Lewis v. JPMorgan Chase Bank NA et al

Filing 25

ORDER granting 18 Defendant JPMorgan Chase Bank's Motion to Dismiss for Failure to State a Claim. That the clerk enter judgment dismissing this action with prejudice. The clerk shall terminate the case. Signed by Judge Neil V Wake on 10/15/12.(DMT)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Pamella Lewis,
Plaintiff,

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No. CV-12-08054-PCT-NVW
ORDER

vs.
JPMorgan Chase Bank, N.A.; Quality Loan
Services, et al.,

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Defendants.

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Before the Court is Defendant JPMorgan Chase Bank’s Motion to Dismiss Second

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Amended Complaint (Doc. 18).

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granted, and Plaintiff’s claims will be dismissed with prejudice.

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I.

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For the reasons stated below, this Motion will be

Background
Plaintiff owns a home in Flagstaff, Arizona, with both a first and second mortgage.

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Defendant JPMorgan Chase Bank (“Chase”) is her current lender.

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Plaintiff began missing payments and defaulted on the loans. She alleges that she has

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attempted to bring both loans current but Chase has refused to accept her payments.

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Quality Loan Services – previously a defendant in this case – has noticed a trustee’s sale

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that has not yet occurred.

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II.

At some point,

Legal Standard

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To state a claim for relief under Fed. R. Civ. P. 8(a), a plaintiff must make “‘a

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short and plain statement of the claim showing that the pleader is entitled to relief,’ in

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order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon

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which it rests.’”

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omitted). This “short and plain statement” must also be “plausible on its face.” Ashcroft

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v. Iqbal, 556 U.S. 662, 677 (2009).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations

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“Determining whether a complaint states a plausible claim for relief . . . [is] a

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context-specific task that requires the reviewing court to draw on its judicial experience

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and common sense.” Id. at 679. A claim is plausible if it contains “[f]actual allegations

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[sufficient] to raise a right to relief above the speculative level,” Twombly, 550 U.S. at

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555, and to permit a reasonable inference that the defendant is liable for the conduct

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alleged, Iqbal, 556 U.S. at 678. In evaluating a motion to dismiss, the Court accepts all

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of Plaintiffs’ plausible factual allegations as true and construes the pleadings in a light

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most favorable to them. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). The

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principle that a court accepts as true all of the allegations in a complaint does not,

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however, apply to legal conclusions or conclusory factual allegations. Iqbal, 566 U.S. at

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678. “Threadbare recitals of the elements of a cause of action, supported by mere

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conclusory statements, do not suffice.” Id. Rather, the plaintiff must at least “allege

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sufficient facts to state the elements of [the relevant] claim.” Johnson v. Riverside

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Healthcare Sys., LP, 534 F.3d 1116, 1122 (9th Cir. 2008).

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material beyond the pleadings on a motion to dismiss when documents are described in a

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complaint, the documents’ authenticity is not contested, and the plaintiff's complaint

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necessarily relies on them. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

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III.

A court may consider

Analysis
A.

Counts Previously Dismissed with Prejudice

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The Court previously dismissed with prejudice several of the claims that Plaintiff

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reintroduced in her Second Amended Complaint (SAC). Count 3 for breach of contract,

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Count 3B (also listed as Count 3 in the SAC) for declaratory relief, Count 4 for violation

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of A.R.S. § 33-807, Count 6 for violation of the Fair Debt Collections Practices Act

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(FDCPA), Count 7 for declaratory relief, and Count 8 for wrongful foreclosure were all

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dismissed with prejudice in a previous Order (Doc. 14). Plaintiff has again included each

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of these claims in her SAC without seeking leave of the Court. Nevertheless, the Court

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has again considered each of the counts as stated in the SAC to determine whether new

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allegations or theories are presented. Plaintiff has again failed to state a claim in each

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count.

