Schoenbart v. JPMorgan Chase Bank, National Association et al

Filing 63

ORDER: (1) GRANTING MOTION TO DISMISS, AND (2) GRANTING MOTION FOR ENTRY OF JUDGMENT [re 45 MOTION to Dismiss Plaintiff's First Amended Complaint filed by U.S. Bank National Association as Trustee for LSF9 Master Participation Trust, Caliber Home Loans, Inc., 44 MOTION for Entry of Judgment under Rule 54(b) filed by JPMorgan Chase Bank, National Association]. Signed by Judge William Alsup on 7/15/2016. (whasec, COURT STAFF) (Filed on 7/15/2016)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 THERESA M. SCHOENBART, 11 For the Northern District of California United States District Court 10 12 13 14 15 16 Plaintiff, No. C 16-00070 WHA v. U.S. BANK NATIONAL ASSOCIATION, as Trustee for LSF9 Master Participation Trust; QUALITY LOAN SERVICE CORPORATION; CALIBER HOME LOANS, INC.; and DOES 1–20, Defendants. / 17 18 ORDER: (1) GRANTING MOTION TO DISMISS, AND (2) GRANTING MOTION FOR ENTRY OF JUDGMENT INTRODUCTION 19 In this foreclosure dispute, defendants move to dismiss plaintiff’s first amended 20 complaint, and a former defendant moves for entry of final judgment. Although the Court was 21 at first inclined to sustain the complaint in part, the oral argument persuaded the Court to the 22 contrary and defendants’ motion to dismiss is GRANTED. The former defendant’s motion for 23 entry of final judgment is also GRANTED. 24 25 STATEMENT Plaintiff Theresa Schoenbart owns real property located in Lafayette, California, and has 26 lived rent-free in the house since 2008 without paying on her home loan. Here are the details. 27 In December 2007, Schoenbart obtained a $1.2 million loan from Washington Mutual Bank, 28 F.A. (WAMU) secured by a deed of trust in Schoenbart’s property. The deed of trust identified 1 WAMU as the lender and beneficiary and California Reconveyance Company (CRC) as the 2 trustee. Schoenbart alleges that WAMU transferred her loan to the WAMU Securitized Trust 3 that month, which then sold the loan to an unidentified third-party investment trust. No specific 4 facts have been alleged to back up this allegation. At the hearing on defendants’ motion to 5 dismiss, Schoenbart’s counsel conceded that this allegation was based solely on WAMU’s 6 “business model” of securitization. 7 Once WAMU collapsed, several known convoluted transactions ensued. In September alleged in the complaint, this order takes judicial notice of the fact that the FDIC immediately 10 sold WAMU’s assets to former defendant JPMorgan Chase & Co., which assumed WAMU’s 11 For the Northern District of California 2008, the Federal Deposit Insurance Company put WAMU into receivership. Although not 9 United States District Court 8 banking operations and loan portfolio. In May 2009, CRC purported to execute and record a 12 notice of default. In August 2014, Chase, acting as attorney-in-fact for the FDIC, recorded an 13 assignment of the deed of trust, thereby assigning Schoenbart’s loan to itself. Chase in turn 14 recorded a second assignment of the deed of trust in May 2015, assigning the loan to defendant 15 U.S. Bank, N.A., as Trustee for the LSF9 Master Participation Trust. In October 2015, 16 defendant Caliber Home Loans, Inc., acting as attorney-in-fact for U.S. Bank, executed a 17 substitution of trustee which purported to substitute defendant Quality Loan Service 18 Corporation as trustee for Schoenbart’s deed of trust. Quality subsequently executed and 19 recorded a notice of trustee’s sale, claiming Schoenbart owed $1.7 million. 20 Schoenbart essentially speculates that because WAMU had a business model of 21 securitization, WAMU must have securitized and sold her loan to a third-party investment trust 22 in 2007 (à la “The Big Short”). Schoenbart claims, based solely on WAMU’s business model, 23 that the FDIC could not have acquired her loan when it put WAMU into receivership nine 24 months later. Thus, she argues, Chase could not have acquired her loan when it assumed 25 WAMU’s loan portfolio. Rather, Schoenbart asserts that an unnamed and unknown third-party 26 investment trust must own the beneficial interest in her loan (and, for reasons only known to 27 itself, has taken no action all these years to collect on the loan). As such, she argues that Chase, 28 2 1 as attorney-in-fact for the FDIC, had no interest in the deed of trust to assign to itself and that 2 all documents stemming from that invalid assignment are void. 3 Schoenbart initiated the instant action in state court in December 2015 against Chase, 4 