Zacharias v. JP Morgan Chase Bank, N.A. et al

Filing 29

Order by Hon. Samuel Conti granting 3 , 20 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 2/13/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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REYNA U. ZACHARIAS,

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Plaintiff,

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v.

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JP MORGAN CHASE BANK, N.A.,
BANK OF AMERICA, N.A.,

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Defendants.

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) Case No. 12-06525 SC
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) ORDER GRANTING MOTION TO
) DISMISS
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I.

INTRODUCTION
Plaintiff Reyna U. Zacharias ("Plaintiff") brings this action

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in connection with foreclosure proceedings commenced against her

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San Francisco home.

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slander of title, (2) wrongful foreclosure, and (3) violation of

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the Racketeer Influenced and Corrupt Organizations Act ("RICO").

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ECF No. 1 Ex. 1 ("Compl.").

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("Chase") and Bank of America, N.A. ("BofA") (collectively,

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"Defendants") now move to dismiss for failure to state a claim

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pursuant to Federal Rule of Civil Procedure 12(b)(6).

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("MTD").1

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Specifically, she asserts claims for: (1)

Defendants JP Morgan Chase Bank, N.A.

ECF No. 5

The motion is fully briefed, ECF Nos. 22 ("Opp'n"), 27

Defendants first noticed their motion on December 26, 2012 and
re-noticed the motion after the matter was re-assigned to the
undersigned. ECF Nos. 3, 20.

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("Reply"), and appropriate for resolution without oral argument.

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For the reasons set forth below, the Court GRANTS the motion.

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II.

BACKGROUND

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In April 2007, Plaintiff obtained a loan from Washington

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Mutual Bank, F.A. ("WaMu"), secured by a deed of trust (the "DOT")

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encumbering her San Francisco home.

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for Judicial Notice ("RJN")) Ex. 1 ("DOT").2

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WaMu as the beneficiary and indicates that WaMu lent Plaintiff

Compl. ¶ 9; ECF No. 6 (Request
The DOT identifies

United States District Court

For the Northern District of California

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$947,500.

The federal government later closed WaMu and appointed

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the Federal Deposit Insurance Corporation ("FDIC") as the bank's

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receiver.

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2008, Chase acquired certain assets and liabilities of WaMu through

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an asset purchase agreement with the FDIC.

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2009, an "Assignment of Deed of Trust" was recorded with the San

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Francisco Assessor-Recorder.

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Assignment").

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interest to WaMu, assigned its interest in the DOT to BofA.

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Assignment.

See RJN Ex. 2 ("Purchase Agreement").

Id.

On September 25,

On September 21,

Compl. ¶ 10; RJN Ex. 3 ("DOT

The document states that Chase, as successor in
DOT

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Plaintiff's objections to Defendants' RJN, ECF No. 23, are
OVERRULED and the Court takes judicial notice of the deed of trust
and the other publicly filed documents attached to the RJN, but not
the truth of the matters asserted by those documents. Pursuant to
Federal Rule of Evidence 201, the Court may take judicial notice of
"a fact that is not subject to reasonable dispute" because, among
other things, it "can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned."
Accordingly, the Court "may properly take notice of public facts
and public documents." Cactus Corner, LLC v. U.S. Dept. of Agric.,
346 F. Supp. 2d 1075, 1098 (E.D. Cal. 2004). Additionally,
Plaintiff references many of the documents attached to the RJN in
her complaint and, under the "incorporation by reference doctrine,"
a court may properly consider such documents. See Knievel v. ESPN,
393 F.3d 1068, 1076 (9th Cir. 2005)

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A notice of default was also recorded on September 21, 2009,

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indicating that Plaintiff was $13,873.88 in arrears on her loan

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payments.

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recorded, the first on December 23, 2009, and the second on

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November 5, 2012.

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a trustee's sale was scheduled for November 26, 2012, and the

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unpaid balance and other charges on Plaintiff's loan totaled

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$1,082,141.68.

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occurred.

United States District Court

Two notices of trustee's sale were later

RJN Exs. 5, 6.

According to the second notice,

It is unclear whether the trustee's sale has yet

On November 19, 2012, Plaintiff filed the instant action in

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For the Northern District of California

RJN Ex. 4.

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California Superior Court and the case was subsequently removed on

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diversity and federal question grounds.

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asserts three causes of action: (1) slander of title, (2) wrongful

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foreclosure, and (3) violation of the RICO statute.

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57.

