Niki Alexander Shetty v. Lsf9 Master Participation Trust et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.February 2, 2017

L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Nina Huerta (SBN 229070) nhuerta@lockelord.com Simon M. Feng (SBN 295360) simon.feng@lockelord.com LOCKE LORD LLP 300 South Grand Avenue Los Angeles, California 90071 Telephone: (213) 687-6751 Facsimile: (213) 341-6751 Attorneys for Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA NIKI-ALEXANDER SHETTY f/k/a SATISH SHETTY, an individual, Plaintiff, vs. LSF9 MASTER PARTICIPATION TRUST, A DELAWARE STATUTORY TRUST; ALL PERSONS UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF’S TITLE OR ANY COULD ON PLAINTIFF’S TITLE THERETO AND DOES 1-10, INCLUSIVE, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:16-cv-9362-SJO-(FFMx) Judge S. James Otero Magistrate Judge Frederick F. Mumm DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS THE VERIFIED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: March 13, 2017 Time: 10:00 a.m. Place:Courtroom 10C Complaint Filed: December 19, 2016 Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 1 of 19 Page ID #:126 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT on March 13, 2017 at 10:00 a.m., or as soon thereafter as the matter may be heard in the above-entitled Court, Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) (the “Trustee”) will present for hearing before the Honorable S. James Otero, United States District Judge, in Courtroom 10C of the United States District Court located at 350 West 1st Street, Los Angeles, California, 90012, its Motion to Dismiss the Verified Complaint (the “Complaint”) filed by Plaintiff Niki-Alexander Shetty f/k/a Satish Shetty. The Trustee seeks dismissal pursuant to Federal Rules of Civil Procedure 12(b)(6) on the grounds that Plaintiff fails to state a claim upon which relief can be granted. This Motion is made following the conference of the Trustee’s counsel and the pro se Plaintiff pursuant to L.R. 7-3 which took place on January 12, 2017. The Trustee’s counsel and Plaintiff were unable to reach an agreement on the issues raised in this Motion. Therefore, the Trustee is presenting this Motion to the Court. This Motion is based on this Notice of Motion and Motion, the incorporated Memorandum of Points and Authorities, the pleadings, papers and records on file in this action, and such oral argument as may be presented at the time of the hearing. This Motion seeks dismissal of all of Plaintiff’s claims in the Complaint against the Trustee. /// /// /// /// /// /// /// /// Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 2 of 19 Page ID #:127 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Dated: February 2, 2017 Respectfully submitted, LOCKE LORD LLP By: /s/ Nina Huerta Nina Huerta Simon M. Feng Attorneys for Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 3 of 19 Page ID #:128 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) TABLE OF CONTENTS Page(s) I. INTRODUCTION........................................................................................1 II. STATEMENT OF FACTS...........................................................................2 A. The Subject Loan ...............................................................................2 B. Plaintiff’s Prior Action.......................................................................3 III. LEGAL ARGUMENT .................................................................................3 A. Applicable Legal Standard.................................................................3 B. Plaintiff’s Claims Are Barred By Res Judicata .................................4 C. Plaintiff Lacks Standing to Challenge The Foreclosure ....................6 D. Plaintiff’s Claims Lack Factual Support To State A Claim...............7 1. Plaintiff fails to state a claim for slander of title .....................8 2. Plaintiff fails to state a claim to cancel the recorded instruments...............................................................................9 3. Plaintiff fails to state a claim to quiet title...............................10 4. Plaintiff is not entitled to declaratory relief.............................10 IV. CONCLUSION ............................................................................................11 Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 4 of 19 Page ID #:129 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) TABLE OF AUTHORITIES Page(s) Cases Appel v. Burma, 159 Cal.App.3d 1209 (1984) ..................................................................................... 