(PS) Bliss v. Quality Loan Service Corp.,et al ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 KAY BLISS, No. 2:23-cv-02614 DJC AC (PS) 12 Plaintiff, 13 v. FINDINGS AND RECOMMENDATIONS 14 QUALITY LOAN SERVICE CORPORATION, et al., 15 Defendants. 16 17 18 Plaintiff is proceeding in this matter pro se, and pre-trial proceedings are accordingly 19 referred to the undersigned pursuant to Local Rule 302(c)(21). This case was removed from 20 Nevada County Superior Court on November 9, 2023 by defendants PNC Financial Group, 21 William S. Demchak, and Gregory B. Jordan. ECF No. 1. These defendants move to dismiss this 22 case in its entirety. ECF No. 4. For the reasons that follow, the undersigned recommends that the 23 motion be granted and that the case be DISMISSED. 24 I. Background 25 A. The Complaint 26 Plaintiff Kay Bliss (who refers to herself not as a plaintiff but rather as the “Sovereign-in- 27 Party”) has filed a set of documents which constitute the operative pleading, entitled “To the 28 Clerk of the Court: Prerogative Notice to ‘File on Demand’” and “Prerogative Direction to Quiet 1 Title, and for Compensation for Damages from Fraud.” ECF No. 1 at 5-44 (“Complaint”). 2 Plaintiff commenced her action in the Superior Court of California, County of Nevada, on 3 October 10, 2023. Id. On November 9, 2023, defendants filed a notice of removal of the action 4 to this United States District Court for the Eastern District. Plaintiff’s claims are based on a 5 Notice of Trustee Sale that was recorded September 1, 2023 and the subsequent foreclosure sale 6 of property located at 14207 Chestnut Court, Penn Valley, California (“the Property”). Plaintiff 7 claims the sale was fraudulent on the basis that “the alleged Trustee, its live agent is required to 8 have the original Promissory Note in their possession when conducting a Trustee Sale, so that at 9 the close of the foreclosure sale process they will be able to return the wet-ink original 10 Promissory Note to the undersigned Sovereign-in-Party.” Id. Plaintiff alleges Quality Loan 11 Service Corporation is the Trustee for PNC Financial Services Group. Id. 12 Plaintiff alleges defendants are liable for fraud due to their failure to produce the original 13 Note (Fraud Count One) and for presenting themselves as “licensed and regulated by the 14 ‘CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION’ 15 (DFPI)” (Fraud Count Two). Id. at 12-13. Plaintiff asks for a “Quiet Title judgment.” Id. at 13. 16 Plaintiff alleges that the “Adverse Parties by their silence agreed to a fee schedule for their 17 fraudulent actions.” Id. at 13. 18 B. Motion to Dismiss 19 All defendants who have appeared now move to dismiss on the grounds that plaintiff does 20 not state any plausible legal claim. ECF No. 4. Plaintiff filed an opposition. ECF No. 16. 21 Moving defendants filed a reply brief. ECF No. 19. 22 II. Analysis 23 A. Legal Standards Governing Motions to Dismiss 24 “The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal 25 sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 26 1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of 27 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t., 901 28 F.2d 696, 699 (9th Cir. 1990). In order to survive dismissal for failure to state a claim, a 1 complaint must contain more than a “formulaic recitation of the elements of a cause of action;” it 2 must contain factual allegations sufficient to “raise a right to relief above the speculative level.” 3 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). It is insufficient for the pleading to 4 contain a statement of facts that “merely creates a suspicion” that the pleader might have a legally 5 cognizable right of action. Id. (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure 6 § 1216, pp. 235-35 (3d ed. 2004)). Rather, the complaint “must contain sufficient factual matter, 7 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 8 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when 9 the plaintiff pleads factual content that allows the court to draw the reasonable inference that the 10 defendant is liable for the misconduct alleged.” Id. 11 In reviewing a complaint under this standard, the court “must accept as true all of the 12 factual allegations contained in the