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

Filing 83

ORDER by Judge Edward M. Chen Granting 17 39 Defendants' Motions to Dismiss; and Denying 32 Plaintiff's Motion for Default Judgment. (Attachments: # 1 Certificate of Service). (emcsec, COURT STAFF) (Filed on 10/8/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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EDWARD C. TIDWELL,

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Plaintiff,
ORDER GRANTING DEFENDANTS’
MOTIONS TO DISMISS; AND
DENYING PLAINTIFF’S MOTION FOR
DEFAULT JUDGMENT

v.

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For the Northern District of California

United States District Court

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No. C-13-2621 EMC

JPMORGAN CHASE BANK, N.A., et al.,

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Defendants.
___________________________________/

(Docket Nos. 17, 32, 39)

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I.

INTRODUCTION

Before the Court are two motions to dismiss, one filed by Defendants JPMorgan Chase Bank,

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N.A., for itself and as successor to Chase Home Finance LLC, and JPMC Specialty Mortgage LLC

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(collectively, “Chase Defendants”) and one filed by Defendant NRT, LLC and its subsidiary Valley

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of California, Inc. d/b/a Coldwell Banker Residential Brokerage (collectively “Coldwell Banker).1

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Plaintiff filed this pro se action against thirteen defendants, bringing nine causes of action in

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connection with what he contends was the illegal non-judicial foreclosure sale of his property. For

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the following reasons, these motions will be GRANTED as to the first and second causes of action

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against the Chase Defendants and Coldwell Banker.2

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Defendant Rust Consulting, Inc. has also filed a motion to dismiss. During a hearing on
this motion on September 19, 2013, Plaintiff voluntarily dismissed, with prejudice, Rust Consulting,
Inc. from this lawsuit. Accordingly, Rust Consulting, Inc’s motion is not discussed herein.
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On June 17, 2013, Plaintiff filed a Notice of Lis Pendens. (Dkt. No. 7). Under California
law, a pro se litigant may not record a notice of lis pendens unless it has been approved by a judge.
Cal. Code of Civ. P. § 405.20. Because the Court finds that Plaintiff has failed to state a federal
claim, and is declining at this point to address Plaintiff’s state law claims, Plaintiff’s request to have

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Also before the Court is Plaintiff’s motion for default judgment as to Defendant Homesale,
Inc. For the following reasons, this motion is DENIED.3

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II.

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FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Edward C. Tidwell (“Plaintiff”), who is pro se, filed the case at bar on June 7, 2013,

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seeking monetary compensation and the cancellation of a deed of sale in connection with what he

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contends was the illegal non-judicial foreclosure of his property on February 4, 2011. (Complaint ¶

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1, Dkt. 1). The real property in question is located at 5157 Roundup Way in Antioch, California

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(“Property”). (Id. ¶ 2).

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A.

Transactions Regarding the Property and Plaintiff’s Allegations
On August 2, 2005, Plaintiff obtained a residential loan in the amount of $455,000.00

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For the Northern District of California

United States District Court

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secured by a deed of trust (“DOT”), encumbering the Property. (Complaint, Ex. C, at 1). This deed

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of trust lists Plaintiff as borrower, Argent Mortgage Company, LLC (“Argent”) as

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lender/beneficiary, and Town and Country Title Services, Inc. (“T&C”) as trustee. (Id. at 1-2).

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Following Plaintiff’s default, T&C recorded a Notice of Default and Election to Sell Under

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Deed of Trust with the Contra Costa County Recorder’s Office on May 8, 2006. (“NOD #1”).

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(Complaint, Ex. J., at 1). NOD #1 asserted that Plaintiff was $15,444.97 in arrears and instructed

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Plaintiff to contact “WM Specialty Mortgage LLC, without recourse, c/o AMC Mortgage Services,

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Inc. as Authorized Agent” to find out how much was owed and to arrange payment to stop

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foreclosure. (Id.) Also on May 8, 2006, Argent executed an Assignment of Deed of Trust

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transferring all beneficial interest in the DOT to WM Specialty Mortgage LLC, without recourse.

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(Complaint, Ex. D, at 1). This assignment was executed on behalf of Argent by a Dana A. Rosas

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and was recorded on May 12, 2006. (Id.)

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this court approve his notice of lis pendens is DENIED without prejudice. Cf. Austero v. Aurora
Loan Servs., Inc., No. C-11-00490 JCS, 2011 WL 1585530 (N.D. Cal. Apr. 27, 2011) (“Because the
Court has dismissed Plaintiffs’ case, the Court cannot determine whether Plaintiffs will be able to
satisfy the requirements for lis pendens, i.e., the probable validity of the claims.”).
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On September 23, 2013, Plaintiff filed a motion for summary judgment against Homesale,
Inc., based entirely on Homesale’s failure to appear and respond to Plaintiff’s complaint. (Dkt. No.
64). For the same reasons that this Court is denying the motion for default judgment, Plaintiff’s
motion for summary judgment is DENIED.

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Following the filing of NOD #1, Plaintiff made an approximately $21,000 payment to AMC

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Mortgage Services. (Complaint, ¶ 54, Ex. L). Consequently, T&C filed a Notice of Rescission of

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Notice of Default on July 20, 2006, rescinding NOD #1. (Complaint, Ex. M).

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Three months later, Plaintiff again defaulted, and on October 16, 2006, Cal-Western

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Reconveyance Corp. (“Cal-Western”) recorded another Notice of Default. (“NOD #2”).

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(Complaint, Ex. I, at 1). NOD #2 asserted that Plaintiff was $11,458.85 in arrears and directed

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Plaintiff to contact WM Specialty Mortgage LLC, c/o AMC Mortgage Service, Inc. to arrange

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payment. (Id.)

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On December 6, 2006, two documents regarding the Property were recorded. Just as it had
in the May 8, 2006 assignment, Argent recorded an Assignment of Deed of Trust transferring

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For the Northern District of California

United States District Court

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beneficial interest in the DOT to WM Specialty Mortgage LLC, without recourse. (Complaint, Exh.

