Smiley v. JP Morgan Chase

Filing 30

ORDER GRANTING MOTION TO DISMISS Re: Dkt. No. 20 . Signed by Judge Nathanael Cousins. (lmh, COURT STAFF) (Filed on 1/15/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KIONA L. SMILEY,
Plaintiff,

Case No. 14-cv-01651-NC

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v.
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JP MORGAN CHASE, et al.,

United States District Court
Northern District of California

Defendants.

ORDER GRANTING MOTION TO
DISMISS
Re: Dkt. No. 20

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This case arises out of the foreclosure on a 2007 mortgage loan taken out by pro se

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plaintiff Kiona Smiley. Pending before the Court is JPMorgan’s motion to dismiss the

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First Amended Complaint for failure to state a claim. For the reasons set forth below, the

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Court finds that Smiley fails to state a claim upon which relief can be granted, and

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therefore GRANTS JPMorgan’s motion to dismiss the complaint.

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I.

BACKGROUND
Smiley initially filed a complaint alleging negligence, breach of contract, unfair

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business practices, fraud and deceit, and slander. Dkt. No. 1. She alleged that JPMorgan

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foreclosed on her property while she was “awaiting status of [a] modification,” presumably

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of her mortgage. Smiley alleged that JPMorgan knew plaintiff’s address but “kept

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corresponding with a vacant house.” Id. She further alleged that JPMorgan “reacted

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without thinking,” took “negligent actions,” and committed “grand larceny,” but failed to

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specify what facts supported those allegations. Id. Plaintiff stated that her “demand

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started at $329,000.00 [but] now it’s at $3.9 Million Dollars.” Id.

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This Court dismissed Smiley’s complaint for failure to state a claim upon which

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relief can be granted. Dkt. No. 8. Additionally, the Court found that she failed to allege

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facts supporting federal subject matter jurisdiction. Id. The Court granted Smiley’s

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application to proceed in forma pauperis and gave Smiley leave to amend her complaint.

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Id.
In her First Amended Complaint, Smiley alleges that JPMorgan violated her due

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process rights under the Fourteenth Amendment, the Truth in Lending Act, and the Real

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Estate Settlement Procedures Act. Dkt. No. 12. Smiley alleges that she refinanced the

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loan on her rental property located in Oakland on May 6, 2007. Id. at 3. She alleges that

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she requested a loan modification on her Oakland rental property in October 2009. Id.
While waiting for a response to her request, she states that she opened an account with the

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United States District Court
Northern District of California

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Stockton, California branch of JPMorgan because it was “ the only way [she] can make a

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payment” on the note to her property. Id.

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Smiley then alleges that some time afterwards she discovered another person living

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at her Oakland rental property. Id. On a later visit to the property, she found a padlock on

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the gate and learned that her house had been foreclosed upon without notice to her. Id.

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Smiley alleges that she called JPMorgan “a number of times” to find out what happened.

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Id. JPMorgan told her that there was not anything she could do. Id. Smiley alleges that

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JPMorgan never called or wrote to her Stockton home address—where she allegedly

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lives—concerning the foreclosure. Id. at 4. Instead, Smiley states that JPMorgan only

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contacted her rental property in Oakland. Id. Smiley states that she “never had a chance to

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respond in any kind of way.” Id. She states that JPMorgan knew she did not live in the

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Oakland rental property. Id. JPMorgan’s failure to contact her in Stockton violated her

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due process rights, as well as RESPA and TILA.
Smiley and JPMorgan both consented to the jurisdiction of a magistrate judge under

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28 U.S.C. § 636(c). Dkt. Nos. 6, 16.
II.

LEGAL STANDARD
A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a
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motion to dismiss, all allegations of material fact are taken as true and construed in the

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light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-

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38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are

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merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re

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Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need

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not allege detailed factual allegations, it must contain sufficient factual matter, accepted as

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true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,

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550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft

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v. Iqbal, 556 U.S. 662, 678 (2009).
If a court grants a motion to dismiss, leave to amend should be granted unless the

United States District Court
Northern District of California

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pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203

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F.3d 1122, 1127 (9th Cir. 2000).

