Paatalo v. J.P. Morgan Chase Bank et al
Filing
12
OPINION AND ORDER: Defendant's motion to dismiss 6 is DENIED. Defendant's request for oral argument is DENIED as unnecessary. See formal OPINION AND ORDER. Signed on 11/12/2015 by Chief Judge Ann L. Aiken. (rh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
WILLIAM J. PAATALO,
Plaintiff,
vs.
JPMORGAN CHASE BANK,
Defendant.
John A. Cochran
The Cochran Law Firm
3404 SE 45th Ave
Portland, OR 97206
Attorney for plaintiff
Frederick B. Burnside
Davis Wright Tremaine, LLP
1201 Third Avenue
Suite 2200
Seattle, WA 98101-1688
Kaley L. Fendall
Kevin H. Kono
Davis Wright Tremaine, LLP
1300 SW Fifth Avenue
Suite 2400
Portland, OR 97201-5630
Attorneys for defendant
PAGE 1 - OPINION AND ORDER
Case No. 6:15-cv-01420-AA
OPINION AND ORDER
AIKEN, Chief Judge:
Plaintiff William J.
Paatalo seeks a
declaratory judgment
deeming null and void the 2009 foreclosure of his home loan and
trustee's
sale
of
JPMorgan Chase,
sale,
moves
the
property
securing
the
loan.
Defendant
the purchaser of the property at the trustee's
to
For
dismiss.
the
reasons
set
forth
below,
defendant's motion is denied.
BACKGROUND
In 2006, plaintiff refinanced the loan on his property ("the
property") in Yachats, Oregon.
"Option
$155,000)
Arm"
loan
and
a
Compl. 'JI 2.
nearly
$110, 000
home equity line of credit
Mutual Bank,
F .A.
("WaMu").
Compl.
He obtained a $880,000
(later
("HELOC")
'J['J[
2,
secured by deeds of trust on the property.
increased
to
from Washington
Both loans were
3.
Compl. 'JI 2.
Plaintiff alleges WaMu misapplied payments and reported false
derogatory information to credit reporting agencies on the HELOC
account.
Compl. 'JI 5.
After disputing those actions with WaMu,
plaintiff alleges he began to suspect fraud.
alleges
WaMu
inflated
the
appraised
value
Compl.
of
his
'JI 6.
He
property,
falsified plaintiff's income on his loan application without his
knowledge or consent, 1 and committed numerous violations of the
1
Contrary to the complaint, defendant characterizes the
statement of income on plaintiff's loan application as "a
representation [p]laintiff made to WaMu, not a lender
disclosure." Def.'s Reply Supp. Mot. Dismiss at 7 (emphasis in
original). But allegations a lender altered or otherwise
PAGE 2 - OPINION AND ORDER
Truth in Lending Act ("TILA"), 15 U.S.C.
§§
1601 et seq., including
"fail[ing] to provide proper 'Notices of Rescission' on the 2006
loans[.]"
Plaintiff further alleges he sent a written "Notice of
Rescission" on both loans to WaMu on or about March 29,
2008.
Plaintiff asserts WaMu sent him a letter declining his rescission
and attaching a "payoff quote" of just under one million dollars.
~
Compl.
7.
According to plaintiff, the letter stated he could not
rescind unless he first paid off the amount of the debt in full something he was unable to do.
In July 2008, plaintiff filed suit
against WaMu.
On September 25, 2008, at the "height of the global financial
crisis,
[WaMu] was seized by its regulator .
in what has been
described as 'the largest bank failure in U.S. history.'"
Savs. Bank, FSB v. United States, 121 Fed. Cl. 296, 302
2015)
Anchor
(Fed. Cl.
(quoting Robin Sidel et al., WaMu Is Seized, Sold Off to J.P.
Morgan,
In Largest Failure in U.S.
Journal,
Sept.
2 5 '
Banking History,
Wall Street
available
2 0 0 8 '
at
Pursuant to a Purchase
and Assumption Agreement, the Federal Deposit Insurance Corporation
("FDIC")
transferred many
of WaMu' s
assets
and
liabilities
to
falsified the income on a borrower's loan application in order to
obtain approval for a higher loan amount are common components of
predatory lending claims.
See, ~' Penaloza v. Select
Portfolio Servicing, Inc., No. CV 14-02571-AB (PJWx), 2014 WL
6910334 at *2 (C.D. Cal. Dec. 8, 2014); Garner v. Bank of Am.
Corp., No. 2:12-CV-02076-PMP-GWF, 2013 WL 5492691 at *1 (D. Nev.
Sept. 30, 2013).
PAGE 3 - OPINION AND ORDER
defendant.
Id.; Compl.
28.
~
After WaMu's failure, plaintiff's
pending claims against WaMu "went to the FDIC," pursuant to the
Federal Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"),
12 U. S.C.
1811 et seq.
§§
Compl.
~
8.
Plaintiff
alleges he did not file a TILA rescission claim in court or assert
one in the FIRREA claims process because WaMu told him he had to
first
be
Compl.
~
able
to
tender
the
full
payoff amount
for
the
loan.
9.
Plaintiff alleges on April 2, 2009, WaMu recorded a "Notice of
Default and Election to Sell" in connection with the property.
Compl.
10.
~
Plaintiff
further
alleges
a
set
of
additional
documents were recorded in connection with the property on July 31,
2009.
Compl.
~
11.
These
documents
included
a
Notice
of
Foreclosure, Trustee's Notice of Sale, and affidavits claiming WaMu
was
the
beneficiary
of
plaintiffs'
deeds
of
trust.
At
the
trustee's sale, defendant purchased the property for $410,000 cash,
and on August 18, 2009, a Trustee's Deed was issued to defendant
for the property.
In late 2010,
Compl.
~
13.
defendant
filed an unlawful detainer action
against plaintiff in state court.
a lis pendens on the property.
while
the
unlawful
detainer
~
Compl.
Compl.
~
action was
defendant sold the property for $285,000.
PAGE 4 - OPINION AND ORDER
14.
Plaintiff recorded
15.
On July 12, 2011,
still
being
litigated,
In February 2015,
the United States Supreme Court decided
Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015).
After
Jesinoski was decided, plaintiff alleges he sent defendant a notice
memorializing
the
March
29,
2008
rescissions.
Compl.
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