How To Plead Abuse of Process - Arguments

Case 2:09-ap-01135-PC Doc 25 Filed 11/12/09 Entered 11/12/09 17:03:47 Desc
Main Document Page 1 of 19
1 RICHARD W. ESTERKIN, State Bar No. 70769

BRIAN M. JAZAERI, State Bar No. 221144
2 MORGAN, LEWIS & BOCKIUS LLP
300 South Grand Avenue, 22nd Floor
3 Los Angeles, CA 90071
Tel: 213.612.2500
4 Fax: 213.612.2501
5 Attorneys for Defendant
MORTGAGE ELECTRONIC REGISTRATION
6 SYSTEMS, INC.
7
UNITED STATES BANKRUPTCY COURT
8
CENTRAL DISTRICT OF CALIFORNIA – LOS ANGELES DIVISION
9
In re Chapter Number 7 Case No. LA08-17036-SB
10
RAYMOND VARGAS, an individual Adversary No.: 09-01135-SB
11
SSN xxx-xx-1938, DEFENDANT MORTGAGE
12 ELECTRONIC REGISTRATION
Debtor, SYSTEMS, INC.'S MEMORANDUM OF
13 POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS
14 PLAINTIFF’S ADVERSARY COMPLAINT
15 [Notice of Motion and Motion filed concurrently

herewith]
16
Judge: Hon. Samuel L. Bufford
17 Date: December 15, 2009
Time: 9:00 a.m.
18 Courtroom: 1575
RAYMOND VARGAS, JOHN P
19 PRINGLE, Chapter 7 Bankruptcy Trustee
of RAYMOND VARGAS,
20
Plaintiffs,
21
vs.
22
FREEDOM HOME MORTGAGE
23 CORPORATION, MORTGAGE
ELECTRONIC REGISTRATION
24 SYSTEMS, INC., and all persons claiming
by, through, or under such person, all
25 persons unknown, claiming any legal or
equitable right, title, estate, lien, or interest
26 in the property described in the complaint
adverse to Plaintiff’s title thereto; and Does
27 1-150, inclusive,
28
M ORGAN , L EWIS &
Defendants.
B OCKIUS LLP
ATTORNEYS AT LAW DEFENDANT MORTGAGE ELECTRONIC
NEW YORK DB1/63901881.4 REGISTRATION SYSTEMS, INC.'S MPA IN
SUPPORT OF MOTION TO DISMISS
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION .............................................................................................................. 2
II. STATEMENT OF FACTS ................................................................................................. 3
4
A. The Parties............................................................................................................... 3
5 B. Lenders and the Residential Mortgage Market ....................................................... 4
6 C. How MERS Works ................................................................................................. 4
III. ARGUMENT ...................................................................................................................... 6
7
A. Legal Standards....................................................................................................... 6
8 1. A complaint must plead sufficient facts to support each claim
against each defendant. ............................................................................... 6
9
2. Federal Rule of Civil Procedure 9(b) requires allegations of fraud to
10 be “stated with particularity.” ..................................................................... 7
B. The Complaint Should Be Dismissed Because It Fails to Allege Any
11 Claims Against MERS Specifically ........................................................................ 8
12 C. Plaintiff’s Fraud Claim Fails to Meet the Heightened Pleading
Requirements Under Federal Rule of Civil Procedure 9(b).................................... 9
13 D. Plaintiff Fails to State a Claim Against MERS for Abuse of Process .................. 10
14 1. Plaintiff Fails to Allege the Necessary Legal and Factual Bases to
Support an Abuse of Process Claim for relief........................................... 10
15 2. Plaintiff’s Abuse of Process Claim for relief Is Barred by the
Litigation Privilege Under California Code of Civil Procedure §
16 47(b) .......................................................................................................... 12
17 E. Plaintiff Fails to State a Claim Against MERS to Quiet Title .............................. 13
F. Plaintiff Fails To State a Claim Against MERS For Injunctive Relief................. 13
18
IV. CONCLUSION ................................................................................................................. 14
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1 TABLE OF AUTHORITIES
2 Page
3 Federal Cases
4 Alicea v. GE Money Bank,

2009 U.S. Dist. LEXIS 60813 (N.D. Cal. July 15, 2009)............................................................ 5
5
Anderson v. Clow
6 (In re Stac Elecs. Sec. Litig.),
89 F.3d 1399 (9th Cir. 1996).................................................................................................... 6, 8
7
Ashcroft v. Iqbal,
8 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) ......................................................................... passim
9 Bell Atlantic v. Twombly,

550 U.S. 544 (2007)............................................................................................................ passim
10
Bly-Magee v. California,
11 236 F.3d 1014 (9th Cir. 2001)...................................................................................................... 7
12 Brady v. State Bar of California,