8 Ashcroft v. Iqbal, 556 U.S. 662 (2009)............................................................................................... 3, 4 Austin v. Ocwen Loan Servicing, LLC, 2014 WL 3845182, No. 14-cv-00970........................................................................ 6 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)................................................................................................... 4 Bell v. United States, No. CV F 02-5077, 2002 WL 1987395 (E.D.Cal. June 28, 2002)............................ 6 Bridgeman v. U.S., No. 2:10-cv-01457, 2011 WL 221639 ...................................................................... 9 CB v. Sonora School Dist., 691 F. Supp. 2d 1123 (E.D. Cal. Sept. 22, 2009)...................................................... 1 Davis. v. Wood, 61 Cal.App.3d 788 (1943) ......................................................................................... 8 Ferguson v. Avelo Mortgage, LLC, 195 Cal.App.4th 1618 (2011) .................................................................................. 10 Gardner v. Nationstar Mortgage LLC, No. 14-1583, 2015 WL 1405539 (E.D. Cal. Mar. 26, 2015) .................................. 11 George v. U.S.A., No. C 07-04673 MHP, 2008 WL 1766945 (N.D. Cal. Apr. 17, 2008)..................... 5 Harris v. County of Orange, 682 F. 3d 1126 (9th Cir.) ........................................................................................... 3 Kachlon v. Markowitz, 168 Cal.App.4th 316 (2008) ...................................................................................... 8 Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 5 of 19 Page ID #:130 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Melegrito v.CitiMortgage Inc., No. C 11-01765 LB, 2011 WL 2197534 (N.D. Cal. June 6, 2011) .......................... 7 MHC Financing LTD v. City of San Rafael, 714 F. 3d 1118 (9th Cir. 2013) .................................................................................. 5 Monreal v. GMAC Mortgage, LLC, 948 F. Supp. 2d 1069 (S.D. Cal. June 4, 2013)....................................................... 11 Ogilvie v. Select Portfolio Servicing, No. 12-cv-001654-DMR, 2012 WL 3010986 (N.D. Cal. July 23, 2012) .......................................................................................................................... 9 Owens v. Kaiser Foundation Health Plan, Inc., 244 F. 3d 708 (9th Cir. 2001) .................................................................................... 4 Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952 (N.D. Cal. Aug. 9, 2010)........................................................ 10 Scott v. Kuhlmann, 746 F.2d 1377 (9th Cir. 1984) ................................................................................... 4 Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) ..................................................................................... 4 Stewart v. U.S. Bancorp, 297 F. 3d 953 (9th Cir. 2002) .................................................................................... 5 Stratosphere Litigation LLC v. Grand Casinos, Inc., 298 F.3d 1137 (9th Cir. 2002) ................................................................................... 5 Tahoe-Sierra Pres. Council v. Tahoe Reg. Planning, 332 F. 3d 1064 (9th Cir. 2003) .................................................................................. 4 Taylor v. Sturgell, 128 S. Ct. 2161 (2008)............................................................................................... 6 Tritz v. U.S. Postal Service, 721 F.3d 1133 (9th Cir. 2013) ................................................................................... 4 Truck Ins. Exch. v. Bennett, 53 Cal.App.4th 75 (1997) .......................................................................................... 8 Yazdanpanah v. Sacramento Valley Mortgage Group, No. C 09-02024 SBA, 2009 WL 4573381 (N.D. Cal. Dec. 1, 2009)........................ 9 Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 6 of 19 Page ID #:131 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iv DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Statutes California Civil Code Section 761.020......................................................................... 10 California Civil Code Section 1624(a)(6)....................................................................... 