Burke et al v. JPMorgan Chase Bank, N.A. et al
Filing
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Order by Hon. Samuel Conti granting 5 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 1/14/2014)
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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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DEBORAH BURKE and SEAN K. BURKE ) Case No. 13-4249 SC
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Plaintiffs,
) ORDER GRANTING MOTION TO
) DISMISS
v.
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JPMORGAN CHASE BANK, N.A; WELLS )
FARGO BANK, N.A. AS TRUSTEE FOR )
JPMORGAN MORTGAGE TRUST 2008-R2 )
MORTGAGE PASS-THROUGH
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CERTIFICATE SERIES 2008-R2,
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Defendants.
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I.
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INTRODUCTION
Plaintiffs Deborah Burke and Sean Burke (collectively,
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"Plaintiffs") bring this action in connection with the threatened
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foreclosure of their home in Livermore, California ("the
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Property").
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Wells Fargo Bank, N.A. ("Wells Fargo") now move to dismiss for
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failure to state a claim pursuant to Federal Rule of Civil
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Procedure 12(b)(6).
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briefed, ECF Nos. 10 ("Opp'n"), 19 ("Reply"), and appropriate for
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determination without oral argument pursuant to Civil Local Rule 7-
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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.
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II.
BACKGROUND
On August 7, 2007, Plaintiffs refinanced their existing
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mortgage on the Property, obtaining a $1,256,250 loan.
ECF No. 1
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("Compl.") ¶ 5, Ex. A.
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identifies Washington Mutual Bank, FA ("WaMu") as the lender.
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Ex. A ("DOT").
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2008, their mortgage loan was contributed to a mortgage backed
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security ("MBS") identified as JPMorgan Mortgage Trust 2008 R-2
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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
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the trustee.
Id. ¶ 7.
Plaintiffs further allege that the
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securitization of their loan failed, leaving Wells Fargo without
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any legal or equitable interest in the mortgage.
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complaint is vague on why the securitization failed, stating only
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that the sale "w[as] made without the required intervening
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assignment of Plaintiffs' Deed of Trust and endorsement of the
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Note."
Id. p. 2.
The
Id. ¶ 12.
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On September 25, 2008, WaMu was closed by the Office of Thrift
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Supervision, and the Federal Deposit Insurance Corporation ("FDIC")
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was named Receiver.
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certain assets and liabilities of WaMu through an asset purchase
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agreement with the FDIC.
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Plaintiffs now allege that JPMorgan does not have any legal or
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equitable interests in their loan, they applied for a loan
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modification with JPMorgan sometime in 2010.
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JPMorgan rejected the application in May 2010, stating that
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Plaintiffs' income was insufficient.
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applied for a loan modification.
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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
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because [they] ha[d] the ability to pay [their] current mortgage
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payment."
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Id. ¶ 15.
On October 28, 2010, a notice of default and election to sell
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("NOD") was recorded with Alameda County, stating that Plaintiffs
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were $28,024.95 in arrears.
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that the NOD's statement that Plaintiffs could contact JPMorgan
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about the foreclosure proceedings was false because JPMorgan had no
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right to collect mortgage payments and there is no evidence that
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JPMorgan is a valid loan servicer or beneficiary of Plaintiffs'
Plaintiffs allege
United States District Court
For the Northern District of California
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mortgage.
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to the MBS trust before JPMorgan acquired the assets of WaMu,
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JPMorgan did not succeed to the servicing rights of WaMu.
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April 2011 and April 2012, notices of trustee sales were recorded
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with Alameda County.
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sale indicates that the unpaid balance on the loan was
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$1,395,095.88.
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NOD, are null and void.
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pleadings whether the foreclosure sale has yet taken place.
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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
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for: (1) wrongful foreclosure, (2) quiet title, (3) slander of
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title, (4) fraud, (5) cancellation of instruments, (6) violation of
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California Civil Code section 2923.5, (7) violation of California
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Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et
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seq.; and (8) unjust enrichment.
