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McMahon v. JPMorgan Chase Bank, N.A.

United States District Court, E.D. California

May 30, 2017

GORDON MCMAHON, an individual; Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.; SELECT PORTFOLIO SERVICING, INC.; and DOES 1 through 20 inclusive, Defendants.

          ORDER GRANTING DEFENDANT JPMORGAN CHASE BANK'S MOTION TO DISMISS

          JOHN A. MENDEZ JUDGE

         Plaintiff Gordon McMahon (“McMahon”) sued Defendants Select Portfolio Servicing (“SPS”) and JPMorgan Chase Bank (“Chase”) seeking to save his home from foreclosure. ECF No. 1. Chase moves to dismiss McMahon's First Amended Complaint (“FAC”) with prejudice. ECF No. 43. McMahon opposes the motion. ECF No. 45.[1]

         I. FACTS

         The Court takes the facts alleged by McMahon as true for purposes of this motion.

         McMahon obtained a mortgage loan in 2005. FAC ¶ 1. The interest rate and monthly payment increased about two years later. Id. By late 2007, McMahon could not pay his mortgage. Id.

         Chase began servicing McMahon's loan in September 2011. FAC ¶ 38. Chase scheduled a foreclosure for April 2013. FAC ¶ 42. To explore options to avoid the foreclosure, McMahon called Karen Hyman-his “Customer Assistance Specialist” at Chase-several times in January 2013, but she never returned his calls. FAC ¶ 43. McMahon then sent Chase a Qualified Written Request (“QWR”). FAC ¶ 44. Chase “provided an incomplete response” to the QWR two months later. FAC ¶ 45. McMahon then filed a Request for Mortgage Assistance (“RMA”) with Chase in March 2013. FAC ¶ 46. Chase did not respond to McMahon's application. Id.

         Two months later, Chase informed McMahon it would transfer servicing of the loan to SPS effective June 1, 2013. FAC ¶ 49. According to McMahon, SPS was Chase's “subservicer” on McMahon's account. FAC ¶ 88.

         McMahon brings seven claims against Chase: (1) violation of the Homeowners Bill of Rights (“HBOR”) at California Civil Code Section 2924.12, (2) violation of the Equal Credit Opportunity Act (“ECOA”) at 15 U.S.C. § 1691(d)(1), (3) violation of the Real Estate Settlement Procedures Act (“RESPA”) at 12 U.S.C. § 2605(e), (4) violation of Regulation X at 12 C.F.R.

         Section 1024.41, (5) violation of Regulation X at 12 C.F.R. Sections 1024.35, 1024.36, (6) negligence, and (7) violation of California Business and Professions Code Section 17200.

         II. OPINION

         A. Analysis

         1. First Claim: HBOR

         McMahon asks the Court to grant him “injunctive relief for material violations of California Civil Code sections 2923.55, 2923.6, and 2924.17.” FAC ¶ 118.

         California Civil Code Section 2924.12 permits a borrower to “bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, . . . or 2924.17” if “a trustee's deed of sale has not been recorded.” Cal. Civ. 2924.12(a)(1).

         Chase argues McMahon cannot seek injunctive relief against it because Chase no longer services McMahon's loan. Mot. at 3. McMahon counters that he can seek injunctive relief against Chase because “Chase remains directly involved as a master servicer.” Opp'n at 6. McMahon contends Chase has “direct liability” or “secondary liability under . . . agency, joint venture, and/or aiding and abetting.” Id. at 5.

         This same “master servicer” argument was at issue in Cooksey v. Select Portfolio Servicing, 2014 WL 4662015, at *6 (E.D. Cal Sept. 8, 2014). In Cooksey, the court stated the plaintiffs needed to plead facts to support their allegations that Bank of America-the alleged master servicer-aided and abetted or was in a joint venture with SPS. Id. The Cookseys' allegations against Bank of America as to aiding and abetting of SPS closely resemble McMahon's allegations against Chase here. Compare id. (citing Complaint ¶¶ 9-10) with FAC ¶¶ 11-12. The Cooksey court stated:

In California, “liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant assisted.” Casey v. U.S. Bank Nat'l Ass'n, 127 Cal.App.4th 1138, 1145 (2005). In addition, “‘[t]here are three basic elements of a joint venture: the members must have joint control over the venture (even though they may delegate it), they must share the profits of the undertaking, and the members must each have an ownership interest in the enterprise.'” Jeld-Wen, Inc. v. Sup. Ct.,131 Cal.App.4th 853, 872 (2005) (quoting Orosco v. Sun-Diamond Corp., 51 Cal.App.4th 1659, 1666 (1997)). Each of these theories must be supported by sufficient facts to show either BANA's knowledge of SPS's HBOR violations or BANA's profit-sharing, joint control and ownership of the undertaking. Fields v. Wise Media, LLC, No. C 12-05160-WHA, 2013 WL 5340490, at *3-4 (N.D. Cal. Sep.24, 2013); Uecker v. Wells Fargo Capital Fin. (In re ...

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