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Penaloza v. Select Portfolio Servicing Inc.

United States District Court, C.D. California

December 8, 2014

Noemi Penaloza
Select Portfolio Servicing Inc.; JPMorgan Chase Bank N.A



Proceedings: [In Chambers]- COURT ORDER

Pending before the Court are Motions to Dismiss Plaintiff's Second Amended Complaint (" SAC") filed by Defendant Select Portfolio Servicing, Inc. (" SPS"), and Defendant JPMorgan Chase Bank, N.A. (" Chase") (collectively " Defendants"). (Dkt. Nos. 29, 32.) Plaintiff Noemi Penaloza filed its Opposition to the Motions to Dismiss. (Dkt. Nos. 35, 36.) SPS and Chase filed their replies on October 10, 2014. (Dkt. Nos. 38, 39.) The Court took this matter under submission on November 6, 2014. (Dkt. No. 43.) Based on the foregoing, the Court GRANTS in Part and DENIES in Part the Motions to Dismiss.


This action arises from the pending foreclosure of the real property located at 11332 Youngworth Street, Culver City, CA 90230 (" Property"). (Dkt. No. 1.) Chase was Plaintiff's loan servicer until August 1, 2013, when SPS began servicing the loan. (Id.) On April 4, 2014, this case was removed based on federal question and diversity jurisdictional grounds. (Id.) On May 5, 2014, Plaintiff filed her First Amended Complaint (" FAC"). (Dkt. No. 14.) After Plaintiff filed her FAC, this Court granted in part and denied in part Defendants' Motions to Dismiss the FAC. (Dkt. No. 24.) The Court granted Plaintiff leave to amend certain claims. (Id.)

On August 25, 2014, Plaintiff filed her SAC. (Dkt. No. 26.) The Second Amended Complaint (" SAC") asserts nine (9) causes of action. (Id.) Plaintiff's causes of action are as follows:

(1) Predatory Lending Violations;
(2) Violation of California Code § 2924(f);
(3) Violation of California Civil Code § 2924(a)(5);
(4) Unfair, Fraudulent Business Practice;
(5) Breach of Contract;
(6) Quiet Title;
(7) Violation of RESPA;
(8) Violation of California Civil Code § 2923.6(c);
(9) Violation of California Civil Code § 2924.10(a).


All of the claims are brought against both Defendants except for Plaintiff's Predatory Lending Violations and § 2924(f) claims, which are against Chase. Plaintiff's § 2923.6(c) and § 2924.10(a) claims are against SPS.[1] (Id.)

On September 10, 2014, Chase filed its Motion to Dismiss, and on September 15, 2014, SPS filed its Motion to Dismiss. (Dkt. Nos. 29, 32.) Both Motions challenge the sufficiency of the factual allegations asserted in Plaintiff's SAC. (Id.) Plaintiff filed her Opposition to the Motions on October 6, 2014. (Dkt. Nos. 35, 36.) Defendants filed their reply briefs on October 10, 2014. (Dkt. Nos. 38, 39.)


A complaint survives a motion to dismiss under Rule 12(b)(6) if it contains a " short and plain statement of the claim showing that the pleader is entitled to relief, " which does not require " detailed factual allegations, " but it " demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A claim must be " plausible on its face, " which means that the Court can " draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.; see Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In other words, " a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotations and alterations omitted). Allegations of fact are taken as true and construed in the light most favorable to the nonmoving party. See Newdow v. Lefevre, 598 F.3d 638, 642 (9th Cir. 2010), cert. denied, 131 S.Ct. 1612, 179 L.Ed.2d 501 (2011).

In analyzing the sufficiency of the complaint, the Court must first look at the requirements of the causes of action alleged. See Iqbal, 556 U.S. at 675. The Court may then identify and disregard any legal conclusions, which are not subject to the requirement that the Court must accept as true all of the allegations contained in the complaint. Id. at 678. The Court must then decide whether well-pleaded factual allegations, when assumed true, " plausibly give rise to an entitlement to relief." Id. at 679. In doing so, the Court may not consider material beyond the pleadings, but may consider judicially noticeable documents, documents attached to the complaint, or documents to which the complaint refers extensively or which form the basis of the plaintiff's claims in the complaint. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). To the extent attached documents contradict factual allegations in the body of the complaint, the documents control. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).


The Court now examines Defendants' arguments in their Motions to Dismiss. (Dkt. Nos. 29, 32.)

1. Plaintiff's First Cause of Action for Predatory Lending and Other Lending Violations Against Chase

Plaintiff's first cause of alleges Predatory Lending and other Lending violations against Chase. ( See Dkt. No. 26.) The SAC details American Mortgage Network (" AMN") as the perpetrator of the violations. (Id. at pp. 10-11.) Plaintiff claims that AMN misrepresented Plaintiff's income, AMN misrepresented signatures, and AMN falsely inflated the Property's value. (Id.) Although AMN committed these violations, Plaintiff asserts that Chase is " liable as the successor in interest to AMN." (Id.)

Plaintiff still has not provided a basis for holding Chase liable for AMN's actions, outside of the statement that Chase is " the successor in interest to AMN." (Id.) Plaintiff has not identified the capacity of Chase's interest in AMN, if any. The allegations only give raise to the misconduct of AMN, not Chase. As Chase noted in its Motion to Dismiss, AMN should be liable for the misrepresentation. (Dkt. No. 29, p. 4 ΒΆ 2.) Chase ...

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