Morgan v. JP Morgan Chase Bank et al

Filing 51

Opinion and Order: The Court GRANTS the Motion 29 to Dismiss of Defendants Baxter & Baxter and Lyndon Ruhnke and DISMISSES Plaintiff's legal-malpractice claims without prejudice. Signed on 10/10/2013 by Judge Anna J. Brown. See attached 11 page Opinion and Order for full text. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

KRISTY MORGAN,
Plaintiff,

3:13-CV-00842-BR
OPINION AND ORDER

v.
JP MORGAN CHASE BANK;
SAFEGUARD PROPERTIES
MANAGEMENT, INC.; LPS FIELD
SERVICES, INC.; BAXTER &
BAXTER; and LYNDON RUHNKE,
Defendants.

SANDY N. WEBB
Skyline Building
0224 S.W. Hamilton St
Suite 202
Portland, OR 97239
[phone]
Attorney for Plaintiff
MICHAEL J. FARRELL
THOMAS W. PURCELL
Martin Bischoff Templeton Langslet & Hoffman
888 S.W. Fifth Avenue, Suite 900
Portland, Oregon 97204
[phone]
Attorneys for Defendant JP Morgan Chase Bank
1 - OPINION AND ORDER

KATHRYN P. SALYER
ELEANOR A. DUBAY
Tomasi Salyer Baroway
121 S.W. Morrison Street, Suite 1850
Portland, Oregon 97204
[phone]
Attorneys for Defendant Safeguard Properties
Management, Inc.
PAUL SILVER
KATIE M. EICHNER
Lindsay Hart Neil & Weigler, LLP
1300 S.W. Fifth Avenue
Suite 3400
Portland, OR 97201
[phone]
Attorneys for Defendants Baxter & Baxter and Lyndon
Ruhnke
BROWN, Judge.
This matter comes before the Court on the Motion (#29) to
Dismiss of Defendants Baxter & Baxter and Lyndon Ruhnke.

For the

reasons that follow, the Court GRANTS Defendants' Motion and
dismisses Plaintiff's claims for legal malpractice without
prejudice.

BACKGROUND
The following facts are taken from Plaintiff's Amended
Complaint.
Plaintiff Kristy Morgan was the owner of Unit 54, 14946 S.W.
109th Avenue, Tigard, Oregon.
From April through July 2010 Plaintiff worked with "the bank
2 - OPINION AND ORDER

toward a modification."1

Plaintiff and the bank were not able to

come to an agreement regarding modification.
On June 19, 2010, Plaintiff filed for bankruptcy "using the
services of [Defendant] Baxter & Baxter."
On July 6, 2010, "Baxter & Baxter advised [Plaintiff]
. . . about her homeowner’s association fees and her need to move
out of the house to surrender it to the bank in accordance with
her petition."
At some point before mid-January 2011 Plaintiff was locked
out of her unit and "told repeatedly [her unit] was being taken."
In mid-January 2011 Plaintiff was locked out of her unit again
while she was trying to move out.
In February 2011 Plaintiff was locked out of her unit
without notice.
In April 2011 "the foreclosure notice was posted on her home
stating the home was to be sold in August 2011.

[Plaintiff] was

never told the sale was rescinded."
In July and August 2011 Defendant LPS Field Services, Inc.,
entered Plaintiff's unit after incorrectly "declaring it . . .
vacant."
In August 2012 and April 2013 Defendant Safeguard Properties
Management, Inc., entered Plaintiff's unit "repeatedly."

1

Plaintiff does not identify "the bank" and does not allege
the reason she began working with the bank "toward modification."
3 - OPINION AND ORDER

Plaintiff alleges she "left behind numerous items that are now
missing."
At some point "[t]he HOA [Homeowners Association]2 Garnished
[sic] wages in the amount of $9,455.87 from [P]laintiff’s
paycheck."
On May 18, 2013, Plaintiff filed an action in this Court
against JP Morgan Chase Bank; Safeguard Properties, Inc. (SPI);
Lender Processing Services, Inc. (LPS); Baxter & Baxter; and
Lyndon Ruhnke.

Plaintiff asserted this Court has federal-

question jurisdiction and supplemental jurisdiction over her
claims for (1) breach of contract by JP Morgan Chase, LPS, and
SPI; (2) violation of the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. §§ 1692d and 1692e(5) by JP Morgan Chase;
(3) trespass by JP Morgan Chase, SPI, and LPS; (4) conversion by
JP Morgan Chase, SPI, and LPS; and (5) negligence/legal
malpractice by Baxter & Baxter and Ruhnke.
On June 24, 2013, Baxter & Baxter and Ruhnke filed a Motion
to Dismiss Plaintiff's claims against them for negligence/legal
malpractice.
On July 11, 2013, Plaintiff filed a Motion for Leave to File
Amended Complaint on the ground that LPS and SPI were incorrectly
named parties.

