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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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DELIA S. PALCE,
Plaintiff,

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v.
JP MORGAN CHASE BANK, et al.,

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For the Northern District of California

United States District Court

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No. C 11-2932 PJH
ORDER GRANTING MOTION
TO DISMISS; GRANTING MOTION
TO EXPUNGE; DENYING MOTION
TO STRIKE

Defendants.
_______________________________/

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Defendants’ motion to dismiss, motion to strike, and motion to expunge lis pendens

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came on for hearing on January 11, 2012 before this court. Plaintiff Delia S. Palce

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(“plaintiff”) failed to appear at the hearing. Defendants JP Morgan Chase Bank, N.A.

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(“Chase”) and California Reconveyance Company (“California Reconveyance”)(collectively

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“defendants”), appeared through their counsel, Berrie Goldman. Having read all the papers

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submitted and carefully considered the relevant legal authority, the court hereby GRANTS

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defendants’ motion to dismiss and motion to expunge lis pendens, and DENIES the motion

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to strike as moot, for the reasons stated at the hearing, and summarized as follows:

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1.

Plaintiff’s claims asserted against defendant Chase are DISMISSED. Plaintiff

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alleges that she entered into the underlying loan with defendant on October 3, 2007 and

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that defendant was formerly known as Washington Mutual Bank. See FAC, ¶ 8. In fact, it

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was not until September 25, 2008, the same day that the Office of Thrift Supervision closed

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Washington Mutual Bank and appointed the FDIC as receiver for the bank, that Chase

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entered into a Purchase and Assumption agreement with the FDIC, pursuant to which

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Chase acquired many of Washington Mutual’s assets. The Purchase and Assumption

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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

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plaintiff’s claims are fundamentally premised upon allegations stemming from the October

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3, 2007 loan originally executed between plaintiff and Washington Mutual, the FDIC is the

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real party in interest with respect to plaintiff’s claims, and Chase cannot be deemed to have

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assumed any liability related to any of them. See, e.g., Rosenfeld v. JPMorgan Chase

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Bank, N.A., 732 F. Supp. 2d 952, 960 (N.D. Cal. 2010)(acknowledging that, under

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Purchase and Assumption agreement, Chase “did not assume the potential liabilities of

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[WaMu] associated with claims of borrowers”); see also Yeomalakis v. F.D.I.C., 562 F.3d

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56 (1st Cir. 2009)(finding denial of motion to substitute Chase Bank as party appropriate,

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For the Northern District of California

relating to any Washington Mutual lending or loan purchase activities that predate

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United States District Court

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since FDIC was appropriate party pursuant to Purchase and Assumption

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agreement)(“When Washington Mutual failed, Chase Bank acquired many assets but its

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agreement with the FDIC retains for the FDIC “any liability associated with borrower claims

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for payment of or any liability to any borrower for monetary relief, or that provide for any

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other form of relief to any borrower.”).

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Since plaintiff cannot cure the foregoing deficiency by amendment, plaintiff’s claims
against Chase are dismissed with prejudice.
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With respect to the remaining defendant California Reconveyance,

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defendants correctly note that plaintiff’s complaint alleges no specific unlawful conduct

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purportedly undertaken by California Reconveyance. At most, the FAC alleges that

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California Reconveyance “does not have authority to act as trustee” and furthermore, that it

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is not in possession of the original Note and had no ability to transfer the Note or foreclose

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upon plaintiff’s property. See FAC, ¶ 10; see also id., ¶¶ 27-29. However, to the extent

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that California Reconveyance is alleged to be the designated trustee with respect to the

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underlying loan, California Reconveyance could have played no role with respect to any act

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occurring at the time of loan origination, or occurring in connection with the issuance or

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servicing of plaintiff’s loan. Nor does plaintiff allege as much. As such, since plaintiff’s

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substantive legal claims relate only to acts occurring at the time of loan origination or in

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connection with loan servicing, they fail to state viable claims against California

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Reconveyance.

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To the extent, moreover, that plaintiff otherwise seeks to hold California

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Reconveyance accountable for wrongfully foreclosing upon plaintiff’s property due to failure

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to possess the “original note,” not only is there no claim for wrongful foreclosure stated, but

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as defendants correctly note, a trustee need not possess the original note in order to

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initiate foreclosure pursuant to a Deed of Trust. See, e.g., Gamboa v. Trustee Corps.,

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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

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For the Northern District of California

United States District Court

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to initiate foreclosure process, and production of original note is not required).

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Finally, while the court need to go into detail with respect to the specifics of each

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claim asserted against California Reconveyance in light of the foregoing universal

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deficiencies, the court nonetheless notes that even it if did, it would find the individual

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claims inadequately pleaded.

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Having failed to properly allege any actionable conduct by California Reconveyance

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in connection with loan origination or servicing, or in connection with the foreclosure of

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plaintiff’s property, plaintiff’s claims as to California Reconveyance are hereby DISMISSED.

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Since this is plaintiff’s second opportunity to amend her complaint (having previously had

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her complaint dismissed and been given leave to amend) and she has still failed to cure the

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deficiencies noted therein, and moreover since any amendment is likely to be futile, the

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instant dismissal is with prejudice.

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3.

To the extent plaintiff seeks to add additional claims against defendants under

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the Truth in Lending Act and the Real Estate Settlement Procedures Act by way of her

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opposition brief, the court notes that such claims are not properly before it, since plaintiff

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has failed to allege them in her amended complaint, nor has she sought leave to amend the

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complaint in order to do so. Moreover, even if these claims were properly before the court,

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they would suffer the same deficiencies already noted above in connection with plaintiff’s

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already existing claims.

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4.

In view of the foregoing, defendants’ motion to strike plaintiff’s references to

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the lending industry, and plaintiff’s requests for punitive and injunctive relief and for

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attorney’s fees, is DENIED as moot.

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5.

Defendants’ corresponding motion to expunge the recorded lis pendens filed

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by plaintiff in state court is GRANTED. Defendants may seek whatever relief they are

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entitled to, by virtue of the court's order, in the appropriate state court forum.

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IT IS SO ORDERED.

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For the Northern District of California

United States District Court

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Dated: January 11, 2012

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______________________________
PHYLLIS J. HAMILTON
United States District Judge

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