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Yuhre v. JP Morgan Chase Bank

April 6, 2010


The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge


JPMorgan Chase Bank, N.A. ("JPMorgan") and Mortgage Electronic Registration Systems, Inc. ("MERS") filed a motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiff's first amended complaint.*fn1 (Docket No. 17.) American Mortgage Network, Inc. ("Amnet") also filed a dismissal motion under Federal Rule of Civil Procedure 12(b)(6) and a motion to strike certain portions of Plaintiff's complaint under Federal Rule of Civil Procedure 12(f). (Docket Nos. 22, 23.) Plaintiff only opposes JPMorgan and MERS' dismissal motion. For the reasons stated below, Plaintiff's federal claims are dismissed with prejudice and the court, under 28 U.S.C. § 1367(c)(3), declines to continue exercising supplemental jurisdiction over Plaintiff's remaining state law claims.


A Rule 12(b)(6) motion "challenges a complaint's compliance with . . . pleading requirements." Champlaie v. BAC Home Loans Servicing, LP, No. S-09-1316 LKK/DAD, 2009 WL 3429622, at *1 (E.D. Cal. Oct. 22, 2009). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests . . . ." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Further, "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

To avoid dismissal, the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547. "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." Iqbal, 129 S.Ct. at 1949. Plausibility, however, requires more than "a sheer possibility that a defendant has acted unlawfully." Id. "When 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. (quotations and citation omitted).

In evaluating a dismissal motion under Rule 12(b)(6), the court "accept[s] as true all facts alleged in the complaint, and draw[s] all reasonable inferences in favor of the plaintiff." Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements nor legal conclusions are entitled to a presumption of truth. See Iqbal, 129 S.Ct. at 1949-50.

Both Plaintiff and Defendants request that the court consider certain documents outside of the pleadings. Specifically, JPMorgan and MERS request that the court take judicial notice of a deed of trust recorded July 31, 2006 with the Sacramento County Recorder's Office. (JPMorgan and MERS' Request for Judicial Notice ("RJN") Ex. 1.) Amnet also requests that the court consider the same deed of trust as well as an Interest Only Adjustable Rate Note dated July 26, 2006 and signed by Plaintiff, a Truth-in-Lending Disclosure Statement dated July 26, 2006 and signed by Plaintiff and a Notice of Right to Cancel dated July 26, 2006 and signed by Plaintiff. (Amnet RJN Ex. A-D.) Plaintiff does not oppose the consideration of these documents and submits her own request that the court take judicial notice of a law review article entitled "The Great Collapse: How Securitization Caused the Subprime Meltdown" and a copy of a mortgage loan statement dated April 13, 2009. (Pla.'s RJN Ex. 1-2.)

"As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (quotations and citation omitted). There are, however, two exceptions to this general rule. Id. First, the "incorporation by reference" doctrine permits a district court "to take into account documents 'whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (quotations and citations omitted). This doctrine is also applicable "to situations in which the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Id. (quotations and citations omitted). Therefore, a document is "incorporated by reference" into a complaint only if: "(1) the complaint refers to the document; (2) the document is central to plaintiff's claim; and (3) no party questions the authenticity of the document." Delaney v. Aurora Loan Servicing, Inc., No. C 09-3131 VRW, 2009 WL 5062339, at *2 (N.D. Cal. Dec. 23, 2009) (citing Branch v. Tunnell, 14 F.3d 449, 453-454 (9th Cir. 1994)).

The second exception allows consideration of facts which may be judicially noticed. See Mack v. S. Bay Beer Distribs., Inc., 789 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by, Astoria Fed. Sav. And Loan Ass'n v. Solimino, 501 U.S. 104 (1991) (stating that "[o]n a motion to dismiss . . . a court may take judicial notice of facts outside the pleadings."). A fact may be judicially noticed if it is either "generally known within the territorial jurisdiction of the trial court" or "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).

Since the deed of trust is a publically recorded document, it may be judicially noticed and Defendants' request that it be considered is granted. See W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F. Supp. 790, 792 (1992) (taking judicial notice of documents in a county's public record, including deeds of trust).

Amnet argues the other documents it has submitted may be considered since they are referred to in Plaintiff's first amended complaint or form the basis of Plaintiff's claims. Plaintiff's first amended complaint makes multiple references to the "Promissory Note" executed on July 26, 2006 between Plaintiff and Amnet as well as the "TILA disclosure" and "Notice of Right to Cancel." (First Amended Compl. ("FAC") ¶¶ 30, 32, 42, 44, 59, 61.) Further, these documents and their contents, are central to Plaintiff's claims and she does not dispute the authenticity of the documents Amnet submitted. Therefore, Amnet's request for judicial notice of these documents is granted.

Plaintiff's request for judicial notice, however, is denied since neither the article nor mortgage loan statement are facts subject to judicial notice nor incorporated into the complaint by reference.


Plaintiff alleges that in April 2006, defendant Norman Schriever, a loan officer for defendant Streamline Funding, approached her and solicited her to refinance her property. (FAC ¶ 26.) Shriever allegedly represented that "he could get [Plaintiff] the 'best deal' and the 'best interest rates' available on the market." (Id. ¶ 27.) Defendant Shriever also allegedly "advised Plaintiff that if the loan ever became unaffordable, he would simply refinance it into an affordable loan . . . ." (Id. ¶ 28.)

On or about July 26, 2006, Plaintiff obtained a loan of $242,000.00 from Amnet. (Id. ¶ 32; Amnet RJN A.) The terms of the loan were memorialized in an Interest Only Adjustable Rate Note (the "Note"), which was secured by a deed of trust recorded against the real property located at 9558 Big Timber Drive in Elk Grove, California. (Id.) The deed of trust identifies Amnet as the lender, First American Title Insurance Company as the trustee, and MERS as beneficiary and the nominee for the lender and the lender's successors and assigns. (Amnet RJN B.) Plaintiff, however, alleges she was not given a "a copy of any of the loan documents prior to [the] closing [and] [a]t the closing, Plaintiff was only given a few minutes to sign the documents." (FAC ¶ 30.) Further, Plaintiff alleges she was not allowed to review the loan documents and "was simply told to sign and initial the documents provided by the notary." (Id.) Plaintiff also alleges that the "deed of trust must fail" since MERS "is not licensed to be and/or act as a nominee or a beneficiary of any of the Defendants . . . ." (Id. ¶ 33.)

Plaintiff filed her initial complaint in this federal court on August 25, 2009, alleging nine claims under federal and California law against six named defendants. JPMorgan and MERS filed a motion to dismiss Plaintiff's original complaint on September 29, 2009; Amnet also filed a dismissal motion on October 9, 2009. Both dismissal motions, however, were mooted when Plaintiff filed a first amended ...

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