United States District Court, E.D. California
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
JOHN A. MENDEZ, District Judge.
Before the Court is Defendant JPMorgan Chase Bank's ("Defendant") motion to dismiss Plaintiff Paiman Rahbarian's ("Plaintiff") first amended complaint ("FAC") that alleges chain-of-title defects and procedural irregularities in Defendant's servicing of his mortgage. For the following reasons, Defendant's motion is GRANTED in part and DENIED in part.
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Attar Fakhri, Plaintiff's mother, took out a mortgage on her home in 2007. FAC ¶ 35. The Deed of Trust named California Reconveyance ("CRC") as trustee and Washington Mutual as lender and beneficiary. Id . Plaintiff alleges, "on information and belief, " that Washington Mutual transferred the mortgage to "WaMu Mortgage Pass-Through Certificate Series 2007-OA4." FAC ¶ 36. This entity then "filed a Form 10-K with the SEC and was dissolved." FAC ¶ 37. Dissolution caused "the assets, " including Plaintiff's mother's mortgage, to be distributed to the certificate holders. Id . Washington Mutual then itself dissolved, conveying its assets to Defendant. FAC ¶ 38. Plaintiff alleges that his mother's mortgage was not among these assets now owned by Defendant, because it was previously transferred to the certificate holders. FAC ¶ 45.
Following his mother's death in 2011, Plaintiff took possession of the mortgaged home. FAC ¶¶ 40-41. Plaintiff soon defaulted on the mortgage, and CRC issued a Notice of Default and Election to sell, dated March 12, 2013. FAC ¶¶ 41, 46. On that same day, CRC recorded a "Corporate Assignment of Deed of Trust, " signed by Colleen Irby as Vice President of JPMorgan Chase. FAC ¶¶ 42-43. Plaintiff alleges that Colleen Irby "is, in fact, a robo-signer.'" FAC ¶ 43.
Plaintiff alleges that he then contacted Defendant to request a short sale, but Defendant rejected the request because Plaintiff "d[id] not qualify for loss mitigation." FAC ¶ 51. Nonetheless, the trustee sale has been "postponed indefinitely." FAC ¶ 53.
The Court previously granted in part and denied in part (Doc. #17) Defendant's motion to dismiss Plaintiff's original complaint. Plaintiff then filed this FAC (Doc. #19) on December 10, 2014 - ten days after the deadline set by the Court's order. The FAC contains one cause of action brought under California's Homeowner Bill of Rights ("HBOR"). Plaintiff alleges that Defendant violated HBOR by failing to "provide notice to Plaintiff that he could request certain information from Defendant, " having Colleen Irby "robo-sign" the "Corporate Assignment of Deed of Trust, " and "fail[ing] to engage in the appropriate loss mitigation." FAC ¶¶ 57-59 (citing Cal. Civ. Code §§ 2923.55, 2924.17 & 2923.55(b)(1)(iii)). Defendant now moves to dismiss the "robo-signing" allegations of the FAC (Doc. #20). Plaintiff opposes the motion (Doc. #21).
1. Late Filing of FAC
Defendant first urges the Court to dismiss the FAC under Federal Rule of Civil Procedure 41(b) for failure to obey a court order. Mot. at 3. Absent a showing of prejudice, this Court prefers to decide cases on the merits. The Court finds that Defendant has not suffered any significant prejudice owing to Plaintiff's delay of ten days in filing the FAC. Indeed, Defendant puts forth no specific reasons that it was prejudiced. Instead, Defendant states generally that it "incurred increased costs in moving to dismiss the complaint, engaging in case management practice, and otherwise participating in and monitoring this litigation[.]" Mot. at 5:27-28. The Court therefore considers the merits of the motion under Rule 12(b)(6).
2. Robosigning Allegations
Defendant argues that the FAC's robosigning allegations should be dismissed because even if robosigning occurred, it was not a "material" violation of HBOR. Mot. at 8; Reply at 3-4; see Cal. Civ. Code § 2924.12. Plaintiff counters that Colleen Irby's signing without verifying that Defendant had a "beneficial interest in the loan" was material because "different lenders and their servicers offer a varying set of... mitigation options to avoid foreclosure." FAC ¶ 45; Opp. at 9:3-4.
California Civil Code section 2924.12 provides injunctive relief only for "material" violations of certain provisions of HBOR, including the section prohibiting robosigning: section 2924.17. There is little case law defining the term "material" with respect to robosigning allegations. Defendant cited Johnson v. PNC Mortgage, 2014 WL 6629585 (N.D. Cal. Nov. 21, 2014). See Mot. at 8. In Johnson, the plaintiffs alleged robosigning where the defendant bank had purported to assign their mortgaged property to a different bank, but that "assignment [was] void" because the defendant did not have an interest in the property at the time. 2014 WL 6629585, at *2. The court concluded that even if "the assignment [was] a sham, that would materially affect the original lender[, ]" but not the plaintiffs. Id. at *9. "Nothing in the FAC suggest[ed] that the assignment ...