Octavio Corona et al v. GMAC Mortgage LLC et al

OPPOSITION to MOTION to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12

C.D. Cal.March 7, 2014

Notice of Plaintiffs’ Opposition to Defendant’s Motion to Dismiss 1 Khinh V. Yam, Esq. (California Bar Number 228219) 1 1511 E. Anaheim Street #6 Long Beach, CA 90813 2 Telephone: 562-443-4360 Facsimile: 562-599-2259 3 Email: lawpro3370@yahoo.com 4 Todd S. Dion, Esq. (Rhode Island Bar Number 6852) (pro hac to be filed) 5 1599 Smith Street North Providence, RI 02920 6 Telephone: 401-649-4330 Facsimile: 401-649-4331 7 Email: toddsdion@msn.com 8 Attorneys for Plaintiffs Octavio Corona and Angelica Corona on behalf of themselves and all others similarly situated 9 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 OCTAVIO CORONA AND ) 11 ANGELICA CORONA, ) on behalf of themselves ) 12 and all others similarly situated ) ) C.A. NO. 2:14-cv-00621-DOC-RNB 13 ) Plaintiffs, ) PLAINTIFFS’ RESPONSE IN 14 ) OPPOSITION TO vs. ) DEFENDANTS’ MOTION TO 15 ) DISMISS [DOCUMENT 6]; ) MEMORANDUM OF POINTS 16 GMAC MORTGAGE LLC, ) AND AUTHORITIES GMAC MORTGAGE CORPORATION, ) 17 U.S. BANK NATIONAL ) The Hon. David O. Carter ASSOCIATION, as Trustee for ) Date: May 27, 2014 18 GREENPOINT MORTGAGE ) Time: 8:30 a.m. FUNDING TRUST, SERIES 2006-AR6 ) Courtroom: 9D 19 Defendants. 20 ____________________________________ 21 22 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 1 of 28 Page ID #:381 Notice of Plaintiffs’ Opposition to Defendant’s Motion to Dismiss 2 1 TO THE COURT, TO ALL PARTIES AND TO THEIR COUNSEL OF RECORD: 2 Plaintiffs’ submit the following Response and Memorandum of Points and Authorities 3 in Opposition to Defendant U.S. Bank National Association, as Trustee for GreenPoint 4 Mortgage Funding Trust, Series 2006-AR6’s Motion to Dismiss [Document 6] Plaintiffs’ 5 Class Action Complaint. Plaintiffs’ Opposition is based upon this Memorandum of Points and 6 Authorities, in Opposition to the afore noted Defendant’s Motion to Dismiss Plaintiffs’ Class 7 Action Complaint, and any further oral argument received by this Court at the hearing of this 8 matter. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 2 of 28 Page ID #:382 Table of Contents and Table of Authorities i TABLE OF CONTENTS 1 I. INTRODUCTION ......................................................................................................……..…1 2 II. ARGUMENT .............................................…………………....................................……….2 3 1. Legal Standard…………………………………………………….……………………..2 4 2. Plaintiffs' Allegations………………………………………………..……….…………..3 5 3. Suretyship Arguments………………………………………….……………..………….4 6 4. The Trouble With Trust Agreements……………………………………….…………..10 7 5. Advances on Behalf of Plaintiffs………………………………………………………12 8 6. Plausibility…………………………………….………….…………..…………….…..19 9 7. Res Judicata and Judicial Estoppel Issues………………………….………………..…20 10 8. The Tender Rule………………………………………………………….…………..…21 11 III. SUMMARY & CONCLUSION…………………………………………………………..21 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 3 of 28 Page ID #:383 Table of Contents and Table of Authorities ii TABLE OF AUTHORITIES 1 Case Law 2 Ammeran v. Miller, 488 F.2nd 1285, 1298-99 (D.C. Cir. 1973)……………………………….7 3 Ashcroft v. Iqbal,556 U.S. 662 (2009) .........................................................................................2 Belknap Hardware & Mfg. Co. v. Ohio River Contract Co., 71 F. 144, 146 (6th Cir. 1921)…..7 4 Bell Atlantic v. Twombly,550 U.S................................................................................................2 5 6 Belknap Hardware & Mfg. Co. v. Ohio River Contract Co., 271 F. 144, 146 (6th Cir. 1921)…7 7 Castorr v. Brundage, 459 U.S. 928, 103 S.Ct.240, 74 L.Ed.2nd 189 (1982)………………….20 8 Command Transp. v. B.J.’s Wholesale Club, 864 F. Supp. 226, 230 (D. Mass. 1994)……….10 9 Crowley v. Adams, 226 Mass. 582 (1917)…………………………………………………18, 19 10 Duncan, Fox & Co. v. North and South Wales Bank, 6 App. Cas. 1 (H.L. 1834)………………7 11 Eaton v. Fed. Nat’l Mortg. Ass’n, 462 Mass. 569, 969 N.E.2d 1118 (2012)………………18, 19 12 Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 292, 294 (2005)…………20 13 GASH Assoc. v. Vill of Rosemont, 995 F.2nd 726, 728 (7th Cir. 1993)…………………………20 14 Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997)………………………………2 15 Hampton v. Phillips, 108 U.S. 260, 263 (1883)…………………………………………………7 16 In re Yale Express Sys., Inc., 362 F.2d 111, 114 (2d Cir. 1966)……………………………….10 17 Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)………………………………...3 18 Lidderdale's Executors v. Robinson's Executor, 12 Wheat. 594, 6 L. Ed. 740 (1827)………….7 19 Lona V. Citibank, N.A., Cal. App. 6th (2011)………………………………………………….21 20 Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)……………………………………...2 21 Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994)…………………………………………...2 22 National Shawmut Bk. of Boston v. New Amsterdam Cas. Co., 411 F.2d 843 (1st Cir. 1969) …6 23 Pearlman v. Reliance Insurance Company, 371 U.S. 132, 137 (1962)…………………………7 24 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 4 of 28 Page ID #:384 Table of Contents and Table of Authorities iii Scheuer v. Rhodes, 416, U.S. 232, 236 (1974)…………………………………………………2 1 Stockton, Supra, (1957) 148 Cal.App.2d At P. 564……………………………………………21 2 Sundheim v. Philadelphia School District, 311 Pa. 90, 101, 166, 365, 369-370 (Pa. 1933)……7 3 Restatements 4 Restatement (Third) Of Suretyship § 1(1) (1996)………………………………………………..5 5 Restatement (Third) Of Suretyship & Guaranty § 1(1)(B)……………………………………..10 6 Restatement (Third) Of Suretyship & Guaranty § 1(2)………………………………………….8 7 Restatement (Third) Of Suretyship §§ 18………………………………………………………..5 8 Restatement (Third) of Suretyship § 28…………………………………………………………7 9 Restatement (Third) of Suretyship & Guaranty § 58…………………………………………….7 10 Restatement of Security § 104……………………………………………………………………5 11 12 State Laws California Civil Code § 2932…………………………………………………………………...18 13 California Civil Code § 2924…………………………………………………………………...18 14 California Commercial Code § 3602……………………………………………………………18 15 Misc. 16 17 73 Am. Jur. 2nd, Subrogation S 1 (1974)………………………………………………………………..7 18 Black’s Law Dictionary 1482 (8th ed. 2004)…………………………………………………...14 19 West's Encyclopedia of American Law, edition 2. (2008)……………………………………4, 14 20 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 5 of 28 Page ID #:385 Memorandum of Points and Authorities 1 MEMORANDUM OF POINTS AND AUTHORITIES 1 I. INTRODUCTION 2 3 The Defendant’s have filed a Motions to Dismiss the Class Action Complaint (CAC) of 4 the Plaintiffs pursuant to Fed. R. Pro. 12(b)(6) arguing that Plaintiffs have failed to state a claim 5 for relief under the CACts as alleged in the CAC, and also arguing that certain Plaintiffs claims’ 6 are barred by res judicata and the Rooker-Feldman doctrine. However, as argued in this 7 Opposition, Plaintiffs’ have stated claims for relief, res judicata and Rooker-Feldman do not 8 apply and accordingly, this Court should deny all Defendant’s Motion to Dismiss. 