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F, at 1). This assignment was executed by Tamara Price, listed as a “Vice President,” and Dana A.

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Rosas, listed as authorized agent. (Id.) The assignment was dated October 27, 2006, but, below that

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date, someone wrote “effective 10/15/2006.” (Id.). Also on December 6, 2006, WM Specialty

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Mortgage LLC recorded a Substitution of Trustee which replaced T&C with Cal-Western as trustee

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under the DOT. (Complaint, Exh. G, at 1). This substitution was signed by Tamara Price as Vice

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President of WM Specialty Mortgage LLC. (Id.) As with the December 6 DOT assignment, this

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was dated October 27, 2006 but again included the handwritten note “effective 10/15/2006.” (Id.)

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The significance of the retroactive October 15, 2006 date appears to be that it is the day before Cal-

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Western recorded NOD #2.4

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Plaintiff has filed a request for judicial notice (Dkt. 53) that includes unrecorded copies of
the October 27, 2006 dated assignment and substitution referenced in this paragraph. These versions
do not include the “effective 10/15/2006” annotation. To the extent that Mr. Tidwell is asking this
Court to take judicial notice of documents already attached to his Complaint, his request is DENIED
as moot. Exhibits attached the complaint are already considered for purposes of motions to dismiss.
See Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (recognizing that district courts may
consider exhibits attached to the complaint in evaluating a motion to dismiss). To the extent
Plaintiff is seeking to have this court take notice of the unrecorded versions of the assignment and
substitution, as well as Ms. Price’s power of attorney, the foreclosure title policy, the Independent
Foreclosure Review, and the Qualified Written Request, his request is DENIED as they are not
documents whose authenticity is capable of accurate and ready determination. However, in his
amended complaint, Plaintiff may, of course, attach these documents as exhibits to have them
considered at the pleading stage. The Court GRANTS Plaintiff’s request to the remaining
documents (the county assessor’s property detail printout and the writ of execution).

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Plaintiff alleges that NOD #2, filed October 16, 2006, was faulty insofar as it was

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“prematurely” recorded two months prior to the assignment of the DOT from Argent to WM

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Specialty Mortgage, LLC and the substitution of Cal-Western as Trustee. (Complaint § 51, 59).

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Essentially, Plaintiff alleges that NOD #2 is defective because at the time Cal-Western recorded it in

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October 2006, it was not the trustee. Plaintiff also alleges that Ms. Price lacked signing authority at

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the time she executed the assignment and substitution recorded in December, that she lied about her

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employment title, and that neither the assignment nor the substitution were executed in the presence

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of a notary. (Id. §§ 43-50, 56, 61). Plaintiff also alleges that the handwritten annotation “effective

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10/15/2006” contained in the assignment and substitution is evidence that these documents were

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For the Northern District of California

United States District Court

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“tampered with.” (Id. § 165).
On May 27, 2010, Cal-Western recorded a Notice of Trustee’s Sale. (“NOTS”).

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(Complaint, Ex. Q, at 1). Plaintiff argues that this Notice was defective because JPMC Specialty

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Mortgage LLC (“JPMC”)5 (the successor entity to WM Specialty Mortgage LLC) had never secured

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from Argent (the original beneficiary under the loan) a “legally executed Assignment prior to

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commencement of the foreclosure sale,” and therefore lacked standing to authorize Cal-Western to

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conduct the foreclosure sale as trustee. (Id. ¶ 53). Accordingly, he argues that the foreclosure

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violated RESPA. (Id. ¶ 52). A public auction was held on February 4, 2011. (Complaint, Exh. O,

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at 2). The Property was purchased by JPMC. (Id. at 1).

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On February 7, 2011, shortly after the foreclosure, Defendant Coldwell Banker sent Plaintiff

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a letter titled “Important Notice Regarding Your Occupancy of the Property,” indicating that the

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foreclosure on Plaintiff’s home had been conducted by Defendant Chase Home Finance LLC

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(“Chase Home”). (Compl. ¶ 79, 99; Compl. Ex. S). On September 14, 2011, however, Coldwell

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Banker issued another notice, this time indicating that the foreclosure had been conducted by

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Defendant JPMorgan Chase Bank (“Chase Bank”). (Compl. ¶ 79, 107; Compl. Ex. S). Both notices

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indicated that the foreclosing party had retained Coldwell Banker as the real estate agent for the

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Where possible, Defendants JPMC Specialty Mortgage LLC, Chase Home Finance LLC,
and JP Morgan Chase Bank, N.A. will be referred to collectively as “Chase Defendants.” Where
individual reference is necessary, they will be referred to as “JPMC,” “Chase Home,” and “Chase
Bank,” respectively.

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property. Compl. Ex. S. The notices set out various options available to Plaintiff, including

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requesting relocation assistance.

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Plaintiff’s allegations about the implications of the change of the foreclosing party in

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Coldwell Banker’s notices are not entirely clear. In one place, he appears to allege that this change

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is evidence that “Defendant Chase Home’s privileges to operate as a Foreign LLC was [sic]

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cancelled effective January 20, 2005.”6 (Complaint ¶ 108). Elsewhere, he notes that a merger of

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Defendant Chase Home and Defendant Chase Bank was conditionally approved in April 2011,

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which is after the first notice Plaintiff received from Coldwell Banker, but before the second. (

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Complaint ¶ 112-13; Complaint, Ex. T). This merger, he contends, is evidence that “Defendant
Chase Home transacted interstate business in violation of this State’s laws during the illegal

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For the Northern District of California

United States District Court

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foreclosure sale on February 4, 2011 as a Foreign LLC after filing of [sic] its cancellation on

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January 20, 2005.” (Complaint ¶ 112). Somewhat perplexingly, he cites the merger as evidence that

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Coldwell Banker lied on the notices they sent him. (Id. ¶ 113). If anything, however, the merger

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between Chase Home and Chase Bank provides an innocent explanation for the change in

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foreclosing party listed on the two notices. The merger would tend to suggest that though Chase