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In Count 3, Plaintiff has not stated a claim for breach of contract: she generally

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alleges that an adjustment of the periodic rate and annual percentage rate on the second

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mortgage was not performed, but fails to identify when or how a breach of the contract

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occurred. In Count 3B, Plaintiff seeks declaratory relief based on a theory that alleges

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defects in assignment of the deed of trust. As before, Plaintiff lacks standing to bring

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such a claim. In re Mortg. Elec. Registration Sys. (MERS) Litig., No. CV11-8085-PCT-

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JAT, 2012 WL 1931365, at *4 (D. Ariz. May 25, 2012). In Count 4, Plaintiff alleges

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violation of § A.R.S. § 33-807, which requires lenders to contact borrowers in an attempt

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to avoid foreclosure at least thirty days before the notice of trustee’s sale can be issued.

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A.R.S. § 33-807.01(A). Plaintiff fails to state a claim under A.R.S. § 33-807, however,

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because her allegations make clear that she did discuss options to avoid foreclosure with

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Defendant on several occasions. (Doc. 17 at 15-17.) In Count 6, Plaintiff again argues

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that Defendant violated the FDCPA. But Chase –as a mortgage servicing company – is

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not a debt collector subject to the FDCPA when the debt it takes for servicing is not in

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default. Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1188-89 (D.

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Ariz. 2009). Plaintiff has not alleged that the loans were in default when Chase began

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servicing the loan, and so fails to state a claim under the FDCPA. In Count 7, Plaintiff

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seeks declaratory relief based on allegations that Defendant was not a proper assignee

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because it did not produce the original promissory note. Plaintiff contends that this is not

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a “show me the note” claim, but the basis of the claim is Plaintiff’s allegation that she

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cannot be “in default until Defendant can exhibit the instrument, proving dishonor.”

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(Doc 17 at 57.) Count 7 is, therefore, effectively a “show me the note” claim that fails as

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a matter of law. Hogan v. Washington Mut. Bank, N.A., 277 P.3d 781, 784 (Ariz. 2012).

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Finally, in Count 8, Plaintiff again brings a claim based on a theory of wrongful

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foreclosure.

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foreclosure on a note in default, and the Ninth Circuit has counseled the district courts

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against trailblazing such a cause of action. Cervantes v. Countrywide Home Loans, Inc.,

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656 F.3d 1034, 1043 (9th Cir. 2011). Accordingly, all of these Counts will again be

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dismissed, with prejudice.

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B.

But Arizona courts do not recognize a cause of action for wrongful

Count 1: A.R.S. § 33-715

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Arizona law provides that the borrower in a home-loan relationship may make a

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“written demand” to the lender for the payoff amount on the loan. A.R.S. § 33-715(A).

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If the lender “has more than one branch, office or other place of business, the payoff

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statement demand shall be made to the branch or office address provided in the payment

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billing notice or payment book.” Id. § 33-715(G). Upon receipt of a proper demand, the

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lender “shall prepare and deliver a payoff demand statement to the person who has

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requested it within fourteen days after receipt of the demand.” Id. § 33-715(A). If a

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lender “willfully fails to prepare and deliver a payoff demand statement for fourteen or

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more days after receipt of a written demand,” the lender “is liable to the entitled person

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for all damages sustained for failure to deliver the statement. The [lender] is also liable

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to the [borrower] for five hundred dollars whether or not actual damages are sustained.”

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Id. § 33-715(F). “Willfully,” in this context, “means a failure to comply with this section

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[i.e., A.R.S. § 33-715] without just cause or excuse.” Id. Each such failure “constitutes a

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separate cause of action.” Id.

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The Court gave Plaintiff leave to amend to clarify her allegation that she had made

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written demands for the payoff amount on the loan. In her SAC, Plaintiff does allege that

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she sent more than ten letters that she alleges were written demands to both Chase and the

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trustees of her loan and specifies the address to which she sent the letters. In their Motion

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to Dismiss, Defendant produced copies of the letters that Plaintiff sent. Because the

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authenticity of the letters is not in dispute, and because Count 1of SAC necessarily relies

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on the letters as Plaintiff describes them, the Court may consider these documents at the

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motion to dismiss stage. Lee, 250 F.3d at 689. The Court has reviewed the letters (Doc.

