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Chavez v. Washington Mutual Bank

United States District Court, Ninth Circuit

June 5, 2013

RAQUEL CHAVEZ, an individual, Plaintiff,


LUCY H. KOH, District Judge.

Plaintiff Raquel Chavez ("Chavez") brings this action based on a loan obtained in 2007 and on the subsequent foreclosure proceedings instituted against her. Defendants Washington Mutual Bank ("Washington Mutual"), Wells Fargo Bank, N.A. ("Wells Fargo"), Mortgage Electronic Registration Systems, Inc. ("MERS"), and JPMorgan Chase Bank, N.A. ("JPMorgan") (collectively "Defendants") move to dismiss Chavez's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). See Defs.' Mot. to Dismiss ("Motion"), ECF No. 23. Chavez opposes this motion. See Pl.'s Opp. To Defs.' Mot. to Dismiss ("Opp'n"), ECF No. 26. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and hereby VACATES the hearing and case management conference scheduled for June 6, 2013. Having considered the submissions of the parties and the relevant law, and for good cause shown, the Court hereby GRANTS Defendants' Motion to Dismiss with prejudice.


A. Facts[1]

On or about December 19, 2007, Chavez purchased her home at 12330 1st Fork Road, Los Gatos, California (the "Subject Property"), with a $950, 000.00 loan from Washington Mutual. See Compl. ¶ 2; see also RJN, Ex. 1. In connection with this loan, Chavez executed a promissory note and a deed of trust, which encumbered the Subject Property. See Compl. ¶ 2; see also RJN, Ex. 1. MERS was listed as the beneficiary of the deed of trust. See Compl. ¶ 28(f). The deed of trust was recorded in the Santa Cruz County Recorder's Office on December 31, 2007. See RJN, Ex. 1. On September 25, 2008, JPMorgan allegedly purchased certain assets and liabilities of Washington Mutual, including Chavez's loan, and thus became the "purported Master Servicer" of the mortgage. See Compl. ¶9; RJN, Ex. 6.[2]

Chavez alleges that, prior to the time that JPMorgan purchased Chavez's loan, Washington Mutual began a series of transactions in which her promissory note was sold to several parties and was eventually purchased by a trust represented by Wells Fargo as trustee.[3] Compl. ¶ 21. Chavez claims that, during each of these sales, the promissory note was not transferred properly. Compl. ¶ 4. Specifically, the transfer was improper because Washington Mutual failed to transfer the physical note. Compl. ¶ 23. In addition, Chavez alleges that the transfer was improper because the interest in the note was separated from the deed of trust when it was sold, thus invalidating any security interest Defendants may have had in the note. Compl. ¶ 28(g). Because of these alleged transactions Chavez claims that none of the Defendants possessed the legal right to foreclose on her home. Compl. ¶ 30.

On or about February 17, 2009, Chavez received a letter notifying her that she was in arrears in the amount of $33, 845.63. See RJN, Ex. 2. On February 18, 2009, this notice was recorded in the Santa Cruz County Recorder's Office. See id. Chavez failed to cure the default, and a Notice of Trustee's Sale was recorded on May 25, 2009. See RJN, Ex. 4. The Subject Property was sold at a trustee's sale on June 11, 2009. See RJN, Ex. 5.

B. Prior Proceeding

On August 5, 2009, Chavez, with her husband, filed a complaint in the Northern District of California alleging ten causes of action against Defendant Washington Mutual. See RJN, Ex. 7 (" Chavez I "). Specifically, Chavez alleged violations of: (1) the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.; (2) the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2605, et seq.; and (3) related state law claims, including fraud and wrongful foreclosure. See RJN, Ex. 5. Defendant moved to dismiss. See RJN, Ex. 9. On January 7, 2010, the Honorable Jeremy Fogel granted the motion to dismiss for failure to state a claim with leave to amend. See id. Chavez then filed a second amended complaint which did not raise any federal claims. See RJN, Ex. 8. Given that all of Chavez's remaining claims arose under state law, Judge Fogel declined to exercise his supplemental jurisdiction and dismissed the complaint without prejudice. See Chavez v. Washington Mutual, Bank, F.A., et al., No. 09-3583 (N.D. Cal. April 7, 2010) (Order Granting Mot. to Dismiss Without Prejudice).[4]

Chavez filed another complaint in Santa Cruz Superior Court on May 7, 2010, bringing nine claims against Defendants JPMorgan and Washington Mutual in connection with the same loan. See RJN, Ex. 10 (" Chavez II "). In addition to other state law claims, Chavez again alleged wrongful foreclosure and fraud. Chavez's claim for wrongful foreclosure was based on a theory that JPMorgan was not in possession of the promissory note to Chavez's loan, and therefore was not entitled to commence foreclosure proceedings. Chavez's claim for fraud was based, among other things, on allegations that JPMorgan misrepresented that it had the right to collect payments from her. See id. Defendants filed a demurrer as to each of Chavez's causes of action, which the Superior Court sustained without leave to amend. See RJN, Ex. 11. The Superior Court also dismissed the action against JP Morgan with prejudice, id., and entered a final judgment against Chavez on September 13, 2010. See RJN, Ex. 12. After the Superior Court entered final judgment, Chavez sought to voluntarily dismiss the action. See RJN, Ex. 13.

C. Instant Proceeding

On July 6, 2012, Chavez filed another complaint in the Santa Cruz County Superior Court, alleging six causes of action against Defendants Washington Mutual, JPMorgan, Wells Fargo, and MERS. See ECF No. 1. Chavez once again alleges claims under TILA and RESPA, as well as state law claims for wrongful foreclosure, fraud, declaratory relief, and quiet title. See id.

On August 21, 2012, Defendants removed the case on the basis of federal question jurisdiction. See ECF No. 1. The case was assigned to the undersigned judge on September 26, 2012. ECF No. 22. Defendants then brought the Motion to Dismiss now before the Court. See ECF No. 23. Chavez filed a timely opposition, see ECF No. 26, to which ...

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