Plaintiff sought leave to amend her Complaint to

2

The Homeowners Association is not a defendant in this
matter.
4 - OPINION AND ORDER

bring claims against LPS Field Services, Inc. (LPSF) and
Safeguard Properties Management, LLC (SPM) rather than LPS and
SPI.
On July 15, 2013, the Court granted Plaintiff's Motion for
Leave and directed Defendants to either stand on their responses
to Plaintiff's initial Complaint or to file new responsive
pleadings by July 26, 2013.
On July 19, 2013, Plaintiff filed an Amended Complaint
against JP Morgan Chase, SPM, LPSF, Baxter & Baxter, and Ruhnke.
Plaintiff brings claims for (1) breach of contract by JP Morgan
Chase, LPSF, and SPM; (2) violation of §§ 1692d and 1692e(5) of
the FDCPA by JP Morgan Chase; (3) trespass by JP Morgan Chase,
SPM, and LPSF; (4) conversion by JP Morgan Chase, SPM, and LPSF;
and (5) legal malpractice by Baxter & Baxter and Ruhnke.
The Court took the Motion to Dismiss of Defendants Baxter &
Baxter and Ruhnke under advisement on July 23, 2013.

STANDARDS
To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as
true, to “state a claim to relief that is
plausible on its face.” [Bell Atlantic v.
Twombly, 550 U.S. 554,] 570, 127 S. Ct. 1955. A
claim has facial plausibility when the plaintiff
pleads factual content that allows the court to
draw the reasonable inference that the defendant
is liable for the misconduct alleged. Id. at 556.
. . . The plausibility standard is not akin to a
“probability requirement,” but it asks for more
than a sheer possibility that a defendant has
5 - OPINION AND ORDER

acted unlawfully. Ibid. Where a complaint pleads
facts that are “merely consistent with” a
defendant's liability, it “stops short of the line
between possibility and plausibility of
‘entitlement to relief.’” Id. at 557, 127 S. Ct.
1955 (brackets omitted).
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
Atlantic, 550 U.S. at 555-56.

See also Bell

The court must accept as true the

allegations in the complaint and construe them in favor of the
plaintiff.

Intri-Plex Tech., Inc. v. Crest Group, Inc., 499 F.3d

1048, 1050 n.2 (9th Cir. 2007).
"In ruling on a 12(b)(6) motion, a court may generally
consider only allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice."

Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th

Cir. 2007)(citing Jacobson v. Schwarzenegger, 357 F. Supp. 2d
1198, 1204 (C.D. Cal. 2004)).

A court, however, "may consider a

writing referenced in a complaint but not explicitly incorporated
therein if the complaint relies on the document and its
authenticity is unquestioned."

Id. (quoting Parrino v. FHP,

Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on
other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676
(9th Cir. 2006)).

DISCUSSION
Defendants Ruhnke and Baxter & Baxter move to dismiss

6 - OPINION AND ORDER

Plaintiff's legal-malpractice claims against them for lack of
subject-matter jurisdiction.

Specifically, Defendants contend

Plaintiff's legal-malpractice claims against Ruhnke and Baxter &
Baxter do not derive from the common nucleus of operative facts
underlying Plaintiff's federal claims (i.e., Plaintiff's FDCPA
claims against JP Morgan Chase, SPM, and LPSF), and, therefore,
this Court does not have supplemental jurisdiction over
Plaintiff's legal-malpractice claims.
I.

Supplemental Jurisdiction
28 U.S.C. § 1367(a) provides in pertinent part:
[I]n any civil action of which the district courts
have original jurisdiction, the district courts
shall have supplemental jurisdiction over all
other claims that are so related to claims in the
action within such original jurisdiction that they
form part of the same case or controversy under
Article III of the United States Constitution.
"A state law claim is part of the same case or controversy

when it shares a 'common nucleus of operative fact' with the
federal claims and the state and federal claims would normally be
tried together."

Bahrampour v. Lampert, 356 F.3d 969, 978 (9th

Cir. 2004)(quoting Trs. of the Constr. Indus. & Laborers Health &
Welfare Trust v. Desert Valley Landscape Maint., Inc., 333 F.3d
923, 925 (9th Cir. 2003)).

Courts have concluded they lack

supplemental jurisdiction over state-law claims that do not
derive from a common nucleus of operative fact with federal
claims.

See, e.g., Soliday v. Miami County, Ohio, 55 F.3d 1158

7 - OPINION AND ORDER

(6th Cir. 1995); Ray v. Tenn. Valley Auth., 677 F.2d 818, 826
(11th Cir. 1982).
II.

Analysis
Plaintiff's federal claims arise under the FDCPA and are

asserted only against JP Morgan Chase, SPM, and LPSF.

