Copeland-Turner v. Wells Fargo Bank, N.A.

800 F.Supp.2d 1132

Tobin COPELAND–TURNER, Plaintiff,

v.WELLS FARGO BANK, N.A., a foreign bank, Gorilla Capital, Inc., a foreign corporation, and Nancy K. Cary, an individual, Defendants.

No. CV–11–37–HZ.

United States District Court, D. Oregon.

July 6, 2011.

Alex Golubitsky, Case & Dusterhoff, LLP, Beaverton, OR, for Plaintiff.

Robert J. Bocko, Keesal, Young & Logan, Seattle, WA, for Defendant Wells Fargo Bank.

OPINION & ORDER

HERNANDEZ, District Judge:

Plaintiff Tobin Copeland–Turner brings this foreclosure-related action against defendants Wells Fargo Bank, N.A., Gorilla Capital, Inc., and Nancy Cary. Plaintiff initially brought several claims, but in his Amended Complaint he brings a single claim for conversion, based on three different theories as explained below. Wells Fargo moves to dismiss or for summary judgment. I grant the motion.

BACKGROUND

The following facts are taken from the Amended Complaint. In October 2005, plaintiff executed a Promissory Note in the amount of $150,050, and a Deed of Trust on property located in Eugene, which secured the Note. Am. Compl. at ¶ 2. The lender, World Savings Bank, F.S.B. (WSB), was the beneficiary of the “Security Agreement.” Id. First American Title Insurance Company of Oregon was the original trustee under the Deed of Trust. Defendant Cary is the successor trustee. Id. On information and belief, Wachovia purchased WSB, and Wells Fargo purchased Wachovia. Id. Cary acted as an agent for Wells Fargo. Id.

On March 31, 2010, plaintiff was served with a “Notice of Default and Election to Sell under the Terms of a Trust Deed,” stating that the property would be sold at auction on August 26, 2010. Id. at ¶ 3. Plaintiff contacted Wachovia and applied for a loan modification on July 15, 2010. Id. at ¶ 4. Wachovia told plaintiff that the foreclosure process would be stopped, and that the foreclosure sale had been postponed until March 11, 2011. Id.

On October 13, 2010, Wachovia denied the loan modification request, but a Wachovia representative told plaintiff he had thirty days to re-apply for the modification, during which time the foreclosure sale would not occur. Id. at ¶ 5. Wachovia reiterated that the foreclosure sale would not occur until March 11, 2011. Id. Nonetheless, it sold the property at auction on October 27, 2010. Id. at ¶ 6.

Based on these facts, plaintiff brings a claim of conversion, based on three separate theories: (1) WSB was the named beneficiary in the Deed of Trust and thus, because neither Wells Fargo nor Wachovia were the named beneficiaries of the Deed of Trust, the Deed of Trust and subsequent notice of sale were invalid; Am. Compl. at ¶ 11 ¹; (2) Cary was not the successor trustee when the notice of default was issued, invalidating the notice of default; Id. at ¶ 12; and (3) Wachovia, acting as an agent for Wells Fargo, told plaintiff that the foreclosure sale scheduled for October 27, 2010 was postponed and that plaintiff could apply for a loan modification to stop that sale at any point before November 13, 2010. Id. at ¶¶ 8–10.

STANDARDS

I. Dismissal

On a motion to dismiss, the court must review the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. American Family Ass'n, Inc. v. City & County of San Francisco, 277 F.3d 1114, 1120 (9th Cir.2002). However, the court need not accept conclusory allegations as truthful. Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.1992).

A motion to dismiss under Rule 12(b)(6) will be granted if plaintiff alleges the “grounds” of his “entitlement to relief” with nothing “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action[.]” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “Factual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact) [.]” Id. (citations and footnote omitted).

To survive a motion to dismiss, the complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[,]” meaning “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, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation omitted). Additionally, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. The complaint must contain “well-pleaded facts” which “permit the court to infer more than the mere possibility of misconduct.” Id.

II. Summary Judgment

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial responsibility of informing the court of the basis of its motion, and identifying those portions of “ ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)).

Once the moving party meets its initial burden of demonstrating the absence of a genuine issue of material fact, the burden then shifts to the nonmoving party to present “specific facts” showing a “genuine issue for trial.” Fed. Trade Comm'n v. Stefanchik, 559 F.3d 924, 927–28 (9th Cir.2009) (internal quotation omitted). The nonmoving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex, 477 U.S. at 322–23, 106 S.Ct. 2548.

The substantive law governing a claim determines whether a fact is material. Suever v. Connell, 579 F.3d 1047, 1056 (9th Cir.2009). The court views inferences drawn from the facts in the light most favorable to the nonmoving party and draws all reasonable inferences in that party's favor. Long v. City & County of Honolulu, 511 F.3d 901, 905 (9th Cir.2007).

If the factual context makes the nonmoving party's claim as to the existence of a material issue of fact implausible, that party must come forward with more persuasive evidence to support his claim than would otherwise be necessary. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

DISCUSSION

Wells Fargo moves to dismiss the Amended Complaint on the basis that plaintiff's conversion claim is preempted by federal law.² Alternatively, Wells Fargo moves for summary judgment on the merits of the claims.

I. Preemption

Congress enacted the Home Owners' Loan Act of 1933, 12 U.S.C. §§ 1461–1468 (HOLA), in order to “charter savings associations under federal law, at a time when record numbers of home loans were in default and a staggering number of state-chartered savings associations were insolvent.” Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir.2008). “HOLA was designed to restore public confidence by creating a nationwide system of federal savings and loan associations to be centrally regulated according to nationwide ‘best practices.’ ” Id. The Ninth Circuit has explained that HOLA and its implementing regulations are “a radical and comprehensive response to the inadequacies of the existing state system, and so pervasive as to leave no room for state regulatory control.... Because there has been a history of significant federal presence in national banking, the presumption against preemption of state law is inapplicable.” Id. at 1004–05 (citation, internal quotation, and brackets omitted).

As part of HOLA, Congress gave the Office of Thrift Supervision (OTS) “broad authority to issue regulations governing thrifts.” Id. at 1005 (citing 12 U.S.C. § 1464). OTS in turn promulgated a preemption regulation published at 12 C.F.R. § 560.2. See Id. (explaining that the fact that the preemption is expressed in OTS's regulation instead of HOLA itself is immaterial).

The regulation reads, in pertinent part:

OTS hereby occupies the entire field of lending regulation for federal savings associations. OTS intends to give federal savings associations maximum flexibility to exercise their lending powers in accordance with a uniform federal scheme of regulation. Accordingly, federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) of this section....

12 C.F.R. § 560.2(a). Section 560.2(b) lists specific types of state laws which are preempted. Section 560.2(c) lists types of state laws that are not preempted “to the extent that they only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purposes of paragraph (a) of this section[.]” 12 C.F.R. § 560.2(c).

In Silvas, the Ninth Circuit applied a method of analysis promulgated by OTS for evaluating whether a state law is preempted under the regulation:

“When analyzing the status of state laws under § 560.2, the first step will be to determine whether the type of law in question is listed in paragraph (b). If so, the analysis will end there; the law is preempted. If the law is not covered by paragraph (b), the next question is whether the law affects lending. If it does, then, in accordance with paragraph (a), the presumption arises that the law is preempted. This presumption can be reversed only if the law can clearly be shown to fit within the confines of paragraph (c). For these purposes, paragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved in favor of...