Wright v. JPMorgan Chase Bank, N.A. et al

Filing 30

ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND FOR EMERGENCY TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION - denying 14 Motion to Remand; denying as moot 21 Motion to Withdraw; and denying as moot 27 Motion to Strike. Signed by Senior Judge Edward F. Shea. (CC, Case Administrator)

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1
2
3
4
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON

5
6
7

No.

BERYL ANN WRIGHT,

8

4:16-CV-5155-EFS

Plaintiff,

9

ORDER DENYING PLAINTIFF’S MOTION
TO REMAND AND FOR EMEGENCY
TEMPORARY RESTRAINING ORDER AND
PRELIMINARY INJUNCTION

v.

10

JPMORGAN CHASE BANK, N.A. et al.,

11

Defendants.

12
13

Before the Court, without oral argument, is Plaintiff Beryl Ann

14

Wright’s Motion to Remand Action to State Court and for Emergency

15

Temporary

16

No. 14. On December 2, 2016, Defendant JPMorgan Chase Bank removed

17

this

18

Plaintiff objects to this removal and also requests injunctive relief

19

to

20

pleadings and the file in this matter, the Court is fully informed and

civil

prevent

Restraining

lawsuit

a

to

Order

and

federal

foreclosure

sale

OSC

court.

of

her

Preliminary

ECF

No.

home.1

1.

Injunction,

In

Having

her

ECF

motion,

reviewed

the

21
22
1

23
24
25
26

It is unclear to the Court whether the property at issue in this
case is owned by Ms. Wright or by her son, Anthony Malveto. As
explained below, the mortgage documents are in Mr. Malveto’s name.
Ms. Wright declares, however, that she owns the property in fee
simple absolute with her son. See ECF No. 1-1 at 1; ECF No. 14-1 at
32. When the Court uses the term “her home” or variants of that
term, the Court refers only to Ms. Wright’s purported interest in
the property, while recognizing that there is no documentation in
the record to support that purported interest.

ORDER - 1

Case 4:16-cv-05155-EFS

1

denies

both

Plaintiff’s

2

Document 30

motion

injunctive relief.
I.

3
On October 19, 2016,

4

Washington,

remand

and

her

request

for

BACKGROUND

Beryl Ann Wright, a resident of College

5

Place,

6

Superior Court, Case No. 16-2-00708-3, alleging that Defendants are

7

unlawfully attempting to foreclose on Ms. Wright’s house and have

8

engaged in unfair and deceptive practices. ECF No. 1-1. Ms. Wright’s

9

allegations regarding the unlawful nature of the foreclosure rely in

10

part on her claim that the mortgage agreement was rescinded under the

11

Truth in Lending Act (TILA), but Defendant JPMorgan Chase disregarded

12

the rescission, and the Defendants continued in “wrongful and unlawful

13

collection” on the mortgage. ECF No. 1-1 at 10. Ms. Wright also claims

14

that

15

practices” and that no valid mortgage contract exists regarding her

16

property. ECF No. 1-1 at 145. Although Ms. Wright does not expressly

17

make a claim under the Washington Consumer Protection Act (WCPA), RCW

18

19.86, her claim of unfair and deceptive acts and practices mirrors

19

some of the language in that Act. Ms. Wright also uses the term

20

“Consumer Protection Act” in one instance. ECF No. 14 at 3. Construing

21

Ms. Wright’s claim liberally, as a pro se plaintiff, the Court finds

22

that Ms. Wright has alleged violations of the WCPA. Based on her

23

claims, Ms. Wright seeks a preliminary injunction and a permanent

24

injunction

25

reversal of negative credit reports, return of all payments made on

26

the mortgage, payment for damages, and legal fees.

the

ORDER - 2

filed

to

Filed 02/02/17

Defendants

preventing

a

civil

engaged

in

foreclosure

complaint

“unfair

on

her

in

and

house

Walla

Walla

deceptive

and

County

acts

requiring

and

the

ECF No. 1-1 at 16.

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

Defendant JPMorgan Chase’s removal of this action followed. ECF

2

No. 1. On December 15, 2016, Ms. Wright filed the instant Motion to

3

Remand to State Court and for Emergency Temporary Restraining Order

4

and OSC Preliminary Injunction. ECF No. 14. Ms. Wright argues that

5

this Court does not have jurisdiction over her land and lacks personal

6

jurisdiction over her and subject matter jurisdiction over this case.

7

ECF No. 14 at 3. She also argues that Defendants removed this action

8

in bad faith. ECF No. 14 at 6.
II.

