Monthly Archives: May 2011

The Noose Tightens around Borrowers’ Necks in California: the time for Revolution against the Bank Controlled Government and Judiciary is NOW

JUDICIALLY UNQUESTIONABLE but PLAINLY ILLEGAL DEBT COLLECTION and ENFORCEMENT SPELLS DEATH to the AMERICAN FAMILY, PRIVATE PROPERTY, and the middle class’ (“bourgeois”) DEMOCRATIC-REPUBLICAN STATE:

Ever since I learned of the Gomes v. Countrywide Home Loan decision on February 18, 2011 of this year, I have lost faith that the people can use any aspect of California law to shake off the “private property purges” whereby in true Stalinist fashion, the banks and the (apparently) Bank-Controlled Judiciary enforce mass foreclosure and eviction against the people.  Decision after decision comes down against homeowners, and all I can do is ask the downtrodden current and former homeowners and other victims of predatory lending in California (and everywhere in the United States) to support my campaign to become the next U.S. Senator from California and unseat the Banks’ and corrupt Judiciary’s best friend, Dianne Feinstein.

 I was “cite-checking” Gomes hopefully this morning, looking for some glimmer of light in the tunnel, and instead found this newly handed down, albeit unpublished, decision where the U.S. District Court for the Southern District of California had followed a whole series of bad, anti-private property, unconstitutional precedents, precisely last (but not at all least) among which was Gomes.  The Federal Courts seem unwilling to address the constitutionality of California Civil Code 2924 et seq., even the notorious subsections 2924a and 2924i which insulate trustees and trustee sales from all judicial challenges, and/or 1714.10 which shields lawyers from suit for every kind of fraud committed in conjunction with clients (and judges).  Despite the fact that ALL of these sections of the California Civil Code and related provisions of the California Code of Civil Procedure violate the letter and spirt of the Constitution’s Impairment of Contracts clause, the Fifth Amendment, and the statutory guarantees of equal access to the Courts and equal rights to make and enforce contracts relating to the purchase and maintenance of interests in property enshrined in 42 U.S.C. Sections 1981 and 1982 pursuant to the Fourteenth Amendment, the Federal Courts, the guarantors of the Constitution, unceasingly yield to the Bankers and Attorneys for the Mortgage Finance Industry:

2011 WL 1597475
Only the Westlaw citation is currently available.
United States District Court,

S.D. California.

Sharon J. MADRID, Plaintiff,
v.
BANK OF AMERICA CORPORATION doing business as BAC Home Loan Servicing, LP, MERA, Does 1 through 50, inclusive, Defendants.
No. 3:11–cv–0077 AJB (WVG).
April 26, 2011.

Attorneys and Law Firms

Mitchell L. Abdallah, Abdallah Law Group, Sacramento, CA, for Plaintiff.
Alison M. NorrisShanna M. RamsowerSteven A. Ellis, Goodwin Procter LLP, Los Angeles, CA, for Defendants.

Opinion

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION AS MOOT
ANTHONY J. BATTAGLIA, District Judge.
*1 Pending is Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction (Doc. No. 10), filed February 3, 2011, and Defendants’ Motion to Dismiss the First Amended Complaint (Doc. No. 15), filed February 16, 2011.
BACKGROUND
On June 7, 2005, Plaintiff obtained a loan from Countrywide Home Loans, Inc. (“Countrywide”) and executed a promissory note in the amount of $1,555,000. (Am.Compl.Ex. C). As security for the note, Plaintiff signed a Deed of Trust that was recorded on June 23, 2005. (Am.Compl.Ex. B). The Deed of Trust identifies Countrywide as the lender, ReconTrust Company, N.A. (“Recon”) as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary and nominee for the lender. (Id.). Bank of America Corporation doing business as BAC Home Loan Servicing, LP (“BAC”) purchased Countrywide. (Am.Compl.¶ 8).
Plaintiff subsequently defaulted on the loan. (Am.Compl.Ex. D). Recon, acting as an agent for MERS, issued a Notice of Default beginning foreclosure proceedings against Plaintiff in September 2010. (Id.). Plaintiff received two letters from Recon, dated September 2, 2010, and September 23, 2010, verifying the indebtedness on the note and identifying Countrywide as the original creditor of the underlying debt. (Am.Compl.Ex. C).
On January 13, 2011, Plaintiff filed this action against BAC, MERS, and Does 1–50. Specifically, Plaintiff alleges that MERS served solely as the nominee for the lender and could not be the beneficiary of the Deed of Trust. (Id. at ¶¶ 9, 11). Plaintiff argues that MERS, while serving a limited capacity as nominee on the Deed of Trust, had no authority to transfer any beneficial interest in the Deed of Trust. (Am.Compl.¶¶ 11, 12). Plaintiff contends that the current beneficiary of the note is unknown because there are “no recorded documents that transfer, convey, or assign any rights, title or interest as beneficiary holding legal title to a different present beneficiary.” (Id. at ¶ 9). Thus, Plaintiff alleges that Recon lacks the authority necessary to institute foreclosure proceedings on Plaintiff’s property. Based on these allegations, the First Amended Complaint contains the following five counts: Count One—Fraud and Fraud in the Inducement against BAC and MERS; Count Two—Declaratory Relief against BAC; Count Three—Negligence against BAC and MERS; Count Four—Negligent Misrepresentation against BAC and MERS; and Count Five—Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 against BAC.
LEGAL STANDARD FOR MOTION TO DISMISS
A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6)Navarro v. Block, 250 F.3d 729, 731 (9th Cir.2001). The court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996). To avoid a Rule 12(b)(6)dismissal, a complaint need not contain detailed factual allegations, rather, it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, –––U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citingTwombly, 550 U.S. at 556).
*2 However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain,478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)) (alteration in original). A court need not accept “legal conclusions” as true. Iqbal, 129 S.Ct. at 1949. In spite of the deference the court is bound to pay to the plaintiff’s allegations, it is not proper for the court to assume that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the … laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ ” Iqbal, 129 S.Ct. at 1949 (quoting Twombly,550 U.S. at 557).
For a Rule 12(b)(6) motion, a court generally cannot consider material outside the complaint. See Branch v. Tunnell, 14 F.3d 449, 453–54 (9th Cir.1994)overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir.2002). A court may, however, consider exhibits submitted with the complaint. Van Winkle v. Allstate Ins. Co., 290 F.Supp.2d 1158, 1162 n. 2 (C.D.Cal.2003). A court may disregard allegations in the complaint if they are contradicted by facts established by exhibits attached to the complaint. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.1987).
ANALYSIS
California Civil Code section 2924 provides the “comprehensive statutory framework established to govern nonjudicial foreclosure sales [and] is intended to be exhaustive.” Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d 777 (1994)I.E. Assoc. v. Safeco Title Ins. Co. ., 39 Cal.3d 281, 216 Cal.Rptr. 438, 702 P.2d 596 (1985). Under section 2924(a)(1), a “trustee, mortgagee, or beneficiary or any of their authorized agents” may conduct the foreclosure process. The Deed of Trust names Recon as the trustee and MERS as nominee for the lender and beneficiary. (Am. Compl. Ex. C at 2). While the Amended Complaint argues that MERS does not have the capacity to act as a beneficiary, Plaintiff has not provided the Court with any legal basis for this proposition. In fact, Plaintiff agreed to MERS’ designation as nominee and beneficiary with the power to foreclose when she executed the Deed of Trust. That document clearly states that “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property….” (Id. at 3–4, 216 Cal.Rptr. 438, 702 P.2d 596.). Thus, pursuant to the Deed of Trust, MERS had authority to assign its interest beneficial interest to another party. Castaneda v. Saxon Mortg. Servs., Inc., 687 F.Supp.2d 1191, 1198 (E.D.Cal.2009)Lane, 713 F.Supp.2d at 1099 (“MERS has standing to foreclose as the nominee for the lender and beneficiary of the Deed of Trust and may assign its beneficial interest to another party”). As discussed further below, Plaintiff’s claims to the contrary are unsupported.
*3 Count One alleges that BAC and MERS engaged in fraud by intentionally omitting the fact that “MERS had no authority to convey or transfer its beneficial interest to any party because it lacked the substantive rights and … had no legal beneficial interest to begin with.” (Am.Compl.¶ 30). Plaintiff claims that “[t]hrough MERS’s invalid transfer of the Deed of Trust to BAC, a scheme was borne [sic] wherein BAC, as the purported/beneficiary of the Note is now attempting to collect the debt and foreclose on the Subject Property as though it has legal authority to do so.” (Id. at ¶ 28). As an initial matter, Plaintiff’s allegations that BAC is foreclosing on the loan contradict the Notice of Default attached to the Amended Complaint. (Am.Compl.Ex. D). The Notice of Default clearly states that Recon acting as an agent for MERS is foreclosing on Plaintiff’s property. Both Recon as the trustee and MERS as the beneficiary under the Deed of Trust have authority to foreclose following Plaintiff’s default by virtue of section 2924(a)(1). Additionally, Plaintiff has not pled her fraud claim with particularity as required under Fed.R.Civ.P. 9(b). While Plaintiff argues that Defendants fraudulently failed to inform her of MERS’ capabilities, Plaintiff has not offered any support for her claim that MERS could not legally serve as beneficiary under the Deed of Trust or the specific nature of the alleged omissions by the Defendants. For these reasons, Count One is dismissed for failure to state a claim upon which relief may be granted.
Counts Three and Four are based upon allegations nearly identical to those in Count One and, thus, fail for the same reason. Count Three asserts a negligence claim against BAC and MERS. Plaintiff claims the Defendants breached their duty of care to Plaintiff by acting carelessly when filing, transferring, and assigning loan-related documents without regard to whether the documents reflected the truth and by wrongfully instituting the foreclosure sale.1 (Id. at ¶¶ 46, 47, 50). Similarly, Count Four alleges that BAC and MERS made negligent misrepresentations and omissions “causing Plaintiff to believe any transfers, sales or assignments of the Note would be made in a legal manner consistent with prevailing state law.” (Id. at ¶ 55). Counts Three and Four allege, in essence, that BAC and MERS negligently failed to inform Plaintiff that MERS could not legally serve as beneficiary on the Deed of Trust or make valid transfers of its interest under the Deed of Trust. Once again, Plaintiff has not offered any support for her claim that MERS could not legally serve as beneficiary. Pursuant to the Deed of Trust, Plaintiff authorized MERS to serve as nominee for the lender and as the beneficiary. Thus, Counts Three and Four are dismissed.
Count Two requests declaratory relief because the “scheduled foreclosure and sale [of Plaintiff’s property] will be wrongful and should be enjoined by virtue of the facts alleged” in the Amended Complaint. (Id. at ¶ 44). Plaintiff specifies in her prayer for relief that she seeks a declaration that “trustee had no right to foreclose and conduct the trustee sale, and has no right to transfer title as a result of that sale because no breach occurred by Plaintiff.” (Am. Compl. Prayer ¶ 1). As discussed above, a “trustee, mortgagee, or beneficiary or any of their authorized agents” may conduct the foreclosure process. Inasmuch as Recon had authority to foreclose as both either the trustee or as the beneficiary’s agent under section 2924(a)(1), Count Two is dismissed.
*4 Count Five alleges that BAC violated the FDCPA “in that it should have informed Plaintiff that it was the legal owner or had authority from the legal owner to collect and pursue payment on the debt tied to the Note secured to the Deed of Trust.” (Id. at ¶ 60). The FDCPA prohibits certain unfair and oppressive methods of collecting debt. 15 U.S.C. § 1692e. In order to be liable under the FDCPA, BAC must fall under its definition of “debt collector.” 15 U.S.C. § 1692a(6). A “debt collector” under the FDCPA is “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” Id. However, it was Recon “acting as an agent for the Beneficiary” MERS that filed the Notice of Default under the Deed of Trust.2 (Am. Compl. Ex. D at 2). Nothing in the Amended Complaint suggests that BAC had any communication with Plaintiff in an attempt to collect on the mortgage debt. Accordingly, Count Five is dismissed for failure to state a claim upon which relief may be granted.
As Plaintiff may wish to amend her Complaint, the Court also notes that Count Five fails to identify the specific sections of the FDCPA that BAC allegedly violated. It is not the role of the Court to construct Plaintiff’s claims based upon the general nature of her pleadings. In order to survive a motion to dismiss, Count Five needs to provided more direction as to the nature of Plaintiff’s FDCPA claim.
Having dismissed each of Plaintiff’s claims for the reasons set forth above, the Court need not address Defendants’ remaining arguments in favor of dismissal, though Plaintiff may wish to consider them when contemplating an amended complaint.
CONCLUSION
Based on the foregoing, Defendants’ Motion to Dismiss the First Amended Complaint is GRANTED without prejudice. Plaintiff may file an amended complaint consistent with this Order within twenty (20) calendar days from the date of this Order. If Plaintiff chooses to amend the complaint, no additional parties or causes of action shall be included without first filing a motion for leave to amend.
Inasmuch as the Court granted Defendants’ Motion to Dismiss the First Amended Complaint, it is further ORDERED that Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction is DENIED as moot.

