Burke et al v. JPMorgan Chase Bank, N.A. et al

Filing 25

Order by Hon. Samuel Conti granting 5 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 1/14/2014)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 United States District Court For the Northern District of California 9 10 11 12 13 14 15 16 DEBORAH BURKE and SEAN K. BURKE ) Case No. 13-4249 SC ) Plaintiffs, ) ORDER GRANTING MOTION TO ) DISMISS v. ) ) JPMORGAN CHASE BANK, N.A; WELLS ) FARGO BANK, N.A. AS TRUSTEE FOR ) JPMORGAN MORTGAGE TRUST 2008-R2 ) MORTGAGE PASS-THROUGH ) CERTIFICATE SERIES 2008-R2, ) ) Defendants. ) ) ) 17 18 I. 19 INTRODUCTION Plaintiffs Deborah Burke and Sean Burke (collectively, 20 "Plaintiffs") bring this action in connection with the threatened 21 foreclosure of their home in Livermore, California ("the 22 Property"). 23 Wells Fargo Bank, N.A. ("Wells Fargo") now move to dismiss for 24 failure to state a claim pursuant to Federal Rule of Civil 25 Procedure 12(b)(6). 26 briefed, ECF Nos. 10 ("Opp'n"), 19 ("Reply"), and appropriate for 27 determination without oral argument pursuant to Civil Local Rule 7- 28 1(b). Defendants JP Morgan Chase Bank, N.A. ("JPMorgan") and ECF No. 5 ("Mot."). The Motion is fully For the reasons set for below, the Motion is GRANTED. 1 2 II. BACKGROUND On August 7, 2007, Plaintiffs refinanced their existing 3 mortgage on the Property, obtaining a $1,256,250 loan. ECF No. 1 4 ("Compl.") ¶ 5, Ex. A. 5 identifies Washington Mutual Bank, FA ("WaMu") as the lender. 6 Ex. A ("DOT"). 7 2008, their mortgage loan was contributed to a mortgage backed 8 security ("MBS") identified as JPMorgan Mortgage Trust 2008 R-2 9 Pass-through Certificates Series 2008-R2, of which Wells Fargo is The deed of trust securing the mortgage Id. Plaintiffs allege that on or before August 22, United States District Court For the Northern District of California 10 the trustee. Id. ¶ 7. Plaintiffs further allege that the 11 securitization of their loan failed, leaving Wells Fargo without 12 any legal or equitable interest in the mortgage. 13 complaint is vague on why the securitization failed, stating only 14 that the sale "w[as] made without the required intervening 15 assignment of Plaintiffs' Deed of Trust and endorsement of the 16 Note." Id. p. 2. The Id. ¶ 12. 17 On September 25, 2008, WaMu was closed by the Office of Thrift 18 Supervision, and the Federal Deposit Insurance Corporation ("FDIC") 19 was named Receiver. 20 certain assets and liabilities of WaMu through an asset purchase 21 agreement with the FDIC. 22 Plaintiffs now allege that JPMorgan does not have any legal or 23 equitable interests in their loan, they applied for a loan 24 modification with JPMorgan sometime in 2010. 25 JPMorgan rejected the application in May 2010, stating that 26 Plaintiffs' income was insufficient. 27 applied for a loan modification. 28 rejected on the ground that Plaintiffs were "not at risk default On September 25, 2008, JPMorgan acquired ECF No. 17 ("RJN") Ex. 2. Id. Though Compl. ¶ 14. Plaintiffs then re- That application was also 2 1 because [they] ha[d] the ability to pay [their] current mortgage 2 payment." 3 Id. ¶ 15. On October 28, 2010, a notice of default and election to sell 4 ("NOD") was recorded with Alameda County, stating that Plaintiffs 5 were $28,024.95 in arrears. 6 that the NOD's statement that Plaintiffs could contact JPMorgan 7 about the foreclosure proceedings was false because JPMorgan had no 8 right to collect mortgage payments and there is no evidence that 9 JPMorgan is a valid loan servicer or beneficiary of Plaintiffs' Plaintiffs allege United States District Court For the Northern District of California 10 mortgage. 11 to the MBS trust before JPMorgan acquired the assets of WaMu, 12 JPMorgan did not succeed to the servicing rights of WaMu. 13 April 2011 and April 2012, notices of trustee sales were recorded 14 with Alameda County. 15 sale indicates that the unpaid balance on the loan was 16 $1,395,095.88. 17 NOD, are null and void. 18 pleadings whether the foreclosure sale has yet taken place. 19 Id. Id. ¶ 17, Ex. E. Plaintiffs reason that because their loan was sold Id. ¶¶ 21, 22. Id. In The first notice of trustee's Plaintiffs allege that these instruments, like the Id. ¶ 23. It is unclear from the Based on these allegations, Plaintiffs assert causes of action 20 for: (1) wrongful foreclosure, (2) quiet title, (3) slander of 21 title, (4) fraud, (5) cancellation of instruments, (6) violation of 22 California Civil Code section 2923.5, (7) violation of California 23 Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et 24 seq.; and (8) unjust enrichment. 25 an injunction against foreclosure activity on the Property, a 26 finding that Plaintiffs are the rightful holders of title to the 27 Property, general and consequential damages, and attorney's fees. Plaintiffs pray for, inter alia, 28 3 1 III. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure 2 3 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. 4 Block, 250 F.3d 729, 732 (9th Cir. 2001). 5 on the lack of a cognizable legal theory or the absence of 6 sufficient facts alleged under a cognizable legal theory." 7 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 8 1988). 9 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 10 plausibly give rise to an entitlement to relief." Ashcroft v. 11 Iqbal, 556 U.S. 662, 679 (2009). 12 must accept as true all of the allegations contained in a complaint 13 is inapplicable to legal conclusions. 14 elements of a cause of action, supported by mere conclusory 15 statements, do not suffice." 16 Twombly, 550 U.S. 544, 555 (2007)). However, "the tenet that a court Threadbare recitals of the Id. (citing Bell Atl. Corp. v. 17 18 19 IV. DISCUSSION The gravamen of all eight of Plaintiffs' claims is that 20 Defendants do not have a beneficial interest in Plaintiffs' 21 mortgage either because (1) the securitization of the mortgage 22 failed, or (2) Plaintiffs' mortgage was not transferred as part of 23 the P&A Agreement because it was securitized and sold before the 24 agreement took effect. 25 Accordingly, the Court finds all of Plaintiffs' claims implausible. Both of these theories are unavailing. 26 With respect to the first theory, Plaintiffs lack standing to 27 challenge the securitization process because they were not parties 28 to the agreement that securitized the note. 4 See Junger v. Bank of 1 Am., N.A., CV 11-10419 CAS VBKX, 2012 WL 603262, at *3 (C.D. Cal. 2 Feb. 24, 2012). 3 pleadings why the alleged securitization failed. 4 that the sale of the loan to the MBS trust was made "without the 5 required intervening assignment of Plaintiffs' Deed of Trust and 6 endorsement of the Note," Compl. ¶ 12, but has yet to point to any 7 authority which would impose such a requirement. 8 makes reference to Section 860 of the Internal Revenue Code, id. ¶ 9 9, which pertains to "deduction[s] for deficiency dividends." In any event, it is entirely unclear from the Plaintiffs plead The Complaint It United States District Court For the Northern District of California 10 is unclear why this tax statute has any application here, and to 11 the extent that it does, it is unclear how it could disrupt the 12 chain of title to Plaintiffs' DOT and note or JPMorgan's right to 13 service the loan. 14 Plaintiffs' second theory -- that Defendants lost all interest 15 in the loan when it was sold to the MBS trust -- is also 16 unpersuasive. 17 claim for wrongful foreclosure based on allegations that sale of 18 the DOT precluded Defendants from retaining a beneficial interest 19 in that DOT. 20 2013 WL 5913789, at *4 (N.D. Cal. Oct. 31, 2013). 21 Plaintiffs have not alleged that WaMu ever transferred the DOT to a 22 third party (though Plaintiffs have alleged that WaMu's assets were 23 conveyed to JPMorgan as part of the P&A Agreement). 24 Plaintiffs merely allege that the promissory note was transferred 25 to a MBS trust. 26 non-judicial foreclosure scheme that requires a beneficial interest 27 in the Note to foreclose. 28 trustee, mortgagee, beneficiary, or any of their agents to initiate This Court has held that a plaintiff may state a See Subramani v. Wells Fargo Bank N.A., C 13-1605 SC, However, Rather, "There is no stated requirement in California's Rather, the statute broadly allows a 5 1 non-judicial foreclosure." Lane v. Vitek Real Estate Indus. Grp., 2 713 F. Supp. 2d 1092, 1099 (E.D. Cal. 2010). 3 judicially noticeable documents suggest that WaMu retained a 4 beneficial interest in the DOT after the alleged securitization of 5 the note and that this interest was transferred to JPMorgan as part 6 of the P&A Agreement, the Court finds implausible Plaintiffs' 7 conclusory allegations that Defendants lack sufficient interest to 8 commence foreclosure proceedings. As the pleadings and Accordingly, Plaintiffs' Complaint is DISMISSED with leave to 9 United States District Court For the Northern District of California 10 amend. The amended pleading shall set forth specific and plausible 11 allegations explaining why Defendants lack sufficient interest to 12 foreclose on the Property. 13 14 15 V. CONCLUSION For the foregoing reasons, Defendants JPMorgan Chase Bank, N.A 16 and Wells Fargo Bank, N.A.'s Motion to Dismiss is GRANTED. 17 Plaintiffs Deborah Burke and Sean Burke's Complaint is DISMISSED 18 with leave to amend. 19 within thirty (30) days of the signature date of this Order. 20 Failure to do so may result in dismissal of this action with 21 prejudice. Plaintiffs shall file their amended pleading 22 23 IT IS SO ORDERED. 24 25 January 14, 2014 26 UNITED STATES DISTRICT JUDGE 27 28 6

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