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Norma Lopez v. Jp Morgan Chase Bank

July 18, 2012




Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants JP Morgan Chase Bank, California Reconveyance Company and Mortgage Electronic RegistrationSystem, Inc. ("Defendants") filed a motion to dismiss Plaintiff Norma Lopez's ten causes of action. For the reasons discussed below, the motion shall be granted.


This is a mortgage and foreclosure case concerning Plaintiff's residence in Modesto California. Compl. ¶ 1. On February 8, 2007, Plaintiff executed a Deed of Trust for $262,500, naming Defendant SCME Mortgage Bankers, Inc. ("SCME") as Lender, Stewart Title of San Diego as Trustee, and Defendant Mortgage Electronic Registration System, Inc. ("MERS") as Beneficiary. See RJN Ex. A. On May 27, 2009 MERS assigned the Deed of Trust to Defendant JP Morgan Chase Bank ("JP Morgan"). See RJN Ex. B. Defendant California Reconveyance Company ("CRC") was substituted as Trustee on the same day.See RJN Ex. C.On May 28, 2009 a Notice of Default was recorded indicating Plaintiff defaulted on her monthly loan obligations. See RJN Ex. D. A Notice of Trustee's sale was recorded on September 1, 2009 and January 11, 2011. See RJN Ex. E. The property was sold at a public auction on February 22, 2011, and a Trustee's Deed Upon Sale was recorded on February 25, 2011. See RJN Ex. G.

Plaintiff filed the instant lawsuit against Defendants alleging claims for (1) fraudulent misrepresentation; (2) fraudulent inducement; (3) violation of the Fair Debt Collection Practices Act; (4) predatory lending practices; (5) breach of trust contract; (6) RICO violations; (7) quiet title; (8) declaratory relief; (9) injunctive relief; and (10) cease and desist. Defendants JP Morgan, MERS and CRC, pursuant to Federal Rule of Civil Procedure 12(b)(6), filed a motion to dismiss all of Plaintiff's causes of action. Plaintiff did not file a response.


Under Federal Rule of Civil Procedure 12(b)(6), a claim must be dismissed for a"failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all of the complaint's material allegations of fact are taken as true, and the facts are construed in the light most favorable to the non-moving party. Marceau v. Balckfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The court must also assume that general allegations embrace the necessary, specific facts to support the claim. Smith v. Pac. Prop.& Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004). However, the court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Although they may provide the framework of a complaint, legal conclusions are not accepted as true and "[t]hreadbare recitals of elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). See also Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). As the Supreme Court has recently explained:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949.

The plausibility standard is not akin to a 'probability requirement,' but it asks more than a sheer possibility that a defendant has acted unlawfully. Where 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.'. . . Determining whether a complaint states a plausible claim for relief will . . . be a context specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not shown -- that the pleader is entitled to relief.

Iqbal, 129 S.Ct. at 1949-50. "In sum, for a complaint to survive a motion to dismiss, the nonconclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).


A. Fraud

The Complaint alleges two causes of action for fraud. Both claims are subject to, and fail to meet, Federal Rule of Civil Procedure 9(b).

As to the First Cause of Action, entitled Fraudulent Misrepresentation, Plaintiff alleges that Defendants misrepresented their right to payment, and their right to conduct a non-judicial foreclosure sale. Compl. ¶ 18. Plaintiff further contends that Defendants actually intended to "either force Plaintiffs [sic] to pay large sums of money to either all of the Defendants or an unknown Defendant...or [for Plaintiff] to abandon the property to Defendants by not resisting the proposed foreclosure sale." Id. ¶ 20. Finally, Plaintiff alleges that Defendants do not have any right to the property, and have not been lawfully authorized to foreclose against Plaintiffs. Id.

The Complaint's Second Cause of Action, entitled Fraudulent Inducement, contains numerous vague allegations against Defendants. Plaintiff alleges that Defendants, working together, failed to verify Plaintiff's ability to repay certain loans and "instead manufactured facts and figures and documents (cooking the books) to justify [Plaintiff's] reasonable ability to repay the loan." (Compl. ¶ 22). The claim also includes allegations of a loss of good standing, conversion, and unconscionability. Id. ¶¶ 23, 26-27

As to both claims, Defendants argue that the statute of limitations bars the allegations relating to the origination of the subject loan. See Doc. No. 8, p10. Defendants further argue that Plaintiff fails to plead her claim with particularity, as required by Federal Rule of Civil Procedure 9(b). Id. Finally, Defendants contend that Plaintiff's allegations are insufficient to satisfy the substantive elements of a fraud claim. Id. at 11.

To establish a prima facie case for fraud, a plaintiff must show (1) a misrepresentation;

(2) knowledge of the falsity; (3) the intent to defraud; (4) justifiable reliance; and (5) resulting damage. Phillipson & Simon v. Gulsvig, 154 Cal. App. 4th 347, 363 (2007). Federal Rule of Civil Procedure 9(b) requires plaintiffs to state with particularity the circumstances constituting fraud.Fed. R. Civ. Proc. 9(b). Furthermore, "Rule 9(b) does not allow a complaint to merely lump multiple defendants together but requires plaintiffs to differentiate their allegations when suing more than one defendant and inform each defendant separately of the allegations surrounding his alleged participation in the fraud." United States v. Corinthian Colleges, 655 F.3d 984, 997-98 (9th Cir. 2011).

The complaint includes broad statements of several fraud elements, including misrepresentation, knowledge of falsity and the intent to defraud, but fails to allege any justifiable reliance on Defendant's actions or resulting damage. Even assuming Plaintiff stated the requisite elements, the claim lacks the necessary particularity. The allegations do not contain any dates, locations or actual false statements made by Defendants. Plaintiff also continuously refers to "Defendants acting in unison and in association with," but fails to set forth each individual Defendant's alleged participation in the fraud.

Accordingly, the First and Second Causes of Action are dismissed without prejudice.

B. Violation of the Fair Debt Collection Practices Act

As to the Third Cause of Action, Plaintiff alleges that Defendants intentionally violated the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. § 1692 and the Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"), Cal. Vic. Code § 1788. Plaintiff alleges that "the Defendants surprised them by allegedly foreclosing on the home during same time [sic] the process of loan modification or settlement with [Plaintiff] was taking place." Compl. ¶ 28. Defendants contend that foreclosure-related conduct is not ...

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