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Madrid v. J.P. Morgan Chase Bank

March 25, 2010

ELIJA V. MADRID, PLAINTIFF,
v.
J.P.MORGAN CHASE BANK, N.A., A NATIONAL BANKING ASSOCIATION, CHASE HOME FINANCE, LLC; TRIDENT FINANCIAL GROUP; NDEX WEST, LLC; AND DOES 1 THROUGH 100, DEFENDANTS.



ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

This matter comes before the Court on Defendants JPMorgan Chase Bank, N.A. ("JPMorgan") and Chase Home Finance, LLC's ("Chase") (collectively "Defendants") Motion to Dismiss Plaintiff Elija Madrid's ("Plaintiff's") Second Amended Complaint ("SAC") for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff opposes the motion.*fn1 Defendants also filed a Request for Judicial Notice ("RJN") of six exhibits, and the Court takes judicial notice as requested. For the reasons explained below, the Court grants Defendants' Motion to Dismiss.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Elija V. Madrid purchased her home at 7808 Megan Ann Court, Antelope, California ("Subject Property") in March 2006. In connection with the purchase of the subject property, Plaintiff applied for a loan through Trident Financial Group and received two adjustable rate loans from Defendant JP Morgan Chase in March 2006. Defendant Chase Home Financing was assigned as the beneficiary under the Deed of Trust in July 2008.

Plaintiff defaulted on the loan, and Defendants caused NDEX West, LLC to record a Notice of Default with the Sacramento County Recorder's Office on June 30, 2008. RJN, Exh. 4. A trustee's sale was scheduled for October 22, 2008. RJN, Exh. 7. The subject property was not sold at that time, and in March 2009, Plaintiff filed her original complaint in this court, along with an ex parte motion for a temporary restraining order and a preliminary injunction to block a future foreclosure sale of the subject property. The temporary restraining order and the preliminary injunction were denied by this court. Defendants brought a motion to dismiss the original complaint, as well as a request for judicial notice. Both filings were vacated upon Plaintiff's filing of an amended complaint ("FAC"). Defendants filed a motion to dismiss the FAC, which was granted in part and denied in part. Plaintiff's SAC pleads amended versions of most of the causes of action that were dismissed without prejudice. Defendants now seek dismissal with prejudice of those claims that were previously dismissed with leave to amend.

II. OPINION

A. Legal Standard

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Upon granting a motion to dismiss, a court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Absent prejudice, or a strong showing of any [other relevant] factor[], there exists a presumption under Rule 15(a) in favor of granting leave to amend." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2002). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Id. Accordingly, a court should grant leave to amend the Complaint unless the futility of amendment warrants dismissing a claim with prejudice.

In general, a court may not consider materials other than the facts alleged in the complaint when ruling on a motion to dismiss. Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996). The court may, however, consider additional materials if the plaintiff has alleged their existence in the complaint and their authenticity is not disputed. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).

Defendants request the Court take judicial notice of six exhibits. Plaintiff does not challenge the authenticity of these exhibits, all of which were referenced in Plaintiff's SAC. Accordingly, the Court takes judicial notice as requested.

B. Amended Causes of Action

1. Breach of the Covenant of Good Faith and Fair Dealing

Plaintiff's SAC alleges the implied covenant of good faith and fair dealing applies to Defendant JPMorgan through the Note and Deed of Trust, requiring Defendant to "safeguard, protect, or otherwise care for the assets and rights of [Plaintiff]." SAC ¶ 74. Plaintiff further alleges that Defendant JPMorgan's acts of pursuing foreclosure and "fail[ing] to cure insufficient disclosure . . . at or before closing . . ." constituted a breach. Id. at ¶ 77. Additionally, Plaintiff argues that she may be deprived of the opportunity to take advantage of loan modification incentives in the future because of her financial state, which she attributes to JPMorgan and the interest rate of her loan. Plaintiff also names Defendant Chase in the caption of this cause of action, but does not specifically name Defendant Chase in any of the paragraphs substantiating Plaintiff's claims.

Under California law, every contract "imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." McClain v. Octagon Plaza, L.L.C., 159 Cal.App.4th 784, 798, 71 Cal.Rptr.3d 885 (2008). However, "[t]he covenant . . . cannot be endowed with an existence independent of its contractual underpinnings. It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." Guz v. Bechtel Nat'l Inc., 24 Cal. 4th 317, 349-350, 100 Cal.Rptr.2d 352 (1992)(citations and quotations omitted). "[T]he implied covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect ...


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