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King v. LSF9 Master Participation Trust

United States District Court, D. Montana, Missoula Division

June 20, 2018

DAVID P. KING, JR., Plaintiff,
v.
LSF9 MASTER PARTICIPATION TRUST, Defendant.

          ORDER, AND FINDINGS AND RECOMMENDATION

          Jeremiah C. Lynch, United States Magistrate Judge.

         Before the Court is the Fed.R.Civ.P. 12(c) motion for judgment on the pleadings filed by Defendant U.S. Bank, N.A., as Trustee for LSF9 Master Participation Trust (“U.S. Bank”). Also before the Court is Plaintiff David King, Jr.'s subsequent Fed.R.Civ.P. 15 motion for leave to file an amended complaint. For the reasons discussed, the Court grants King's motion to amend and, therefore, recommends U.S. Bank's motion be denied with leave to renew.

         I. Background

         On December 15, 2017, King commenced this action by filing his complaint. He was appearing in this action and prosecuting his claims pro se at that time.

         King resides on his private property in Darby, Montana, which he purchased in approximately 2001. He later commenced construction of a new home on the property, and to do so he obtained a construction loan secured by a deed of trust encumbering his real property. Due to construction complications and cost overruns, King refinanced the construction loan and the balance on the debt grew. The new loan and promissory note that is apparently the subject of this action was originally stated as a loan in the amount of $350, 000.

         King apparently was not able to continue making the required loan payments after December, 2008. By March, 2009, the trustee on the deed of trust sought to foreclose and sell King's property, but the foreclosure did not occur.

         In March, 2011, King filed for bankruptcy. At that time OneWest Bank, FSB asserted it was the secured creditor relative to King's promissory note.

         In September, 2016, King received a notice indicating that LSF9 Master Participation Trust had become the owner of the subject loan. But, at the same time, King had been informed that Fannie Mae held ownership of the subject promissory note.

         Through King's bankruptcy proceedings OneWest and Fannie Mae eventually disavowed ownership of King's promissory note. LSF9 Master Participation Trust remained as the purported owner of the note.

         But through this action King asserts LSF9 Master Participation Trust is not the owner or holder of the promissory note that King signed. He believes the actual creditor on the promissory note is OneWest Bank. Consequently, King's original complaint requests a declaratory judgment establishing that LSF9 Master Participation Trust is not the “Note Holder”, is not entitled to receive loan payments, and does not possess the rights to enforce either the promissory note or the deed of trust. He further alleges LSF9 Master Participation Trust has falsely claimed ownership of the promissory note, allegedly in violation of federal law at 15 U.S.C. § 1602(g), and that it provided him with an inaccurate address for its business, allegedly in violation of 15 U.S.C. § 1641(g). Thus, he also requests an award of compensatory and punitive damages.

         In response to King's complaint U.S. Bank, as Trustee for LSF9 Master Participation Trust, filed a Fed.R.Civ.P. 12(c) motion for judgment on the pleadings. In substance, it argues that the existing transaction documents of which the Court can take judicial notice establish that the creditor rights under King's promissory note have been assigned to LSF9 Master Participation Trust. And it argues the federal statutes on which King relies do not provide him with a legal cause of action. Therefore, it requests the Court dismiss King's complaint.

         On May 3, 2018, King filed a Notice of Appearance reflecting that he retained legal counsel to represent him in this action. On that same date King's new counsel filed a Motion for Leave to File a First Amended Complaint under authority of Fed.R.Civ.P. 15.

         King's proposed amended complaint, as later revised and resubmitted to the Court on May 30, 2018 (doc. 36-2), contains many of the same factual allegations set forth in King's original complaint. King asserts the chain of documents allegedly assigning ownership of the promissory note to LSF9 Master Participation Trust is defective.

         King's proposed amended complaint advances various legal claims for relief predicated primarily upon his theory that LSF9 Master Participation Trust, contrary to its representations to King, is not the current owner of King's promissory note, and does not have the authority to enforce either the note or the related deed of trust. King's proposed claims assert LSF9 Master Participation Trust is liable for negligent misrepresentation, constructive fraud, unfair and deceptive practices, and for violations of the Fair Debt Collection ...


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