Footnotes

It should be noted that Plaintiff provided no authority for the proposition that BAC or MERS owed a duty to Plaintiff in their capacities as lender, beneficiary, or servicer of the loan. Generally, absent special circumstances a loan transaction is at arms-length and no duties arise from the loan transaction outside of those in the agreement.Castaneda v. Saxon Mortg. Servs., Inc., 687 F.Supp.2d 1191, 1198 (E.D.Cal.2009)Oaks Mgmt. Corp. v. Superior Court, 145 Cal.App.4th 453, 466, 51 Cal.Rptr.3d 561 (2006).
Plaintiff expresses concern throughout her Amended Complaint that “it is unclear how [Recon] has been given authority to collect payments, or foreclose on the Subject Property” and that Recon failed to provide any “evidence or clarification as to who the current beneficiary/real party in interest is.” (Am.Compl.¶¶ 25, 21). However, the Notice of Default clearly provides that Recon was acting on behalf of MERS. Section 2924 authorizes Recon to initiate foreclosure proceedings while serving in its capacity as either the named trustee or as agent for the named beneficiary under the Deed of Trust. Cal. Civ.Code § 2924(a)(1). As to the Plaintiff’s suggestion that Recon had some sort of obligation to disclose the current beneficiary of the loan, Plaintiff has provided no authority to support this proposition and the Deed of Trust contains “no suggestion that the lender or its successors and assigns must provide [Plaintiff] with assurances that MERS is authorized to proceed with a foreclosure at the time it is initiated .”See Gomes, 192 Cal.App.4th at 1157, 121 Cal.Rptr.3d 819.

Will the Walls Come Tumbling Down? Have fatal cracks appeared in the “Integrated” State Bar Monopoly? If Non-Lawyers Can Own and Operate Law Firms, which will require that they analyze and direct the work and productivity of lawyers, why can they not work side-by-side as equals?

This is truly astounding and excellent news which I found published at: http://blogs.findlaw.com/strategist/2011/05/jacoby-meyers-sues-to-allow-nonlawyers-to-own-law-firms.html#more.  I think this is evidence that the legal monopoly is breaking down under economic pressure.  The Island of Illegitimate Monopolistic privilege occupied by members of the Judicially Controlled “Integrated” State Bars which first became entrenched in the 1920s-30s, and which today approximate something like a “peerage” of titled-nobility, achievable by competitive examination and oaths of loyalty of loyalty administered by the very same judges who make all other decisions, including those relating to disbarment.  The judicial administration of an “all lawyer” legal profession has had nothing short of catastrophic effects on (1) the securities, banking, and mortgage finance industries, (2) the state and federal family law regimes and divorce/dissolution “industries”, (3) above all, politics (which is neither more nor less than the legal “manufacturing” industry, whose sole product is law) the legal profession and court systems themselves, which have become ingrown and corruptly self-perpetuating.   In any event, though, perhaps if non-lawyers can own lawfirms, the integrated bar will finally begin to collapse and the judicial strangle-hold on justice will start to be loosened.

Jacoby & Meyers Sues to Allow Nonlawyers to Own Law Firms

By Robin Enos on May 26, 2011 5:44 AM | No TrackBacks

So if Mother England no longer bars nonlawyers from owning equity stakes in law firms, who are we Yanks to continue our ethical objections?

After all, both the Constitution and the Judiciary Act of 1789 incorporate “the common law,” i.e., the common law of England.

The British, Australians, the District of Columbia, and maybe soon North Carolina, have discarded the ethical rule against nonlawyers owning equity stakes in law firms, reports the ABA Journal.

And now multi-state law firm Jacoby & Meyers has filed lawsuits in New York, New Jersey and Connecticut, alleging the rule denies them equal protection, due process and other fundamental rights, reports The Wall Street Journal.

So is it time to revisit the issue?

Jacoby & Meyers practices law in many states. Their New York lawsuit, filed in federal court, alleges most of their clients are “those who cannot afford” expensive lawyers, reports The Wall Street Journal.

Thus, Jacoby & Meyers’ complaint alleges, the firm cannot raise capital to keep up in today’s technological law practice without reaching outside the legal profession “to exchange equity for capital.”

Jacoby & Meyers’ New York lawsuit prays for relief from New York’s Rule of Professional Conduct 5.4. The firm’s lawsuits in New Jersey and Connecticut make similar attacks on those states’ ethics rules, reports The Wall Street Journal.

Legal grounds cited by Jacoby & Meyers include the Dormant Commerce Clause, and the Equal Protection and Due Process clauses of the 14th Amendment.

Interestingly, the complaint also alleges class action status, on behalf of “all entities and persons licensed to practice law in the State of New York.”

Critics of the idea rely on familiar arguments regarding loss of confidentiality, loss of independence, conflicts of interest and possible loss of professionalism, reports the ABA Journal.

The ABA seeks input to its study group on the subject, the Ethics 20/20 Commission.

If the ABA, historical standard-bearer for the status quo, has started gathering facts, this issue might soon be sounding in a courthouse near you.

Iconoclasts like Ralph Nader broke loose and challenged certain elements of the legal hierarchy based on alliance with big corporations and big government, as did a very few criminal lawyers like Gerry Spence and, on a smaller scale, Edwin G. Morris of Austin, Texas, and on an admittedly much less successful scale, your current blogger here—Charles Edward Lincoln and his former associates and allies, most notably Francis W. Williams-Montenegro and Valorie Wells Davenport.  But the truth is that the vast majority of licensed attorneys would bend over backwards rather than defy the most insanely unjust judges.  I will never forget an occasion back in the 1990s when another attorney with whom I used to work, John F. Campbell, forcibly muzzled a prominent client who wanted to call a press conference to condemn the notorious, viciously cruel, dictatorial and unfair Austin/Travis County District Judge W. Jeanne Meurer after she summarily jailed his terminally-ill wife (suffering from several forms of cancer with a life-expectancy of less than a year) for default on child-support.  Campbell quite honestly and directly explained that support for the judiciary was the key to his success as a lawyer, and that if he allowed his clients to criticize judges publicly, it would undermine his credibility as an attorney with those very same judges.  In this one sentence one finds the complete explanation for why the profession of law has become so hopelessly corrupt and ineffective.   (The story of “The Honorable” Jeanne Meurer ends with a mild slap on the wrist administered to her only after she retired, and revolved around a complaint filed by another group of monsterously abusive state employees, Child Protective Services operative—no one who has ever appeared before Judge Meurer could believe that this is there is any justice in the fact that this was the worst that has ever happened to her:  http://www.statesman.com/news/local/retired-judge-admonished-for-ordering-adults-into-locked-544970.html).

        I write all this as a man among whose proudest five legal achievements are: (1) to have worked in the chambers of two of the best and most outstanding Federal Judges of the late 20th century (namely Stephen Reinhardt of the 9th Circuit and Kenneth Ryskamp of the Southern District of Florida) and been close acquaintances with several more,

(2) to have been disbarred and indicted at the instigation of two of the worst Federal Judges in history (namely James R. Nowlin and Sam Sparks of the Western District of Texas)—
(3) the latter of those two horrendous Judges (namely Sam Sparks, who once dismissed a suit under the endangered species act with a poem, a really BAD poem) pronounced Atwater v. Lago Vista“the worst civil rights case he had ever seen not filed by a pro se prisoner writing in and from prison” in 1998, only to see the Court reach the U.S. Supreme Court and only lose, by a 5-4 vote and the spirited dissent of Justice Sandra Day O’Connor,

(4) to have been convicted on the most trivial of charges in 2000 and thereby giving up my license and then being sanctioned $150,000.00 in 2008 for “spearheading a movement to have the Texas Family Code declared unconstitutional” by one of the very strangest Judges in Texas history since Roy Bean, namely the Honorable Walter W. Smith of Waco, who had previously presided of the farcical Branch Davidian Trials where only the truly guilty murderers (members of the ATF & FBI who attacked David Koresh and Mount Carmel) were never charged with anything at all (and all this happened only after

(5) Judge James W. Clawson reversed himself in mid-trial at the behest of J. Randall Grimes, Mike Davis, Laurie J. Now and the Texas Attorney General had, in January 2006, sanctioned me $50,000.00 for trying to close down forever (and as the Honorable Judge Clawson himself admitted, very nearly succeeding in closing down) the Family Law Courts in Williamson County after a series of blood-curdling NKVD-KGB series of operations and kangaroo courts which would have shamed the most hardened technocrats of Stalin’s Soviet Union.