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Plaintiff also points to a Supreme Court of New York decision to argue that the real estate
agents working for the Coldwell Defendants are lying about the identity of the foreclosing party.
(Complaint ¶ 108-09). That case, Deutsche Bank National Trust Co. v. Ezagui, No. 3724/07 (N.Y.
Sup. Ct. Dec. 21, 2007), concerned an unrelated property and different parties. (Complaint, Ex. P).
The court in that case found that the same individual, Tamara Price, had signed paperwork for both
the assignee and assignor of the mortgage in question. The court thus found there was cause to be
concerned “that there may be fraud . . . or at least malfeasance,” and ordered Ms. Price to submit an
affidavit regarding her employment history.
Ms. Price has also signed an assignment of deed of trust and substitution of trustee form with
respect to the assignment of interest in Plaintiff’s property. (Complaint, Exs. F, G). The two
documents she signs were executed on the same day, and the companies that she signs for on the two
documents appear to be related, but possibly not identical. Id. (company on assignment of deed
listed as “Argent Mortgage Company, LLC by AMC Mortgage Services, Inc., as authorized agent”
and on the substitution of trustee as “WM Specialty Mortgage LLC, without recourse by AMC
Mortgage Services, Inc, as attorney-in-fact”). The question of whether there was fraud in the
assignment of interest in Plaintiff’s property, however, is distinct from the question of whether
Coldwell Banker made false statements regarding the identity of the foreclosing party on the notices
they sent Plaintiff. It is not at all clear why Plaintiff contends that the alleged irregularity in the
assignment documents necessarily means that the Coldwell Banker made false statements in the
notices.

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Home was the foreclosing party, and thus the original notice was correct, Chase Home was

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subsequently acquired by Chase Bank, who then became the owner of the property in question.

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On March 8, 2011, JPMC filed an unlawful detainer action in the Superior Court of

that the foreclosure proceedings by which it had acquired the Property “were done in compliance

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with Section 2924 et seq. of the California Civil Code” and that Plaintiff continued to possess the

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Property without JPMC’s consent. (Id. at 2). It requested restitution, possession of the property,

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and $50.00 a day in damages for every day from March 4, 2011 on. (Id. at 3). On November 4,

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2011, the superior court granted JPMC’s summary judgment. (RJN, Ex. 2). The court found that

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satisfactory proof had been made that “title to the Property has been duly perfected in the name of

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For the Northern District of California

California, County of Contra Costa. (Def. Req. for Judicial Notice (“RJN”), Ex. 1).7 JPMC asserted

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United States District Court

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JPMC” and that it acquired the Property “in accordance with Section 2924 of the California Civil

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Code.” (Id.)

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On July 5, 2012, Plaintiff sent a letter which he alleges constituted a Qualified Written

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Request (“QWR”) to Defendants Chase Bank and Chase Home. (Complaint ¶ 124). He asserts that

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this letter requested an independent foreclosure review to “assess Plaintiff’s financial injuries as a

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result of Defendants Chase Bank and Chase Home’s errors, misrepresentations or other deficiencies

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made during the illegal foreclosure processes of Plaintiff’s property.” (Id. ¶ 125). Plaintiff alleges

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that he did not receive a response within 60 days as required by the Real Estate Settlement

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Procedures Act (“RESPA”). (Id.). Rather, Plaintiff alleges that on February 26, 2013, The Chase

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Defendants’ attorney responded. (Id. ¶ 127). This response stated that Plaintiff’s letter did not

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qualify as a QWR as it did “not include a statement of the reasons why it is believed that the account

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was in error but rather generally sought copies of all documents related to the Property. (Complaint,

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Ex. K, at 1). The letter also attached a number of the recorded documents pertaining to the Property.

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(See id.)

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Defendants JPMC and JPMorgan Chase Bank ask this Court to take judicial notice of
filings and orders in prior cases involving Plaintiff and the Property. The court GRANTS
defendants’ request. See U.S. ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d
244, 248 (9th Cir. 1992) (“[W]e may take notice of proceedings in other courts, both within and
without the federal judicial system, if those proceedings have a direct relation to matters at issue.”
(citation omitted)).

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Plaintiff alleges that the conduct of a number of the defendants violate RESPA. For

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example, he alleges that JPMC, Chase Bank, and Chase Home failed to provide him notice of

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default and a period of time in which to take corrective action. (Id. ¶ 102). He argues that this

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notice and opportunity was required by the uniform covenants of the DOT. (Id. ¶ 100). Plaintiff

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also alleges that Chase Bank and Chase Home violated RESPA by failing to respond to his QWR

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within the required time. (Id. ¶125). Plaintiff also appears to allege that the failure of Defendants to

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secure validly executed assignments of the DOT as well as their failure to notify him upon transfer

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or assignment of the DOT constitute a violation of RESPA. (Id. ¶ 138, 157).

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Plaintiff’s claims also appear to be based in part on a Consent Order the United States Office
of Comptroller of Currency (“OCC”) issued regarding Defendant Chase Bank on April 13, 2011.

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For the Northern District of California

United States District Court

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(Complaint ¶ 38). This Consent Order identified “certain deficiencies and unsafe or unsound

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practices” in Chase Bank’s servicing of residential mortgages, and its initiation and handling of

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foreclosure proceedings. Id. (quoting In re JPMorgan Chase Bank, N.A., AA-EC-11-15 (April 13,

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2011) (Complaint, Ex. A). The Consent Order indicated that the OCC found that Chase Bank had

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engaged in the following practices: filing affidavits that were purportedly based on the affiant’s

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personal knowledge or review of the relevant records, when in fact they were not based on personal

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knowledge or a review of the records; filing affidavits or other mortgage-related documents that

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were not properly notarized; litigating foreclosure proceedings and initiating non-judicial

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foreclosures without always ensuring that the promissory note or the mortgage document were

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properly endorsed or assigned; failure to devote sufficient financial, staffing, and managerial

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resources to ensure proper administration of foreclosure proceedings; failure to provide adequate

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oversight, internal controls, and auditing to its foreclosure processes; and failure to sufficiently

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oversee outside counsel and third-party providers handling foreclosure-related proceedings.