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an injunction against foreclosure activity on the Property, a
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finding that Plaintiffs are the rightful holders of title to the
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Property, general and consequential damages, and attorney's fees.
Plaintiffs pray for, inter alia,
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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, 679 (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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Twombly, 550 U.S. 544, 555 (2007)).
However, "the tenet that a court
Threadbare recitals of the
Id. (citing Bell Atl. Corp. v.
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IV.
DISCUSSION
The gravamen of all eight of Plaintiffs' claims is that
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Defendants do not have a beneficial interest in Plaintiffs'
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mortgage either because (1) the securitization of the mortgage
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failed, or (2) Plaintiffs' mortgage was not transferred as part of
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the P&A Agreement because it was securitized and sold before the
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agreement took effect.
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Accordingly, the Court finds all of Plaintiffs' claims implausible.
Both of these theories are unavailing.
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With respect to the first theory, Plaintiffs lack standing to
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challenge the securitization process because they were not parties
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to the agreement that securitized the note.
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See Junger v. Bank of
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Am., N.A., CV 11-10419 CAS VBKX, 2012 WL 603262, at *3 (C.D. Cal.
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Feb. 24, 2012).
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pleadings why the alleged securitization failed.
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that the sale of the loan to the MBS trust was made "without the
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required intervening assignment of Plaintiffs' Deed of Trust and
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endorsement of the Note," Compl. ¶ 12, but has yet to point to any
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authority which would impose such a requirement.
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makes reference to Section 860 of the Internal Revenue Code, id. ¶
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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
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is unclear why this tax statute has any application here, and to
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the extent that it does, it is unclear how it could disrupt the
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chain of title to Plaintiffs' DOT and note or JPMorgan's right to
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service the loan.
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Plaintiffs' second theory -- that Defendants lost all interest
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in the loan when it was sold to the MBS trust -- is also
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unpersuasive.
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claim for wrongful foreclosure based on allegations that sale of
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the DOT precluded Defendants from retaining a beneficial interest
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in that DOT.
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2013 WL 5913789, at *4 (N.D. Cal. Oct. 31, 2013).
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Plaintiffs have not alleged that WaMu ever transferred the DOT to a
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third party (though Plaintiffs have alleged that WaMu's assets were
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conveyed to JPMorgan as part of the P&A Agreement).
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Plaintiffs merely allege that the promissory note was transferred
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to a MBS trust.
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non-judicial foreclosure scheme that requires a beneficial interest
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in the Note to foreclose.
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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
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non-judicial foreclosure."
Lane v. Vitek Real Estate Indus. Grp.,
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713 F. Supp. 2d 1092, 1099 (E.D. Cal. 2010).
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judicially noticeable documents suggest that WaMu retained a
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beneficial interest in the DOT after the alleged securitization of
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the note and that this interest was transferred to JPMorgan as part
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of the P&A Agreement, the Court finds implausible Plaintiffs'
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conclusory allegations that Defendants lack sufficient interest to
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commence foreclosure proceedings.
As the pleadings and
Accordingly, Plaintiffs' Complaint is DISMISSED with leave to
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United States District Court
For the Northern District of California
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amend.
The amended pleading shall set forth specific and plausible
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allegations explaining why Defendants lack sufficient interest to
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foreclose on the Property.
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V.
CONCLUSION
For the foregoing reasons, Defendants JPMorgan Chase Bank, N.A
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and Wells Fargo Bank, N.A.'s Motion to Dismiss is GRANTED.
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Plaintiffs Deborah Burke and Sean Burke's Complaint is DISMISSED
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with leave to amend.
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within thirty (30) days of the signature date of this Order.
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Failure to do so may result in dismissal of this action with
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prejudice.
Plaintiffs shall file their amended pleading
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IT IS SO ORDERED.
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January 14, 2014
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UNITED STATES DISTRICT JUDGE
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