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Title: Gustavo Valdez v. Jpmorgan Chase Bank

March 20, 2012

TITLE: GUSTAVO VALDEZ
v.
JPMORGAN CHASE BANK, N.A.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

Before the Court is Defendant JPMorgan Chase Bank, N.A.'s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). ("Mot.") (Dkt. 13). The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. The Court has considered the moving, opposing, and replying papers, and hereby GRANTS in part and DENIES in part Defendant's Motion to Dismiss.

I. BACKGROUND

The facts alleged by Gustavo Valdez ("Plaintiff") are as follows:

In January 2006, Plaintiff obtained a mortgage loan from Washington Mutual Bank, FA ("WaMu") in the amount of $228,750 secured by a Deed of Trust encumbering Plaintiff's home in San Bernardino, CA. First Amended Complaint ("FAC") (Dkt. 11) ¶¶ 12-13. At that same time, Plaintiff obtained a Home Equity Line of Credit from WaMu in the amount of $45,750 secured by a second Deed of Trust encumbering Plaintiff's home. Request for Judicial Notice ("RJN") (Dkt. 14) Ex. 2.*fn1

Much of Plaintiff's FAC revolves around actions allegedly taken by WaMu during the origination of these loans -- notably, allegations that WaMu did not provide proper disclosures, engaged in predatory lending, falsified Plaintiff's income and assets, and did not provide forms in Plaintiff's native Spanish

See, e.g., FAC ¶¶ 15-19, 34-60. As will be discussed later, Plaintiff cannot maintain an action against JPMorgan Chase Bank, N.A. ("Defendant") for claims arising out of WaMu's lending practices, and therefore a detailed discussion of the facts supporting these claims is unwarranted. The Court instead discusses only those facts relevant to actionable claims against Defendant.

On September 25, 2008, WaMu entered receivership under the direction of the FDIC in the largest bank failure in United States history. On that same day, Defendant entered into a Purchase and Assumption Agreement (the "Purchase Agreement") with the FDIC whereby certain assets and liabilities were transferred from WaMu to Defendant. Per Section 2.5 of the Purchase Agreement, Defendant specifically disclaimed the assumption of any borrower claims against WaMu relating to WaMu's lending practices. RJN Ex. 7.

In late 2008, Plaintiff fell behind on his mortgage payments and a Notice of Default was recorded against Plaintiff on February 4, 2009. RJN Ex. 3. Plaintiff claims that prior to the recordation of this Notice of Default, Defendant made no effort to contact him regarding foreclosure alternatives. FAC ¶ 23. After receiving the Notice of Default, Plaintiff applied for a loan modification with Defendant under the Making Home Affordable Modification Program ("HAMP") in August 2009.

In August 2009, Defendant sent Plaintiff a document titled "SPECIAL FORBEARANCE AGREEMENT" ("SFA"). FAC ¶ 86. Plaintiff alleges that under the terms of the SFA, "if Plaintiff agreed to a temporary payment plan and made all payments on the terms set forth by Defendants, Defendants would reevaluate Plaintiff's Loan in order to offer Plaintiff a permanent modification." FAC ¶ 87. Plaintiff signed and returned the SFA to Defendant and made all payments required under the SFA. FAC ¶ 88.

In February 2010, Plaintiff avers that he received a letter from Defendant (the "February 2010 Letter"). FAC ¶ 89. In Plaintiff's words, the letter stated that "his Loan was scheduled to be adjusted beginning March 1, 2010 with a reduced payment of $1,036.04 and an interest rate of *fn2 Id. Plaintiff claims that because he had made all his payments under the SFA, thereby obligating Defendant to reevaluate his loan, the February 2010 Letter led him to believe that Defendant had reevaluated his loan and was offering him a permanent loan modification. FAC ¶ 90.

Plaintiff made timely payments in the amount specified by the February 2010 Letter for the periods of March 2010 through July 2010. FAC ¶ 91. However, on June 28, 2010, Defendant returned Plaintiff's July 2010 payment, stating that Defendant was "no longer going to accept Plaintiff's payment as it did not fully reinstate Plaintiff's loan." FAC ¶ 92. Plaintiff claims that after this payment was returned, Defendant refused to accept any further payments made under the terms of the February 2010 Letter. FAC ¶¶ 97, 117.

On March 15, 2011, Plaintiff sent Defendant a qualified written request ("QWR") in accordance with the provisions of the Real Estate Settlement Procedures Act ("RESPA"). FAC ¶ 105. Defendant allegedly gave an incomplete response to Plaintiff's QWR on April 7, 2011, failing "to provide Plaintiff of proper validation of documentation, Plaintiff's loan application and all [Truth In Lending Act] disclosures." Id.

Several Notices of Trustee's Sale have been recorded against Plaintiff's home; the most recent one provided to the Court was recorded on January 31, 2011, with a sale scheduled for February 22, 2011. RJN Ex. 6. The pleadings do not reflect that a sale of Plaintiff's home has yet occurred.

Based on this conduct, Plaintiff brings twelve causes of action against Defendant: (1) fraud in the origination of loan; (2) violation of Civil Code Section 2932.5; (3) violation of Civil Code Section 2923.5; (4) breach of contract; (5) violation of RESPA; (6) breach of the implied covenant of good faith and fair dealing; (7) violation of the Truth In Lending Act ("TILA"); (8) rescission; (9) predatory lending in violation of Business & Professions Code Section 17200; (10) unfair and deceptive business act practices in violation of ...


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