9 The central question now before this Court is a simple one. Does a mortgagee and note 10 holder have the right to foreclose when they have received all payments due from a third party? 11 Notwithstanding that this simple question is surrounded by complex circumstances, the Trustee 12 and Servicer Defendants have endeavored to increase the complexity of the arguments in 13 support of their opposition, in an effort to obstruct the Court’s view of the forest for the trees. 14 Regardless of the contracts at issue, or the legal doctrines at hand, it is clear that 15 pursuant to well settled Law in the State of Rhode Island, a mortgagee cannot pursue non-16 judicial foreclosure without acceleration of the sums due. Further, there can be no acceleration 17 if a mortgagee has received payment every month and acceleration is not dependent on the 18 identity of who pays the mortgagee. 19 The Defendant Servicers and Trustees attempt to argue their way around these facts by 20 hiding behind their Trust Agreements and the language therein, believing that those contracts 21 somehow provide them the ability to operate with impunity simply because their wrongful 22 actions are agreed to among the parties thereto. However, the Law cannot be re-written by 23 contract, regardless of the intent of the parties therein and the rights they seek to enforce. 24 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 6 of 28 Page ID #:386 Memorandum of Points and Authorities 2 1 II. ARGUMENT 2 1. Legal Standard 3 4 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal 5 sufficiency of the claims asserted in the complaint. See Ashcroft v. Iqbal, 129 S. Ct. 6 1937, 1949-50 (2009). Rule 12(b)(6) is read in conjunction with Federal Rule of Civil 7 Procedure Rule 8(a), which requires only a short and plain statement of the claim 8 showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). When evaluating a 9 Rule 12(b)(6) motion, the district court must accept all material allegations in the 10 complaint as true and construe them in the light most favorable to the non-moving party. 11 Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994). 12 To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must allege 13 “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 14 Twombly, 550 U.S. 544, 570 (2007). “The plausibility standard is not akin to a 15 ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant 16 has acted unlawfully.” Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 556). To 17 be clear, the issue on a motion to dismiss for failure to state a claim “is not whether the 18 [claimant] will ultimately prevail, but whether the claimant is entitled to offer evidence to 19 support the claims” asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 20 1997) (quoting Scheuer v. Rhodes, 416, U.S. 232, 236 (1974). 21 Once the defendant objects to a lack of subject matter jurisdiction, plaintiff bears the 22 burden of establishing that the court has subject matter jurisdiction. Lujan v. Defenders of 23 Wildlife, 504 U.S. 555, 561 (1992). To survive a motion to dismiss under Rule 12(b)(1), 24 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 7 of 28 Page ID #:387 Memorandum of Points and Authorities 3 plaintiff must prove that the Court has jurisdiction to hear the case. Kokkonen v. Guardian Life 1 Ins. Co., 511 U.S. 375, 377 (1994) (“Federal courts are of limited jurisdiction...It is to be 2 presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the 3 contrary rests on the party asserting jurisdiction.”). 4 2. Plaintiffs’ Allegations 5 6 Plaintiffs’ plainly alleged in their CAC the identities of the Defendants that were the 7 holder of their deed of trust1 and note (underlying obligation). Plaintiffs’ further alleged that, 8 pursuant to contract2, the identified mortgage servicer Defendants’ were required to pay 9 Plaintiffs’ scheduled monthly payments of interest and principal to the identified 10 trustee/mortgagee/note holder Defendant, regardless of whether those payments are received by 11 the Servicers from the Plaintiff Borrowers. Plaintiffs’ supported their alleg tions with evidence 12 entered into the Court record as Exhibit the related pages of the prospectus supplement of the 13 mortgage backed trusts at issue, in support of Plaintiffs’ allegations that the servicers paid their 14 mortgage payments when Plaintiff Borrowers’ do not pay them. 15 Plaintiffs’ alleged that in “advancing” their monthly scheduled payments of interest and 16 principal to the trustees/mortgagees/note holders, the Servicer Defendants, took over their 17 obligation under their note as specified in their note at Section 8. 18 Plaintiffs’ alleged that no default of their note existed at the time the Defendants’ 19 foreclosed Plaintiffs’ mortgage and that such foreclosure action, was in violation of the statutes 20 governing foreclosure and Uniform Commercial Code, invalid, void, and without force and 21 effect. 22 1 The term “Mortgage” is used liberally throughout this document and is meant to also refer to Deeds of Trust when not otherwise specifically referenced. 2 pooling and servicing agreement; referred to through ut this memorandum as “PSA” or “Trust Agreements” Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 8 of 28 Page ID #:388 Memorandum of Points and Authorities 4 Pursuant to Rule 8(a)(2), Plaintiffs’ allegations are a short plain statement of the facts 1 entitling them to relief. The Court must accept Plaintiffs’ allegations as true and view them in a 2 light most favorable to the Plaintiffs. As such, the only question remaining is whether Plaintiffs’ 3 claims fail as a matter of law, and despite the Defendants’ attempt to downplay the foundation 4 of Plaintiffs’ pleadings, as discussed herein, the issues raised by Plaintiffs’ pleadings in the 5 CAC are far from settled. 6 3. Suretyship Arguments 7 8 As alleged by Plaintiffs’, all PSA’s contain “advance clauses” that contractually obligate 9 the mortgage servicer to “advance” all sums of principal and interest due on the notes, to the 10 trust (mortgagee and noteholder), regardless of whether or not those sums were received by the 11 servicer from the borrower. When a borrower fails to pay, the servicer is contractually 12 obligated to pay the borrower’s obligation to the trustee. 