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Nardolillo v. JPMorgan Chase Bank, N.A.

United States District Court, N.D. California

April 26, 2017



          William H. Orrick, United States District Judge


         Plaintiff Gary Nardolillo filed this action in Superior Court, seeking to prevent defendant JPMorgan Chase Bank, N.A. (“Chase”) from pursuing foreclosure proceedings on his residence (“Property”) based on alleged violations of the California Homeowners Bill of Rights (“HBOR”). Underlying all of these claims is Nardolillo's allegation that Chase did not have an ownership interest in the Note and Deed of Trust securing the Property and, therefore, did not have the authority to substitute former defendant MTC Financial, Inc., doing business as Trustee Corps (“Trustee Corps”) to record a Notice of Sale on the Property.[1] Chase removed this action to federal court and moves to dismiss the claims against it, arguing that plaintiff has failed to state sufficient facts for any of his claims. While Chase may have valid arguments on summary judgment, the causes of action alleged are plausible because Nardillo has specifically identified why he asserts Chase did not own the Property and why he believes dual tracking has occurred. Chase's motion is DENIED.


         In 2004, Nardolillo took out a loan with Washington Mutual Bank, FA (“WaMu”) for $1, 462, 500. Complaint [Dkt. No. 1-1] ¶ 10. He executed a Promissory Note (“Note”) and a Deed of Trust (“DOT”) to secure the loan. Id. The DOT listed WaMu as the lender and beneficiary, and California Reconveyance Company (“CRC”) as the trustee. Id., Request for Judicial Notice (“RJN”) [Dkt. No. 31-2], Ex. 1.[2]

         Nardolillo then purchased the Property-5405 Greenville Road, Livermore, California- using the loan from WaMu as part of the purchase money. Id. ¶ 11. Soon after, plaintiff alleges that WaMu sold Nardolillo's DOT and Note to a mortgage-backed securitized trust. Id. ¶ 12. Nardolillo's “securitization audit indicates [his] loan was possibly sold to the WaMu Mortgage Pass-Through Certificates Series 2004-AR12 trust-a real estate mortgage investment conduit (‘REMIC') registered with the Securities and Exchange Commission (‘SEC').” Id.

         In 2008, WaMu became insolvent and entered a receivership. Id. ¶ 13. The Federal Deposit Insurance Corporation (“FDIC”) acted as the receiver. Id. Defendant JPMorgan Chase Bank, N.A. (“Chase”) entered into a Purchase and Assumption Agreement (“PAA”) to acquire “certain” of WaMu's assets. Id.; RJN, Ex. 2.[3] Nardolillo alleges his Note and DOT were not among the assets acquired by Chase through the PAA because they “possibly” had already been sold and securitized years earlier. Id. ¶ 14. Yet on March 14, 2011, Chase held itself out to be the beneficiary of Nardolillo's DOT and directed CRC as trustee to record a Notice of Default against the Subject Property. Id. ¶ 15. CRC recorded a Notice of Default, stating the amount due as of March 11, 2011 was $36, 304.16. RJN, Ex. 4.

         On October 20, 2014, in a recorded “Corporate Assignment of Deed of Trust, ” Chase purported to act as “attorney in fact” for the FDIC and to transfer all beneficial interest in Nardolillo's DOT to itself. Id. ¶ 16; RJN, Ex. 3. Nardolillo alleges this was a void assignment because: (1) Nardolillo's DOT was never among the assets received by the FDIC from WaMu and transferred to Chase; and (2) Chase was not authorized to serve as the attorney in fact for the FDIC at the time it executed and recorded the Corporate Assignment. Id. ¶ 17.

         On April 17, 2015, Chase recorded a Substitution of Trustee, substituting former-defendant Trustee Corps in place of CRC as trustee under the DOT. Id. ¶ 18. Nardolillo alleges that this substitution is also void. Id. ¶ 19.

         On July 7, 2016, Chase directed Trustee Corps to record a Notice of Trustee's Sale against the Subject Property. Id. ¶ 20; RJN, Ex. 13. On July 22, 2016, Nardolillo submitted his first loan modification application to Chase. Id. ¶ 21. However, defendants have continued to notice trustee's sale dates on the Property. Id.

         Nardolillo filed this suit against Chase and Trustee Corps in state court, asserting three causes of action: (1) violation of California Civil Code § 2924.17; (2) violation of California Civil Code § 2923.6; and (3) violation California Civil Code § 2924(a)(6). Nardolillo seeks a declaration of the rights of the parties to the Property, injunctive relief to prevent defendants from asserting any interest in the Property or attempting to dispossess Nardolillo of the Property, and damages.


         Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts do not require “heightened fact pleading of specifics, ” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570.

         In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court accepts the plaintiff's allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” See In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

         If the court dismisses the complaint, it “should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” See Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making this determination, the court should consider factors such as “the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment.” See Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989).


         Chase moves to dismiss all three claims against it under HBOR, arguing that Nardolillo fails to ...

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