive, or misleading representations in an effort to collect a debt. Cal. Civ. Code § 1788, et seq. [*19] Pursuant to Cal. Civ. Code Section 1788.17, the Rosenthal Act incorporates the provisions of the federal Fair Debt Collection Practices Act prohibiting “[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false.” 15 U.S.C. § 1692e(8).

Plaintiff alleges that AHMSI violated the Rosenthal Act by making false reports to credit reporting agencies, falsely stating the amount of debt, falsely stating a debt was owed, attempting to collect said debt through deceptive letters and phone calls demanding payment, and increasing plaintiff’s debt by stating amounts not permitted including excessive service fees, attorneys’ fees, and late charges. FAC P 73-75. AHMSI argues that foreclosing on a property is not collection of a debt, and so is not regulated by the Rosenthal Act, that the alleged prohibited activities resulted from plaintiff’s default, and plaintiff has not alleged when the violations occurred. AHMSI correctly points out that foreclosure on a property securing a debt is not debt collection activity encompassed by Rosenthal Act. Cal. Civ. Code § 2924(b), Izenberg, 589 F. Supp. 2d at 1199. However, plaintiff’s allegations  [*20] with respect to this cause of action do not mention foreclosure, instead alleging violations related to payment collection efforts. See Champlaie v. BAC Home Loans Servicing, LP, 2009 U.S. Dist. LEXIS 102285, 2009 WL 3429622 at *18 (E.D. Cal. October 22, 2009). Further, the actions of debt collectors under the act are not immunized if plaintiff actually owed money. Rather, the Rosenthal Act prohibits conduct in collecting a debt, whether valid or not. Accordingly, AHMSI’s second argument is without merit. Lastly, as to AHMSI’s third argument, plaintiff has sufficiently alleged the general time of the conduct he claims violates the Rosenthal Act. 3 Specifically, the court infers from the complaint, that the alleged conduct occurred after plaintiff stopped making his loan payments. Thus, AHMSI’s motion to dismiss this claim is denied.

3   AHMSI only appears to move under Federal Rule of Civil Procedure 8, and not 9(b).

E. Wrongful Foreclosure

Plaintiff alleges wrongful foreclosure against AHMSI, T.D., ADSI, Deutsche, and MERS because they do not possess the note, are not beneficiaries, assignees, or employees of the person or entity in possession of the note, and are not otherwise entitled to payment, such that they are  [*21] not persons entitled to enforce the security interest under Cal. Com. Code Section 3301. FAC P 146. Plaintiff also alleges in his complaint that the foreclosure is wrongful because defendants failed to give proper notice of the notice of default under Cal. Civ. Code Section 2923.5 and AHMSI allegedly failed to respond to a QWR. 4 FAC PP 149-50.

4   Defendants only move to dismiss this claim based upon the first theory of liability. As such, plaintiff’s claim is not dismissed insofar as it depends on these other theories of liability articulated in his complaint.

AHMSI, ADSI, Deutsche, and MERS assert that they need not be in possession of the note in order to foreclose, and that recorded documents establish that Deutsche is holder in due course of the note and deed of trust and the foreclosing entity, and is thus legally entitled to enforce the power of sale provisions of the deed of trust. Defendant T.D. contends that the holder of the note theory is invalid, as a deed of trust is not a negotiable instrument, and that the requirements of Cal. Civ. Code Section 2923.5 have been met.

California’s non-judicial foreclosure process, Cal. Civ. Code Sections 2924-29241, establishes an exhaustive  [*22] set of requirements for non-judicial foreclosure, and the production of the note is not one of these requirements. Champlaie, 2009 U.S. Dist. LEXIS 102285, 2009 WL 3429622 at *13. Accordingly, possession of the promissory note is not a prerequisite to non-judicial foreclosure in that a party may validly own a beneficial interest in a promissory note or deed of trust without possession of the promissory note itself. 2009 U.S. Dist. LEXIS 102285, [WL] at *13-14. Consequently, defendants need not offer proof of possession of the note to legally institute non-judicial foreclosure proceedings against plaintiff, although, of course, they must prove that they have the right to foreclose. Thus, plaintiff’s wrongful foreclosure claim is dismissed insofar as it is premised upon this possession of the note theory.

Nonetheless, plaintiff may have stated a claim against defendants that they are not proper parties to foreclose. Plaintiff and AHMSI, Deutsche, and MERS have requested that the court take judicial notice of the assignment of deeds of trust which purport to assign the interest in the deed of trust first to AHMSI and then to Deutsche. As described above, the deed of trust listed MERS as the beneficiary. On June 23, 2009, T.D. recorded a notice of  [*23] default that listed Deutsche as the beneficiary and AHMSI as the trustee. Nearly a month later, on July 20, 2009, MERS first recorded an assignment of this mortgage from MERS to AHMSI, which indicated that the assignment was effective June 9, 2009. Eleven seconds later, AHMSI recorded an assignment of the mortgage from AHMSI to Deutsche, which indicated that the assignment was effective June 22, 2009. The court interprets plaintiff’s argument to be that the backdated assignments of plaintiff’s mortgage are not valid, or at least were not valid on June 23, 2009, and therefore, Deutsche did not have the authority to record the notice of default on that date. Essentially, the court assumes plaintiff argues that MERS remained the beneficiary on that date, and therefore was the only party who could enforce the default.

