Wallace v. PennyMac Loan Servs., LLC, No. 2:25-cv-02297-APG-EJY (Mar. 26, 2026)

Case details
Full caption
Anthony Wallace v. PennyMac Loan Services, LLC, et al.
Country
United States
Jurisdiction
Nevada (NV)
Court
Nevada Supreme Court
Decided
Mar. 26, 2026
Majority
Andrew P. Gordon (C. J.) (unanimous Court)
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.12026 WL 837418Only the Westlaw citation is currently available.United States District Court, D. Nevada.ANTHONY WALLACE, Plaintiffv.PENNYMAC LOAN SERVICES,LLC, et al., DefendantsCase No. 2:25-cv-02297-APG-EJY|Filed 03/26/2026Editor's Note: This decision contains discussion of citationreferences that are incorrect or do not actually exist. Theseinvalid citations appeared in the original court opinion andhave been preserved as written since they are part of theofficial record. Any links to these invalid citations have beenremoved.[ECF Nos. 6, 24, 27, 33, 39, 44]Attorneys and Law FirmsAnthony Wallace, Las Vegas, NV, Pro Se.Natalie L. Winslow, Atlas Solomon LLP, Las Vegas, NV, forDefendants.Order (1) Granting Defendants’ Motion for Leave toFile Supplemental Authority; (2) Denying the Motion forJudicial Notice; (3) Denying the Motion to Strike as Moot;(4) Granting in Part Plaintiff's Motion to Amend; (5)Denying Defendants’ Motion to Dismiss as Moot; and(6) Ordering Supplemental Briefing on the Motions forInjunctive ReliefANDREW P. GORDON CHIEF UNITED STATESDISTRICT JUDGE*1 Plaintiff Anthony Wallace sues PennyMac LoanServices, LLC, along with PennyMac CEO David Spectorand CFO Daniel Perotti, for claims associated with a loan. In2020, Wallace obtained a mortgage loan from PennyMac thatwas secured by a deed of trust on Wallace's property located at9605 Stoney Mesa Court in Las Vegas. He has not made anymonthly loan payments since the September 1, 2025 paymentwas due. ECF No 48-4 at 3. In November 2025, Wallace filedthis suit, asserting various alleged irregularities with the loanand the defendants’ conduct. ECF No. 1.The defendants moved to dismiss the complaint onnumerous grounds, which Wallace opposed. Additionally, thedefendants asserted in their reply to their motion to dismissthat Wallace relied on fake cases to support his response brief.ECF No. 17 at 2.After briefing on the motion to dismiss was complete, thedefendants moved for leave to file supplemental authorityin the form of a decision by another judge in this districtwho sanctioned an attorney for using fake case citations. ECFNo. 24. Wallace opposed the motion, arguing it has nothingto do with the substantive claims at issue and is aimed at“improperly prejudicially influenc[ing] the Court.” ECF No.26 at 2. Wallace stated that the defendants “do not allege thatPlaintiff relied on non-existent cases; they merely dispute theinterpretation or application of legitimate authorities that existin the record.” Id.Wallace later filed a motion for judicial notice along witha “memorandum in support of core legal principles.” ECFNo. 27. The defendants moved to strike this document underFederal Rule of Civil Procedure 12(f) because it requestsjudicial notice of legal arguments rather than facts andWallace's opportunity to raise those arguments was in hisresponse to the motion to dismiss. ECF No. 33. Alternatively,they opposed it, asserting that Wallace's complaint fails tostate a claim regardless of the newly cited authorities. Wallaceresponded that Rule 12(f) applies to pleadings, not a motion.He also asserted that he is not asking the court to acceptdisputed facts as true, he is asking the court to take judicialnotice of relevant legal authorities. He asserted the defendantshave not been prejudiced by the filing. Finally, he argued thatif I am not inclined to consider his motion, the proper remedyis to deny it, not strike it.On February 26, 2026, PennyMac, through its trustee MTCFinancial Inc., recorded a notice of breach and election tosell the property due to Wallace's default under the deedof trust. ECF No. 48-3 at 2. That prompted Wallace to fileemergency motions for a temporary restraining order (TRO)and preliminary injunction to block the sale. ECF Nos. 39;40; see also ECF No. 44 (requesting an emergency hearing onthe TRO and preliminary injunction motions). I ordered thedefendants to respond to the TRO motion by March 17 andWallace to reply by March 19. ECF No. 47. The defendants