533 F.2d 502 (9th Cir. 1976)...................................................................................................... 14
13
Brittain v. Indymac Bank,
14 No. C-09-2953 SC, 2009 U.S. Dist. LEXIS 84863, 2009
WL 2997394 (N.D. Cal. Sept. 16, 2009) ................................................................................... 14
15
Clegg v. Cult Awareness Network,
16 18 F.3d 752 (9th Cir. 1994).......................................................................................................... 7
17 Conley v. Gibson,
355 U.S. 41 (1957)....................................................................................................................... 6
18
Edwards v. Marin Park, Inc.,
19 356 F.3d 1058 (9th Cir. 2001)............................................................................................. passim
20 Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta,

458 U.S. 141 (1982)..................................................................................................................... 5
21
I.C.C. v. Transcon Lines,
22 513 U.S. 138 (1995)................................................................................................................... 13
23 In re MERSCORP, Inc., RESPA Litigation,

MDL No. 1810, 2008 U.S. Dist. LEXIS 40473 (S.D. Tex. May 16, 2008) ................................ 4
24
Lunsford v. American Guar. & Liab. Ins. Co.,
25 18 F.3d 653 (9th Cir. Cal. 1994) ................................................................................................ 11
26 McKeever v. Block,
932 F.2d 795 (9th Cir. 1991)........................................................................................................ 2
27
Nguyen v. LaSalle Bank Nat'l Ass'n,
28 2009 U.S. Dist. LEXIS 99412 (C.D. Cal. 2009)........................................................................ 13
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(continued)
2 Page
3 Papasan v. Allain,
478 U.S. 265 (1986)..................................................................................................................... 7
4
Reddy v. Litton Indus.,
5 912 F.2d 291 (9th Cir. 1990)........................................................................................................ 3
6 Rosales v. Downey S&L Ass'n, F.A.,

2009 U.S. Dist. LEXIS 15923 (S.D. Cal. Mar. 2, 2009)............................................................ 13
7
Semegen v. Weidner,
8 780 F.2d 727 (9th Cir. 1985)........................................................................................................ 8
9 Swartz v. KPMG LLP,

476 F.3d 756 (9th Cir. 2007)...................................................................................................... 10
10
Vess v. Ciba-Geigy Corp. USA ,
11 317 F.3d 1097 (9th Cir. 2003)...................................................................................................... 9
12 Vicom, Inc. v. Harbridge Merchant Servs.,

20 F.3d 771 (7th Cir. 1994)........................................................................................................ 10
13
State Cases
14
Abraham v. Lancaster Cmty. Hosp.,
15 217 Cal. App. 3d 796; 266 Cal. Rptr. 360 (1990)................................................................ 10, 12
16 Asia Investment Co. v. Borowski,

133 Cal. App. 3d 832; 184 Cal. Rptr. 317 (1982)...................................................................... 12
17
Conroy v. Regents of University of California,
18 45 Cal. 4th 1244; 91 Cal. Rptr. 3d 532 (2009)............................................................................. 9
19 Drasin v. Jacoby & Meyers,

50 Cal. App. 3d 481; 197 Cal. Rptr. 768 (1984)........................................................................ 12
20
Ion Equipment Corp. v. Nelson,
21 110 Cal. App. 3d 868; 168 Cal. Rptr. 361 (1980)...................................................................... 11
22 Meadows v. Bakersfield Savings & Loan Co.,

250 Cal. App. 2d 749; 59 Cal. Rptr. 34 (1967).......................................................................... 11
23
Merlet v. Rizzo,
24 64 Cal. App. 4th 53; 75 Cal. Rptr. 83 (1998)............................................................................. 13
25 Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma,

42 Cal. 3d 1157; 232 Cal. Rptr. 567 (1986)......................................................................... 11, 12
26
Pimentel v. Houk,
27 101 Cal. App. 2d 884; 226 P.2d 739 (1951) .............................................................................. 12
28
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(continued)
2 Page
3 Silver v. Gold,
211 Cal. App. 3d 17; 259 Cal. Rptr. 185 (1989)........................................................................ 12
4
Spellens v. Spellens,
5 49 Cal. 2d 210; 317 P.2d 613 (1957) ................................................................................... 10, 11
6 Tellefsen v. Key System Transit Lines,

198 Cal. App. 2d 611; 17 Cal. Rptr. 919 (1961)........................................................................ 11
7
Federal Statutes
8
Fed. R. of Civ. P. 8(a)(2)............................................................................................................ 3, 13
9
Fed. R. of Civ. P. 9(b) ............................................................................................................. passim
10
Fed. R. of Civ. P. 12(b)(6) ........................................................................................................... 2, 6
11
Fed. R. of Civ. P. 65....................................................................................................................... 13
12
Statutes
13
Cal. Civ. Pro. § 47(b) ........................................................................................................... 3, 12, 13
14
Cal. Civ. Pro. § 761.020................................................................................................................. 13
15
Other Authorities
16
C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE
17 § 1202 (3d ed. 2004) .................................................................................................................... 6
18 Moore’s Federal Practice (3d ed.)