Related Resources:

Another Note on MERS claims in Bankruptcy Court, this time from Idaho

2009 Comm. Fin. News. 59
Commercial Finance Newsletter
Professor Dan Schechtera
July27,2009
Assignees of Mortgages Cannot Enforce Unendorsed Notes in Their Possession Because MERS Documentation Does Not Expressly Authorize Assignment of Notes [In re Wilhelm (Bankr. D. Idaho)]
A bankruptcy court in Idaho has held that the assignees of pooled mortgages cannot enforce unendorsed promissory notes in their possession, because the controlling MERS documentation does not expressly authorize MERS to assign the notes. [In re Wilhelm, 2009 WL 1988812 (Bankr. D. Idaho 2009).]
Facts:
A group of financial institutions filed motions in separate consumer bankruptcy cases, seeking relief from the automatic stay in order to enforce the borrowers’ promissory notes and to foreclose. Each of the deeds of trust named Mortgage Electronic Registration Systems, Inc. (MERS) as the nominal beneficiary, but the trust deeds did not state that MERS was authorized to transfer the underlying notes. On its own motion, the court questioned the lenders’ standing to enforce the promissory notes.
Reasoning:
The court first noted that all of the lenders were assignees, rather than the original holders of the notes. The court then held that since none of the notes was endorsed to the assignees, the assignees bore the burden under state law of showing possession of the notes, which they failed to do in an evidentiary-competent manner.
Most importantly, the court held that even if the lenders were in possession, they could not enforce the notes because they had not adequately documented the authority of MERS to assign the notes:
[The lenders] apparently rely upon an assignment document to show that the notes were transferred to them. The signature block in these assignments typically indicate that MERS executed the assignments on behalf of the original lender and that lender’s successors and assigns. [The lenders] seem to presume that the assignments, standing alone, entitle them to enforce the underlying notes. Such a presumption is unfounded, however, because [the lenders] have not established MERS’s authority to transfer the notes at issue…. [T]he relevant deeds of trust name MERS as the “nominal beneficiary” for the lender. Further, MERS is granted authority to foreclose if required by “custom or law.” But what this language does not do–either expressly or by implication–is authorize MERS to transfer the promissory notes at issue. [Citations omitted.]
Comment:
This opinion calls to mind an ancient joke: “They said cheer up, things could be worse. So I cheered up, and sure enough, things got worse.” Just recently, a few bankruptcy courts have held that the failure of the originating lender to endorse the notes to the assignee meant that the assignee lacked standing to enforce the notes; see, e.g., 2009 Comm. Fin. News. 57, Assignee in Possession of Mortgage Note May Not Enforce It Because Note Is Not Endorsed to Assignee. I thought that was alarming enough, since it is so difficult to obtain those endorsements after the fact.
This latest case goes much further, however: even if the assignee is physically in possession of the note, the assignee may not have standing to enforce it because MERS, the original beneficiary, had no authority to assign it in the first place. That problem cannot be solved by ex post facto redocumentation.
This seeming lack of authority is particularly alarming because the apparent defect in the MERS documentation is system-wide. There are millions of mortgages, originated during the last several years, that use MERS as the nominal beneficiary. If MERS has no authority to assign the mortgages, then all of those mortgage pools holding “infected mortgages” will have no way to enforce them.
Although this decision may be technically (even hypertechnically) correct, I predict reversal, probably by the Ninth Circuit or the Ninth Circuit BAP. The consequences of stripping the mortgage pools of their ability to foreclose are too severe. My guess is that a reviewing court will find, by implication, that if MERS has the power to foreclose, it also has the power to assign. There is no express prohibition on assignment contained in the documentation, and virtually all contractual rights can be assigned, unless there is some supervening reason to forbid assignment (such as, for example, in the case of personal services contracts). Therefore, the power to assign is inherent in the status of MERS as the original beneficiary, even if that power is not expressly contained in the documents.

Copyright Thomson Reuters

Footnotes

These materials were written by Dan Schechter, Professor of Law at Loyola Law School, Los Angeles, California. The opinions expressed herein are solely those of Professor Schechter.
End of Document © 2011 Thomson Reuters. No claim to original U.S. Government Works.

Lane & Lane v. Vitek Real Estate Industries Group, 713 F.Supp.2d 1092 (E.D. California 2010)—From East and South, California Courts have surrendered to MERS and California Civil Code 2924 Unconstitutional Foreclosure without Due Process of Law

2010 Comm. Fin. News. 51
Commercial Finance Newsletter
Professor Dan Schechtera
June 28, 2010
Foreclosure Is Valid Because MERS Has Power to Designate New Trustee Under Deed of Trust, Even Though It Holds No Interest in Underlying Note. [Lane v. Vitek Real Estate Industries Group (E.D. Cal.).]
A district court in California has held that MERS had the power to designate a new trustee under a deed of trust (thus validating the designee’s foreclosure), even though neither MERS nor the designee held any interest in the underlying promissory note. [Lane v. Vitek Real Estate Industries Group, 2010 WL 1956707 (E.D. Cal. 2010).]
Facts
Two borrowers filed suit against their mortgage lenders and Mortgage Electronic Registration Systems, Inc. (“MERS”), claiming that the defendants had wrongfully conducted a nonjudicial foreclosure sale of the borrowers’ home. MERS had been initially designated as the “nominal beneficiary” under the deed of trust and had then executed a substitution of trustee in favor of another entity, following the borrowers’ default.
As part of the borrowers’ wrongful foreclosure claim, they asserted that the foreclosure was improper because none of the parties to the foreclosure were beneficiaries of the underlying note and instead held interests in the deed of trust. MERS moved to dismiss that aspect of the borrowers’ claim.
Reasoning
The court ruled in favor of MERS, holding that MERS and its assignees could foreclose on the deed of trust, even though MERS held no interest in the underlying note:
Under California Civil Code section 2924(a)(1), a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process. Under California Civil Code section 2924b(4), a “person authorized to record the notice of default or the notice of sale” includes “an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.”…. There is no stated requirement in California’s nonjudicial foreclosure scheme that requires a beneficial interest in the Note to foreclose. Rather, the statute broadly allows a trustee, mortgagee, beneficiary, or any of their agents to initiate nonjudicial foreclosure. Accordingly, the statute does not require a beneficial interest in both the Note and the Deed of Trust to commence a nonjudicial foreclosure sale.
This interpretation is consistent with the rulings of this court, along with many others, that MERS has standing to foreclose as the nominee for the lender and beneficiary of the Deed of Trust and may assign its beneficial interest to another party.
Author’s Comment
Although there is some disagreement across the country on this issue (see below), the emerging trend in California is to validate the role of MERS as a nominee. The court in Lane relied primarily upon the wording of the statute to reach that result. However, Stephen Dyer (one of my four coauthors of California Real Estate Finance) has alerted me to a possible contractual glitch resulting from Paragraph 24 of the standardized Freddie Mac form, used throughout California, which provides: “Lender, at its option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the Property is located…. This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution.” [Source: http:// http://www.freddiemac.com/uniform/doc/3005-CaliforniaDeedofTrust.doc.%5D
The problem, of course, is that MERS is not identified as the “lender” in that form, and the “lender” is defined as the originating lender itself. Therefore, although the statute would appear to empower an agent (such as MERS) to execute a substitution of trustee, the current wording of the contract itself seems more restrictive, empowering no one other than the originating lender to execute a substitution of trustee.
Ideally, the Freddie Mac form should be amended to make it clear that MERS is authorized to appoint a successor. Admittedly, an amendment would not retroactively solve the problem under the existing documentation. My guess is that if a California court were presented with this contractual argument, the court would probably use the wording of the statute to empower MERS, as the agent of the lender, to act on its behalf, even if the document itself did not say so. The only caveat is that there are a few bankruptcy courts, primarily in Southern California, that have subjected MERS transactions to very strict scrutiny; those courts might not rescue the lender from the effect of the Freddie Mac language.
For discussions of other cases involving MERS and its standing as an agent or nominee, see:
  • –2009 Comm. Fin. News. 103, Assignee of Mortgage Lacks Standing to Foreclose Because Assignee Failed to Show That MERS Assigned Underlying Promissory Note, Along with Mortgage.
  • –2009 Comm. Fin. News. 72, Senior Lienholder’s Failure to Give Notice of Foreclosure to MERS Did Not Affect Validity of Senior’s Foreclosure Because MERS Was Merely a Nominee.
  • –2009 Comm. Fin. News. 59, Assignees of Mortgages Cannot Enforce Unendorsed Notes in Their Possession Because MERS Documentation Does Not Expressly Authorize Assignment of Notes.

Copyright Thomson Reuters

Footnotes

These materials were written by Dan Schechter, Professor of Law at Loyola Law School, Los Angeles, California. The opinions expressed herein are solely those of Professor Schechter.
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713 F.Supp.2d 1092
United States District Court,

E.D. California.

James LANE and Dawna Lane, Plaintiffs,
v.
VITEK REAL ESTATE INDUSTRIES GROUP dba Vitek Mortgage Group, a California corporation; Mortgage Electronic Registration Systems, Inc., a California corporation; Aurora Loan Services, Inc., a Delaware corporation; CitiMortgage, Inc., a New York corporation; Cal-Western Reconveyance Corp., a California corporation; and Does 1 to 100, inclusive, Defendants.
No. CIV. 2:10-335 WBS GGH.
May 13, 2010.

Synopsis

Background: Trustors under deed of trust brought action against lender, nominal beneficiary for the lender and other defendants, alleging various federal and state claims arising out of mortgage transaction. Defendants filed motions to dismiss.
Holdings: The District Court, William B. Shubb, J., held that:
1 trustors did not have a valid claim for wrongful foreclosure;
2 equitable tolling of limitations period for exercising right to rescind loan was not warranted;
3 borrowers failed to adequately plead a claim under Real Estate Settlement Procedures Act (RESPA) based on kickbacks; and
4 trustors could not quiet title against the mortgagee without paying the debt secured.
Motions granted.

