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Fields v. Nationstar Mortgage LLC

United States District Court, D. Hawaii

July 28, 2016

JANEECE FIELDS, Plaintiff,
v.
NATIONSTAR MORTGAGE LLC; CHARTER CAPITAL CORPORATION; AURORA LOAN SERVICING LLC; AURORA BANK; STRUCTURED ASSETS SECURITIES CORPORATION, aka SASCO; CITIBANK N.A. AS TRUSTEE FOR THE SASCO MORTGAGE PASS-THROUGH CERTIFICATES 2005-17 POOL GROUP 4; LEHMAN BROTHERS HOLDINGS INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, aka MERS; MERSCORP HOLDINGS, INC.; and DOE ENTITIES 1-5O, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MERS DEFENDANTS’ MOTION TO DISMISS [ECF NO. 83] PLAINTIFF’S FIRST AMENDED COMPLAINT FOR FRAUD & MISREPRESENTATION, FILED SEPTEMBER 28, 2015

          Leslie E. Kobayashi United States District Judge

         On April 20, 2016, Defendants Mortgage Electronic Registration Systems, Inc. (“MERS”) and MERSCORP Holdings, Inc. (“MERSCORP, ” collectively “MERS Defendants”)[1] filed their Motion to Dismiss [ECF No. 83] Plaintiff’s First Amended Complaint for Fraud & Misrepresentation, Filed September 28, 2015 (“Motion”). [Dkt. no. 157.] Pro se Plaintiff Janeece Fields (“Plaintiff”) filed her memorandum in opposition on May 16, 2016, and the MERS Defendants filed their reply on May 23, 2016. [Dkt. nos. 161, 162.] On May 27, 2016, Plaintiff filed a surreply, with a supporting affidavit. [Dkt. nos. 163-64.] On June 1, 2016, this Court issued an entering order finding the Motion suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai'i (“Local Rules”). [Dkt. no. 167.] After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, the MERS Defendants’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

         BACKGROUND

         Plaintiff filed her original Complaint on January 15, 2015. [Dkt. no. 1.] The MERS Defendants were among the defendants named in the Complaint. [Complaint at ¶¶ IX-X.] There is no indication in the record that Plaintiff served the Complaint on the MERS Defendants.

         Plaintiff filed her First Amended Complaint for Fraud & Misrepresentation (“Amended Complaint”) on September 28, 2015. [Dkt. no. 83.] The MERS Defendants are among the defendants named in the Amended Complaint. [Amended Complaint at ¶¶ IX-X.[2]

         The case arises from Plaintiff’s refinance loan from Defendant Charter Capital Corporation (“Charter Capital”).[3]Plaintiff alleges that Charter Capital verbally offered her certain loan terms in August 2005, but the actual terms of the loan “were misrepresented and . . . documents were fabricated and falsified.” [Id. at ¶ XI.] According to the Amended Complaint, Plaintiff discovered in January 2011 that the recorded documents did not include the terms that she agreed to. Plaintiff alleges that a “bait and switch” occurred, and she denies agreeing to/signing either the mortgage in favor of Charter Capital (“Mortgage”) or the promissory note the Mortgage secures (“Note”).[4] [Id. at pp. 3-4.]

         In addition to the allegations regarding the origination of the refinance loan, Plaintiff challenges the assignment of the Mortgage from Charter Capital to Defendant Nationstar Mortgage LLC (“Nationstar”).[5] She “denies signing or receiving any Notice of Assignment, Sale or Transfer of Servicing Rights or any notice of transfer or sale and asserts that these documents, as well as the Assignment of Mortgage from Charter to Nationstar [(“Nationstar Assignment”)], are fabricated, falsified and invalid.”[6] [Id. at p.4.] Plaintiff alleges that, because the Nationstar Assignment is invalid, the foreclosure proceeding that Nationstar filed against her in state court (“Foreclosure Action”) was wrongful. [Id.]

         On March 10, 2016, this Court issued an Order to Show Cause (“OSC”) directing Plaintiff to show cause why her claims in the Amended Complaint against Defendants Aurora Loan Servicing LLC (“Aurora Servicing”); Aurora Bank; Structured Assets Securities Corporation, also known as SASCO (“SASCO”); Lehman Brothers Holdings Inc.; MERS; and MERSCORP (collectively “the Unserved Defendants”) should not be dismissed for failure to make timely service.[7] [Dkt. no. 148.] On April 7, 2016, Plaintiff filed a Proof of Service for MERSCORP and one for MERS. [Dkt. no. 153, 154.]

         After Plaintiff and the MERS Defendants filed their responses to the OSC, [dkt. nos. 149, 155, ] this Court issued an order that dismissed Plaintiff’s claims in the Amended Complaint against Aurora Servicing, Aurora Bank, SASCO, and Lehman Brothers without prejudice. [Order Regarding Responses to March 10, 2016 Order to Show Cause, filed 4/18/16 (dkt. no. 156) (“OSC Order”).] The OSC Order directed the MERS Defendants to either answer the Amended Complaint or file the appropriate motion because this Court found that the arguments which the MERS Defendants raised in their response to the OSC should be addressed through motions practice. [OSC Order at 3-4.] On April 21, 2016, after this Court issued the OSC Order, Plaintiff filed an affidavit in support of her response the OSC (“Plaintiff OSC Affidavit”). [Dkt. no. 160.]