complaint,” construe those allegations in the light most 13 favorable to the plaintiff, and resolve all doubts in the plaintiff’s favor. See Erickson v. Pardus, 14 551 U.S. 89, 94 (2007); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 15 960 (9th Cir. 2010), cert. denied, 131 S. Ct. 3055 (2011); Hebbe v. Pliler, 627 F.3d 338, 340 (9th 16 Cir. 2010). However, the court need not accept as true legal conclusions cast in the form of 17 factual allegations, or allegations that contradict matters properly subject to judicial notice. See 18 Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981); Sprewell v. Golden State 19 Warriors, 266 F.3d 979, 988 (9th Cir.), as amended, 275 F.3d 1187 (2001). 20 Pro se pleadings are held to a less stringent standard than those drafted by lawyers. 21 Haines v. Kerner, 404 U.S. 519, 520 (1972). Pro se complaints are construed liberally and may 22 only be dismissed if it appears beyond doubt that the plaintiff can prove no set of facts in support 23 of his claim which would entitle him to relief. Nordstrom v. Ryan, 762 F.3d 903, 908 (9th Cir. 24 2014). The court’s liberal interpretation of a pro se complaint, however, may not supply essential 25 elements of the claim that were not pled. Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 26 266, 268 (9th Cir. 1982); see also Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992). A pro se 27 litigant is entitled to notice of the deficiencies in the complaint and an opportunity to amend, 28 //// 1 unless the complaint’s deficiencies could not be cured by amendment. See Noll v. Carlson, 809 2 F.2d 1446, 1448 (9th Cir. 1987). 3 B. Plaintiff Cannot State a Fraud Claim 4 To assert a cause of action for fraud, a plaintiff must allege the following: (1) a 5 misrepresentation by the defendant; (2) knowledge of falsity; (3) intent to defraud; (4) justifiable 6 reliance; and resulting damages. Clark v. Countrywide Home Loans, Inc., 732 F.Supp.2d 1038, 7 1044 (E.D.Cal. 2010). “All claims for fraud must comply with Federal Rule of Civil Procedure 8 9(b), which requires that a plaintiff to clearly set forth the ‘who, what, when, where, and how’ 9 concerning their fraud allegations.” Id. at 1043 (“Upon removal to federal court, all claims for 10 fraud must be pled with sufficient particularity to satisfy Federal Rule of Civil Procedure Rule 11 9(b)”); Foster Poultry Farms v. Alkar-Rapidpak-MP Equipment, Inc., 868 F.Supp.2d 983, 991 12 (E.D.Cal. 2012) (“The Rule 9(b) particularity standard requires ‘an account of the time, place, and 13 specific content of the false representation, as well as the identities of the parties to the 14 misrepresentations . . . The purpose of this heightened pleading standard is to protect defendants 15 from the ‘reputational harm’ associated with fraud allegations”) 16 Here, plaintiff failed to allege the elements of fraud with specificity against any of the 17 defendants. With respect to “Fraud Count Two,” plaintiff asserts that defendants fraudulently 18 represent themselves as being licensed by state agency DFPI, and cites to two statutes upon which 19 she claims entitlement to relief: 18 U.S.C. §1346 and 18 U.S.C. §1951(b)(2). ECF No. 1 at 13. 20 Neither of these statutes has any relevance to the sole allegation associated with this cause of 21 action. 18 U.S.C. §1346, the honest services fraud statute, applies only to cases involving bribery 22 or kickback schemes, which is not applicable. Meyer v. One West Bank, F.S.B., 91 F.Supp.3d 23 1177, 1183 (C.D.Cal. 2015). 18 U.S.C. §1951(b)(2), on the other hand, applies to criminal 24 “extortion,” meaning the “obtaining of property from another, with his consent, induced by 25 wrongful use of actual or threatened force, violence, or fear, or under color of official right.” 26 Ocasio v. U.S., 578 U.S. 282, 297 (2016).1 Plaintiff sets forth no basis or theory upon which 27 1 While defendants did not raise the issue, the court notes for the pro se plaintiff’s benefit that 28 (continued…) 1 defendants’ purported misrepresentation as to which California state agency regulates and 2 licenses them could possibly provide her with a viable fraud claim. The court finds there is no 3 plausible basis for such a claim. 