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Nava v. JP Morgan Chase Bank, N.A.

United States District Court, C.D. California

November 25, 2014

Roberto Nava
JP Morgan Chase Bank, N.A

Attorneys for Plaintiffs: Not Present.

Attorneys for Defendants: Not Present.


Honorable DALE S. FISCHER, United States District Judge.

Proceedings: (In Chambers) Order re Motion to Dismiss (Dkt. No. 13, 15)

Defendant JP Morgan Chase Bank, N.A. (Chase) requests dismissal of Plaintiff Roberto Nava's Complaint. The Court deems this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7-15. The hearing set for December 1, 2014 is removed from the Court's calendar.

First Cause of Action: Breach of Contract

Under California law, a plaintiff alleging a breach of contract must prove " the existence of the contract, performance by the plaintiff or excuse for nonperformance, breach by the defendant and damages." First Commercial Mortg. Co. v. Reece, 89 Cal.App.4th 731, 745, 108 Cal.Rptr.2d 23 (2001). " In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language." Constr. Protective Servs., Inc. v. TIG Specialty Ins. Co., 29 Cal.4th 189, 198-99, 126 Cal.Rptr.2d 908, 57 P.3d 372 (2002).

Nava alleges that he entered into a Trial Period Plan (TTP) with Chase and that Chase breached the agreement by failing to provide Nava with a final loan modification offer. (Compl. ¶ ¶ 9-21.) According to Nava, the TPP obligated him (1) to " accept the TPP by signing and returning copies of the TPP with the first TPP payment of $1, 433.02 by June 1, 2009; and (2) to make two " subsequent payments for $1, 433.02." (Id. ¶ 13(a), (b).) Chase, in turn, was obligated to (1) " provide [Nava] with a final loan modification offer based on the TPP payments so long as [Nava] had not defaulted during the period" [1]; (2) " honor the final loan modification terms until the loan maturation date"; and (3) " abstain from initiating or continuing any foreclosure proceedings as long as [Nava] comply [sic] with the terms of the TPP." (Id. ¶ 13(c), (d), (e).)

Nava alleges that he made all payments required under the TPP in a timely manner, and that Chase received, accepted, and drew upon his payments. (Id. ¶ ¶ 30-31.) The Complaint further claims that notwithstanding Nava's timely payments, Chase failed to offer a final loan modification or abstain from foreclosing on the subject property. (Id. ¶ ¶ 32-33.) The foregoing allegations are sufficient to satisfy Nava's burden at the pleading stage. Nava had no obligation to plead the TPP's terms " verbatim" or attach a copy of the TPP to the Complaint. Even assuming that the TPP falls within the statute of frauds, see Secrest v. Sec. Nat. Mortg. Loan Trust 2002-2, 167 Cal.App.4th 544, 552-54, 84 Cal.Rptr.3d 275 (2008), Nava's reference to " executed copies of all agreements" is sufficient, at the pleading stage, to constitute an allegation that such a writing exists. This conclusion in no way limits Chase's ability to later move for dismissal of this claim based on, for instance, Nava's failure to produce evidence of a writing signed by Chase following discovery.

Second Cause of Action for Negligence

Nava does not oppose Chase's claim that Nava's negligence cause of action is barred by the applicable statute of limitations. Even assuming that Nava's negligence claim is otherwise valid, Nava's lack of response warrants dismissal of this claim.

Third Cause of Action: Implied Covenant of Good Faith and Fair Dealing

" Breach of the covenant of good faith and fair dealing gives rise to a contract action . . . or, in limited contexts, a tort action with the tort measure of compensatory damages and the right to recover punitive damages." Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 1369, 108 Cal.Rptr.3d 682 (2010). There is a " general rule precluding tort recovery for noninsurance contract breach, at least in the absence of violation of 'an independent duty arising from principles of tort law' other than the bad faith denial of the existence of, or liability under, the breached contract." See Harris v. Wachovia Mortgage, FSB, 185 Cal.App.4th 1018, 1023, 111 Cal.Rptr.3d 20 (2010). Chase argues that a claim arising in tort cannot survive because Nava has failed to plead the sort of wrongdoing or relationship necessary to support such a claim. Nava does not directly respond to this challenge, but rather asserts that his claim may proceed because he has alleged a contractual relationship between the parties. The existence of a contract is a prerequisite to Nava's claim, but it is insufficient to support a claim arising in tort. Nava's covenant of good faith and fair dealing claim, to the extent it arises in tort, is dismissed.

Chase has not convinced the Court, however, that Nava has failed to plausibly plead a contract claim alleging breach of the covenant of good faith and fair dealing. Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 1369, 108 Cal.Rptr.3d 682 (2010), the lone authority cited by Chase, does not support Chase's position that a plaintiff may not rely on the same facts to support a breach of contract claim and the related implied covenant of good faith and fair dealing claim. In Durell, the parallel allegations doomed the plaintiff's implied covenant of good faith and fair dealing claim not because parallel facts are inherently problematic, but rather because the facts did not support plaintiff's underlying -- and prerequisite -- breach of contract claim. Nava's cause of action alleging breach of implied covenant of good faith and fair dealing may proceed as a contract claim.

Fourth Cause of Action for Promissory Estoppel

Chase claims that Nava's cause of action alleging promissory estoppel is barred by the applicable statute of limitations. Nava's opposition does not even mention his promissory estoppel claim, which is accordingly dismissed.

Fifth Cause of Action for Violation of Civil Code § 2924.17

Nava does not respond to Chase's claim that Nava fails to state a claim for violation of California Civil Code § 2924.17. The cause of action is accordingly dismissed.

