Thomas v. Quality Loan Service Corporation ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 RUDIE THOMAS, Case No. 18-cv-2791-BAS-NLS 11 Plaintiff, ORDER GRANTING 12 DEFENDANT’S MOTION TO DISMISS 13 v. [ECF No. 17] 14 QUALITY LOAN SERVICE CORPORATION, et al., 15 Defendants. 16 17 18 Plaintiff Rudie Thomas is a litigant familiar to this Court. In 2014, he was 19 declared a vexatious litigant with respect to the repeated lawsuits he filed against 20 Bank of America following foreclosure of his property located at 5048 Crescent Bay. 21 (See 13-cv-1576-LAB-JLB, ECF No. 24.) In that case, Chief Judge Burns enjoined 22 Mr. Thomas from filing any further civil actions against Bank of America with 23 respect to foreclosure of his home without approval of the court. 24 Astonishingly, in 2016, Mr. Thomas was issued another mortgage on a 25 property located at 3771 Coleman Avenue. When Wells Fargo Bank foreclosed on 26 this property, Mr. Thomas commenced legal proceedings against Wells Fargo Bank 27 in San Diego Superior Court. Upon losing his case in state court, he now files this 1 Bank foreclosure sale. 2 In the Superior Court case Mr. Thomas alleged: (1) Wells Fargo Bank did not 3 have the right to foreclose on his Coleman Avenue property because the note was 4 forged, (2) Wells Fargo Bank was not properly assigned the Deed of Trust, and (3) 5 Wells Fargo Bank did not properly substitute Quality Loan Service Corp. as the 6 trustee under the Deed of Trust. The San Diego Superior Court found all of these 7 claims lacked merit, ruling: It is undisputed that plaintiff entered into the subject loan transaction, 8 accepted the loan funds and purchased the property, moved into the 9 property and made payments to Wells Fargo. The undisputed evidence demonstrates that Wells Fargo was properly assigned the Deed of Trust 10 and properly substituted in Quality Loan Service Corp. as the 11 foreclosure trustee. 12 Thomas v. Wells Fargo Home, Cas No. 37-2016-00019344-CU-OR-CTL. (See ECF 13 No. 7-2, at 39.) 14 Plaintiff filed this federal case against QLS, and in his original complaint he 15 alleged numerous causes of action, including violations of the Fair Debt Collections 16 Practices Act and the Racketeer Influenced and Corrupt Organizations Act. The 17 Court dismissed certain causes of action with prejudice and others without prejudice. 18 (“Prior Order,” ECF No. 15, at 16–17.) The Court granted Plaintiff leave to amend. 19 (Id.) Plaintiff filed an amended complaint, this time bringing causes of action under 20 the False Claims Act (specifically, section 3729(a)(1)(B)) and California Civil Code 21 section 2924(A)(6). (First Amended Complaint, “FAC,” ECF No. 16.) Plaintiff also 22 requests declaratory judgment declaring the status of the Coleman Avenue property. 23 Plaintiff requests $15,375,463.90 in damages. 24 Defendant QLS again moves to dismiss the complaint, (“Mot.,” ECF No. 17). 25 Plaintiff opposes the motion. (ECF No. 19.)1 The Court finds this Motion suitable 26 27 1 Plaintiff filed four separate requests for judicial notice, attaching dozens of documents. (ECF 19, 1 for determination on the papers and without oral argument. Civ. L. R. 7.1(d)(1). For 2 the reasons stated below, the Court GRANTS Defendant’s Motion. 3 I. FACTUAL ALLEGATIONS 4 Plaintiff alleges he is the owner of a property located at 3771 Coleman Avenue 5 in San Diego. (FAC ¶ 1.) A deed of trust dated August 26, 2014 indicates Plaintiff 6 obtained a loan of $356,385 secured by a Deed of Trust against the property located 7 at 3771 Coleman Avenue. The deed of trust lists Mortgage Electronic Registration 8 Systems, Inc. (“MERS”) as the nominal beneficiary for Moria Development, Inc. 9 (ECF No. 16-1, at 2.)2 On December 29, 2015, a Substitution of Trustee was 10 recorded, and Defendant QLS was named as trustee. (ECF No. 16-3, at 19.) 11 On December 31, 2015, Defendant recorded a Notice of Default. (Id. at 22.) 12 On April 4, 2016, Defendant recorded a Notice of Trustee’s Sale due to Plaintiff’s 13 unpaid balance. (ECF No. 16-4, at 56.) On May 13, 2016, Defendant recorded a 14 Trustee’s Deed Upon Sale. (Id. at 59.) 