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III.

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DISCUSSION
A.

RESPA Claim

JPMorgan moves to dismiss plaintiff’s claim under RESPA on the grounds that it is

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barred by the statute of limitations and fails to state a claim. Dkt. No. 20 at 7-8.

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“Congress enacted RESPA to control real estate settlement costs by ‘insur[ing] that

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consumers throughout the Nation are provided with greater and more timely information

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on the nature and costs of the settlement process and are protected from unnecessarily high

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settlement charges caused by certain abusive practices that have developed in some areas

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of the country.’” Bloom v. Martin, 865 F. Supp. 1377, 1381 (N.D. Cal. 1994), aff’d, 77

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F.3d 318 (9th Cir. 1996) (quoting 12 U.S.C. § 2601(a) (1989)). “To effectuate these

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objectives, RESPA requires advance disclosure of settlement costs, the elimination of

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kickbacks or referral fees, and a reduction of the amount that buyers are required to place

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in escrow accounts for taxes and insurance.” Id. (12 U.S.C. § 2601(b) (1989)).

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Depending on which specific provision of the statute is asserted, a RESPA claim
must be made within one to three years “from the date of the occurrence of the violation.”
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12 U.S.C. § 2614; Blackwell v. Wells Fargo Home Mortg., Inc., No. 10-cv-04917 JF, 2011

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WL 250436, at *2 (N.D. Cal. Jan. 26, 2011) (the RESPA statute of limitations runs on the

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date the loan is consummated); Metcalf v. Drexel Lending Grp., No. 08-cv-00731, 2008

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WL 4748134, at *9 (S.D. Cal. Oct. 29, 2008) (“Typically, in cases involving loan

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documents, the statute begins to run when the documents are signed unless evidence is

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presented to override this assumption.”) (citation omitted)). Here, whether the alleged

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violation took place in 2007 (when Smiley alleges she refinanced her loan) or in 2009

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(when Smiley alleges she requested a loan modification), Smiley’s RESPA claim is time-

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barred absent tolling. See Dkt. No. 12 at 3.
The circuit courts are split as to whether equitable tolling can apply to RESPA

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United States District Court
Northern District of California

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claims, and the Ninth Circuit has not directly considered the issue. Courts within this

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District deciding the issue have held that equitable tolling is available. See Spears v. First

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Am. eAppraiseIt, No. 08-cv-00868 RMW, 2013 WL 1748284, at *3 (N.D. Cal. Apr. 23,

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2013); Marcelos v. Dominguez, No. 08-cv-00056 WHA, 2008 WL 1820683, at *6 (N.D.

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Cal. Apr. 21, 2008). “Equitable tolling may be applied if, despite all due diligence, a

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plaintiff is unable to obtain vital information bearing on the existence of his claim.” Gens

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v. Wachovia Mortg. Corp., No. 10-cv-01073 LHK, 2011 WL 1791601, at *6 (N.D. Cal.

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May 10, 2011), aff'd, 503 F. App’x 533 (9th Cir. 2013) (quoting Santa Maria v. Pac. Bell,

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202 F.3d 1170, 1178 (9th Cir. 2000)). Here, Smiley has not alleged any specific facts

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stating what formed the basis of her RESPA claim, and how she was unable to obtain vital

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information relating to that claim until 2014.

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Additionally, JPMorgan contends that the complaint does not sufficiently state a

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claim under RESPA because it does not have any factual allegations suggesting that

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Smiley suffered pecuniary loss as a result of JPMorgan’s alleged RESPA violation. Dkt.

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No. 20 at 7. RESPA provides that anyone who fails to comply with its provisions shall be

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liable to the borrower for “any actual damages to the borrower as a result of the failure.”

