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Caravantes v. California Reconveyance Co.

October 14, 2010

DAVID CARAVANTES, AN INDIVIDUAL, PLAINTIFF,
v.
CALIFORNIA RECONVEYANCE COMPANY, A CALIFORNIA CORPORATION; WASHINGTON MUTUAL BANK, FA, A [DOC. NO. 11] FEDERAL SAVINGS BANK ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES; CHASE HOME FINANCE LLC, A DELAWARE LIMITED LIABILITY COMPANY; VREJ JOUKADARIAN, AN INDIVIDUAL, CLEMENTS J. DURKIN, AN INDIVIDUAL, DEBORAH BRIGNAC, AN INDIVIDUAL, ANN THORN, AN INDIVIDUAL, AND DOES 1-20, INCLUSIVE, DEFENDANTS.



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

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S COMPLAINT

Presently before the Court is a motion to dismiss brought by Defendants California Reconveyance Company, JPMorgan Chase Bank, N.A., an acquirer of certain assets and liabilities of Washington Mutual Bank from the FDIC acting as receiver, and Chase Home Finance LLC (collectively "Defendants"). (Doc. No. 11.) In his Complaint, Plaintiff has asserted thirteen separate causes of action stemming from Defendants' conduct in issuing a mortgage loan and, upon Plaintiff's default, initiating non-judicial foreclosure proceedings. (See Doc. No. 1.) For the reasons described herein, the Court GRANTS IN PART and DENIES IN PART Defendants' motion to dismiss.

BACKGROUND

Plaintiff became the owner of property located at 5189 Argonne Court, San Diego, CA 92117 on or about August 15, 2007. (See Compl. ¶¶ 5, 18.) He acquired the property via a loan from Defendant Washington Mutual Bank, F.A. ("WaMu"). (Id. ¶ 18.) The corresponding Deed of Trust was recorded in San Diego on August 27, 2007. (Id. ¶ 19.) The Deed of Trust identified Defendant WaMu as the lender and Defendant California Reconveyance Company ("CRC") as the trustee. (Id.) Plaintiff alleges that when the loan was consummated, he did not receive all of the required documents and disclosures, including the Truth in Lending Disclosure statement containing required material disclosures and the required number of copies of the Notice of Right to Cancel containing the date that the rescission period expires. (Id. ¶ 20.)

Subsequently, Plaintiff appears to have experienced problems in making his loan payments when his income decreased dramatically in 2008. (Id. ¶ 21.) In September 2008, after Defendant WaMu closed, Plaintiff alleges he received a form letter stating that Defendant WaMu had become Defendant JPMorgan Chase Bank ("JPMorgan"). (Id. ¶ 22.) The letter did not state anything about whether Defendant JPMorgan was now the beneficiary under the Deed of Trust, nor has Plaintiff received any other notice of any change in beneficiary. (Id.) Plaintiff subsequently received statements from Defendant Chase Home Finance ("Chase"), and he directed payments to Defendant Chase, assuming that Chase was the new servicer of his loan. (Id.)

In or around November 2009, Plaintiff received a letter from Chase Home Ownership Preservation Office stating that many Americans are experiencing difficulty with their mortgage payments and that if Plaintiff was experiencing financial difficulty, there were some options available to him that would assist him with making payments. (Compl. ¶ 23.) Plaintiff subsequently received several of such letters. (Id.) According to Plaintiff, none of these letters discussed Plaintiff's actual financial situation. (Id.)

On January 25, 2010, Defendant Chase mailed to Plaintiff a letter titled "Notice of Collection Activity," alleging Plaintiff was in default under the terms of his loan. (Id. ¶ 24; Def.'s Request for Judicial Notice ("RJN"), Ex. 3.) The letter did not attempt to discuss any options available to Plaintiff to avoid foreclosure other than paying the full amount allegedly due. (Compl. ¶ 24.) On March 10, 2010, Defendant CRC recorded a Notice of Default on Plaintiff's property. (Id. ¶ 25.) The Notice of Default was accompanied by a Declaration of Compliance, which stated that the undersigned "tried with due diligence but was unable to contact the borrower to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure as required by Cal. Civ. Code Section 2923.5. Thirty days or more have elapsed since these due diligence efforts were completed." (Id. ¶ 27.) However, according to Plaintiff, except for the generic letters discussed above, none of Defendants sent any letters or made any phone calls to Plaintiff concerning his personal financial situation and options to avoid foreclosure that were specifically available to him. (Id. ¶ 28.)

