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Sottile v. JP Morgan Chase Bank N.A.

United States District Court, N.D. California

December 12, 2014

JP MORGAN CHASE BANK N.A., et al., Defendants

For Carolanne Sottile, Plaintiff: Charles Thomas Marshall, LEAD ATTORNEY, Law Offices of Charles T. Marshall, San Diego, CA.

For JP Morgan Chase Bank N.A., Federal National Mortgage Association, as Trustee for Guaranteed Pass-Through Certificates Fannie Mae Trust 2003-W8, Defendants: Nathaniel William Peters, LEAD ATTORNEY, David A. Owens, Bryan Cave LLP, San Francisco, CA.


WILLIAM H. ORRICK, United States District Judge.


Plaintiff Carolanne Sotille filed this action against defendants JP Morgan Chase Bank, N.A. (" Chase") and the Federal National Mortgage Association (" Fannie Mae"), alleging that because her mortgage loan was securitized, defendants have no interest in the loan and may not foreclose on her property or collect mortgage payments from her. Defendants move to dismiss the complaint for failure to state a claim. Because Sotille's claims are based on the same securitization theories that have been repeatedly rejected by courts in this district, the motion is GRANTED.



On or around March 18, 2003, Sotille and her husband borrowed $299, 000 from Washington Mutual Bank, F.A. (" WaMu"). Compl. ¶ 12, Ex. A. The loan is recorded in a promissory note (the " Note") and is secured by a deed of trust (the " DOT") against a property in San Mateo, California (the " Property"). Compl. ¶ 12, Exs. A, B. The DOT identifies WaMu as the lender and California Reconveyance Company as the trustee.[1] Compl. ¶ 12, Ex. B. Sotille's husband is now deceased, and she is the sole owner of the Property. Compl. ¶ 12. The complaint does not state whether the Property is Sotille's residence.

Sotille alleges that on or around May 1, 2003, Fannie Mae purchased her loan. Compl. ¶ 14. On or around the same date, Fannie Mae contributed the loan to the Guaranteed Pass Through Certificates, Fannie Mae Trust 2003-W8 (the " Trust"), a mortgage-backed securities trust for which Fannie Mae serves as trustee. Compl. ¶ 2. The Trust has an " election and continuing qualification" as a real estate mortgage investment conduit (a " REMIC"), which enables the trust to receive favorable tax treatment under the Internal Revenue Code. Compl. ¶ 16. For the trust to qualify as a REMIC, all steps in the transfer of mortgage notes must constitute a " true sale" between the transferring parties. Compl. ¶ 17. " Each step of the 'true sale' process must be supported by effective delivery and certification of acceptance [by] the receiving party of the endorsed mortgage note and assigned deed of trust, reflecting the complete intervening assignments and transfers of each mortgage loan from each assignor to the last assignee." Compl. ¶ 17. The Trust's " governing documents" mandate compliance with this " chain of title protocol." Compl. ¶ 4. No recorded assignments of Sotille's DOT or endorsements of her Note have been filed with the San Mateo County Recorder's Office. Compl. ¶ 21.

Sotille contends that when Chase acquired certain of WaMu's assets in 2008, Chase could not have acquired a beneficial interest in her loan, because the securitization of the loan " extinguished all beneficial interest in [Sotille's] DOT held by [WaMu]." Compl. ¶ 2. Sotille emphasizes that " the securitization of her loan, without more, extinguished any interest in her loan held by WaMu." Compl. ¶ 3. Sotille also contends the securitization of her loan was improper because it was performed without assignment of the DOT or endorsement of the note, as required by the Trust's governing documents for continuing qualification as a REMIC. Compl. ¶ 4, 20-21. Sotille alleges that because her loan was securitized improperly, " the true beneficiary of [the] loan is unknown." Compl. ¶ 4.

Sotille is current in her mortgage payments and there are no foreclosure proceedings pending against the Property. Compl. ¶ 6.[2]


Sotille filed this action on December 20, 2013. Dkt. No. 1. The complaint seeks declaratory relief under Cal. Code Civ. P. § 1060 on the ground that Chase and Fannie Mae " falsely claim to hold a beneficial interest in plaintiff's loan, " and that Chase " continues to claim rights to collect mortgage payments from plaintiff when it has no authority to do so." Compl. ¶ 33. The complaint requests an order declaring that: (i) the legal interest in the DOT and Note were not properly assigned from WaMu to Chase or Fannie Mae; (ii) defendants do not have any legal interest in the DOT or Note; (iii) defendants lack standing to institute foreclosure proceedings against the Property; and (iv) defendants are prohibited from collecting mortgage payments from Sotille. Id. In addition to declaratory relief, the complaint alleges causes of action for (i) quiet title; (ii) cancellation of instruments; (iii) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq .; (iv) unjust enrichment; and (v) ...

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