"All Causes of Action Survive Motion to Dismiss in California Federal Case Against Bank of America
By Daniel Edstrom
DTC Systems, Inc.
Thanks to Brian Davies for this one. Prosper Law Group’s complaint in Johnson vs. HSBC Bank USA, NA as Trustee for the Ellington Trust Series 2007-1, Bank of America, NA and does 1 – 10 inclusive contains 7 causes of action. The conclusion and order from Federal Judge Jeffrey T. Miller is:
For the reasons stated above, the motion to dismiss is DENIED. Defendants’ motion has failed to demonstrate that Plaintiff’s claims were implausible or precluded as a matter of law.
The following is an excerpt, but the rest is great reading also.
A. Viability of Attack on Loan Securitization
1. Ability to Challenge Loan Securitization
The threshold issue of whether Plaintiff can make any claim related to the loan’s securitization affects the viability of many of the individual claims discussed below. BOA cites Rodenhurst v. Bank of America, 773 F.Supp.2d 886, 899 (D. Haw. 2011) for its statement that “[t]he overwhelming authority does not support a cause of action based upon improper securitization.” However, the discussion cited in that case centers on plaintiffs who claim that securitization itself violates the agreement between the mortgagor and mortgagee. Here, Plaintiff does not dispute the right to securitize the mortgage, but alleges that as a result of improper procedures, the true owner of his mortgage is unclear. As a result, he has allegedly been paying improper entities an excess amount.
Ninth Circuit district courts have come to different conclusions when analyzing a plaintiff’s right to challenge the securitization process as Plaintiff has here. See Schafer v. CitiMortgage, Inc., 2011 WL 2437267 (C.D. Cal. 2011) (denying defendants’ motion to dismiss declaratory relief claim, which was based on alleged improper transfer due to alleged fraud in signing of documents); Vogan v. Wells Fargo Bank, N.A., 2011 WL 5826016 (E.D. Cal. 2011) (allowing § 17200 claim when plaintiffs alleged that assignment was executed after the closing date of securities pool, “giving rise to a plausible inference that at least some part of the recorded assignment was fabricated”). But see Armeni v. America’s Wholesale Lender, 2012 WL 603242 (C.D. Cal. 2012) (dismissing declaratory relief, quasi-contract, UCL, and accounting claims because “plaintiff lack[ed] standing to challenge the process by which his mortgage was (or was not) securitized because he is not a party to the PSA”); Junger v. Bank of America, N.A., 2012 WL 603262 at *3 (C.D.Cal. 2012).
Here, the court finds that Plaintiff is not categorically excluded from making claims based on allegations surrounding the loan’s securitization.3 As in Vogan, and unlike Armeni, Plaintiff here alleges both violations of the PSA and relevant law. BOA has not sufficiently demonstrated that violations of law associated with the loan’s securitization can go unchecked because Plaintiff is not a party to the PSA.
Other cases cited by BOA on this issue are irrelevant or inapplicable here.
Download ruling here: http://dtc-systems.net/wp-content/uploads/2012/03/22-Order-Denying-Motion-to-Dismiss.pdf"