Quality, and Caliber, who jointly removed it to federal court here in San Francisco on the basis 5 of diversity jurisdiction. Chase and Caliber moved to dismiss. A prior order granted Chase’s 6 motion to dismiss and ordered Schoenbart to amend her complaint to add U.S. Bank as a 7 defendant (Dkt. No. 37). Caliber was ordered to re-notice its motion to dismiss and did so 8 (Dkt. Nos. 38, 47). Schoenbart filed a first amended complaint alleging claims for: (1) breach 9 of contract; (2) cancellation of instruments; (3) violation of California Business and Professions Code Section 17200; (4) violations of the California Homeowner Bill of Rights; and 11 For the Northern District of California United States District Court 10 (5) declaratory relief (Dkt. No. 43). Defendants U.S. Bank and Caliber now move to dismiss 12 the complaint for failure to state a claim. Former defendant Chase moves for entry of final 13 judgment as to the claims initially brought against it. This order follows full briefing and oral 14 argument. 15 ANALYSIS 16 1. 17 To survive a motion to dismiss a complaint must contain sufficient factual matter, U.S. BANK AND CALIBER’S MOTION TO DISMISS. 18 accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 19 556 U.S. 662, 678 (2009). A claim is facially plausible when there are sufficient factual 20 allegations to draw a reasonable inference that the defendants are liable for the misconduct 21 alleged. While a court “must take all of the factual allegations in the complaint as true,” it is 22 “not bound to accept as true a legal conclusion couched as a factual allegation.” A complaint 23 offering “labels and conclusions” or “a formulaic recitation of the elements of a cause of action 24 will not do.” Ibid. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 25 At the hearing, the undersigned judge initially stated a view that some of Schoenbart’s 26 claims should survive while others should not. Schoenbart’s counsel admitted at the hearing, 27 however, that the allegation regarding the 2007 sale of Schoenbart’s loan was based on nothing 28 more than a business model, which counsel attributed to WAMU — a circumstance that had not 3 1 been clear from the complaint. This is too speculative and is insufficient to state a claim for 2 relief. 3 In Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149 (2011), the plaintiff 4 alleged based on information and belief that the foreclosing entity did not have authority to 5 foreclose. He did not assert any specific factual basis for his allegations. Gomes held that “[n]o 6 case law or statute authorizes such a speculative suit.” Id. at 1156. 7 So too here. Counsel conceded at the hearing that the allegation that WAMU sold model of securitization involved the bundling of home loans into securities, which it then sold 10 on the secondary mortgage market. Based on this general business model and nothing more, 11 For the Northern District of California Schoenbart’s loan in 2007 is based on nothing more than mere conjecture. WAMU’s business 9 United States District Court 8 Schoenbart alleges that her specific loan was bundled and sold in December 2007. Schoenbart 12 offers no specific factual basis for the assertion that WAMU bundled and sold her specific loan. 13 Thus, she has not properly alleged that defendants lack the authority to foreclose. 14 Two things highlight the speculative nature of this allegation. One is that if the loan had 15 been sold to some unknown investor, surely that investor would have surfaced and demanded 16 payment when Schoenbart defaulted eight years ago. That no one has self-identified in these 17 circumstances is convincing that no such investor exists. (Had plaintiff alleged such a specific 18 investor, then the complaint would have been sustained.) The other is that at the end of 19 WAMU’s run, a large portfolio of loans remained in its possession — the very ones taken over 20 by the FDIC. If the “business model” were as accurate and efficient as Schoenbart’s counsel 21 supposes, no loans would have been left for the FDIC to seize. 22 Accordingly, U.S. Bank and Caliber’s motion to dismiss is GRANTED. 23 2. 24 A prior order dismissed former defendant Chase from our action without prejudice 25 after Chase showed that it is not involved in the current foreclosure on Schoenbart’s home. 26 Chase now moves for entry of final judgment. Rule 54(b) provides: 27 28 CHASE’S MOTION FOR ENTRY OF FINAL JUDGMENT. When an action presents more than one claim for relief . . . or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or 4 1 parties only if the court expressly determines that there is no just reason for delay. 