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12 U.S.C. § 2605(f)(1). A number of courts within this District have held that, in order to

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state a claim under RESPA, a plaintiff must allege that they suffered actual, pecuniary
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damages as a result of the RESPA violation. See, e.g., Tamburri v. Suntrust Mortg., Inc.,

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875 F. Supp. 2d 1009, 1014-15 (N.D. Cal. 2012); Allen v. United Fin. Mortg. Corp., 660 F.

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Supp. 2d 1089, 1097 (N.D. Cal. 2009). Here, Smiley states that her “company suffered a

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big loss,” but does not allege how that loss resulted from JPMorgan’s alleged violations of

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RESPA. Therefore, the RESPA claim is dismissed, but Smiley may seek leave to amend.

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In short, if Smiley chooses to seek leave to amend this claim, she must point out the

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specific section of RESPA that forms the basis of her allegations. She must also show how

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any alleged damages relate to her RESPA claim. Further, Smiley must explain why she

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was unable to obtain vital information about the RESPA claim until 2014.
B.

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United States District Court
Northern District of California

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JPMorgan contends that Smiley’s TILA claim should be dismissed as time-barred.

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TILA Claim

The Court agrees.

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TILA obligates lenders to make certain disclosures to the borrower relating to

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finance charges. 15 U.S.C. §§ 1638, 1632. A damages claim for a TILA violation must be

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brought “within one year from the date of the occurrence of the violation.” Id. § 1640(e).

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The statutory period generally runs from the date the loan agreement was executed. Meyer

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v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003) (“The failure to make the

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required disclosures occurred, if at all, at the time the loan documents were signed.”).

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Here, what forms the basis for Smiley’s TILA claim is unclear. But to the extent any

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claim is based on actions by JPMorgan in 2007, when Smiley refinanced her loan, the time

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period for bringing an action for damages ended in 2008. Similarly, to the extent Smiley

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brings a cause of action for TILA based on alleged violations by JPMorgan in 2009, when

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Smiley sought to modify her loan, the time period for bringing an action ended in 2010.

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Because plaintiff did not file this action until 2014, any TILA claims for damages are time-

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barred.

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The Court recognizes, however, that “the doctrine of equitable tolling may, in the

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appropriate circumstances, suspend the limitations period until the borrower discovers or

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had reasonable opportunity to discover the fraud or nondisclosures that form the basis of
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the TILA action.” King v. State of Cal., 784 F.2d 910, 915 (9th Cir. 1986). As the Ninth

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Circuit has further explained, “‘[e]quitable tolling’ focuses on whether there was excusable

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delay by the plaintiff: If a reasonable plaintiff would not have known of the existence of a

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possible claim within the limitations period, then equitable tolling will serve to extend the

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statute of limitations for filing suit until the plaintiff can gather what information he needs

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. . . . Equitable estoppel, on the other hand, focuses primarily on actions taken by the

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defendant to prevent a plaintiff from filing suit, sometimes referred to as ‘fraudulent

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concealment.’” Lukovsky v. City & Cnty. of San Francisco, 535 F.3d 1044, 1051 (9th Cir.

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2008) (internal quotation marks and citations omitted).

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Put differently, plaintiff must allege facts demonstrating that she could not have

United States District Court
Northern District of California

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discovered the alleged violations by exercising reasonable diligence. Rosenfeld v.

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JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 964 (N.D. Cal. 2010); see also

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Hubbard v. Fid. Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996) (plaintiff was not entitled to

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equitable tolling on TILA claim where “nothing prevented [plaintiff] from comparing the

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loan contract, [lender]’s initial disclosures, and TILA’s statutory and regulatory

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requirements.”). Moreover, a tolling of the statute of limitations based on fraudulent

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concealment must be alleged with particularity, and cannot be based simply on a

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restatement of the TILA claims. Robertson v. Bank of Am., NA, No. 10-cv-3525 SBA,

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2011 WL 1231003, at *3 (N.D. Cal. Apr. 1, 2011) (citations omitted).

