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Di Loreto v. Chase Manhattan Mortgage Corp.

United States District Court, N.D. California

November 20, 2017




         Defendants Specialized Loan Servicing LLC (SLS) and Chase Manhattan Mortgage Corporation (Chase) (collectively, Defendants) move to dismiss the complaint filed by Plaintiffs Gregory and Theresa Di Loreto.[1] Plaintiffs move for a preliminary injunction against foreclosure of the real property at issue in this case. Each side opposes the other's motion and each has filed a reply. After considering the parties' submissions and oral argument, the Court grants in part and denies in part Defendants' motion to dismiss and grants Plaintiffs' motion for a preliminary injunction.

         The Court also grants the unopposed requests for judicial notice filed by all parties, and takes judicial notice of the uncontested public documents submitted. The Court does not, however, take judicial notice of the disputed inferences the parties seek to draw from the documents or the parties' respective characterization of those documents. Nor does the Court make any finding about whether other evidence exists regarding the disputed issues.


         Plaintiffs own real property in Contra Costa County, California. In December 2004, Plaintiffs obtained a $1, 350, 000 refinance loan from originating lender Chase. They secured the loan by a deed of trust. Around the same time, Plaintiffs also obtained a $500, 000 home equity line of credit from non-party JP Morgan Chase Bank N.A. (JPMorgan). Shortly thereafter, Plaintiffs transferred title to the subject property into their family trust. In October 2015, the trust then transferred the title back to Plaintiffs and Gregory Di Loreto transferred his interest to Theresa Di Loreto. Oct. 11, 2017 Supp. Decl. of Gregory Di Loreto ¶ 2 & Ex. A.

         In November 2015, Chase assigned its beneficial interest in the refinance loan to non-party U.S. Bank National Association, as Trustee for J.P. Morgan Mortgage Trust 2006-A3 (U.S. Bank).

         “Approximately two years” before Plaintiffs filed this action, Plaintiffs submitted an application for loan modification to Chase and/or SLS. Complaint ¶ 11. Defendants requested additional information, which Plaintiffs attempted to provide. The application was still pending in July 2017, when SLS advised Plaintiffs in writing that their loan modification application was “currently under review.” Complaint ¶ 14 & Ex. E. SLS informed Plaintiffs that they needed to submit a “Request for Mortgage Assistance Form” but also listed numerous other required documents that it deemed “complete” with no further action needed. Id.

         Meanwhile, in January 2017, NBS caused to be recorded a notice of default and election to sell the subject property. In July 2017, NBS caused to be recorded a notice of Trustee's Sale.

         On August 1, 2017, Plaintiffs filed the complaint in this action in Contra Costa Superior Court. They enumerated separate claims seeking: (1) declaratory relief against all Defendants; (2) injunctive relief against Defendants Chase and SLS; (3) accounting against Defendants Chase and SLS; (4) relief under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, against Defendant SLS; and (5) relief under the California Homeowner Bill of Rights (HBOR), Cal. Civil Code §§ 2923.6, 2924.12, 2924.18, against Defendants Chase and SLS. On August 10, 2017, the Superior Court entered an order to show cause why the court should not issue a preliminary injunction prohibiting the sale of the subject property as well as a temporary restraining order prohibiting sale of the property pending the hearing on the order to show cause. On September 8, 2017, Defendants Chase and SLS filed a notice of removal.


         I. Motion to Dismiss

         A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). The plaintiff must proffer “enough facts to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). On a motion under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Twombly, 550 U.S. at 555. A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). The court's review is limited to the face of the complaint, materials incorporated into the complaint by reference, and facts of which the court may take judicial notice. Id. at 1061. However, the court need not accept legal conclusions, including threadbare “recitals of the elements of a cause of action, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

         When granting a motion to dismiss, the court is generally required to grant the plaintiff leave to amend, even if no request to amend the pleading was made, unless amendment would be futile. Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment would be futile, the court examines whether the complaint could be amended to cure the defect requiring dismissal “without contradicting any of the allegations of [the] original complaint.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). The court's discretion to deny leave to amend is “particularly broad” where the court has previously granted leave. Chodos v. West Publ'g Co., 292 F.3d 992, 1003 (9th Cir. 2002).

         II. Standing

         In order to satisfy Article III's standing requirements, plaintiffs must allege that: (1) they suffered an “injury in fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) that the injury is fairly traceable to the defendants' challenged conduct; and (3) that it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

         The Court evaluates a motion to dismiss for lack of Article III standing under Federal Rule of Civil Procedure 12(b)(1). See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011); White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). The threshold question of whether plaintiffs have standing is distinct from, and precedes, analysis of the merits of their claims. Maya, 658 F.3d at 1068. A “plaintiff must demonstrate standing for each claim he seeks to press and for each form of relief that is sought.” Davis v. Fed. Election Comm'n, 554 U.S. 724, 734 (2008) (internal quotations omitted).

         A motion to dismiss under Rule 12(b)(1) may be “facial or factual.” White, 227 F.3d at 1242. Where a defendant makes a facial attack on jurisdiction, the court takes the factual allegations of the complaint as true, and construes them in the light most favorable to the plaintiffs. Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). Where a defendant makes a factual attack, however, the court “need not presume the truthfulness of the plaintiffs' allegations” and, where the jurisdictional question is separable from the merits of the case, may resolve factual disputes without converting the motion into one for summary judgment. White, 227 F.3d at 1242; see also Thornhill Publ'n Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979). The plaintiff then “bears the burden of proving by a preponderance of the evidence that each of the requirements for subject-matter jurisdiction has been met.” Leite, 749 F.3d at 1121.

         III. Motion for Preliminary Injunction

         “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Alternatively, “a preliminary injunction could issue where the likelihood of success is such that serious questions going to the merits were raised and the balance of hardships tips sharply in plaintiff's favor, ” so long as the plaintiff demonstrates irreparable harm and shows that the injunction is in the public interest. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citation and internal quotation and editing marks omitted).

         A court employs a sliding scale when considering a plaintiff's showing as to the likelihood of success on the merits and the likelihood of irreparable harm. Id. “Under this approach, the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Id.


         I. Motion to Dismiss

         A. Untimely Opposition

         Defendants contend that the Court should disregard Plaintiffs' untimely opposition brief and grant the motion to dismiss as unopposed. Defendants' motion to dismiss was filed on September 26, 2017. Plaintiffs' opposition was due on October 10, 2017. On October 17, 2017, Defendants filed a notice that Plaintiffs had not opposed the motion. That same day, Plaintiffs filed a “Memorandum of Points and Authorities in Opposition to Defendant's Motion to Strike, ” which, despite the title, generally appears to ...

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