Perez et al v. JPMorgan Chase Bank et al

Filing 29

ORDER GRANTING DEFENDANTS 5 , 25 MOTION TO DISMISS. Amended Pleadings due by 3/29/2012. Signed by Judge Claudia Wilken on 3/15/12. (ndr, COURT STAFF) (Filed on 3/15/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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AMELIA D. PEREZ and CONSTANTINO
R. PEREZ,

No. C 11-03602 CW

Plaintiffs,

ORDER GRANTING
DEFENDANTS’ MOTION
TO DISMISS

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United States District Court
For the Northern District of California

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v.
JPMORGAN CHASE BANK, a National
Association F/K/A WASHINGTON
MUTUAL BANK; CALIFORNIA
RECONVEYANCE COMPANY, a
California Corporation; and
LASALLE BANK, NA,
Defendants.
________________________________/

Defendants JPMorgan Chase Bank (JPMorgan), California

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Reconveyance Company (CRC) and Bank of America1 move pursuant to
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Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint

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against them.

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R. Perez oppose the motion.2

Pro se Plaintiffs Amelia D. Perez and Constantino
Having considered the papers filed

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Bank of America acquired LaSalle Bank in 2007.
erroneously named “LaSalle Bank.”
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Plaintiffs

On February 13, 2012, Defendants filed a “Notice of NonReceipt of Opposition to Motion to Dismiss Complaint” in which
they requested that the Court grant the motion to dismiss in its
entirety, without leave to amend, as unopposed. The Court denies
this request. The Court will consider the opposition Plaintiffs
filed on November 3, 2011, in response to Defendants’ first motion
to dismiss.

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by the parties,3 the Court GRANTS the motion to dismiss, and

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GRANTS Plaintiffs leave to amend one of their claims.

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BACKGROUND

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On December 8, 2006, the Perezes obtained a $1,000,000.00

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loan to “own the Property” located at 1116 Ridgewood Drive,
Millbrae, California, in the County of San Mateo.

Comp. ¶ 19.

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The loan was secured by a deed of trust (DOT) which identified the
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Perezes as the borrowers, Washington Mutual Bank (WaMu) as the

United States District Court
For the Northern District of California

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lender and beneficiary, and CRC as the trustee.

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Judicial Notice (RJN), Ex. 2.

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Request for

On September 25, 2008, the Office of Thrift Supervision

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closed WaMu and appointed the Federal Deposit Insurance

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Corporation (FDIC) as receiver for WaMu’s assets.

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On the same

date, JPMorgan acquired certain assets of WaMu, including WaMu’s

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interest in the Perezes’ loan, pursuant to a Purchase and
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Assumption Agreement (P&A Agreement) between the FDIC and

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JPMorgan.

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would not assume WaMu’s liabilities relating to borrower claims.

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RJN, Ex. 6.

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Section 2.5 of the P&A Agreement provides that JPMorgan

Borrowers must direct such claims to the FDIC.

On February 2, 2009, JPMorgan transferred all beneficial
interest under the DOT on the Perezes’ loan to Bank of America.

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The Perezes also oppose JPMorgan, CRC and Bank of America’s
request for judicial notice. The Court grants the request for
judicial notice. See Fed. R. Civ. P. 12(d); Mir v. Little Co.,
844 F.2d 646, 649 (9th Cir. 1988) (court may take judicial notice
of matters of public record without converting motion to dismiss
into motion for summary judgment).
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RJN, Ex. 3.

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with the San Mateo County Recorder’s Office.

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of January 30, 2009, the amount in arrears on the Perezes’ loan

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was $13,298.14.

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Trustee’s Sale of the Perezes’ property was recorded with the San

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On that same date, a Notice of Default was recorded

RJN, Ex. 4.

It indicated that as

On May 6, 2009, a Notice of

Mateo County Recorder’s Office.

RJN, Ex. 5.

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On May 26, 2011, the Perezes filed a complaint in the
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Superior Court of the State of California for the County of San

United States District Court
For the Northern District of California

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Mateo.

The Perezes allege twenty-four causes of action against

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JPMorgan, CRC and Bank of America.

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implicate federal law.

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respectively, the Perezes allege that JPMorgan, CRC and Bank of

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America violated the Truth in Lending Act (TILA), 15 U.S.C.

Three causes of action

In their fifth and sixth claim,

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§§ 1601 et seq., and the Real Estate Settlement Procedures Act
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(RESPA), 12 U.S.C. §§ 2601 et seq.

In their fourteenth claim, the

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Perezes allege that they are entitled to rescind their loan under

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TILA.

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On July 21, 2011, JPMorgan, CRC and Bank of America removed

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this action to federal district court pursuant to 28 U.S.C.

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§§ 1441 et seq.

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On January 23, 2012, they filed this motion to

dismiss the complaint for failure to state a claim upon which

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relief can be granted under Federal Rule of Civil Procedure
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12(b)(6).