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.2timely filed their oppositions, and Wallace timely filed hisreply. ECF Nos. 48; 50; 51. Wallace also moved to amend hiscomplaint, which the defendants opposed. ECF Nos. 43; 49.*2 I grant the defendants’ motion for leave to filesupplemental authority. I deny Wallace's motion for judicialnotice and deny as moot the defendants’ motion to strike. Igrant in part Wallace's motion to amend the complaint anddeny as moot the defendants’ motion to dismiss because it isdirected at the original complaint. Finally, I order the partiesto file supplemental briefs on Wallace's motions for injunctiverelief.I. I grant the motion for leave to file supplementalauthority (ECF No. 24).Under Local Rule 7-2(g), a party may not file supplementalauthorities without the court's leave “granted for good cause.”The defendants have good cause to bring to my attentionanother judge in this district sanctioning counsel for providingfake caselaw citations because the defendants assert thatWallace has likewise presented fake case citations. AlthoughWallace contends the defendants do not accuse him ofpresenting fake cases, they do. In their reply brief, thedefendants identified four fake cases related to Wallace'sRESPA and fraudulent inducement claims. ECF No. 17 at3, 7. And while the defendants acknowledge that two othercases exist, they assert that Wallace quoted language fromthose cases that does not exist. Id. at 5. Thus, the supplementalauthority is pertinent to issues before the court, and I grant themotion for leave to file it.Wallace has cited to fake case authority as follows:1. “Shapiro v JPMorgan Chase & Co., No. 1:13-cv-09764-PGG, 2014 WL 1224546, at 5 (S.D.N.Y. Mar. 24, 2014).”ECF No. 13 at 6. The case citation does not bring up a caseby that name. A search of the Southern District of New York'sdocket shows that case number is not associated with anycase.2. “Bally v. Home Loan Servicing, LP, No. 2:09-cv-02445-MCE-KJM, 2011 WL 867568, at 4 (E.D. Cal. Mar. 10,2011).” ECF No. 13 at 6. The case citation does not bring upa case with that name, and the Eastern District of Californiacase number is assigned to a different case.3. “Boyle v. Bank of America, N.A., No. 2:13-cv-02021-APG-VCF, 2015 WL 1321435, at 6 (D. Nev. Mar. 24, 2015).”ECF No. 13 at 4. The case citation does not bring up a caseby that name, and that case number is assigned to a differentcase in this court.4. “Holmes v. Countrywide Financial Corp., No. 2:10-cv-00333-RCJ-PAL, 2010 WL 11597538, at 3 (D. Nev. Dec.16, 2010).” ECF No. 13 at 5. The case citation does not bringup a case by that name, and that case number is assigned toa different case in this court.5. Wallace also cited at least one fake case in his reply brief,which was filed after the defendants had already notifiedWallace that some of his other cases were fake. See ECF No.51 at 7 (citing “Pasillas v. HSBC Bank USA, N.A., No. 2:12-cv-01107, 2013 WL 3873227, at 5 (D. Nev. July 24, 2013),”but the citation does not bring up a case by that name and thecase number is assigned to a different case in this court).Additionally, Wallace has cited two cases that exist butthe quotations he presented are not in those cases. Wallacepurports to quote Weingartner v. Chase Home Finance, LLC,702 F. Supp. 2d 1276, 1288 (D. Nev. 2010) as statingthat fiduciary duties may arise from special circumstancesincluding “(1) reliance by one party on the other, (2) exerciseof trust and confidence by one party in the other, or (3) anagreement by the servicer to act primarily for the benefit of theborrower.” ECF No. 13 at 3 (quotations omitted). Weingartneris a real case at that citation, but it does not contain thequoted language. Similarly, Wallace represents that Jolley v.Bank of America, N.A., 213 Cal. App. 4th 872, 905 (2013)states that a “loan servicer can owe a fiduciary duty whenit assumes additional responsibilities beyond mere paymentprocessing, such as handling escrow accounts or providingfinancial advice.” ECF No. 13 at 3 (quotations omitted). Acase named Jolley exists at that case citation, but the case isJolley v. Chase Home Finance, LLC and it does not containthe quoted language.*3 When a party presents a filing to a court, the partycertifies “that to the best of the [party's] knowledge,information, and belief, formed after an inquiry reasonableunder the circumstances ... the claims, defenses, and otherlegal contentions are warranted by existing law.” FRCP 11(b).This imposes an “affirmative duty of investigation ... asto law ... before motions are filed.” Golden Eagle Distrib.Corp., v. Burroughs Corp., 801 F.2d 1531, 1536 (9th Cir.1986). This extends to attorneys and pro se litigants alike.FRCP 11(b). “A fake opinion is not existing law, and citationto a fake opinion does not provide a non-frivolous groundfor extending, modifying, or reversing existing law, or for