13 With respect to the contractual arrangements in private label securitizations regarding 14 delinquency advances, suretyships clearly arise. As defined in West's Encyclopedia of 15 American Law, edition 2. (2008), a surety is “An individual who undertakes an obligation to pay 16 a sum of money or to perform some duty or promise for another in the event that person fails t 17 act.” 18 The suretyship created by the private label PSAs arises via operation of law when not 19 otherwise specified as such in a PSA. Operation of Law is defined as “[t]he manner in which an 20 individual acquires certain rights or liabilities through no act or cooperation of hisr er own, 21 but merely by the application of the established legal rules to the particular transaction.” West's 22 Encyclopedia of American Law, edition 2 (2008). The Restatement of Suretyship clarifies the 23 position of suretyship created via operation of law as follows: 24 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 9 of 28 Page ID #:389 Memorandum of Points and Authorities 5 Transactions Giving Rise to Suretyship Status 1 (1) A "secondary obligor" has suretyship status whenever: 2 (a) one person (the "principal obligor") owes performance of a duty (the 3 "underlying obligation") to another person (the "obligee"); and 4 (b) pursuant to contract, a third person (the "secondary obligor") is subject 5 to a "secondary obligation," whereby either: 6 (1) the secondary obligor also owes performance, in whole or in part, of the duty of the 7 principal obligor to the obligee; 8 Restatement (Third) Of Suretyship § 1(1) (1996). 9 Upon analysis of the totality of the substantive rights and obligations of the parties to 10 private label PSAs, suretyship principles properly apply, notwithstanding the apparent lack of 11 any surety relationship being expressly stated among the parties therein. The servicer 12 (secondary obligor), pursuant to contract (PSA), owes performance, in whole or in part, of the 13 duty of the principal obligor (mortgagor) to the obligee (trustee). Thus, in private label PSAs, 14 therein arises a situation in which the surety relationship between the obligee 15 (trustee/mortgagee) and secondary obligor (servicer) may not be expressly stated as a 16 suretyship, but a suretyship arises by operation of law based on the contractual obligations of 17 servicer to the trustee in PSAs. 18 The secondary obligor (servicer) and principal obligor (mortgagor) have no agreement. 19 However, a surety relationship arises via Operation of Law when a third party assumes the 20 obligation of the principal obligor without novation. In such cases, if the secondary obligor is 21 called upon to perform the underlying obligation, the rights of the secondary obligor against the 22 principal obligor result from implied contract or the equitable principles of restitution and 23 subrogation. (See; Restatement of Security § 104 & cmt. f; Restatement (Third) Of Suretyship §§ 24 18 & cmt. a, 22 & cmt. a.). 25 The fundamental structure of this suretyship transaction created by a PSA is triangular: 26 on the corners one finds the trustee/obligee, the mortgagor/principal obligor, and the 27 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 10 of 28 Page ID #:390 Memorandum of Points and Authorities 6 surety/servicer/secondary obligor. The line running between the obligee and the principal 1 obligor represents the underlying contract, performance of which is primarily the responsibility 2 of the principal obligor. However, once the surety/secondary obligor performs, in whole or in 3 part, the duty of the principal obligor to the obligee, the line between the principal obligor and 4 the secondary obligor becomes clearly defined and a suretyship is created by Operation of Law 5 between them. 6 The First Circuit has recognized this principle of a surety standing in multiple shoes 7 when performing as a secondary obligor. “…the tendency is to think of the surety on Miller Act 8 payment and performance bonds as standing in the shoes only of the entity it "insures" - th 9 contractor. So long as this one-dimensional concept prevails, logic compels the surety to be 10 assessed as merely one of the contractor's creditors, and to be subject to the system of priorities 11 rationalized by the Uniform Commercial Code. But the surety in cases like this undertakes 12 duties which entitle it to step into three sets of shoes. When, on default of the contractor, i pays 13 all the bills of the job to date and completes the job, it stands in the shoes of the contractor 14 insofar as there are receivables due it; in the shoes of laborers and material men who have been 15 paid by the surety - who may have had liens; and, not least, in the shoes of the government, for 16 whom the job was completed.” National Shawmut Bk. of Boston v. New Amsterdam Cas. Co., 17 411 F.2d 843 (1st Cir. 1969). 18 While the surety servicers are not “insuring” performance of a construction contract, the 19 same logic applies here. When making delinquency advance payments to trusteeshe surety 20 servicer is standing in the shoes of the Plaintiff obligors. Once the surety does so, it i entitled to 21 stand in the shoes of the trustee obligee and “is subrogated to the rights of the obligee against 22 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 11 of 28 Page ID #:391 Memorandum of Points and Authorities 7 the principal obligor to the same extent as if that co-surety had paid the same funds to the 1 obligee.” Restatement (Third) of Suretyship & Guaranty § 58 cmt. d, (1996). 2 Further, when an obligee has obtained two obligors for performance of an obligation, 3 and the obligee accepts performance of the secondary obligor, the underlying debt is discharged 4 and along with it the original obligor from further liability, thereby preventing he possibility of 5 double recovery on the part of an obligee that enjoys the benefits of two obligors. See; 6 Restatement (Third) of Suretyship § 28 cmts. a-b. (1996). 7 Once the servicer stands in the shoes of the principal obligor and pays the obligation to 8 the trustee as obligee, they are subrogated to the rights of the obligee against the principal 9 obligor. "[A] surety who pay's the debt of another is entitled to all the rights of the person he 10 paid to enforce his right to be reimbursed." Pearlman v. Reliance Insurance Company, 371 U.S. 11 132, 137 (1962) citing Hampton v. Phillips, 108 U.S. 260, 263 (1883); Lidderdale's Executors 12 v. Robinson's Executor, 12 Wheat. 