Gilliland v. Chase Home Finance, LLC et al

Filing 47

ORDER signed by District Judge John A. Mendez on 02/11/16 DENYING 37 Motion for Judgment on the pleadings. Defendants' reply brief exceeded the page limits allowed by this Court's previous order. Accordingly, Defendants' counsel, Morgan, Lewis & Bockius, LLP, is SANCTIONED in the amount of $250.00, which shall be paid to the Clerk of the Court within 5 days of the date of this order. (Jackson, T)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KAYRINKIA J. GILLILAND,

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No.

2:14-cv-2834-JAM-AC

Plaintiff,
v.

ORDER DENYING DEFENDANTS’ MOTION
FOR JUDGMENT ON THE PLEADINGS

CHASE HOME FINANCE, LLC;
CHASE HOME FINANCE, INC.; JP
MORGAN & COMPANY; JP MORGAN
CHASE; CHASE BANK USA; GLENN
MOURIDY; THOMAS WIND; and
DOES 1-20, et al.,

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Defendants.
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Plaintiff Kayrinkia J. Gilliland (“Plaintiff”) sued

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Defendants Chase Home Finance, LLC, Chase Home Finance, Inc., JP

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Morgan & Company, JP Morgan Chase, Chase Bank USA, and some of

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their employees (collectively, “Defendants”) for purportedly

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mishandling her residential loan modification leading to

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foreclosure on her home.

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pleadings, recycling many of the same arguments they already

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unsuccessfully raised in their prior motion to dismiss.

Defendants move for judgment on the

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For the

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reasons stated below, the Court denies Defendants’ motion. 1

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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Plaintiff alleges she received a notice from Defendants in

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December 2009 that promised to modify her residential mortgage if

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she complied with the terms of a Modification Program Trial

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Period Plan (“TPP”).

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a requirement that Plaintiff make three monthly trial period

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payments of $731.29 on January 1, 2010, February 1, 2010, and

Compl. ¶¶ 1, 20.

The TPP’s terms included

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March 1, 2010.

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three payments on time and on March 31, 2010, Defendants wrote to

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Plaintiff congratulating her on qualifying for a loan

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modification and enclosed a Home Affordable Modification

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Agreement (“modification agreement”) containing the terms of her

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modified loan.

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returned the modification agreement to Defendants.

Compl. ¶ 21.

Plaintiff alleges that she made all

Compl. ¶¶ 22-23.

Plaintiff allegedly signed and
Compl. ¶ 25.

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Plaintiff alleges that, on April 14, 2010, she had two

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independent conversations with two different representatives of

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Defendants.

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confirmed to Plaintiff that Defendants had received the signed

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contract and that Plaintiff had a “solid” agreement with

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Defendants.

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was not in default or arrears, that her home was not in

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foreclosure proceedings, and that she only needed to make timely

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payments to remain in compliance with their agreement.

Compl. ¶¶ 27-28.

Id.

Both representatives allegedly

They also allegedly assured Plaintiff that she

Id.

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for January 12, 2016.
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Nevertheless, on April 16, 2010, a collection agency

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allegedly called Plaintiff to inform her that Defendants had

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reported her in default on her home loan in an amount of about

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$3,500.

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Defendants and spoke to a representative who now told her that

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Defendants would not honor the terms of the modification

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agreement, that there had been no loan modification, that

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Plaintiff was in default, and that she should not make further

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payments.

Compl. ¶ 29.

Plaintiff claims that she again contacted

Compl. ¶¶ 30-31.

However, the representative also

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allegedly told Plaintiff that she was being considered for

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another loan modification, and that while her application for a

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loan modification was pending, Defendants would not file a notice

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of default or proceed toward foreclosure.

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Despite this conversation, Plaintiff allegedly continued to

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follow the terms of the modification agreement, including

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tendering payments.

Compl. ¶¶ 31-32.

Compl. ¶ 34.

