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Rolly Pugal, An Individual v. Asc (America's Servicing Company); Fremont Investment and Loan

September 21, 2011


The opinion of the court was delivered by: Susan Oki Mollway Chief United States District Judge




On January 21, 2011, pro se Plaintiffs Rolly and Mary Ann Pugal filed this action against Defendants America's Servicing Company, Fremont Investment and Loan, Maui Mortgage Express, Inc., and Mortgage Electronic Registration Systems ("MERS"). The Pugals assert federal and state law claims arising from a September 10, 2005, mortgage transaction concerning real property on the island of Maui.

The Pugals used a "form" complaint that this court is very familiar with. At the hearing on the motion, Rolly Pugal indicated that he and his wife paid Francha Services, LLC, and/or Richard W. Guidotti $4,000 for the Complaint and a "forensic audit" of their loan attached to the Complaint. These documents appear to have been prepared by Francha and/or Guidotti for the Pugals to file with this court on a pro se basis. The complaint is nearly identical to many other complaints that appear to have been prepared by Francha that have been dismissed by this court. The Complaint seeks declaratory and injunctive relief, as well as damages and rescission of the mortgage transaction. MERS seeks dismissal of all counts against it.*fn1

For the reasons set forth in this order, the court GRANTS MERS's motion and dismisses the Complaint with leave to amend as to certain counts as set forth in this order. Given obvious pleading defects applicable to all other Defendants, as well as Rolly Pugal's stated acquiescence at the hearing with respect to the untimeliness of some claims, the court also sua sponte dismisses all claims against nonmoving Defendants.


On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Marcus v. Holder, 574 F.3d 1182, 1184 (9th Cir. 2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 554).

Dismissal under Rule 12(b)(6) may be based on either:

(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984)).


The court assumes the Complaint's factual allegations are true for purposes of this motion. See, e.g., Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.1 (9th Cir. 2003).

According to the Complaint, the Pugals entered into a loan repayment and security agreement with Maui Mortgage Express, Inc., "on or about September 10, 2005." See Complaint ¶ 2, ECF No. 1, Jan. 21, 2011. Plaintiffs allege that they obtained a 30-year loan of $571,500 with a fixed mortgage rate of 6.75%. Id. It appears that Fremont Investment and Loan serviced the loan. See id. ¶ 20. MERS is alleged to be the "beneficiary for the loan." Id. ¶ 113. The Complaint alleges that "MERS was created to eliminate the need for the executing and recording of assignment of mortgages, with the idea that MERS would be the mortgagee of record." Id. This allegation is basically consistent with the Ninth Circuit's recent explanation of how MERS operates. See Cervantes v. Countrywide Home Loans, __ F.3d __, 2011 WL 3911031 (9th Cir. Sept. 7, 2011). For purposes of this motion, the court does not rely on the facts set forth in Cervantes, but simply notes the existence of the opinion to provide general background.

The Pugals assert, among other things, that (1) the terms of the transaction were not clear and Defendants never explained the transaction to them, id. ¶ 29; (2) the loan was more expensive than alternative financing arrangements they qualified for, id. ¶ 22; and (3) Defendants charged excessive or illegal fees. Id. ¶ 31.*fn2 The Complaint asserts twelve separate counts: (1) Declaratory Relief; (2) Injunctive Relief; (3) Contractual Breach of Implied Covenant of Good Faith and Fair Dealing; (4) Violations of the Truth in Lending Act ("TILA"); (5) Violations of the Real Estate Settlement Practices Act ("RESPA"); (6) Rescission; (7) Unfair and Deceptive Acts and Practices ("UDAP"); (8) Breach of Fiduciary Duty; (9) Unconscionability; (10) Predatory Lending; (11) Quiet Title; and (12) Lack of Standing (MERS).*fn3

On July 11, 2011, MERS filed the present Motion, seeking dismissal of all counts. See ECF No. 18. The Pugals did not file an Opposition to the motion, but were given a chance to oppose the motion orally at the hearing held on September 14, 2011. At that hearing, Rolly Pugal acquiesced in the present dismissal. For the reasons set forth below, the court grants the motion.


The Pugals have submitted a "form" Complaint that

asserts claims that are nearly identical to claims asserted in many other cases filed in this court. The Complaint attaches a "Forensic Audit Report" by Francha Services, LLC. This court notes that it has addressed the same claims on many occasions, although there are also numerous other cases based on "form" complaints that this court has not yet addressed in orders. See, e.g., Caniadido v. MortgageIT, LLC, 2011 WL 3837265 (D. Haw. Aug. 26, 2011); Ramos v. Chase Home Fin., 2011 WL 3793346 (D. Haw. Aug. 25, 2011); Gambing v. OneWest Bank, 2011 WL 2940318 (D. Haw. July 18, 2011); Kelly v. Bank of Am., 2011 WL 2493048 (D. Haw. June 22, 2011); Campollo v. Bank of Am., 2011 WL 2457674 (D. Haw. June 16, 2011); Balagso v. Aurora Loan Servs., LLC, 2011 WL 2133709 (D. Haw. May 26, 2011); Casino v. Bank of Am., 2011 WL 1704100 (D. Haw. May 4, 2011); Asao v. Citi Mortgage, Civ. No. 10-00553 SOM/KSC, ECF No. 50 (D. Haw. Apr. 28, 2011); Badua v. Fremont Inv. & Loan, Civ. No. 10-00580 DAE/BMK, ECF No. 45 (D. Haw. Apr. 20, 2011); Hoilien v. Bank of Am., Civ. No. 10-00712 JMS/BMK, 2011 WL 976699 (D. Haw. Mar. 17, 2011); Marzan v. Bank of Am., 2011 WL 915574 (D. Haw. Mar. 10, 2011); Sakugawa v. Countrywide Bank F.S.B., 2011 WL 572528 (D. Haw. Feb. 14, 2011); Gorospe v. Security Natl. Mortgage, 2011 WL 578844 (D. Haw. Feb. 8, 2011); Mier v. Lordsman Inc., Civ. No. 10-00584 JMS-KSC, 2011 WL 285862 (D. Haw. Jan. 27, 2011); Phillips et al. v. Bank of Am., 2011 WL 240813 (D. Haw. Jan. 21, 2011); Sakugawa v. Indymac Bank, FSB, Civ. No. 10-00504 JMS/LEK, ECF No. 15 (D. Haw. Nov. 24, 2010). The court draws extensively from those orders.

