Junod v. Mortgage Electronic Registration Systems, Inc.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT AUG 06 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
PAUL JUNOD and PATRICIA JUNOD, No. 12-55712
Plaintiffs - Appellants, D.C. No. 2:11-cv-07035-ODW
v.
MEMORANDUM*
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.;
WELLS FARGO HOME MORTGAGE,
d/b/a America’s Servicing Company; and
U.S. BANK NA, as Trustee for CSMC
Mortgage-Backed Trust 2006-6,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Otis D. Wright, District Judge, Presiding
Argued and Submitted on March 4, 2014
Pasadena, California
Before: BYBEE and BEA, Circuit Judges, and GLEASON, District Judge.**
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Sharon L. Gleason, United States District Judge for
the District of Alaska, sitting by designation.
Patricia and Paul Junod appeal the district court’s dismissal of their Second
Amended Complaint (SAC) for failure to state a claim.1 They assert the district
court erred by dismissing their claims for wrongful foreclosure and cancellation of
the trustee’s deed upon sale; declaratory judgment; violation of the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692–1692p; and violation of
California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§
17200–17210. We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de
novo the district court’s dismissal of the SAC’s claims under Federal Rule of Civil
Procedure 12(b)(6). Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025,
1030 (9th Cir. 2008). We affirm.
I.
Underpinning the SAC’s claims for wrongful foreclosure and cancellation of
the trustee’s deed upon sale (Counts 5 and 6) is the allegation that the assignment
of the Junods’ home loan obligation to a securitized investment trust was void
because it did not comply with the pooling and servicing agreement (PSA)
governing the trust. Dismissal was correctly entered because this allegation is not
1
Although Mortgage Electronic Registration Systems, Inc. is listed in
the caption on appeal, it is not a party to this action, as it was not named as a
defendant in the SAC.
2
plausible.2 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007))).
The SAC and the attachments thereto allege that on June 1, 2006, the
Junods’ home lender purported to transfer their Note (but not the Deed of Trust) to
the CSMC Mortgage-Backed Trust 2006-6 (CSMC Trust). The SAC further
alleges that Sections 2.01 and 2.02 of the CSMC Trust’s PSA required that all
“notes and mortgages” be transferred to the CSMC Trust by June 29, 2006 (the
Closing Date) “in order for the mortgage loan to be a part of the trust res.” And the
SAC alleges that the Junods’ “Mortgage” was not transferred to the CSMC Trust
by the Closing Date. Although obfuscated in the SAC and in the Junods’ briefing
on appeal, by these allegations the SAC appears to assert that because the Deed of
Trust was not formally assigned in a recorded transaction to the CSMC Trust by
the Closing Date, the assignment of the Junods’ loan to the CSMC Trust was
rendered void.
2
At oral argument, the parties focused on whether the Junods have
standing under California law to enforce the PSA. We need not reach this
question because the key allegation underpinning Counts 5 and 6 is not plausible.
3
However, under California law, “[t]he assignment of a debt secured by
mortgage carries with it the security.” Cal. Civ. Code § 2936; see also United
States v. Thornburg, 82 F.3d 886, 892 (9th Cir. 1996). In other words, the transfer
of the Junods’ Note to the CSMC Trust on June 1, 2006—one month prior to the
Closing Date—carried with it the security interest created by the Deed of Trust to
secure the Note. Moreover, the Junods have not pointed to any PSA provision
appended to their SAC that required the Deed of Trust to be formally assigned in a
recorded transaction to the CSMC Trust prior to the Closing Date. To the contrary,
PSA Section 2.01 appended to the SAC clearly states that for a “MERS Mortgage
Loan,” which presumably includes the Junods’ loan,3 the Trust Custodian need
only be provided with “a copy of the Mortgage certified by the public recording
office in which such Mortgage has been recorded.”4 By contrast, “for each
Mortgage Loan that is not a MERS Mortgage Loan,” the “original Mortgage” must
be delivered to the Trust Custodian. Cf. Cervantes v. Countrywide Home Loans,
3
The Deed of Trust appended to the SAC identifies MERS as the
Beneficiary,“solely as a nominee for Lender and Lender’s successors and assigns.”
4
Additionally, the “Securitized Mortgage Report” attached to and
referenced in the SAC provides that “the PSA stipulates that any ‘MERS’
registered transaction need not be concerned with recordation of the Assignments.”
4
Inc., 656 F.3d 1034, 1039 (9th Cir. 2011) (“MERS was designed to avoid the need
to record multiple transfers of the deed [of trust] by serving as the nominal record
holder of the deed on behalf of the original lender and any subsequent lender.”).
Because the SAC does not plausibly allege that the PSA was violated, we affirm
the dismissal of the claims challenging the validity of the foreclosure.
II.
