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Olson v. Deutsche Bank National Trust Co.

United States District Court, Ninth Circuit

July 5, 2013

Kevin M. Olson and Alyssa N. Olson, Plaintiffs,
Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Trust 2007-FLX, Mortgage Pass-Through Certificates, Series 2007-FLX3 under the Pooling and Servicing Agreement dated April 1, 2007; IndyMac, FSB, a Federally Chartered Savings Bank; Indy Mac Bank Mortgage Services as advisor of One West Bank, FSB; OneWest Bank, FSB; and David W. Cowles, Trustee for March 21, 2007 Deed of Trust Defendants.


DAVID G. CAMPBELL, District Judge.

Defendants have filed a motion to dismiss. Doc. 7. The motion is fully briefed. Doc. 11, 15. No party has requested oral argument. For the reasons that follow, the Court will grant the motion.

I. Background.

Plaintiffs Kevin and Alyssa Olson bought property and constructed a house at 5493 E. Desperado in Gilbert, Arizona. Doc. 1-1 ¶ 9. Plaintiffs refinanced the property, resulting in execution of a promissory note and deed of trust ("DOT") with IndyMac Bank, FSB on March 21, 2007, in the amount of $760, 000. Id. at ¶ 13. Plaintiffs secured a $125, 000 equity line of credit with another DOT. Doc. 7-13 at 2.

In October 2008, Plaintiffs contacted IndyMac Bank about a modification to the $760, 000 loan. Doc. 1-1 at ¶¶ 20-21. The IndyMac representative told them that the loan must be ninety days delinquent before a modification would be considered. Id. at ¶ 22. Plaintiffs, who were current on their payments, accordingly did not make a payment for three months. Id. at ¶ 23. Plaintiffs contacted IndyMac again, and a representative gave verbal approval for a modification and a reduced payment figure. Id. at ¶ 25. After making the first reduced payment, however, Plaintiffs received a letter stating that the loan modification had been denied. Id. at ¶ 27. Plaintiffs called IndyMac again and were told that they qualified for a modification and that the necessary paperwork would arrive by April 21, 2009. Id. at ¶¶ 30-31. When the paperwork did not arrive, Plaintiffs called weekly to obtain the loan modification paperwork and continued to make the reduced payment. Id. at ¶ 32. In July of 2009, Plaintiffs were contacted by realtors about their home being in foreclosure. Plaintiffs learned that a trustee's sale had been noticed on their property, but claim they never received the notice. Id. at ¶¶ 33-34.

Plaintiffs filed for Chapter 13 bankruptcy and an automatic stay prevented the trustee's sale. Id. at ¶¶ 35, 45. During the bankruptcy proceedings, OneWest Bank[1] (which had acquired the $760, 000 DOT to Plaintiffs' home) assigned the DOT to Deutsche Bank, which filed a claim in court against Plaintiffs' home for $821, 182.41. Id. at ¶¶ 42, 44.

Plaintiffs were unable to keep up with the Chapter 13 payment plan and converted their bankruptcy to Chapter 7. Id. at ¶ 47. Plaintiffs received a full discharge of their personal debts on March 29, 2011. Id. at ¶ 49. Deutsch Bank has since noticed a second trustee's sale, and is seeking over $1, 000, 000 on the $760, 000 debt. Id. at ¶ 51.

II. Legal Standard.

When analyzing a complaint for failure to state a claim to relief under Rule 12(b)(6), the well-pled factual allegations "are taken as true and construed in the light most favorable to the nonmoving party.'" Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009) (citation omitted). Legal conclusions couched as factual allegations "are not entitled to the assumption of truth, " Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and they "are insufficient to defeat a motion to dismiss for failure to state a claim.'" In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010) (citation omitted). To avoid a Rule 12(b)(6) dismissal, the complaint must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged B but it has not show[n]' - that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

The Court generally will not consider evidence or documents beyond the complaint when ruling on a Rule 12(b)(6) motion. Fed.R.Civ.P. 12(d). "A court may, however, consider certain materials - documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice - without converting the motion to dismiss into a motion for summary judgment." United States v. Ritchie, 342 F.3d 903, 908 (citations omitted); see also Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (noting that the court may take into account documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading.").

Defendants attached exhibits A-U to the motion to dismiss, none of which were attached to the complaint. The complaint, however, incorporates by reference exhibits A, B, E, F, I, J, M, N, Q, R, and S, and Plaintiffs' response to the motion to dismiss does not contest the authenticity of these documents. These exhibits will be considered for purposes of this motion. Plaintiffs attached four exhibits to their response, all of which were incorporated by reference in the complaint and will also be considered.

III. Defendants' Motion.

A. Quiet Title.

The complaint alleges that the $760, 000 promissory note and DOT are unenforceable because Plaintiffs' personal liabilities were discharged in their bankruptcy. Doc 1-1 at ¶¶ ...

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