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Cecilia Argueta, An Individual v. J.P. Morgan Chase

June 30, 2011

CECILIA ARGUETA, AN INDIVIDUAL, PLAINTIFF,
v.
J.P. MORGAN CHASE, DBA WASHINGTON MUTUAL F.S.B., QUALITY LOAN SERVICE CORPORATION,
FEDERAL HOME LOAN MORTGAGE CORPORATION, AND DOES 1-20, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION TO DISMISS

Plaintiff Cecilia Argueta brought this action against defendants J.P. Morgan Chase ("Chase") d/b/a Washington Mutual F.S.B. ("Washington Mutual" or "WAMU"), Quality Loan Service Corporation, and Federal Home Loan Mortgage Corporation ("FHLMC" or "Freddie Mac"), arising from defendants' allegedly wrongful conduct related to a residential loan modification application and a Notice of Default and Election to Sell Under Deed of Trust. Chase and FHLMC have filed a joint motion to dismiss the First Amended Complaint ("FAC"), (Docket No. 12), in its entirety for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket No. 13.)

I. Factual and Procedural Background In January of 2007, plaintiff refinanced an existing loan and signed a promissory note with Washington Mutual for a $320,000.00 loan, which was secured by a deed of trust for plaintiff's primary residence. (FAC ¶¶ 1, 4, 12, 14; Req. for Judicial Notice in Supp. of Defs.' Mot. to Dismiss ("Defs.' Req. for Judicial Notice") Ex. A (recorded deed of trust) (Docket No. 13-2).)

The FAC alleges that "[t]he promissory note and the deed of trust was subsequently transferred to Freddie Mac, although WaMu, now Chase, retained servicing rights." (FAC ¶13.)

A Notice of Default and Election to Sell Under Deed of Trust reflecting a default in the amount of $8,007.99 was recorded on April 24, 2009, in the Recorder's Office of San Joaquin County. (Defs.' Req. For Judicial Notice Ex. B.) On August 26, 2010, a Notice of Trustee Sale was recorded. (Id. Ex. D.) The FAC details a series of interactions between plaintiff and Chase from September of 2010 to January of 2011 in which plaintiff applied for a loan modification, the trustee sale date was postponed, and ultimately Chase did not give plaintiff a loan modification. (See, e.g., FAC ¶¶ 15-55.)

On or about January 10, 2011, Chase wrote to plaintiff that "she was denied for the Home Affordable Modification Program ("HAMP") because Chase was 'unable to verify that you live in the Property as your primary residence.'" (Id. ¶ 49.) The FAC alleges that "[u]p to that point, Chase never requested information from Plaintiff verifying that she lives in the Property as her primary residence," which she does. (Id. ¶¶ 49, 66.)

On January 19, 2011, Chase refused to discuss plaintiff's account because the "account [was] in litigation." (Id. ¶ 50.) Approximately a day later, "Plaintiff received a letter from Chase confirming that she was denied for a HAMP modification, but also solicited Plaintiff to further contact Chase for other 'workout' options." (Id. ¶ 51.) The FAC alleges that "[o]ther than a HAMP modification, Plaintiff was never denied for any other modification review, such as an internal review." (Id. ¶ 52.)

Plaintiff alleges that even if plaintiff qualified for a modification under a program other than HAMP, "Chase has refused to actually review Plaintiff [sic] such a program since Chase has a policy to not review any borrower for any modification program after that borrower has been denied for a modification for any reason." (Id. ¶ 53.) Plaintiff alleges that, because of this policy, Chase has "refused to allow Plaintiff to submit additional information to Chase in order to confirm that the Property was Plaintiff's primary residence" and has "refused to consider Plaintiff for any other modification programs that Chase participates in, including an internal modification program." (Id. ¶¶ 54-55.)

On January 26, 2011, plaintiff filed a complaint in state court. On February 16, 2011, Chase and FHLMC removed the action to this court. (Docket No. 1.) The court dismissed all but the claim for violation of California Civil Code section 2923.5 in plaintiff's original Complaint and afforded plaintiff leave to amend. (Apr. 11, 2011, Order at 15:13-17 (Docket No. 11).) Plaintiff's FAC abandons the stand-alone claim for violation of section 2923.5 and asserts claims for "Promissory Estoppel/Breach of Contract," breach of covenant of good faith and fair dealing, negligence, and violation of California's Unfair Competition Law*fn1 ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210.

II. Discussion

To survive a motion to dismiss, a plaintiff must plead "only 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). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S. Ct. 1937, 1949 (2009), and "[w]here 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. (quoting Twombly, 550 U.S. at 557). In deciding whether a plaintiff has stated a claim, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972).

In general, a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).

Defendants request that the court judicially notice the applicable recorded documents. (See Defs.' Request for Judicial Notice Exs. A-D.) The court will take judicial notice of these documents, since they are matters of public record whose accuracy cannot be questioned. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

A. "Promissory Estoppel/Breach of Contract"

The elements of a cause of action for breach of contract are (1) the existence of the contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) damages. First Commercial Mortg. Co. ...


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