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Dias v. Chase

United States District Court, N.D. California, San Jose Division

June 25, 2014

LEX DIAS, an individual, and SHERRY DIAS, an individual, Plaintiffs,
JP MORGAN CHASE, N.A., a national association; U.S. BANK, N.A., a national association, and Does 1-50, inclusive, Defendants.


EDWARD J. DAVILA, District Judge.

Presently before the Court is JPMorgan Chase Bank, N.A. ("Chase") and U.S. Bank National Association's ("USBank") (collectively, "Defendants") Motion to Dismiss Lex Dias and Sherry Dias's (collectively, "Plaintiffs") Complaint. The Court found this matter suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Having fully reviewed the parties' briefings, and for the following reasons, the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion.


The following facts are taken from Plaintiffs' Complaint and regarded as true for the purposes of the Motion.

Plaintiffs are homeowners who bring this action as a result of Defendants' allegedly unlawful conduct concerning a residential mortgage loan for the property located at 8411 Wren Avenue, Gilroy, Santa Clara County, California 95020 ("the Property"). Docket No. 1, Compl. ¶ 2. Plaintiffs are individuals who, at all relevant times, live in and own the Property. Id . ¶ 3. Chase is a diversified financial marketing and/or corporation engaged primarily in residential mortgage banking and/or related business and at all relevant times, was the servicer of Plaintiffs' loan. Id . ¶ 4. USBank is a diversified financial marketing and/or corporation engaged primarily in residential mortgage banking and/or related business, the successor in interest to Plaintiffs' loan, and the current beneficiary under the Note. Id . ¶ 5.

Plaintiffs secured financing for the Property by executing a Promissory Note and Deed of Trust in favor of Washington Mutual, F.A. ("WaMu") on October 19, 2004. Chase purchased WaMu in 2008 and assumed WaMu's assets, including Plaintiffs' Note and Deed of Trust. The Deed of Trust contains a provision for attorneys' fees in enforcing the terms of the Deed of Trust in connection with borrower's default. Id . ¶ 9. Thereafter, the Note and Deed of Trust were subsequently transferred to U.S. Bank, N.A., while Chase remained the loan servicer. Id . ¶ 10.

Between October 2004 and January 2012, Plaintiffs fully performed under the contract by making a timely mortgage payment each month. Id . ¶ 11. In February of 2012, Plaintiffs were current in their loan payments when they went to their local Chase branch, specifically the Gilroy, CA branch, to request a loan modification. Id . ¶ 12. At that time, Plaintiffs were able to make their mortgage payment but were seeking a loan modification in order to obtain a more comfortable monthly mortgage payment. Id . At that time, Plaintiffs spoke with one of the Chase representatives regarding the possibility of a loan modification and were advised that they could not grant one because Plaintiffs were current on their payments. Id . Plaintiffs were also told that in order to get a loan modification, they would have to stop making payments and submit an application. Id.

Between July 2012 and November 2012, Plaintiffs submitted complete loan modification applications with all requested documents, and each time, Chase rejected their applications because Chase claimed that it needed additional information. Id . ¶ 13. Plaintiffs were puzzled as to why, although their applications were complete, they were continuously rejected, but continued applying in reliance on their customer service representatives' representations. Id.

Plaintiffs were shocked when, on November 15, 2012, they received a Notice of Default and a Declaration of Compliance stating that Chase had tried to contact Plaintiffs, but were unable to reach them. Id . ¶ 14. This seemed to fly in the face of the circumstances as Plaintiffs knew them to be because, while Plaintiffs themselves had frequently contacted Chase for more than a year by this time, they had not received any contacts from Chase. Id.

Having received the Notice of Default, Plaintiffs were distressed by the possibility of losing their home, so they immediately called Chase to inquire about the Notice. Id . ¶ 15. At that time, Chase's representative, Pamela Bennett, assured Plaintiffs that there was no active sale date for Plaintiffs' property and advised them to continue waiting for approval of their loan modification. Id.

In December 2012, Plaintiffs were relieved when they received a letter from Chase confirming that there were no issues with Plaintiffs' loan modification. Id . ¶ 16. Chase approved Plaintiffs for a loan modification and instructed them to make three trial payments from February 2013 through April 2013. Id.

After Plaintiffs promptly and fully made each trial payment of $2, 438.79, Chase sent Plaintiffs their final loan modification. Id . ¶ 17. In May 2013, Plaintiffs submitted their first payment under their loan modification. Id . ¶ 18. However, it was refused by Chase. Id . When Plaintiffs went to their local Chase branch to ask why their payment was refused, the representative refused to tell them why and also refused Plaintiffs' proffered payment. Id.

Plaintiffs again attempted to make a mortgage payment at the Gilroy branch in person in June 2013. Id . ¶ 19. However, the Chase representative again said that Chase could not accept the payment because Plaintiffs' house was going into foreclosure. Id . Plaintiffs requested additional details on how they could save their home, but the Chase representatives refused to provide Plaintiffs any information and, instead, instructed Plaintiffs to contact Chase's customer service center. Id.

Plaintiffs then contacted Chase customer service. Id . ¶ 20. The Chase representative that they spoke to told them to reapply for a loan modification. Id . Plaintiffs did not understand why they would need to start over and submit a new application. Id . However, the Chase representative told Plaintiffs that reapplying was the only way to save their home. Id . Thus, Plaintiffs submitted another loan modification application in early June 2013. Id.

Chase recorded a Notice of Trustee's Sale ("NOTS") on June 6, 2013. Id . ¶ 21. From June 2013 until September 2013, Plaintiffs frequently contacted Chase to follow-up on their application, but no Chase representative was ever able to give them any additional information regarding either their application or their trustee sale date. Id . ¶ 22.

In August 2013, Chase told Plaintiffs to re-submit their documents, which Plaintiffs did. Id . ¶ 23. However, Chase once again denied Plaintiffs' application, even though they had done everything that Chase asked in the application. Id.

Plaintiffs made a final attempt to apply for a loan modification in September. Id . ¶ 24. However, before completing their review of Plaintiffs' application, Chase recorded a Notice of Trustee's Sale for October 23, 2013. Id.


Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim in the complaint with sufficient specificity to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim is "proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Shroyer v. New Cingular Wireless Servs., Inc. , 606 F.3d 658, 664 (9th Cir. 2010) (quoting Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001)). In considering whether the complaint is sufficient to state a claim, the court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal ...

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