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Hover v. GMAC Mortgage Corporation

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

March 21, 2017

LYNN HOVER, el al, Plaintiffs,
v.
GMAC MORTGAGE CORPORATION, et al, Defendants.

          ORDER

          JAMES L. ROBART United States District Judge

         I. INTRODUCTION

         Before the court is Defendants Nationstar Mortgage, LLC ("Nationstar"), Mortgage Electronic Registration Systems, Inc. ("MERS"), and Federal National Mortgage Association's ("Fannie Mae") (collectively "Moving Defendants") second motion to dismiss (2d MTD (Dkt. # 20)) Plaintiffs Lynn Hover and Mila Hover's (collectively, the "Hovers") amended complaint (Am. Compl. (Dkt. # 17)). The Hovers oppose the motion. (2d MTD Resp. (Dkt. #25).) The court has considered the motion, the submissions filed in support thereof and opposition thereto, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court STRIKES the Hovers' libel claim, GRANTS Moving Defendants' motion to dismiss, and DISMISSES with prejudice the Hovers' claims against Moving Defendants for private nuisance, unjust enrichment, and fraud. Further, the court ORDERS the Hovers to show cause why the court should not dismiss for failure to serve their claims against Defendants GMAC Mortgage LLC ("GMAC"), "Residential Mortgage Lender, " Northwest Trustee Services, Inc. ("NWTS"), and John or Jane Does 1-1000 (collectively "Non-Moving Defendants").

         II. BACKGROUND[2]

         This case arises out of a planned non-judicial foreclosure of the Hovers' house. (See Am. Compl. ¶¶ 33-35.) On July 17, 2002, the Hovers signed a deed of trust for $196, 000.00 that was recorded against the Hovers' residence in Issaquah, Washington. (Id. ¶¶ 1-4, 10; see also Deed of Tr. at 18.) On June 17, 2016, NWTS recorded a notice of trustee's sale against the Hovers' residence. (Not. of Tr. Sale; Am. Compl. ¶ 33.) The notice stated that the Hovers owed $35, 636.50 in order to keep the residence from foreclosure and that the mortgage had a remaining principal balance of $155, 980.04. (Not. of Tr. Sale at 3; Am. Compl. ¶ 34.)

         In response to the notice of trustee's sale, on July 6, 2016, the Hovers filed a complaint in King County Superior Court. (Compl. (Dkt. #1-1).) In that complaint, the Hovers alleged claims of private nuisance, unjust enrichment, and fraud. (Compl. ¶¶ 20, 30-34, 37-39, 49, 80-86.) The complaint also requested injunctive relief. (Id. ¶¶ 130-60.) On August 8, 2016, Nationstar timely removed this action on the basis of diversity jurisdiction. (See Not. of Rem. (Dkt. #1).) In the notice of removal, Nationstar contended that NWTS, a non-diverse party, was a nominal defendant to this suit and thus did not destroy complete diversity. (Id. ¶ 13.)

         On August 17, 2016, the court ordered Moving Defendants and Non-Moving Defendants to show cause why the case should not be remanded for lack of subject matter jurisdiction. (OSC (Dkt. # 10) at 1-2.) The order detailed the argument in the notice of removal that NWTS did not destroy complete diversity because it was a nominal defendant, but the court noted that the Hovers' complaint-although not a model of clarity-could be construed to assert claims against NWTS. (Id. at 3-4.) The order required Moving Defendants and Non-Moving Defendants to show cause and allowed, but did not require, the Hovers to submit a responsive memorandum. (Id. at 5.)

         On August 29, 2016, Moving Defendants responded to the show cause order. (OSC Resp. (Dkt. #12).) Moving Defendants argued that because the original complaint only named NWTS in its capacity as trustee, case law supported treating NWTS as a nominal party. (Id. at 9.) Moving Defendants contended that only when the trustee is alleged to have committed misconduct under the Deed of Trust Act, RCW ch. 61.24, such as making a false statement on the notice of trustee's sale, does the trustee qualify as a real party in interest in a foreclosure case. (Id. at 6 (citing Beiermann v. JP Morgan Chase Bank Nat'l Ass'n No. C11-5952RSL, 2012 WL 1377094, at *3 (W.D. Wash. Apr. 19, 2012); Leem v. Bank of Am. Home Loans, No. C13-1517RSL, 2014 WL 897378, at *3 (W.D. Wash. Mar. 6, 2014)).) The Hovers did not respond to the order to show cause. (See generally Dkt.) Based on Moving Defendants' brief, the legal authority cited therein, and the Hovers' nonresponse, the court concluded that it had subject matter jurisdiction because NWTS was a nominal defendant and therefore did not destroy complete diversity.

         On August 11, 2016, Moving Defendants moved to dismiss the original complaint for failure to state a claim. (1st MTD (Dkt. # 7).) Moving Defendants contended that the securitization of the deed of trust did not give rise to a cause of action. (Id. at 8-9.) Additionally, Moving Defendants argued that the Hovers fail to state a claim because all three claims were time barred by the applicable statutes of limitations. (Id. at 5-7.) Finally, Moving Defendants argued that the Hovers failed to allege sufficient facts to support each claim. (Id. at 11-13 (arguing private nuisance), 13-15 (arguing unjust enrichment), 15-18 (arguing fraud).) The Hovers did not respond to the motion to dismiss. (See generally Dkt.) On September 2, 2016, Moving Defendants filed a reply memorandum in which they argued that the court should treat the Hovers' failure to respond as an admission that Moving Defendants' motion has merit. (1st MTD Reply (Dkt. # 13) at 3 (citing Local Rules W.D. Wash. LCR 7(b)(2)).)

         On September 8, 2016, the court dismissed the Hovers' claims against Moving Defendants. (9/8/16 Order (Dkt. #14).) In the order, the court explained that "each of [Moving] Defendants' arguments has a firm legal basis." (Id. at 3.) Furthermore, the court treated the Hovers' failure to respond as an admission that Moving Defendants' motion had merit. (Id. at 2-3.) However, the court granted the Hovers leave to amend their complaint to "remedy the deficiencies identified in Moving Defendants' motion to dismiss." (Id. at 3.) The court cautioned the Hovers that "failure to timely amend the complaint" would result in the court dismissing their claims against Moving Defendants with prejudice. (Id. at 3-4.)

         On October 18, 2016, the Hovers filed an amended complaint. (See Am. Compl.) The amended complaint asserts a new cause of action, libel, stemming from the notice of trustee's sale. (Id. ¶¶ 31-49.) The amended complaint also contains a lengthy discussion of a party's right to a jury trial. (Id. ¶¶ 19-30, 52.) Besides the libel claim and the right to a jury trial discussion, the Hovers' new complaint contains few allegations that were not in the original complaint. (See Id. ¶¶ 51 (asserting a private nuisance claim that is partially premised on the libel claim), 62 (attempting to correct the elements for an unjust enrichment claim), 64-65 (asserting legal conclusions), 82-83 (asserting legal conclusions), 91-93 (discussing attached "industry publications"), 110 (asserting legal conclusions and statements that all parties are aware or should be aware that "no real loan exists").)

         On October 31, 2016, Moving Defendants filed a second motion to dismiss. (2d MTD.) Moving Defendants argue that "very little distinguishes" the Hovers' amended complaint from their original complaint. (Id. at 2.) Moving Defendants address the Hovers' new libel claim (id. at 12-14) and reiterate their arguments from the first motion as to the Hovers' other claims (id. at 5-12, 14-24). Moving Defendants' motion to dismiss is now before the court.

         III. ANALYSIS

         The court first addresses the Hovers' libel claim and then turns to the remainder of the ...


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