7 California Civil Code Section 1698 (a) .......................................................................... 7 California Civil Code Section 2922................................................................................ 7 California Civil Code Section 2924(d)(2) ...................................................................... 8 Other Authorities Federal Rule of Civil Procedure Rule 12(b)(6) .............................................................. 1 Federal Rule of Civil Procedure Rule 17........................................................................ 6 Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 7 of 19 Page ID #:132 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) (the “Trustee” or “Defendant”) moves to dismiss Plaintiff Shetty’s Complaint relating to the real property located at 3331 Wolf Creek Court, Simi Valley, California 93063 (the “Property”) on the grounds that the claims are barred by the doctrine of res judicata, that Plaintiff lacks standing to challenge the foreclosure, and that Plaintiff fails to allege sufficient facts to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). Plaintiff is a serial filer vexatious litigant who has been a plaintiff in numerous lawsuits in the United States District Court for the Central District of California.1 In this case, he seeks to challenge the validity of the foreclosure of 3331 Wolf Creek Court, Simi Valley, California 93063 (the “Property”) to which he is not a borrower or mortgagor. In fact, this is not the first time Shetty has challenged the validity of the foreclosure of the Property. On January 20, 2015, he filed a state court action asserting the same claims as this case against a party defendant that is in privity with the Trustee. That prior state court action (the “Prior Action”) was removed to the United States District Court for the Central District of California and the matter was dismissed on the merits. Because there was a final adjudication on the merits in the Prior Action where he alleges the same claims as in this case against a party defendant that is in privity with the Trustee, this matter is barred by res judicata and should be dismissed with prejudice for this reason alone. 1 A search on PACER reveals that Plaintiff has filed at least twelve lawsuits, including this case, in the United States District Court for the Central District of California, against lenders and mortgage servicers. Plaintiff has also filed numerous cases against federal officials and agencies in this district court. Request for Judicial Notice (“RJN”), Ex. 1. This Court may take judicial notice of the PACER search results. See CB v. Sonora School Dist., 691 F. Supp. 2d 1123, 1138 (E.D. Cal. Sept. 22, 2009) (“The Court may take judicial notice of … court records available to the public through the PACER system via the internet.”). Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 8 of 19 Page ID #:133 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Plaintiff’s entire Complaint should also be dismissed under Rule 12(b)(6) because he lacks standing to challenge the foreclosure. He is not the borrower on the note or the mortgagor on the Property. His interest in the Property stems from a purchase of a junior homeowners’ association lien in late 2014 (Compl., ¶ 26; id., at Ex. 1) which is inferior to the Deed of Trust. Further, Plaintiff fails to plead sufficient facts to state a claim for which relief can be granted. Accordingly, the Complaint should be dismissed with prejudice for these additional reasons. II. STATEMENT OF FACTS A. The Subject Loan. On or about June 16, 2005, Sarah Lim Kim obtained a mortgage loan in the amount of $851,250.00 (the “Subject Loan”) from Countrywide Bank. Request for Judicial Notice (“RJN”), Ex. 2. The Subject Loan was secured by a Deed of Trust recorded on June 22, 2005 and against the Property as Document Number 20050622- 0152162 in the Ventura County Recorder’s Office. See Ex. 2. Several notable assignments were recorded thereafter. On or about May 12, 2011, an Assignment of Deed of Trust was recorded as Document Number 20110512-00073570-0 in the Ventura County Recorder’s Office whereby the interest in the Deed of Trust was transferred to BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing, LP. RJN, Ex. 3. On or about November 5, 2014, a Corrective Assignment of Deed of Trust was recorded as Document Number 20141105-00139883-0 in the Ventura County Recorder’s