A. Counts I and II (Declaratory and Injunctive Relief).

MERS contends that Count I (Declaratory Relief) and Count II (Injunctive Relief), as pled, fail to state claims upon which relief can be granted. The court agrees.

Count I appears to seek relief under the Declaratory Judgment Act, 28 U.S.C. § 2201.*fn4 Count I alleges that "[a]n actual controversy has arisen and now exists between Plaintiffs and Defendants regarding their respective rights and duties, in that Plaintiffs contend[] that Defendants did not have the right to foreclose on the Subject Property[.]" Complaint ¶ 43. The Pugals ask the court to declare that "the purported power of sale contained in the Loan [is] of no force and effect at this time" because of "numerous violations of State and Federal laws designed to protect borrowers[.]" Id. ¶ 44. The Pugals say, "As a result of Defendants' actions, Plaintiffs have suffered damages . . . and seek[] declaratory relief that Defendants' purported power of sale is void and has no force or effect[.]" Id. ¶ 45.

MERS seeks dismissal of the declaratory relief claim asserted in Count 1, arguing that the respective statutes of limitations for the state and federal laws on which the claim is based have run. As discussed below with respect to the substantive counts, this court agrees that the applicable statutes of limitations have run. However, the court dismisses the declaratory relief claim on a more fundamental level because, as alleged in the Complaint, it is not cognizable as an independent cause of action. See Seattle Audubon Soc. v. Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996) ("A declaratory judgment offers a means by which rights and obligations may be adjudicated in cases brought by any interested party involving an actual controversy that has not reached a stage at which either party may seek a coercive remedy and in cases where a party who could sue for coercive relief has not yet done so." (citation and quotation signals omitted)). Because the Pugals' declaratory relief claim is based on allegations regarding Defendants' past wrongs, their claim under the Declaratory Relief Act is improper and essentially duplicates their other causes of action. See, e.g., Ballard v. Chase Bank USA, NA, 2010 WL 5114952, at *8 (S.D. Cal. Dec. 9, 2010) ("A claim for declaratory relief 'rises or falls with [the] other claims.'") (citation omitted); Ruiz v. Mortg. Elec. Registration Sys., Inc., 2009 WL 2390824, at *6 (E.D. Cal. Aug. 3, 2009) (dismissing claim for declaratory judgment when foreclosure had already occurred and the plaintiff was seeking "to redress past wrongs"); Edejer v. DHI Mortg. Co., 2009 WL 1684714, at *11 (N.D. Cal. June 12, 2009) ("Plaintiff's declaratory relief cause of action fails because she seeks to redress past wrongs rather than a declaration as to future rights."); Mangindin v. Washington Mut. Bank, 637 F. Supp. 2d 700, 707 (N.D. Cal. 2009) ("A claim for declaratory relief is unnecessary where an adequate remedy exists under some other cause of action.").

With respect to Count II, the court agrees with MERS that a claim for "injunctive relief" standing alone is not a cause of action. See, e.g., Jensen v. Quality Loan Serv. Corp., 702 F. Supp. 2d 1183, 1201 (E.D. Cal. 2010) ("A request for injunctive relief by itself does not state a cause of action"); Henke v. Arco Midcon, L.L.C., 2010 WL 4513301, at *6 (E.D. Mo. Nov. 2, 2010) ("Injunctive relief, however, is a remedy, not an independent cause of action."); Plan Pros, Inc. v. Zych, 2009 WL 928867, at *2 (D. Neb. Mar. 31, 2009) ("no independent cause of action for injunction exists"); Motley v. Homecomings Fin., LLC, 557 F. Supp. 2d 1005, 1014 (D. Minn. 2008) (same). Injunctive relief may be available if the Pugals are entitled to such a remedy on an independent cause of action.

Accordingly, the court DISMISSES Counts I and II without leave to amend. If the Pugals eventually prevail on an independent claim, the court will necessarily render a judgment setting forth (i.e., "declaring") as much and providing appropriate remedies. Similarly, if injunctive relief is proper, it will be because the Pugals have prevailed (or have met the necessary test for such relief under Rule 65 of the Federal Rules of Civil Procedure) on an independent cause of action. Although only MERS has moved to dismiss, the dismissal of Counts I and II is as to all Defendants because the Pugals cannot prevail on Count I or II as to any Defendant. See Omar v. Sea-Land Serv. Inc., 813 F.2d 986, 991 (9th Cir. 1987) (stating that a "trial court may dismiss a claim sua sponte under Fed. R. Civ. P. 12(b)(6). . . . Such a dismissal may be made without notice where the claimant cannot possibly win relief.").

B. Count III (Covenant of Good Faith and Fair Dealing).

Count III asserts a claim for "Contractual Breach of Implied Covenant of Good Faith and Fair Dealing." The Pugals allege that every contract imposes a duty of good faith and fair dealing "in its performance and its enforcement," Complaint ΒΆ 56, and that Defendants "willfully breached their implied covenant of good faith and fair dealing" by engaging in the acts alleged in the Complaint (such as withholding disclosures or ...

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