9

STANDING

10

As an initial matter, the Court must address whether Ms. Wright

11

has standing to bring this claim in federal court. Article III of the

12

Constitution limits a federal court’s judicial power to “cases” and

13

“controversies.” U.S. Const. art. III. To ensure that a federal court

14

exercises its power over only a case or controversy, a plaintiff must

15

have standing. Warth v. Seldin, 422 U.S. 490, 498 (1975). To establish

16

this standing, a plaintiff must show (1) an actual or imminent injury

17

that is concrete and particularized (“injury-in-fact”), (2) a causal

18

connection between the injury-in-fact and challenged conduct, and (3)

19

a substantial likelihood that the relief requested will prevent or

20

redress the injury-in-fact. Lujan v. Defenders of Wildlife, 504 U.S.

21

555, 560-61 (1992); Covington v. Jefferson Cty., 358 F.3d 626, 637-38

22

(9th Cir. 2004).

23

In this case, it is not immediately clear that Ms. Wright has a

24

legally protected interest in the property at issue. She is not named

25

in, and her signature does not appear on, the mortgage note or the

26

deed. Instead, Ms. Wright’s son, Anthony John Malveto, is the party

ORDER - 3

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

named in those documents. See ECF Nos. 9-1 & 9-2. The Court therefore

2

finds that Ms. Wright likely could not bring a claim under TILA based

3

on the mortgage agreement, to which she was not a party. See In re

4

Crevier, 820 F.2d 1553, 1555 (9th Cir. 1987)(noting that a lower court

5

employed the “judicially imposed prudential rule of standing that bars

6

a litigant from asserting the rights of others” to dismiss a TILA

7

claim for lack of standing); see also Frempong v. Nat’l City Bank of

8

Ind., 452 F. App’x 167 (3d Cir. 2011) (holding that a plaintiff had

9

“no direct interest in the property or the foreclosure action as a

10

result of the fact that he was not contractually obligated to the

11

mortgage,” despite the fact that plaintiff lived on the property and

12

his wife was the party named in the deed); Mashburn v. Wells Fargo

13

Bank, NA, 2011 WL 2940363, *3 (W.D. Wash. July 19, 2011) (“Since

14

Plaintiff Hayakawa was not an obligor on the loan and had no right of

15

rescission, Plaintiff Hayakawa does not have standing to bring the

16

present TILA claim.”).

17

In this case, however, Ms. Wright is not asserting a claim under

18

TILA, but is instead asserting a claim based on allegedly unlawful,

19

unfair,

20

house. The issue of prudential standing again arises, as there is no

21

documentation indicating that Ms. Wright is the record owner of the

22

property, and all evidence instead indicates that her son is the legal

23

owner

24

contest

25

claimant’s

26

property, along with physical possession of the property at the time

and

of

ORDER - 4

deceptive

the

practices

property.

forfeiture

the

‘unequivocal’

regarding

Nevertheless,
Ninth

Circuit

assertion

of

when
has

the

foreclosure

analyzing
indicated,

ownership

in

on

her

standing
that
the

to

“[a]
seized

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

of seizure, can overcome the summary judgment hurdle.” United States

2

v. JP Morgan Chase Bank Account No. Ending 8215 in Name of Ladislao V.

3

Samaneigo, 835 F.3d 1159, 1164–65 (9th Cir. 2016). The Court finds

4

this reasoning instructive.

5

As to the property at issue here, Ms. Wright claims to be a

6

“joint owner in fee simple with her Son.” ECF No. 1-1 at 1; see also

7

ECF No. 14-1 at 32 (“THIS CERTIFIES that Anthony John Malveto and

8

Beryl Ann Wright are joint owners in fee simple absolute, as assignees

9

for valuable consideration of the following-described personal and

10

natural family homestead . . . .”). Ms. Wright also seems to have

11

physical possession of the property at issue. If Ms. Wright has an

12

ownership interest, a possessory interest, or both, in the property,

13

based on an agreement with her son or otherwise, that interest is

14

likely sufficient for standing purposes. See Gibson v. PNC Bank Nat’l

15

Assoc., 2016 WL 7131518, at *1 (9th Cir. Dec. 7, 2016) (unpublished)

16

(holding that a Plaintiff “has standing to challenge the foreclosure

17

and sale based on the property interest he acquired via his quitclaim

18

deed” despite not being a party to the note or deed foreclosed upon);

19

see also Hurst v. Fed. Nat’l Mortg. Ass’n, 642 F. App’x 533, 537 (6th

20

Cir.

