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Ophelia Diaz v. Bsi Financial Services

June 5, 2012

OPHELIA DIAZ
v.
BSI FINANCIAL SERVICES, INC. ET AL



The opinion of the court was delivered by: The Honorable Gary Allen Feess

LINKS: 22, 23, 25

CIVIL MINUTES - GENERAL

Present: The Honorable GARY ALLEN FEESS

Renee Fisher None N/A Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

None None

Proceedings: (In Chambers)

ORDER RE: MOTIONS TO DISMISS AND TO EXPUNGE LIS PENDENS

I.

INTRODUCTION & BACKGROUND

Plaintiff Ophelia Diaz brings this action against Defendants BSI Financial Services, Inc. d/b/a Servis One, Inc. ("BSI"), EMC Mortgage, LLC ("EMC"), JP Morgan Chase Bank, N.A. ("Chase"), Mortgage Electronic Registration Systems, Inc. ("MERS"), HomEq Servicing ("HomEq"), American Default Management, LLC ("ADM"), and Mariners Strategic Fund II, LLC ("Mariners Fund"), asserting one federal claim and various state law claims in connection with alleged irregularities in the servicing of her $684,000 mortgage loan and the non-judicial foreclosure sale of her Northridge, California home. (Docket No. 21 [Second Amend. Compl. ("SAC")].) Plaintiff's federal claim arises under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq. (See id. ¶¶ 76--98.) On April 2, 2012, the Court dismissed Plaintiff's TILA claim but permitted leave to amend. (Docket No. 20 [4/2/12 Order].) Defendants now move to dismiss the Second Amended Complaint ("SAC") and to expunge the lis pendens filed against the subject property. (Docket Nos. 22 [EMC/Chase/MERS Mem.], 23 [ADM/BSI/Mariners Fund Joinder], 25 [HomEq Mem.]; see Docket No. 19 [Notice of Pendency].) For the reasons discussed below, the Court DISMISSES Plaintiff's TILA claim with prejudice and REMANDS this action to state court, but DENIES the motion to expunge the lis pendens.

Plaintiff secured the subject loan from Equifirst Corporation on July 27, 2007, and executed a Promissory Note and a Deed of Trust in favor of Equifirst. The Deed of Trust named MERS as the beneficiary. (SAC ¶¶ 22--23, Exs. A [Note], B [Deed of Trust].) Shortly thereafter, HomEq began servicing the loan, and, in November of 2008, Plaintiff experienced financial hardship and sought a loan modification. (SAC ¶¶ 24--25.) Plaintiff alleges that she made all required payments under a three-month forbearance agreement and then accepted a permanent loan modification, which would have added her outstanding payments to the loan principal and lowered the interest rate. (Id. ¶ 26, Ex. C.) However, around the same time, the servicing of Plaintiff's loan was transferred to EMC, and EMC refused to honor the modification, or to honor another modification subsequently negotiated directly with EMC. (Id. ¶¶ 27--30.)

On August 25, 2010, Plaintiff received a notice that servicing of her loan had been transferred to BSI. However, she continued to receive correspondence from EMC, and was led to believe that she was still pursuing a modification with EMC. (Id. ¶¶ 31, 86, 88.) Also in August of 2010, she began receiving correspondence from Chase, suggesting for the first time to Plaintiff that this entity had a purported interest in her loan. (Id. ¶¶ 32, 87.) Plaintiff alleges that, "[e]ven after beginning to receive the correspondence[] from Chase and BSI," she "was still receiving communications from EMC and continued sending documents to EMC in order to obtain a modification and avoid foreclosure on her Home." (Id. ¶ 88.) According to Defendants' Corporate Disclosure Statement filed with this Court, Chase and EMC are both wholly owned subsidiaries of JPMorgan Chase & Co. (See Docket No. 9.)

On September 8, 2010, MERS, acting as nominee for JP Morgan Acquisition Corporation based in Flint, Michigan, assigned the Note and Deed of Trust to JP Morgan Acquisition Corporation based in San Diego, California. (SAC ¶ 35, Ex. D.) On the same day, the San Diego-based JP Morgan Chase assigned the Note and Deed of Trust to Mariners Fund. (Id.¶ 37, Ex. E.) These assignments are the subject of Plaintiff's TILA claim. (See id. ¶¶ 17, 35--37, 58, 78.) She alleges that they were recorded on October 1, 2010, but that she was never notified of them by any entity. (Id. ¶¶ 78--84.) On October 1, 2010, ADM also recorded a Notice of Default and Election to Sell against the property, indicating that Plaintiff's payments were $127,815.43 in arrears, and directing her to contact Mariners Fund to discuss repayment. (Id. ¶ 41, Ex. F.) Plaintiff alleges that, "[b]ased on the lack of notice as to the assignments of the debt," she "was utterly confused and flustered as to which party had authorization to negotiate on behalf of the debt." (Id. ¶ 85.) On November 29, 2010, she again faxed requested documents to EMC, "in an effort to obtain the long-promised modification." (Id ¶ 89.) However, EMC again informed her that it did not receive any of the documents. (Id.)

A Notice of Trustee's Sale was recorded against the property on January 10, 2011, and the property was sold in a non-judicial foreclosure sale on June 1, 2011. (Id. ¶¶ 44--45, Ex. G.) Plaintiff states that she did not discover that her loan had been sold to Chase and assigned to Mariners Fund until a later unspecified date, and that, as a result of the non-notification, she "is unable to determine whether she sent her monthly mortgage payment to the right party" for an "undetermined amount of time" and may have overpaid interest due on her loan; she "paid an undetermined amount of money in reliance on promised loan modifications while forgoing other options to resolve her financial hardship," and lost several months negotiating a loan modification with EMC when she should have been negotiating with Mariners Fund; she "suffered the loss of her Home and damage to her credit" that would have been avoided had she negotiated with the correct entity; and she "has expended significant funds to cover the costs of attorneys' fees and other related costs in order to remedy the unlawful acts of Defendants." (Id. ¶¶ 90--96; see also id. ¶ 48.) Plaintiff states that, ...


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