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Cagle v. Abacus Mortgage, Inc.

United States District Court, W.D. Washington, Seattle

September 5, 2014

MICHELE ANN CAGLE, a married woman, Plaintiff,
ABACUS MORTGAGE, INC.; BANK OF AMERICA, N.A.; THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK, as Trustee for the Structured Asset Mortgage Investments II Trust, Mortgage Pass-Through Certificates, Series 2006-AR8; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and JOHN Does Nos. 1-25, Defendants.


RICARDO S. MARTINEZ, District Judge.

This matter comes before the Court upon Defendants' Motion to Dismiss Plaintiff's Complaint. Dkt. # 6. Defendants move to dismiss Plaintiff's Complaint in its entirety for failure to state a claim on which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). Having reviewed the parties' briefs and supporting declarations as well as the remainder of the record, and for the reasons set forth below, the Court grants Defendants' Motion and dismisses Plaintiff's complaint with prejudice.


Plaintiff Michele Ann Cagle brings the instant suit against her lender, loan server, investor, and original trust deed beneficiary of record (collectively, "Defendants") for various state law violations pertaining to her housing loan. On September 7, 2006, Plaintiff borrowed $296, 000 from Abacus Mortgage, Inc. ("Abacus") as a refinance loan on her home located at 4203 192nd Place S.W., Lynwood, Washington 98036 (the "Property"). The loan was secured by a Deed of Trust ("DOT") and evidenced by a promissory note (the "Note"), which permits transfer from the original Lender to a subsequent Note Holder entitled to receive payments under the Note. Dkt. # 4, Ex. 1, ¶ 1. The DOT identifies Abacus as the Lender, Pacific Northwest Title as the Trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as beneficiary and nominee for Abacus and its successors and assigns. Id. at Ex. 1, p. 19.

The Deed of Trust provides that the Note or a partial interest therein "can be sold one or more times without prior notice to Borrower." Dkt. # 4, Ex. 1, p. 30, ¶ 20. An Assignment of Deed of Trust (the "Assignment") was recorded on March 22, 2013, which reflected that MERS had assigned its beneficial interest in the DOT to the Bank of New York Mellon ("BNYM") as Trustee for The Structured Asset Mortgage Investments II Trust, Mortgage Pass-Through Certificates, Series 2006-AR8 (the "Trust"). Dkt. # 7, Ex. B. The Assignment was signed by Rene Rosales on behalf of MERS and notarized by a notary public in Los Angeles County, California. Id. A further assignment was recorded on November 26, 2013, through which Bank of America N.A. assigned its beneficial interest in the DOT to Nationstar Mortgage, LLC. Dkt. # 11, Ex. A, Ex. 1. Although Plaintiff has defaulted on her loan repayment obligations, no foreclosure sale on her Property has been initiated.

Plaintiff filed the instant Complaint on October 29, 2013 in Snohomish County Superior Court, and Defendants removed the Complaint to this Court on December 2, 2013. See Dkt. # 1, Ex. B (Compl.). Plaintiff primarily alleges that MERS was an improper beneficiary, that it caused loan documents to be fraudulently "robo-signed, " and that MERS' attempted assignment of the DOT was ineffective. Compl., ¶¶ 3.5, 3.7. Plaintiff further alleges that Defendants failed to properly and timely transfer the Note and DOT into the Trust, and that the Note and DOT have therefore been split and are no longer enforceable. On the basis of these allegations, Plaintiff brings five causes of action for fraud, breach of Washington's Consumer Protection Act, RCW 19.86.090 ("CPA"), negligence, declaratory judgment, and injunctive relief, all of which Defendants now move to dismiss with prejudice.


Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Where the plaintiff fails to "nudge[] [her] claims across the line from conceivable to plausible, [her] complaint must be dismissed." Twombly, 550 U.S. at 570. A claim is facially plausible if the plaintiff has pled "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "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 555). In making this assessment, the Court accepts all facts alleged in the complaint as true, and makes all inferences in the light most favorable to the non-moving party. Baker v. Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009) (internal citations omitted).

"The court should freely give leave [to amend] when justice so requires." Fed.R.Civ.P. 15(a)(2). Where claims are dismissed under Rule 12(b)(6), the court "should grant leave to amend...unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). Leave to amend need not be granted, and dismissal may be ordered with prejudice, if amendment would be futile. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998).


Plaintiff's First Cause of Action states a claim for fraud based on Defendants' alleged misrepresentation of MERS as a beneficiary under the DOT. Plaintiff alleges that this misrepresentation constitutes "constructive fraud" under Washington's Consumer Loan Act, RCW 31.04.027(1)-(3). Defendants move to dismiss Plaintiff's First Cause of Action as time-barred and inadequately pled.

In order to state a claim for fraud, Plaintiff must establish each of the following elements: "(1) [a] representation of an existing fact; (2) its materiality; (3) its falsity; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person to whom it is made; (6) ignorance of its falsity on the part of the person to whom it is made; (7) the latter's reliance on the truth of the representation; (8) his right to rely upon it, [and] (9) his consequent damage." Kirkham v. Smith, 106 Wash.App. 177, 183, 23 P.3d 10 (2001); see also Stiley v. Block, 130 Wash.2d 486, 505, 925 P.2d 194 (1996). Common law fraud thereby "requires proof of a knowing and intentional misrepresentation." Id. The plaintiff must plead with particularity "both the elements and the circumstances of fraudulent conduct." Haberman v. Washington Pub. Power Supply Sys., 109 Wash.2d 107, 165, 744 P.2d 1032 (1987); see also Fed.R.Civ.P. 9(b).

Defendants contend that Plaintiff's First Cause of Action must be dismissed because Plaintiff fails to plead particular facts to support each element of her fraud claim. In particular, Defendants contend that Plaintiff cannot demonstrate that Defendants made any false statement by identifying MERS in a nominee capacity under the DOT. Further, Defendants assert that the sole case on which Plaintiff relies, Bain v. Metro Mortgage Group, Inc., 175 Wash.2d 83, 285 P.3d 34 (Wash. 2012), arose after the loan was executed, and the ...

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