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MTGLQ Investors, LP v. Wellington

United States District Court, D. New Mexico

April 27, 2018

MTGLQ INVESTORS, LP, Plaintiff,
v.
MONICA L. WELLINGTON, THE MONICA L. WELLINGTON DECLARATION OF TRUST DATED DECEMBER 28, 2007, ALTURA VILLAGE HOMEOWNERS' ASSOCIATION, INC., JPMORGAN CHASE BANK, N.A., AND THE UNKNOWN SPOUSE OF MONICA L. WELLINGTON, Defendants, and MONICA L. WELLINGTON, Counter-Claimant,
v.
MTGLQ INVESTORS, LP, Counter-Defendant, and MONICA L. WELLINGTON, Cross-Claimant,
v.
JPMORGAN CHASE BANK, N.A., Cross-Defendant, and MONICA L. WELLINGTON, Third-Party Plaintiff,
v.
WEINSTEIN & RILEY, P.S., ELIZABETH V. FRIEDENSTEIN, RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Third-Party Defendants.

          MEMORANDUM OPINION AND ORDER

         This matter comes before the Court upon “Defendant Monica Wellington's Motion to Dismiss Complaint of MTGLQ Investors, LP” (“Motion to Dismiss Complaint”) filed on June 23, 2017. (Doc. 9). Plaintiff MTGLQ filed its response on July 7, 2017, and Ms. Wellington filed her reply on July 21, 2017. (Docs. 18 and 27). The Court conducted a hearing on March 28, 2018, in which it briefly explained its reasons for denying this motion. That same day, the Court entered an Order noting its tentative ruling. (Doc. 69). This Memorandum Opinion and Order constitutes the full written opinion mentioned at the hearing and in the Order.

         I. Background

         This is a foreclosure case. On February 20, 2007, Profolio Home Mortgage Corporation (“Profolio”) loaned Ms. Wellington $134, 500.00 for the purchase of real property in Albuquerque, New Mexico. (Doc. 1-1) at 2, ¶ 7; Id. at 8. The Note for this loan contains an “Allonge to Note, ”[1] created on the same date as the Note, detailing an undated special indorsement from Profolio to Ohio Savings Bank signed by Baron Wilhelm, President.[2] Id. at 11 (stating “[p]ay to the order of Ohio Savings Bank, without recourse”). The Allonge to Note also contains an undated blank indorsement from Ohio Savings Bank which states “PAY TO THE ORDER OF, ” signed by Authorized Agent Christian Flowers.[3] Id. MTGLQ allegedly possesses the Note at this time. Id. at 2, ¶ 7.

         The Note details the “Maturity Date” for the loan is March 1, 2037. Id. at 8. The Note also states, “[i]f I am in default, the Note Holder may send me written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount.” Id. at 9. The date in the notice requiring full payment of the principal and accrued interest “must be at least 30 days after the date on which the notice is mailed to me or delivered by other means.” Id. The Note defines default status: “[i]f I do not pay the full amount of each monthly payment on the date it is due, I will be in default.” Id.

         Profolio secured the Note with a Mortgage on the purchased real property. Id. at 12-28. The Mortgage names Mortgage Electronic Registration Systems, Inc. (“MERS”) as a nominee for Profolio and its “successors and assigns.” Id. at 12. MERS is also named as the mortgagee. Id. The Mortgage was recorded with the Bernalillo County Clerk on March 20, 2007. Id.; id. at 3, ¶ 11.

         MTGLQ alleges that MERS erroneously released the Mortgage, as recorded on November 1, 2012. Id. at 3, ¶ 12. MTGLQ also alleges that MERS erroneously assigned the Mortgage to JPMorgan Chase Bank, N.A., as recorded on November 13, 2012. Id. at 3, ¶ 13.

         On February 19, 2016, MERS, through Assignment of Mortgage, assigned the Mortgage to MTGLQ. Id. at 45-47. This assignment was recorded on March 2, 2016, with the Bernalillo County Clerk. Id. The Mortgage was re-recorded with the Bernalillo County Clerk on September 27, 2016, to correct the legal description of the property. Id. at 3, ¶ 11; id. at 29-44.

         On January 25, 2017, MTGLQ filed its “Complaint for Debt and Money Due and for Foreclosure” (“Complaint”) in the Second Judicial District Court, County of Bernalillo, State of New Mexico against Ms. Wellington and others. Id. at 1. In Count I, MTGLQ seeks damages from Ms. Wellington under the Note. Id. at 2, ¶ 7. MTGLQ attached copies of the Note, Allonge to Note, Mortgage, and Assignment of Mortgage to its Complaint. Id. at 8-47. MTGLQ alleges Ms. Wellington last paid on the Note on February 1, 2011, and that she has been in default for failure to make payments thereafter. Id. at 2, ¶ 8. MTGLQ also alleges that it provided Ms. Wellington notice of her default, demanding payment. Id. MTGLQ does not allege specifically when it provided Ms. Wellington with notice of default or the date certain for payment in the notice. Id. Because Ms. Wellington failed to cure her default, MTGLQ elected to make the entire remaining principal with accrued interest due and payable. Id.

         In Count II of its Complaint, MTGLQ seeks foreclosure on the Mortgage. Id. at 2-5, ¶¶ 10-21. MTGLQ alleges that Altura Village Homeowners' Association, Inc., JP Morgan Chase Bank, N.A., and the “Unknown Spouse of Monica L. Wellington” (“Unknown Spouse”) may individually claim an interest in the property. Id. at 4-5, ¶¶ 19-21. On April 26, 2017, Ms. Wellington removed this case to this Court. (Doc. 1) at 1.

         II. Standard of Review

         When ruling on a Fed.R.Civ.P. 12(b)(6) motion to dismiss, the Court must accept all well-pleaded allegations as true and must view them in the light most favorable to the plaintiff. See Zinermon v. Burch, 494 U.S. 113, 118 (1990); Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir. 1984). Rule 12(b)(6) requires that a complaint set forth the grounds of a plaintiff's entitlement to relief through more than labels, conclusions and a formulaic recitation of the elements of a cause of action. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must allege facts sufficient to state a plausible claim of relief. Id. at 570. A claim is facially plausible if the plaintiff pleads facts sufficient for the court to reasonably infer that the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

         III. Discussion

         Ms. Wellington raises three significant issues in her Motion to Dismiss Complaint. First, she argues that MTGLQ lacks standing to pursue a personal judgment on the Note or foreclose on the Mortgage. (Doc. 9) at 5-9. Ms. Wellington supports her argument by asserting that the documents attached to the Complaint are either altered, fabricated, or inauthentic and, therefore, MTGLQ should be sanctioned with dismissal of its claims. Id. at 5. Further, she contends that MTGLQ's allegations that MERS erroneously released or assigned the Mortgage are insufficient to state a claim for fraud under Fed.R.Civ.P. 9(b). Id. at 6. Second, she argues that Count I of MTGLQ's Complaint is barred by the California statute of limitations. Id. at 11-13. Third, Ms. Wellington argues that the Court should dismiss the Unknown Spouse from this case. For the reasons explained below, these arguments fail to show why MTGLQ's Complaint should be dismissed or why the Unknown Spouse should be dismissed.

         A. MTGLQ's Standing to Enforce the Note and Foreclose the Mortgage

         1. Standing at the Time of the ...


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