In March 2010, Plaintiff retained a mortgage auditing firm to analyze his loan. Compl. ¶ 29.) On March 23, 2010, Plaintiff sent a Qualified Written Request ("QWR") letter to Defendants CRC, JPMorgan, and Chase. (Id. ¶ 30.) The letter made several requests for documentation and information concerning Plaintiff's loan. (Id.) Defendant CRC acknowledged the receipt of the letter on March 26, 2010 and stated that it forwarded the letter to Defendant JPMorgan. (Id. ¶ 31.) Also on March 26, 2010, Defendant Chase acknowledged the receipt of Plaintiff's letter and indicated that a further response would be forthcoming. (Id.) On June 3, 2010, Defendant Chase responded to Plaintiff's letter, providing some of the requested information and indicating that other information was being withheld because it was either proprietary or unavailable. (Id. ¶ 33.)

On June 11, 2010, Defendant CRC executed a Notice of Trustee's Sale, indicating that the sale was scheduled for July 6, 2010 at 10:00 a.m. (Id. ¶ 34.) The sale was subsequently postponed until July 12, 2010 at 10:00 a.m. (Id.) The Notice of Trustee's Sale was accompanied by a Declaration Pursuant to California Civil Code Section 2923.54, indicating that the undersigned loan servicer has complied with the requirements under Section 2923.54. (Id. ¶ 35.)

Plaintiff filed suit, along with a motion for a temporary restraining order ("TRO"), in this Court on July 6, 2010. Plaintiff filed a motion for a preliminary injunction on July 7, 2010. The Court granted a TRO on July 8, 2010 and granted a preliminary injunction on July 27, 2010. Defendants filed the present motion to dismiss on July 30, 2010, and Plaintiff filed a response in opposition on September 24, 2010.

DISCUSSION

I. Legal Standard

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 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." Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949, 173 LED.2d 868 (2009) (citing Twombly, 550 U.S. at 556).

However, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). A court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949, 173 LED.2d 868 (2009). In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 LED.2d 723 (1983).

II. Analysis

A. Defendant JPMorgan's Assumption of Liability

As an initial matter, Defendants argue that Plaintiff's claims based on the alleged wrongdoings of WaMu fail as asserted against JPMorgan. Defendants argue that the Purchase and Assumption Agreement ("P & A Agreement") entered into with the Federal Deposit Insurance Corporation ("FDIC") establishes that JPMorgan expressly did not assume WaMu's liabilities relating to borrower claims. See Memorandum of Points and Authorities in Support of Motion to Dismiss Complaint ("Def.'s Mot.") at 3-4.

Under the Federal Deposit Insurance Act, 12 U.S.C. §§ 1811-1832(d), the FDIC may accept appointment as a receiver for any closed insured depository institution. 12 U.S.C. § 1821(c). As a receiver, "the FDIC . . . 'steps into the shoes' of the failed [financial institution]" and operates as its successor. O'Melveny & Myers v. F.D.I.C., 512 U.S. 79, 86 (1994); see also 12 U.S.C. § 1821(d)(2)(A)(i), (B)(i) (providing that when it becomes a receiver, the FDIC succeeds to "all rights, titles, powers, and privileges of the insured depository institution" and may "take over the assets of and operate the insured depository institution"). The FDIC then has "broad powers to allocate assets and liabilities," such as through a P & A Agreement. West Park Assocs. v. Butterfield Sav. & Loan Ass'n, 60 F.3d 1452, 1459 (9th Cir. 1995). Absent an express transfer of liability, no liability is transferred from a failed bank to ...


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