21

foreclosure where the plaintiff claimed that she had the right to

22

purchase the property at the redemption price based on property or

23

inheritance rights).2

2016)

(holding

that

a

plaintiff

had

standing

to

contest

a

24
2

25
26

In Hurst, the Sixth Circuit noted that “the facts alleged in the complaint
render the legitimacy of Plaintiff’s interest — as well as the allegedly
defective foreclosure’s effect on that interest — suspect. But those issues
go more to the merits of Plaintiff’s claims rather than her standing to
bring them.” 642 F. App’x at 537.

ORDER - 5

Case 4:16-cv-05155-EFS

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1

Based on that reasoning, Ms. Wright satisfies the elements of

2

standing here: (1) she would suffer an imminent, legally protected

3

injury

4

Defendants’

5

injury; and (3) the Court could redress the injury by granting Ms.

6

Wright’s claim for injunctive relief to prevent foreclosure. The Court

7

therefore finds that Ms. Wright has standing to bring this claim in

8

federal court.

if

her

property

foreclosure

rights

were

attempts

are

impaired
the

by

cause

foreclosure;
of

that

(2)

imminent

III. MOTION FOR WITHDRAWAL AND MOTION TO STRIKE

9
10

Ms. Wright has filed two additional motions relevant to her

11

motion to remand and for preliminary injunction that can be disposed

12

of prior to addressing the substantive issues of that motion. On

13

January

14

Withdrawal of Motion for TRO and OSC Re: Preliminary Injunction and

15

Proposed Order, by Affidavit. ECF No. 21. The Clerk’s Office construed

16

this filing as a Motion for Withdrawal. In this filing, Ms. Wright

17

requests withdrawal of the proposed orders she attached to her motion

18

to remand and also appears to request withdrawal of the portion of her

19

remand motion requesting injunctive relief. Ms. Wright indicates that

20

she requests withdrawal because she does not believe that the Court

21

has jurisdiction to grant such relief. In the motion for withdrawal,

22

however, Ms. Wright also seems to ask the Court to exercise whatever

23

ability it has to grant injunctive relief:

24
25
26

5,

2017,

Ms.

Wright

filed

a

Notice

of

Withdrawal

If this court has further restraining and enjoining powers
without jurisdiction and venue, in that instance only,
without waiving any rights in law and equity, I invoke this
court to exercise such power to order defendants to cease

ORDER - 6

and

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

ALL collection activities described in my proposed order
pending remand . . . .

1
2

ECF No. 21 at 3. This conditional language makes Ms. Wright’s motion
3
to

withdraw

somewhat

unclear.

Still,

based

on

the

above-quoted

4
statement, it appears clear to the Court that Ms. Wright continues to
5
request that the Court grant injunctive relief to the extent possible.
6
Because the Court finds that it has jurisdiction over this case,
7
as outlined below, the Court understands Ms. Wright to continue to
8
request injunctive relief. Accordingly, the Court denies Ms. Wright’s
9
motion to withdraw her request for injunctive relief as moot, finding
10
that the request to withdraw was conditional on a finding that the
11
Court did not have jurisdiction. Because the Court denies injunctive
12
relief,

as

outlined

below,

Ms.

Wright’s

request

to

withdraw

her

13
proposed orders granting such relief is also denied as moot.
14
In addition, on January 20, 2017, Ms. Wright filed a Motion to
15
Strike the request for oral argument included in her Reply regarding
16
the Motion for Remand. ECF No. 27. In Ms. Wright’s Motion for Remand,
17
ECF No. 14, she did not elect oral argument. Nor did Chase elect oral
18
argument in its Response. See ECF No. 19. Under Local Rule 7.1(h)(3),
19
oral argument was therefore waived, and a party would be required to
20
file

a

motion

in

order

to

elect

oral

argument.

Accordingly,

Ms.

21
Wright’s inclusion of the phrase “oral argument requested” in the
22
caption to her Reply was insufficient to elect oral argument and need
23
not be stricken. The Motion to Strike is therefore denied as moot.
24
//
25
/
26

ORDER - 7

Case 4:16-cv-05155-EFS

IV.

1

Document 30

Filed 02/02/17

REMAND MOTION

2

Turning to Ms. Wright’s Motion to Remand, 28 U.S.C. § 1447(c)

3

provides, “[a] motion to remand the case on the basis of any defect

4

other than lack of subject matter jurisdiction must be made within 30

5

days after the filing of the notice of removal under section 1446(a).”