The same allegations and legal theories underpin the Junods’ request for
declaratory relief (Count 1) as underpin their claims challenging the validity of the
foreclosure. Therefore, we affirm the district court’s denial of the Junods’ request
for a declaratory judgment because they “ha[ve] not adequately pled an underlying
claim for relief.” See 28 U.S.C. § 2201(a) (2012) (federal court may grant
declaratory relief only “[i]n a case of actual controversy within its jurisdiction”);
Countrywide Home Loans, Inc. v. Mortg. Guaranty Ins. Corp., 642 F.3d 849, 853
(9th Cir. 2011) (“[W]hile the [Declaratory Judgment Act] expanded the scope of
the federal courts’ remedial powers, it did nothing to alter the courts’ jurisdiction,
or the ‘right of entrance to federal courts.’” (quoting Skelly Oil Co. v. Phillips
Petroleum Co., 339 U.S. 667, 671 (1950))).
5
III.
The SAC fails to state a claim against U.S. Bank under the FDCPA (Count
2) because it does not plausibly allege that U.S. Bank is a “debt collector” within
the meaning of the statute. See Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204,
1208 (9th Cir. 2013) (complaint asserting FDCPA claim “must plead ‘factual
content that allows the court to draw the reasonable inference’” that defendant is a
“debt collector” as defined by the FDCPA (quoting Iqbal, 556 U.S. at 678)). The
SAC alleges that “U.S. Bank, acting as the trustee of the CSMC Trust, is in the
business where the principal purpose is to collect debts on behalf of the investors
in the CSMC Trust” and “is responsible for regularly collecting debts owed to the
CSMC Trust.” But if U.S. Bank is collecting debts owed to the CSMC Trust, then
its actions are “incidental to a bona fide fiduciary obligation,” and it is exempt
from the FDCPA’s definition of “debt collector.”5 15 U.S.C. § 1692a(6)(F) (2012)
(“debt collector” as defined in FDCPA does not include a person whose debt
collection activity “is incidental to a bona fide fiduciary obligation”). Because the
5
The Junods assert that U.S. Bank’s actions with respect to them could
not have been incidental to a bona fide fiduciary obligation because the Junods’
loan obligation was not validly assigned to the CSMC Trust. But as we have
explained, the SAC’s allegation that the assignment was invalid is implausible.
6
SAC fails to allege plausibly that U.S. Bank is a “debt collector,” we affirm the
dismissal of the FDCPA claim.
IV.
The SAC fails to state a claim for violation of California’s UCL (Count 4)
because the Junods lack standing to bring a UCL claim. To have standing under
the UCL, as amended by Proposition 64 in 2004, a private party must “(1) establish
a loss or deprivation of money or property sufficient to qualify as injury in fact,
i.e., economic injury, and (2) show that that economic injury was the result of, i.e.,
caused by, the unfair business practice.” Kwikset Corp. v. Superior Court, 246
P.3d 877, 884–85 (Cal. 2011) (citing Cal. Bus. & Prof. Code § 17204); see also
Rubio v. Capital One Bank, 613 F.3d 1195, 1203–04 (9th Cir. 2010) (discussing
the UCL’s standing requirement). “A plaintiff fails to satisfy the causation prong
of the statute if he or she would have suffered ‘the same harm whether or not a
defendant complied with the law.’” Jenkins v. JP Morgan Chase Bank, N.A., 156
Cal. Rptr. 3d 912, 933 (Cal. Ct. App. 2013) (quoting Daro v. Superior Court, 61
Cal. Rptr. 3d 716, 729 (Cal. Ct. App. 2007)).
The SAC’s UCL claim alleges that U.S. Bank, and America’s Servicing
Company acting on behalf of U.S. Bank, did not have the authority to take actions
7
with respect to the Junods’ Note and Deed of Trust because the assignment of the
Junods’ loan obligation to the CSMC Trust was void.6 The flaw in this claim is
that while the loss of a home to foreclosure is most likely an injury in fact,
causation has not been demonstrated. The Junods’ default triggered the foreclosure
of their home, not the manner in which their Note and Deed of Trust were
transferred to the CSMC Trust. Cf. Cervantes, 656 F.3d at 1043–44 (holding
plaintiffs failed to state wrongful foreclosure claim under Arizona law because
they were “in default and ha[d] not identified damages”). Because the Junods lack
standing, we affirm the dismissal of the UCL claim.
AFFIRMED.
Each party shall bear its own costs on appeal.
6
In SAC Count 4 the Junods contend that the allegedly invalid
assignment could result in “multiple parties . . . seek[ing] to enforce their debt
obligation against them.” But if there were some other, “valid” assignee of the
Junods’ loan obligation, any claim that assignee might validly assert would be
against U.S. Bank and the CSMC Trust, not the Junods.
8