         In the instant Motion, the MERS Defendants point out that Plaintiff defaulted on her loan in December 2013, and Nationstar commenced the Foreclosure Action on February 25, 2014. [Amended Complaint, Exh. 1 (Verified Complaint for Foreclosure (“Foreclosure Complaint”)) at ¶ 10.] In October 2014, Nationstar moved for summary judgment in the Foreclosure Action and an interlocutory decree of foreclosure and, on December 19, 2014, Plaintiff filed objections to that motion, as well as a counterclaim and cross-complaint against Nationstar, alleging the same claims that she alleged in the original Complaint in the instant case. [Motion, Exh. D (Foreclosure Action docket sheet); Mem. in Supp. of Motion at 3.] Plaintiff attempted to remove the Foreclosure Action to this district court, [CV 15-00020 LEK-BMK, Notice of Removal of Action, filed 1/21/15 (dkt. no. 2), ] but this Court ultimately granted Nationstar’s motion to remand. [Id., dkt. nos. 9 (motion to remand), 22 (order granting).]

         Plaintiff and her husband, Frank Lamonte Webb, executed a Warranty Deed, dated March 5, 2015, conveying the property to Michael Edmund Drzymkowski and Annemarie (NMN) Drzymkowski, and Hale Ala Kai, LLC. The Warranty Deed was recorded with the Land Court on March 12, 2015 as document number T-9201128 on Certificate of Title number 973086. [Motion, Exh. E (Warranty Deed) at 1.] On August 27, 2015, Nationstar moved to dismiss the Foreclosure Complaint with prejudice, and the state court granted the motion on December 11, 2015. [Id., Exh. D at 2-3.]

         In the instant Motion, the MERS Defendants argue that this Court must dismiss the Amended Complaint because: 1) Plaintiff failed to timely serve the Amended Complaint on them and there is no excusable neglect for the delay; 2) the Amended Complaint fails to state a claim against them; and 3) any claims that Plaintiff could have asserted against it were rendered moot when the Foreclosure Action was dismissed in light of the sale of the Property.

         DISCUSSION

         I. Preliminary Procedural Issues

         A. The MERS Defendants’ Exhibits

         The MERS Defendants attached several exhibits to the Motion. Only two of the exhibits - the Note and the Nationstar Assignment - are documents that Plaintiff included as exhibits to the Amended Complaint.

         As a general rule, this Court’s scope of review in considering a motion to dismiss is limited to the allegations in the complaint. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “[A] court may consider evidence on which the complaint necessarily relies if: (1) the complaint refers to the document; (2) the document is central to the plaintiff’s claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Id. (citations and internal quotation marks omitted). Ordinarily, consideration of other materials requires the district court to convert a motion to dismiss into a motion for summary judgment. Yamalov v. Bank of Am. Corp., CV. No. 10-00590 DAE-BMK, 2011 WL 1875901, at *7 n.7 (D. Hawai'i May 16, 2011) (citing Parrino v. FHP, Inc., 146 F.3d 699, 706 n.4 (9th Cir. 1998)).

         This Court has considered the following exhibits to the Motion that are not attached to the Amended Complaint: Plaintiff’s Mortgage; the docket sheet for the Foreclosure Action; and Plaintiff’s Warranty Deed.[8] Plaintiff has not questioned the authenticity of the copies of these documents that the MERS Defendants submitted with the Motion. The Amended Complaint refers to both the Mortgage and the Foreclosure Action, and they are central to Plaintiff’s claims. Plaintiff’s Warranty Deed is central to Plaintiff’s claims insofar as Plaintiff’s transfer of the Property may be relevant to the question of whether her claims are moot. This Court therefore concludes that it may consider those exhibits to the Motion without converting the Motion into a motion for summary judgment.

         B. Plaintiff’s Surreply

         As previously noted, Plaintiff filed a surreply, with a supporting affidavit, on May 27, 2016. Local Rule 7.4 states that, other than the memorandum in opposition to a motion and the reply, “[n]o further or supplemental briefing shall be submitted without leave of court.” Plaintiff argues that the surreply was necessary because the MERS Defendants’ reply “contain[ed] incorrect representations” and because new facts came to light.[9][Surreply at 1, 3.] Although Plaintiff failed to obtain leave to file the surreply and supporting affidavit, this Court has considered them in ruling on the Motion.

         However, this Court CAUTIONS Plaintiff that, in future motions practice, she must obtain leave of court before filing documents other than a memorandum in opposition or a reply. If she fails to do so, the additional document may be disregarded and/or stricken from the record.

         This Court now turns to the merits of the Motion.

         II. Failure to Serve

         The MERS Defendants first argue that this Court should dismiss the Amended Complaint against them because Plaintiff failed to effect timely service. When Plaintiff filed the Amended Complaint on September 28, 2015, the Federal Rules of Civil Procedure stated:

If a defendant is not served within 120 days after the complaint is filed, the court - on motion or on its own after notice to the plaintiff - must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the ...

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