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.3establishing new law. An attempt to persuade a court oroppose an adversary by relying on fake opinions is an abuseof the adversary system.” Whiting v. City of Athens Tenn., No.24-5918, --- F.4th ----, 2026 WL 710568, at *3 (6th Cir. Mar.13, 2026) (quotations omitted).There has been a rise in fake authority cited in briefs, usuallyas the result of using generative AI software, like ChatGPT,to draft pleadings. Chavez-DeRemer v. NAB, LLC, No. 2:21-CV-00984-JAD-EJY, 2025 WL 2308676, at *3 (D. Nev.Aug. 11, 2025). Generative AI often invents fake cases andlegal precedent in its drafting, and using it is no excuse fornot verifying the veracity of citations. See Whiting, 2026WL 710568, at *4 (“Citing even a single fake case canbe sanctionable because no brief, pleading, motion, or anyother paper filed in any court should contain any citations—whether provided by generative AI or any other source—that a lawyer [or pro se party] has not personally readand verified.” (simplified)). Citing fake legal authority isnot harmless. It wastes the other parties’ and the court'sresources trying to track down the nonexistent cases. Id. at*9 (“Citing fake cases unnecessarily burdens the court andthe taxpayers, so courts can and should fine the offendinglawyers to reimburse the court for its time.” (simplified)). Andit “can harm the reputation of judges and courts whose namesare falsely invoked as authors of the bogus opinions and thereputation of a party attributed with fictional conduct.” Id. at*4 (simplified).Going forward, Wallace is reminded of his duty under FRCP11(b)(2) and that citing fake cases drafted by generative AIviolates this rule. Failure to comply in the future may resultin sanctions, such as an order to pay a penalty into court ornonmonetary sanctions, such as striking claims or defenses.FRCP 11(c)(4).II. I deny the motion for judicial notice (ECF No. 27) anddeny the motion to strike (ECF No. 33) as moot.Wallace moves for me to take judicial notice of various legalprinciples. The defendants move to strike the motion as animproper request for judicial notice.I deny Wallace's motion because he should argue his pointsof law in a motion, response, or reply he files, and not asa separate motion to set forth what he views as relevantlegal principles. Wallace requests that I consider the citedauthorities when ruling on the defendants’ motion to dismiss,but his opportunity to bring those authorities to my attentionwas in his response to the motion to dismiss. Additionally,the motion to dismiss is now moot. I therefore deny Wallace'smotion for judicial notice. I deny as moot the defendants’motion to strike because I deny Wallace's motion for judicialnotice.III. I grant in part the motion to amend (ECF No. 43) anddeny the motion to dismiss (ECF No. 6) as moot.Wallace moves to amend and attaches a proposed secondamended complaint. ECF No. 43-1. The defendants oppose,arguing amendment is futile and Wallace is repeatedlyamending to prolong the proceedings and stave offforeclosure.*4 I must “freely give leave” to a plaintiff to amend hiscomplaint “when justice so requires.” Fed. R. Civ. P. 15(a)(2).I am to apply this policy “with extreme liberality.” EminenceCap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003)(quotation omitted). I consider “five factors in assessingthe propriety of leave to amend—bad faith, undue delay,prejudice to the opposing party, futility of amendment, andwhether the plaintiff has previously amended the complaint.”United States v. Corinthian Colleges, 655 F.3d 984, 995 (9thCir. 2011).Wallace moved for leave to amend the complaintapproximately four months after filing his first complaint, sothere is no undue delay. Although he made other attemptsto amend the complaint, this is the first time he has done soproperly by seeking leave to do so and attaching the proposedamendment. There is no prejudice to the defendants becausethey responded to the motions for injunctive relief as if theamended complaint were the operative pleading. See ECFNo. 48 at 4-7. And the assertion that Wallace is seekingamendment in bad faith to delay the foreclosure does not havemuch force where Wallace is already seeking to enjoin thesale through a separate motion.Thus, the only reason to deny amendment is if it would befutile. “Under futility analysis, dismissal without leave toamend is improper unless it is clear ... that the complaintcould not be saved by any amendment.” Corinthian Colleges,655 F.3d at 995 (simplified). I should grant leave to amend“if the deficiencies can be cured with additional allegationsthat are consistent with the challenged pleading and that donot contradict the allegations in the original complaint.” Id.(simplified). I address each claim to determine whether theproposed amendment would be futile and whether furtheramendment is needed.