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Defendants falsely recorded the DOT Assignment and the notice of

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default.

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an interest in the DOT based on the false claim that it was

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"entitled to any loan ever made by [WaMu], especially those loans

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NOT owned by [WaMu] at the time that the Federal Government gave

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all of the assets of the defunct [WaMu] to Chase without a public

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auction or any bidding process."

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that Defendants violated the RICO statute by perpetrating a similar

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fraud against a large number of WaMu's other former borrowers.

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id. ¶¶ 31-58.

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ECF No. 1.

Plaintiff

Compl. ¶¶ 15-

The first two claims are predicated on the allegation that

See id. ¶¶ 25, 28.

Plaintiff pleads that Chase asserted

Id.

Plaintiff further alleges

See

Defendants subsequently moved to dismiss for failure to state
a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

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III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure

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12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

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Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1988).

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should assume their veracity and then determine whether they

"Dismissal can be based

"When there are well-pleaded factual allegations, a court

United States District Court

For the Northern District of California

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plausibly give rise to an entitlement to relief."

Ashcroft v.

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Iqbal, 556 U.S. 662, 664 (2009).

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must accept as true all of the allegations contained in a complaint

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is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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v. Twombly, 550 U.S. 544, 555 (2007)).

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complaint must be both "sufficiently detailed to give fair notice

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to the opposing party of the nature of the claim so that the party

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may effectively defend against it" and "sufficiently plausible"

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such that "it is not unfair to require the opposing party to be

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subjected to the expense of discovery."

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1191, 1204 (9th Cir. 2011).

However, "the tenet that a court

Threadbare recitals of the

Id. at 663. (citing Bell Atl. Corp.
The allegations made in a

Starr v. Baca, 633 F.3d

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IV.

DISCUSSION

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A.

Slander of Title and Wrongful Foreclosure

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Plaintiff's first two claims are predicated on the allegation

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that Chase never had a legal interest in Plaintiff's deed of trust

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or the underlying loan, which was made by WaMu.

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Defendants argue

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that these claims fail because Chase purchased WaMu's assets,

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including its interest in Plaintiff's deed of trust, through its

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purchase agreement with WaMu's receiver, FDIC.

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agreement provides that "[Chase] purchases . . . all right, title,

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and interest of the Receiver in and to all of the assets (real

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personal and mixed, wherever located and however acquired) . . . .

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of [WaMu] whether or not reflected on the books of [WaMu] as of

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Bank Closing."

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are excluded from the agreement, but Plaintiff's deed of trust does

Purchase Agreement § 3.1.

The purchase

Several types of assets

United States District Court

For the Northern District of California

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not appear to fall into any of these categories.

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See id. §§ 3.5,

3.6, 4.5.

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In response to Defendants' arguments concerning the FDIC

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purchase agreement, Plaintiff cites to Javaheri v. JPMorgan Chase

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Bank, N.A., CV10-08185 ODW FFMX, 2011 WL 2173786 (C.D. Cal. June 2,

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2011).

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plaintiff asserted a claim for wrongful foreclosure on the ground

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that Chase had no interest in his promissory note.

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WL 2173786, at *5.

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dismiss with respect to Javaheri's wrongful foreclosure claim, it

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did not find Chase's asset purchase agreement with the FDIC

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defective.

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alleged that Chase lacked an interest in his note and deed of trust

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by pleading that the note had been securitized and sold to an

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investment trust prior to the asset purchase agreement.

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asset purchase agreement with FDIC was invalid or did not encompass

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mortgages such as Plaintiff's.

Opp'n at 7-9.

In Javaheri, as in the instant action, the

Javaheri, 2011

While the court denied Chase's motion to

Rather, the court held that Javaheri had plausibly

Id. at *5-

Thus, nothing in the Javaheri opinion suggests that Chase's

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In her opposition brief, Plaintiff also suggests that her

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promissory note, like Javaheri's, was securitized and sold prior to

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the FDIC asset purchase agreement.

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facts are not alleged in the Complaint.

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to securitization in the Complaint is a vague and generalized

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allegation that the foreclosure crisis was caused by "[Chase] and

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[BofA] and their criminal enterprise and underlying conspiracy as

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it related to the fraud involved with the securitization of

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mortgage loans and the issuance of unregulated derivative

See Opp'n at 9.

However, these

Indeed, the only reference

United States District Court

For the Northern District of California

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contracts."3

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into 'pools' and sold multiple times.").