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(Complaint, Ex. A, at 2-3). Though the Consent Order makes no findings specific to any individual

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case, Plaintiff alleges that the findings in the Consent Order provide “undisputed facts that Plaintiff

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and homeowners throughout this State were victimized by Defendants Chase Bank and Chase Home

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illegal foreclosure sale practices.” (Complaint ¶ 42) He does allege that the deficiencies in the

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foreclosure process for his home were of the type identified in the Consent Order. (Id. ¶¶ 57-58).

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Plaintiff further alleges that Chase Bank failed to comply with various California laws. He

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argues that Chase Bank failed to comply with California Civil Code § 2923.5 because at no point did

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any beneficiary of the mortgage ever make contact with him for the “purpose to offer Plaintiff to

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participate in their loan modification program.” (Id. ¶ 63). Additionally, he argues that Chase

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Home “did not qualify as a Foreign LLC to conduct business” in California and therefore could not

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offer Plaintiff a loan modification as required by state law. (Id. ¶ 76). Plaintiff claims that Chase

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Bank, Chase Home, Cal-Western, and JPMC knowingly filed “felonious” documents in state and

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federal court. (Id. § 153). Similarly, Plaintiff alleges violations of various sections of the California

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Corporations Code as well as the California Unfair Competition Law. (Id. ¶¶ 189, 204).
Ultimately, Plaintiff asserts nine causes of action: (1) Violation of 12 U.S.C. §§ 1813, 188;

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(2) Violation of 12 U.S.C. §§ 2601 and 2605; (3) Violation of California Civil Code §§ 2923.5,

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2923.52-55, and 2924; (4) Violation of California Penal Code § 115; (5) Misrepresentation; (6)

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Unfair Business Practices and Violation of California Business and Professions Code §§ 17050,

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17051, and 17456; (8) Declaratory Relief; (9) Injunctive Relief.8

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B.

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Prior Litigation Regarding the Property
This action represents the fifth state or federal case involving the Property. (Complaint ¶

33). The two most recent cases are relevant for purposes of this motion and thus briefly described.

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1.

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On March 10, 2011, Plaintiff filed in the Northern District of California the case of Edward

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C. Tidwell v. JPMorgan Chase & Company, et al., No. 11-cv-01145CRB (“Tidwell I”). (Id.). With

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the exception of Rust Consulting, Inc., Homesale, Inc., and Prommis Solutions, LLC, every

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defendant in this action was a defendant in Tidwell I. (Compare Complaint, at 1, with RJN, Ex. 3, at

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1). With a few exceptions, discussed infra, the complaint in Tidwell I contained materially identical

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allegations arising out of Defendants actions regarding the Property. For example, at Paragraph 51

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of the instant complaint, Plaintiff alleges: “The NOD reflects Argent as the Beneficiary and it is

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defective in that it was prematurely recorded approximately two months prior to the recordation on

The Prior Federal Action

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In his opposition to Coldwell Banker’s motion to dismiss, Plaintiff stated he only intended
to plead the first, fifth, sixth, and seventh causes of action against Coldwell Banker. (Dkt. 22, at 2).

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2006 . . . .” (Complaint ¶ 51). In Tidwell I’s complaint, Plaintiff alleged:”[Defendants] conducted

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the illegal foreclosure sale of Plaintiff’s property under the faulty NOD that was recorded

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approximately two months prior to the recordation of the defective Assignment . . . and Substitution

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. . .that were recorded on December 6, 2006.” (RJN, Ex. 3, at 11 (emphasis in original)). Similarly,

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in Paragraph 63 of this complaint, Plaintiff alleges: “Defendants Chase Bank and Chase failed to

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comply with the due diligence requirements outlined under California Civil Code § 2923.5 in that at

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no time whatsoever as the beneficiary or mortgage servicer did Defendants Chase Bank and Chase

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Home as required by law make contact with Plaintiff for the purpose to offer Plaintiff to participate

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in their loan modification program.” In Tidwell I, Plaintiff alleged: “At no time whatsoever acting

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For the Northern District of California

December 6, 2006 of the required Substitution . . . that was fraudulently executed on October 27,

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United States District Court

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as the beneficiary, servicer or trustee did Defendants Chase, Chase Bank, Chase Home or Cal-

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Western succeed in their efforts as required to make contact with Plaintiff to offer Plaintiff to

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participate in their loan modification program.” (RJN, Ex. 3, at 12 (emphasis in original)). Many

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more examples of similar or identical allegations between the two complaints exist. Tidwell I

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alleged four federal causes of action, including a violation of RESPA, the Truth-in-Lending Act, the

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Home Ownership Equity Protection Act, and the Racketeer Influenced and Corrupt Organizations

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(“RICO”) Act. (RJN, Ex. 3, at 1). It also alleged a number of state law claims, including several

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that are now alleged in the instant complaint. (See id.).

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Judge Charles Breyer dismissed Tidwell with prejudice on June 20, 2011. (RJN, Ex. 4). The

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court found that Plaintiff had dropped his RICO claim and that the other three federal causes of

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action were barred by the statute of limitations. (Id. at 1). The court then declined to exercise

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supplemental jurisdiction over the remaining state law claims, and dismissed them without prejudice

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to Plaintiff refiling them in state court. (Id. at 1-2). Plaintiff did not appeal.

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2.

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On October 28, 2011, 4 months after the Northern District of California dismissed Tidwell I

The State Court Action

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(and a mere one month after Judge Breyer denied Plaintiff’s post-judgment motions in that case) ,

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Plaintiff filed the case of Tidwell v. JPMorgan Chase & Co, et al., No. C11-02461 (“State Action”),

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in the California Superior Court for Contra Costa County. (Complaint ¶ 33). Every defendant

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named in the instant suit with the exception of Homesales, Inc. was named as a defendant in the

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State Action’s second amended complaint. (RJN, Ex. 6, at 1). As with Tidwell I, the second

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amended complaint in the State Action contained numerous factual allegations which are either

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similar or identical to those in the Instance action. (Compare, e.g. , Complaint ¶¶ 46-49, 51, 77-78,

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with RJN, Ex. 6, ¶¶ 35-37, 38, 72). Plaintiff alleged purely state law causes of action, including

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violations of the same California Corporation Code sections, misrepresentation, and the California

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Unfair Competition Law. (RJN, Ex. 6, at 1). Plaintiff also sought to set aside the trustee sale. (Id.).