6

28 U.S.C. § 1447(c).

7

her removal objections were filed on December 15, 2016, less than

8

thirty days after the removal. Although JPMorgan Chase’s removal of

9

this action appears unfair from Ms. Wright’s perspective, the Court
that

removal

Ms. Wright timely filed her motion to remand;

10

finds

is

permitted

by

federal

law.

For

the

reasons

11

outlined below, the Court denies Ms. Wright’s Motion to Remand.

12

A.

Federal Subject Matter Jurisdiction
A state court defendant may remove to federal court any state

13
14

court

action

that

15

jurisdiction of the federal court — that is, claims based on a federal

16

question or involving diversity of citizenship. 28 U.S.C. § 1441.

17

Federal

18

action arises “under the Constitution, laws, or treaties of the United

19

States.” Id.; see also 28 U.S.C. § 1331. “[A] case may arise under

20

federal

21

necessarily turn[s] on some construction of federal law.’”

22

Union of Operating Eng’rs v. Cty. of Plumas, 559 F.3d 104, 1044 (9th

23

Cir. 2009) (quoting Merrell Dow Pharm., Inc. v. Thompson, 478 U.S.

24

804, 808 (1986)) (internal quotation marks omitted). Diversity of

25

citizenship

26

controversy is greater than $75,000 and the parties are diverse. Id.;

question

law

ORDER - 8

could

subject

‘where

subject

the

have

matter

been

jurisdiction

vindication

matter

brought

of

jurisdiction

a

under

exists

right

exists

the

if

under

if

the

original

the

civil

state

law

Int’l

amount

in

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

28 U.S.C. § 1332. State law claims over which a federal court would

2

not have original jurisdiction may also be addressed by a federal

3

court if the state law claims “are so related to claims in the action

4

within such original jurisdiction that they form part of the same case

5

or controversy under Article III of the United States Constitution.”

6

28

7

establishing federal jurisdiction.

8

F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron &

9

Steel Co., 257 U.S. 92, 97 (1921)).

10

U.S.C.

Here,

§ 1367.

The

federal

removing

question

defendant

has

the

burden

of

Emrich v. Touche Ross & Co., 846

subject

matter

jurisdiction

exists

11

because Ms. Wright’s claims, as alleged in her complaint, require

12

interpretation

13

Defendants are attempting to unlawfully foreclose on her house. ECF

14

No. 1-1. This claim is based on the facts recited in her complaint,

15

including statements such as, “On 5/13/2015, the hearsay note & DT

16

[deed of trust] were rescinded under the Truth In Lending Act, Title

17

15 United States Code (USC) Chapter 41, specifically § 1635,” “Chase

18

ignored,

19

general claims cancellation,” and “Chase and QLSCW continued ongoing

20

wrongful and unlawful collection on the rescinded, cancelled hearsay

21

note & DT.” ECF No. 1-1 at 10. Ms. Wright also noted in her complaint

22

that: “the hearsay note & DT alleged to represent the alleged debt and

23

basis of the intended foreclosure are in contravention of Washington

24

and federal law.” ECF No. 1-1 at 7 (emphasis added). In her motion for

25

remand, Ms. Wright again indicated her claim’s partial basis in TILA,

26

stating: “Plaintiff moves this Court to take mandatory judicial notice

ORDER - 9

of

TILA,

neglected,

and

a

federal

disregarded

statute.

the

She

TILA

argues

rescission

that

and

the

the

Case 4:16-cv-05155-EFS

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1

of its duty to enforce the TILA rescission, now that it is in front of

2

it by the defendants’ hands.” ECF No. 14 at 6. Plaintiff’s claims

3

require that the Court determine whether a valid mortgage exists —

4

including whether a valid rescission took place under the federal TILA

5

—

6

Accordingly, this civil action turns on the interpretation of a law of

7

the United States, and federal question subject matter jurisdiction

8

exists. See 28 U.S.C. § 1331.

in

order

There

9

to

is

under

determine

also

supplemental

jurisdiction

state

finding

13

determining whether the foreclosure at issue is lawful. In addition,

14

both the TILA rescission and the WCPA questions involve assessment of

15

the mortgage transaction and any errors or violations in the execution

16

of that transaction. The Court therefore finds that the federal issues

17

and state law issues “form part of the same case or controversy.” 28

18

U.S.C. § 1367.