§ 9.03[1][f] ................................................................................................................................... 8
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1 Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) pursuant to Federal

2 Rule of Civil Procedure 12(b)(6), moves to dismiss Debtor Raymond Vargas’s (“Plaintiff”) First
3 Amended Adversary Complaint (“Complaint”) because it fails to state a claim against MERS
4 upon which relief can be granted.
5 I. INTRODUCTION
6 Plaintiff’s Complaint attempts to allege various claims for relief against MERS based on
7 nothing more than conclusory allegations that fail to recite even the minimum legal elements of
8 Plaintiff’s claims, let alone provide sufficient factual bases to state any viable claims against
9 MERS. Plaintiff’s Complaint is deficient for multiple, independent reasons and should be
10 dismissed without leave to amend.
11 First, Plaintiff fails to allege any of his claims for relief against MERS specifically. A
12 complaint must contain sufficient factual allegations to put the defendant on notice of the claims
13 against it. McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991). The Complaint fails to
14 delineate which of Plaintiff’s claims are asserted against which particular defendant and, as a
15 result, fails to provide a sufficient statement of claims against MERS.
16 Second, Plaintiff’s fraud claim falls woefully short of the heightened pleading
17 requirements under Federal Rule of Civil Procedure 9(b) . Where a complaint includes
18 allegations of fraud, Fed. R. Civ. P. 9(b) requires the party to state with particularity the
19 circumstances constituting fraud including an account of “the time, place, and specific content of
20 the false representations as well as the identities of the parties to the misrepresentations.”
21 Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2001). Plaintiff fails to allege any of
22 these required elements against MERS under his fraud claim for relief. In fact, it is difficult to
23 discern from the Complaint whether Plaintiff is even attempting to allege a fraud claim against
24 MERS as MERS is not named anywhere in Plaintiff’s fraud claim. Plaintiff instead makes certain
25 conclusory allegations against his lender, Freedom Home Mortgage Corporation, and proceeds to
26 lump the rest of his fraud allegations into allegations against “Defendants” generally. Because
27 Plaintiff fails to allege the “time, place, and specific content of the false representations as well as
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1 the identities of the parties to the misrepresentations” (Id.), his fraud claim against MERS fails as
2 a matter of law.
3 Third, Plaintiff fails to allege adequately a claim for relief for abuse of process for
4 multiple reasons. Plaintiff fails to plead that MERS acted with an ulterior purpose in engaging in
5 the underlying conduct that forms the basis of Plaintiff’s claim. Absent an allegation of an
6 ulterior purpose, Plaintiff’s claim fails as a matter of law. Plaintiff further fails to put forth any
7 substantive factual allegations to support his claim, instead relying on bare legal conclusions that
8 fail to meet the pleading standards of Fed. R. Civ. Proc. 8(a)(2) as articulated in Bell Atlantic v.
9 Twombly, 550 U.S. 544, 555 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950, 173 L. Ed. 2d
10 868, 884 (2009). Finally, Plaintiff’s abuse of process claim for relief is barred in its entirety by
11 California Civil Code section 47(b), which extends a litigation privilege over any publication,
12 including pleadings, “made in a judicial proceeding” such as the instant action. As a result,
13 Plaintiff’s abuse of process claim for relief should be dismissed without leave to amend.
14 Fourth, Plaintiff’s claims to quiet title and for injunctive relief against MERS fail as a
15 matter of law. To the extent Plaintiff is asserting a claim to quiet title against MERS – which is
16 unclear from the Complaint – Plaintiff fails to assert the necessary factual or legal bases to
17 maintain such a claim against MERS. Plaintiff’s claim for injunctive relief also fails because
18 injunctive relief is a remedy, not a cause of action. Additionally, because Plaintiff does not allege
19 any valid claims against MERS, the Complaint fails to allege a claim against MERS that would
20 entitle Plaintiff to injunctive relief.
21 Because Plaintiff cannot establish the essential elements of his claims against MERS as a
22 matter of law, repleading would be futile and the Complaint should be dismissed without leave to
23 amend. Reddy v. Litton Indus., 912 F.2d 291, 296 (9th Cir. 1990).
24 II. STATEMENT OF FACTS
25 A. The Parties
26 Plaintiff Raymond Vargas filed a voluntary petition in bankruptcy on May 21, 2008
27 (Complaint, ¶ 1) and subsequently converted his bankruptcy case to one under chapter 7 of the
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bankruptcy code on July 11, 2008. Id., ¶ 2. Plaintiff initially filed an Adversary Complaint on
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1 February 11, 2009 but failed to serve either of the defendants. Plaintiff then filed his current
2 Complaint on October 13, 2009 alleging various claims for relief against defendants MERS and
3 his lender, Freedom Home Mortgage Corporation. Id., ¶¶ 11-12.
4 B. Lenders and the Residential Mortgage Market
5 When a mortgage lender loans money to a home buyer, it obtains two documents: (1) a
6 promissory note in the form of a negotiable instrument from the borrower; and (2) a mortgage
7 instrument granting secured interests in the property as collateral to repay the note. The
8 promissory note is a negotiable instrument under Article 3 of the Uniform Commercial Code, and