West Headnotes (25)Collapse West Headnotes

Court could take judicial notice of several publicly recorded documents related to plaintiffs’ mortgage as well as two court documents relating to plaintiffs’ bankruptcy proceedings since such documents were matters of public record whose accuracy could not be questioned. Fed.Rules Evid.Rule 201, 28 U.S.C.A.
A bankruptcy petitioner loses standing for any causes of action and the estate becomes the only real party in interest unless the bankruptcy trustee abandons the claims. 11 U.S.C.A. § 541(a).
Trustors under deed of trust had standing to pursue suit against lender and other defendants alleging various federal and state claims arising out of their mortgage transaction where their bankruptcy petition was dismissed. 11 U.S.C.A. § 541(a).
Wrongful foreclosure is an action in equity, where a plaintiff seeks to set aside a foreclosure sale.
Lender, which referred trustors under deed of trust to a department which then discussed the procedure they would need to follow to obtain a loan modification, was not required by California law to grant trustors’ request for loan modification prior to initiating non-judicial foreclosure sale. West’s Ann.Cal.Civ.Code § 2923.5.
Under California law, a deed of trust entitles the lender to reach some asset of the debtor if the note is not paid.
California law does not require a beneficial interest in both the note and the deed of trust to commence a non-judicial foreclosure sale. West’s Ann.Cal.Civ.Code § 2924b(b)(4).
Nominee for the lender and beneficiary of the deed of trust had standing to commence non-judicial foreclosure sale and could assign its beneficial interest to another party. West’s Ann.Cal.Civ.Code § 2924b(b)(4).
Under California law, parties do not lose their interest in a loan secured by deed of trust when it is assigned to a trust pool.
Borrowers’ conclusory allegation that they were unable to discover creditors’ Truth in Lending Act (TILA) violations until two weeks before the filing of complaint because creditors “fraudulently concealed those violations” was insufficient to establish the necessity for equitable tolling of limitations period for exercising right to rescind loan secured by deed of trust on borrowers’ principal dwelling. Truth in Lending Act, § 125(f), 15 U.S.C.A. § 1635(f)12 C.F.R. § 226.23(a)(3).
Under Real Estate Settlement Procedures Act (RESPA), only a loan servicer has a duty to respond to a borrower’s qualified written requests (QWR). Real Estate Settlement Procedures Act of 1974, § 6, 12 U.S.C.A. § 2605.
Without alleging that either defendant was a loan servicer under Real Estate Settlement Procedures Act (RESPA), borrowers could not show that either defendant owed them any duty to respond to their qualified written request (QWR). Real Estate Settlement Procedures Act of 1974, § 6, 12 U.S.C.A. § 2605.
A showing of pecuniary damages is required in order to state a claim against loan servicer under Real Estate Settlement Procedures Act (RESPA) for failure to make the required disclosures. Real Estate Settlement Procedures Act of 1974, § 6(f), 12 U.S.C.A. § 2605(f).
Borrowers failed to adequately plead a claim against parties involved in their mortgage transaction under Real Estate Settlement Procedures Act (RESPA) based on kickbacks; borrowers did not explain what the kickbacks were, when they occurred, or which defendants received them, but instead, simply alleged the existence of secret kickbacks and lumped the actions of defendants together. Real Estate Settlement Procedures Act of 1974, § 8(a), 12 U.S.C.A. § 2607(a).
In California, every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.
In California, implied covenant of good faith and fair dealing cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.
In California, the essential elements of a claim for fraud are (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.
Where multiple defendants are asked to respond to allegations of fraud, the complaint must inform each defendant of his alleged participation in the fraud. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.
Fraud allegations, which failed to specify so much as when the fraudulent statements alleged were made, who specifically made them, and why they were false, failed to meet heightened pleading standard for fraud claims.Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.
Purpose of a quiet title action under California law is to establish one’s title against adverse claims to real property.
A basic requirement of an action under California law to quiet title is an allegation that plaintiffs are the rightful owners of the property, i.e., that they have satisfied their obligations under the deed of trust.
Under California law, a mortgagor cannot quiet his title against the mortgagee without paying the debt secured.
Declaratory and injunctive relief are not independent claims, rather they are forms of relief.
Under California law, elements of a breach of fiduciary duty claim are (1) existence of a fiduciary relationship; (2) breach of the fiduciary duty; and (3) damage proximately caused by that breach.
Absent special circumstances, a loan transaction is at arms-length and there is no fiduciary relationship under California law between the borrower and lender.

Attorneys and Law Firms

*1095 Stephen C. Ruehmann, Law Offices of Stephen C. Ruehmann, Sacramento, CA, for Plaintiffs.
Joshua A. Rosenthal, Medlin & Hargrave, PC, Oakland, CA, Thomas N. Abbott, Pite Duncan, LLP, San Diego, CA, Nicole K. Neff, Wright Finlay & Zak, LLP, Newport Beach, CA, for Defendants.