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.4A. Truth in Lending Act (TILA)Wallace's amended complaint alleges all the defendantsviolated TILA by not extending him the loan proceedseither directly or through credits associated with him, failingto produce documentation showing he received the loanproceeds in some fashion, failing to properly assign the deedof trust, and failing to provide evidence that they are theholders of the original promissory note or that the note isproperly endorsed to PennyMac. ECF No. 43-1 at 3-4, 7-8.He alleges this violates TILA because the defendants have notidentified the creditor's identity and the transaction's materialterms. Id. at 8. He alleges the individual defendants are liableunder 12 U.S.C. § 503 and as control persons under TILA. Id.The defendants argue that this claim is futile because it isuntimely. They assert that TILA claims must be broughtwithin one year of the alleged violation, but Wallace's loanoriginated in November 2020, and he did not file this actionuntil November 2025. They also argue that the individualdefendants (Spector and Perotti) are not “creditors,” so thisclaim fails against them. And they contend that althoughWallace invokes 12 U.S.C. § 503 to assign individual liabilityto Spector and Perotti, that statute applies only to banks, not aloan servicer like PennyMac. The defendants also assert that §503 applies only to violations of certain statutory provisions,none of which is at issue here.In reply, Wallace argues that equitable tolling may applywhere a defendant conceals its identity or the transaction'strue nature. He contends that his TILA claim is relevant to hisarguments about who is the true party in interest capable offoreclosing on the property.*5 Wallace's TILA claim is subject to a one-year statute oflimitations. 15 U.S.C. § 1640(e). The limitation period begins“from the date of the occurrence of the violation.” Id. Wallacealleges the defendants violated § 1638(a) by not disclosing,among other things, the identity of the creditor. However,Wallace's loan originated in November 2020, so any violationrelated to loan origination is time-barred because Wallace didnot bring suit until November 2025. ECF Nos. 1; 43-1 at3; 48-1 at 3. Likewise, to the extent Wallace's TILA claimis based on the assignment from MERS to PennyMac inSeptember 2024, his claim is still untimely. ECF Nos. 1; 43-1at 4; 48-2 at 2.Equitable tolling may apply “in situations where, despite alldue diligence, the party invoking equitable tolling is unableto obtain vital information bearing on the existence of theclaim.” Cervantes v. Countrywide Home Loans, Inc., 656 F.3d1034, 1045 (9th Cir. 2011) (discussing equitable tolling in thecontext of a TILA claim) (quotation omitted). But Wallace hasnot explained why he was prevented from bringing his TILAclaim earlier. Although Wallace refers to the identity of thecreditor being concealed, PennyMac is identified as the lenderon the note, the deed of trust, the notice of breach and electionto sell, and the affidavit attached to the notice of breach. SeeECF Nos. 43-1 at 24; 49-1 at 4; 49-3 at 2, 4. It is thus unclearwhat he believes has been concealed about the creditor'sidentity. And it is unclear what he means about the natureof the transaction being concealed. It may have something todo with his assertion that he has not been credited with theloan funds, but he does not state when he discovered factsthat enabled him to bring a TILA claim. Because Wallace'sTILA claim is untimely, the proposed amendment to add thisclaim is futile against any defendant. I therefore deny leave toamend to add this claim as alleged in the proposed amendedcomplaint.B. Fair Credit Reporting Act (FCRA)In the proposed amended complaint, Wallace allegesPennyMac and the individual defendants violated FCRA byfailing to conduct a reasonable investigation and continuingto furnish inaccurate information to credit reporting agencies(CRAs) after he disputed the accuracy of the reportedinformation with the CRAs, who, on information and belief,advised the defendants of Wallace's dispute. ECF No. 43-1 at9.The defendants argue that this proposed amendment is futilebecause Wallace does not identify what account was reportedinaccurately, what the inaccuracy was, what information hedisputed, with which CRA he filed a dispute, or how thedefendants’ investigation was deficient. Additionally, theyargue that Spector and Perotti cannot be liable under FCRAbecause they are not furnishers of information under thatstatute.FCRA “imposes some duties on the sources that providecredit information to CRAs, called ‘furnishers’ in the statute.”Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153(9th Cir. 2009). As relevant here, 15 U.S.C. § 1681s-2(b)provides that a furnisher, upon receiving notice that aconsumer disputes the accuracy of information provided to aCRA, shall conduct an investigation regarding the disputedinformation, review all relevant information provided by theCRA, and report the results of its investigation to the CRA.FCRA also requires that, if the investigation finds incomplete