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Plaintiff eventually voluntarily dismissed all defendants except JPMC. (RJN, Ex. 7, at 3). On

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March 19, 2013, the superior court sustained JPMC’s demurrer without leave to amend. (RJN, Ex.

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9). Plaintiff has appealed this judgment. (RJN, Ex. 10).
Three months later, Plaintiff filed the instant action.
III.

MOTION FOR DEFAULT JUDGMENT DISCUSSION

Also before the Court is Plaintiff’s motion for default judgment against Defendant Homesale,

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Inc. (“Homesale”). On August 8, 2013, Plaintiff filed a proof of service showing that the United

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States Marshal Service served Homesale by delivering a copy of the summons on Kelly Crissinger,

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an employee of JP Morgan Chase Bank designated to accept service, on July 8, 2013. (Dkt. 30, at

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4). Assuming this constituted proper service, Homesale was obligated to file an answer or other

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responsive pleading by July 29, 2013. See Fed. R. Civ. P. 12(a)(1)(A)(I). On August 8, 2013, the

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clerk entered default as to Homesale. (Dkt. 31). To date Homesale has not appeared.

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Pursuant to Federal Rule of Civil Procedure 55(b), the court may enter default judgment

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against a defendant who has failed to plead or otherwise defend an action. “The district court’s

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decision whether to enter default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d

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1089, 1092 (9th Cir. 1980). The Ninth Circuit has provided seven factors for consideration by the

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district court in exercising its discretion: (1) the possibility of prejudice to the plaintiff; (2) the

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merits of plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at

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stake in the action; (5) the possibility of dispute concerning material facts; (6) whether default was

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due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure

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favoring decisions on the merits. Eitel v. McCook, 782 F.2d 1470, 1471-72 (9th Cir. 1986). All

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factual allegations in the complaint are taken as true, except those relating to damages. Televideo

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Sys., Inc. V. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).

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Here, the Eitel factors weigh against default judgment. First, as Eitel recognized, the Federal

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Rules of Civil Procedure strongly favor decisions on the merits. Second, an examination of the

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merits of Plaintiff’s substantive claims against Homesale and the sufficiency of the complaint

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“essentially require plaintiff to state a claim on which it may recover.” Danning v. Lavine, 572 F.2d

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1386, 1388 (9th Cir. 1978). Plaintiff has failed to state any claim against Homesale. In fact,

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Plaintiff does not appear to allege any misconduct against Homesale; besides the caption and the list

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of defendants, the Court can locate no reference to Homesale in the complaint. Nor does Plaintiff’s
Motion for Default Judgment provide any clarification. Rather, he simply alleges that JPMC

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“granted and conveyed Plaintiff’s property to Defendant Homesale who is now referred to as the

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owner.” (Dkt. 32, at 4). However, he does not explain what, precisely Homesale is alleged to have

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done wrong. Default judgment is plainly unwarranted in such circumstances. See Moore v. United

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Kingdom, 384 F.3d 1079, 1090 (9th Cir. 2004) (holding that where plaintiff has failed to state a

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claim, he is not entitled to a default judgment, and dismissal for failure to state a claim is proper).

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Accordingly, Plaintiff’s motion for default judgment against Homesale is DENIED and his

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claims against Homesale are DISMISSED with leave to amend, contingent on the below ruling on

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the motion to dismiss and related order to show cause.

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IV.

MOTION TO DISMISS

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Under Rule 12(b)(6), a party may move to dismiss based on the failure to state a claim upon

21

which relief may be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6)

22

challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. Symington, 51 F.3d

23

1480, 1484 (9th Cir. 1995). In considering such a court must take all allegations of material fact as

24

true and construe them in the light most favorable to the nonmoving party, although “conclusory

25

allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal.”

26

Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While a “complaint need not contain

27

detailed factual allegations . . . it must plead ‘enough facts to state a claim to relief that is plausible

28

on its face.’” Id. “A claim has facial plausibility when the plaintiff pleads factual content that

11

1

allows the court to draw the reasonable inference that the defendant is liable for the misconduct

2

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a

3

‘probability requirement,’ but it asks for more than sheer possibility that a defendant acted

4

unlawfully.” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. V. Twombly, 550 U.S. 544, 556 (2007)).

5

A.

First Cause of Action: Violation of the Federal Insurance Deposit Act

6

Plaintiff argues that he has stated a viable claim against the Chase Defendants and Coldwell

7

Banker for violations of the Federal Deposit Insurance Act (“FDIA”). In particular, he points to 12

8

U.S.C. §§ 1813(g) and 1818(b). Section 1813(g) provides a definition for a savings bank, while §

9

1818(b) provides guidance for cease and desist proceedings with regards to insured depository
institutions that are determined to be engaging in “ unsafe or unsound practice.” The OCC Consent

11
For the Northern District of California

United States District Court

10

Order discussed above was entered pursuant to the OCC’s authority under § 1818(b). (Complaint,

12

Ex. A, at 3). The crux of Plaintiff’s allegations on this cause of action appear to be that the Chase

13

Defendants violated the Consent Order in foreclosing on the property, and that Coldwell Banker

14

enabled or participated in this violation through their association with the Chase Defendants.

15

There are two flaws that are fatal to Plaintiff’s claims against the Chase Defendants and

16

Coldwell Banker under the FDIA. First, to the degree that Plaintiff is alleging that the foreclosure of

17

his home violated the consent order, this argument fails because the foreclosure on his house was

18

completed in February 2011, several months before the April 2011 entry of the Consent Order.

19

(Complaint ¶ 1; Complaint, Ex. A).