Office whereby it corrected the assignee’s name to reflect that the interest in the Deed of Trust was transferred to Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity, but as Trustee of ARLP Trust 3. RJN, Ex. 4. On or about July 15, 2016, an Assignment of Deed of Trust was recorded as Document Number 20160715-00099697-0 in the Ventura County Recorder’s Office whereby the interest in the Deed of Trust was transferred to U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust. Compl., Ex. 10. Kim defaulted on her mortgage obligations and a Notice of Default was recorded Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 9 of 19 Page ID #:134 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) on August 16, 2016 as Document Number 20160816-00116195-0 in the Ventura County Recorder’s Office. Compl., Ex. 6. A Notice of Trustee’s Sale was recorded on November 18, 2016 as Document Number 20161118-00171236-0 in the Ventura County Recorder’s Office. Compl., Ex. 7. B. Plaintiff’s Prior Action. On January 20, 2015, Plaintiff filed the Prior Action in state court relating to the same property at issue in this case - 3331 Wolf Creek Court, Simi Valley, California 93063 - asserting causes of action for: (1) slander of title; (2) cancellation of written instruments; (3) violation of Cal. Civil Code 1788.1; (4) violation of Business and Professions Code § 17200; (5) quiet title; and (6) declarative relief against Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity, but as Trustee of ARLP Trust 3 and other defendants. The Prior Action was removed to the United States District Court for the Central District of California. RJN, Ex. 5.2 Defendant Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity, but as Trustee of ARLP Trust 3 filed a motion to dismiss, and the Court granted that motion on April 9, 2015. RJN, Ex. 6. III. LEGAL ARGUMENT A. Applicable Legal Standard. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Thus, in resolving a Rule 12(b)(6) motion to dismiss, a court engages in a two-prong inquiry. First, a court accepts all well-pled allegations as true, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not 2 Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity, but as Trustee of ARLP Trust 3 is a named defendant in the state court complaint, and that complaint is attached to the Notice of Removal as Exhibit 1. This Court may take judicial notice of the Prior Action. See Harris v. County of Orange, 682 F. 3d 1126, 1132 (9th Cir.) (“We may take judicial notice … [of] documents on file in federal or state courts.”). Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 10 of 19 Page ID #:135 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) suffice.” Id. (citation omitted). A court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. (citation omitted). Nor need a court “accept as true allegations that contradict matters properly subject to judicial notice or by exhibit.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Second, the court determines whether the well-pled factual allegations are sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citation omitted). “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’” Id. (citing Fed. R. Civ. P. 8(a)(2)). B. Plaintiff’s Claims Are Barred By Res Judicata. A Rule 12(b)(6) motion to dismiss may be based on res judicata.3 See Scott v. Kuhlmann, 746 F.2d 1377, 1378 (a defendant may bring a motion to dismiss under Rule 12(b)(6) based on res judicata when the defense does not raise any disputed issues of fact). The doctrine of res judicata “bars litigation in a subsequent action of any claims that were raised or could have been raised in the prior action.” Owens v. Kaiser Foundation Health Plan, Inc., 244 F. 3d 708, 713 (9th Cir. 2001) (citation omitted). Res judicata applies where there is (1) an identity of claims; (2) a final judgment on the merits; and (3) identity or privity between parties. Tritz v. U.S. Postal Service, 721 F.3d 1133, 1142 (9th Cir. 2013). Here, all three elements are satisfied. An identity of claims exists when the two suits arise from the “same transactional nucleus of facts.” Tahoe-Sierra Pres. Council v. Tahoe Reg. Planning, 332 F. 3d 1064, 1078-79 (9th Cir. 2003). Further, a “claim is the ‘same claim’ if it is derived from the same ‘primary right,’ which is the right to be free from a particular 3 For purposes of the res judicata argument, the Trustee does not dispute issues of fact. Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 11 of 19 Page ID #:136 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) injury, regardless of the legal theory on which liability for the injury is based.” MHC Financing LTD v. City of San Rafael, 714 F. 3d 1118, 1126 (9th Cir. 2013). Here, there is an identity of causes of action because this case arises from the same operative facts as Plaintiff’s Prior Action which challenged the validity of recorded documents against the Property and sought judicial determination of interests and rights in the Property. Cf. Ex. 4 to Compl., generally. Further, the case at bar alleges identical claims as Plaintiff’s Prior Action asserting causes of action for slander of title, cancellation of written instruments, quiet title, and declaratory relief. Therefore, an identity of claims exists. Second, the district court dismissed Plaintiff’s Prior Action. See, Ex. 4. This dismissal constitutes a final judgment on the merits. See Stewart v. U.S. Bancorp, 297 F. 3d 953, 956 (9th Cir. 2002) (interpreting a prior dismissal that did not specify whether the suit was dismissed as an adjudication on the merits for res judicata purposes; “Federal Rule of Civil Procedure 41(b) states that ‘unless the court in its order for dismissal otherwise specifies, a dismissal … other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.’”); see also George v. U.S.A., No. C 07- 04673 MHP, 2008 WL 1766945, at *2 (N.D. Cal. Apr. 17, 2008) (district court’s granting motion to dismiss for failure to state claims upon which relief can be granted is a final judgment on the merits for res judicata purposes). Therefore, the second element is met. Lastly, privity between the parties exists. “Privity between parties exists when a party is so identified in interest with a party to former litigation that he represents precisely the same right in respect to the subject matter involved.” Stratosphere Litigation LLC v. Grand Casinos, Inc., 298 F.3d 1137, 1142 n.3 (9th Cir. 2002) (citation omitted). Further, privity exists between an assignee and assignor. See Taylor v. Sturgell, 128 S. Ct. 2161, 2172 (2008) (“nonparty preclusion may be justified based on a variety of pre-existing substantive legal relationships between the Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 12 of 19 Page ID #:137 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) person to be bound and a party to the judgment, e.g., assignee and assignor.”). Here, privity exists between defendant Christiana Trust, a division of Wilmington Savings Fund Society, FSB, not in its individual capacity but as Trustee of ARLP Trust 3 in the Prior Action and defendant Trustee in this case because the Assignment of the Deed of Trust establishes an assignor-assignee relationship. See Compl., Ex. 10. This satisfies the last element. Res judicata is designed to bar cases exactly like this one where the plaintiff has repeatedly filed the same claims against the same parties even after a final adjudication on the merits in the prior case. Bell v. United States, No. CV F 02-5077, 2002 WL 1987395, at *4 (E.D.Cal. June 28, 2002) ("The doctrine of res judicata is meant to protect parties against being harassed by repetitive actions."). Because all three elements of res judicata have been satisfied, Plaintiff is barred from re-litigating these same claims against the Trustee. Therefore, the Complaint should be dismissed with prejudice for this reason alone. C. Plaintiff Lacks Standing To Challenge The Foreclosure. Under Federal Rule of Civil Procedure Rule 17 (“Rule 17”), an action must be prosecuted in the name of the real party in interest. Fed. R. Civ. P. 17. “Whether a party is the real party in interest under Rule 17 depends on the applicable state substantive law.” Austin v. Ocwen Loan Servicing, LLC, 2014 WL 3845182, No. 14- cv-00970 JAM-AC, *2 (E.D. Cal. July 31, 2014 (citing All State Ins. Co. v. Hughes, 358 F.3d 1089, 1094 (9th Cir. 2004)). California Civil Code Section 1624(a)(6) specifically provides that “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent: ... (6) An agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust upon the property purchased, unless assumption of the indebtedness by the purchaser is specifically provided for in the conveyance of the property.” Cal. Civ. Code § 1624(a)(6); see also Cal. Civ.Code, § 2922 (“mortgage Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 13 of 19 Page ID #:138 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property”); Cal. Civ. Code § 1698 (a) (“contract in writing may be modified by contract in writing”). Moreover, under California law, an agreement to modify a mortgage loan must be (1) in writing and (2) signed by the party to be charged or it is subject to the statute of frauds. See Melegrito v.CitiMortgage Inc., No. C 11-01765 LB, 2011 WL 2197534, at *13 (N.D. Cal. June 6, 2011) (quoting Secrest v. Security Nat. Mortg. Loan Trust 2002-2, 167 Cal.App.4th 544, 553 (2008) (explaining that a “deed of trust . . . comes within the statute of frauds”)).” Here, the Deed of Trust encumbering the Property identifies the borrower as Sarah Lim Kim. See Ex. 2. Nowhere in the Deed of Trust is Plaintiff identified as the borrower. Further, Plaintiff admits that he is not a borrower on the Subject Loan (see Compl., ¶ 54(a)), yet he makes numerous allegations challenging the foreclosure of the Property. See Compl., ¶¶ 38-40 (challenging validity that the Trustee is not the note holder); id., at ¶ 46, 119 (challenging Trustee’s authority to foreclosure on the Property); id., at ¶¶ 54-55, 59, 61, 63-64, 70,72,118, 120 (challenging validity of the Notice of Default); id., at ¶¶ 57-58, 61-64, 70, 72, 118, 120 (challenging validity of the Notice of Trustee Sale). But because Plaintiff is not the real in party in interest as required under Rule 17 as based on California substantive law, he lacks standing to challenge the non-judicial foreclosure and assert any causes of action that arise from the Subject Loan to which he was not a party to. Therefore, all of Plaintiff’s claims should be dismissed with prejudice for this additional reason. D. Plaintiff’s Claims Lack Factual Support To State A Claim. Not only are Plaintiff’s claims barred by res judicata and because he lacks standing to challenge the foreclosure, but all of his claims lack factual support necessary to sufficiently plead those claims. As a result, the Complaint should be dismissed on this additional ground. Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 14 of 19 Page ID #:139 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) 1. Plaintiff fails to state a claim for slander of title. To establish a cause of action for slander of title, a plaintiff must show: (1) publication, (2) falsity, (3) absence of privilege, and (4) disparagement of another’s land which is relied upon by a third party and which results in a pecuniary loss. Appel v. Burma, 159 Cal.App.3d 1209, 1215 (1984). Disparagement of title requires publication of some false statement. Truck Ins. Exch. v. Bennett, 53 Cal.App.4th 75, 84 (1997). A plaintiff must also specifically allege the particular financial loss caused by the false statement. Davis. v. Wood, 61 Cal.App.3d 788, 798 (1943). Here, Plaintiff makes conclusory allegations about the Assignment of the Deed of Trust (“AOD”), Substitution of Trustee (“SOD”), Notice of Default (“NOD”), and Notice of Trustee Sale (“NTS”) as being improper (see Compl., ¶¶ 49-72, 81) but fails to plead any facts to support a claim for slander of title. So, Plaintiff’s slander of title claim is insufficiently pleaded. Further, Plaintiff’s claim fails because he cannot allege that the Trustee made a false publication that was damaging to him. The recorded instruments demonstrate that the borrower defaulted on her loan, which default caused the commencement of the foreclosure process. Any damages that Plaintiff alleges to have suffered resulted not from the recording of the instruments, but from the borrower’s failure to make payment on the loan. Additionally, the recording of the AOD, SOT, NOD, and NTS are privileged acts against a slander of title action. See Cal. Civ. Code § 2924(d)(2) (“[p]erformance of the procedures set forth in this Article . . . shall constitute privileged communications pursuant to Section 47.”); see Kachlon v. Markowitz, 168 Cal.App.4th 316, 333 (2008) (“We hold that section 2924 deems the statutorily required mailing, publication, and delivery of notices in non-judicial foreclosures, and the performance of statutory non-judicial foreclosure procedures, to be privileged communication under the qualified common-interest privilege of section 47, subdivision (c)(1).”). However, “[a]n exemption to section 47 privilege arises upon an allegation of malice,” which requires “that the publication was motivated by hatred Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 15 of 19 Page ID #:140 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) or ill will towards the plaintiff or by a showing that the