Silva v. Saxon Mortgage Services, Inc.
2:11-cv-03125
E.D. Cal.Jun 26, 2012Background
- Plaintiffs Pablo and Leticia Silva allege a 2004 loan origination by First Franklin for a Vallejo, CA property, with Spanish-language negotiations and promises of a 30-year fixed-rate loan at 6.25% that were allegedly not fulfilled.
- Plaintiffs claim First Franklin provided false income information and failed to explain loan terms prior to signing, leading to a higher-cost, adjustable-rate loan.
- After funding, First Franklin allegedly sold the loan to Saxon Mortgage Services, with Regional as trustee; Plaintiffs allege Saxon and Regional are liable as successors or agents.
- Plaintiffs filed suit in 2011 in state court asserting fifteen claims, which Saxon removed to federal court; Saxon moves to dismiss under Rule 12(b)(6) with Regional joining.
- The court grants the motion to dismiss as to most claims but allows one remaining viable claim under Cal. Civ. Code § 2923.5, and grants leave to amend to cure deficiencies.
- The memorandum discusses pleading standards under Twombly/Iqbal and the possibility of amendment if deficiencies can be cured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Saxon is a successor-in-interest to First Franklin for origination claims | Silva argues Saxon acts as an agent/continuation of the current lender. | Saxon contends no plausible successor-in-interest basis; no agency or merger evident. | Claims 2,4,5,6,7,8,9,10,11,12 dismissed for lack of successor liability. |
| Whether Plaintiffs state a § 2923.5 claim | Saxon/Regional failed to contact borrowers as required before filing NOD. | Defendants allegedly complied with § 2923.5; NOD inaccurate about due diligence. | First claim denied; § 2923.5 claim survives the motion to dismiss. |
| Whether the negligence per se theory (based on §§ 2924, 2934a) is viable | Non-possession of original note and improper substitution of trustee violated statutes. | Regional had authority to file NOD; alleged violations insufficient to state a viable claim. | Third cause of action dismissed. |
| Whether the Deed of Trust lien and related claims are viable (lien/possession) | No enforceable note or possession; Deed of Trust defects render lien invalid. | Possession not required; substitution issues insufficient to defeat foreclosure. | Thirteenth and related lien claim dismissed; no viable lien challenge. |
| Whether quiet title and declaratory relief claims are viable | Plaintiffs seek title declaration and power-of-sale nullification. | Tender of debt required; § 2923.5 remedy is only foreclosure-postponement. | Fourteenth and Fifteenth claims dismissed; tender not satisfied; declaratory relief barred. |
Key Cases Cited
- Mehta v. Wells Fargo Bank, N.A., 737 F. Supp. 2d 1185 (S.D. Cal. 2010) (§ 2923.5 remedy is foreclosure-postponement; action ends at sale)
- Spencer v. DHI Mortg. Co., Ltd., 642 F. Supp. 2d 1153 (E.D. Cal. 2009) (possession of note not required for non-judicial foreclosure)
- Mabry v. Superior Court, 185 Cal. App. 4th 208 (Cal. Ct. App. 2010) (private right of action under § 2923.5; remedy limited to postponement)
- Jones v. Countrywide Homeloan, 2011 WL 2462845 (E.D. Cal. 2011) (quiet title tender requirements in foreclosure context)
- Iqbal v. Ashcroft, 556 U.S. 662 (U.S. 2009) (pleading standards: plausibility required)
- Twombly v. Bell Atl. Corp., 550 U.S. 544 (U.S. 2007) (requirements for pleading to state a plausible claim)