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Dias v. JP Morgan Chase, N.A.

United States District Court, N.D. California, San Jose Division

March 19, 2015

LEX DIAS, an individual, and SHERRY DIAS, an individual, Plaintiffs,
JP MORGAN CHASE, N.A., a national association; U.S. BANK, N.A., a national association, and Does 1-50, inclusive, Defendants.


EDWARD J. DAVILA, District Judge.

Plaintiffs Lex Dias and Sherry Dias (collectively, "Plaintiffs") bring this suit against Defendants JP Morgan Chase, N.A. ("Chase") and U.S. BANK, N.A. ("U.S. Bank") (collectively, "Defendants"). Presently before the court is Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint ("FAC"). The Court found this matter suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. Having reviewed the parties' briefing, Defendants' motion is DENIED for the reasons stated below.


Plaintiffs own a property located in Gilroy, California ("the Property"), for which they secured financing by executing a Promissory Note and Deed of Trust in favor of Washington Mutual, F.A. ("WaMu") in October 2004. FAC at ¶ 3, 8. Chase purchased WaMu in 2008, and assumed all of WaMu's assets, including Plaintiffs' Promissory Note and Deed of Trust. Id. at ¶ 8. The Promissory Note and Deed of Trust were subsequently transferred to U.S. Bank, while Chase remained the loan servicer. Id. at ¶ 9.

Plaintiffs allege that in February 2012, they were current in their loan payments when they went to their local Chase branch to request a loan modification. Id. at ¶ 11. Although Plaintiffs were able to make their mortgage payments, they were seeking a loan modification in order to obtain a more comfortable monthly mortgage payment. Id . Plaintiffs allegedly spoke with a Chase representative and were advised that they could not receive a loan modification because Plaintiffs were current on their mortgage payments. Id . Chase's representative allegedly told Plaintiffs to stop making payments on the loan, and Plaintiffs would then receive a loan modification. Id . When Plaintiffs expressed concern regarding the effect of missed payments, the Chase representative allegedly told Plaintiffs that they need not worry because Chase and U.S. Bank would not initiate foreclosure proceedings against a borrower that missed payments while pursuing a loan modification. Id. at ¶ 12. Based on this instruction, Plaintiffs allegedly missed their first mortgage payment on the loan and submitted a loan modification application. Id.

Between July 2012 and November 2012, Plaintiff alleges that Chase routinely indicated Plaintiffs' applications were incomplete. Id. at ¶ 13. Although Plaintiffs had already submitted the requested documents on numerous occasions, they complied with each of Chase's requests for additional documents. Id . Plaintiff alleges that in November 2012, Defendants recorded a Notice of Default against the Property, thus initiating foreclosure proceedings. Id . ¶ 14. When Plaintiffs inquired about the Notice, Chase allegedly told Plaintiffs to disregard the Notice because Plaintiffs were in loan modification review and, therefore, their property would not be sold at a Trustee's Sale. Id. at ¶ 15. In December 2012, Plaintiffs allegedly received a letter from Chase confirming that their loan modification application was complete, and in April 2013, Plaintiffs allegedly entered into a final loan modification agreement with Defendants. Id. at ¶¶ 16-17.

In May 2013, Plaintiffs allegedly submitted their first payment pursuant to the loan modification. Id. at ¶ 19. The payment, however, was rejected by Chase and was sent back to Plaintiffs uncashed. Id . When Plaintiffs asked a Chase representative for an explanation, the representative allegedly refused to provide one and instead stated that Plaintiffs' property was in foreclosure. Id . Plaintiffs further allege that in order to save their home, they were told to re-apply for a new loan modification. Id. at ¶ 20.

In June 2013, Plaintiffs allegedly submitted a second loan modification application that contained a documented material change in income. Id . While Chase was in possession of the second application, Chase recorded a Notice of Trustee Sale against the Property on June 6, 2013. Id. at ¶ 21. From June to September 2013, Plaintiffs allege that they frequently contacted Chase to inquire about their application, but were not provided with any information regarding the application or the trustee sale date. Id. at ¶ 22. In September 2013, Chase allegedly sent Plaintiffs a letter denying the application for a purported failure to submit requested documents. Id. at ¶ 23. Plaintiffs allege that when they contacted Defendants regarding the denial, a Chase representative told Plaintiffs to submit a new loan modification application. Id. at ¶ 24.

In September 2013, Plaintiffs allegedly submitted a third loan modification application. Id . Although Chase allegedly confirmed the receipt of this application, Defendants recorded a second Notice of Trustee Sale against the Property in October 2013. Id. at ¶¶ 24, 38.

Plaintiffs commenced the instant action in November 2013. See Dkt. No. 1. The Court previously granted in part and denied in part Defendants' motion to dismiss, and granted leave to amend. See Dkt. No. 26. Plaintiffs filed an amended complaint in July 2014 alleging the following claims: (1) breach of contract; (2) violation of California Civil Code § 2923.6; (3) breach of the implied covenant of good faith and fair dealing; and (4) violation of the California Business and Professions Code § 17200, et seq. See Dkt. No. 29. Defendants filed the instant motion to dismiss in August 2014. See Dkt. No. 30 ("Mot."). Plaintiffs filed an opposition brief, and Defendants filed a reply brief. See Dkt. Nos. 32 ("Opp."), 33 ("Reply").


Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim in the complaint with sufficient specificity to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal under Rule 12(b)(6) for failure to state a claim is "proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Shroyer v. New Cingular Wireless Servs., Inc., 606 F.3d 658, 664 (9th Cir. 2010) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). In considering whether the complaint is sufficient to state a claim, the court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While a complaint need not contain detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id . (quoting Twombly, 550 U.S. at 570). However, mere conclusions couched as factual allegations are not sufficient to state a cause of action. Papasan v. Allain, 478 U.S. 265, 286 (1986).


A. Claim 1: Breach of Contract

In its motion, Defendants contend that Plaintiffs have not sufficiently pled a claim for breach of contract because Plaintiffs failed to attach a copy of the alleged contract to the complaint. Mot. at 3. Alternatively, they argue that Plaintiffs have selectively summarized from the purported contract instead of stating the salient terms of the agreement with the required specificity. Id. at 3-4. In opposition, Plaintiffs ...

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