9 as such, it is often bought and sold. See In re MERSCORP, Inc., RESPA Litigation, MDL No.
10 1810, 2008 U.S. Dist. LEXIS 40473 (S.D. Tex. May 16, 2008), at *14.
11 The mortgage or secured instrument, as distinguished from the note, establishes the lien
12 on the property that secures the repayment of the loan, and it is the mortgage, not the note, that is
13 recorded in the public, local land records. Two aspects of the loan are then usually bought and
14 sold—the servicing rights and the beneficial rights. Id. The servicing rights include the right to
15 collect monthly escrow, principal, and interest payments from the borrower, and the beneficial
16 rights include the right to receive the repayment of the loan itself. Id. For its part, MERS serves
17 as the mortgagee or beneficiary under the security instrument on behalf of or as the nominee of
18 the lender and for any of the lender’s successors and assigns.
19 C. How MERS Works
20 At the origination of the loan, the lender takes possession of the note (and becomes the
21 holder of the note), and the borrower and lender designate MERS (as the lender’s nominee) to
22 serve as the mortgagee or beneficiary such that the lender’s secured interests are held by MERS.1
23 At the time of the loan origination, the borrower contractually agrees in the Deed of Trust or
24 mortgage that MERS will serve as the beneficiary under the Deed of Trust, and in the event of a
25 default on the loan, MERS, as the beneficiary or mortgagee, is a party authorized to foreclose on
26 1 MERS is not involved in the loan origination process—that is, the process by which a
borrower applies for a new loan, generally including all the steps from taking a loan application
27 through disbursal of funds (or declining the application). Plaintiff’s Complaint does not allege
MERS to be involved in the origination of his loans.
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1 the mortgage or deed of trust. See Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 144
2 (1982) (referring to a mortgage as a contract); Alicea v. GE Money Bank, 2009 U.S. Dist. LEXIS
3 60813 at *3 (N.D. Cal. July 15, 2009) (stating that a deed of trust is a contract). After the
4 borrower signs the mortgage agreement, it is recorded in the public, local land records with
5 MERS as the named mortgagee or beneficiary.2
6 MERS then tracks the beneficial and servicing rights to the mortgage. When the note is
7 sold by the original lender to others, the various sales of the note are to be tracked on the MERS®
8 System. As long as the sale of the note involves MERS members, MERS remains the named
9 mortgagee of record, and continues to act as the mortgagee, as the nominee for the new beneficial
10 owner of the note (and MERS member). The seller of the note does not and need not assign the
11 Deed of Trust or mortgage because MERS remains the beneficiary or mortgagee as the nominee
12 for the purchaser of the note, who is the lender’s successor and assign. This relationship is
13 memorialized in the security instrument to which the borrower is a party, as well as by the MERS
14 membership agreements that are entered into between MERS and its members (who are the
15 lenders and servicers). If, however, a MERS member is no longer involved with the note after it
16 is sold, an assignment from MERS to the non-MERS member is provided by MERS, and that
17 assignment is recorded in the county where the real estate is located, and the mortgage is
18 “deactivated” from the MERS® System.
19
20
21
22
23
24
2 See, e.g., Vargas Deed of Trust attached as Exhibit 1 to the Complaint, which contains the
25 following contractual provisions: “MERS is a separate corporation that is acting solely as a
nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary under this
26 Security Instrument… . Borrower understands and agrees that MERS holds only legal title to the
[secured] interests granted by Borrower in this Security Instrument, but, if necessary to comply
27 with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the
right to exercise any and all of those interests, including but not limited to the right to foreclose
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1 III. ARGUMENT
2 A. Legal Standards
3 1. A complaint must plead sufficient facts to support each claim against
each defendant.
4
5 To survive a motion to dismiss, a complaint must plead sufficient facts to state a claim of
6 relief that is “plausible on its face.” Twombly, 550 U.S. at 570.3 Federal Rule of Civil Procedure
7 8(a), made applicable to this proceeding by Bankruptcy Rule 7008(a), requires that a pleading
8 must contain a “short and plain statement of the claim showing that the pleader is entitled to
9 relief.” “[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’
10 but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal,
11 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 555). Factual allegations must “possess enough
12 heft to show that the pleader is entitled to relief.” Twombly, 550 U.S. at 557 (citations omitted).
13 A plaintiff must plead a “statement of circumstances, occurrences, and events in support of the
14 claim presented.” Id. at 556 n.3 (quoting C. WRIGHT & A. MILLER, FEDERAL PRACTICE
15 AND PROCEDURE § 1202 (3d ed. 2004)).
16 For the purpose of a motion to dismiss, facts as alleged are assumed to be true.
17 Anderson v. Clow (In re Stac Elecs. Sec. Litig.), 89 F.3d 1399, 1403 (9th Cir. 1996). This basic
18 tenet, however, is “inapplicable to legal conclusions. Threadbare recitals of the elements of a
19 cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at
20 1949 (citing Twombly, 550 U.S. at 555). A pleading that offers only “labels and conclusions” or
21 “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at