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.5or inaccurate information, the furnisher must report the resultsto all other CRAs that it furnished that information to andmodify, delete, or permanently block reporting the disputedinformation that is inaccurate, incomplete, or unverifiable. 15U.S.C. § 1681s–2(b)(1)(D) and (E). “These duties arise onlyafter the furnisher receives notice of dispute from a CRA;notice of a dispute received directly from the consumer doesnot trigger furnishers’ duties under subsection (b).” Gorman,584 F.3d at 1154.*6 To state a FCRA claim, a plaintiff must plausiblyallege that: (1) he found an inaccuracy in his credit report;(2) he notified a credit reporting agency; (3) the creditreporting agency notified the furnisher of the informationabout the dispute; and (4) the furnisher failed to investigatethe inaccuracies or otherwise failed to comply with therequirements of 15 U.S.C. § 1681s–2(b)(1)(A)-(E). Seeid. “An item on a credit report can be incomplete orinaccurate ... because it is patently incorrect, or because itis misleading in such a way and to such an extent that itcan be expected to adversely affect credit decisions.” Drew v.Equifax Info. Servs., LLC, 690 F.3d 1100, 1108 (9th Cir. 2012)(simplified). The plaintiff bears the burden of showing thatthe investigation was unreasonable. See Gorman, 584 F.3d at1163; see also Chiang v. Verizon New England Inc., 595 F.3d26, 37 (1st Cir. 2010).Wallace's proposed amended complaint avers that he“disputed the accuracy and legitimacy of the reported debtobligation” with CRAs, but he does not identify withwhich agencies or when he did so. ECF No. 43-1 at 6.He does not identify what the inaccuracy or illegitimacyis, nor does he state what he told the CRA about thealleged inaccuracy or illegitimacy. See Gorman, 584 F.3d at1157 (“The pertinent question is ... whether the furnisher'sprocedures were reasonable in light of what it learned aboutthe nature of the dispute from the description in the CRA'snotice of dispute.”). He does not state why any investigationwas unreasonable other than that the defendants allegedlycontinued to report inaccurate information. In sum, Wallace'sconclusory allegations fail to plausibly allege a violation.Additionally, Wallace does not plausibly allege why Spectorand Perotti would be liable under FCRA. Indeed, the casehe cites suggests that they are not proper defendants. SeeOwens v. Cent. Tr. Bank, No. 6:13-CV-03433-MDH, 2014WL 5716762, at *3 n.5 (W.D. Mo. Nov. 5, 2014) (“As statedin the Court's prior order, a ‘furnisher’ is ‘an entity thatfurnishes information relating to consumers to one or moreconsumer reporting agencies for inclusion in a consumerreport.’ 12 C.F.R. § 717.41(c). The individual defendantsare not ‘entities’ and the Second Amended Complaint doesnot plausibly infer that the individual defendants furnishedcredit information to the consumer reporting agencies.”). Itherefore deny leave to amend to add this claim as alleged inthe proposed amended complaint.C. Violation of Nevada Revised Statutes § 107.510Wallace's proposed amended complaint asserts this claimagainst PennyMac and MTC. ECF No. 43-1 at 9. He allegesthat PennyMac did not comply with Nevada Revised Statutes(NRS) § 107.510(2), which requires a mortgagee on aresidential mortgage loan to “contact the borrower in personor by telephone to assess the borrower's financial situationand to explore options for the borrower to avoid a foreclosuresale.” If the mortgagee does not satisfy subsection (2), itcan attempt other means to fulfill its duty to contact theborrower before commencing foreclosure. NRS § 107.510(5).A recorded notice of default and election to sell must “containa declaration that the mortgage servicer has contacted theborrower as required by subsection 2, has attempted to contactthe borrower as required by subsection 5 or that no contractwas required.” NRS § 107.510(6).Wallace's proposed amended complaint alleges PennyMac'sdeclaration in support of the notice of default is “a boilerplate,checkbox form that fails to provide specific factual detailregarding any alleged contact with” him. ECF No. 43-1 at11. He states “[u]pon information and belief, no meaningfulcontact occurred as required by NRS 107.510(2).” Id.