Velasco v. Sec. Nat'l Mortg. Co.

823 F.Supp.2d 1061

Absalon S. VELASCO, Say P. Velasco, and Garry S. Velasco, Plaintiffs,

v.SECURITY NATIONAL MORTGAGE COMPANY dba Security National Mortgage Company, Inc., Bank of America, Mortgage Electronic Registration Systems, Inc., BAC Home Loans Servicing, LP and Does 1 through 20 inclusive, Defendants.

CV. No. 10–00239 DAE KSC.

United States District Court, D. Hawai‘i.

Oct. 14, 2011.

Dexter K. Kaiama, Honolulu, HI, James H. Fosbinder, Ivey Fosbinder Fosbinder LLLC, A Limited Liability Law Company, Wailuku, HI, for Plaintiffs.

Michael C. Bird, Watanabe Ing Kawashima & Komeiji, Keri Ann Kumi Shigemura, Patricia J. McHenry, Cades Schutte, Honolulu, HI, for Defendants.

ORDER: (1) GRANTING DEFENDANTS' MOTIONS TO DISMISS; AND (2) DISMISSING WITH PREJUDICE PLAINTIFFS' SECOND AMENDED COMPLAINT

DAVID ALAN EZRA, District Judge.

On October 13, 2011, the Court heard Defendants BAC Home Loans Servicing, LP (“BAC”), Bank of America (“BOA”), and Mortgage Electronic Registration Systems, Inc.'s (“MERS”) Motion to Dismiss (Doc. # 47) and Defendant Security National Mortgage Company's (“Security”) Motion to Dismiss (Doc. # 48.). James H. Fosbinder, Esq., appeared at the hearing on behalf of Plaintiffs Absalon S. Velasco, Say P. Velasco, and Garry S. Velasco (collectively, “Plaintiffs”); Patricia J. McHenry, Esq., appeared at the hearing on behalf of Defendants BAC, BOA, and MERS; Michael C. Bird, Esq., appeared on behalf of Defendant Security. After reviewing the motions and the supporting and opposing memoranda, the Court GRANTS Defendants' Motions to Dismiss and DISMISSES WITH PREJUDICE Plaintiffs' Second Amended Complaint.

BACKGROUND

Plaintiffs executed a note dated December 21, 2007, which is secured by a mortgage that was recorded in the Bureau of Conveyances on December 28, 2007 (“Mortgage”).¹ (“SAC,” Doc. # 45 Ex. A.) The real property at issue in this loan transaction is located at 534 Kuikahi Drive, Wailuku, Hawaii 96793 (the “Subject Property”). ( Id.) Defendant Security is listed on the Mortgage as the originating lender and MERS is listed as the mortgagee “acting solely as nominee for Lender and Lender's successors and assigns.” ( Id.) On August 26, 2009, MERS executed an assignment, which purports to transfer to BAC Home Loans Servicing “all of its right, title and interest” in the Mortgage (“Assignment”). (SAC, Ex. B.) This Assignment was recorded in the State of Hawaii Bureau of Conveyances on January 12, 2010 as Document Number 2010–004727. ( Id.) On or about December 24, 2009, BAC recorded a Notice of Mortgagee's Intention to Foreclose Under Power of Sale, which advised of BAC's intention to sell the Subject Property. (SAC, Ex. C.)

On April 23, 2010, Plaintiffs filed a Complaint in this Court against Defendants Security, BOA, MERS, BAC, and Does 1–20 (collectively, “Defendants”), alleging that Plaintiffs had been lured into a predatory mortgage loan. (Doc. # 1.) On September 16, 2010, Defendants BAC and BOA filed a Motion to Dismiss, or in the Alternative, for a More Definite Statement (“First Motion”). (Doc. # 12.) On January 13, 2011, the Court granted the First Motion and dismissed the Complaint with leave to amend. (Doc. # 31.) On February 11, 2011, Plaintiffs filed a First Amended Complaint (“FAC”). (Doc. # 32.) On February 25, 2011, Defendants BAC, BOA, and MERS filed a Motion to Dismiss the FAC (“Second Motion”). (Doc. # 34.) Security filed a Motion for Joinder on April 19, 2011. (Doc. # 38.) On May 24, 2011, 2011 WL 2117008, the Court granted both the Second Motion and the Motion for Joinder and dismissed the FAC with leave to amend. (Doc. # 44.) On June 9, 2011, Plaintiffs filed a Second Amended Complaint (“SAC”). (Doc. # 45.) Plaintiffs allege the following causes of action in the SAC:

• Count I: Slander of Title. (SAC ¶¶ 46–54.)

• Count II: Conspiracy to Slander Title. (SAC ¶¶ 55–63.)

• Count III: Unfair or Deceptive Acts and Practices. (SAC ¶¶ 64–72.)

• Count IV: Breach of Contract. (SAC ¶¶ 73–78.)