22 555. Thus, the Court should not accept unsupported conclusions, unwarranted inferences, or
23 sweeping legal conclusions as a basis to proceed. Id. at 555, 570; Clegg v. Cult Awareness
24
3 The Supreme Court’s decision in Twombly significantly tightened the standards for Courts
25 evaluating a Rule 12(b)(6) motion to dismiss. Prior to Twombly, courts were utilizing the “no set
of facts” standard that sprang from Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The “no set of
26 facts” standard was that “once a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the complaint.” Twombly, 544 U.S. at
27 563 (emphasis added). But the Twombly court made clear that “Conley’s ‘no set of facts’
language is best forgotten as an incomplete, negative gloss on an accepted pleading standard.” Id.
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1 Network, 18 F.3d 752, 754-55 (9th Cir. 1994) (holding that the Court “is not required to accept
2 legal conclusions cast in the form of factual allegations”). Nor does a complaint suffice if it
3 tenders “naked assertion[s]” devoid of “further factual enhancement.” Twombly, 550 U.S. at 557.
4 Indeed, a court must only accept as true the plaintiff’s well-pled factual contentions, not its
5 conclusory allegations, and a court may not consider inferences that are either unsupported by or
6 inconsistent with the factual allegations contained in the Complaint. See Papasan v. Allain, 478
7 U.S. 265, 286 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal
8 conclusion couched as a factual allegation”). “[A] court considering a motion to dismiss can
9 choose to begin by identifying pleadings that, because they are no more than conclusions, are not
10 entitled to the assumption of truth.” Iqbal, 129 S. Ct. at 1950.
11 The allegations in Plaintiff’s Complaint here barely recite the minimum legal elements of
12 a claim, if at all, let alone provide sufficient factual bases to state claims for relief that are
13 plausible on their face. Stripped of its legal conclusions, the Complaint consists of scant more
14 than generalized allegations about MERS. These basic allegations, even when taken as true, are
15 insufficient to state a plausible claim for relief against MERS. Id., at 1949 (“Where a complaint
16 pleads facts that are merely consistent with a defendant’s liability, it stops short of the line
17 between possibility and plausibility of entitlement to relief.”) (internal citations and quotations
18 omitted).
19 2. Federal Rule of Civil Procedure 9(b) requires allegations of fraud to be
“stated with particularity.”
20
21 Where a complaint includes allegations of fraud, such as here, Fed. R. Civ. P. 9(b)
22 requires the party to state with particularity the circumstances constituting fraud including an
23 account of “the time, place, and specific content of the false representations as well as the
24 identities of the parties to the misrepresentations.” Edwards, 356 F.3d at 1066. “To comply with
25 Rule 9(b), allegations of fraud must be specific enough to give defendants notice of the
26 particular misconduct which is alleged to constitute the fraud charge so that they can defend
27 against the charge and not just deny that they have done anything wrong.” Bly-Magee v.
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California, 236 F.3d 1014, 1019 (9th Cir. 2001) (emphasis added) (internal citations and
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1 quotations omitted). “Rule 9(b) serves to give defendants adequate notice to allow them to defend
2 against the charge and to deter the filing of complaints ‘as a pretext for the discovery of unknown
3 wrongs,’ to protect [defendants] from the harm that comes from being subject to fraud charges,
4 and to ‘prohibit [] plaintiffs from unilaterally imposing upon the court, the parties and society
5 enormous social and economic costs absent some factual basis.’” In re Stac Elecs. Sec. Litig., 89
6 F.3d at 1406 (citing Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985)).
7 B. The Complaint Should Be Dismissed Because It Fails to Allege Any Claims
Against MERS Specifically
8
9 Plaintiff’s Complaint fails at the outset because it fails to allege any claims for relief
10 against MERS specifically. A complaint must contain sufficient factual allegations to put a
11 particular defendant on notice of the facts that plaintiff believes from the basis of defendant’s
12 liability. Twombly, 550 U.S. at 565, fn. 10. Absent such specific allegations “a defendant
13 seeking to respond … would have little idea where to begin.” Id. Additionally, “[i]f a claim
14 involves multiple defending parties, a plaintiff usually may not group all claimed wrongdoers
15 together in a single set of allegations. Rather, the claimant must make specific and separate
16 allegations against each defendant.” 2-9 Moore’s Federal Practice (3d ed.) § 9.03[1][f].
17 Here, Plaintiff fails to specify which of his claims for relief for fraud, abuse of process,
18 quiet title and injunctive relief are asserted against which particular defendant. Indeed, several of
19 Plaintiff’s claims for relief, including fraud, quiet title and injunctive relief do not mention MERS
20 anywhere in the allegations but instead veer back and forth between allegations against Freedom
21 Home Mortgage Corporation to allegations against “Defendants” generally without any indication
22 as to which allegations apply to which defendant. There is no basis for MERS to ascertain which
23 of Plaintiff’s claims for relief relate to it and which it must defend. The Complaint therefore fails
24 to provide sufficient statements of Plaintiff’s claims against MERS and, as a result, the Complaint
25 should be dismissed.
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1 C. Plaintiff’s Fraud Claim Fails to Meet the Heightened Pleading Requirements