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On May 29, 2010, Defendants allegedly notified Plaintiff by

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letter that she was in default in an amount of more than $5,000.

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Compl. ¶ 35.

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Plaintiff had failed to make the monthly payments required by the

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TPP agreement - a statement that Plaintiff contends was

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contradicted by earlier correspondence from Defendants confirming

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timely receipt of the three required TPP payments.

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The same letter also allegedly stated that

Id.

In June 2010, Plaintiff alleges that she again spoke with

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Defendants’ representatives who assured her that she was not in

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foreclosure proceedings and that foreclosure proceedings would

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not commence while Defendants considered her for a loan

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modification.

Compl. ¶¶ 36-38.

Plaintiff allegedly received
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another written notice on July 6, 2010, demanding past due

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payments in the amount of $5,729.88.

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Compl. ¶ 39.

Plaintiff filed a voluntary Chapter 7 bankruptcy petition on

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February 26, 2011.

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(“RJN”) Exh. B.

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of Trustee’s Sale, listing $161,809 as the loan amount owed.

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Compl. ¶ 74.

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September 20, 2011, for $30,000.

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Defendants’ Request for Judicial Notice

On August 24, 2011, Defendants recorded a Notice

Plaintiff’s home was sold at a foreclosure sale on
Compl. ¶¶ 40, 75.

Plaintiff filed her complaint on September 15, 2014, in

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Sacramento County Superior Court (Doc. #1).

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causes of action: (1) breach of the TPP contract, (2) breach of

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the modification agreement, (3) breach of the TPP’s covenant of

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good faith and fair dealing, (4) breach of the modification

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agreement’s covenant of good faith and fair dealing, (5) wrongful

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foreclosure, (6) intentional misrepresentation, (7) unfair

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business practices in violation of California Business and

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Professions Code sections 17200, et. seq. (“UCL”), (8) violation

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of California Civil Code sections 2923 and 2924, (9) violation of

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California Civil Code sections 2953 and 2954, and

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(10) negligence.

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filed a motion to dismiss (Doc. #21).

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motion in part, dismissing Plaintiff’s eighth, ninth, and tenth

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causes of action without leave to amend, and denying the motion

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as to the first seven causes of action (Doc. #27).

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answered (Doc. #28), and now move for judgment on the pleadings

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(Doc. #37).

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Defendants removed the action to this Court and
The Court granted that

Defendants

Plaintiff opposes the motion (Doc. #44).

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She asserted ten

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II.

OPINION

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A.

Judicial Notice

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Defendants seek judicial notice of two exhibits: (1) the

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modification agreement referenced in the complaint and (2) the

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docket of Plaintiff’s bankruptcy case (Doc. #38).

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Under the doctrine of incorporation by reference, the Court

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may consider a document that a plaintiff “necessarily” relied on

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in the complaint if “(1) the complaint refers to the document;

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(2) the document is central to the plaintiff’s claim; and (3) no

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party questions the authenticity of the copy attached to the []

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motion.”

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These elements have been met here, as Plaintiff has not contested

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that the document provided by Defendants is in fact the

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modification agreement she refers to throughout her complaint.

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See, e.g., Compl. ¶ 52.

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agreement incorporated by reference.

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Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).

The Court therefore considers the

As to the bankruptcy docket, it is in the public record and

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cannot be reasonably disputed.

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Monica Food Not Bombs v. City of Santa Monica, 450 F.3d 1022,

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1025 n.2 (9th Cir. 2006); Lee v. City of Los Angeles, 250 F.3d

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662, 689 (9th Cir. 2001).

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B.

Fed. R. Evid. 201; see Santa

Thus, the Court takes judicial notice.

Analysis
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Standing

Defendants first argue that Plaintiff lacks standing because

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all of her claims and any recovery of damages on those claims

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constitute property of her bankruptcy estate.

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Plaintiff counters that the claims arose after the she filed her

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bankruptcy petition, so they are not property of the estate.
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Mot. at 5-6.