Opinion

MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS
WILLIAM B. SHUBB, District Judge.
Plaintiffs James and Dawna Lane brought this action against defendants Vitek Real Estate Industries Group dba Vitek Mortgage Group (“Vitek”), Mortgage Electronic Registration Systems, Inc. (“MERS”), Aurora Loan Services, Inc. (“Aurora”), CitiMortgage, Inc. (“CMI”), and Cal-Western Reconveyance Corporation (“CWRC”) alleging various federal and state claims arising out of plaintiffs’ mortgage transaction. Presently before the court are defendants Vitek and CMI and MERS’s motions to dismiss the First Amended Complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6).
I. Factual and Procedural Background
On July 17, 2003, plaintiffs obtained a loan from Vitek to refinance their home, located at 8442 West Hidden Lakes Drive in Granite Bay, California. (FAC Ex. 1.) This loan was secured by a Deed of Trust on the property. (Id.) The Deed of Trust listed Fidelity National Title Company as trustee, Vitek as lender, and MERS as the nominal beneficiary for the lender and the lender’s successors and assigns. (Id.) At the time of consummation of the loan, defendants allegedly falsely represented to plaintiffs that plaintiffs were qualified for their mortgage and that plaintiffs could pay back the loan even though defendants had not conducted an investigation into plaintiffs’ finances. (Id. ¶ 51.) The FAC further alleges that Vitek failed to provide plaintiffs with two copies of the statutory right to rescind their loan and received kickbacks to steer plaintiffs into an unaffordable loan. (Id. ¶ 34.)
Plaintiffs began experiencing financial difficulties in October 2008 and eventually fell behind on their loan payments. (Id. ¶ 13.) CMI allegedly never contacted plaintiffs to discuss loan modification before filing a Notice of Default, and the only calls plaintiffs ever received from CMI were collection calls. (Id. ¶ 15.) Plaintiffs called CMI in response to the alleged collection calls and were eventually referred to CMI’s Loss Mitigation Department, which provided them with loan modification forms and advised them that a loan negotiator would be assigned to their account. (Id. ¶ 17.) Plaintiffs completed the loan modification paperwork and sent it to CMI by fax. (Id. ¶ 18.) After allegedly calling twice a week for forty-five days and being unable to reach a loan negotiator, plaintiffs were allegedly told by CMI that it lost their paperwork and that they should reapply for loan modification. (Id.) Plaintiffs resubmitted their paperwork and allegedly were not contacted by anyone at CMI while they attempted to contact CMI every week for eight months. (Id.)
*1096 In May of 2009, plaintiffs allege that they were told orally that their loan modification was approved at a payment of $2,700 a month of three months that would subsequently become permanent. (Id. ¶ 18.) After sending in a payment, plaintiffs were subsequently told that their payment was only partial and that their loan modification was denied. (Id.) On September 14, 2009, MERS substituted CWRC as the new trustee under the Deed of Trust. (CMI Req. Judicial Notice Ex. C.) On September 15, 2009, MERS assigned its beneficial interest in the Deed of Trust to CMI pursuant to an Assignment of Deed of Trust. (Id. Ex. D.) A Notice of Default was filed on plaintiffs’ property on September 18, 2009. (Id. ¶ 16.) In October, plaintiffs hired a representative to negotiate with CMI. (Id. ¶ 18.) CMI allegedly again denied plaintiffs’ request for loan modification without negotiation or discussion. (Id.)
A trustee’s sale of plaintiffs’ property was originally scheduled for February 10, 2010. (Id. Ex. B.) On February 9, 2010, plaintiffs filed this action and a motion for a temporary restraining order (“TRO”) enjoining the foreclosure sale. (Docket Nos. 1, 7.) The court granted plaintiffs’ unopposed motion for a TRO on February 9, 2010, and issued an Order to Show Cause why a preliminary injunction ought not issue in this action. (Docket No. 11.) The court vacated the TRO and denied plaintiffs’ motion for a preliminary injunction on February 26, 2010, after CMI and MERS appeared and opposed the motion. (Docket No. 30.) Vitek filed a Rule 12(b)(6) motion to dismiss on March 18, 2010. (Docket No. 33.) CMI and MERS filed their own motion to dismiss the FAC on March 30, 2010. (Docket No. 36.) Plaintiffs did not oppose the motions. Nor did plaintiffs file a statement of non-opposition pursuant to Local Rule 230(c). Therefore, on May 3, 2010, the court vacated the hearing date on Vitek, MERS, and CMI’s motions pursuant to Local Rule 230(c), and took the motions to dismiss under submission without oral argument. (Docket No. 39.) On May 10, 2010, plaintiffs and Vitek filed a stipulation dismissing Vitek from this action with prejudice. (Docket No. 41.)
II. Discussion
On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984)Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). To survive a motion to dismiss, a plaintiff needs to plead “only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This “plausibility standard,” however, “asks for more than a sheer possibility that a defendant has acted unlawfully,” and where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility.” Ashcroft v. Iqbal, — U.S. —-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 556-57, 127 S.Ct. 1955).
In general a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.1994). A court may take judicial notice of facts “not subject to reasonable dispute” because they are either “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort *1097 to sources whose accuracy cannot reasonably be questioned.”Fed.R.Evid. 201.
1CMI and MERS submitted a request for judicial notice. CMI and MERS request the court take judicial notice of several publically recorded documents related to plaintiffs’ mortgage as well as two court documents relating to plaintiffs’ bankruptcy proceedings. (Docket No. 36.) The court will take judicial notice of these documents, since they are matters of public record whose accuracy cannot be questioned. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir.2001).
A. Standing
2CMI and MERS contend that plaintiffs lack standing to bring this action because their claims are now property of their bankruptcy estate. On March 12, 2010, plaintiffs filed a Voluntary Chapter 7 Bankruptcy Petition in the United States Bankruptcy Court for the Eastern District of California. (CMI Req. Judicial Notice Ex. E.) Upon a declaration of bankruptcy, all petitioner’s property becomes the property of the bankruptcy estate. See 11 U.S.C. § 541(a). This includes “all legal or equitable interests of the debtor in property,” id. at § 541(a)(1), which has been interpreted to include causes of action. See Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707 (9th Cir.1986)Rowland v. Novus Fin. Corp., 949 F.Supp. 1447, 1453 (D.Haw.1996) (holding claims under the Truth in Lending Act are included as an interest under § 541(a)(1)). Accordingly, a bankruptcy petitioner loses standing for any causes of action and the estate becomes the only real party in interest unless the bankruptcy trustee abandons the claims. See In re Lopez, 283 B.R. 22, 28-29 (9th Cir.2002)In re Pace, 146 B.R. 562, 565-66 (9th Cir.1992).
3If plaintiffs were in bankruptcy they clearly would lack standing to bring this action absent abandonment of their claims by the bankruptcy trustee. However, plaintiffs continue to have standing to pursue this case because their bankruptcy petition was dismissed after CMI and MERS filed their motion to dismiss. See In re Lane, No. 10-25998 at Docket No. 14.
B. Section 2923.5 Wrongful Foreclosure Claim
4Plaintiffs’ FAC purports to state a claim for wrongful foreclosure against all defendants. Wrongful foreclosure is an action in equity, where a plaintiff seeks to set aside a foreclosure sale. See Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1109, 51 Cal.Rptr.2d 286 (1996)Karlsen v. American Sav. & Loan Ass’n, 15 Cal.App.3d 112, 117, 92 Cal.Rptr. 851 (1971). Plaintiffs primarily base this claim on defendants’ alleged failure to comply with the communication requirements set forth in California Civil Code section 2923.5Section 2923.5(a)(2) requires a “mortgagee, beneficiary or authorized agent” to “contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” Section 2923.5(b) requires a default notice to include a declaration “from the mortgagee, beneficiary, or authorized agent” of compliance with section 2923.5, including attempt “with due diligence to contact the borrower as required by this section.”
The FAC only makes the conclusory claim that no one from CMI attempted to contact them to discuss options to pay their loan or assess their financial situation before foreclosure and that there was no personal meeting or telephonic communication between CMI and plaintiffs at any time. (FAC ¶¶ 15-16, 19, 21.) However, plaintiffs further state that they called CMI in response to what they characterize as “constant collection calls” and were subsequently *1098 referred to CMI’s Loss Mitigation Department, which provided plaintiffs with loan modification forms to fill out. (Id. ¶¶ 17-18.) These contradictory statements are difficult to reconcile-plaintiffs claim they had no contact with CMI and yet that CMI referred them to a department which then discussed the procedure plaintiffs would need to follow to obtain a loan modification.
5While section 2923.5 requires the borrower to discuss options to prevent foreclosure, it does not require that any loan modification take place. See Vega v. JPMorgan Chase Bank, N.A., 654 F.Supp.2d 1104, 1113 (E.D.Cal.2009) (O’Neill, J.). Although plaintiffs plead they responded to “collection calls” by CMI, the actions allegedly taken by CMI are consistent with an attempt to assess plaintiffs’ financial situation and investigate ways to avoid foreclosure. As plaintiffs admit, CMI provided plaintiffs with loan modification forms and told them a loan negotiator would be assigned to their account. (FAC ¶ 17.) While CMI ultimately rejected plaintiffs’ application for loan modification after a protracted process, CMI was not required by law to grant plaintiffs’ request. Plaintiffs’ allegations against CMI “stop [ ] short of the line between possibility and plausibility” and cannot survive a motion to dismiss because they are both contradictory and not inconsistent with compliance with section 2923.5Iqbal, 129 S.Ct. at 1949.
6Plaintiffs base their wrongful foreclosure claim on “numerous improprieties in the assignment, transfer and exercise of power of sale contained in the Deed of Trust, and that … CWRC[ ] is not properly appointed or authorized by the true beneficiary to foreclose upon the Subject Property.” (Id. ¶ 27.) The FAC contends that CWRC is not authorized to foreclose because none of the parties are beneficiaries of the Note and only have interests in the Deed of Trust, which leaves them without any right to foreclose upon the Deed of Trust. “Financing or refinancing of real property is generally accomplished in California through a deed of trust. The borrower (trustor) executes a promissory note and deed of trust, thereby transferring an interest in the property to the lender (beneficiary) as security for repayment of the loan.” Bartold v. Glendale Fed. Bank, 81 Cal.App.4th 816, 821, 97 Cal.Rptr.2d 226 (2000). A deed of trust “entitles the lender to reach some asset of the debtor if the note is not paid.” Alliance Mortg. Co. v. Rothwell, 10 Cal.4th 1226, 1235, 44 Cal.Rptr.2d 352, 900 P.2d 601 (1995).
The California Court of Appeal for the Fourth District has explained that California’s non-judicial foreclosure statute, California Civil Code section 2924, is a “comprehensive statutory framework established to govern nonjudicial foreclosure sales [and] is intended to be exhaustive.” Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d 777 (1994)see I.E. Assoc. v. Safeco Title Ins. Co., 39 Cal.3d 281, 216 Cal.Rptr. 438, 702 P.2d 596 (1985) (“These provisions cover every aspect of exercise of the power of sale contained in a deed of trust.”). Because of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute. See Moeller, 25 Cal.App.4th at 834, 30 Cal.Rptr.2d 777; see also, I.E. Assocs. v. Safeco Title Ins. Co., 39 Cal.3d 281, 288, 216 Cal.Rptr. 438, 702 P.2d 596 (1985).
7Under California Civil Code section 2924(a)(1), a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process. Under California Civil Code section 2924b(b)(4), a “person authorized to record the notice of default or the notice of sale” includes “an agent for the mortgagee or *1099 beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.” “Upon default by the trustor, the beneficiary may declare a default and proceed with a nonjudicial foreclosure sale.” Moeller, 25 Cal.App.4th at 830, 30 Cal.Rptr.2d 777. There is no stated requirement in California’s non-judicial foreclosure scheme that requires a beneficial interest in the Note to foreclose. Rather, the statute broadly allows a trustee, mortgagee, beneficiary, or any of their agents to initiate non-judicial foreclosure. Accordingly, the statute does not require a beneficial interest in both the Note and the Deed of Trust to commence a non-judicial foreclosure sale.
8This interpretation is consistent with the rulings of this court, along with many others, that MERS has standing to foreclose as the nominee for the lender and beneficiary of the Deed of Trust and may assign its beneficial interest to another party. See, e.g., Morgera v. Countrywide Home Loans, Inc., No. Civ. 2:09-01476 MCE GGH, 2010 WL 160348, at *8 (E.D.Cal. Jan. 11, 2010)(collecting cases); Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177 (N.D.Cal.2009)Castaneda v. Saxon Mortg. Servs., Inc., 687 F.Supp.2d 1191, 1197-98 (E.D.Cal.2009)Benham v. Aurora Loan Servs., No. C-09-2059 SC, 2009 WL 2880232, at *3 (N.D.Cal. Sept. 1, 2009)Kachlon v. Markowitz, 168 Cal.App.4th 316, 334-35, 85 Cal.Rptr.3d 532 (2008). MERS properly substituted Cal-Western Reconveyance Corp. as a Trustee and assigned its beneficial interest to CMI on September 15, 2009. (Oaks Decl. Exs. C, D.)
9Finally, plaintiffs contend that none of the defendants have the authority to foreclose because their loan was packaged and resold in the secondary market, where it was put into a trust pool and securitized. The argument that parties lose their interest in a loan when it is assigned to a trust pool has also been rejected by many district courts. See, e.g., Benham, 2009 WL 2880232, at *3 (“Other courts … have summarily rejected the argument that companies like MERS lose their power of sale pursuant to the deed of trust when the original promissory note is assigned to a trust pool.”); Hafiz v. Greenpoint Mortg. Funding, Inc., 652 F.Supp.2d 1039, 1042-43 (N.D.Cal.2009). Accordingly, the court must grant CMI and MERS’s motion to dismiss plaintiffs’ wrongful foreclosure claim.
C. Truth in Lending Act Rescission Claim
Plaintiffs’ second cause of action demands for rescission of their loan under the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 16011667f. In a consumer credit transaction where the creditor acquires a security interest in the borrower’s principal dwelling, TILA provides the borrower with “a three-day cooling-off period within which [he or she] may, for any reason or for no reason, rescind” the transaction. McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 421 (1st Cir.2007) (citing 15 U.S.C. § 1635). A creditor must “clearly and conspicuously disclose” this right to the borrower along with “appropriate forms for the [borrower] to exercise his right to rescind.” 15 U.S.C. § 1635(a).
If a creditor fails to provide the borrower with the required notice of the right to rescind, the borrower has three years from the date of consummation to rescind the transaction. Id. § 1635(f)see 12 C.F.R. § 226.23(a)(3) ( “If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation.”). “[Section] 1635(f) completely extinguishes the right of rescission at the end of the 3-year period.” Beach v. *1100 Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998)see also Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir.2002) (“[S]ection 1635(f) represents an ‘absolute limitation on rescission actions’ which bars any claims filed more than three years after the consummation of the transaction.” (quoting King v. California, 784 F.2d 910, 913 (9th Cir.1986))); Cazares v. Household Fin. Corp., 2005 WL 6418178, at *8, 2005 U.S. Dist. LEXIS 39222, at *24-25 (C.D.Cal.2005) (concluding that, “[i]f certain Plaintiffs did exercise their rights to rescind[ ] prior to the expiration of the three-year limitation period,” such facts “would only entitle Plaintiffs to damages, not rescission” (citing Belini v. Wash. Mut. Bank, FA, 412 F.3d 17 (1st Cir.2005))). Plaintiffs argue that the Complaint, filed February 9, 2010, acted to rescind the loan. (Docket No. 1.) However, plaintiffs’ loan closed on July 13, 2003, putting their notice of rescission well outside of the three-year limitations period. (FAC Ex. 1.)