20

Second, and more critically, the FDIA does not provide a private right of action for

21

individuals who are allegedly harmed by an institution’s non-compliance with that Act. A court

22

recently rejected similar claims brought under 12 U.S.C. §§ 1818, 1867, and 4631 by homeowners

23

suing various financial institutions in connection with the pending foreclosure of their home in

24

Soberanis v. Mortgage Elec. Registration Sys., Inc., 13-CV-1296-H KSC, 2013 WL 4046458 (S.D.

25

Cal. Aug. 8, 2013):

26
27

Plaintiffs allege causes of action pursuant to 12 U.S.C. §§ 1818, 1867,
and 4631. Section 1818(b) gives the Office of the Comptroller of the
Currency the authority to issue charges against a depository institution
for “unsafe or unsound” business practices. 12 U.S.C. § 1818(b). . . .

28

12

1

Plaintiffs identify no provisions in these statutes providing for a
private right of action, and offer no reason for the Court to imply a
private right of action under these statutes. The statutes create
comprehensive regulatory relationships between banking institutions
and federal regulatory agencies. The express provision of one method
of enforcing a substantive rule suggests that Congress intended to
preclude others. See Alexander v. Sandoval, 532 U.S. 275, 290, 121
S.Ct. 1511, 149 L.Ed.2d 517 (2001). The statutes focus on the
regulatory relationship and do not identify specific classes of
individuals they were designed to protect. See id. at 289 (stating
“statutes that focus on the person regulated rather than the individuals
protected create ‘no implication of an intent to confer rights on a
particular class of persons,’ “ nor do statutes that focus “on the
agencies that will do the regulating” confer such rights); see also
Reyn’s Pasta Bella, LLC v. Visa, U.S.A., 259 F.Supp.2d 992, 1002
(N.D. Cal.2003) (holding 12 U.S.C. § 1867, et seq. “bears no
indication that Congress intended a private right of action”). Without
an express or implied right of action, Plaintiffs can state no claim
pursuant to these statutory provisions.

2
3
4
5
6
7
8
9

11
For the Northern District of California

United States District Court

10

None of these statutes provide for a private right of action and
Plaintiffs provide no grounds for the Court to imply a private right of
action. Plaintiffs allege no other violations of these statutes or
regulations that give rise to a private right of action.

12
13
14

Id. at *6-7. Further, the Stipulation adopting the Consent Order explicitly provides that “[n]othing

15

in this Stipulation or the Consent Order, express or implied, shall give to any person or entity, other

16

than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right,

17

remedy or claim under this Stipulation or the Consent Order.” Complaint, Ex. A (Docket No. 1 at

18

83-84)).

19

Absent a private right of action provided in the statute, Plaintiff may not personally bring a

20

cause of action against Defendants based on these statutory provisions. Plaintiff’s first cause of

21

action is therefore DISMISSED with prejudice as to the Chase Defendants and Coldwell Banker.

22

B.

23

Second Cause of Action: Violation of the Real Estate Settlement Procedures Act
As detailed above, Plaintiff alleges that the Chase Defendants and violated RESPA through a

24

variety of alleged irregularities in the treatment of his deed of trust and the foreclosure of his home.

25

He also argues that the Chase Defendants violated RESPA in failing to timely respond to his QWR.

26

The Court finds that Plaintiff’s RESPA claims should be dismissed with prejudice.

27
28

13

1

1.

2

The Chase Defendants argue that res judicata bars Plaintiff’s RESPA claims. “The doctrine

Res Judicata Bars Plaintiff’s RESPA Claim Accruing Before March 11, 2011

parties or their privies [in a subsequent lawsuit] based on the same cause of action . . . .”

5

Headwaters Inc. v. U.S. Forest Serv., 399 F.3d 1047, 1051 (9th Cir. 2005) (internal quotation marks

6

omitted). Res judicata, also know as claim preclusion, “serves to promote judicial efficiency by

7

preventing multiple lawsuits and to enable the parties to rely on the finality of adjudications.” Dodd

8

v. Hood River County, 136 F.3d 1219, 1224-25 (9th Cir. 1998). The doctrine bars a Plaintiff from

9

re-litigating claims adjudicated in a prior judgment, even if the prior decision was wrongly decided.

10

See, e.g., Federated Dep’t Stores, Inc. V. Moitie, 452 U.S. 394, 398 (1981) (“Nor are the res judicata

11
For the Northern District of California

of res judicata provides that a final judgment on the merits [in one lawsuit] bars further claims by

4

United States District Court

3

consequences of a final, unappealed judgment on the merits altered by the fact that the judgment

12

may have been wrong or rested on a legal principle subsequently overruled in another case.”);

13

Proctor & Gamble Co. v. Amway Corp., 376 F.3d 496, 500 (5th Cir. 2004) (“The question whether

14

that judgment on the merits was correct, however, does not enter into our inquiry on the subject of

15

res judicata, for even an incorrect judgment is entitled to res judicata effect.”).

16

A defendant relying on res judicata must demonstrate that there is (1) an identity of claims

17

(though the claims need not be identical), (2) a final judgment on the merits, and (3) there must be

18

identity or privity between the parties in the two actions. See Turtle Island Restoration Network v.

19

U.S. Dep’t of State, 673 F.3d 914, 917 (9th Cir. 2012); George v. United States, No. C 07-04673

20

MHP, 2008 WL 1766945, at *2 (N.D. Cal. Apr. 17, 2008). Where these elements are met, res

21

judicata not only bars claims that were actually adjudicated in the prior action, but also all claims

22

which could have been raised in that action. See W. Radio Servs. Co., Inc. v. Glickman, 123 F.3d

23

1189, 1192 (9th Cir. 1997) (“Res judicata . . . bars litigation in a subsequent action of any claims

24

that were raised or could have been raised in the prior action.”). Here, because of the adjudication in

25

Tidwell I, res judicata operates to bar Plaintiff’s federal claims asserted in this case arising before

26

March 10, 2011.

27
28

First, there is clearly an identity of parties insofar as Plaintiff sued the Chase Defendants,
Cal-Western, and Coldwell Banker in both the instant action and Tidwell I. Second, Plaintiff’s

14

1

RESPA and other federal claims in Tidwell I were dismissed with prejudice as barred by the statute

2

of limitations. Dismissals based on the statute of limitations are deemed an adjudication on the

3

merits for purposes of res judicata. See, e.g., Mitchell v. Chapman, 343 F.3d 811, 820 (6th Cir.