594, 6 L. Ed. 740 (1827); Duncan, Fox & Co. v. North and 13 South Wales Bank, 6 App. Cas. 1 (H.L. 1834). 14 Historically, subrogation has been described as the substitution of one person (the 15 surety) in place of another (the creditor) with respect to the others lawful claim or right. 73 Am. 16 Jur. 2nd, Subrogation S 1 (1974). See also; Ammeran v. Miller, 488 F.2nd 1285, 1298-99 (D.C. 17 Cir. 1973); Belknap Hardware & Mfg. Co. v. Ohio River Contract Co., 271 F. 144, 146 (6th Cir. 18 1921); Sundheim v. Philadelphia School District, 311 Pa. 90, 101, 166, 365, 369-370 (Pa. 19 1933). The substitution occurs when the surety discharges an obligation of the principal to the 20 creditor. The surety then acquires the lawful claims or rights of the creditor. 21 However, once establishing the rights of the parties under the legal doctrines of surety 22 and subrogation as discussed supra, two issues arise related to the Plaintiffs’ foreclosure. First, 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 12 of 28 Page ID #:392 Memorandum of Points and Authorities 8 Plaintiffs’ have alleged that it was the trustee mortgagee that foreclosed their mortgage, not the 1 servicers exercising their rights of subrogation, and to that end Plaintiffs’ foreclosure was 2 conducted unlawfully and they may bring an action to set aside their void foreclosures. 3 Second, under the statutes regarding foreclosure a default of the underlying obligation 4 must exist prior to foreclosure, and here none existed with respect to the underlying obligation, 5 due to the alleged advanced payments made by the servicers of Plaintiffs’ mortgage loan to the 6 trustee/mortgagee/note holder as pled. 7 Suretyship status should be applied to Defendants under the circumstances because 8 Trusts have recourse against servicers for Borrowers’ obligations. 9 In clarification recourse is defined as follows; 10 “An obligee has recourse against a secondary obligor with respect to an underlying 11 obligation whenever: 12 (a) the principal obligor owes performance of the underlying 13 obligation; and (b) pursuant to the secondary obligation either (i) the 14 secondary obligor has a duty to effect, in whole or in part, the 15 performance that is the subject of the underlying obligation; or (ii) the 16 obligee has recourse against the secondary obligor or its property in 17 the event of the failure of the principal obligor to perform the 18 underlying obligation; or (iii) the obligee may subsequently require 19 the secondary obligor to either purchase the underlying obligation 20 from the obligee or incur the duties described in subparagraph (i) or 21 (ii). 22 RESTATEMENT (THIRD) OF SURETYSHIP & GUARANTY § 1(2).” 23 The Restatement makes no statement or inference about a secondary obligor being liabl 24 under the underlying obligation3. Rather it quite clearly states that (a) the principal obligor 25 (Plaintiff Borrowers) owes performance of the underlying obligation. Secondly, section (b) 26 completely supports Plaintiffs’ argument that suretyship accurately applies under the 27 3 In spite of this fact, the Plaintiffs did allege tha the servicers became liable under their notes the minute they made the first advance with respect thereto. (See; CAC Id. ¶ 25). Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 13 of 28 Page ID #:393 Memorandum of Points and Authorities 9 circumstances as alleged by Plaintiffs, to wit; pursuant to the secondary obligati n (Trust 1 Agreements) either (i) the secondary obligor (Servicers) has a duty to effect, in whole or in part, 2 the performance that is the subject of the underlying obligation (i.e. pay the mortgage payment 3 when the Borrower does not pay it). Lastly, the Restatement clearly states; “(b) pursuant to the 4 secondary obligation EITHER (i) the secondary obligor has a duty to effect, in whole or in part, 5 the performance that is the subject of the underlying obligation; OR (ii) the obligee has recourse 6 against the secondary obligor...” (Emphasis Added). Considering that the pursuant to contract 7 (Trust Agreement) which requires Servicers (secondary obligors) to advance mortgage 8 payments of borrowers when those borrowers do not pay (a duty to effect in part the 9 performance that is the subject of the underlying obligation), the obligee, under the 10 circumstances related to the arguments as presented in this case, clearly has recourse, as defined 11 by Restatement authority. 12 The situation is even more pronounced in the context of the Non-Fannie Mae Trust 13 Agreements, which expressly state that the Servicer is not required to make any Delinquency 14 Advance if the Servicer determines that it would constitute a “Non-recoverable Advance,” or an 15 advance that, in the Servicer’s business judgment, would not ultimately be recoverable from late 16 collections or liquidation proceeds from the Borrower. 17 However, Plaintiffs’ alleged that their mortgage servicers did make Delinquency 18 Advance or Guaranty payments in respect to their mortgage loan, not that they might have. As 19 those allegations must be presumed true and viewed in a light most favorable to the Plaintiffs4, 20 the Court must accept that Delinquency Advances were made with respect to Plain iff 21 Borrowers’ mortgage loans. In other words, the Servicers allegedly advanced the funds, so they 22 had a duty to advance them - thereby satisfying the underlying obligation - so the Borrowers’ 23 4 Especially in light of the fact that these allegations are well supported by the Trust Agreement. Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 14 of 28 Page ID #:394 Memorandum of Points and Authorities 10 debt was not more than could be recovered by the Servicers’ collection efforts, or f om 1 foreclosure and sale of the Borrowers’ property. 