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Anthony Lemon and Laurielle Lemon v. Bear Stearns Residential Mortgage Corp

June 25, 2012


The opinion of the court was delivered by: Hon. Otis D. Wright, II United States District Judge




Before the Court is Defendants Bear Stearns Residential Mortgage Corporation and JPMorgan Chase Bank, N.A.'s Motion to Dismiss Plaintiffs Anthony and Laurielle Lemon's Second Amended Complaint ("SAC"). (ECF No. 41.) Having carefully considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. The Court finds that Plaintiffs fail to state a claim under Federal Rule of Civil Procedure 12(b)(6), and therefore GRANTS Defendants' Motion to Dismiss and DISMISSES this action WITH PREJUDICE.


In November 2006, Plaintiff Laurielle Lemon refinanced her home located at 38506 37th Street East, Palmdale, California 93550, with a mortgage loan extended by Bear Stearns at an adjustable rate of 9.7%. (SAC 6.)*fn1

In August 2007, Laurielle*fn2 wanted to obtain a fixed-rate mortgage, and so she negotiated with a Bear Stearns representative to do so. (SAC 6.) The Lemons explain that the selling points of the new loan were: a lower PITI payment from $3,443.81 to $2,463.49, a fixed-rate mortgage instead of an adjustable-rate mortgage, lower interest rate from 9.7% to 6.925%, and Bear Stearns promised to pay off a previous loan of $26,000. (SAC 6.)

On November 9, 2007, Laurielle signed a mortgage loan agreement (the "Note") with Bear Stearns, which listed an interest rate of 6.875% and monthly payments of $2,463.49. (Chase's Request for Judicial Notice ("RJN"),*fn3 Ex. A.)

Plaintiffs assert that the notary who supervised the signing told Laurielle that if she did not sign the Note, she would be responsible for over $20,000.00 in fees and costs. (SAC 7.) Laurielle's new loan payment under the Note was $3,114.40 (SAC 7), an amount slightly less than the $3,159.39 per month estimated by the Residential Loan Application she signed. (RJN, Ex. D.)

In May 2008, Laurielle began to fall behind on her loan payments, and so in September 2008, Laurielle began negotiations with Bear Stearns for a loan modification. (SAC 7--8.)

In March 2009, Bear Stearns gave Laurielle a repayment plan that began on April 5, 2009, for $3,214.05 a month for the next six months. (SAC 8.) The Lemons made these payments through March 2010, five months longer than the repayment plan required. (SAC 8.)

But, in November 2009, Laurielle received a statement from EMC Mortgage on behalf of Bear Stearns stating that the past due amount was $22,304.31. (SAC 8.) Then, in March 2010, EMC informed Laurielle that she was $35,000.00 delinquent in her mortgage payments. (SAC 9.)

On January 31, 2011, debt collector NDEx West, L.L.C. informed Laurielle that her property was being foreclosed upon. (RJN, Ex. C.) The disputed property was subsequently sold at a foreclosure sale on March 3, 2011. (RJN, Ex. C.)

On March 24, 2011, Plaintiffs filed a Complaint in Los Angeles County Superior Court against Defendants Bear Stearns, EMC Mortgage Corporation, and JP Morgan Chase. (ECF No. 1.) On April 28, 2011, EMC removed the action to federal court and subsequently moved to dismiss Plaintiffs' Complaint. (ECF Nos. 1, 6, 7.) Plaintiffs, however, filed an untimely opposition to EMC's motion, in which they failed to substantively address EMC's arguments. (ECF No. 17.) Consequently, on June 8, 2011, the Court granted EMC's motion to dismiss, giving Plaintiffs 30 days in which to amend their Complaint.

Plaintiffs, however, failed to meet this deadline. Nevertheless, upon Plaintiffs' request for leave, the Court permitted Plaintiffs' untimely First Amended Complaint ("FAC") to be filed and processed. In doing so, the Court cautioned Plaintiffs on July 13, 2011, that "[i]n the future, further leave of this nature w[ould] not be so readily granted." (ECF No. 20.)

On August 1, 2011, EMC filed a motion to dismiss Plaintiffs' FAC. (ECF No. 22.) This time, Plaintiffs failed to oppose EMC's motion at all. As a result, the Court dismissed all claims against EMC with prejudice. (ECF No. 26.)

On March 9, 2012, Defendants Bear Stearns and JP Morgan moved to dismiss Plaintiffs' FAC-these Defendants' first motion to dismiss in this action. (ECF No. 30.) While Plaintiffs filed a timely opposition on March 26, 2012, Plaintiffs did not substantively oppose Bear Stearns and JP Morgan's motion; instead, Plaintiffs sought leave to file a Second Amended Complaint. (ECF No. 35.) In response, the Court granted Bear Stearns and JP Morgan's motion, dismissing the sixth claim for violation of California Civil Code section 2923.5 with prejudice and the remaining claims without prejudice. (ECF No. 39.) The Court granted Plaintiffs 14 days to file their SAC.

On April 30, 2012, Plaintiffs timely filed a SAC. (ECF No. 40.) Defendants Bear Stearns and JP Morgan responded by filing the instant Motion to Dismiss. (ECF No. 41.) Plaintiffs filed an untimely Opposition to Defendants' Motion on May 30, 2012. (ECF 44.) The Court turns now to Defendants' Motion.


Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. Determining whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

When considering a Rule 12(b)(6) motion, a court is generally limited to the pleadings and must construe "[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]." Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of fact, and unreasonable inferences need not be blindly accepted as true by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a complaint should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts" supporting plaintiff's claim for relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999).

As a general rule, leave to amend a complaint that has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).


Plaintiffs' SAC alleges 18 claims against Defendants, styled as follows:

(1) invalidate/void trustee sale; (2) Federal Trade Commission Act violations; (3) breach of oral contract; (4) slander of title; (5) violation of debt validation; (6) intentional misrepresentation; (7) negligent misrepresentation; (8) violation of Unruh Civil Rights Act, Cal. Civ. Code § 51; (9) quiet title, Cal. Code Civ. Proc. § 760,010--764.080; (10) cancellation of instrument; (11) rescission in equity; (12) violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691; (13) violation of the Trust in Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. § 226 et seq.; (14) unconscionable contract and adhesion contract; (15) civil conspiracy to defraud; (16) ...

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