4

2003) (“[A] dismissal for failing to comply with a statute of limitations is a decision on the merits

5

for claim preclusion purposes.”); World Triathlon Corp. v. Dunbar, No. Civ. 05-00351JMS/KSC,

6

2006 WL 897586, at *3 (D. Hawaii Apr. 6, 2006) (“[T]here was a final judgment on the merits: . . . a

7

judgment based on the statute of limitations is ‘on the merits’ for purposes of claim preclusion.”).9

8

Finally, there is an identity of claims between Tidwell I and the instant case. The Ninth

9

Circuit has mandated a four factor test for determining whether there is an “identity of claims”:
(1) whether rights or interests established in the prior judgment would
be destroyed or impaired by prosecution of the second action; (2)
whether substantially the same evidence is presented in the two
actions; (3) whether the two suits involve infringement of the same
right; and (4) whether the two suits arise out of the same transactional
nucleus of facts.

11
For the Northern District of California

United States District Court

10

12
13
14

Turtle Island, 673 F.3 at 917-18 (quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-

15

02 (9th Cir. 1982)). The Ninth Circuit has “often held the common nucleus criterion to be outcome

16

determinative under the first res judicata element.” Mpoyo v. Litton Electro-Optical Sys., 450 F.3d

17

985, 988 (9th Cir. 2005). This action arises out of the same transactional nucleus of facts as Tidwell

18

I. “Whether two suits arise out of the ‘same transaction nucleus’ depends upon ‘whether they are

19

related to the same set of facts and whether they could conveniently be tried together.’”

20

ProShipLine Inc. V. Aspen Infrastructures Ltd., 609 F.3d 960, 968 (9th Cir. 2010) (quoting W. Sys.,

21

Inc. V. Ulloa, 958 F.2d 864, 871 (9th Cir. 1992) (emphasis omitted)). Both Tidwell I and the current

22

action are based on the same set of facts. In both actions Plaintiff alleges the same course of

23

conduct occurring from 2006 through 2011 in which Defendants are alleged to have fraudulently

24

executed documents, recorded defective notices of default and assignments of the deed of trust,

25
26
27
28

9

Because the court in Tidwell I declined to exercise supplemental jurisdiction over Plaintiff’s
state law claims and dismissed those claims without prejudice to Plaintiff filing them in state court,
there was no adjudication on the merits of these claims. See Lamont v. Time Warner, Inc., No. CV
12-8030-CAS (VBKx), 2012 WL 5248061, at *3 n.5 (C.D. Cal. Oct. 19, 2012). Accordingly there
is no res judicata bar to Plaintiff’s state law claims as a result of Tidwell I.

15

1

forged dates on documents, failed to offer loan modifications, and then illegally foreclosed

2

Plaintiff’s home. In fact, as detailed above, a large portion of the allegations in the respective

3

complaints are identical. Thus, the current action and Tidwell I have an identity of issues.

4

Accordingly, Plaintiff’s RESPA claims are clearly barred by res judicata to the extent they

5

are based on conduct which occurred before March 11, 2011 (the date Tidwell I was filed). The

6

RESPA claims herein either were raised or could have been raised in Tidwell I. Accordingly, these

7

claims are DISMISSED as to the Chase Defendants.

8

“‘A pro se litigant must be given leave to amend his or her complaint unless it is absolutely

Los Angeles Police Dep’t, 839 F.2d 621, 621 (9th Cir. 1988) (qusoting Noll v. Carlson, 809 F.2d

11
For the Northern District of California

clear that the deficiencies of the complaint could not be cured by amendment.’” Karim-Panahi v.

10

United States District Court

9

1446, 1448 (9th Cir. 1987)). Given the circumstances, any attempt by Plaintiff to replead his

12

RESPA claim—or any other federal claims arising out of conduct which occurred prior to March 10,

13

2011—would be futile. Accordingly, dismissal of these claims is with prejudice and without leave

14

to amend. See Flowers v. First Hawaiian Bank, 295 F.3d 966, 976 (9th Cir. 2002) (permitting

15

dismissal without leave to amend where amendment would be futile).10

16

2.

17

Plaintiff’s RESPA claim is also based on the Chase Defendants’ alleged failure to timely

Plaintiff’s RESPA Claim Arising After March 11, 2011 Fails to State a Claim

18

respond to his QWR. The Chase Defendants acknowledge that res judicata does not apply to this

19

claim insofar as it is based in conduct which occurred after Tidwell I was dismissed. However, they

20

argue that Plaintiff has failed to state a claim.

21

RESPA requires loan servicers to respond to QWRs from borrowers which request

22

“information relating to the servicing of [the] loan.” 12 U.S.C. § 2605(e)(1). A QWR is defined by

23

statute as “written correspondence” which includes, in part, “a statement of the reasons for the belief

24

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

25
10

26
27
28

The Court notes, in the alternative, that even if not barred by res judicata, any RESPA
claim arising out of conduct before March 11, 2011 (this includes conduct relating to the notice of
default, notice of trustee sale, and the like) would be barred by the one-year statute of limitations.
See Bloom v. Martin, 865 F. Supp. 1377, 1386 (N.D. Cal. 1994) (“Private RESPA claims carry a
one-year statute of limitations.”). The latest any such claim could have accrued would be March 11,
2012. This action was filed over 15 months later on June 7, 2013.

16

1

the servicer regarding other information sought by the borrower.” Id. § 2605(e)(1)(B). Federal

2

regulations further provide that:

3
4

A written request does not constitute a qualified written request if it is
delivered to a servicer more than 1 year after either the date of transfer
of servicing or the date that the mortgage servicing loan amount was
paid in full, whichever date is applicable.