19

The

need

not

WCPA

reach

was

the

jurisdiction.

law

12

the

supplemental

the

lawful.

finding as to whether there was a valid rescission under TILA and a
whether

on

over

is

11

Court

based

foreclosure

claims

to

WCPA

the

10

as

the

whether

violated

question

of

are

Both

essential

whether

a

to

diversity

20

jurisdiction also exists in this case, although the Court notes that

21

the

22

remaining balance of the mortgage is greater than $75,000. See ECF

23

No. 14-1 at 21. In addition, diversity of citizenship clearly exists

24

for all Defendants apart from Quality Loan Service Corporation of

25

Washington. The only question, therefore, would be whether Quality

26

Loan Service Corporation of Washington is a nominal Defendant, as

amount

ORDER - 10

in

controversy

requirement

is

satisfied

here,

as

the

Case 4:16-cv-05155-EFS

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1

alleged by Defendant JPMorgan Chase, see ECF No. 19 at 5. The Court

2

need not decide that issue at this time.

3

To the extent Ms. Wright requests to amend her complaint in

4

order to eliminate federal subject matter jurisdiction, ECF No. 26 at

5

8, that request is denied. The Ninth Circuit has made clear that

6

“jurisdiction must be analyzed on the basis of the pleadings filed at

7

the

8

Sparta Surgical Corp. v. Nat’l Ass’n of Sec. Dealers Inc., 159 F.3d

9

1209, 1213 (9th Cir. 1998), abrogated on other grounds by Merrill

10

Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562 (2016).

11

“[A]

12

eliminate the federal question upon which removal was based.” Id.

13

B.

time

of

removal

plaintiff

may

without

not

compel

reference

remand

to

by

subsequent

amending

a

amendments.”

complaint

to

Personal Jurisdiction

14

The Court also has personal jurisdiction over Ms. Wright. The

15

record indicates that Ms. Wright is physically present in the Eastern

16

District of Washington and has resided in the district at all times

17

relevant to this case. As a result, in personam jurisdiction exists.

18

See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 925

19

(2011) (“For an individual, the paradigm forum for the exercise of

20

general jurisdiction is the individual’s domicile[.]”); Burnham v.

21

Sup. Ct. of Cal., 495 U.S. 604, 619 (1990) (“[J]urisdiction based on

22

physical presence alone constitutes due process because it is one of

23

the continuing traditions of our legal system that define the due

24

process standard of ‘traditional notions of fair play and substantial

25

justice.’”). The Court also has jurisdiction over the property at

26

ORDER - 11

Case 4:16-cv-05155-EFS

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1

issue in this case, as it is located in the Eastern District of

2

Washington.

3

C.

Venue
In addition, venue is appropriate in the Eastern District of

4
5

Washington. For cases that have been removed to federal court, venue

6

is governed by 28 U.S.C. § 1441. Polizzi v. Cowles Magazines, Inc.,

7

345 U.S. 663, 665 (1953). Section 1441 states:
[A]ny civil action brought in a State court of which the
district courts of the United States have original
jurisdiction, may be removed by the defendant or the
defendants, to the district court of the United States for
the district and division embracing the place where such
action is pending.

8
9
10
11

The Eastern District of Washington is the federal district associated
12
with the state court where Ms. Wright filed her complaint, so venue is
13
appropriate in this Court based on Ms. Wright’s original choice of
14
filing in Walla Walla County.
15
V.

MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY

16
INJUNCTION
17
In

her

motion,

Ms.

Wright

also

requested

both

a

temporary

injunction,

with

the

18
restraining

order

and

a

preliminary

goal

of

19
preventing Defendants from foreclosing on her house.3 The analysis for
20
issuance

of

a

preliminary

injunction

is

generally

as

follows:

“A

21
plaintiff seeking a preliminary injunction must establish that he is
22
likely

to

succeed

on

the

merits,

that

he

is

likely

to

suffer

23
irreparable

harm

in

the

absence

of

preliminary

relief,

that

the

24
balance of equities tips in his favor, and that an injunction is in
25
3

26

The foreclosure was originally scheduled for December 15, 2016, ECF No. 141 at 2, but Plaintiff has since indicated that the sale is now scheduled
for February 10, 2017, ECF No. 21 at 3.

ORDER - 12

Case 4:16-cv-05155-EFS

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1

the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S.

2

7, 20 (2008). Under this inquiry, “courts must balance the competing

3

claims of injury and must consider the effect on each party of the

4

granting or withholding of the requested relief.” Id. at 24 (internal

5

quotation marks omitted). If a court finds, however, that there is a

6

complete lack of probability of success on the merits, no further

7

findings are necessary. Daniels v. Cmty. Lending, Inc., 621 F. App’x

8

427, 427 (9th Cir. 2015) (citing Flexible Lifeline Sys., Inc. v.