2 Further, the second criterion for suretyship status is that, “to the extent that the 3 underlying obligation or the secondary obligation is performed, the obligee is not entitled to 4 performance of the other obligation.” RESTATEMENT (THIRD) OF SURETYSHIP & 5 GUARANTY § 1(1)(b); see Command Transp. v. B.J.’s Wholesale Club, 864 F. Supp. 226, 230 6 (D. Mass. 1994) (“Suretyship is the relation which exists where one person has undertaken an 7 obligation and another is also under an obligation or other duty to the obligee, who is entitled to 8 but one performance.”) (emphasis added) (quoting In re Yale Express Sys., Inc., 362 F.2d 111, 9 114 (2d Cir. 1966)). In other words, an obligee cannot recover more than once on the same 10 debt, yet that is exactly what happens when a mortgagee forecloses on a mortgage that has been 11 paid. 12 At the time of foreclosure or attempted foreclosure of Plaintiff Borrowers’ mortgage their 13 monthly mortgage obligations had allegedly been paid by their servicers. As these allegations 14 must be presumed true, upon foreclosure the Defendant Trustee/mortgagee allegedly recovered 15 more than once on the same debt. 16 4. The Trouble With Trust Agreements 17 As duly noted, Plaintiff Borrowers are not party to the Trust Agreement, so their rights 18 that cannot possibly be governed by the Trust Agreement related to their mortgage and note. In 19 fact the only effect the Trust Agreement has had on Plaintiffs’ rights is to trample on them. 20 In this case, the contract creating a suretyship is the Trust Agreement, and that 21 suretyship arises via Operation of Law. As argued infra these Agreements make clear that 22 Borrowers’ debts to the trustee, mortgagee, and note holder are discharged as a r sult of 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 15 of 28 Page ID #:395 Memorandum of Points and Authorities 11 Delinquency Advances made by the Servicers. Further, in so much as Trust Agreements 1 “allow” for foreclosure, they do not make it legal for the parties thereto to violate the Law in 2 accomplishment of that remedy, just because the contract among them agrees to do so. 3 The Defendant argues that Plaintiffs’ entire legal theory is based on a contr ctual 4 agreement to which they are strangers. However, Plaintiffs’ legal theory is not based on their 5 beneficiary status under the Trust Agreement, or a misreading of it. Delinquency Advance 6 payments are made to Trustees of mortgage backed trusts and that alleged fact is the sole 7 impetus behind Plaintiffs’ claims. 8 It matters not whether the Plaintiff Borrowers are strangers to these contracts, or third-9 party beneficiaries. The Borrowers are not challenging the contracts or their beneficiary status 10 thereunder. The Trust Agreement was entered as Exhibit only as evidence in support of 11 Plaintiffs’ allegation that Delinquency Advance payments were in fact made with respect to 12 their mortgage loan. 13 However, notwithstanding the Defendant’s mischaracterization of Plaintiffs’ intent 14 regarding their entry of the Trust Agreement in the Record, the Defendant’s argument is still 15 unavailing, as there is no benefit from the PSAs received by Plaintiffs under the ci cumstances 16 outlined in the complaint or discussed herein. 17 The Plaintiffs’ never alleged that they did not owe the debt they agreed to pay under their 18 note and mortgage. What Plaintiffs’ alleged is that the collection method (foreclosure) was 19 unlawful under the circumstances as alleged. The Defendant Mortgage Servicers as sureties had 20 alternate remedies for collection of the delinquent sums owed by obligee Plaintiffs, through 21 collection actions in the appropriate courts. However, the foreclosure conducted vicariously 22 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 16 of 28 Page ID #:396 Memorandum of Points and Authorities 12 through the Defendant Trustee mortgagee is not one of those remedies. As such, there is no 1 benefit conveyed to Plaintiffs by the PSAs. 2 Trust Agreement supports Plaintiff Borrowers’ allegations that the mortgagee holding 3 thereunder was in fact paid each month. If a mortgagee has been paid the monthly payments 4 due, it cannot legally accelerate and exercise the statutory power of sale, and acceleration of the 5 sums due is not expressly dependent on the identity of who pays said mortgagee. 6 A mortgagee can no more accelerate and move to exercise the statutory power of sal 7 contained in a mortgage after having received and accepted payment due on that mortgage from 8 a mortgagor’s uncle, cousin, or friend5, anymore then they can if a third party mortgage servicer 9 makes that same payment. The bottom line is that under the circumstances alleged in the CAC, 10 Plaintiff Borrowers’ mortgage payments were made to the mortgagees and those payments were 11 accepted as such by same. 12 5. Advances are “On Behalf” of Plaintiffs’ 13 The Defendant strains to argue that Delinquency Advances are not made on Plaintiff14 Borrowers’ behalf6, preferring to surmise that Delinquency Advances are specifically designed 15 only to maintain a continuous flow of the pro-rata share of the scheduled interest and principal 16 due and payable on the mortgages and notes held by the Trust to each bond/certificate holder. In 17 essence, the Defendant’s argue that Delinquency Advance payments aren’t payments of 18 borrowers’ monthly scheduled interest and principal at all, yet the Defendant Trustee distributes 19 them to bond/certificate holders as such, thereby maintaining the “continuous flow” o the 20 scheduled interest and principal due and payable on the mortgages and notes held by the trust. 21 5 Mortgagees routinely accept payment from third parties such as family members or friends of borrowers. 6 Interestingly enough, the Defendants never offer any explanation of on whose behalf Delinquency Advances are being paid. Delinquency Advance and GSE Guaranty payments can only be made on Plaintiff Borrowers’ behalf, as those payments cannot possibly be made on anyone else’s behalf; there are no other parties to the mortgages and notes, which are being paid, on whose behalf such payments could have been paid. Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 17 of 28 Page ID #:397 Memorandum of Points and Authorities 13 This of course begs the question; How can you distribute the continuous flow of 1 scheduled interest and principal due to the bond/certificate holders, when you didn’t actually2 receive the scheduled interest and principal payments? The answer is; You cann t. 3 This sleight of hand has been perpetuated by the mortgage securities industry for decades 4 as a way to ensure that mortgage back securities are desirable as investme ts, by designing a 5 mechanism that virtually renders the assets of a mortgage backed trust quite li erally default 6 proof on a monthly basis, thus producing a marketable security that is virtually granteed to 7 pay off for investors each and every month. 