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Tollette v. JPMorgan Chase Bank, N.A.

United States District Court, C.D. California

April 17, 2014

JEFFREY TOLLETTE, an individual, Plaintiff,


DEAN D. PREGERSON, District Judge.

Presently before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint (the "Motion"). For the reasons stated in this order, the Motion is GRANTED IN PART.

I. Background

Plaintiff Jeffrey Tollette ("Plaintiff") brings this action against Defendants JP Morgan Chase, N.A. and U.S. Bank, N.A.[1] ("Defendants"), alleging various causes of action relating to the foreclosure of the single family residence located at 926 W. Hillcrest Blvd., Monrovia, CA 91016 (the "Property"). (FAC ¶ 6.)

On November 15, 2006, Plaintiff executed a promissory note in the amount of $855, 000 (the "Loan") on the Property. ( Id. ¶ 12.) The original lender of the note was Fieldstone. (Id.) However, at some point Fieldstone transferred its assets, including the Loan, to EMC, a subsidiary of Bear Stearns. ( Id. ¶ 13.) Plaintiff alleges that shortly after EMC obtained the Loan, it sold or transferred the Loan through a process known as "QSPE Bank Securitization" or another similar process that separated the Loan into multiple parts. ( Id. ¶ 14.)

On March 16, 2008, Defendant Chase acquired all of Bear Stearns' loans. ( Id. ¶ 17.) Plaintiff alleges that Chase did not acquire the rights to the Loan, however, because the Loan "was never endorsed by the correct party providing such rights, including foreclosure rights." ( Id. ¶ 16.) Plaintiff alleges that only a partial interest in the Loan was actually negotiated and sold to the trust pool, not the entire mortgage. ( Id. ¶ 19.)

On or about February 14, 2008, "Defendant"[2] recorded a Notice of Default against the Property. ( Id. ¶ 20.) Plaintiff alleges that Chase never had any rights to foreclose on the Property because under California Commercial Code § 3203(d), if a transferor purports to transfer less than the entire instrument, then negotiation of the instrument does not occur. ( Id. ¶ 22.)

Plaintiff alleges that he attempted on several occasions to obtain proof from Chase that it had standing to foreclose on the Property, but Plaintiff never received any substantive response. ( Id. ¶ 23.) Plaintiff eventually sought rescission of the Loan based on the fact that "Chase was unable to validate its standing as the holder in due course of the Note." ( Id. ¶ 26.) Chase purportedly sold the Property to U.S. Bank without a valid security interest in the Property on September 9, 2010. ( Id. ¶ 27.) Plaintiff claims that this sale was therefore invalid. (Id.)

The Court previously dismissed Plaintiff's original complaint without prejudice. (Docket No. 27.) Plaintiff has now filed the FAC, which alleges four causes of action: (1) wrongful foreclosure; (2) negligence against Chase; (3) negligence against U.S. Bank; and (4) fraud. ( Id. ¶¶ 28-47.) Defendants have moved to dismiss Plaintiff's complaint for failure to state a claim on which relief can be granted pursuant to Rule 12(b)(6). (Docket No. 33.)

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "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) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes , 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations, " it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal , 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions, " a "formulaic recitation of the elements, " or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly , 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 556 U.S. at 679.

III. Discussion[3]

A. Wrongful ...

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