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Here, Smiley fails to allege facts showing how JPMorgan hid a TILA violation or

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why Smiley could not have discovered the violation until recently. Still, because the Ninth

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Circuit generally disfavors resolving a motion to dismiss on equitable tolling grounds

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unless it is clear that equitable tolling is inappropriate, plaintiff’s damages claims brought

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under TILA are dismissed, but Smiley may seek leave to amend. See Rai v. GMAC

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Mortgage, No. 10-cv-04291 LHK, 2011 WL 337842, at *4 (N.D. Cal. Jan. 31, 2011)

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(citing Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995)).

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But to the extent plaintiff seeks rescission under TILA, such a claim is also timebarred and dismissed without leave to amend. Under TILA, a borrower generally may
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rescind a loan within three business days after it is consummated. 15 U.S.C. § 1635(a).

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The right to rescission expires “three years after the date of consummation of the

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transaction or upon the sale of the property, whichever occurs first, notwithstanding the

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fact that the information and forms required under this section or any other disclosures

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required under this part have not been delivered . . . .” Id. § 1635(f). Section 1635(f) is “a

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statute of repose, depriving the courts of subject matter jurisdiction when a § 1635 claim is

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brought outside the three-year limitation period.” Miguel v. Country Funding Corp., 309

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F.3d 1161, 1164 (9th Cir. 2002); Beach v. Ocwen Fed. Bank, 523 U.S. 410, 419 (1998)

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(TILA “permits no federal right to rescind, defensively or otherwise, after the 3-year
period of § 1635(f) has run.”). Whether the Court considers the loan transaction here as

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United States District Court
Northern District of California

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consummated in 2007 or in 2009, the time period to bring a claim for rescission under

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TILA expired in 2012 at the latest. Therefore, as plaintiff did not file this action until

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2014, any claim for rescission under TILA is time-barred and is dismissed without leave to

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amend.

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C.

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Smiley alleges that JPMorgan deprived her of her due process rights under the

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Fourteenth Amendment. But Smiley has failed to allege facts sufficient to maintain a

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claim under that Amendment. To the extent Smiley alleges that JPMorgan violated her

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due process rights by instituting non-judicial foreclosure proceedings, the Court grants

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JPMorgan’s motion to dismiss without leave to amend.

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Due Process Claims

“The Fourteenth Amendment provides: ‘No state shall . . . deprive any person of

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life, liberty, or property, without due process of law.’ It thus shields citizens from

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unlawful governmental actions, but does not affect conduct by private entities.” Apao v.

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Bank of New York, 324 F.3d 1091, 1093 (9th Cir. 2003). Thus, to withstand a motion to

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dismiss claim under this amendment, a plaintiff must allege facts demonstrating that the

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defendant’s supposed unlawful conduct constitutes “state action.” Id. In the foreclosure

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context in California, it is “it is well-settled law that non-judicial foreclosure proceedings

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do not involve ‘state action,’ even though such proceedings are regulated by state law.”
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Geist v. Cal. Reconveyance Co., 10-cv-0367 CRB, 2010 U.S. Dist. LEXIS 48978, at *3-4

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(N.D. Cal. May 18, 2010) (citing Apao, 324 F.3d at 1091).

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Because JPMorgan’s foreclosing on Smiley’s property does not constitute “state
action,” Smiley’s Fourteenth Amendment claim fails as a matter of law.
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Claims Against Attorney

In her complaint, Smiley names attorney Amy M. Spicer as a defendant. Dkt. No.

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12 at 2. As JPMorgan points out, however, Smiley neither attributes any alleged wrong

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doing to Spicer nor mentions Spicer anywhere else in the complaint. Because Smiley has

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not alleged sufficient facts against Spicer, any claims against Spicer are dismissed without
leave to amend. The Court does note that in her response to JPMorgan’s motion to

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United States District Court
Northern District of California

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dismiss, Smiley states, “Plaintiff hereby dismiss A. Spricer [sic] as a defendant.” Dkt. No.

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E.