9

Precision

Lift,

Inc., 654

F.3d

989,

993–94

(9th

Cir.

2011)

(per

10

curiam); Global Horizons, Inc. v. U.S. Dep’t of Labor, 510 F.3d 1054,

11

1058 (9th Cir. 2007)).
The Ninth Circuit has noted that the analysis for issuance of a

12
13

temporary

14

analysis for issuance of a preliminary injunction. Stuhlbarg Int’l

15

Sales Co., Inc. v. John D. Brush and Co., Inc., 240 F.3d 832, 839 n.7

16

(9th

17

restraining order and a preliminary injunction are the duration of the

18

injunction and the availability of argument prior to issuance of the

19

injunction. Bennett v. Medtronic, Inc., 285 F.3d 801, 804 (9th Cir.

20

2002). A temporary restraining order may last no longer than 14 days

21

and argument is not required prior to issuance of the order. Fed. R.

22

Civ. P. 65. In this case, Ms. Wright is requesting ongoing relief, and

23

the parties have had time to fully brief the issue, so the Court will

24

treat the request as one for a preliminary injunction.

25
26

restraining

Cir.

The

2001).

Court

order

The

finds

is

primary

that,

at

“substantially

differences

this

juncture,

identical”

between

Ms.

a

Wright

to

the

temporary

has

not

demonstrated a likelihood of success in this case on any issue that

ORDER - 13

Case 4:16-cv-05155-EFS

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1

would affect the validity of the foreclosure. The Court therefore

2

denies Plaintiff’s motion for injunctive relief without reaching the

3

other preliminary injunction factors. See Daniels, 621 F. App’x at 427

4

(“The

5

plaintiffs’ motion for a preliminary injunction after . . . concluding

6

that plaintiffs had failed to establish a likelihood of success on the

7

merits with regard to any claim that could affect the validity of the

8

foreclosure.”).

district

First,

9

court

Ms.
under

did

Wright

has

not

its

provided

evidence

of

valid

rescission right extends to “each consumer whose ownership interest is

13

or will be subject to the security interest.” 12 C.F.R. § 226.15(a).

14

Under 15 U.S.C. § 1635(f): “An obligor’s right of rescission shall

15

expire three years after the date of consummation of the transaction

16

or

17

notwithstanding the fact that the information and forms required under

18

this section or any other disclosures required under this chapter have

19

not been delivered to the obligor.” Consummation is defined under

20

Regulation Z as the point when the borrower becomes contractually

21

obligated on the loan. 12 C.F.R. § 226(a)(13). The Ninth Circuit has

22

explained that when a borrower is contractually obligated is defined

23

by state law. Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989). In

24

Washington, a contract is created when the essential elements of a

25

contract,

26

promise,

ORDER - 14

“the
the

sale

of

subject
terms

and

the

matter

15

property,

of

the

conditions,

U.S.C.

the

a

12

transactions.

with

denying

rescind

the

borrowers

by

11

consumer

provides

discretion

rescission

upon

TILA

abuse

10

certain

TILA.

not

§ 1635(a).

whichever

contract,
and

(in

the
some

right

occurs

to
The

first,

parties,

the

but

all

not

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

jurisdictions) the price or consideration,” have been included in the

2

agreement. DePhillips v. Zolt Const. Co., Inc., 959 P.2d 1104 (Wash.

3

1998).

4

Ms. Wright’s son, Mr. Malveto, signed the mortgage documents on

5

August 1, 2003. ECF Nos. 9-1 & 9-2. There is no evidence to support a

6

finding

7

documents. According, the Court finds that the mortgage transaction

8

was likely consummated shortly after its execution, as demonstrated by

9

the fact that Mr. Malveto made payments on the loan between 2003 and

10

2011. ECF No. 9-4 at 3. Ms. Wright claims that the transaction was

11

rescinded on May 13, 2015. ECF No. 14 at 10; see also ECF No. 14-1 at

12

31. The statutory time period for rescission concluded long before May

13

13, 2015, making any rescission at that time ineffective. See Miguel

14

v.

15

(“[S]ection 1635(f) represents an ‘absolute limitation on rescission

16

actions’ which bars any claims filed more than three years after the

17

consummation of the transaction.” (quoting King v. California, 784

18

F.2d 910, 913 (9th Cir. 1986))).

that

Country

any

essential

Funding

1161,

in

22

apparently attempted to rescind the loan transaction based on the

23

following:

creation

of

the

mortgage

no

sent

2002)

violation

presents

been

Cir.