defendant lacked reasonable ground for belief in the truth of publication and therefore acted in reckless disregard of the plaintiff’s rights.” Ogilvie v. Select Portfolio Servicing, No. 12-cv-001654-DMR, 2012 WL 3010986, at *4 (N.D. Cal. July 23, 2012). Here, Plaintiff appears to recognize that the recorded instruments are privileged, and presumably, that is the reason why he conclusively alleges that the “recordation of the instruments … was motivated by defendant’s malice and oppression and that defendant LSF9 knew that it did not purchase any debt as it relates to the subject property…” Compl., ¶ 90. But Plaintiff does not provide any factual support to show that the recording of instruments was motivated by malice. Therefore, Plaintiff cannot state a claim for slander of title, and this claim should be dismissed for this additional reason. 2. Plaintiff fails to state a claim to cancel the recorded instruments. Plaintiff also “seeks to cancel the various assignments of deed of trust caused to be recorded by the defendant and their agents and doe defendants as purported [a]ssignment of deed of trust and any purported substitution of trustee, notice of default, and notice of trustee sale [were]… executed … without any authority…” Compl., ¶ 83. But “cancellation of instrument” is not a cause of action, it is a remedy. Yazdanpanah v. Sacramento Valley Mortgage Group, No. C 09-02024 SBA, 2009 WL 4573381, at *6 (N.D. Cal. Dec. 1, 2009) (“A request to cancel the trustee’s deed is ‘dependent upon a substantive basis for liability, [and it has] no separate viability.’”) (citation omitted). Plaintiffs have not pleaded any facts that would provide a legal basis for adjudging the recorded documents void. This necessitates dismissal of this claim. See Yazdanpanah, 2009 WL 4573381, at *6 (“Even if the claim to cancel trustee’s deed were independently actionable, Plaintiff fails to support this claim with factual allegations.”); Bridgeman v. U.S., No. 2:10-cv-01457, 2011 WL 221639, at *17 (“[B]ecause … plaintiff’s other claims for relief should be dismissed, plaintiff’s claim for cancellation should be dismissed as well.”). Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 16 of 19 Page ID #:141 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) 3. Plaintiff fails to state a claim to quiet title. The basis for Plaintiff’s quiet title action is based on the conclusory allegation that the Trustee does not have an interest in the Property and any claims to the Property clouds Plaintiff’s title to the Property. Compl., ¶ 99-101. To plead a claim for quiet title, the complaint must contain: (1) a legal description of the property and the street address or common designation, if any; (2) the title of the plaintiff as to which a determination of quiet title is sought; (3) the adverse claims to plaintiff’s title; (4) the date as of which the determination is sought; and (5) a prayer for determination of plaintiff’s title against the adverse claims. See Cal. Civ. Code § 761.020. Further, “to bring an action to quiet title a plaintiff must allege he or she has paid any debt owed on the property.” Ferguson v. Avelo Mortgage, LLC, 195 Cal.App.4th 1618, 1623 (2011). Here, Plaintiff cannot establish a quiet title claim because he cannot plead that he has paid all the debt owed on the Property since he was not the borrower on the Subject Loan. Further, Plaintiff does not plead that he has paid the amount due and owing under the borrower’s loan to allow him to assert a quiet title action. Thus, Plaintiff cannot claim that he is the rightful owner, and his quiet title claim should be dismissed accordingly for this additional reason. See Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 975 (N.D. Cal. Aug. 9, 2010) (“it is dispositive as to this claim that, under California law, a borrower may not assert ‘quiet title’ against a mortgagee without first paying the outstanding debt on the property.”) (citation omitted). 