4 Plaintiff’s “Fraud Count One” is based on the assertion that Quality Loan Service 5 Corporation, as the trustee for PNC, was required to have the original Promissory Note in their 6 possession when conducting a Trustee Sale, but courts have repeatedly held that this is a “wholly 7 discredited legal theory serially advanced in mortgage fraud cases.” Clark, 732 F.Supp.2d at 8 1043. “It is well established that there is no requirement under California law that the party 9 initiating foreclosure be in possession of the original note.” Id.; Nool v. HomeQ Servicing, 653 10 F.Supp.2d 1047, 1053 (E.D.Cal.2009). Because neither of plaintiff’s fraud claims state any 11 possible basis for relief, dismissal is appropriate. 12 C. Plaintiff’s Quiet Title Claim Fails 13 To the extent plaintiff seeks to quiet title to the Property, the request is entirely 14 unsupported. Plaintiff alleges that there is a cloud on the title to the Property which has caused 15 uncertainty, but does not make any allegation in the complaint itself that she is the actual owner 16 of the property or that she has paid any outstanding debt or mortgage on the property. A 17 borrower may not quiet title against a secured lender without first paying the outstanding debt on 18 which the mortgage or deed of trust is based; the cloud on title remains until the debt is paid. 19 Luceras v. BAC Home Loans Servicing, LP., 221 Cal. App. 4th 49, 86 (2013). 20 In her opposition, plaintiff clarifies the basis for her belief that title should be quieted in 21 her favor by asserting that the “subject property is part of a valid land patent.” ECF No. at 16 at 22 3. Plaintiff asserts that the “allodial title is superior to all claims to the land and hereditaments.” 23 Id. at 3-4. She attaches an affidavit, which she signed and appears to have drafted, stating she has 24 accepted a land patent on the Property. Id. at 9-11. She also attaches illegible copies of what 25 these statutes are part of the criminal code and neither give rise to a private cause of action. A 26 citizen does not have authority to bring criminal charges. “Criminal proceedings, unlike private civil proceedings, are public acts initiated and controlled by the Executive Branch.” Clinton v. 27 Jones, 520 U.S. 681, 718 (1997). Accordingly, Title 18 of the United States Code does not establish any private right of action and cannot support a civil lawsuit. See Aldabe v. Aldabe, 28 616 F.2d 1089, 1092 (9th Cir. 1980) (criminal provisions provide no basis for civil liability). 1 appears to be a response to a public information request from the California Bureau of Land 2 Management. Id. at 12-15. 3 Land patents cannot be used as a defense to contest a lender’s foreclosure sale. See 4 Basulto v. GMAC Mortgage, 2009 WL 1658033, at *2, 2009 U.S. Dist. LEXIS 50116, *4 (N.D. 5 Cal. June 12, 2009) (citing Nixon v. Phillipoff, 615 Supp. 890, 895 (N.D. Ind. 1985) (“holding 6 ‘land patent claim,’ when raised to avoid foreclosure is ‘spurious’ and a ‘frivolous legal nullity 7 that [does] not and [can] not affect the title to the mortgaged land at issue in [an] underlying 8 foreclosure action.’”); Barbieri v. Aurora Loan Services, 2011 WL 13277763, at *2, 2011 U.S. 9 Dist. LEXIS 165864, *6 (N.D. Cal. July 1, 2011) (holding that the borrower may not assert a 10 “land patent” defense to avoid foreclosure). In Barbieri, the court aptly noted, “[w]hatever [the 11 borrower’s] belief as to his interest in the subject property (he characterizes his title as ‘allodial’), 12 the fact remains that he willingly entered into a loan secured by a deed of trust on the property. 13 He may not, after the fact, avoid his contractual obligations to pay his loan obligations on penalty 14 of foreclosure by asserting fanciful claims of superior title.” Barbieri, 2011 WL 13277763, at *2. 15 Thus, to the extent plaintiff is asserting a land patent claim to challenge the foreclosure of the 16 Property, such claim is without merit and must be rejected. 17 D. Plaintiff Raises Several Non-Responsive and Frivolous Arguments 18 In the opposition, plaintiff makes a frivolous and irrelevant argument that defendants’ 19 counsel “refused” to produce a copy of their law license to plaintiff in response to her public 20 record request and that defendants should not continue to use the services of unlicensed attorneys 21 in this action. As the court previously explained to plaintiff in its January 9, 2024 order, this 22 argument is not responsive to the Motion to Dismiss. ECF No. 15. 