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Burke v. Jpmorgan Chase Bank, N.A.

United States District Court, N.D. California

May 11, 2015



SAMUEL CONTI, District Judge.


Plaintiffs Deborah Burke and Sean Burke (collectively, "Plaintiffs") bring this action in connection with the threatened foreclosure of their home in Livermore, California ("the Property"). On January 14, 2014, the Court granted Defendants' motion to dismiss and gave Plaintiffs the opportunity to amend their complaint to "set forth specific and plausible allegations explaining why Defendants lack sufficient interest to foreclose on the Property." ECF No. 25 ("MTD Order") at 6. Defendants JPMorgan Chase Bank, N.A. ("JPMorgan") and Wells Fargo Bank, N.A. ("Wells Fargo") now move to dismiss Plaintiffs' first amended complaint ("FAC") for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 43 ("Mot."). The motion is fully briefed, ECF Nos. 47 ("Opp'n"), 51 ("Reply"), and appropriate for determination without oral argument pursuant to Civil Local Rule 7-1(b). Accordingly, the motion hearing set for May 15, 2015 is hereby VACATED. For the reasons set for below, the Motion is GRANTED in part and DENIED in part.


On August 7, 2007, Plaintiffs refinanced their existing mortgage on the Property, obtaining a $1, 256, 250 loan (the "Loan"). ECF No. 29 ("FAC") ¶ 5, Ex. A. The deed of trust securing the mortgage identifies Washington Mutual Bank, FA ("WaMu") as the lender. Id . Ex. A ("DOT"). Plaintiffs allege that on or before August 22, 2008, their mortgage loan was contributed to a mortgage backed security ("MBS") identified as JPMorgan Mortgage Trust 2008 R-2 Pass-through Certificates Series 2008-R2 ("JPMMT 2008-R2"), of which Wells Fargo is the trustee. Id . ¶ 12. Plaintiffs allege that WaMu sold their mortgage loan temporarily to the depositor of the JPMMT 2008-R2, but that the sale failed to assign the DOT. Id . ¶ 16. As Plaintiffs, put it, "[t] his was the first sale of the Plaintiff's mortgage loan, but without effectively assigning the [DOT] and indorsing the underlying original Promissory Note to the interim loan purchaser...." Id . Next, JP Morgan Acceptance Corporation "sold and securitized the pooled mortgages (including Plaintiffs' mortgage loan) into the JPMMT 2008-R2 Trust" on or before the trust's "closing date" on August 22, 2008. Id . Plaintiffs allege that this sale, too, failed to properly assign the DOT or original note. Id.

On September 25, 2008, WaMu was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation ("FDIC") was named Receiver. On September 25, 2008, JPMorgan acquired certain assets and liabilities of WaMu through an asset purchase agreement with the FDIC. ECF No. 17 ("RJN I") Ex. 2. Though Plaintiffs now allege that JPMorgan does not have any legal or equitable interests in their loan, they applied for a loan modification with JPMorgan sometime in 2010. FAC ¶ 21. JPMorgan rejected the application in May 2010, stating that Plaintiffs' income was insufficient. Id . Plaintiffs then reapplied for a loan modification. That application was also rejected, this time on the ground that Plaintiffs had the ability to pay their existing mortgage using cash reserves or other assets. Id . ¶ 22.

On October 28, 2010, a notice of default and election to sell ("NOD") was recorded with Alameda County, stating that Plaintiffs were $28, 024.95 in arrears. Id . ¶ 24, Ex. E.

Plaintiffs allege that the NOD's statement that Plaintiffs could contact JPMorgan about the foreclosure proceedings was false because JPMorgan had no right to collect mortgage payments, and that there is no evidence that JPMorgan is a valid loan servicer or beneficiary of Plaintiffs' mortgage. Id . ¶ 24. Plaintiffs reason that because their loan was sold to the MBS trust before JPMorgan acquired the assets of WaMu, JPMorgan did not succeed to the servicing rights of WaMu. Id . The NOD contained a statement certifying that JPMorgan had complied with California law by contacting the borrower to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure. Id . Ex. E. Plaintiffs allege that they were never contacted by a "valid mortgagee" because Defendants JPMorgan and Wells Fargo were not mortgagees or authorized agents.

In April 2011 and April 2012, notices of trustee sales were recorded with Alameda County. Id . ¶¶ 28, 30. The first notice of trustee's sale indicates that the unpaid balance on the loan was $1, 395, 095.88. Id . Ex. F. Plaintiffs allege that these instruments, like the NOD, are null and void. Id . ¶ 28-31. It is unclear from the pleadings whether the foreclosure sale has yet taken place.


A. Motion to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id . (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

B. Rule 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." See Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). "To satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] statement, and why it is false." United ...

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