4. Plaintiff is not entitled to declaratory relief. Plaintiff’s fourth claim is a “claim for declaratory relief.” He asserts that “declaratory relief is necessary and appropriate at this time because without judicial resolution of the existing dispute related to their respective rights, interest, title and obligations Plaintiff is threatened with a loss of his property…” Compl., at ¶ 108. But declaratory relief is not a separate cause of action, but rather a remedy, [and] it Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 17 of 19 Page ID #:142 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) remains available as a remedy if plaintiff prevails on a claim and shows declaratory relief is an appropriate remedy under the circumstances. Gardner v. Nationstar Mortgage LLC, No. 14-1583, 2015 WL 1405539, at *12 (E.D. Cal. Mar. 26, 2015) (dismissing plaintiff’s claims for declaratory relief because declaratory relief is not an independent claim, but a form of relief; “if [p]laintiff prevails on any other cause of action, and declaratory or injunctive relief are the appropriate remedy, then those forms of relief remain available.”). Here, given that Plaintiff fails to state a valid underlying claim, he cannot establish that he will prevail on any of the claims that justifies this remedy. See supra Section III. Further, “declaratory relief should be denied if it will neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties.” Monreal v. GMAC Mortgage, LLC, 948 F. Supp. 2d 1069, 1081 (S.D. Cal. June 4, 2013) (quoting U.S. v. State of Washington, 759 F.2d 1353, 1356-57 (9th Cir. 1985)). In Monreal, plaintiff sought declaratory relief and sought a judicial determination of respective rights of the parties relating to a property. Monreal, 948 F. Supp. at 1080-81. But because the plaintiff ‘s request for declaratory relief was “entirely commensurate with the relief sought through her other causes of action,” the court found this claim to be “duplicative and unnecessary.” Id. at 1081. Likewise here, all of Plaintiff’s claims derive from his challenges to the Trustee’s interest in the property and the recorded instruments, so his action for declaratory relief is duplicative and unnecessary. See id. (“A claim for declaratory relief is unnecessary where an adequate remedy exists under some other cause of action.”). Accordingly, Plaintiff’s request for declaratory relief should be dismissed. IV. CONCLUSION For these reasons, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 18 of 19 Page ID #:143 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Statutory Trust) respectfully requests that this Court grant its Motion to Dismiss in its entirety. Dated: February 2, 2017 Respectfully submitted, LOCKE LORD LLP By:/s/ Nina Huerta Nina Huerta Simon M. Feng Attorneys for Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) Case 2:16-cv-09362-SJO-FFM Document 12 Filed 02/02/17 Page 19 of 19 Page ID #:144 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 [PROPOSED] ORDER Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) Nina Huerta (SBN 229070) nhuerta@lockelord.com Simon M. Feng (SBN 295360) simon.feng@lockelord.com LOCKE LORD LLP 300 South Grand Avenue Los Angeles, California 90071 Telephone: (213) 687-6751 Facsimile: (213) 341-6751 Attorneys for Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA NIKI-ALEXANDER SHETTY f/k/a SATISH SHETTY, an individual , Plaintiff, vs. LSF9 MASTER PARTICIPATION TRUST, A DELAWARE STATUTORY TRUST; ALL PERSONS UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF’S TITLE OR ANY COULD ON PLAINTIFF’S TITLE THERETO AND DOES 1-10, INCLUSIVE, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:16-cv-9362-SJO-(FFMx) [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE VERIFIED COMPLAINT Date: March 13, 2017 Time: 10:00 a.m. Place:Courtroom 10C [Filed concurrently with: (1) Motion to Dismiss Verified Complaint; and (2) Request for Judicial Notice] Complaint Filed: December 19, 2016 Case 2:16-cv-09362-SJO-FFM Document 12-1 Filed 02/02/17 Page 1 of 2 Page ID #:145 L o ck e L o rd L L P 3 0 0 S o u th G ra n d A v en u e, S u it e 2 60 0 L o s A n g el es , C A 9 00 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 [PROPOSED] ORDER Shetty v. LSF9 Master Participation Trust, et al., Case No. 2:16-cv-9362-SJO-(FFMx) The Court, having considered the Motion to Dismiss each cause of action in Verified Complaint of Plaintiff Niki-Alexander Shetty f/k/a Satish Shetty pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by Defendant U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (incorrectly sued as LSF9 Master Participation Trust, a Delaware Statutory Trust) as well as the arguments of the parties and the papers submitted, hereby GRANTS the Motion to Dismiss on the grounds that Plaintiff’s Verified Complaint fails to state a claim upon which relief can be granted against Defendant. IT IS SO ORDERED. Dated: Honorable S. James Otero United States District Judge Case 2:16-cv-09362-SJO-FFM Document 12-1 Filed 02/02/17 Page 2 of 2 Page ID #:146