21

Plaintiff

had

(9th

the

time

the

rescission

1164

from

statutory

period,

of

F.3d

missing

20

26

notice

309

were

Even

25

the

Corp.,

terms

19

24

if

contract

evidence

agreement.

within
of
Mr.

a

TILA

Malveto

[U]nder the three day rule, the three year limitation, and
under
the
usury,
extortion,
lack
of
disclosure,
misrepresentation, ultra vires, unconscionability, unfair
trade practice, and deprivation of fundamental human
rights, including, but not limited to, the intangible

ORDER - 15

the

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

rights to receive honest services and to be free from being
deceived into violation of the state of Washington
Constitution Article 12 Section 11 and general claims
theories and causes of action for deceptive and unfair
business practices have made my alleged obligation to be
void and unenforceable from its first alleged inception. By
failing to disclose that the “borrower” is not a consumer
for personal, family or household purposes, as myself
seeking a consumer loan solely for those purposes, and by
failing to disclose the true lender and using subterfuge to
hide the fact that the “lender at closing was paid to pose
as the lender when in fact an undisclosed unregistered
third party had rented the charter or lending license of
the “lender”, and for these facts constituting the creation
of an unconscionable contract the limitation on my right to
rescind was extended indefinitely. For refusal, failure,
and/or neglect to provide all lawfully required loan
disclosures form inception of the original alleged “loan”,
I, Anthony John Malveto, do hereby rescind/cancel “loan
number 48580583” and all pertaining to and in relation
thereto every time, in every place, by every device,
to/for/by all persons, and for all purposes, including but
not limited to all related prior and/or subsequent alleged
loans, information, applications, modifications, business,
instrument, document, alleged transactions, and all of
every nature relevant thereto.

1
2
3
4
5
6
7
8
9
10
11
12
13
14

ECF No. 14-1 at 38–39. Mr. Malveto separately alleged appraisal fraud,
15
fraud

in

the

inducement,

fraud

in

the

execution,

and

usury.

ECF

16
No. 14-1 at 40–41. Most of these claims are not of the type for which
17
rescission under TIlA would be allowed. See 15 U.S.C. § 1635; 12
18
C.F.R. §§ 226.18, 226.23(a)(3). In addition, at this time, there is no
19
evidence in the record beyond the bare assertions of Ms. Wright and
20
Mr. Malveto to support the alleged grounds for TILA rescission. The
21
Court therefore finds that Ms. Wright is unlikely to succeed on the
22
merits of her claim regarding TILA rescission.
23
In addition, neither Plaintiff nor her son has returned the loan
24
proceeds

from

the

mortgage

transaction,

and

Plaintiff

remains

in

25
possession of the property purchased with those loan proceeds. See
26

ORDER - 16

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

Semar v Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 702 (9th

2

Cir.

3

dissolved,

4

borrower returns the loan proceeds, less any finance or other charge.”

5

(citing

6

satisfied the borrower obligations that would have been required had a

7

valid rescission occurred.

1986)

(“Under
the

a

TILA

lender

rescission,

returns

15 U.S.C. § 1635(b))).

the

the

security

borrower’s

interest

payments,

and

is
the

As a result, Mr. Malveto has not

8

There is also no evidence in the record that either Ms. Wright

9

or Mr. Malveto intends to return the loan proceeds. Instead, Ms.

10

Wright’s statements indicate that she believes no debt is owed to the

11

Defendants by her or her son. See, e.g., ECF No. 1-1 at 3 (“Chase and

12

QLSCW

13

rescinded, cancelled hearsay not & DT.”); ECF No. 1-1 at 7 (“[T]he

14

facts obtained on the record by discovery will reveal . . . that the

15

alleged note & DT were never in default.”). A court need not approve a

16

rescission if it is clear that the borrower will not satisfy its

17

obligations upon rescission. Yamamoto v. Bank of N.Y., 329 F.3d 1167,

18

1173 (9th Cir. 2003) (“[A] court may impose conditions on rescission

19

that assure that the borrower meets her obligations once the creditor

20

has performed its obligations.”).

continued

ongoing

wrongful

and

unlawful

collection

on

the

21

Second, to the extent Ms. Wright has stated a claim under the

22

WCPA, Ms. Wright has not provided evidence of a violation of that Act.