15 II. LEGAL STANDARD 16 A complaint must plead sufficient factual allegations to “state a claim to relief 17 that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal 18 quotation marks and citations omitted). “A claim has facial plausibility when the 19 plaintiff pleads factual content that allows the court to draw the reasonable inference 20 21 DENIES Plaintiff’s requests. 22 2 Plaintiff attached relevant documents to his FAC, for example, the deed of sale, substitution of trustee, notice of default, and notice of trustee’s sale. The Court incorporates the documents by 23 reference. Incorporation by reference allows a court deciding a Rule 12(b)(6) motion to dismiss to consider materials “properly submitted as part of the complaint.” Hal Roach Studios, Inc. v. 24 Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989). A court deciding a Rule 12(b)(6) 25 motion to dismiss may consider a document that is not attached to the complaint if the complaint “necessarily relies” on it and “(1) the complaint refers to the document; (2) the document is central 26 to the plaintiff’s claims; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Marker v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). Plaintiff’s FAC refers to 27 the attached documents, which are central to his claims regarding the foreclosure on his property. 1 that the defendant is liable for the misconduct alleged.” Id. 2 A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 3 Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 4 Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court 5 must accept all factual allegations pleaded in the complaint as true and must construe 6 them and draw all reasonable inferences from them in favor of the nonmoving party. 7 Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). To avoid a Rule 8 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, 9 it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell 10 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A Rule 12(b)(6) dismissal may 11 be based on either a ‘lack of a cognizable legal theory’ or ‘the absence of sufficient 12 facts alleged under a cognizable legal theory.’” Johnson v. Riverside Healthcare 13 Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (quoting Balistreri v. Pacifica Police 14 Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)). 15 III. ANALYSIS 16 QLS moves to dismiss each of Plaintiff’s causes of action but, as it did in the 17 prior motion, first argues its actions are protected by privilege. 18 The Court previously found that QLS is protected by the litigation privilege. 19 The privilege bars any tort action based on a protected communication made without 20 malice. Rubin v. Green, 4 Cal. 4th 1187, 1193–94 (1993). The privilege does not, 21 however, defeat federal causes of action. Hinrichsen v. Bank of Am. N.A., No. 17- 22 cv-219 DMS (RBB), 2017 WL 2992662, at *2 n.3 (S.D. Cal. July 14, 2017) (citing 23 cases). 24 The Court has reviewed Plaintiff’s FAC and finds that its allegations do not 25 change this conclusion; QLS remains protected by the litigation privilege for certain 26 causes of action. The Court analyzes Plaintiff’s first federal cause of action under 27 the False Claims Act. 1 A. False Claims Act 2 Plaintiff specifies he is bringing a cause of action under the False Claims Act, 3 31 U.S.C. § 3729(a)(1)(B), which imposes liability on any person who “knowingly 4 makes, uses, or causes to be made or used, a false record or statement material to a 5 false or fraudulent claim.” 6 The False Claims Act (“FCA”) imposes liability for defrauding the 7 Government by making false or fraudulent claims for money or property. The FCA 8 is “intended to reach all types of fraud, without qualification, that might result in 9 financial loss to the Government.” United States v. Neifert-White Co., 390 U.S. 228, 10 232 (1968). The essential elements of FCA liability under section 3729(a)(1)(A) or 11 3729(a)(1)(B) are “(1) a false statement or fraudulent course of conduct, (2) made 12 with scienter, (3) that was material, causing (4) the government to pay out money or 13 forfeit moneys due.” U.S. ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1174 14 (9th Cir. 2006). 15 Plaintiff alleges QLS made a false record/claim by drafting and recording the 16 Notice of Trustee’s Sale and the Trustee’s Deed Upon Sale. (Id. ¶ 45–46.) This act 17 was allegedly false because QLS knew that Wells Fargo was not in possession of the 18 Note. (Id. ¶ 47.)3 19 The Court found in its prior order that QLS’s acts of filing the notice of 20 trustee’s sale and trustee’s deed upon sale was proper under the Civil Code. (Prior 21 Order at 6.) The Court found that QLS had properly been substituted as trustee. (Id. 22 (“[T]he Court finds that Wells Fargo was the beneficiary at the time of the 23 substitution and validly substituted QLS as the trustee.”). Therefore, Plaintiff’s 24 25 3 It is unclear if the Government or a government agency allegedly made a payment relating to 26 Plaintiff’s mortgage. Plaintiff alleges Wells Fargo was accepting payments from the Department of Veterans Affairs (“the VA”). (FAC ¶ 39.) It appears Plaintiff’s loan was guaranteed by the VA, 27 and Plaintiff alleges the VA had to pay money as a result of QLS’s actions. Assuming this 1 conclusory allegation that QLS filed false or fraudulent documents is unsupported. 2 The Court DISMISSES this cause of action. 3 B. California Civil Code Section 2924(a)(6) 4 This civil code section provides, “No entity shall record or cause a notice of 5 default to be recorded or otherwise initiate the foreclosure process unless it is the 6 holder of the beneficial interest under the mortgage or deed of trust, the original 7 trustee or the substituted trustee under the deed of trust, or the designated agent of 8 the holder of the beneficial interest.” Cal. Civil Code § 2924(a)(6) 9 Plaintiff’s second cause of action alleges that his right to his personal property 10 was violated because he was not in default and therefore his property should not have 11 been sold at an auction. (Id. ¶ 49.)4 The Court previously found that QLS is the 12 substituted trustee. (Prior Order at 6.) Therefore, QLS had the right to initiate 13 foreclosure proceedings. QLS has not violated section 2924(a)(6) and the Court 14 DISMISSES this cause of action. 15 C. Declaratory Judgment 16 Plaintiff requests declaratory judgment as to the status of the Coleman Avenue 17 property. Plaintiff requests a declaration that he is the owner of the property and that 18 QLS has no right to it. (FAC ¶ 59.) The Court has found above that Plaintiff has not 19 sufficiently alleged that he is still the owner of the property, and the Court declines 20 to issue a declaratory judgment. 21 IV. CONCLUSION 22 For the foregoing reasons, the Court GRANTS the Motion to Dismiss. The 23 24 4 The allegation also appears to relate to Plaintiff’s assertion that the promissory note relating to the mortgage is not valid because the deed of trust was physically separated from the note. (FAC 25 ¶ 19.) The argument is unclear. However, a “deed of trust . . . is inseparable from the note it secures, and follows it even without a separate assignment.” Yvanova v. New Century Mortg. 26 Corp., 62 Cal. 4th 919, 927 (2016); United States v. Thornburg, 82 F.3d 886, 892 (9th Cir. 1996) 27 (holding even if the party holding the deed of trust instrument fails “to hand [it] over” to the note holder, the note holder has the right to foreclose). 1 || Court previously granted Plaintiff leave to amend his complaint, and he failed to add 2 || any new allegations that changed the Court’s conclusion that he could not sufficiently 3 || plead a claim. The Court therefore finds that granting Plaintiff leave to amend would 4 |\be futile. See Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th □□□□ □□□□□ 5 || (holding a “district court’s discretion to deny leave to amend is particularly broad 6 || where plaintiff has previously amended the complaint”). Therefore, the dismissal is 7 || without leave to amend. This concludes the litigation in this matter and the Clerk is 8 |/instructed to close the case. 9 IT IS SO ORDERED. 10 11 ||/DATED: January 15, 2020 / tla | - Ly hy ‘ □ 12 nisi Cynthia Bashant 3 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28