George Kramer v. Quality Loan Servicing Corp.
666 F. App'x 646
| 9th Cir. | 2016Background
- George Kramer sued Bank of America, Quality Loan Service Corp. (QLSC), MERS, and Freddie Mac after foreclosure-related actions on his mortgage; district court dismissed his complaint under Rule 12(b)(6) without leave to amend.
- Kramer alleged the promissory note was transferred into a Freddie Mac REMIC trust but the deed of trust was not, and challenged various recorded assignments and substitutions (including a MERS assignment and QLSC substitution as trustee).
- Kramer asserted claims for wrongful foreclosure, quiet title, cancellation of instruments, negligence (based on a requested loan modification), accounting, and violations of California’s Unfair Competition Law (UCL).
- He alleged improprieties including robo-signing, unauthorized assignments, failure to record transfers into the Freddie Mac trust, wrongful beneficiary status, and improper credit reporting/collection.
- The Ninth Circuit affirmed dismissal, finding Kramer’s factual allegations insufficient to state viable claims and identifying legal doctrines (e.g., deed follows the note; tender requirement) that defeat his theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing/claim that deed wasn’t transferred into Freddie Mac Trust | Kramer: Note went into Freddie Mac Trust but Deed of Trust did not, violating PSA; gives him standing | Defendants: Under California law deed follows the note; alleged split cannot occur | Court: Unnecessary to decide standing; under California law deed inseparable from note so transfer-split claim cannot occur; claim fails (Yvanova) |
| Validity of MERS assignment / robo‑signing challenge | Kramer: MERS lacked possession/authority and assignment was robo‑signed (Renee Rosales) so invalid/void | Defendants: MERS acted as lender’s nominee with authority per deed; robo‑signed acts are voidable and subject to ratification; lack of recordation not required | Court: MERS had ostensible authority; allegations don’t show lack of agency; assignment would be voidable not void and Kramer lacks standing to void it; recording not required (Fontenot; Cal. Com. Code) |
| Foreclosure-related claims (wrongful foreclosure, quiet title, cancellation) and tender rule | Kramer: Foreclosure was unauthorized; debt invalid; exceptions to tender apply | Defendants: Kramer must plead tender to attack foreclosure; no exception shown | Court: Kramer failed to adequately allege ability/willingness to tender; claims dismissed (Robinson/In re MERS; Shimpones; Arnolds Mgmt.) |
| Negligence based on loan‑modification request | Kramer: Bank/QLSC owed duty once he requested modification and breached it | Defendants: No breach adequately alleged even if a duty existed | Court: Even assuming a duty, Kramer’s facts don’t show breach; negligence claim dismissed (Alvarez) |
| Accounting and UCL claims | Kramer: Defendants acted unlawfully, recorded false documents, collected non‑existent debts, reported falsely, and failed to transfer deed into trust | Defendants: No fiduciary duty; no plausible showing of loss or illegal conduct; UCL predicates unsupported | Court: No fiduciary relationship; accounting fails; UCL claims lack legal/factual support and are inadequately pleaded (Nymark; Teselle; Davis) |
Key Cases Cited
- Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919 (2016) (deed of trust inseparable from the note; deed follows the note)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256 (2011) (MERS may act as nominee and effect assignments per deed language)
- In re Mortg. Elec. Registration Sys., Inc. (Robinson v. Am. Home Mortg. Servicing, Inc.), 754 F.3d 772 (9th Cir. 2014) (tender rule requires allegation of ability/willingness to tender to challenge foreclosure)
- Shimpones v. Stickney, 219 Cal. 637 (1934) (quiet title requires tender or its equivalent)
- Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575 (1984) (cancellation of instrument claims require tender or ability to tender)
- Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal. App. 4th 941 (2014) (discussing duties arising from loan modification requests)
- Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089 (1991) (lender–borrower relationship not fiduciary)
- Teselle v. McLoughlin, 173 Cal. App. 4th 156 (2009) (requirements for an accounting claim against a lender)
- Davis v. Ford Motor Credit Co., 179 Cal. App. 4th 581 (2009) (standards for pleading UCL claims)