8 The Defendant Trustee, in obvious attempt to have their cake and eat it too, is now 9 confronted with the fact that they can’t have it both ways. Either they received and accepted 10 payment of the scheduled interest and principal due from so eone, thus enabling them to make 11 said distributions to the bond/certificate holders, or they did not. 12 In order to pay investors their monthly share of scheduled monthly payments of interest 13 and principal received, those scheduled monthly payments of principal and interest must be 14 paid, or you cannot pay them to investors. The Trustee cannot distribute monthly payments 15 received to bond/certificate holders and now claim here that those payments were nev r made. 16 Advances are payment to the mortgagee of the mortgagor’s monthly mortgage obligation, plain 17 and simple. 18 Additionally, Delinquency Advance payments could not have been made on behalf of 19 any other persons or entities, other than Plaintiff Borrowers’. The note is a contrct between the 20 Plaintiff Borrowers and the noteholder, and there are no other parties to the note. The concept of 21 the promissory note is but a simple one. One party pays (obligor), one party receives th 22 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 18 of 28 Page ID #:398 Memorandum of Points and Authorities 14 payment (obligee) and they are the only parties in the controlling contract that is at issue under 1 the circumstance as described herein. 2 By acting as sureties when making these payments, the Servicers are undertaki g the 3 obligation to pay a sum of money or to perform some duty or promise for another in the event 4 that person fails to act. (See; Definition of Surety, West’s Encyclopedia of Law, supra). 5 According to Black’s Law Dictionary, a “surety” is defined as “[a] person who is primarily 6 liable for the payment of another’s debt or the performance of another’s obligation.” Black’s 7 Law Dictionary 1482 (8th ed. 2004). By creating the contractual obligations outlined in the 8 PSAs, relevant to the discussion herein, the Servicers made themselves liable for the payment of 9 another’s debt and the performance of another’s obligation, as sureties. 10 Given the simplistic nature of the structure of a mortgage promissory note, it is clear that 11 the only “payment of another’s debt” or “performance of another’s obligation” that could have 12 possibly been undertaken by the Servicers in the scenario at issue would be that of the obligors 13 on the mortgage promissory notes; the Plaintiff Borrowers. As discussed supra, the Servicers, as 14 sureties stand in the shoes of the mortgagors and make the mortgagors’ payment to the 15 mortgagee trustee, and due to the suretyship that arises by Operation of Law, as outlined supra, 16 between the mortgagors, Servicers, and those payments can only be construed as being made 17 “on behalf” of Plaintiff mortgagors. 18 Moreover, the notes themselves provide clear and unambiguous language regarding the 19 issue of potential third party payments made thereunder. As duly noted in the CAC, Plaintiffs’ 20 aptly alleged that standard uniform mortgage promissory notes all state that “any person who 21 takes over these obligations, including the obligations of a guarantor, suretyor endorser of this 22 note, is also obligated to keep all of the promises made in this note.” (Emphasis Added)23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 19 of 28 Page ID #:399 Memorandum of Points and Authorities 15 Fannie Mae’s world renowned unconditional guaranty to their trusts makes for excellent 1 example of this concept. Fannie Mae, as guarantor, promises to pay to the trusts they created, 2 the monthly payments of borrowers who do not pay, if the servicer of those mortgages is not 3 required to (or does not) pay those payments according to their Direct Servicing Contracts. (Id. 4 FNMA Mast. Trust Agree., Art. VII sec. 7.5). As stated in Fannie Mae’s Master Trust 5 Agreement, when making this guaranty, Fannie Mae is acting in its capacity as guarantor. (Id. 6 FNMA Mast. Trust Agree., “Recitals” E,). When making these payments, Fannie Mae is taking 7 over the obligations of the note, including the obligations of a guarantor. This fact cannot be 8 construed in any other way. In doing so they take over the obligations of the notes, make 9 borrowers’ payments on borrowers’ behalf, and they are now obligated to do so under the 10 express terms of the notes. 11 The payments made by the Defendant Servicers as sureties, derives from “an bligation 12 to pay” the note, as clearly stated in the express terms of the note. Pursuant to their PSA 13 contractual obligations, Servicers’ have “an obligation to pay”, “on behalf” of the only other 14 party (obligor) to the controlling contract (note), and in doing so take over the obligations of the 15 note as surety, and are now obligated to keep all the promises made in the note, pursuantto the 16 clear and unambiguous terms of the note. 17 Defendants’ argue that Advances do not extinguish the monthly obligation of the Plaintiff 18 Borrowers because the Servicers’ intent is only to maintain those cash flows to the 19 bond/certificate holders. However, on closer examination, via the cycle of payments to Trustee, 20 and distribution of those payments by the Trustee to bond/certificate holders, the montly 21 obligation owed under the mortgage and note can only be characterized as extinguished as to 22 the trustee mortgagee. 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 20 of 28 Page ID #:400 Memorandum of Points and Authorities 16 The Servicers’ only “intent” when making Advances is to merely fulfill their contractual 1 obligation to do so. The contract states that these “advances” are intended to maintain a 2 continuous cash flow to bond/certificate holders each month. In other words, Servicers’ are 3 intending that when they pay Delinquency Advances that the bond certificate holders wi l be 4 paid their pro-rata share of the scheduled interest and principal due and payable on the 5 mortgages and notes. As just discussed above, the trustee cannot pay to bond/certificate holders 6 the “payments” of scheduled interest and principal due and payable on the mortgages and notes, 7 if the trustee didn’t receive them. The Servicer “intends” to pay the mortgage payments of 8 Plaintiff Borrowers’ so that the bond/certificate holders can get paid their s are of the scheduled 9 payments of interest and principal due each month. 10 Once bond/certificate holders are paid their monthly pro-rata shares of the scheduled 11 payments of interest and principal due on the mortgage loans held by a trust, the trustee cannot 12 and does not later recover those distributed payments directly from the bond/certificat holders, 13 and in turn repay the advancing servicer or guarantor monies they advanced. Once those 14 payments are made they are final, and on a monthly basis those payments act to constructively 15 extinguish any monthly obligation owed under the mortgage and note to the holder of those 16 instruments; the trustee mortgagee and note holder. 