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Opp. at 2.

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Plaintiff is correct.

A claim that accrues prior to filing

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a bankruptcy petition is indeed property of the estate, and only

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the bankruptcy trustee - not the debtor – may bring those claims.

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See Cusano v. Klein, 264 F.3d 936, 945 (9th Cir. 2001).

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of the claims here accrued post-petition, and therefore they are

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not property of the estate.

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Title Ins. Co., 2016 WL 301974, at *7 (N.D. Cal. Jan. 25, 2016).

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Namely, this Court already decided that – taking the complaint’s

But each

See Cox v. Old Republic National

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allegations as true - the contract claims accrued on September

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20, 2011 when Defendants sold Plaintiff’s home at foreclosure.

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See Order Granting in Part and Denying in Part Defendants’ Motion

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to Dismiss (“Order re MTD”) (Doc. #27) at 14; NBCUniversal Media,

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LLC v. Superior Court, 225 Cal.App.4th 1222, 1231 (2014) (“[T]he

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limitations period starts running when the last element of a

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cause of action is complete.”).

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Plaintiff had filed for bankruptcy in February 2011, and in fact

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after the entire bankruptcy proceeding had concluded in June

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2011.

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claims also accrued upon foreclosure.

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for “wrongful foreclosure” could not have existed before

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foreclosure.

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previously concluded that Defendants’ “assurances were not proven

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false until [they] foreclosed on plaintiff’s home,” Order re MTD

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at 17:1-2, so her misrepresentation claim also accrued post-

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petition.

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forming the basis of Plaintiff’s UCL claim did not come to light

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until foreclosure.

Foreclosure occurred after

See In re Gilliland, 11-br-24840 (E.D. Cal.).

The other

The fifth cause of action

As to the sixth cause of action, the Court

Similarly, the allegedly unfair and unlawful activity

Because all of Plaintiff’s claims accrued
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post-petition, she has standing to bring them.

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Plaintiff asserts in her opposition that to the extent they

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involve pre-petition events, she intends to reopen her bankruptcy

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proceeding in order to seek the trustee’s abandonment of the

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claims she pursues here.

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stay its decision in this case until that process is complete.

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Id.

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apparently has not made an attempt to reopen the bankruptcy

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proceeding.

Opp. at 2.

She requests that the Court

But since Plaintiff filed her opposition (in December), she

See In re Gilliland, 11-br-24840 (E.D. Cal.).

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Because the Court now holds that the complaint adequately alleges

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Plaintiff’s standing, the Court declines to stay the case in

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anticipation of a possible reopening of the bankruptcy matter.

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2.

Statutes of Limitations

Defendants next argue that the statutes of limitation bar

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Plaintiff’s contract claims and her UCL claim.

Mot. at 8.

But

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this Court has previously determined that, on the pleadings, her

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contract claims are not barred by the statutes of limitation.

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Order re MTD at 14.

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to revisit that holding, and the Court declines to do so.

Defendants provide no reason for the Court

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The UCL cause of action is also timely.

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the UCL claim accrued on September 20, 2011.

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statute of limitations of four years.

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§ 17208.

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it was within the statute of limitations.

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As discussed above,
Such a claim has a

Cal. Bus. & Prof. Code

Plaintiff filed her complaint on September 15, 2014, so

Defendants contend that accrual upon foreclosure is only

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possible if “[Plaintiff’s] damages were only related to the

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Property.”

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perplexing, but believes it may be an attempt to argue that

Mot. at 11:18-19.

The Court finds this statement

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Plaintiff’s claims accrued earlier than foreclosure because she

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sustained at least some of her damages earlier.

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an incorrect interpretation of the law.

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action accrues when all elements are completed.

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Media, 225 Cal.App.4th at 1231.

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completed is damages, then it accrues upon a plaintiff incurring

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damages.

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such as breach of an agreement, the claim accrues upon the

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completion of that last element.