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the plaintiff specifically alleged the security in which his loan

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was pooled.

Compl. ¶ 36; see also id. ¶ 50 ("[L]oans were grouped
In contrast, in Javaheri,

2011 WL 2173786, at *5.

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Because Plaintiff has failed to plausibly allege that Chase

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has no interest in the note or the deed of trust, her claims for

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wrongful foreclosure and slander of title necessarily fail.

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Accordingly, these claims are DISMISSED with leave to amend.

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B.

RICO

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Plaintiff's third cause of action is for violation of the RICO

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statute, 18 U.S.C. § 1962(c).

Section 1962(c) imposes civil

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liability on persons and organizations engaged in a "pattern of

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racketeering activity."

Racketeering activity is defined to

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This is not the only new allegation raised in Plaintiff's
opposition brief. Plaintiff also argues that Defendants failed to
comply with California Civil Code section 2923.5 and that
Defendants' foreclosure proceedings are oppressive and illegal
because the notice of default was not recorded by the true trustee
on the deed of trust. Opp'n at 10, 14. Because neither of these
allegations appear in the Complaint, the Court declines to address
them at this time. If Plaintiff wishes to plead a violation of
Civil Code section 2923.5, then she should do so in her amended
complaint, not her opposition papers.

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include a number of generically specified criminal acts, as well as

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the commission of one of a number of listed predicate offenses.

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U.S.C. § 1961(1).

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conduct (2) of an enterprise (3) through a pattern (4) of

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racketeering activity (known as 'predicate acts') (5) causing

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injury to the plaintiff's 'business or property.'"

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Brown, 75 F.3d 506, 510 (9th Cir. 1996).

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The elements of a civil RICO claim are: "(1)

Grimmett v.

Here, Plaintiff alleges that "Defendants intentionally
participated in a scheme to defraud everyone" by "sending the

United States District Court

For the Northern District of California

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fraudulent affidavits, assignments and pleadings to the clerks of

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court, judges, attorneys, and defendants in foreclosure cases."

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Compl. ¶ 33 (emphasis added).

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predicate acts of fraud are: "[c]laiming ownership of assets on

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behalf of entities which were not the real parties in interest,"

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"[a]ctively concealing the parties' lack of standing in their

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standard documents for foreclosure," and "[t]he drafting of the

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fraudulent affidavits and documents and the subsequent execution of

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the documents . . . and the filing of fraudulent and forged

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affidavits as to loan ownership."

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Plaintiff further alleges that the

Id. ¶ 37.

This claim is far from plausible.

As discussed in Section

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IV.A supra, Plaintiff has failed to allege facts to support the

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contention that Defendants lack standing to foreclose on

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Plaintiff's property.

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broad and sweeping contention that Defendants defrauded "everyone"

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by falsely claiming ownership of any number of other loans.

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Further, Plaintiff has failed to plausibly allege racketeering

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activity distinct from the alleged RICO enterprise.

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OneWest Bank F.S.B., 11CV0092-LAB WVG, 2012 WL 896206, at *3 (S.D.

Nor has she pled any facts to support her

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See Banayan v.

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Cal. Mar. 14, 2012).

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be nothing more than conclusory allegations punctuated by

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threadbare recitals of the elements of a RICO cause of action.

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Plaintiff's attempt to cast a straightforward foreclosure

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proceeding as a pattern of racketeering activity is simply

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improper.

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WL 4092426, at *1 n.2 (E.D. Cal. Sept. 17, 2012).

See Johnson v. Wachovia Bank FSB, 2:10-CV-2839 GEB, 2012

Accordingly, Plaintiff's third cause of action for civil RICO

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In short, Plaintiff's RICO claim appears to

violations is DISMISSED WITH PREJUDICE.

United States District Court

For the Northern District of California

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V.

CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants JP

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Morgan Chase N.A. and Bank of America N.A.'s motion to dismiss.

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Plaintiff Reyna U. Zacharias's first and second causes of action

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(slander of title and wrongful foreclosure) are DISMISSED WITH

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LEAVE TO AMEND.

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DISMISSED WITH PREJUDICE.

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complaint within thirty (30) days of the signature date of this

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Order.

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with prejudice.

Plaintiff's third cause of action (RICO) is
Plaintiff shall file an amended

Failure to do so may result in the dismissal of this action

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IT IS SO ORDERED.

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Dated:

February 13, 2013
UNITED STATES DISTRICT JUDGE

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