2 In determining whether final judgment should be entered under Rule 54(b), a district 3 court must first determine whether there is a final judgment. “It must be a ‘judgment’ in the 4 sense that it is a decision upon a cognizable claim for relief, and it must be ‘final’ in the sense 5 that it is an ultimate disposition of an individual claim entered in the course of a multiple claims 6 action.” Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7–8 (1980). Here, Chase showed 7 that it sold its interest in Schoenbart’s loan in 2015 and is not involved in the foreclosure of her 8 home. Following a hearing on Chase’s motion to dismiss, the prior order dismissed Chase from 9 the action (Dkt. No. 37). The order was a judgment in the sense that it determined Schoenbart 10 all of Schoenbart’s claims against Chase in this foreclosure dispute. Thus, the prior order was a For the Northern District of California United States District Court had failed to state a claim against Chase. The order was also final in the sense that it disposed of 11 12 final judgment under Rule 54(b). 13 After determining finality, the district court must decide whether there is any just reason 14 for delay by considering “judicial administrative interests as well as the equities involved.” 15 Curtiss-Wright Corp., 446 U.S. at 7–8. In our action, the administrative interests and equities 16 are both served by entry of final judgment. Here, there is no risk of duplicative effort by the 17 courts because Chase is not involved in any of Schoenbart’s claims against U.S. Bank, Caliber, 18 and Quality. Moreover, entry of final judgment as to Chase would not affect Schoenbart’s 19 claims against the remaining defendants. Chase has already shown that it sold whatever 20 beneficial interest it might have had in Schoenbart’s loan to U.S. Bank. As such, Chase is 21 neither the lender nor the servicer on the loan. Because Chase is in no way involved in the 22 current foreclosure on Schoenbart’s home, there is no danger of piecemeal litigation. 23 Additionally, entry of final judgment would “streamline the ensuing litigation” and free Chase 24 from further unduly burdensome litigation. Noel v. Hall, 568 F.3d 743, 747 (9th Cir. 2009). 25 Schoenbart argues only that entry of final judgment could potentially prejudice her in the 26 future, asserting that she might uncover wrongdoing by Chase once she conducts discovery. 27 This argument fails. It would be inequitable to delay entry of final judgment because of the mere 28 possibility that Schoenbart might later discover some new information implicating Chase. 5 1 2 This order finds that there is no just reason for delay. Accordingly, Chase’s motion for entry of final judgment is GRANTED. 3 4 5 CONCLUSION For the reasons stated above, U.S. Bank and Caliber’s motion to dismiss is GRANTED. U.S. Bank and Caliber’s request for judicial notice is DENIED AS MOOT. 6 Plaintiff will have until JULY 29, 2016, AT NOON, to file a motion, noticed on the normal 7 35-day calendar, for leave to amend her claims. A proposed second amended complaint must be 8 appended to the motion. Plaintiff must plead her best case. The motion should clearly explain 9 how the amended complaint cures the deficiencies identified herein. If such a motion is not filed by the deadline, the case will be closed. Such a motion should be accompanied by a tender and 11 For the Northern District of California United States District Court 10 deposit of all loan payments due since the commencement of the action into the registry of the 12 district court, namely $56,000 (seven monthly payments of $8,000 each). This is without 13 prejudice to a motion for further tender of the vast sums plaintiff should have been paying to 14 someone (but has not) over the last eight years. This small measure of equity will be a 15 precondition to consideration of the equity Schoenbart seeks from this district court. 16 With respect to any future motion for summary judgment, possession of the original note 17 with the original-ink signature will be presumptive evidence that the note itself did get assigned.* 18 Chase’s motion for entry of final judgment is GRANTED. Final judgment as to the claims 19 against Chase will follow. 20 21 IT IS SO ORDERED. 22 23 Dated: July 15, 2016. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 24 25 26 27 28 * See Cal. Comm. Code §§ 3301, 3412. 6

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