*7 The defendants argue this claim is futile because thestatute does not require the affidavit to be in any particularform or to contain the details Wallace identifies. They notethat Wallace does not allege that PennyMac did not contacthim, instead asserting that any contact was not “meaningful.”But, they argue, the statute does not require meaningfulcontact. Alternatively, they argue that substantial compliancewith the statute is all that is required, and they met thatburden. Finally, they assert Wallace cannot show prejudicefrom any technical violation because the foreclosure sale hasnot occurred and he can pursue foreclosure alternatives duringthe statutory 90-day period following a notice of default.Wallace replies that Nevada's Homeowner's Bill of Rightswas meant to “mandate meaningful, substantive contact – nottechnical, checkbox compliance.” ECF No. 51 at 7.
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.6I deny leave to amend this claim because Wallace has notplausibly alleged a violation of NRS § 107.510(2) or (6). Therecorded notice of breach contains the required affidavit thatindicates that the “mortgage servicer tried with due diligenceto contact the borrower pursuant to NRS § 107.510(5) inorder to assess the borrower's financial situation and exploreoptions for the borrower to avoid foreclosure.” ECF No. 48-3at 7. The statute does not dictate a particular form for theaffidavit, and it does not prohibit the use of a form that allowsthe mortgage servicer to fill in a circle to indicate which ofseveral options it employed to comply with the statute.Wallace does not allege that PennyMac never tried to contacthim. Instead, he asserts the contact must be “meaningful.”But it is unclear what he means by this assertion. He doesnot explain what was not meaningful about the contactsor attempted contacts PennyMac made. Section 107.510(2)describes what must occur if contact is made, and subsection(5) describes what the servicer must do if it has not contactedthe borrower under subsection (2). Wallace does not identifywhat statutory requirement PennyMac has failed to meet.Consequently, I deny leave to amend to add this claim asalleged in the proposed amended complaint.D. Failure of Consideration and Declaratory ReliefThe proposed amended complaint sets forth separate claimsfor “failure of consideration” and declaratory judgment.ECF No. 43-1 at 9-10, 12. Wallace asserts the “failure ofconsideration” claim against PennyMac and MTC and allegesthey lack authority to foreclose on the property because theloan, which the deed of trust secures, was not supportedby consideration. Specifically, he alleges that he “did notreceive actual loan proceeds, funds, or credits traceable toDefendants.” ECF No. 43-1 at 10. He asserts his declaratoryrelief claim against all defendants and seeks declarationson: (1) whether the defendants are the lawful holders ofthe promissory note; (2) whether the assignment of thedeed of trust from MERS to PennyMac was valid; (3)whether MTC was properly appointed as successor trustee;(4) whether the loan transaction fails for lack of consideration;(5) whether the defendants violated TILA and FCRA; and(6) whether the defendants complied with Nevada's pre-foreclosure requirements. ECF No. 43-1 at 12.PennyMac argues that amendment to add the failure ofconsideration claim is futile because this is a defense toa breach of contract claim, and Nevada law does notrecognize failure of consideration as a standalone cause ofaction. Similarly, PennyMac argues that declaratory reliefis a remedy, not an independent cause of action where noclaim otherwise exists. PennyMac asserts that because allof Wallace's other claims fail, so does his declaratory reliefclaim.The Supreme Court of Nevada has characterized a failureof consideration as an affirmative defense. See St. James v.Diversified Com. Fin. Corp., 714 P.2d 179, 180 (Nev. 1986)(“Appellants answered, setting forth as an affirmative defensefailure of consideration ....”); Rocky Mountain Powder Co.v. Hamlin, 310 P.2d 404, 406 (Nev. 1957) (“As between themaker and the payee of a promissory note, absence or failureof consideration is available as a defense.”). There does notappear to be a standalone claim for failure of consideration.Thus, I deny leave to amend to assert that claim.