10Even if plaintiffs were legally entitled to equitable tolling of their claim, plaintiffs have not alleged any facts in the Complaint that would warrant tolling the statute of limitations. Plaintiffs simply assert that they were unable to discover defendants’ TILA violations until two weeks before the filing of the FAC because defendants “fraudulently concealed those violations ….” (FAC ¶ 34.) This conclusory allegation is insufficient to establish the necessity for equitable tolling under even the pleading standards ofFederal Rule of Civil Procedure 8(a)See Ashcroft v. Iqbal, —U.S. —-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)Cervantes v. Countrywide Home Loans, Inc., 2009 WL 3157160, at *4, 2009 U.S. Dist. LEXIS 87997, at *13-14 (D.Ariz.2009) (holding that equitable tolling was not appropriate when plaintiffs simply alleged that defendants “fraudulently misrepresented and concealed the true facts related to the items subject to disclosure”). Accordingly, the court will grant CMI and MERS’s motion to dismiss plaintiffs’ TILA claim.
D. Real Estate Settlement Procedures Act Claim
Plaintiffs’ third claim alleges violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 26012617. Plaintiffs allege that defendants violated RESPA in two ways: (1) by failing to respond to plaintiffs’ Qualified Written Request (“QWR”) and (2) “by receiving money and/or other things of value for referrals of settlement service business … including secret kickbacks and yield spread premiums to loan brokers such as Vitek.” (FAC ¶¶ 42-43.) The court will address each allegation in turn.
1. Failure to Respond to QWR
RESPA provides that borrowers must be provided certain disclosures relating to the mortgage loan settlement process. See 12 U.S.C. § 2601Section 2605 of RESPA relates to the disclosures and communications required regarding the servicing of mortgage loans, and provides that loan servicers have a duty to respond to QWRs from borrowers asking for information relating to the servicing of their loan. 12 U.S.C. § 2605(e). Under RESPA lenders of federally related mortgage loans must disclose whether servicing of a loan may be assigned, sold or transferred to loan applicants. 12 U.S.C. § 2605(a). Additionally, borrowers may send QWRs under RESPA to loan servicers for information relating to the servicing of their loan. 12 U.S.C. § 2605(e)(1). Loan servicers have sixty days after the receipt of a QWR to respond to the borrower inquiry. 12 U.S.C. § 2605(e)(2).
1112Plaintiffs allege that they submitted a QWR and that defendants failed to timely respond. (FAC ¶ 42.) The FAC *1101does not indicate to whom the QWR was sent or when it was sent. Perhaps this is because plaintiffs claim that they “are not certain at this point in time exactly which entity was and is actually the beneficiary, lender, servicer or trustee” of their loan. (Id.) “[U]nder RESPA § 2605, only a loan servicer has a duty to respond to a borrower’s inquiries.” Gonzalez v. First Franklin Loan Servs., No. Civ. 1:09-941 AWI GSA, 2010 WL 144862, at *12 (E.D.Cal. Jan. 11, 2010). Without alleging that MERS or CMI is a loan servicer under RESPA, plaintiffs cannot show that MERS or CMI owed any duty to respond to plaintiffs’ QWR. Castaneda,687 F.Supp.2d at 1196-97; see Blanco v. Am. Home Mortgage Servicing, Inc., No. Civ. 2:09-578 WBS DAD, 2009 WL 4674904, at *6 (E.D.Cal. Dec. 4, 2009). Accordingly, plaintiffs’ RESPA claim is insufficient as currently pled. See Iqbal, 129 S.Ct. at 1949.
13Plaintiffs’ RESPA claim must also allege actual harm to survive a motion to dismiss. Section 2605(f) imposes liability on servicers that violate RESPA and fail to make the required disclosures. 12 U.S.C. § 2605(f). Although this section does not explicitly make a showing of damages part of the pleading standard, “a number of courts have read the statute as requiring a showing of pecuniary damages in order to state a claim.” Allen v. United Fin. Mortgage Corp., 660 F.Supp.2d 1089, 1097 (N.D.Cal.2009). For example, in Hutchinson v. Del. Sav. Bank FSB, the court stated that “alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiff must, at a minimum, also allege that the breach resulted in actual damages.”410 F.Supp.2d 374, 383 (D.N.J.2006).
This pleading requirement has the effect of limiting the cause of action to circumstances in which plaintiffs can show that a failure to respond or give notice has caused them actual harm. See Singh v. Wash. Mut. Bank, No. 09-2771, 2009 U.S. Dist. LEXIS 73315, *16, 2009 WL 2588885, *5 (N.D.Cal. Aug. 19, 2009) (dismissing RESPA claim because, “[i]n particular, plaintiffs have failed to allege any facts in support of their conclusory allegation that as a result of defendants’ failure to respond, defendants are liable for actual damages, costs, and attorney fees”) (citations omitted). Plaintiffs here have not offered any facts to support an inference that defendants’ failure to respond to their QWR resulted in pecuniary damages. The closest plaintiffs get to alleging any harm is stating that they “have suffered and continues [sic] to suffer compensable damages.” (FAC ¶ 44.) Even under a liberal pleading standard for harm, plaintiffs’ pleading fails.
2. Kickbacks and Illegal Fees
14Plaintiffs’ second allegation relating to kickbacks similarly fails. RESPA § 2607 prohibits any person from giving or accepting “any fee, kickback, or thing of value pursuant to any agreement or understanding … that business incident to or a part of a real estate service … shall be referred to any person,” 12 U.S.C. § 2607(a), and from accepting any unearned fee in relation to a settlement service, 12 U.S.C. § 2607(b). Plaintiffs’ allegations of kickbacks are completely devoid of any factual enhancement whatsoever. Plaintiffs do not explain what these kickbacks were, when they occurred, or which defendants received them. Instead, plaintiffs simply allege the existence of secret kickbacks and lump the actions of defendants together. Defendants should not be forced to guess how they each violated RESPA. See Gauvin v. Trombatore, 682 F.Supp. 1067, 1071 (N.D.Cal.1988). Accordingly, plaintiffs’ kickback claim “stops short of the line between possibility and *1102 plausibility” and must be dismissed.Iqbal, 129 S.Ct. at 1949.
E. Breach of the Implied Covenant of Good Faith and Fair Dealing Claim
15“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”Marsu, B.V. v. Walt Disney Co., 185 F.3d 932, 937 (9th Cir.1999) (quoting Carma Developers, Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342, 371, 6 Cal.Rptr.2d 467, 826 P.2d 710 (1992)). “A typical formulation of the burden imposed by the implied covenant of good faith and fair dealing is ‘that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.’ ” Andrews v. Mobile Aire Estates, 125 Cal.App.4th 578, 589, 22 Cal.Rptr.3d 832 (2005) (quoting Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 573, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973)). Plaintiffs allege that defendants violated the implied covenant of good faith and fair dealing by “failing and refusing to comply with the foreclosure avoidance provisions of Civil Code § 2923.5 ….” (FAC ¶ 47.)
16The implied covenant of good faith and fair dealing “cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” Agosta v. Astor, 120 Cal.App.4th 596, 607, 15 Cal.Rptr.3d 565 (2004) (internal citation omitted). “Absent [a] contractual right … the implied covenant has nothing upon which to act as a supplement, and should not be endowed with an existence independent of its contractual underpinnings.” Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 36, 44 Cal.Rptr.2d 370, 900 P.2d 619 (1995) (internal citations omitted). Plaintiffs have not articulated how a failure to comply with section 2923.5 frustrated plaintiffs’ rights under the loan contract. The claim is also inadequate because it lumps all defendants together and fails to explain what actions each individual defendant took to violate the covenant of good faith and fair dealing. See Gauvin, 682 F.Supp. at 1071. Accordingly, the court must grant CMI and MERS’s motion to dismiss plaintiffs’ breach of the implied covenant of good faith and fair dealing claim.
F. Fraud Claims
1718Plaintiffs’ fifth (fraudulent misrepresentation), sixth (fraudulent concealment), and seventh (civil conspiracy to defraud)1 causes of action are all species of fraud. In California, the essential elements of a claim for fraud are “(a) a misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” In re Estate of Young, 160 Cal.App.4th 62, 79, 72 Cal.Rptr.3d 520 (2008). Under the heightened pleading requirements for claims of fraud under Federal Rule of Civil Procedure 9(b), “a party must state with particularity the circumstances constituting the fraud.” Fed.R.Civ.P. 9(b). The plaintiffs must include the “who, what, when, where, and how” of the fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.2003) (citation omitted); Decker v. GlenFed, Inc., 42 F.3d 1541, 1548 (9th Cir.1994). Additionally, “[w]here multiple defendants are asked to respond to allegations of fraud, the complaint must inform each defendant of his alleged participation in the fraud.” Ricon v. Recontrust *1103 Co., No. 09-937, 2009 WL 2407396, at *3 (S.D.Cal. Aug. 4, 2009) (quoting DiVittorio v. Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir.1987)).
19Plaintiffs’ fraud allegations do not even come close to surviving a motion to dismiss. First, the FAC’s fraud claims rarely differentiate between defendants. Plaintiffs’ concealment and conspiracy claims, for example, simply allege that “[d]efendants concealed the fact from [p]laintiffs that they had a right to rescind or cancel the loan” (FAC ¶ 57), and that “[d]efendants represented to [p]laintiffs that they were qualified for their mortgage ….” (Id. ¶ 61.) Defendants should not be forced to guess as to how their conduct was allegedly fraudulent. See Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)Gauvin, 682 F.Supp. at 1071. Plaintiffs’ other fraud allegations fail to specify so much as when the fraudulent statements alleged were made, who specifically made them, and why they were false. Plaintiffs’ conclusory statements come nowhere close to meeting the pleading standard generally required under Rule 8, let alone the heightened pleading standard of Rule 9(b)See Iqbal, 129 S.Ct. at 1949; Vess, 317 F.3d at 1106.
Additionally, the statute of limitations for fraud claims under California law is three years. Cal.Code Civ. P. § 338(d). As previously discussed, plaintiffs brought this cause of action long after the close of the statute of limitations and have not plead any facts suggesting why they might be entitled to equitable tolling outside of conclusory allegations of fraud. Accordingly, the court will grant defendants’ motions to dismiss plaintiffs’ fifth, sixth, and seventh fraud causes of action against CMI and MERS.
G. Quiet Title Claim
202122Plaintiffs cannot sustain a quiet title claim as a matter of law. The purpose of a quiet title action is to establish one’s title against adverse claims to real property. A basic requirement of an action to quiet title is an allegation that plaintiffs “are the rightful owners of the property, i.e., that they have satisfied their obligations under the Deed of Trust.” Kelley v. Mortgage Elec. Reg. Sys., Inc., 642 F.Supp.2d 1048, 1057 (N.D.Cal.2009). “[A] mortgagor cannot quiet his title against the mortgagee without paying the debt secured.” Watson v. MTC Fin., Inc., No. Civ. 2:09-01012 JAM KJM, 2009 WL 2151782 (E.D.Cal. Jul. 17, 2009)(quoting Shimpones v. Stickney, 219 Cal. 637, 649, 28 P.2d 673 (1934)). As plaintiffs concede they have not paid the debt secured by the mortgage, they cannot sustain a quiet title action against defendants.
H. California’s Unfair Competition Law Claim
California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code §§ 1720017210, prohibits “any unlawful, unfair, or fraudulent business act or practice.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). This cause of action is generally derivative of some other illegal conduct or fraud committed by a defendant, and “[a] plaintiff must state with reasonable particularity the facts supporting the statutory elements of the violation.” Khoury v. Maly’s of Cal., Inc., 14 Cal.App.4th 612, 619, 17 Cal.Rptr.2d 708 (1993).
Plaintiffs’ claim under the UCL is vague and conclusory, simply alleging that “the unlawful acts and practices of [d]efendants alleged herein constitute unlawful business acts and/or practices….” (FAC ¶ 72.) Plaintiffs’ claim lumps all defendants together*1104 and fails to identify any specific act taken by any one of the named defendants. (See FAC ¶¶ 72-76.) Such vague and conclusory allegations are insufficient to inform defendants as to their liability. See Associated Gen. Contractors of Cal., 459 U.S. at 526, 103 S.Ct. 897; Gauvin, 682 F.Supp. at 1071; see also Lingad v. Indymac Fed. Bank, 682 F.Supp.2d 1142, 1155 (E.D.Cal.2010). Although plaintiffs cite violations of California Civil Code sections 2923.5 and 2924 in their UCL claim, the court has already found that plaintiffs’ section 2923.5 wrongful foreclosure claim is inadequately pled, and plaintiffs have not alleged how defendants purportedly violated section 2924. Accordingly, the court will grant defendants’ motion to dismiss plaintiffs’ UCL claim.
I. Declaratory and Injunctive Relief
23Plaintiffs’ tenth claim purports to state a cause of action for declaratory and injunctive relief. Declaratory and injunctive relief are not independent claims, rather they are forms of relief. See McDowell v. Watson, 59 Cal.App.4th 1155, 1159, 69 Cal.Rptr.2d 692 (1997) (“Injunctive relief is a remedy and not, in itself a cause of action ….” (internal quotation marks omitted)); see also, Nat’l Union Fire Ins. Co. v. Karp, 108 F.3d 17, 21 (2d Cir.1997). Because plaintiffs’ other claims have been dismissed and declaratory and injunctive relief are not causes of action in and of themselves, the court must grant MERS and CMI’s motion to dismiss plaintiffs’ tenth cause of action as well.
J. Breach of Fiduciary Duty/Aiding and Abetting Claim
24The elements of a breach of fiduciary duty claim are (1) existence of a fiduciary relationship; (2) breach of the fiduciary duty; and (3) damage proximately caused by that breach. Roberts v. Lomanto, 112 Cal.App.4th 1553, 1562, 5 Cal.Rptr.3d 866 (2003). “The absence of any one of these elements is fatal to the cause of action.” Pierce v. Lyman, 1 Cal.App.4th 1093, 1101, 3 Cal.Rptr.2d 236 (1991). Plaintiffs allege that Vitek owed them a fiduciary duty because it was plaintiffs’ mortgage broker and MERS interfered with the fiduciary obligations of Vitek by aiding and abetting Vitek in violating its fiduciary duty. (FAC ¶¶ 84-86.)
25“Absent special circumstances, a loan transaction is at arms-length and there is no fiduciary relationship between the borrower and lender.” Rangel v. DHI Mortgage Co., Ltd., No. CV F 09-1035 LJO GSA, 2009 WL 2190210, at *3 (E.D.Cal. July 21, 2009) (quoting Oaks Management Corp. v. Superior Court, 145 Cal.App.4th 453, 466, 51 Cal.Rptr.3d 561 (2006)). Plaintiffs claim that MERS can be held secondarily liable for the actions of Vitek because it “aided and abetted” Vitek. (FAC ¶ 87.) Even assuming that plaintiffs can establish MERS is liable for aiding and abetting a breach of fiduciary claim as a matter of law, plaintiffs have not alleged sufficient facts to suggest what actions MERS took to aid and abet any of Vitek’s alleged violations of its fiduciary duties. Without such facts plaintiffs cannot override the presumption that a lender owes no fiduciary duty to its borrowers. Accordingly, the court must dismiss plaintiffs’ breach of fiduciary duty claim. See Iqbal, 129 S.Ct. at 1949.
K. Sanctions
If plaintiffs’ attorney could not draft a complaint that contained a single claim upon which relief could be granted, he could have at least complied with Local Rule 230(c) and told the court he had no opposition to the granting of defendants’ motion. Instead, counsel ignored the Local Rule and did nothing in response to the motion to dismiss the Complaint. Counsel’s failure to comply with Local *1105 Rule 230(c) and timely file any response to Vitek and MERS and CMI’s motions to dismiss is inexcusable, and has inconvenienced the court by forcing it to nevertheless examine the motion on the merits.
Local Rule 110 authorizes the court to impose sanctions for “[f]ailure of counsel or of a party to comply with these Rules.” Therefore, the court will sanction plaintiffs’ counsel, Stephen C. Ruehmann (also identified in the FAC as Mendstephen C. Ruehmann) $250.00 payable to the Clerk of the Court within ten days from the date of this Order, unless he shows good cause for his failure to comply with the Local Rules.
IT IS THEREFORE ORDERED that MERS and CMI’s motion to dismiss those claims that apply to MERS and CMI be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that Vitek’s motion to dismiss be, and the same hereby is, DENIED AS MOOT.
IT IS FURTHER ORDERED that within ten days of this Order Stephen C. Ruehmann shall either (1) pay sanctions of $250.00 to the Clerk of the Court, or (2) submit a statement of good cause explaining his failure to comply with Local Rule 230(c).
Plaintiffs have twenty days from the date of this Order to file an amended complaint, if they can do so consistent with this Order.