Sixth Cause of Action for Violation of Business & Professions Code § 17200

" The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as 'any unlawful, unfair or fraudulent business act or practice.'" Kwikset Corp. v. Super. Ct., 51 Cal.4th 310, 320, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011) (quoting UCL § 17200). Because " section 17200 is written in the disjunctive, it establishes three varieties of unfair competition -- acts or practices which are unlawful, or unfair, or fraudulent." Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49, 80-81, 163 Cal.Rptr.3d 804 (2013) (internal quotation marks and ellipsis omitted). Chase argues that Nava lacks standing to pursue this claim, and that in the event standing exists, Nava has nevertheless failed to plausibly plead an unlawful, unfair or fraudulent business act or practice as required under the statute.

To have standing under UCL § 17204, a party must (1) establish an injury in fact and (2) show that the " injury was the result of, i.e., caused by, the unfair business practice . . . that is the gravamen of the claim." Kwikset Corp., 51 Cal.4th at 322. " A UCL claim will survive a demurrer based on standing if the plaintiff can plead general factual allegations of injury resulting from the defendant's conduct." Lueras, 221 Cal.App.4th at 81. In his opposition, Nava lays out the ways in which a party can establish injury in fact. But there is no question that Nava has satisfied this element of standing. The real issue is whether Nava has plausibly pleaded that his injury -- the loss of his house through foreclosure -- was caused by Chase's purportedly improper conduct.

Although arguably a close call, the Court concludes that Nava has standing to bring his § 17200 claim. Chase argues that the requisite causal showing is absent because the challenged conduct occurred after Nava's default, which itself justified foreclosing on his home.[2] To support its position, Chase cites Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 523, 156 Cal.Rptr.3d 912 (2013), in which the court affirmed a demurrer to the plaintiff's § 17200 claim on the basis that the plaintiff failed to plead a causal link between her economic injury (home foreclosure) and defendants' purportedly unlawful or unfair acts. Although similar to this case, Jenkins is distinguishable because the defendant did not allege that she had entered a contract with the defendant by which the defendant agreed not to initiate or continue foreclosure proceedings. The Court recognizes that absent the TPP, Nava does not suggest that the foreclosure on his home would have been improper. However, by entering the TPP -- which according to Nava included a provision prohibiting foreclosure -- Chase altered the status quo in such a way that breach of the TPP constitutes an arguable cause of Nava's injury.

Having concluded that standing exists, the survival of Nava's claim turns on whether he pleaded an unlawful, unfair, or fraudulent business practice. In his opposition, Nava fails to respond to Chase's claim that the two California laws that Chase allegedly violated are not retroactive. The Court accordingly concludes that Nava has failed to plausibly plead an " unlawful" business practice.

As to " unfair" business practices or acts, Nava argues that Chase's " act of negligent servicing AND BLAMING [Nava] for its' [sic] OWN MISTAKES, is clearly unfair . . . ." (Pl.'s Opp. at 11.) But beyond this assertion and general propositions concerning the standing for establishing an unfair business practice, Nava fails to explain in any detail (or through citation to relevant authority) why or how Chase's conduct was unfair. Nava's conclusory and wholly undeveloped argument is insufficient to satisfy the Court.

" [A] fraudulent business practice is one that is likely to deceive members of the public." Boschma v. Home Loan Ctr., Inc., 198 Cal.App.4th 230, 252, 129 Cal.Rptr.3d 874 (2011) (internal quotation marks omitted). It includes business practices that " may be accurate on some level, but will nonetheless tend to mislead or deceive. A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under the UCL." Id. (internal quotation marks and ellipsis omitted).

In its motion to dismiss, Chase argues that Nava has not made this showing because Nava " fail[ed] to allege facts that the public had any expectation or made any assumptions regarding the purported loan at issue." (Def.'s Mot. to Dismiss at 15.) This argument fails for the simple reason that it is premised on an inaccurate statement of the law. Unlike claims of common law fraud, a UCL plaintiff need only allege that the defendant engaged in business practices likely to deceive the public, not that the public actually possessed particular expectations or assumptions. See Morgan v. AT & T Wireless Servs., Inc., 177 Cal.App.4th 1235, 1256-57, 99 Cal.Rptr.3d 768 (2009) (" The determination as to whether a business practice is deceptive is based on the likely effect such [a] practice would have on a reasonable consumer."). The Court therefore denies Chase's motion to dismiss Nava's UCL claim. To the extent Chase's reply raises additional arguments premised on accurate statements of law, the Court declines to consider them at this time. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007) (" [A] district court need not consider arguments raised for the first time in a reply brief.").

Seventh Cause of Action for Negligent Infliction of Emotional Distress

Nava has not responded to Chase's argument that his seventh cause of action for negligent infliction of emotional distress is time-barred. The cause of action is accordingly dismissed.


Chase's motion to dismiss is granted in part and denied in part. The following four causes of action are dismissed: Negligence; Promissory Estoppel; Violation of Civil Code § 2924.17; and Negligent Infliction of Emotional Distress. Nava's cause of action for Implied Covenant of Good Faith and Fair Dealing is dismissed to the extent Nava's claim arises in tort, but may proceed as a contract claim. The following two causes of action may proceed: Breach of Contract and Violation of Business & Professions Code § 17200.

An amended complaint must be filed and served no later than December 19, 2014. Failure to file by that date will waive the right to do so. The Court does not grant leave to add new defendants or new claims. Leave to add defendants or new claims must be sought by a separate, properly noticed motion. Defendant's response will be due January 9, 2015.


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