*8 However, Wallace also seeks to assert a declaratoryrelief claim to request a declaration about whether the loantransaction fails for lack of consideration. The DeclaratoryJudgment Act allows federal courts to provide the remedyof a declaratory judgment in a case involving an actualcontroversy falling within the federal court's subject matterjurisdiction. See 28 U.S.C. § 2201(a). In such a case, “theparties litigate the underlying claim, and the declaratoryjudgment is merely a form of relief that the court may grant.”Val-Com Acquisitions Trust v. CitiMortgage, Inc., 421 Fed.Appx. 398, 400-01 (5th Cir. 2011) (unpublished); see alsoCollin Cty., Tex. v. Homeowners Ass'n for Values Essentialto Neighborhoods, (HAVEN), 915 F.2d 167, 171 (5th Cir.1990) (“Since it is the underlying cause of action of thedefendant against the plaintiff that is actually litigated in adeclaratory judgment action, a party bringing a declaratoryjudgment action must have been a proper party had thedefendant brought suit on the underlying cause of action.”).The underlying claim here would be PennyMac's breach ofcontract claim that Wallace breached the note by failingto make payments. Thus, Wallace properly may seek adeclaration that he owes no duty to make those paymentsbecause the contract fails for lack of consideration.Because PennyMac makes no other argument for whyWallace's declaratory relief claim would be futile, I allowit to proceed. Thus, I grant Wallace's motion to amend toassert his declaratory relief claim seeking declarations about:(1) whether the defendants are the lawful holders of thepromissory note; (2) whether the assignment of the deedof trust from MERS to PennyMac was valid; (3) whetherMTC was properly appointed as successor trustee; and (4)whether the loan transaction fails for lack of consideration.
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.7However, I deny leave to amend to seek declarations aboutwhether the defendants violated TILA, FCRA, or Nevada'spre-foreclosure requirements because I have denied Wallaceleave to amend to add those claims and any declaratory reliefclaim would be duplicative of the substantive claims.I direct the clerk of court to detach and file separately thesecond amended complaint, and that is now the operativecomplaint in this matter. Because it is the operative complaint,I deny the defendants’ motion to dismiss (ECF No. 6) as mootbecause it is directed at the original complaint. See Ramirez v.Cnty. of San Bernardino, 806 F.3d 1002, 1008 (9th Cir. 2015).Finally, if Wallace wants to amend his TILA, FCRA, andNRS § 107.510 claims, he must file a motion to amend andattach to that motion a proposed amended complaint thatcorrects the deficiencies identified in this order. Additionally,if Wallace seeks to amend again, I suggest Wallace reviewthe defendants’ briefs related to the motion to dismiss, themotion to amend, and the motions for injunctive relief. IfWallace does not move to amend again, the case will proceedon Wallace's declaratory relief claim only.IV. I deny the motions for injunctive relief in part becauseWallace is not likely to succeed on the merits of hisTILA, FCRA, and NRS § 107.510 claims, but I directsupplemental briefing on whether Wallace's likelihoodof success or serious questions on the merits of thedeclaratory relief claim.Because I have denied Wallace leave to amend as to hisTILA, FCRA, and NRS § 107.510 claims, he is not likely tosucceed on the merits of those claims. Even if I consideredthose claims, the TILA claim is not likely to succeed becauseit is time-barred. The FCRA claim is not likely to succeedbecause although Wallace avers that he filed a dispute withCRAs, he does not identify which agencies or when he didso. ECF No. 41 at 2. He does not identify what he toldthe CRA the alleged inaccuracy was. He states only thathe “disputed the debt,” and he did not provide me with thedispute letters. Id. He does not state why any investigationwas unreasonable other than that the defendants allegedlycontinued to report inaccurate information. His conclusorystatements are insufficient to support the extraordinaryinjunctive relief he requests. Winter, 555 U.S. at 22 (statingthat injunctive relief is “an extraordinary remedy that mayonly be awarded upon a clear showing that the plaintiffis entitled to such relief”). Additionally, it is unclear whya FCRA violation would support enjoining the foreclosuresale as opposed to potential damages for inaccurate creditreporting. And the NRS § 107.510 claim fails becauseWallace has not shown PennyMac violated the statute'srequirements.