On June 28, 2011, BAC, BOA, and MERS filed the instant Motion to Dismiss the SAC. (Doc. # 47.) On June 29, 2011, Security filed a separate Motion to Dismiss the SAC. (Doc. # 48.) On August 22, 2011, Plaintiffs filed an Opposition to BAC, BOA, and MERS' Motion to Dismiss.² (Doc. # 62.) On August 30, 2011, BAC, BOA, and MERS filed a Reply in support of their Motion. (Doc. # 66.)

STANDARD OF REVIEW

I. Motion to Dismiss for Failure to State a Claim

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (“Rule”), a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. A complaint may be dismissed as a matter of law for one of two reasons: “(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal claim.” Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984) (citation omitted). Allegations of fact in the complaint must be taken as true and construed in the light most favorable to the plaintiff. See Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005).

A complaint need not include detailed facts to survive a Rule 12(b)(6) motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). However, in providing grounds for relief, a plaintiff must do more than recite the formulaic elements of a cause of action. See id. at 556–57, 127 S.Ct. 1955; see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir.1988) (“[C]onclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim.”) (citation omitted). “The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions,” and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotations and citations omitted). Thus, “bare assertions amounting to nothing more than a formulaic recitation of the elements” of a claim “are not entitled to an assumption of truth.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir.2009) ( “[T]he non-conclusory ‘factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”) (internal quotations and citations omitted).

A court looks at whether the facts in the complaint sufficiently state a “plausible” ground for relief. See Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A plaintiff must include enough facts to raise a reasonable expectation that discovery will reveal evidence and may not just provide a speculation of a right to relief. Id. at 586, 127 S.Ct. 1955. When a complaint fails to adequately state a claim, such deficiency should be “exposed at the point of minimum expenditure of time and money by the parties and the court.” Id. at 558, 127 S.Ct. 1955 (citation omitted). If a court dismisses the complaint or portions thereof, it must consider whether to grant leave to amend. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir.2000) (finding that leave to amend should be granted “if it appears at all possible that the plaintiff can correct the defect”) (internal quotations and citations omitted).

II. Sua Sponte Dismissal

The court may dismiss a complaint pursuant Rule 12(b)(6) on its own motion. See Omar v. Sea–Land Serv., Inc., 813 F.2d 986, 991 (9th Cir.1987) (“A trial court may dismiss a claim sua sponte under [Rule] 12(b)(6). Such a dismissal may be made without notice where the claimant cannot possibly win relief.”); Ricotta v. California, 4 F.Supp.2d 961, 968 n. 7 (S.D.Cal.1998) (“The Court can dismiss a claim sua sponte for a Defendant who has not filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6).”); see also Baker v. Dir., U.S. Parole Comm'n, 916 F.2d 725, 727 (D.C.Cir.1990) (holding that district court may dismiss cases sua sponte pursuant to Rule 12(b)(6) without notice where plaintiff could not prevail on complaint as alleged). Additionally, a paid complaint that is “obviously frivolous” does not confer federal subject matter jurisdiction and may be dismissed sua sponte before service of process. Franklin v. Murphy, 745 F.2d 1221, 1227 n. 6 (9th Cir.1984); see also Fed.R.Civ.P. 12(h)(3); Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 593, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (“[I]t is the obligation of both district court and counsel to be alert to jurisdictional requirements.” ); Branson v. Nott, 62 F.3d 287, 291 (9th Cir.1995) (“[D]ismissal of Branson's complaint was required because the district court lacked subject matter jurisdiction....”).

A court may also sua sponte dismiss a complaint for failure to comply with Rule 8. Rule 8 mandates that a complaint include a “short and plain statement of the claim,” Fed.R.Civ.P. 8(a)(2), and that each allegation “be simple, concise, and direct.” Fed.R.Civ.P. 8(d)(1). A complaint that is so confusing that its “ ‘true substance, if any, is well disguised’ ” may be dismissed sua sponte for failure to satisfy Rule 8. Hearns v. San Bernardino Police Dep't, 530 F.3d 1124, 1131 (9th Cir.2008) (quoting Gillibeau v. City of Richmond, 417 F.2d 426, 431 (9th Cir.1969)); Simmons v. Abruzzo, 49 F.3d 83, 86 (2d Cir.1995) (stating that a district court has the power to sua sponte dismiss a complaint for failure to comply with Rule 8 where the complaint is so confused, ambiguous, or unintelligible that its true substance is well disguised); see also McHenry v. Renne, 84 F.3d 1172, 1180 (9th Cir.1996) (“Something labeled a complaint but written ..., prolix in evidentiary detail, yet without simplicity, conciseness and clarity as to whom plaintiffs are suing for what wrongs, fails to perform the essential functions of a complaint.”); Nevijel v. N. Coast Life Ins. Co., 651 F.2d 671, 673 (9th Cir.1981) (“A complaint which fails to comply with [Rule 8]...