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Smiley alleges in part that JPMorgan never made attempts to contact her at her

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JPMorgan’s Failure to Contact Smiley

Stockton home address about the foreclosure.
Section 2923.5 of California’s Homeowners’ Bill of Rights provides that “a

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mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default . . .

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until 30 days after initial contact is made as required by paragraph (2) or 30 days after

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satisfying the due diligence requirements as described in subdivision (e).” Cal. Civ. Code

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§ 2923.5(a)(1). Under paragraph (2), the authorized agent must “contact the borrower in

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person or by telephone in order to assess the borrower’s financial situation and explore

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options for the borrower to avoid foreclosure.” Cal. Civ. Code § 2923.5(a)(2). Under

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subdivision (e), “a notice of default may be filed . . . when a mortgagee, beneficiary, or

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authorized agent has not contacted a borrower as required by paragraph (2) of subdivision

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(a) provided that the failure to contact the borrower occurred despite the due diligence of

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the mortgagee, beneficiary, or authorized agent.” Cal. Civ. Code § 2923.5(e). The due

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diligence requirements are described further in section (e).

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Yet regardless of whether JPMorgan satisfied these due diligence requirements
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(e.g., mortgage servicer must send certified letter, with return receipt requested, if

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borrower fails to respond within 2 weeks of telephone call), the only relief available under

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§ 2923.5 is a postponement of the foreclosure sale until the lender complies. See Mabry v.

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Superior Court, 185 Cal. App. 4th 208, 214 (2010). Here, Smiley alleges that JPMorgan

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sold her Oakland property for $93,000. Dkt. No. 12 at 4. Because Smiley is no longer in

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possession of the property, a claim under § 2923.5 based on JPMorgan’s failure to notify

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her of the foreclosure would not survive a motion to dismiss.

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IV.

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CONCLUSION
JPMorgan’s motion to dismiss is GRANTED and the complaint is DISMISSED.

Smiley may seek leave to amend the complaint. She will have until February 4, 2015, to

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United States District Court
Northern District of California

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file a motion for leave to amend her claims for relief. Specifically, Smiley may seek leave

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to amend her claims under RESPA and TILA (though not any recession claims). A

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proposed amended complaint must be attached to such a motion. The motion should

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explain how the amended complaint cures the deficiencies identified in this order.

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Additionally, the Court warns Smiley that if her motion fails to address these specific

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defects, the action may be terminated without further briefing or a hearing.

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For more guidance, Smiley may contact the Legal Help Center, which provides

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information and limited-scope legal advice to pro se litigants in civil cases. The Legal

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Help Center requires an appointment, which can be made by calling [phone].

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Smiley may also refer to the Court’s Pro Se Handbook, available on the Court’s website at

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http://www.cand.uscourts.gov/prosehandbook.

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If Smiley chooses not to file leave, her claims will be dismissed with prejudice.

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IT IS SO ORDERED.

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Dated: January 15, 2015
_____________________________________
NATHANAEL M. COUSINS
United States Magistrate Judge

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KIONA L. SMILEY,

Case No. 14-cv-01651-NC

Plaintiff,
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v.

CERTIFICATE OF SERVICE

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JP MORGAN CHASE, et al.,
Defendants.

United States District Court
Northern District of California

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I, the undersigned, hereby certify that I am an employee in the Office of the Clerk, U.S.
District Court, Northern District of California.
That on 1/15/2015, I SERVED a true and correct copy(ies) of the attached, by placing said
copy(ies) in a postage paid envelope addressed to the person(s) hereinafter listed, by depositing
said envelope in the U.S. Mail, or by placing said copy(ies) into an inter-office delivery receptacle
located in the Clerk's office.

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Kiona L. Smiley
9837 Milan Dr
Stockton, CA 95212

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Dated: 1/15/2015

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Richard W. Wieking
Clerk, United States District Court

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By:________________________
Lili Harrell, Deputy Clerk to the
Honorable NATHANAEL M. COUSINS

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