Footnotes

“Civil conspiracy to defraud” is not a separate tort. Conspiracy only serves as a theory of liability for claims of fraud.See Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 511, 28 Cal.Rptr.2d 475, 869 P.2d 454 (1994).
End of Document © 2011 Thomson Reuters. No claim to original U.S. Government Works.
End of Document © 2011 Thomson Reuters. No claim to original U.S. Government Works.

In the Mind of the American People (and the Eye of the American Media), Iraq is all but forgotten…..

http://www.youtube.com/watch?v=u95Orx_oFRo&feature=player_embedded

After eight years and two months in Iraq and nearly nine full years in Afghanistan, and Osama bin Laden supposedly dead*…..what IS the purpose of our Orwellian perpetual war now?  It is a criminal scheme to uphold the criminal enterprise known as the de facto government of the United States of America.  When I was President of College Republicans at Tulane University, in 1976-77, I was no fan of Ralph Nader….but looking back, he was and remains more of a Patriot (and hence in a remarkable way much more conservative, than any member of either Bush Administration, or Clinton, never mind Obama).  Obviously, I applaud Ralph Nader for every word in the attached video**, and with him urge the impeachment of President Barack Hussein Obama. Yes, I think he is directly responsible for forging his own identity documents (and derivative right to hold high office and title) and for those crimes alone he would have been boiled in oil in 16th Century England, but unfortunately, as Nader points out, he is continuing the war crimes and treachery against the constitution instituted by “W” Bush, especially yesterday when he signed a four year extension of the Patriot Act while on his deplorable “show tour” through Europe.  

Accordingly, even if indeed BHO is ultimately proven guilty of inventing his qualifications for office, then forgery is really the least of Obama’s crimes, and as of this moment I can only say “Three Cheers for Ralph Nader”—although his contributions to Tort and Personal Injury Law (through Products Liability) in the past 45 years since “Unsafe at any Speed” had already convinced me long ago that he was a great American Hero:  

http://www.youtube.com/watch?v=u95Orx_oFRo&feature=player_embedded 

If elected to the United States Senate, I would do all in my power to restore tort and personal injury law against products liability to the strength it had in the 1960s-70s.  I think that private or class action lawsuits are a much more productive and certain means of achieving public health, safety, and welfare than government regulation.  So long as the individual controls his own destiny, he can be free.  So long as the individual depends on the government to secure his destiny, never mind his health, safety, and welfare, he is by definition unfree—not necessarily dead but a soulless vampire or zombie compared to a truly free man.

*My sincerest thanks to Ba-ba-barbara Anne K-H for alerting me (a rockin’ and a reelin’ me actually) to the strangely Freudian slip of a typographical error originally written into this line.  Just like Spike Maligna, the famous typographical error in the old BBC Goon-Show—typos never mean or suggest anything, do they?

**My even greater thanks and gratitude to Palmetto Patriot for passing along this wonderful short address by Nader on Youtube.

What could one Senator do? If only one Senator wanted to try? What can any one person do? Maybe almost as much as one cartoonist?

Let’s start off by saying that I know perfectly well that one person by himself could never change history, but if no one person ever tried, then history would never change, evolution would end, and the world would come to a standstill.  So long as we let the people who appear richer, smarter, more handsome, more beautiful, or with better (or more expensive) resumés or better (or more expensive) wardrobes decide for us, we will always be little more than slaves.  

Let those of whom the tyrants have oppressed stand up and say “we are as good as you. We have a much greater right to make policy for ourselves than you do, and to judge what is right and wrong.”  Let us challenge and displace the petty controlling hobgoblins who dominate local and special interest majorities or apparent majorities (or supposedly “dominant, normative” positions, even on the internet).

If I were elected to the Senate, I would stand alone on a lot of the issues I would care most about, at least at first.  But the Senate is a great platform from which to preach. The United States Senate, like the Roman Senate of Classic Antiquity, was once described as the greatest forum of debate in the entire world.  

Rational speech could win over many converts on specific points, especially as there are many, many, 50-50 splits on issues in the Senate as is—and much party-line crossing and criss-crossing.  One Senator speaking new and fresh ideas could have an amazing impact, especially if he represented the most populous state in the nation, which would be the seventh most powerful economy in the world if it were its own country.

I would advocate the abolition of a great number of government agencies, especially the finance-regulation and money-changing agencies, commissions and sub-departments.  Environmentalists might find my hatred of government regulation offensive, until they realized that most of the great polluting industries and activities are made possible by government regulation.  The destruction of the countryside by suburban and ex-urban sprawl was made possible by the government sponsored explosion of “soft-money” credit, along with government promoted damn (excuse me, “dam”) construction and water diversion which creates precarious cities in the desert and semi-arid regions, which nature had not endowed with abundant natural water resources.  Get rid of government subsidies and false economy and nature will recover against the ruined cities in many areas of the United States.  These ruins can either be plowed under or left to the vicissitudes of nature like the ruins of vast cities in the Central American and Southeast Asian jungles.  Compaction or dispersal of the population due to economic realignment will lead to less flagrant consumption of fossil fuels.  

One Senator would be able to cast many votes which will align a sound, natural resource based monetary policy with sound environmental adjustment. Regulation of the kind we have now is just an attempt to put a few inefficient environmentally oriented brakes on a much more inefficient economic juggernaut leading, ultimately, to the nightmare of a Frankenstein-like monster environment fueled by the Frankenstein-monster economy.  

Similarly, social welfare advocates will at first be aghast at my contention that most of Federal Title 42, Public Health & Welfare, should be repealed—all except the civil rights provisions, which should be made race neutral and possibly transferred to Title 28.

How to transform welfare from a negative millstone around the neck of people everywhere is simple: government should support the diffusion of technologies of self-sufficiency rather than money.  This is the old “buy a family a fish they eat for a day—or if it’s a really big yellowfin tuna, maybe several days—but if you teach a family to fish, then (if they’re located in a good spot for it at least) they’ll eat forever.”  Now, since teaching families to fish is a “welfare solution” that won’t really work for the Apache, Navajo, and Zuni of Arizona-New Mexico, nor any of their Anglo or Hispanic neighbors, we should focus on what WILL work for them: teaching them how to install, and providing at low cost, home or neighborhood solar and wind generated energy technology.

The history of welfare, as I repeatedly comment, goes back to “Oriental Despotism” as the origin of communist totalitarianism in the meta-historical thesis of Karl A. Wittfogel and other Anthropological and Historical “Cultural Materialists.”  The basic evolutionary theory of Oriental Despotism runs something like this: “Evolution,” at least in the short term, always favors quantity over quality.  Concentration of power permits ecological intrusion and innovation into marginal areas (as defined by availability of water and good soil) at great effort and cost, meaning that only a powerful centralized government can achieve and maintain these innovative ecological intrusions.  However, from the standpoint of both the individual and the longue duree of human evolution, such innovations are ultimately maladaptive in the sense that the quality of life of the more numerous humans is radically reduced by the requirements of forced labor and coerced cooperation that ultimately lead to ecological collapse due to ecological degradation.  It is better to cut off the tyrannical power of despots before they expand their empires in area and population before the collapse.