*9 As to the declaratory relief claim for failure ofconsideration, the parties have not adequately addressedvarious issues associated with that claim, so I ordersupplemental briefing. First, Wallace has not addressed thewarranty deed he issued to The Strategic-Moor Non-StatutoryPrivate Irrevocable Trust purporting to transfer the propertyfor $10. ECF No. 6-3. This warranty deed raises numerousquestions that Wallace must address in supplemental briefing,specifically: (1) does he have standing to challenge aforeclosure on the property if he no longer owns it; (2) shouldThe Strategic-Moor Non-Statutory Private Irrevocable Trustbe joined as a party to this case; (3) is this purported transfer abreach of the deed of trust; and (4) how does he reconcile thiswarranty deed with his statements in his affidavit in supportof the TRO motion that he is “the owner and resident of” theproperty at issue. ECF No. 41 at 1.Second, Wallace must address issues surrounding hischallenge to the failure of consideration. Although Wallaceasserts that he has not received the loan funds, he admits hesigned the note, and it appears he paid on the loan for yearsuntil recently. Wallace must address: (1) why he obtained theloan (i.e., was it a purchase money loan by which he boughtthe property or a home equity loan for some other purpose);(2) if he never received the loan proceeds or credit for theloan proceeds, why did he pay on the loan for years and whydid he decide to stop paying on the loan in 2025; and (3)why does he contend that so-called “bookkeeping entries” areinsufficient consideration if those bookkeeping entries reflectthe satisfaction of another obligation (for example, anotherloan on the property or another obligation Wallace owed).ECF No. 41 at 2. Wallace's opening brief must address theseissues.The defendants also have not adequately addressed thelikelihood of success of Wallace's declaratory relief claimbecause they argued only that it cannot be a standalone claim.Thus, the defendants must address, with evidence, Wallace'sassertion that he “did not receive actual loan proceeds, funds,or credits traceable to Defendants.” ECF No. 43-1 at 10. Forexample, the defendants may provide escrow instructions orfinancial records showing how the loan proceeds either weretransferred to him or credited for his benefit. Additionally,the defendants have not addressed Wallace's other requesteddeclarations regarding (1) whether the defendants are the
ANTHONY WALLACE, Plaintiff v. PENNYMAC LOAN SERVICES,..., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.8lawful holders of the promissory note; (2) whether theassignment of the deed of trust from MERS to PennyMacwas valid; and (3) whether MTC was properly appointed assuccessor trustee. The defendants’ opening brief must addressthese issues.I will allow each side one response brief to address the issuesraised in the other side's opening brief.V. ConclusionI THEREFORE ORDER that plaintiff Anthony Wallace'smotion to amend (ECF No. 43) is GRANTED in part.I FURTHER ORDER the clerk of court to detach and fileseparately the second amended complaint (ECF No. 43-1).That is the operative complaint in this case going forwardand the only claim that may proceed at this point is Wallace'sclaim for declaratory relief seeking declarations regarding(1) whether the defendants are the lawful holders of thepromissory note; (2) whether the assignment of the deed oftrust from MERS to PennyMac was valid; (3) whether MTCwas properly appointed as successor trustee; and (4) whetherthe loan transaction fails for lack of consideration.I FURTHER ORDER the defendants’ motion to dismiss(ECF No. 6) is DENIED as moot because it is directed at theoriginal complaint.I FURTHER ORDER that the defendants’ motion for leave tofile supplemental authority (ECF No. 24) is GRANTED.I FURTHER ORDER that plaintiff Anthony Wallace's motionfor judicial notice (ECF No. 27) is DENIED.I FURTHER ORDER that the defendants’ motion to strike(ECF No. 33) is DENIED as moot.*10 I FURTHER ORDER the parties to file supplementalbriefs addressing the issues identified in this order regardingplaintiff Anthony Wallace's motions for temporary restrainingorder and preliminary injunction (ECF Nos. 38, 40). Theparties’ opening briefs are due April 10, 2026. Responsebriefs are due April 24, 2026. No reply briefs are allowedabsent further order of the court.I FURTHER ORDER that plaintiff Anthony Wallace's motionfor emergency hearing (ECF No. 44) is DENIED withoutprejudice.DATED this 26th day of March, 2026.All CitationsSlip Copy, 2026 WL 837418End of Document© 2026 Thomson Reuters. No claim to original U.S.Government Works.
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