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St. James v. JP Morgan Chase Bank Corp.

September 15, 2010


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

Order Denying Plaintiff's Motion for Temporary Restraining Order

Plaintiff Samuel St. James, proceeding pro se, has filed a complaint alleging breach of mortgage contract, bad faith breach of contract, fraud, misrepresentation, and breach of fiduciary duty. Plaintiff invokes this Court's jurisdiction under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq. and the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.*fn1 Plaintiff moves the Court for an order staying foreclosure of his home, indicating Defendant JP Morgan Chase Bank Corporation has set the sale for September 22, 2010. For the reasons explained herein, the Court DENIES Plaintiff's motion.


Plaintiff's complaint arises from a mortgage loan contract entered into by Plaintiff on April 7, 2005 with regard to the real property located at 6923 Worchester Place, San Diego, CA 92126. [Complaint, ¶ 7.] Prior to that mortgage contract, Plaintiff refinanced the property two or three times from approximately July 2001 through April 2005. [Id.] In these refinance transactions, the lenders utilized the Mortgage Electronic Registration System, Inc. ("MERS"). Based upon the involvement of MERS, Plaintiff alleges there exists a cloud on title. [Complaint, ¶¶ 8-9.] Plaintiff alleges Defendants were aware of the cloud on title resulting from MERS' involvement in the refinance transactions prior to April 7, 2005. [Id.]

On September 17, 2009, through attorney John Bakhit, Plaintiff entered into a "Making Home Affordable" ("MHA") loan modification with Defendant. [Complaint, ¶ 10.] Plaintiff was unaware of the cloud on title when he entered into the MHA program, and would not have entered into the agreement and made monthly payments under that agreement had he known of the cloud on title. [Complaint, ¶ 11.]

Based upon the foregoing facts, Plaintiff alleges Defendants breached their real estate mortgage contract because the contract restricted the downward adjustment of his rate of interest in violation of Cal. Civ. Code § 1916.7.*fn2 [Complaint, ¶¶ 14-15.] Plaintiff further alleges bad faith breach of the mortgage contract, arguing he received only one copy of the "right of rescission" notice required by 12 C.F.R. § 226.23. [Complaint, ¶¶ 17-19.] Plaintiff alleges fraud and requests the imposition of a constructive trust, arguing Defendants were aware of the involvement of MERS in the earlier refinance transactions and did not inform him of the cloud on his title. [Complaint, ¶ 21.] Plaintiff alleges misrepresentation, arguing under TILA and RESPA that the finance charges used calculate the loan amount is $1,140.68 greater than the charges set forth in the estimated settlement statement. [Complaint, ¶¶ 23-24.] Finally, Plaintiff alleges constructive fraud and breach of fiduciary duty arising out of the negotiations between himself and JP Morgan Chase Bank beginning on September 17, 2009, related to his efforts to obtain a loan modification under the MHA program. [Complaint, ¶¶ 26-33.]


Under Rule 65(b) of Federal Rules of Civil Procedure, the Court may issue a temporary restraining order ("TRO") if "specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition" and "the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required." The purpose of the TRO is "preserving the status quo and preventing irreparable harm just so long as necessary to hold a hearing, and no longer." Granny Goose Foods, Inc. v. Brotherhood of Teamsters Local No. 70, 415 U.S. 423, 439 (1974) (citations omitted). In order to obtain a TRO or a preliminary injunction, the plaintiff must show that he is "likely to prevail on the merits." Ashcroft v. Am. Civil Liberties Union, 542 U.S. 656, 666 (2004).

Upon review, the Court concludes Plaintiff has not demonstrated a likelihood of success on the merits sufficient to justify a TRO. As described above, the majority of Plaintiff's claims are state law breach of contract, misrepresentation, fraud, and breach of fiduciary duty claims. Plaintiff states no separate cause of action for violation of TILA or RESPA. Instead, Plaintiff's Second Cause of Action for bad faith breach of contract includes citations to the Federal Regulations requiring lenders to give notice of a right of rescission. Plaintiff also cites both TILA and RESPA under his Fourth Cause of Action for misrepresentation. Unfortunately, any claims Plaintiff may have had under these two statutes with regard to the April 7, 2005 mortgage contract are now time barred.

TILA provides that the consumer has an unconditional right to change his mind and cancel the transaction for any reason, or for no reason at all, provided it is done within a three-day period. See 15 U.S.C. § 1635(a). Moreover, where the creditor fails to provide the consumer with proper notice concerning his right of rescission, the consumer's right to rescind is extended to three years. See id. § 1635(f); 12 C.F.R. § 226.23(a)(3). Under RESPA, any claim under 12 U.S.C. §§ 2607 or 2608 must be brought within one year and any claim under § 2605 must be brought within three years of the "date of the occurrence of the violation." 12 U.S.C. § 2614; Lewis v. Diamond Essentials, Inc., 2010 WL 3070365 (S.D. Cal. 2010). Here, the mortgage transaction occurred more than five years ago, far beyond the time periods set forth in 15 U.S.C. § 1635(f) and 12 U.S.C. § 2614. Furthermore, to the extent Plaintiff relies upon the alleged misstatement of estimated costs in his Fourth Cause of Action for misrepresentation, the remedy for a violation of RESPA is monetary damages and costs, not injunctive relief. Gray v. Central Mortg. Co., 2010 WL 1526451 (N.D. Cal. 2010) (citing 12 U.S.C. § 2605, which provides for the payment of actual damages, costs, and attorneys fees for plaintiffs alleging a violation of that section).

Even assuming Plaintiff's complaint adequately sets forth claims against Defendants based upon the failure to consummate the restructuring of his loan under the MHA*fn3 program, Plaintiff has not demonstrated he is entitled to injunctive relief on those claims. Plaintiff has not alleged facts in his complaint demonstrating Defendants owed him a fiduciary duty or that Defendants were required to modify the loan. See Domnie v. Saxon Mortg., 2010 WL 2991250 (N.D. Cal. 2010) (dismissing plaintiff's complaint, finding plaintiff failed to state a claim based upon the defendant borrower's failure to modify a loan under the Making Home Affordable Program); Simmons, 2010 WL 2636220 at *5 (finding that borrowers who entered into an agreement with their lender under the Making Home Affordable Plan "cannot reasonably rely on a manifested intent to confer rights upon them since the Agreement does not require that [the lender] modify all eligible loans.")


For the reasons explained herein, the Court concludes Plaintiff has failed to demonstrate a likelihood of success on the merits warranting the issuance of a temporary ...

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