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18-1), and finds that they cannot be construed as written demands under § 33-715. In one

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of the letters, Plaintiff questioned “validity of the foreclosure” in the context of a

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“grievance against compliance issues” and demanded that Defendant produce all records

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related to her account. The letter does not suggest that Plaintiff is making a written

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payoff demand; rather, the implication is that Plaintiff is challenging the validity of the

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debt itself. Each of the letters either asks for a deferral of payment, a delay of the

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trustee’s auction date, or generally questions the validity of the trustee’s sale. None of

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the letters could be construed as a written payoff demand as contemplated by § 33-715.

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In light of the documents themselves, the Court need not accept Plaintiff’s conclusory

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factual statement that the letters were written demands. As a result, Plaintiff fails to state

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a claim under A.R.S. § 33-715.

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C.

Count 2: A.R.S. § 33-813

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A.R.S. § 33-813 requires lenders to permit borrowers to reinstate the trust deed by

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paying the entire amount then due “other than the portion of the principal as would not

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then be due had no default occurred,” in addition to other costs. The trustee is required to

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provide – upon request by the borrower – a good faith estimate of the amount required to

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bring the account current and thereby reinstate the trust deed. A.R.S. § 33-813(C).

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Importantly, the statute is clear that it creates a duty on the part of the trustee, not the

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trust’s beneficiary or loan servicer, and specifies that the trustee is liable for any

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damages. A.R.S. § 33-813(E). Defendant is not the trustee of the property in question,

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and so the statute imposes no liability on Defendant. McIntosh v. IndyMac Bank, FSB,

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CV-11-1805-PHX-GMS, 2012 WL 176316 (D. Ariz. Jan. 23, 2012).

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cannot state a claim under A.R.S. § 33-813.

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Plaintiff thus

D.

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Count 5: RESPA

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The Real Estate Settlement Procedures Act (RESPA) imposes on loan servicers a

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duty to respond to borrower inquiries about their mortgage loans. Generally, a loan

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servicer must respond to a qualified written request (QWR) from a borrower within 20

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days of receipt. 12 U.S.C. § 2605(e)(1)(A). In order to trigger the loan servicer’s duty,

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the borrower’s request must meet the definition of a QWR in the statute, including a

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requirement that the QWR “include[] a statement of the reasons for the belief of the

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borrower, to the extent applicable, that the account is in error or provides sufficient detail

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to the servicer regarding other information sought.” 12 U.S.C. § 2605(e)(1)(B). A QWR

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is therefore a request from the borrower that relates specifically to the servicing of the

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loan. Brabant v. JP Morgan Chase Bank, CV 11-00848-TUC-JGZ, 2012 WL 2572281

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(D. Ariz. July 2, 2012). In order to be a QWR, a borrower’s request must address “the

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servicing of the loan, and not its validity[.]” Consumer Solutions Reo, LLC v. Hillery,

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658 F. Supp. 2d 1014 (N.D. Cal. 2009). Here, as discussed supra, Part II.B, the letters

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Plaintiff alleges to be QWRs did not relate to an error in the servicing of the loan; rather,

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Plaintiff questioned the validity of the loan. Plaintiff demanded that Defendant produce

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the entire file related to her loan, sought deferrals, alleged various compliance violations,

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and sought restitution for pain and suffering caused by an the notice of trustee’s sale, but

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did not address the servicing of the loan. As a result, Plaintiff’s letters were not QWR,

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and Plaintiff cannot state a claim under RESPA.
E.

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Leave to Amend

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The SAC was Plaintiff’s third opportunity to state viable claims, including several

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claims that the Court had previously dismissed with prejudice. Further amendment of the

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Complaint would be futile: the SAC is dismissed with prejudice and without leave to

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amend, and the case is now terminated.

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//

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//

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IT IS THEREFORE ORDERED that Defendant JPMorgan Chase Bank’s Motion
to Dismiss (Doc. 18) is GRANTED.
IT IS FURTHER ORDERED that the clerk enter judgment dismissing this action

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with prejudice. The clerk shall terminate the case.

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Dated this 15th day of October, 2012.

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