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DISCUSSION

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2 I.
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Legal Standard
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

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Fed. R.

On a motion under Rule 12(b)(6) for failure to

state a claim, dismissal is appropriate only when the complaint

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does not give the defendant fair notice of a legally cognizable
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claim and the grounds on which it rests.

Bell Atl. Corp. v.

United States District Court
For the Northern District of California

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Twombly, 550 U.S. 544, 555 (2007).

In considering whether the

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complaint is sufficient to state a claim, the court will take all

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material allegations as true and construe them in the light most

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favorable to the plaintiff.

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896, 898 (9th Cir. 1986).

NL Indus., Inc. v. Kaplan, 792 F.2d

However, this principle is inapplicable

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to legal conclusions; “threadbare recitals of the elements of a
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cause of action, supported by mere conclusory statements,” are not
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taken as true.

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1949-50 (2009) (citing Twombly, 550 U.S. at 555).

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court holds pro se pleadings to “less stringent standards” than

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formal pleadings drafted by lawyers.

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519, 520 (1972).

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Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937,
Moreover, the

Haines v. Kerner, 404 U.S.

When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request
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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 246-47 (9th Cir. 1990).

In determining whether
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amendment would be futile, the court examines whether the

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complaint could be amended to cure the defect requiring dismissal

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“without contradicting any of the allegations of [the] original

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complaint.”

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Cir. 1990).

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II.

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

TILA

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The purpose of TILA is “to assure a meaningful disclosure of
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credit terms so that the consumer will be able to compare more

United States District Court
For the Northern District of California

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readily the various credit terms available to him and avoid the

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uninformed use of credit.”

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1167, 1169 (9th Cir. 2003) (citing 15 U.S.C. § 1601(a)).

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required disclosures are not made, the consumer has two remedies:

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1) recover damages, 15 U.S.C. § 1640; or 2) seek to rescind the

Yamamoto v. Bank of N.Y., 329 F.3d
If

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loan, 15 U.S.C. § 1635(a).

TILA damages claims are cognizable

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against creditors, 15 U.S.C. § 1640(a), and assignees of
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creditors, 15 U.S.C. § 1641(a).

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A. Damages

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JPMorgan, CRC and Bank of America argue that the Perezes’

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claim for damages is barred by the one-year statute of limitation.

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Claims for damages for TILA violations must be brought “within one

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year from the date of the occurrence of the violation.”

15 U.S.C.

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§ 1640(e).

The statutory period generally runs from the date the

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loan transaction was consummated.

Meyer v. Ameriquest Mortg. Co.,

342 F.3d 899, 902 (9th Cir. 2003).

The Perezes entered into the

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loan agreement on December 8, 2006, so any claim for damages for

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TILA violations expired on December 8, 2007.

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The Perezes filed this action on May 26, 2011, approximately

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three and a half years after their TILA damages claim expired.

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They argued that “any and all statute[s] of limitations” should be

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equitably tolled.

Comp. ¶ 72.

Equitable tolling may be

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appropriate when the borrower, using reasonable diligence, might
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not have had an opportunity to discover the fraud or

United States District Court
For the Northern District of California

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nondisclosures on the part of the originator at the time that the

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loan was consummated.

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allege that they were never given a complete loan document package

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needed to conduct their own due diligence.

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of the pertinent disclosures they did not receive were the Truth-

Meyer, 342 F.3d at 902.

Here, the Perezes

They state that some

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in-Lending statement, Adjustable Rate Booklet and Right to Copy of
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Appraisal.

Comp. ¶ 72.

Moreover, the Perezes allege that when

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they called JPMorgan to learn “exactly how their loan functions

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and adjusts,” the representative at JPMorgan “painted a very rosy

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picture.”

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they were more than able to afford the home they were applying

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for” and failed to explain that the initial payment structure was

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Id.

The representative “convinced [the Perezes] that

only temporary and that payments would soon go up dramatically.

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Id.

The Perezes claim that “it wasn’t till only recently when

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[their] payments changed dramatically that they realized what they
had gotten themselves into.”

Id.

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The Perezes’ allegations support their argument for equitable

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tolling, but they are not sufficient to support tolling from

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December 8, 2007 to their filing date of May 26, 2011.

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Perezes claim that they did not know the actual terms of their

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loan until “only recently” when their payments “changed

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The

dramatically,” but they fail to specify when that occurred.

See

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Comp. ¶ 72.

Because the Perezes defaulted on their loan as of

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February 2, 2009, it is sensible to infer that they must have

United States District Court
For the Northern District of California

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become aware of the actual terms of their loan by that point.

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RJN, Ex. 4.

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barred by the one-year statute of limitation.

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See

In that case, the TILA damages claim would still be

Because the Perezes do not allege adequate facts to establish
that their TILA damages claim should be equitably tolled to their

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filing date of May 26, 2011, the Court DISMISSES this claim, with
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leave to amend to establish a sufficient basis for equitable
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tolling.

