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Contreras v. JPMorgan Chase

United States District Court, Central District of California

November 6, 2014

Ramiro Contreras
v.
JPMorgan Chase, et al

CIVIL MINUTES--GENERAL

The Honorable JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE.

Proceedings: Order (1) GRANTING Defendants' Motion to Dismiss IN PART and DENYING in PART (Doc. No. 23); (2) VACATING the November 10, 2014 hearing (IN CHAMBERS)

Before the Court is a Motion to Dismiss filed by Defendants Federal National Mortgage Association (" Fannie Mae") and JPMorgan Chase, N.A. (" JPMorgan"). (Doc. No. 23.) After considering the papers timely filed in support of and in opposition to the Motion, the Court GRANTS IN PART and DENIES IN PART the Motion.

I. BACKGROUND

A. Procedural History

Ramiro Contreras (" Plaintiff") filed the initial Complaint in this action in the Superior Court of California, County of Riverside, on March 5, 2014, alleging, inter alia, that JPMorgan, Fannie Mae, and co-defendant NDEX West LLC (" NDEX"), wrongfully foreclosed on his property because they were " third-party strangers to his mortgage loan." (Not. of Removal, Doc. No. 1, Exh. A.) An amended complaint was filed on May 7, 2014. (" FAC, " Not. of Removal, Exh. B.)

On June 6, 2014, JPMorgan and Fannie Mae removed the action to this Court on the basis of diversity. (Not. of Removal.) On June 13, 2014, JPMorgan and Fannie Mae filed a motion to dismiss. (Doc. No. 9.) On June 17, 2014, Plaintiff filed a motion to remand. (Doc. No. 12.) The Court granted in part the motion to dismiss and denied the motion to remand. (" FAC Dismissal, " Doc. No. 20.)

On September 17, 2014, Plaintiff filed a Second Amended Complaint alleging claims for: (1) breach of security instrument, (2) wrongful foreclosure, and (3) violation of California Business and Professions Code § 17200. (" SAC, " Doc. No. 21.) On October 6, 2014, JPMorgan and Fannie Mae filed a Motion to Dismiss the SAC.[1] (" Motion, " Doc. No. 23.) Plaintiff opposed on October 10, 2014. (" Opp'n, " Doc. No. 25.) JPMorgan and Fannie Mae replied on October 27, 2014. (" Reply, " Doc. No. 27.)

B. Requests for Judicial Notice

Along with the Motion, JPMorgan and Fannie Mae filed Requests for Judicial Notice (" RJN, " Doc. No. 23-2). In the RJN JPMorgan and Fannie Mae request the Court take judicial notice of:

(1) the Deed of Trust encumbering Contreras's property, recorded on April 24, 2007; (2) a Corporate Assignment of Deed of Trust, in which Mortgage Electronic Registration Systems, Inc. (" MERS"), acting as nominee for former defendant Land Home Financial, transferred its interest in the property to Chase, dated October 20, 2011; (3) a Notice of Default and Election to Sell Under Deed of Trust, recorded by NDEX, as an agent for Chase, on January 20, 2012; (4) a Substitution of Trustee, naming NDEX as trustee, recorded on June 1, 2012; (5) a Notice of Trustee's Sale recorded on June 19, 2012; (6) a Notice of Trustee's Sale, recorded on March 6, 2013; (7) a Notice of Trustee's Sale, recorded on May 17, 2013; (8) a Notice of Trustee's Sale, recorded on August 17, 2013; (9) a Trustee's Deed Upon Sale, indicating that the property was conveyed by NDEX as trustee to Defendant Fannie Mae on September 19, 2013, recorded on October 29, 2013; and (10) an Assignment of Deed of Trust, also recorded on October 29, 2013, in which JPMorgan assigned its interest in the property to Fannie Mae.

A court may take judicial notice of court filings and other matters of public record. See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (citing Burbank-Glendale-Pasadena Airport Auth. v. City of Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998)). Accordingly, the Court grants the RJN and takes judicial notice of these documents.[2]

C. Allegations in the FAC

On April 24, 2007, Plaintiff obtained a loan for $215, 500.00 from Land Home Financial. (SAC ¶ 20; RJN Exh. 1.) The loan note was secured by a Deed of Trust on the property in favor of Land Home Financial. (Id. ¶ 21) MERS was named as nominal beneficiary and assigned its interest to JPMorgan in 2011. (Id. ¶ ¶ 21-22; RJN Exh. 2.) Plaintiff alleges this assignment was void and improper because MERS had no right or interest to assign. (Id. ¶ 21.)

On January 20, 2012, NDEX recorded a Notice of Default (" NOD") with the Recorder's Office for Riverside County. (SAC ¶ 24; RJN Exh. 3.) The NOD stated Plaintiff was $69, 575.77 in arrears. (RJN Exh. 3.) NDEX attached to the NOD a declaration of compliance, dated May 5, 2011. (Id.) The declaration states the mortgagee, beneficiary, or authorized agent contacted the borrower to explore foreclosure prevention options and thus complied with California Civil Code § 2923.5. (Id.) Plaintiff alleges that no one contacted him and the declaration is therefore false. (SAC ¶ 25-26.) Plaintiff also alleges JPMorgan breached Section 22 of the Deed of Trust. (SAC 27-28.) Section 22 requires the lender give notice to Plaintiff before accelarating repayment of the loan. (RJN Exh. 1.)

NDEX recorded a Notice of Trustee's Sale (" NOTS") on June 19, 2012. (SAC ¶ 30.) The NOTS asserts Plaintiff's unpaid balance to be $280, 632.41. (RJN Exh. 5.) NDEX recorded three more NOTS between March and August 2013. (SAC ¶ ¶ 32-34.) Plaintiff alleges he submitted a full loan modification application on August 1, 2013. (SAC ¶ 41.) This application was denied on September 23, 2013. (Id.; Exh. N, Doc. No. 21-14.) On September 19, 2013, the trustee's sale of the subject property took place. (RJN Exh. 9.) On October 29, 2013, NDEX recorded a Trustee's Deed Upon Sale (" TDUS") conveying the subject property to Fannie Mae. (SAC ¶ 36; RJN Exh. 9.)

Plaintiff further alleges various defects in the chain of title. As an example, Plaintiff claims that a Corporate Assignment of Deed of Trust purporting to pass title from MERS to JPMorgan was improper because MERS had previously assigned that interest to JPMorgan. (SAC ¶ 31.) Moreover, Plaintiff asserts that at the time the Trustee's Sale was completed, Fannie Mae was listed as the beneficiary under the Deed of Trust, but Fannie Mae only entered the chain of title after the sale was complete. (See id. ¶ ¶ 47-48.)

II. LEGAL STANDARD[3]

Federal Rule of Civil Procedure 12(b)(6) allows a party to bring a motion to dismiss for failure to state a claim upon which relief can be granted. Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (holding that the Federal Rules require that a plaintiff provide " 'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." (quoting Fed.R.Civ.P. 8(a)(2))); Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). When evaluating a Rule 12(b)(6) motion, a court must accept all material allegations in the complaint -- as well as any reasonable inferences to be drawn from them -- as true and construe them in the light ...


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