5
6
7

24 C.F.R. § 3500.21(e)(2)(ii).
Plaintiff alleges that he sent the putative QWR to Chase Bank and Chase Home on July 5,

8

2012. However, Plaintiff’s home was sold at a trustee’s sale on February 4, 2011. (Complaint, Ex.

9

O). At that time, the borrower-servicer relationship between Plaintiff and any Chase Defendant
ceased. Accordingly, Plaintiff’s written request does not qualify as a QWR under federal law as it

11
For the Northern District of California

United States District Court

10

was sent more than a year after the Chase Defendants ceased to be a servicer under the loan. See,

12

e.g., Fantroy v. First Fin. Bank, N.A., 12-CV-82-N-BH, 2013 WL 4434913 (N.D. Tex. Aug. 19,

13

2013) (“Ultimately, because he sent the written requests more than five years after his loan was

14

terminated by the foreclosure and ceased being serviced, the requests were not QWRs.”); Sanchez v.

15

Onewest Bank, FSB, 11-cv-6820, 2013 WL 139870 (N.D. Ill. Jan. 10, 2013) (“IndyMac could not

16

have been servicing the loan at the time because the Circuit Court had already approved the judicial

17

sale. . . . IndyMac thus had no obligation to respond under RESPA.”); Bros v. Bank of Am., N.A.,

18

12-cv-03121 EJD, 2012 WL 4471590 (N.D. Cal. Sept. 26, 2012) (“In any event, it is unlikely the

19

QWR could relate to loan servicing when it was sent in January 2012, since, at that point, Plaintiff

20

had been in default since sometime in late 2008, and the foreclosure process had commenced in

21

April 2009. The ‘servicing’ of Plaintiff’s loan was no longer an issue when the QWR was sent

22

nearly three years later.” (Citation omitted)).

23

Accordingly, Plaintiff’s RESPA claim arising out of Plaintiff’s alleged QWR is

24

DISMISSED with prejudice as to the Chase Defendants. See Flowers, 295 F.3d at 976 (permitting

25

dismissal without leave to amend where amendment would be futile).

26
27
28

17

1

V.

ORDER AS TO REMAINING CLAIMS

2

For the reasons articulated above, Plaintiff’s first cause of action, brought under the FDIA, is

3

dismissed with prejudice as to the Chase Defendants and Coldwell Banker. Plaintiff’s claims under

4

RESPA (whether based on the alleged failure to respond to the QWR or for alleged irregularities

5

arising from the Defendants’ handling of the deed of trust, notice of default, and the like) are

6

dismissed with prejudice as to the Chase Defendants. Further, during the September 19, 2013

7

hearing, Plaintiff disclaimed any intention of alleging a RESPA claim against Coldwell Banker.

8

To the extent that this dismissal (with prejudice) of Plaintiff’s federal claims against the

9

Chase Defendants and Coldwell Banker eliminates all of the federal claims in this action, the Court
would be inclined to refuse to exercise supplemental jurisdiction over Plaintiff’s state law claims.

11
For the Northern District of California

United States District Court

10

See, e.g., S. Cal. Painters & Allied Trades, Dist. Council No. 36 v. Rodin & Co., 558 F.3d 1028,

12

1036 (9th Cir. 2009) (“Because the district court appropriately dismissed all of the federal claims, it

13

acted within its discretion in declining to resolve the state law claims under its supplemental

14

jurisdiction.”). The Court is so inclined given the early nature of these proceedings and the fact that

15

an adverse ruling against Plaintiff on related (and in places identical) state law claims is currently on

16

appeal before the California Court of Appeals. If Plaintiff loses his appeal, most, if not all, of the

17

current state law claims may very well be barred by res judicata. On the other hand, were this Court

18

to exercise jurisdiction over the state law claims and Plaintiff wins his pending appeal, there would

19

be simultaneous duplicative actions on the same claims.

20

Were the Court to decline to exercise supplemental jurisdiction over Plaintiff’s state law

21

claims, the dismissal of the state law claims would be without prejudice to Plaintiff pursuing them in

22

California state court.

23

However, there are three defendants who did not join in either motion to dismiss – Cal-

24

Western, Homesale, or Prommis Solutions, LLC. It is unclear to what extent Plaintiff intended to

25

assert his federal causes of action or on what basis such a claim would be based. It appears to the

26

Court that Plaintiff only intended to assert his two federal causes of action against the Chase

27

Defendants and Coldwell Banker.

28

18

1

However, out of an abundance of caution, Plaintiff is ordered to show cause within 14 days

2

of this order as to whether he is attempting to assert an FDIA or RESPA claim against Defendants

3

Cal-Western, Homesale, or Prommis Solutions, LLC. To the extent Plaintiff is attempting to assert

4

either federal cause of action against these defendants, Plaintiff is further ordered to state the factual

5

basis for such a claim. Plaintiff’s response to this order shall not exceed 10 double spaced pages in

6

length and shall not repeat any claims against the Chase Defendants or Coldwell Banker.

7
8
9

VI.

CONCLUSION

For the foregoing reasons, Plaintiff’s motion for default judgment against Defendant
Homesale is DENIED.
Defendant Rust Consulting LLC is DISMISSED with prejudice.

11
For the Northern District of California

United States District Court

10

The motions to dismiss filed by the Chase Defendants and Caldwell banker are GRANTED

12

with prejudice as to Plaintiff’s first and second causes of action against the Chase Defendants and

13

Caldwell Banker. The Court reserves its ruling on the state causes of action pending Plaintiff’s

14

compliance with the above mentioned order to show cause.

15

Plaintiff is ORDERED TO SHOW CAUSE as to the extent Plaintiff is attempting to state a

16

federal claim under the FDIA or RESPA against Defendants Cal-Western, Homesale, and Prommis

17

Solutions, Inc. If Plaintiff is attempting to state either claim against these Defendants, Plaintiff is

18

ordered to describe the factual bases for such a claim. Plaintiff’s response shall not exceed 10

19

double spaced pages and shall be filed by October 25, 2013.

20

This order disposes of Docket Nos. 7, 17, 32, 39, and 64.

21
22

IT IS SO ORDERED.

23
24

Dated: October 8, 2013

25

_________________________
EDWARD M. CHEN
United States District Judge

26
27
28

19