Wisdom dictates that sound, practical principles of economic and natural conservation go hand-in-hand.  Humans have the power and ingenuity to destroy the world, but rational minds will put brakes on the process, at the same time respectfully regarding human liberty and individual autonomy.  

All policies which concentrate wealth, power, and decision-making in the hands of a few are unnatural, anti-evolutionary, and essentially sacrilegious, because evolution proceeds best in the presence of real diversity of ideas and options, where each option is tailored not to the world as a whole, but to each local set of circumstances and situations.  The law should exist to protect the people from, among other things, the tyranny of local majorities, and the tyranny of special interest groups over specialized industries and industrial, population settings.   

I knew an Eagle Scout leader once, one of the proudest acquaintances I can claim to have had in my life.  That man died on March 22, 2001 at the age of 90: his name William Hanna, a man who shaped the childhood imagination of my own and several other generations including my father’s and my son’s.   What is less remembered about Hanna is that he was an evolutionist and ecologist par excellence. Though remembered by the population at large for his moving picture cartoon creations, which covered the Stone Age through the Future and ecology, from bears to backstreet alleys and American Teenagers (e.g. the Flintstones, Jetsons, Tom & Jerry, Yogi Bear, Scooby Doo), Bill Hanna’s original training was in engineering, not art or entertainment.   Throughout his life he retained an incredibly practical mind as well as an amazing work ethic, trying out new flight simulating video games with my 7-8 year old son, Charlie, just a few months before Bill Hanna passed away.  

His common sense wisdom was something I treasured, and I would try to carry that wisdom to the Senate with me.  He commented about foreign policy that any intervention without truly rational self-interest was naked imperialism (Hanna was no fan of Desert Storm I in the early ’90s, which was quintessentially irrational intervention).  About ecological boondoggles he compared dams and mass-transit by air: these processes demand the maximum concentrations of effort and energy to achieve the easiest and most immediate gratification of needs with no thought to the overall impact that such concentrations of human and natural resources has on the population at large.  Hanna’s father was a railroad engineer who oversaw the installation of waterworks all over the United States, including New Mexico where Bill was born, and I think this must have shaped his thinking about many aspects of society, and his practical wisdom was always made apparent in his humor.

Without William Hanna, the American imagination, and probably my own, would have been very different.  So he is, without much doubt, a shining example of how much difference one person can make.  I certainly do not claim to be any kind of political equivalent to William Hanna, but I can claim to have a similar sense of practical justice as well as a similar sense of humor.   It is difficult to imagine the childhood culture of the United States without William Hanna’s creations.  I would like to take a seat in the Senate where I could advocate practical innovations at least as imaginative and as well-tailored to restructuring the techno-environmental and socio-economic reality of this nation.  

My son was always a special fan of “Scooby Doo” and in fact he has a “Scooby-Phone” at home to this day.  Scooby-Doo was about a great many things, but among them was debunking superstitions and silly fears based on those superstitions.  I don’t know exactly where I stand on ghosts and zombies but I know where I stand on the relationship between human society and nature—sound economics on the one side leads to sound ecological relations on the other side.  I know that the current monetary system is based on currency worth no more than ghostlike notes and zombie-like credit systems which defy the laws of nature and therefore threaten the natural life of man and all his fellow creatures.

People talk about regulation as the solution, but it is not: regulation is the cause.  If it were not for the regulations permitting the Federal Reserve Banking System, none of the wild economic rides of the 20th century, including the two World Wars, the Cold War, “Star Wars,”  and the War on Terrorism, would have been possible.  If the Securities and Exchange Commission (“SEC”) did not exist to “pre judge” and thereby prejudice the marketplace in favor of approved, registered securities, such as the original Mortgage Backed Securities drafting and editing whose registration statements I toiled for all too long at Cadwalader, Wickersham, & Taft (“CWT”) in 1993-4, practical businessmen never would have envisioned or created such “derivatives” as soon flooded the market and crashed the economy.  “Greater regulation” would simply have led to “greater boondoggles.”  

The art, the thought, the work CWT lawyers and paralegals put into SEC registration statements (justifications for buying and selling securities by the negative psychology of ridiculous disclaimers) for these early mortgage-backed securities was intense.  But at CWT, there was a young and very very junior (and extremely unpopular) associate who raised questions like, “doesn’t this process break the chain of title necessary for holder-in-due course” status.  That same associate (a former head of the Environmental Law Society at the University of Chicago Law School) questioned whether the environmental impact statements on individual houses or land plots were really as significant as the environmental impact of the suburbs themselves, and asked what were the economic consequences of first globbing all the mortgages together and then redividing them.   And finally, above all, this certain young and very junior and very unpopular associate at CWT questioned whether it were not a monumental breach of fiduciary duty inherent for a law firm to create, out of a planned breach in common law chains of title, such a massively imbalanced set of transactions which could as easily backfire on our clients as enrich them.  Well, as you can imagine, that associate (I shan’t mention any names here) was accused of stupidity, not understanding the economic brilliance of the New World Order, of being a dark impediment to progress, of flirting with office girls too much… and he was finally marginalized after many warnings and ultimately terminated.

That same associate as a United States Senator from California would be regarded by “the good old boys & girls” of the Senatorial club very suspiciously.  They might not even let poor Rudolph join in any Reindeer games….  But who knew that the securitized mortgage bubble would burst and threaten to take the world economy with it, along with the remaining strands of individual freedom, family, private property, and the State?  Who knows what will happen some foggy winter’s night?  

As I have mentioned, if I run for Senate, I will be facing the vast personal wealth of Dianne Feinstein, along with the big money interests, especially the banking and financial industries, who back every serious senatorial campaign, winning or losing.  

No banks or investment houses are going to support any candidate who wants to abolish the Federal Reserve, and all its collateral back-up organizations such as the Securities and Exchange Commission and the Social Security Administration—especially a convicted social security number mis-stater.*  

No major law firms (but I’m hoping more than a few marginalized lawyers) will support a disbarred attorney who advocates disbarring the entire profession of law, by which I mean freeing the profession from the bonds of State Supreme Court licensure and career control.

No more specialized law firms practicing family law would ever support a senatorial candidate who would free parents from the strictures of Title 42 USC §666 which (in plain violation of the Fifth, Ninth, Tenth, and Fourteenth Amendments) requires the States to set standards for the enforcement of child support** or any of the other draconian Federal Social Welfare Laws which in essence makes state family and property law subordinate to Federal law.

So once again, I send out my invitation to the people who are not making millions out of the financial meltdown, who fear for the future of this Country—consider supporting a real renegade, not just a maverick but a genuine black sheep willing to don a Red Wolf’s Cloak and fight to save his fellows from the real wolves, all of whom are wearing pin-striped suits and difficult to distinguish from the pigs.

*One goofy but sensationally vulgar Maoist conformity website pretending to be a forum for popular scatalogical viewpoints keeps publishing a social security number and claiming that I misstated three digits of my social security number rather than two (wow, wouldn’t that have just made the crime SOOO much more serious)—but that website, ironically and inexplicably, keeps stating my social security number incorrectly (THANK GOD!).   Marking any person with a number as his primary identity is positively inhuman sacrilegious in my opinion.  No one understood this better than George Orwell when he created the character 6079 Smith W, except perhaps the authors of “V-for-Vendetta” about the life and heroic resurrection of the prisoner from Cell Number V (Roman 5) at Larkhill, mystically located by Stonehenge on the Salisbury Plain.

** 42 U.S.C. § 666 : US CODE – SECTION 666: REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT

SEARCH 42 U.S.C. § 666 : US CODE – SECTION 666: REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT

§ 666 Requirement of statutorily prescribed procedures to improve effectiveness

The Strange Corollary Between “Emancipation” and “Overflowing Prison Populations”

I have posted two new items today: one includes the full text of Monday’s decision from the United States Supreme Court in Brown v. Plata, the other is an excerpt from one of modern Historian Jacques Barzun’s books “The Culture we Deserve” in which Barzun makes the case that the decline in traditional values has opened the door to a much more unpredictable and potentially “antinomian” (lawless) society in which guidelines for the enforcement of “equality” becomes the hammer of oppression and injustice in the hands of arbitrary and capricious bureaucrats (and a species of soulless administrative functionaries rather than any “spiritual” or idealistic breed of judges).  (I once worked for a truly upstanding, virtuous, Christian [Presbyterian] U.S. District Judge in Florida, Kenneth L. Ryskamp, who had a plaque on the wall in his chambers “Judgment is Mine Alone, Sayeth the Lord”—quite a bit more idealistic than my own great grandfather, a Louisiana State Court Judge who had a plaque in his chambers that read, “Dead Lawyers Lie Still.”)

The reality is that “Emancipation” and Expanding Prison Populations are historically linked in the United States for many reasons, one of which is the 13th Amendment, which provides that “neither slavery nor involuntary servitude shall exist except as a punishment for crime” in these United States.  So when did prison populations first start to explode in the United States?  Well, right after the war of 1861-1865, of course, during what is sometimes facetiously called the period of “Reconstruction” (in which the original American nation was torn down, thrown away, and the seeds of the modern corporate socialist-welfare state firmly planted all over the country).

So yes, indeed, this Candidate for the United States Senate from believes that there is a strong correlation between “Emancipation” in the sense that term is used by Jacques Barzun, below, and the problems of prison crowding described in Brown v. Plata.  What we have to avoid is what I predict will be Dianne Feinstein’s solution with which every “main line” Republican in the state will agree: If the prisons are overcrowded, then we must build more prisons.  I say: change the laws and release all inmates held on drug charges and all other non-violent criminals, provide them neither more nor less welfare than any other citizens, and let Freedom Ring as the population stops depending on locking up one large percentage of our co-citizens for the economic benefit of another large percentage of our co-citizens.  Tear down the prison walls, and let the people of California (and America) rebuild their lives free from a tyrannical government and all its “protective services” and pointless overregulation!  

Too many politicians are already warning about the horrible dangers of releasing prisoners into the neighborhoods and demanding that more prisons be built immediately and quickly—providing new jobs for the 12% of Californians officially unemployed (which only counts those who became unemployed during the past year of course…not those whose unemployment goes back farther….)

Please Support me in my Campaign to Emancipate California and the United States of America from Dependence on Prisons for Security and Prosperity!  

(Instead, let’s find those who REALLY profit by the destruction of freedom, and either lock THEM up or at least confiscate all their ill-gotten wealth and distribute it among the victims of law all over this country)