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Thompson v. JPMorgan Chase Bank, N.A.

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

July 19, 2017

JPMORGAN CHASE BANK, N.A., et al., Defendants.


          BETH LABSON FREEMAN United States District Judge

         Plaintiff Debbie Thompson (“Thompson”) brought this suit against Defendants for “injunctive relief against mistaken and erroneous foreclosure.” Notice of Removal 12 et seq. (“Compl.”), ECF 1. This case relates to a loan Thompson obtained in the amount of $1, 770, 000 from Washington Mutual Bank, FA (“WaMu”), secured by a Deed of Trust (the “DOT”) on real property located at 18285 Constitution Avenue, Monte Sereno, CA 95030. DOT and Adjustment Rate Note (the “Note”), Exs. 1 and 12 to Compl. Defendants removed the case from Santa Clara Superior Court to this Court and moved to dismiss the case. On March 7, 2017, the Court granted Defendants' motion to dismiss the complaint without leave to amend. Order, ECF 37. The parties later stipulated to entering of judgment. ECF 39. Now before the Court is Thompson's motion to alter or amend judgment pursuant to Fed. R. Civ. Proc. 59(e). Mot., ECF 40. For the reasons stated below, the Court DENIES the motion.


         A motion “under Rule 59(e) should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law.” McDowell v. Calderon, 197 F.3d 1253, 1254 (9th Cir. 1999) (internal quotation and citation omitted). The Ninth Circuit has identified “four basic grounds upon which a Rule 59(e) motion may be granted: (1) if such motion is necessary to correct manifest errors of law or fact upon which the judgment rests; (2) if such motion is necessary to present newly discovered or previously unavailable evidence; (3) if such motion is necessary to prevent manifest injustice; or (4) if the amendment is justified by an intervening change in controlling law.” Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). Moreover, “[a] motion for reconsideration ‘may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation.'” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir.2009) (quoting Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir.2000)).


         Thompson's basis for amending this Court's judgment rests on the grounds of (1) “newly discovered or previously unavailable evidence;” and (2) “manifest errors of law or fact upon which the judgment rests.” See Mot. 6. The Court addresses each in turn below.

         A. Newly Discovered or Previously Unavailable Evidence

         Thompson claims that the new evidence, in the form of “Declaration of Private Investigator William J. Paatalo, ” justifies amending the judgment. Mot. 7 (citing to Paatalo Decl., ECF 40-2). Accordingly, Thompson “must make three showings”: the evidence must be “newly discovered, ” the movant must have exercised “due diligence” to discover the evidence, and the evidence “must be of such magnitude that production of it earlier would have been likely to change the disposition of the case.” Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208, 211 (9th Cir. 1987).[1]

         Here, Thompson contends that the “new evidence, ” the Paatalo Declaration, reveals that “there is no evidence . . . that endorsement took place and that Defendant is the alleged bearer of the instrument and holder of the rights to the note in this dispute.” Mot. 8. The Paatalo Declaration states that “[Paatalo] was retained by Debbie Thompson to review the chain of title and alleged securitization of her Deed of Trust and Note.” Paatalo Decl. ¶ 11. In the declaration, Paatalo opines that based on WaMu's filings with the Securities and Exchange Commission, WaMu admitted “that no endorsements would be placed upon the notes it was selling, and no assignments of mortgages would be prepared or recorded.” Id. ¶ 13. Pattalo further states that the signature of “Cynthia A. Riley [on the Note] signifies forgery.” Id.

         The Court need not determine whether Thompson exercised due diligence because she fails to meet the other two criteria of the test. First, the Paatalo Declaration is not newly discovered. Thompson does not dispute that the Paatalo Declaration was available prior to this Court's Order granting Defendants' motion to dismiss. ECF 23; see Mot. 7-8; see also Blakeney v. Ascension Servs., L.P., No. 15-05544-LHK, 2016 WL 6804603, at *4 (N.D. Cal. Nov. 17, 2016) (finding that the evidence is not newly discovered because the plaintiff does not assert that the evidence was unavailable prior to the Court's order granting the motion to dismiss or that the plaintiff was unable to discover the evidence after exercising reasonable diligence).

         Second, the Paatalo Declaration is not of “such magnitude that production of it earlier would have been likely to change the disposition of the case.” See Coastal Transfer, 833 F.2d at 211. Thompson fails to explain how the Paatalo Declaration is capable of altering any aspect of the Court's Order. The Paatalo Declaration does not challenge the Court's conclusion that this is an unpermitted “preemptive suit to enjoin a foreclosure.” See Order at 5-7. It does not render Thompson's claim for injunctive relief a proper standalone cause of action. Id. at 7. It does not overcome California state law governing non-judicial foreclosure, which does not require that the original note be produced in order for the foreclosure proceedings to be valid. Lomely v. JP Morgan Chase Bank, Nat. Ass'n, No. 5:12-CV-01194-EJD, 2012 WL 4123403, at *4 (N.D. Cal. Sept. 17, 2012). And it does not implicate, let alone overcome, the deficiencies in Thompson's purported wrongful foreclosure claim: the failure to allege (1) illegality in Defendants' enforcement of Thompson's DOT, (2) Plaintiff's tender of her debt, or (3) prejudice to Thompson. Id. at 8-12. Accordingly, Thompson fails to demonstrate why the judgment should be amended on the basis of the Paatalo Declaration.

         B. Manifest Errors of Law or Fact

         Thompson also argues that the Court “has misapprehended the facts . . . or controlling law” in granting Defendants' motion to dismiss. Mot. 12-30. Thompson avers that the Court erred in construing her “mistaken and erroneous foreclosure” as a “wrongful foreclosure” cause of action. Mot. 13, 14. According to Thompson, the Court also erred by “assuming the ownership of the loan by the foreclosing party.” Id. at 14, 15.

         As a preliminary matter, the Court noted in the Order that the complaint contains only a standalone injunctive relief claim, which is not a valid cause of action. Thompson does not dispute that but only that her claims were based on “mistaken and erroneous foreclosure.” Id. at 14. However, there is no recognized cause of action for “mistaken and erroneous foreclosure” as something distinct from the tort of “wrongful foreclosure.” Thompson identifies no authority for the independent existence of the “mistaken and erroneous foreclosure” cause of action, and fails to explain how it differs from “wrongful foreclosure.” Construing Thompson's complaint liberally, the Court provided additional analysis by treating the complaint as if it had attempted to allege wrongful foreclosure, even though it had not done so expressly. Order 7-12. Now in this motion to amend judgment, Thompson insists that the only actual cause of action alleged ...

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