17 However, this does not mean that Borrowers’ are beholden to no one. They still owed the 18 debt they promised to pay. It is who they owed the debt to after it has been paid to the 19 mortgagee and note holder that is the defining point of Plaintiffs’ claim. Once the monthly 20 mortgage payment was made to, and accepted by, the mortgagee and note holder, the mortgag e 21 had no legal right to foreclose. The funds advanced for the Borrower’s monthly mortgage 22 payment were owed to the party that advanced them. Legally, that party, be it uncl, cousin, 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 21 of 28 Page ID #:401 Memorandum of Points and Authorities 17 friend, servicer or guarantor, can only recover that money through an action in the appropriate 1 venue, and by statute is precluded from foreclosure as a legal remedy regardless of any deal that 2 has been struck between the “advancing” party and the mortgagee. 3 The advancing servicer cannot legally recover those funds advanced through foreclosure, 4 any more than a third party uncle, cousin or friend that “advanced” payments to pay a 5 borrower’s mortgage could. Such an action can only lie in equity, as clearly, foreclosure would 6 be precluded. It is only through the legally flawed mechanism of the trustee/mortgagee taking 7 foreclosure action, then liquidating the security (Plaintiff Borrowers’ real property), does the 8 payment advancing surety servicer recover its monies from the liquidation proceeds. By design, 9 the only way for the entire flawed system to work is through wrongful foreclosure. 10 Further, the “unambiguous” language of the Trust Agreement does little to support 11 Defendant’s contention that their actions are legal simply because their Trust Agreement 12 “expressly provide for remedy against defaulting borrowers.” The Defendant would have this 13 Court believe that statutes can somehow be summarily re-written, indeed overruled, by the 14 language of their Trust Agreement. However, regardless of such hubris, two parties c nnot 15 violate the law just because the contract between them states that they agree to do so. Contrary 16 to their argument, a statute cannot be rewritten by contract. Regardless of how Trust 17 Agreements might satisfy the whims of the parties thereto, any part (or parts) therein that 18 violates the Law, violates the Law, irrespective of the intent of the parties nd the rights therein 19 they seek to enforce. 20 Trustee mortgagees and note holders have every right to foreclose, should they not 21 receive payment. Under common law and statute, the Trust may foreclose in the event of a 22 default of the monthly obligation owed to them as mortgagee and note holder. However, under 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 22 of 28 Page ID #:402 Memorandum of Points and Authorities 18 the circumstances as alleged, they foreclosed, when no default to them existed, and therein lays 1 the controversy, which ought to be tested on the merits. 2 With payments made by the surety mortgage servicers under their contractual 3 obligations with the trustee, the note, the underlying obligation, was not in default. Under the 4 doctrines of surety and subrogation, and the Uniform Commercial Code, the obligation owed to 5 the trustee/mortgagee/note holder is discharged. With no default of the underlying obligation, a 6 mortgagee cannot exercise the statutory power of sale; there can be no acceleration, and no 7 foreclosure. “…a mortgagee has no authority to foreclose if the underlying mort age debt has 8 been paid. This proposition clearly is true…” Eaton v. Fed. Nat’l Mortg. Ass’n, 462 Mass. 569, 9 969 N.E.2d 1118 (2012), See also; Crowley v. Adams, 226 Mass. 582 (1917). In foreclosing 10 when the underlying obligation was discharged, the trustees lacked the authority to frecl se 11 and violated California Commercial Code § 3602, and California Civil Code § 2932 and 12 2924(c) et seq. 13 Payments are payments, whether by the mortgagor, or the surety, or the guarantors, and 14 merely re-labeling them as “advances” does not change this fact. California law does not allow 15 a default and a foreclosure when monthly payments are made with respect to a mortgage and 16 note. The notion of the servicers that they should be repaid by the mortgagors on the theory on 17 an unjust enrichment only means that those entities may test those theories in separate tort 18 actions. California only allows a right to foreclosure when there is not payment to the 19 mortgagee or its successors, the Trustee, who under the circumstances as alleged h s been paid 20 by a surety. The payments by the surety meant that there was no violation of the statutory 21 condition, and that the note otherwise had been paid. 22 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 23 of 28 Page ID #:403 Memorandum of Points and Authorities 19 Plaintiffs’ have pled that both their note and mortgage was sold, assigned, and transferred 1 to a private label trust. Further Plaintiffs’ have pled that either the Defendant Trustee, as 2 mortgagee and note holder, or their mortgage Servicers acting as nominees, on behalf of the 3 Trustee, foreclosed Plaintiffs’ mortgage. Servicers were not acting as sureties standing in the 4 shoes of the entity entitled to payment when they foreclosed. As alleged, only the enti y allowed 5 to foreclose under California Law, conducted the foreclosure of Plaintiffs’ mortgage; the 6 Trustee mortgagee, note holder and/or their nominee acting in an administrative capacity, on 7 their behalf, conducted the foreclosure. 8 However, the Trustee, and/or their nominees acting on their behalf, lacked the authority 9 to foreclose because the underlying obligation was paid. (See; Eaton, Crowley supra). and to 10 this end an action may be brought to set aside a void foreclosure. 11 6. Plausibility 12 The notion that if Plaintiffs’ theory were accepted by the Court, everyone wuld get free 13 homes is wholly misplaced. Additionally, nothing could be further from the truth. If Plaintiffs’ 14 legal theory were to prevail, all that will happen is that Trustee mortgagees nd note holders 15 will have to obey the laws governing foreclosure in order to foreclose. As noted by the 16 Defendant, the Servicers did not have to make Delinquency Advances if they believed th m to 17 be non-recoverable. If Servicers are no longer able to recover them through the flawed and 18 illegal method as designed by Trust Agreements, they would no doubt cease to make those 19 Delinquency Advances. Accordingly, if the Trustee, mortgagee, and note holder does not 20 receive the scheduled monthly payments of interest and principal due, a true default of the 21 obligation would exist and the mortgagee may legally accelerate the sums due, exercise th 22 statutory power of sale, and proceed to foreclose. No one would get a free home. 