While California law does not require beneficiaries to record assignments, see California Civil Code Section 2934, the process of recording assignments with backdated effective dates may be improper, and thereby taint the notice of default. Defendants have not demonstrated that these assignments are valid or that even if the dates of the assignments are not valid, the notice  [*24] of default is valid. Accordingly, defendants motion to dismiss plaintiff’s wrongful foreclosure is denied insofar as it is premised on defendants being proper beneficiaries. As discussed below, defendant is invited, but not required, to file a motion addressing the validity of the notice of default given the suspicious dating in the assignments with respect to both their motion to dismiss and their motion to expunge the notice of pendency.

Thus, Plaintiff has not stated a claim that defendants did not possess the right to foreclose plaintiff’s loan because (1) defendants did not possess or produce the note or (2) Deutsche lacked the authority to record a notice of default. For the reasons described above, this claim is dismissed insofar as liability is based upon defendants’ not possessing the note.

F. Negligence

Plaintiff alleges negligence against all defendants, but only T.D. has moved to dismiss this claim. Under California law, the elements of a claim for negligence are “(a) a legal duty to use due care; (b) a breach of such legal duty; and (c) the breach as the proximate or legal cause of the resulting injury.” Ladd v. County of San Mateo, 12 Cal. 4th 913, 917, 50 Cal. Rptr. 2d 309, 911 P.2d 496 (1996) (internal citations  [*25] and quotations omitted); see also Cal Civ Code § 1714(a).

The other defendants do not directly counter the negligence claim, but T.D. argues that it fails because the FAC does not mention it by name or allege what it was supposed to do. The only notice T.D. received of the negligence allegations against it through plaintiff’s complaint are the words “Against all Defendants” and the incorporation of allegations set forth above. When a defendant must scour the entire complaint to learn of the basis of the charges against them, they have not received effective notice. See Baldain v. American Home Mortg. Servicing, Inc., No. CIV. S-09-0931, 2010 U.S. Dist. LEXIS 5671, 2010 WL 582059, *8 (E.D.Cal. Jan. 5, 2010). Accordingly, this claim is dismissed as to T.D., with leave to amend.

G. Violations of California Business and Professions Code Sec. 17200

California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, (“UCL”) proscribes “unlawful, unfair or fraudulent” business acts and practices. Plaintiff claims all defendants violated the UCL. The claim against AHMSI is based on its alleged violations of the Rosenthal Act, RESPA, negligence, fraud, and illegal foreclosure activities. FAC P 122. The claim against T.D.,  [*26] Deutsche, and MERS is based on allegations of negligence, fraud, and illegal foreclosure activities. FAC P 124.

As discussed above, plaintiff has alleged valid causes of action against AHMSI for violation of the Rosenthal Act and RESPA and for negligence. Plaintiff has also stated valid claims against Deutsche and MERS for negligence. However, the court has dismissed the negligence claim against T.D. and the fraud and wrongful foreclosure claims against all defendants, and thus, these claims cannot form the basis of a violation of UCL under the present complaint.

Plaintiff’ UCL claim is therefore dismissed as to T.D., and as to the AHMSI, Deutsche, and MERS insofar as the claim is predicated on fraud and wrongful foreclosure under the possession or production of the note theory.

H. Motion to Expunge Notice of Pendency of Action (Lis Pendens)

1. Merits of Motion

Defendants AHMSI, Deutsche, and MERS move to expunge notice of pendency of action. As described above, in order to succeed in opposing a motion to expunge a notice of pendency of action, plaintiff 5 must establish (1) that his complaint contains a real property claim, (2) that it is more likely than not that he will obtain a judgment  [*27] against the defendant, and (3) that there was a defect in service or filing. See Castaneda v. Saxon Mortgage Servs., Inc., No. 2:09-01124 WBS DAD, 2010 U.S. Dist. LEXIS 17235, 2010 WL 726903, *8 (E.D. Cal. Feb 26, 2010). Accordingly, plaintiff must tender evidence to successfully demonstrate that he is more likely than not to obtain a judgment against defendants. Because plaintiff must prevail on all of these elements, the court need not resolve all three. Rather, the court grants defendants’ motion on all claims save one, because plaintiff has not established that it is more likely than not that he will obtain a judgment against the defendant.

