The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge
ORDER GRANTING AMENDED COMPLAINT DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' FIRST [Docket No. 16]
This case comes before the Court on Defendants JP Morgan Chase Bank N.A. and California Reconveyance Company's motion to dismiss Plaintiffs' First Amended Complaint ("FAC"). Plaintiffs filed an opposition to the motion, and Defendants filed a reply. For the reasons discussed below, the Court grants Defendants' motion.
On or about July 20, 2007, Plaintiff Geoffrey Moncrief refinanced the property located at 417 Sea Ridge Drive, La Jolla, California. (FAC ¶ 6.) Defendant La Jolla Finance brokered the loan and Defendant Washington Mutual, FA ("WaMu") financed the loan. (Id. ¶ 7.)
Plaintiff alleges he applied for a fixed rate mortgage with a 2.4% interest rate. (Id. ¶ 11.) As part of the application process, Plaintiff executed a release form that enabled Defendants La Jolla Finance and WaMu to obtain a copy of his tax returns. (Id. ¶ 15.) Plaintiff also told Defendant La Jolla Finance about his monthly income. (Id. ¶ 17.) Plaintiff alleges Defendants did not obtain a copy of his tax return, and thus did not learn that Plaintiff did not qualify for the loan. (Id.) Plaintiff also alleges Defendant La Jolla Finance did not use the monthly income Plaintiff provided, but instead inflated Plaintiff's monthly income so he would qualify for a different loan. (Id.)
Plaintiff alleges Defendants La Jolla Finance and WaMu "conspired" to place Plaintiff into a loan that was more expensive than the one he applied for to increase their profit on the transaction. (Id. ¶ 9.) Plaintiff alleges Defendant WaMu enticed Defendant La Jolla Finance to place Plaintiff into the more expensive loan through payment of an unlawful yield spread premium. (Id. ¶ 10.) As part of the ruse, Defendant La Jolla Finance misrepresented to Plaintiff the affordability of the loan and the amount of the monthly payments. (Id. ¶¶ 19-20.) It also provided Plaintiff with an inaccurate Good Faith Estimate. (Id. ¶ 18.)
The loan Plaintiff ultimately received was not a fixed rate loan, but rather was an adjustable rate mortgage, and the interest rate was much higher than 2.4%. (Id. ¶¶ 8, 11, 13.) As a result, Plaintiff began having difficulty making his monthly payments. (Id. ¶ 25.) As a result, Defendant California Reconveyance Company ("CRC") recorded a Notice of Default against Plaintiff's property on October 27, 2009. (Id. ¶ 26.)
After the loan closed, but before the Notice of Default was recorded, Defendant WaMu failed and was placed into receivership with the Federal Deposit Insurance Corporation ("FDIC"). On September 25, 2008, Defendant JPMorgan Chase ("JPMorgan") entered into a Purchase and Assumption Agreement ("PAA") with the FDIC pursuant to which JPMorgan purchased certain assets of Defendant WaMu, including Plaintiff's mortgage. (See Defs.' Req. for Judicial Notice in Supp. of Mot., Ex. 4.)*fn1 Defendant JPMorgan assumed certain liabilities of Defendant WaMu, subject to the following:
Notwithstanding anything to the contrary in the Agreement, any liability associated with borrower claims for payment of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower, whether or not such liability is reduced to judgment, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, legal or equitable, judicial or extra- judicial, secured or unsecured, whether asserted affirmatively or defensively, related in any way to any loan or commitment to lend made by [WaMu] prior to failure, or to any loan made by a third party in connection with a loan which is or was held by [WaMu], or otherwise arising in connection with [WaMu's] lending or loan purchase activities are specifically not assumed by [JPMorgan]. (Id. ¶ 2.5.) Plaintiff alleges Defendant JPMorgan is liable in this case as "the successor in interest to Defendant Washington Mutual." (FAC ¶ 42.)
Plaintiff Geoffrey Moncrief and his wife, Leila Moncrief, filed the present case on February 12, 2010. After Defendants JPMorgan and CRC filed a motion to dismiss, Plaintiffs filed a First Amended Complaint, along with a motion for a temporary restraining order ("TRO") to halt the foreclosure sale of their property. The Court denied Plaintiff's motion for a TRO, after which Defendants JPMorgan and CRC filed a motion to dismiss the FAC. Plaintiffs thereafter filed a motion for a preliminary injunction to again prevent the foreclosure sale of their property, which the Court denied.
The FAC alleges seven claims for relief: (1) intentional misrepresentation, (2) fraudulent concealment, (3) breach of fiduciary duty, (4) constructive fraud, (5) quiet title, (6) violation of the Truth in Lending Act ("TILA"), and (7) violation of the Real Estate Settlement Procedures Act ("RESPA").
Defendants move to dismiss the FAC in its entirety. They raise several arguments in support of their motion to dismiss, most notably, that the PAA relieves them of any liability for WaMu's ...