23 Plaintiff also alleges in her complaint that the “Adverse Parties” failed to stipulate to 24 certain “material facts” posed by Plaintiff concerning Defendants’ “constitutional authority to 25 sell, service, or foreclose on mortgage notes in California.” ECF No. 1 at 2. In the opposition, 26 plaintiff contends that the “Adverse Parties” would “include everyone named as a Defendant in 27 this matter” and that the “Stipulation of Material Facts and Agreement by the Parties is to 28 establish if we can come to an administrative agreement before entering the court.” ECF No. 16 1 at 4. This argument is also not responsive to the Motion to Dismiss. 2 Finally, plaintiff argues that should defendants’ counsel “persist in their refusal to produce 3 their license with oath . . . then the remedy for their refusal is to provide a summary judgment in 4 favor of Kay: Bliss. This judgment shall invalidate the trustee sale. . .” ECF No. 16 at 5. Not 5 only is this argument unresponsive to the Motion to Dismiss but it is also improper to the extent 6 plaintiff is requesting summary judgment. A party seeking summary judgment must file and 7 serve a formal noticed motion and comply with the requirements of Federal of Civil Procedure 8 56(a)-(e). (Fed. R. Civ. P. 56(a)-(e).) 9 E. The Case Should be Dismissed Entirely and Leave to Amend is Futile 10 Plaintiff’s complaint is fatally flawed because it does not present any civil cause of action. 11 It is clear from the content of the complaint and plaintiff’s other filings that leave to amend would 12 be futile. Though a pro se plaintiff is generally entitled to an opportunity to correct defects in a 13 complaint by amendment, that step is not appropriate where, as here, the defects cannot be cured. 14 Noll, 809 F.2d at 1448. 15 The court recognizes that defendants Quality Loan Service Corporation, Kevin McCarthy, 16 and Rochelle Matkin have not appeared and have, therefore, not moved to dismiss. Still, the 17 court should dismiss the claims against them. “A District Court may properly on its own motion 18 dismiss an action as to defendants who have not moved to dismiss where such defendants are in a 19 position similar to that of moving defendants or where claims against such defendants are 20 integrally related.” Silverton v. Dep’t of Treasury of U. S. of Am., 644 F.2d 1341, 1345 (9th Cir. 21 1981). Here, the complaint is equally defective as to all defendants because it is entirely without 22 any legal or factual basis. Further, the claims appear to be alleged equally against all defendants. 23 Because the claims against the non-moving defendants are substantially the same as those against 24 the moving defendants, the non-moving parties are equally entitled to dismissal for the reasons 25 explained above. Under these circumstances, dismissing case against the non-moving defendants 26 is proper. 27 //// 28 //// 1 Ill. Pro Se Plaintiff?s Summary 2 It is being recommended that defendants’ motion to dismiss be granted and that this case 3 || be dismissed. You may file objections to the recommendation within 21 days. The District Judge 4 || assigned to this case will issue the final order. 5 IV. Conclusion 6 Accordingly, the undersigned recommends that the motion to dismiss (ECF No. 4) be 7 || GRANTED and that this case be dismissed in its entirety. 8 These findings and recommendations are submitted to the United States District Judge 9 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within twenty-one days 10 || after being served with these findings and recommendations, any party may file written 11 || objections with the court and serve a copy on all parties. Id.; see also Local Rule 304(b). Such a 12 || document should be captioned “Objections to Magistrate Judge’s Findings and 13 || Recommendations.” Failure to file objections within the specified time may waive the right to 14 || appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez 15 | v. Yist, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 16 || DATED: February 7, 2024 ~ 17 Htttenr— Lhor—e_ ALLISON CLAIRE 18 UNITED STATES MAGISTRATE JUDGE 19 20 21 22 23 24 25 26 27 28