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Ambriz v. Quality Loan Service Corp.

May 20, 2010


The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge


This case comes before the Court on Defendant JP Morgan Chase Bank N.A.'s motion to dismiss Plaintiffs' First Amended Complaint. Plaintiffs filed an opposition to the motion, and Defendant filed a reply. For the reasons discussed below, the Court grants Defendant's motion.


On or about February 28, 2007, Plaintiffs Esther and Rafael Ambriz purchased a home in Fallbrook, California. Defendant EJ Mortgage, Inc. ("Defendant EJ") was the mortgage broker for Plaintiffs' purchase of the home. (First Am. Complaint ("FAC") at ¶ 14.) As part of the loan process, Defendant EJ requested information about Plaintiffs' income. (Id. at ¶ 18.) Plaintiffs provided that information, but allege they were unable to qualify for the loan based on their actual income. (Id. at ¶¶ 19, 24.) Plaintiffs allege Defendant EJ inflated Plaintiffs' income on the loan application so the loan would be approved. (Id. at ¶¶ 24-25.) Plaintiffs also allege the closing packet they received from Defendant EJ was deficient in that: (1) The Notice of Right to Cancel did not state a transaction date or expiration date for the rescission period, (2) the closing packet did not include two copies of the Notice of Right to Cancel, (3) there were no initial or final disclosures, (4) the actual finance charge was more than the disclosed finance charge, (5) the actual annual percentage rate ("APR") was more than the disclosed APR, and (6) Defendant EJ failed to disclose that Plaintiffs would be responsible for a yield spread premium ("YSP") payment of $7,254 to Defendant EJ. Plaintiffs were unable to make their payments on the loan, and their home was thereafter sold at a foreclosure sale.

On July 13, 2009, Plaintiffs filed the present case against Defendants Quality Loan Service Corp. and Washington Mutual Bank, FA. The original complaint alleged eighteen claims for relief, including: (1) intentional misrepresentation, (2) breach of fiduciary duty, (3) breach of the covenant of good faith and fair dealing, (4) declaratory relief, (5) quiet title, (6) violation of the Equal Credit Opportunity Act ("ECOA"), (7) predatory lending, (8) negligence, (9) usury, (10) accounting, (11) violations of the Truth in Lending Act ("TILA") and the Home Owners Equity Protection Act ("HOEPA"), (12) violation of the Real Estate Settlement Procedures Act ("RESPA"), (13) violation of the Fair Credit Reporting Act ("FCRA"), (14) slander of title, (15) violation of California Civil Code § 1632, (16) violation of California Business and Professions Code § 17200, (17) violation of California Civil Code § 2923.6, and (18) violation of California Civil Code § 2923.5.

After the Court held a status conference with counsel, Plaintiffs filed the FAC. The FAC renames Defendants Quality Loan Service Corp. and Washington Mutual Bank, FA, and also names Defendants EJ and JP Morgan Chase National Corporate Services, Inc. Plaintiffs have dropped claims (7), (9), (13), (14), (17) and (18) in the FAC, and have added a claim for breach of contract. In response to the FAC, Defendant JP Morgan Chase filed the present motion.


Defendant JP Morgan Chase moves to dismiss the FAC in its entirety. It argues Plaintiffs have failed to satisfy the pleading requirements for each individual claim. Plaintiffs state they did not intend to assert the breach of fiduciary duty claim against Defendant JP Morgan Chase. (Opp'n to Mot. at 10.) Therefore, the Court will not address that claim here. Plaintiffs also state they are "willing to concede" on their bad faith, ECOA and negligence claims. (Id.) Plaintiffs do not explicitly concede their accounting, breach of contract or § 1632 claims, but they fail to address these claims in their opposition to the motion. Accordingly, the Court dismisses these claims with prejudice as against Defendant JP Morgan Chase. The remainder of Plaintiffs' claims are discussed below.

A. Standard of Review

In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "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. (citing Twombly, 550 U.S. at 556).

"Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task "by identifying the allegations in the complaint that are not entitled to the assumption of truth." Id. at 1951. It then considered "the factual allegations in respondent's complaint to determine if they plausibly suggest an entitlement to relief." Id. at 1951.

B. Intentional Misrepresentation

Plaintiffs' first claim for relief is for intentional misrepresentation. Defendant JP Morgan Chase argues this claim should be dismissed because Plaintiff has failed to satisfy Federal Rule of Civil Procedure 9(b).

A fraud-based pleading satisfies Rule 9(b) if it identifies "the who, what, when, where, and how" of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). The allegations in the FAC do not meet this standard. Indeed, Plaintiffs fail to identify any individual at Defendant JP Morgan Chase, what that individual said or did to Plaintiffs, or when or where that conduct occurred. Plaintiffs allege, in general terms, that Defendant JP Morgan Chase "took over" Plaintiffs' loan "as either investor, and/or servicer[,]" (FAC at ¶ 62), and that Defendant thereafter "continued the concealment and fraud by [Defendant] EJ[,]" (id. at ¶ 64), but these allegations do not satisfy Rule 9(b). Furthermore, they do not set forth any facts to support the first element of a fraud claim, namely, a false ...

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