Flores v. EMC Mortgage Co.
997 F. Supp. 2d 1088
E.D. Cal.2014Background
- Vincent Elijah Flores obtained a $208,000 loan in 2005 secured by a deed of trust with MERS named as beneficiary; MERS assigned the beneficial interest to Bank of New York Mellon in 2010 and Mellon purchased the property at a nonjudicial trustee’s sale in October 2012.
- Plaintiffs sued (86-page complaint) asserting wrongful foreclosure and related claims: alleged invalid assignment/securitization, violation of a federal consent judgment, lack of note possession, and statutory/common-law causes of action.
- Defendants (Mellon, National Default Servicing (NDS), and MERS) moved to dismiss under Fed. R. Civ. P. 12(b)(6).
- The court found the complaint procedurally deficient (violative of Rule 8), substantively defective on multiple legal grounds (lack of standing, failure to tender, statutory immunities, privileged foreclosure communications), and without plausible factual support for the asserted claims.
- The court dismissed all claims with prejudice as to Mellon, NDS, and MERS and entered judgment for those defendants; plaintiffs were ordered to show cause or dismiss remaining defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 8 sufficiency | Complaint alleges various wrongful acts and should survive; factual detail supplied across lengthy pleading | Complaint is prolix, lumps defendants, fails to give fair notice of claims | Dismissed for failing Rule 8 (not simple, concise, or particularized) |
| Standing to challenge securitization/PSA | Flores may attack chain of assignment/securitization and thus challenge foreclosure (relying on Glaski) | Non-party borrower lacks standing to enforce PSA or challenge securitization | No standing; Glaski is unpersuasive and contrary to prevailing authority; securitization claims dismissed |
| Standing to enforce federal consent judgment | Plaintiffs claim they are third‑party beneficiaries entitled to enforce the consent judgment | Consent decrees are enforceable only by parties or entities the decree authorizes; individual borrowers are incidental beneficiaries | No standing; claims based on consent judgment barred |
| Tender requirement to challenge foreclosure | Tender unnecessary because the trustee’s deed was void for lack of authorization | A borrower must credibly tender the full debt to challenge a foreclosure; no credible tender alleged | Dismissed for failure to plead ability/offer to tender debt |
| Need for note possession / real party in interest | Defendants must possess the original note to have authority to foreclose | California law does not require physical possession of the original note to conduct a nonjudicial foreclosure | Plaintiff’s note-possession theory rejected; declaratory relief on this ground dismissed |
| RESPA / FDCPA claims | Correspondence to trustee and alleged false representations gave rise to RESPA and FDCPA claims | Correspondence did not constitute a RESPA qualified written request; foreclosure is not FDCPA debt collection; NDS was not servicer/debt collector | RESPA and FDCPA claims dismissed (plaintiffs conceded RESPA/FDCPA deficiencies) |
| Trustee immunity / slander of title | Trustee acted improperly and lost statutory privileges | Section 2924 statutory privileges and qualified privilege for foreclosure communications protect trustee; no malice shown | Claims against NDS barred by statutory immunities and privilege; slander of title dismissed |
| Negligence, UCL, accounting, emotional distress, quiet title | Various claimed duties and harms from foreclosure and alleged statutory violations | Lender/servicer duties are limited; no special fiduciary duty; UCL needs injury/causation; accounting derivative; tort claims barred by contract context | All claims dismissed with prejudice for failure to state viable causes of action or standing |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (requiring factual content supporting plausible claims)
- Moeller v. Lien, 25 Cal.App.4th 822 (Cal. Ct. App. 1994) (nonjudicial foreclosure statutory framework and presumption of regularity)
- Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (Cal. Ct. App. 2013) (borrower lacks standing to enforce PSA/securitization interests)
- Glaski v. Bank of America, N.A., 218 Cal.App.4th 1079 (Cal. Ct. App. 2013) (contrasting, minority view on borrower standing to challenge trust closing dates)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (Cal. Ct. App. 2011) (prejudice required to overturn trustee’s sale; assignments do not usually prejudice borrower)
- Hagberg v. California Federal Bank FSB, 32 Cal.4th 350 (Cal. 2004) (section 2924 privilege for foreclosure communications)
- Karlsen v. American Sav. & Loan Ass'n, 15 Cal.App.3d 112 (Cal. Ct. App. 1971) (tender requirement to set aside trustee’s sale)