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Ratliff v. JP Morgan Chase Bank N.A.

United States District Court, N.D. California

July 6, 2017

JP MORGAN CHASE BANK N.A., et al., Defendants.


          EDWARD M. CHEN United States District Judge.

         Plaintiff Lonnie Ratliff[1] has filed against multiple defendants, asserting claims for, inter alia, wrongful foreclosure, quiet title, violation of the Fair Debt Collection Practices Act (“FDCPA”), violation of the Fair Credit Reporting Act (“FCRA”), and violation of the California Business & Professions Code § 17200. Currently pending before the Court is a motion to dismiss filed by four of the named defendants - i.e., JPMorgan Chase Bank, N.A. (“Chase”); Homesales, Inc.; EMC Mortgage, LLC (“EMC”); and Mortgage Electronic Registration Systems, Inc. (“MERS”).[2] Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS the motion to dismiss.


         In his complaint, Mr. Ratliff alleges as follows.

         Mr. Ratliff's lawsuit concerns certain real property that he owned in Oakland, California. The real property has both a front unit and a back unit. See Compl. ¶ 2.

         In October 2003, Mr. Ratliff obtained a $630, 000 loan from Mortgage Store. See Compl. ¶ 39. Chase appears to have been servicer for the $630, 000 loan. See Compl., Ex. G (Forensic Rept. at 2).

         The loan was secured by a deed of trust (“DOT”) on the Oakland property. See Compl. ¶ 39 & Ex. B (DOT at 2). The trustee named on the DOT was First American. See Compl., Ex. B (DOT at 2). In addition, MERS was identified on the DOT as “a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the beneficiary under this Security Instrument.” Compl., Ex. B (DOT at 2) (emphasis added).

         At some point, Mortgage Store transferred the loan/DOT to the Impac Trust but the transfer, according to Plaintiff, was not properly effected. See, e.g., Compl. ¶ 28 (alleging that “there was no 'True Sale' of Plaintiff's Tangible Note, a circumstance whereby the MORTGAGE STORE sold Plaintiff's Tangible Note to the 'buyer/seller' IMPAC Mortgage Holdings, Inc. in an ordinary course of business”) (emphasis omitted); Compl. ¶ 29 (alleging that “The MORTGAGE STORE, INC. never negotiated the Tangible Note by operation of law for full value in accordance with all applicable law to IMPAC MORTGAGE HOLDINGS, INC.”). The closing date for transfer of loans to the Impac Trust was supposed to be in December 2003. See Compl. ¶ 33.

         Although Mr. Ratliff takes the position, in his complaint, that there was no proper transfer to the securitized trust, he also argues, at least in his opposition brief, that, because of the transfer to the securitized trust, “only the Trust Pool[, ] or Deutsche Bank as its trustee, had the right to foreclose as they were the beneficiaries of Plaintiffs' [sic] mortgage at that point, ” Opp'n at 12, and not MERS. See Opp'n at 3 (arguing that “MERS listed itself as the beneficiary despite the fact that, at this point, the Impac . . . Trust . . . was the true beneficiary of Plaintiff's mortgage and MERS was a stranger to Plaintiff's DOT”).

         On July 21, 2005 - i.e., several years after the closing date for transfer of loans to the Impac Trust - MERS signed a substitution of trustee in which it designated ETS as the new trustee in place of First American. See Defs.' RJN, Ex. A (substitution of trustee).

         On the same day, ETS - acting at MERS's behest - issued a notice of default on the real property at issue. See Compl., Ex. I (notice of default). This notice of default was subsequently rescinded in August 2005. See Compl., Ex. J (rescission).

         On February 6, 2006, another notice of default was issued. As above, the notice indicated that ETS was taking action on behalf of MERS. See Compl., Ex. K (notice of default).

         Several months later, in May 2006, ETS had a notice of trustee's sale recorded against the real property. See Compl., Ex. L (notice of trustee's sale). For an unknown reason, that sale did not take place and another notice of trustee's sale issued in August 2007. See Compl., Ex. M (notice of trustee's sale).

         Ultimately, the real property was sold in October 2007. The trustee's deed upon sale reflects that the ETS, as trustee, conveyed the property to EMC. See Compl., Ex. N (trustee's deed upon sale).

         Many years later, in October 2013, a grant deed was recorded transferring the real property from EMC to Homesales. See Compl., Ex. O (grant deed).

         In November 2013, Homesales filed an unlawful detainer action against Mr. Ratliff in state court with respect to the front unit of the real property. In February 2014, Homesales initiated a second unlawful detainer action, this time with respect to the back unit. See Compl. ¶¶ 50, 55.

         In March 2017, a judgment was entered in favor of Homesales on the front unit. See Compl. ¶ 52. The status of the back unit has not yet been resolved. See Compl. ¶ 55.

         In January 2017 - prior to the final judgment on the front unit - Mr. Ratliff filed a Chapter 7 petition in bankruptcy court. See Compl. ¶ 56. Mr. Ratliff identified Chase in one of his bankruptcy filings as a creditor (even though, as indicated above, Chase appears to have been only the servicer of the loan at issue). See In re Ratliff, No. 17-40264 (N.D. Cal. Bankr. Ct.) (Docket No. 12, at 15) (summary of assets and liabilities) (stating that Homesales had a secured claim on the real property at issue in the amount of approximately $738, 000 and that Chase had a secured claim on the same real property in the same amount).

         In what appears to be a response to the bankrupting filing, Chase sent a letter to Mr. Ratliff in February 2017. The letter states in relevant part as follows:

Here's how your recent bankruptcy filing affects your account
Account: [REDACTED]
Bankruptcy Case Number: 17-40264
Property Address 2304 9th Ave
Oakland CA 94606
Dear Lonnie Ratliff Jr[.]:
We recently received notification that you've filed for bankruptcy.
If you've filed Chapter 7 bankruptcy, please call us at one of the numbers below to discuss plans for the property. We'd like to understand if you want to keep the property and if you're requesting to reaffirm the debt, meaning the debt will not be discharged and you'll still be responsible for the balance on your mortgage loan.
Reaffirming a debt is a serious financial decision. You should determine if it's in your best interest and if you can afford to make the payments on the debt. . . .
To request a reaffirmation agreement, you should call us at one of the numbers below. We don't consider your stated intention within your bankruptcy documents to be a request to enter into a reaffirmation agreement or a reaffirmation of the debt.
We don't report full contractual information to the credit reporting agencies on bankruptcy accounts. On accounts included in Chapter 7 bankruptcy and if the debt isn't reaffirmed, we'll stop reporting on the discharged debt after the bankruptcy case is closed regardless of whether the loan is current or is brought current at a later date.
If you're interested in keeping the property and your loan isn't current, homeowner assistance options may be available. Please call us at one of the numbers below to discuss your options. . . .
If you surrender the property, the title won't automatically transfer and you'll still be responsible for any post-petition taxes, insurance and Homeowners Association dues until the title is transferred. . . .
If you don't want to receive monthly statements We'll continue to send you monthly statements for informational purposes, but not as an attempt to impose personal liability for the debt. . . .
Payments on your account are voluntary Any payment we receive is voluntary and won't be considered an assumption or ...

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