Under Federal Rule of Civil Procedure 9(b)
2
Under California law, to state a claim for fraud, a plaintiff must allege (1) a
3
misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s
4
reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage. Conroy v.
5
Regents of University of California, 45 Cal. 4th 1244, 1255; 91 Cal. Rptr. 3d 532, 543 (2009). To
6
survive a motion to dismiss, under Rule 9(b), a pleader must provide an account of the “time,
7
place, and specific content of the false representations as well as the identities of the parties to
8
the misrepresentations.” Edwards, 356 F.3d at 1066 (emphasis added). “Averments of fraud
9
must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged. . . .
10
‘[A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The
11
plaintiff must set forth what is false or misleading about a statement, and why it is false.’” Vess v.
12
Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (citations omitted).
13
Plaintiff’s fraud claim does not come close to meeting the heightened pleading
14
requirements under Rule 9(b). Initially, it is unclear whether Plaintiff is even attempting to allege
15
a fraud claim against MERS because Plaintiff does not allege specifically any false
16
representations by MERS nor does Plaintiff name MERS anywhere in his fraud claim for relief.
17
See Complaint, ¶¶ 18-27. Instead, Plaintiff’s fraud claim is based primarily on the following
18
allegations against his lender, Freedom Home Mortgage Corporation:
19
• “On or about October 03, 2006 Defendants [Freedom Home Mortgage
20
Corporation] and Does 1 through 50, inclusive defrauded Plaintiff Vargas by
21
purporting to have Plaintiff enter into two (2) home loans, the first for $630,000.00
22
(See attached Exhibit 1) and the second for $115,500.00 (See attached Exhibit 2).”
23
Complaint, ¶ 19.
24
• “On or about October 03, 2006 Defendants [Freedom Home Mortgage
25
Corporation] and Does 1 through 50, inclusive made the following representations
26
to Plaintiff Vargas: that said Defendants were offering to Plaintiff Vargas a reverse
27
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1 mortgage loan for which he could receive cash and not have to make any mortgage
2 payments during his lifetime.” Id., ¶ 22.
3 Based on these allegations, Plaintiff proceeds to combine his remaining fraud allegations
4 into allegations against “Defendants” generally without any indication as to which defendant the
5 particular fraud allegations apply. Id., ¶¶ 23-27. Such allegations are insufficient to state a claim
6 under the standards announced in Twombly, and fall well short of the heightened pleading
7 standards of Rule (9)(b). See Edwards, 356 F.3d at 1066; see also Swartz v. KPMG LLP, 476
8 F.3d 756, 765 (9th Cir. 2007) (“Rule 9(b) does not allow a complaint to merely lump multiple
9 defendants together but require[s] plaintiffs to differentiate their allegations when suing more
10 than one defendant ... and inform each defendant separately of the allegations surrounding his
11 alleged participation in the fraud”) (citations omitted).
12 The Complaint not only fails to allege “the who” as it relates to MERS, but it also fails to
13 plead “the what, where, when, and how” of the alleged fraud. As to MERS, the Complaint fails
14 to identify when the alleged fraud took place, where the alleged fraud took place, how Plaintiff
15 was misled by MERS’s conduct, and how MERS’s actions were the proximate cause of damage
16 to Plaintiff. As a result, the Complaint fails to provide fair notice, “perhaps the most basic
17 consideration underlying Rule 9(b),” to MERS of its alleged misconduct, see Vicom, Inc. v.
18 Harbridge Merchant Servs., 20 F.3d 771, 778 (7th Cir. 1994), and fails to plead fraud with the
19 particularity required under Rule 9(b).
20 D. Plaintiff Fails to State a Claim Against MERS for Abuse of Process
21 1. Plaintiff Fails to Allege the Necessary Legal and Factual Bases to
Support an Abuse of Process Claim for relief.
22
23 The essential elements of an abuse of process claim in California are: (1) that defendant
24 acted with an ulterior purpose; and (2) that a willful act or threat was committed by defendant, not
25 authorized by the process and not proper in the regular conduct of some official proceedings; and
26 (3) that defendant’s misuse of the legal process was a cause of injury, damage, loss or harm to
27 plaintiff. Spellens v. Spellens, 49 Cal. 2d 210, 232; 317 P.2d 613, 626-627 (1957); see also
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Abraham v. Lancaster Cmty. Hosp., 217 Cal. App. 3d 796, 826; 266 Cal. Rptr. 360, 378 (1990).
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1 “Some definite act or threat beyond the scope of the process is required in an abuse of process
2 cause of action. Generally, an action lies only where the process is used to obtain an unjustifiable
3 collateral advantage.” Ion Equipment Corp. v. Nelson, 110 Cal. App. 3d 868, 876; 168 Cal. Rptr.
4 361, 364 (1980). Further, “the mere filing or maintenance of a lawsuit -- even if for an improper
5 purpose -- is not a proper basis for an abuse of process action.” Oren Royal Oaks Venture v.
6 Greenberg, Bernhard, Weiss & Karma, 42 Cal. 3d 1157, 1169; 232 Cal. Rptr. 567, 574 (1986);
7 Lunsford v. American Guar. & Liab. Ins. Co., 18 F.3d 653, 655 (9th Cir. Cal. 1994).
8 Plaintiff’s abuse of process claim fails on multiple levels. First, Plaintiff makes no
9 allegation that MERS was acting with an ulterior purpose when engaging in the underlying
10 conduct that forms the basis of Plaintiff’s claim. That alone is fatal to Plaintiff’s claim for relief
11 for abuse of process. Spellens, 49 Cal. 2d at 232. Plaintiff’s claim for relief is also devoid of any
12 substantive factual allegations that could support an abuse of process claim for relief against
13 MERS. Plaintiff bases his entire claim on the conclusory allegation that MERS “in bad faith
14 sought relief from the bankruptcy court’s automatic stay by filing a motion for relief from stay
15 with no evidentiary support.” Complaint, ¶ 30. Based only on MERS’s filing of a motion,
16 Plaintiff alleges that “in engaging in the conduct described above, Defendants acted maliciously,
17 willfully, and with specific intent to injure Plaintiff and endanger his property.” Id., ¶ 31. Such
18 conclusory allegations, with no factual support whatsoever, are not sufficient state a claim for
19 abuse of process. See Iqbal, 129 S.Ct. at 1949. (“Threadbare recitals of the elements of a cause
20 of action, supported by mere conclusory statements, do not suffice”).
21 MERS’s filing of a relief from stay motion does not represent a wrongful act that could
22 possibly triggers abuse of process liability. A wrongful act that supports an abuse of process tort