23

The statutory time period for a WCPA claim concluded long before the

24

filing of this action. See RCW 19.86.120 (“Any action to enforce a

25

claim for damages under RCW 19.86.090 shall be forever barred unless

26

commenced within four years after the cause of action accrues[.]”). In

ORDER - 17

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

addition, Ms. Wright has not provided evidence to support her claim

2

for violation of the WCPA. In the complaint, Plaintiff argues that the

3

mortgage transaction was invalid because “a. there is no document

4

signed by both parties; b. they are adhesion contracts; c. there was

5

no bargaining over terms and conditions; d. there was no meeting of

6

the

7

‘consideration’ which each party was to provide under the contract was

8

never mutually agreed to, and/or was never performed.” ECF No. 1-1 at

9

8. Ms. Wright has not, however, provided evidence to support these

10

allegations. In addition, Defendant Chase has raised the argument that

11

Ms. Wright is barred from asserting the WCPA claims based on res

12

judicata stemming from a prior Washington State Court judgment. See

13

ECF No. 9 at 10. For these reasons, based on the evidence currently

14

before it, the Court finds that Ms. Wright is unlikely to succeed on

15

her WCPA claims.

minds

into

mutually

agreed

terms

and

conditions;

e.

the

16

Third, because at this time there is no evidence of a valid

17

rescission under TILA and there is no support in the record for Ms.

18

Wright’s claim that the mortgage agreement was an invalid contract

19

under the WCPA or otherwise, Ms. Wright has failed to establish that

20

the

21

rescinded and was otherwise valid, then the holder of the mortgage

22

note

23

borrower’s default. Ms. Wright does not seem to contest the allegation

24

that neither she nor Mr. Malveto has been making payments on the

25

mortgage, but instead argues only that they are not required to make

26

such

foreclosure

would

be

payments.

ORDER - 18

is

unlawful.

authorized

This

to

failure

If

the

foreclose

to

make

mortgage

on

the

payments,

agreement

property

without

was

upon

a

not

the

valid

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

rescission or invalidation of the mortgage, appears to constitute

2

default sufficient to justify foreclosure.

3

The Court finds that, at this time, Ms. Wright has failed to

4

establish a likelihood of success on the merits that would affect the

5

validity of the foreclosure action. This finding alone is sufficient

6

to justify denial of her request for a preliminary injunction.
In addition to her failure to prove a likelihood of success on

7
8

the merits, the

9

equitable relief by the doctrine of unclean hands. Silvas v. G.E.

10

Money Bank, 449 F. App’x 641, 644 (9th Cir. 2011). In Silvas, the

11

Ninth

12

prevent foreclosure based on the doctrine of unclean hands, noting

13

that the Plaintiff “wishes to continue to live in her house, but she

14

has not offered to make any payments on her loan, she did not tender

15

any payments when she sought rescission, nor is she able to repay the

16

loan

17

maintains possession of the property purchased with the loan proceeds

18

from the mortgage transaction with Defendants, and neither she nor Mr.

19

Malveto have repaid the loan proceeds or offered to do so, Ms. Wright

20

cannot now seek judicial interference to prevent sale of the property.

Circuit

at

this

Court

finds that Ms.

affirmed

time.”

the

Id.

denial

As

of

a

explained

21

1.

preliminary

above,

barred from

injunction

because

Ms.

to

Wright

Accordingly, IT IS HEREBY ORDERED:

22

Wright is also

Plaintiff’s Motion to Remand Action to State Court and for

23

Emergency Temporary Restraining Order and OSC Preliminary

24

Injunction, ECF No. 14, is DENIED.

25

2.

Plaintiff’s construed Motion for Notice of Withdrawal and
Motion

26

ORDER - 19

for

Withdrawal

of

Motion

for

TRO

and

OSC

RE:

Case 4:16-cv-05155-EFS

Document 30

Filed 02/02/17

1

Preliminary Injunction and Proposed Order, ECF No. 21, is

2

DENIED AS MOOT.

3

3.

6
7

Motion

to

Strike,

ECF

No. 27,

is

DENIED

AS

MOOT.

4
5

Plaintiff’s

IT IS SO ORDERED.

The Clerk’s Office is directed to enter this

Order and provide copies to all counsel.
DATED this

2nd

day of February 2017.

8
s/Edward F. Shea
EDWARD F. SHEA
Senior United States District Judge

9
10
11
12
13
14
15
16
17
18
19
20
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22
23
24
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26

Q:\EFS\Civil\2016\5155.Wright.ord.deny.remand.TRO.PI.lc02.docx

ORDER - 20