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B. Rescission

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The Perezes allege that they are entitled to rescind their

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loan under TILA.

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argue that the Perezes’ loan was a purchase money loan in a

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Comp. ¶ 125.

JPMorgan, CRC and Bank of America

residential mortgage transaction and is thereby exempted from the

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right to rescission under TILA.

Defendants are correct.

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Rescission of a residential purchase money mortgage

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transaction is not an available remedy under TILA.

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1635(e) states that “a residential mortgage transaction,” as
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Section

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defined in 15 U.S.C. § 1602(w), is not subject to rescission.

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Section 1602(w) defines a “residential mortgage transaction” as “a

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transaction in which a mortgage, deed of trust, purchase money

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security interest arising under an installment sales contract, or

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equivalent consensual security interest is created or retained

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against the consumer’s dwelling to finance the acquisition or

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initial construction of such dwelling.”

Here, the Perezes entered

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into a residential purchase money mortgage transaction, secured by

United States District Court
For the Northern District of California

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a deed of trust, for the express purpose to “own the Property.”

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See Comp. ¶ 19; RJN, Exs. 1-2.

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statutory right under TILA to rescind their residential purchase

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money mortgage transaction.

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Co., 2011 WL 1842836, at *6 (N.D. Cal.); Lee v. BAC Home Loans

The Perezes do not have a

See Washington v. Nat’l City Mortg.

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Servicing, LP, 2011 WL 794942, at *3 (E.D. Cal.); Saldate v.
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Wilshire Credit Corp., 268 F.R.D. 87, 96 (E.D. Cal. 2010).
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Because any amendment would be futile, the Perezes’ claim for
rescission under TILA is DISMISSED without leave to amend.

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The purpose of RESPA is to ensure that home buyers “are
provided with greater and more timely information on the nature
and costs of the settlement process and are protected from

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unnecessarily high settlement charges caused by certain abusive
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practices.”

12 U.S.C. § 2601(a).

The Perezes allege that

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JPMorgan, CRC and Bank of America violated RESPA by paying illegal

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kickbacks related to their loan from Wamu on September 8, 2006.
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Comp. ¶¶ 83-84.

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CRC or Bank of America.

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This claim cannot be maintained against JPMorgan,

Federal district courts in the Ninth Circuit have held that

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JPMorgan is shielded from liability for borrower claims against

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WaMu that predate the September 25, 2008 P&A Agreement between

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JPMorgan and the FDIC, as receiver of WaMu assets.

See RJN, Ex.

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6; see also Javaheri v. JPMorgan Chase Bank, N.A., 2011 WL 97684,
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at *3 (C.D. Cal.); St. James v. JP Morgan Chase Bank Corp., 2010

United States District Court
For the Northern District of California

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WL 5349855, at *2-3 (S.D. Cal.); Rundgren v. Washington Mut. Bank,

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F.A., 2010 WL 4960513, at *7 (D. Haw.).

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that JPMorgan committed a RESPA violation with respect to their

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loan from Wamu on September 8, 2006.

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their RESPA cause of action against JPMorgan because, pursuant to

Here, the Perezes allege

The Perezes cannot maintain

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the September 25, 2008 P&A Agreement, WaMu’s alleged lending
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improprieties cannot be imputed to JPMorgan.

The Perezes must

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address their RESPA violation claim to the FDIC.

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As noted above, CRC is a trustee of the Perezes’ loan and

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Bank of America received the beneficial interest under the DOT

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from JPMorgan on February 2, 2009.

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claim derives from the origination of the loan transaction with

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Because the Perezes’ RESPA

WaMu on September 8, 2006, it cannot be maintained against CRC or

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Bank of America because these parties were not involved with the
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improprieties WaMu allegedly committed during the course of the
loan negotiations.

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Thus, the Court DISMISSES the Perezes’ RESPA violation claim.
Leave to amend is denied because any amendment would be futile.

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CONCLUSION

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For the foregoing reasons, the Court GRANTS the motion to

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dismiss.

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fourteenth claim for rescission under TILA are DISMISSED without

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The Perezes’ sixth claim for violation of RESPA and

leave to amend.

The Perezes’ fifth claim for damages under TILA

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is DISMISSED with leave to amend to establish a sufficient basis
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United States District Court
For the Northern District of California

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for equitable tolling.

If the Perezes choose to file an amended

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complaint, they must do so within two weeks from the date of this

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order.

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this time, their TILA damages claim will be dismissed for failure

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to prosecute and the remaining state claims will be remanded to

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state court.

If the Perezes do not file an amended complaint within

Meanwhile, the parties shall participate in the

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further Alternative Dispute Resolution phone conference set for
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May 2, 2012 at 3:00 p.m.
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IT IS SO ORDERED.
Dated: 3/15/2012

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CLAUDIA WILKEN
United States District Judge

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cc: ADR

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