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 24 of 28 Page ID #:404 Memorandum of Points and Authorities 20 7. Res Judicata and Judicial Estoppel Issues 1 “We do not hold that the application of the principles of res judicata and collateral 2 estoppel is mandatory in every case. They are an expression of the policy of federal courts 3 preferring finality, i.e., that litigation at some time must become final. I the face of more 4 important federal policies, however, the preference for finality might be outweighed by more 5 compelling considerations.” Castorr v. Brundage, 459 U.S. 928, 103 S.Ct.240, 74 L.Ed.2nd 189 6 (1982). 7 Clearly, in the instant action there exist circumstances where the preferenc for finality 8 is outweighed by more compelling considerations. Plaintiffs’ have alleged in the CAC that the 9 Defendants’ have illegally foreclosed on their home and there are few injuries a litigant can 10 suffer more damaging. 11 Further, in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 292, 294 12 (2005), the Court held that America’s dual system of courts allows for parallel st te and federal 13 litigation, and Rooker-Feldman, does not support the notion “that properly invoked concurrent 14 jurisdiction vanishes” if a state court reaches judgment on the same or related question while the 15 federal suit remains under consideration. Further the Court held that even if a party attempts to 16 litigate in federal court a matter previously litigated in state court, if the federal plaintiff 17 presents some independent claim. “albeit one that denies a legal conclusion that a state court has 18 reached in a case to which he was a party”, then the federal court has jurisdiction. (Id. quoting 19 GASH Assoc. v. Vill of Rosemont, 995 F.2nd 726, 728 (7th Cir. 1993)). 20 Additionally, judicial estoppel should not apply to the Plaintiffs herein as the complaint 21 merely seeks an equitable remedy, and declaratory judgment that the foreclosu of their 22 property was in violation of California Law. There would be no more economic benefit to 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 25 of 28 Page ID #:405 Memorandum of Points and Authorities 21 Plaintiffs’ should they prevail in this Action than they would have had when they made the 1 purported statements in their bankruptcy filings. As such, this Action should not be considered a 2 contingent asset which Plaintiffs failed to disclose in their bankruptcies. 3 8. The Tender Rule 4 The Defendant’s further argue that Plaintiffs’ claims fail because they have not satisfied 5 the “tender rule” in seeking to set aside their foreclosures. There are, however, exceptions to the 6 tender requirement. 7 In Lona v. Citibank, N.A., cal. App. 6th (2011); “first, if the borrower's action attacks the 8 validity of the underlying debt, a tender is not required since it would constitute an affirmation 9 of the debt. (Stockton, supra, (1957) 148 cal.app.2d at p. 564). 10 Here Plaintiffs’ plainly attack the validity of the underlying debt, in that they all ge the 11 default of their note did not exist at the time foreclosure was enacted and no such defa lte 12 amount was due on their note thereunder. As satisfying the tender rule here would only serve to 13 be an affirmation of the debt owed to the Trustee mortgagee by Plaintiffs, tenderhere is not 14 required 15 III. SUMMARY & CONCLUSION 16 Simply put, if my uncle pays my monthly mortgage payment to the mortgagee and note 17 holder and I don’t pay him back, my uncle cannot foreclose my mortgage. That right is only 18 afforded the mortgagee/note holder and he cannot foreclose because he was paid. If my uncle 19 makes a deal with the mortgagee to recover the money he “advanced” for my mortgage payment 20 to the mortgagee by having the mortgagee foreclose my mortgage, liquidate my property, and 21 pay back my uncle from the proceeds, having that deal in writing does not make that foreclosure 22 legal. 23 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 26 of 28 Page ID #:406 Memorandum of Points and Authorities 22 Plaintiffs’ allegations in the CAC provide enough facts to allow the Defendants’ notice 1 of their claims so as to enable them to defend. Plaintiffs’ well pled allegations, are plausible and 2 supported by evidence. Plaintiffs’ have gone far beyond threadbare allegations herein and in the 3 CAC, giving Defendants more than fair notice of the claims. Regardless of Defendant’s 4 mischaracterizations, the legality of the alleged foreclosure action agai st Plaintiffs, under the 5 circumstances as alleged in the CAC, is an issue in controversy that ought to be tesed on the 6 merits. 7 WHEREFORE, for the reasons as stated in their Memorandum in Opposition herein, the 8 Plaintiffs respectfully request this Honorable Court deny the Motions to Dismiss of the 9 Defendant. 10 11 Dated March 7, 2014 12 Respectfully Submitted, 13 _/s/ Khinh V. Yam_ __________ Khinh V. Yam, Esq. 14 1511 E. Anaheim Street #6 Long Beach, CA 90813 15 Telephone: 562-443-4360 Facsimile: 562-599-2259 16 lawpro3370@yahoo.com 17 _/s/ Todd S. Dion_ __________ Todd S. Dion, Esq. (pro hac to be filed) 18 1319 Cranston Street Cranston, RI 02920 19 Telephone: 401-942-9924 Facsimile: 401-942-9925 20 toddsdion@msn.com Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 27 of 28 Page ID #:407 Memorandum of Points and Authorities 23 CERTIFICATE OF SERVICE 1 I, the undersigned, certify and declare that I am over the age of 18 years, employed in the 2 County of Los Angeles, State of California, and not a party to the above-entitled cause. On 3 March 7, 2014, I electronically filed the above document(s) using the CM/ECF system. I 4 certify that all participants in the case are registered CM/ECF usersand will be served by the 5 CM/ECF system. I declare under penalty of perjury that the forgoing statements are true and 6 correct. 7 8 Executed on March 7, 2014, at Long Beach, California. 9 _/s/ Khinh V. Yam_ __________ 10 Khinh V. Yam, Esq. 11 12 Case 2:14-cv-00621-DOC-RNB Document 13 Filed 03/07/14 Page 28 of 28 Page ID #:408