That argument is

That is, a cause of
NBCUniversal

If the last element to be

If, however, the last element is something different,

Thus, the fact that some

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damages may have occurred earlier than September 2011 does not

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change the date of accrual in this case.

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without merit.

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3.

Defendants’ argument is

Defendants’ Performance

Defendants next argue that they adequately performed on the

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TPP by offering Plaintiff a loan modification.

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existence of the modification agreement, according to Defendants,

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disproves any claim that they breached the TPP by not offering a

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modification.

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Mot. at 13.

The

Id.

This argument misunderstands Plaintiff’s claims.

The

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complaint alleges that Defendants breached the TPP by not

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providing the loan modification promised in good faith.

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¶¶ 34-42.

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forward with foreclosure despite Plaintiff’s alleged compliance

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with the TPP and modification terms.

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Compl.

The breach became apparent when Defendants moved

See Compl. ¶¶ 46-49.

A further problem with Defendants’ argument is that ruling

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in their favor would require the Court to reach factual issues

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outside the scope of this motion.

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interpret the TPP in their favor, yet contract interpretation
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Defendants ask the Court to

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involves factual issues that cannot be decided on the pleadings.

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See Gardner v. RSM & A Foreclosure Servs., LLC, 2013 WL 1129392,

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at *3 (E.D. Cal. Mar. 18, 2013).

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Defendants’ arguments.

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4.

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The Court therefore rejects

Contract Formation

Finally, Defendants contend that no loan modification

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contract was formed, because Plaintiff’s signature was

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accompanied by the handwritten statement, “signed under duress.”

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Mot. at 13; see RJN Exh. A.

Plaintiff counters that Defendant

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“waived” this defense by accepting the payments Plaintiff made to

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Defendant under the contract.

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Opp. at 4 (citing Compl. ¶ 53).

The Court agrees with Plaintiff.

Defendants cannot accept

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Plaintiff’s signature and reap the benefit of the resulting

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agreement, just to later defend against their own breach by

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rejecting the signature.

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Kersten, 40 Cal.App.3d 1014, 1026-28 (1974) (“Voluntary retention

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of benefits with knowledge of the unauthorized nature of the act

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constitutes ratification.

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into a false sense of security by conduct causing the latter of

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forebear to do something which he otherwise would have done and

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then take advantage of the inaction caused by his own conduct.”)

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(citations and alterations omitted).

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Plaintiffs’ signature would be a question of fact that the Court

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cannot resolve at this time. 2

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Cf. Common Wealth Ins. Sys., Inc. v.

. . .

A person may not lull another

Moreover, the validity of

See Gruver v. Midas Int'l Corp.,

This problem is especially salient here, where the statement
“signed under duress” is left ambiguous and unexplained. The
statement is accompanied by another handwritten note reading,
“MODIFICATION income is incorrect per atty a [sic][.]” RJN Exh.
A. The Court declines to attempt an interpretation of these
statements at this point in the litigation.
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925 F.2d 280, 282 (9th Cir. 1991).

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the motion on this basis as well.

The Court therefore denies

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III.

ORDER

For the reasons set forth above, the Court DENIES
Defendants’ motion for judgment on the pleadings.
As a final matter, Defendants’ reply brief exceeded the page

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limits allowed by this Court’s previous order.

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Scheduling Order (Doc. #36) at 2-3 (limiting reply memoranda for

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Rule 12 motions to five pages and warning that “[a] violation of

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this Order will result in monetary sanctions being imposed

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against counsel in the amount of $50.00 per page” and that the

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Court will not consider argument made beyond the page limit).

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Accordingly, Defendants’ counsel, Morgan, Lewis & Bockius, LLP,

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is sanctioned in the amount of $250, which shall be paid to the

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Clerk of the Court within five (5) days of the date of this

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order.

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IT IS SO ORDERED.
Dated: February 11, 2016

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See Pretrial