23 is a “misuse of the power of the court.” Meadows v. Bakersfield Savings & Loan Co., 250 Cal.
24 App. 2d 749, 754; 59 Cal. Rptr. 34, 37 (1967). The wrongful act represents a “form of extortion,
25 and it is what is done in the course of negotiation, rather than the issuance of any formal use of
26 the process itself, which constitutes the tort.” Tellefsen v. Key System Transit Lines, 198 Cal.
27 App. 2d 611, 615; 17 Cal. Rptr. 919, 922 (1961), quoting PROSSER ON TORTS 668 (2d ed.).
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“[A]n improper purpose may consist in achievement of a benefit totally extraneous to or of a
B OCKIUS LLP
1 result not within its legitimate scope. Mere ill will against the adverse party in the proceedings
2 does not constitute an ulterior or improper motive.” Ion Equipment Corp., 110 Cal. App. 3d at
3 876.
4 Therefore, the use of the legal process, without more, does not trigger liability, even if
5 done with bad intentions. Silver v. Gold, 211 Cal. App. 3d 17, 24; 259 Cal. Rptr. 185, 189
6 (1989). Even assuming Plaintiff’s allegations are true, which they are not, Plaintiff has failed to
7 allege a proper claim for abuse of process because all that Plaintiff has alleged is that MERS filed
8 a motion within the context of judicial proceedings. Pimentel v. Houk, 101 Cal. App. 2d 884,
9 886; 226 P.2d 739, 740 (1951) (“the fact that [plaintiff] may have had an ulterior motive to
10 destroy defendant financially did not render the use of the writ [of attachment] improper in the
11 regular conduct of the proceeding.”); accord Oren, 42 Cal. 3d at 1169 (“the mere filing or
12 maintenance of a lawsuit—even for an improper purpose—is not a proper basis for an abuse of
13 process action.”). Therefore, Plaintiff’s claim should be dismissed in its entirety.
14 2. Plaintiff’s Abuse of Process Claim for relief Is Barred by the Litigation
Privilege Under California Code of Civil Procedure § 47(b).
15
16 Plaintiff’s abuse of process claim is also barred in its entirety by California Civil Code
17 § 47(b). California Civil Code § 47(b) extends a privilege over any publication “made in a
18 judicial proceeding.” California courts have held that the privilege will bar “virtually all. . .causes
19 of action” based solely on a publication made in the course of a judicial proceeding. Abraham,
20 217 Cal. App. 3d at 824. This includes an abuse of process claim like the one filed by Plaintiff.
21 Id.; Drasin v. Jacoby & Meyers, 150 Cal. App. 3d 481, 485; 197 Cal. Rptr. 768, 770 (1984).
22 Plaintiff’s claim for relief easily meets the test established to invoke the privilege. In order for a §
23 47(b) privilege to apply, the publication must be (1) made in a judicial or quasi-judicial
24 proceeding; (2) with a connection or logical relation to the action; (3) made to achieve the objects
25 of the litigation; and (4) involving the litigants or other participants authorized by law. Asia
26 Investment Co. v. Borowski, 133 Cal. App. 3d 832, 842-43; 184 Cal. Rptr. 317, 325 (1982). The
27 filing of a motion in the context of a lawsuit is a publication in the course of a judicial proceeding
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within the meaning of § 47(b). Abraham, 217 Cal. App. 3d at 822; see also Merlet v. Rizzo, 64
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1 Cal. App. 4th 53, 66; 75 Cal. Rptr. 2d 83, 90 (1998) (filing of a motion and subsequent motion for
2 reconsideration “are clearly permitted by law in the course of judicial proceedings”). Because
3 Plaintiff has alleged no support for his abuse of process claim other than MERS’s allegedly
4 “filing a motion for relief from stay with no evidentiary support” his abuse of process claim
5 should be dismissed as privileged under § 47(b).
6 E. Plaintiff Fails to State a Claim Against MERS to Quiet Title
7 “To state a claim to quiet title, a complaint must be verified and include (1) a legal
8 description of the property and its street address or common designation, (2) the title of the
9 plaintiff and the basis of the title, (3) the adverse claims to the title of the plaintiff, (4) the date as
10 of which the determination is sought, and (5) a prayer for the determination of the title of the
11 plaintiff against the adverse claims.” Rosales v. Downey S&L Ass'n, F.A., 2009 U.S. Dist. LEXIS
12 15923 at *10-11 (S.D. Cal. Mar. 2, 2009) (emphasis added) (citing Cal. Civ. Pro. § 761.020).
13 Plaintiff does not allege any of these required elements against MERS. Indeed, similar to
14 Plaintiff’s fraud claim, it is unclear whether Plaintiff is even attempting to allege a claim to quiet
15 title against MERS as MERS is not mentioned anywhere in the allegations relating to Plaintiff’s
16 claim. Complaint, ¶¶ 33-39. Instead, Plaintiff directs his allegations solely toward Freedom
17 Home Mortgage Corporation and DOES 101 through 150. Id. To the extent Plaintiff is
18 attempting to allege a claim to quiet title against MERS, the Complaint fails to put forth any
19 substantive factual allegations to support Plaintiff’s claim against MERS that meet the pleading
20 standards of Fed. R. Civ. Proc. 8(a)(2). Twombly, 550 U.S. at 555; Iqbal, 129 S. Ct. at 1950. As
21 a result, Plaintiff’s quiet title claim for relief should be dismissed without leave to amend.
22 F. Plaintiff Fails To State a Claim Against MERS For Injunctive Relief
23 Injunctive relief is not a cause of action, it is a remedy. See, e.g., I.C.C. v. Transcon
24 Lines, 513 U.S. 138, 144 (1995) (referring to injunctive relief as a remedy). “Additionally, a
25 claim for injunctive relief is not an independent cause of action.” Nguyen v. LaSalle Bank Nat'l
26 Ass'n, 2009 U.S. Dist. LEXIS 99412 at *7 (C.D. Cal. 2009) citing Brittain v. Indymac Bank, No.
27 C-09-2953 SC, 2009 U.S. Dist. LEXIS 84863 at *17, 2009 WL 2997394, at *6 (N.D. Cal. Sept.
28
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16, 2009). Not only is injunctive relief not an independent claim for relief, but Plaintiff has failed
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1 to allege properly any basis upon which he claims to be entitled to this remedy. As outlined
2 above, Plaintiff does not allege any valid claims against MERS in the first three causes of action
3 for fraud, abuse of process and quiet title and, as a result, the Complaint also fails to allege a
4 claim against MERS that would entitle Plaintiff to injunctive relief. See Brady v. State Bar of
5 California, 533 F.2d 502, 503 (9th Cir. 1976) (“Having failed to state any claim for relief,
6 appellant had no basis for any injunctive relief”).
7 IV. CONCLUSION
8 For the foregoing reasons, Plaintiff’s Complaint as to MERS should be dismissed without
9 leave to amend.
10 Dated: November 12, 2009 MORGAN, LEWIS & BOCKIUS LLP
11
12 By /s/ Richard W. Esterkin