5   Plaintiff bears the burden of proof. Cal. Code Civ. Pro. § 405.30.

As an initial matter, the only evidence plaintiff has presented to establish he is more likely than not to succeed on the merits of his claims are the recorded documents filed in defendants’ request for judicial notice. This in and of itself supports the granting of defendants’ motion on most of his claims. Instead of establishing his likelihood of success on the merits, plaintiff argues that the motion should be denied because he has stated a claim under the Rosenthal Act, the RESPA, and the Unfair Competition  [*28] Law (“UCL”) and for fraud and wrongful foreclosure. As described above, plaintiff has not stated a claim for fraud or wrongful foreclosure premised on the possession of the note he argues in his oppositions to defendants’ motions to dismiss and motion to expunge, 6 so even if the court adopted plaintiff’s standard, he has not demonstrated he is likely to succeed on these claims. Finally, the only relief provided by RESPA 7 and the Rosenthal Act 8 is damages, and therefore, even if plaintiff were likely to succeed on the merits of these claims, it would not entitle him to injunctive relief. The UCL does, however, provide for injunctive relief. Cal. Bus. & Prof. Code § 17203. In support of his argument as to why this cause of action should prevent this court from granting defendants motion, plaintiff merely states,

Plaintiff made viable charging allegations that named Defendants, moving Defendants included, have engaged in unfair and fraudulent business practices . . . [including] violations of . . . . RESPA . . ., fraud, negligence and [the] Rosenthal Act . . . .

Opposition at 23. Plaintiff continues to raise arguments concerning certain defendants alleged failures to make disclosures  [*29] at loan origination, and numerous arguments of which the court disposed above in plaintiff’s wrongful foreclosure claim. Plaintiff makes no argument as to why this claim would likely or even possibly support injunctive relief of enjoining foreclosure of plaintiffs’ home.

6   As noted above, plaintiff also alleges in his complaint that the foreclosure is wrongful because the defendants failed to give proper notice of the notice of default. As further noted, the documents that the defendants requested the court to judicially notice raise questions about the propriety of the notice. Under the circumstances, the court will not expunge the lis pendens.

7   RESPA only affords the following types of relief for individual plaintiffs:

(A) any actual damages to the borrower as a result of the failure; and

(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $ 1,000.

12 U.S.C. § 2605(f)(1).

8   The Rosenthal Act affords the following types of relief:

(A) Any debt collector who violates this title . . . shall be liable to the debtor in an amount equal to the sum of any actual damages sustained  [*30] by the debtor as a result of the violation.

(B) Any debt collector who willfully and knowingly violates this title with respect to any debtor shall . . . also be liable to the debtor . . . for a penalty in such amount as the court may allow, which shall not be less than one hundred dollars ($ 100) nor greater than one thousand dollars ($ 1,000).

Cal. Civ. Code § 1788.30.

Nonetheless, as discussed above, plaintiff has raised a serious issue concerning the validity of the notice of default. Specifically, defendants’ have not persuaded the court that the backdated assignments are valid, and consequently, that they do not taint the notice of default. Accordingly, plaintiff may have demonstrated that it is more likely than not that he will be entitled to judgment on this real property claim that the backdated assignments invalidate the notice of default. Thus, the motion to expunge the notice of pendency of action is denied as to this claim only.

The court recognizes, however, that defendants may be able to demonstrate that the assignments are either valid or if invalid do not taint the notice of default. For this reason, the court invites to file a motion to dismiss and to expunge the notice  [*31] of pendency on this issue alone. This motion should await plaintiff’s filing of any amended complaint.

IV. CONCLUSION

For the reasons stated above, defendants’ motions to dismiss, Doc. 21 and Doc. 23, are GRANTED IN PART.

The court DISMISSES the following claims:

1. Sixth Claim, for fraud, as to all moving defendants.

2. Tenth Claim, for wrongful foreclosure insofar as it is premised on the theory that the note must be possessed or produced to foreclose, as to AHMSI, T.D., and MERS.

All dismissals are without prejudice. Plaintiff is granted twenty-one (21) days to file an amended complaint. It appears to the court that the plaintiff may truthfully amend to cure defects on some of his claims. However, plaintiff is cautioned not to replead insufficient claims, or to falsely plead.

The court DENIES defendants’ motion as to the following claims, insofar as they are premised on the theories found adequate in the analysis above:

1. Second Claim, for violation of the Rosenthal Act.

2. Third Claim, for negligence, as to AHMSI, ADSI, Deutsche, and MERS.

3. Fourth Claim, for violation of RESPA.

4. Seventh Claim, under the UCL, as to AHMSI, ADSI, Deutsche, and MERS.

The court further orders that defendants’  [*32] motion to expunge notice of pendency of action, Doc. 22, is DENIED.

Defendants are invited to file a motion to dismiss and a motion to expunge the notice of pendency as to plaintiff’s wrongful foreclosure claim insofar as it is premised on the backdated assignments of the mortgage.

IT IS SO ORDERED.

DATED: March 30, 2010.

/s/ Lawrence K. Karlton

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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