Palce v. JP Morgan Chase Bank National Association et al

Filing 37

ORDER by Judge Hamilton Granting 25 Motion to Dismiss; Granting 27 Motion to Expunge; Denying 26 Motion to Strike (pjhlc2, COURT STAFF) (Filed on 1/11/2012)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 6 7 DELIA S. PALCE, Plaintiff, 8 9 v. JP MORGAN CHASE BANK, et al., 11 For the Northern District of California United States District Court 10 No. C 11-2932 PJH ORDER GRANTING MOTION TO DISMISS; GRANTING MOTION TO EXPUNGE; DENYING MOTION TO STRIKE Defendants. _______________________________/ 12 13 Defendants’ motion to dismiss, motion to strike, and motion to expunge lis pendens 14 came on for hearing on January 11, 2012 before this court. Plaintiff Delia S. Palce 15 (“plaintiff”) failed to appear at the hearing. Defendants JP Morgan Chase Bank, N.A. 16 (“Chase”) and California Reconveyance Company (“California Reconveyance”)(collectively 17 “defendants”), appeared through their counsel, Berrie Goldman. Having read all the papers 18 submitted and carefully considered the relevant legal authority, the court hereby GRANTS 19 defendants’ motion to dismiss and motion to expunge lis pendens, and DENIES the motion 20 to strike as moot, for the reasons stated at the hearing, and summarized as follows: 21 1. Plaintiff’s claims asserted against defendant Chase are DISMISSED. Plaintiff 22 alleges that she entered into the underlying loan with defendant on October 3, 2007 and 23 that defendant was formerly known as Washington Mutual Bank. See FAC, ¶ 8. In fact, it 24 was not until September 25, 2008, the same day that the Office of Thrift Supervision closed 25 Washington Mutual Bank and appointed the FDIC as receiver for the bank, that Chase 26 entered into a Purchase and Assumption agreement with the FDIC, pursuant to which 27 Chase acquired many of Washington Mutual’s assets. The Purchase and Assumption 28 agreement, however, expressly provides that the FDIC retains liability for borrower claims September 25, 2008. See Request for Judicial Notice (“RJN”), Ex. E at § 2.5. Since all of 3 plaintiff’s claims are fundamentally premised upon allegations stemming from the October 4 3, 2007 loan originally executed between plaintiff and Washington Mutual, the FDIC is the 5 real party in interest with respect to plaintiff’s claims, and Chase cannot be deemed to have 6 assumed any liability related to any of them. See, e.g., Rosenfeld v. JPMorgan Chase 7 Bank, N.A., 732 F. Supp. 2d 952, 960 (N.D. Cal. 2010)(acknowledging that, under 8 Purchase and Assumption agreement, Chase “did not assume the potential liabilities of 9 [WaMu] associated with claims of borrowers”); see also Yeomalakis v. F.D.I.C., 562 F.3d 10 56 (1st Cir. 2009)(finding denial of motion to substitute Chase Bank as party appropriate, 11 For the Northern District of California relating to any Washington Mutual lending or loan purchase activities that predate 2 United States District Court 1 since FDIC was appropriate party pursuant to Purchase and Assumption 12 agreement)(“When Washington Mutual failed, Chase Bank acquired many assets but its 13 agreement with the FDIC retains for the FDIC “any liability associated with borrower claims 14 for payment of or any liability to any borrower for monetary relief, or that provide for any 15 other form of relief to any borrower.”). 16 17 18 Since plaintiff cannot cure the foregoing deficiency by amendment, plaintiff’s claims against Chase are dismissed with prejudice. 2. With respect to the remaining defendant California Reconveyance, 19 defendants correctly note that plaintiff’s complaint alleges no specific unlawful conduct 20 purportedly undertaken by California Reconveyance. At most, the FAC alleges that 21 California Reconveyance “does not have authority to act as trustee” and furthermore, that it 22 is not in possession of the original Note and had no ability to transfer the Note or foreclose 23 upon plaintiff’s property. See FAC, ¶ 10; see also id., ¶¶ 27-29. However, to the extent 24 that California Reconveyance is alleged to be the designated trustee with respect to the 25 underlying loan, California Reconveyance could have played no role with respect to any act 26 occurring at the time of loan origination, or occurring in connection with the issuance or 27 servicing of plaintiff’s loan. Nor does plaintiff allege as much. As such, since plaintiff’s 28 2 1 substantive legal claims relate only to acts occurring at the time of loan origination or in 2 connection with loan servicing, they fail to state viable claims against California 3 Reconveyance. 4 To the extent, moreover, that plaintiff otherwise seeks to hold California 5 Reconveyance accountable for wrongfully foreclosing upon plaintiff’s property due to failure 6 to possess the “original note,” not only is there no claim for wrongful foreclosure stated, but 7 as defendants correctly note, a trustee need not possess the original note in order to 8 initiate foreclosure pursuant to a Deed of Trust. See, e.g., Gamboa v. Trustee Corps., 9 2009 WL 656285 at *4 (N.D. Cal., March 12, 2009); see also Putkkuri v. ReconTrust Co., 2009 WL 32567 at *2 (S.D. Cal., Jan. 5, 2009)(under Civil Code § 2924(a), trustee has right 11 For the Northern District of California United States District Court 10 to initiate foreclosure process, and production of original note is not required). 12 Finally, while the court need to go into detail with respect to the specifics of each 13 claim asserted against California Reconveyance in light of the foregoing universal 14 deficiencies, the court nonetheless notes that even it if did, it would find the individual 15 claims inadequately pleaded. 16 Having failed to properly allege any actionable conduct by California Reconveyance 17 in connection with loan origination or servicing, or in connection with the foreclosure of 18 plaintiff’s property, plaintiff’s claims as to California Reconveyance are hereby DISMISSED. 19 Since this is plaintiff’s second opportunity to amend her complaint (having previously had 20 her complaint dismissed and been given leave to amend) and she has still failed to cure the 21 deficiencies noted therein, and moreover since any amendment is likely to be futile, the 22 instant dismissal is with prejudice. 23 3. To the extent plaintiff seeks to add additional claims against defendants under 24 the Truth in Lending Act and the Real Estate Settlement Procedures Act by way of her 25 opposition brief, the court notes that such claims are not properly before it, since plaintiff 26 has failed to allege them in her amended complaint, nor has she sought leave to amend the 27 complaint in order to do so. Moreover, even if these claims were properly before the court, 28 3 1 they would suffer the same deficiencies already noted above in connection with plaintiff’s 2 already existing claims. 3 4. In view of the foregoing, defendants’ motion to strike plaintiff’s references to 4 the lending industry, and plaintiff’s requests for punitive and injunctive relief and for 5 attorney’s fees, is DENIED as moot. 6 5. Defendants’ corresponding motion to expunge the recorded lis pendens filed 7 by plaintiff in state court is GRANTED. Defendants may seek whatever relief they are 8 entitled to, by virtue of the court's order, in the appropriate state court forum. 9 IT IS SO ORDERED. 11 For the Northern District of California United States District Court 10 Dated: January 11, 2012 12 ______________________________ PHYLLIS J. HAMILTON United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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