According

to Plaintiff's Amended Complaint, the factual allegations
underlying her FDCPA claims are Defendants' alleged
conduct . . . in connection with the collection of
a debt by stating [Defendants] would be sending
people to [Plaintiff's unit] to repeatedly inspect
[her unit] until the debt was paid. . . . [And] by
stating [Plaintiff's unit] would be foreclosed
upon and having no intent to do so.
Am. Compl. at ¶¶ 20-21.

Although it is not completely clear from

the Amended Complaint, it appears the debt underlying Plaintiff's
FDCPA claims is her mortgage and her FDCPA claims relate to
efforts by JP Morgan Chase, SPM, and LPSF to collect and/or to
foreclose on her mortgage and trust deed.
With respect to her legal-malpractice claims, Plaintiff
alleges in her Amended Complaint that Ruhnke and Baxter & Baxter
"advised her . . . about her homeowner's association fees and her
need to move out of the house to surrender it to the bank in
accordance with her [Bankruptcy] petition."

Am. Compl. ¶ 10.

Plaintiff alleges Ruhnke and Baxter & Baxter "failed to use that
degree of care, skill, and diligence ordinarily used by attorneys
practicing in the same or similar circumstances in the same or
similar community."

Am. Compl. ¶ 33.

8 - OPINION AND ORDER

Finally, Plaintiff alleges

Ruhnke and Baxter & Baxter's actions "resulted in [Plaintiff]
. . . being forced to involuntarily pay HOA fees after she was
out of the home."

Am. Compl. ¶ 33.

Plaintiff's legal-

malpractice claims, therefore, involve Plaintiff's HOA dues
rather than her mortgage and relate to Ruhnke and Baxter &
Baxter's actions in Plaintiff's bankruptcy proceedings.

Those

facts are unrelated to the efforts by JP Morgan Chase, SPM, and
LSPF to collect on Plaintiff's mortgage and/or to foreclose on
Plaintiff's unit.

In other words, the Court's decision on

Plaintiff's FDCPA claims would not impact a decision as to the
alleged legal malpractice and vice versa.
In addition, to state a claim under § 1692d of the FDCPA a
plaintiff must allege a debt collector "engag[ed] in . . .
conduct the natural consequence of which [was] to harass,
oppress, or abuse [the plaintiff] in connection with the
collection of a debt."

To state a claim under § 1692e(5) of the

FDCPA a plaintiff must allege a debt collector threatened "to
take any action that cannot legally be taken or that is not
intended to be taken."

In contrast, to state a claim for legal

malpractice under Oregon law a plaintiff must allege
"(1) a duty that runs from the defendant to the
plaintiff; (2) a breach of that duty; (3) a
resulting harm to the plaintiff measurable in
damages; and (4) causation, i.e., a causal link
between the breach of duty and the harm.”
Woods v. Hill, 248 Or. App. 514, 525 (2012)(quoting Stevens v.

9 - OPINION AND ORDER

Bispham, 316 Or. 221, 227, 851 P.2d 556 (1993))(emphasis in
original).

The facts and elements that Plaintiff must plead and

prove to establish her FDCPA claims are markedly different than
those she must plead and prove to establish her legal-malpractice
claims.

Plaintiff's FDCPA claims are "separately maintainable

and determinable without any reference to the facts alleged or
contentions stated in or with regard to" Plaintiff's legalmalpractice claims.

See Hales v. Winn-Dixie Stores, Inc., 500

F.2d 836, 847-48 (4th Cir. 1974)(the plaintiff's state-law claim
against his employer for failure to make payments allegedly due
under a profit-sharing program and the plaintiff's federal claim
that his employer failed to provide information required by
federal statute were “separately maintainable and determinable
without any reference to the facts alleged or contentions stated
in or with regard to the other count,” and, therefore, the claims
did not arise from a “common nucleus of operative fact.”).
The Court, therefore, concludes Plaintiff's legalmalpractice claims do not arise from the common nucleus of
operative fact underlying Plaintiff's federal claims.

Thus, this

Court lacks supplemental jurisdiction over those claims.

See

Ray, 677 F.2d at 825-26 ("The [plaintiff's legal-]malpractice
claim . . . is wholly separate from the [plaintiff's] federal
claims both as to the facts necessary to prove the claim and the
theory of recovery.

Hence, we conclude that the malpractice

10 - OPINION AND ORDER

claim and the federal claims did not arise from a 'common nucleus
of operative fact' and consequently the district court lacked the
power to hear the malpractice claim.").
Accordingly, the Court grants Defendants' Motion to Dismiss
Plaintiff's legal-malpractice claims on the ground that this
Court lacks subject-matter jurisdiction.

The Court, therefore,

dismisses those claims without prejudice.

CONCLUSION
For these reasons, the Court GRANTS the Motion (#29) to
Dismiss of Defendants Baxter & Baxter and Lyndon Ruhnke and
DISMISSES Plaintiff's legal-malpractice claims without prejudice.
IT IS SO ORDERED.
DATED this 7th day of October, 2013.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

11 - OPINION AND ORDER