Richard W. Esterkin
13 Brian M. Jazaeri
14 Attorneys for Defendant

Mortgage Electronic Registration
15 Systems, Inc.
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B OCKIUS LLP

How To Plead Abuse of Process - Arguments

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Case 2:09-ap-01135-PC Doc 25 Filed 11/12/09 Entered 11/12/09 17:03:47 Desc

Main Document Page 1 of 19

1 RICHARD W. ESTERKIN, State Bar No. 70769

15 [Notice of Motion and Motion filed concurrently

4 Alicea v. GE Money Bank,

9 Bell Atlantic v. Twombly,

12 Brady v. State Bar of California,

20 Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta,

23 In re MERSCORP, Inc., RESPA Litigation,

6 Rosales v. Downey S&L Ass'n, F.A.,

9 Swartz v. KPMG LLP,

12 Vicom, Inc. v. Harbridge Merchant Servs.,

16 Asia Investment Co. v. Borowski,

19 Drasin v. Jacoby & Meyers,

22 Meadows v. Bakersfield Savings & Loan Co.,

25 Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma,

6 Tellefsen v. Key System Transit Lines,

18 Moore’s Federal Practice (3d ed.)

1 Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) pursuant to Federal

1 C. Plaintiff’s Fraud Claim Fails to Meet the Heightened Pleading Requirements

6 appellant had no basis for any injunctive relief”).

10 Dated: November 12, 2009 MORGAN, LEWIS & BOCKIUS LLP

12 By /s/ Richard W. Esterkin

14 Attorneys for Defendant

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