United States District Court, E.D. California
FINDINGS AND RECOMMENDATIONS RECOMMENDING THAT
DEFENDANTS JPMORGAN CHASE BANK, N.A. AND WILMINGTON TRUST
COMPANY'S MOTION TO DISMISS BE GRANTED AND
PLAINTIFFS' REQUEST FOR LEAVE TO AMEND BE DENIED (ECF
NOS. 3, 10)
Christopher Dufresne and the Estate of Sylvia Brown
(“Plaintiffs”) bring this suit against Defendants
JPMorgan Chase Bank, N.A. (“Chase”), Wilmington
Trust Company (“WTC”), Quality Loan Service Corp.
(“Quality”), DOES 1-100, and Guaranty Holdings of
California, Inc. (“Guaranty Holdings”),
(collectively “Defendants”) alleging that
Defendants improperly foreclosed on property in Calaveras
County. Plaintiffs allege causes of action for “(1)
wrongful foreclosure, (2) cancellation of instruments, (3)
declaratory relief, and (4) to set aside Trustee's
sale.” (ECF No. 1-1.)
10, 2019, Defendants Chase and WTC filed a motion to dismiss
all of Plaintiffs' claims. (ECF No. 3.) For the following
reasons, the Court recommends that Chase and WTC's motion
to dismiss be granted and that, to the extent considered,
Plaintiffs' request for leave to amend be denied.
Allegations in the Complaint 
Complaint alleges as follows:
about September 23, 2004, Plaintiffs executed a Promissory
Note (“Loan”) in connection with a loan they
received in the amount of $1, 000, 000 from Washington Mutual
Bank, FA (“WAMU”) for real property located at
108 Sanguinetti Court, Copperopolis, CA 5228 (“the
Property”). The Loan was secured by a Deed of Trust
(“DOT”) recorded against the Property with the
Calaveras County Recorder's Office on September 28, 2004.
The DOT identified Sylvia C. Brown and Christopher M.
Dufrense as the “Borrower, ” WAMU as the
“Lender” and “Beneficiary, ” and
California Reconveyance Company as the “Trustee.”
allege on “information and belief” that
immediately after the Loan was funded and no later than
December 31, 2004, WAMU sold and/or transferred the Loan to
an unidentified third-party and WAMU ceased to be the Lender
or Beneficiary under the Loan or DOT. Plaintiffs further
allege that it was WAMU's “business model and
practice to sell these loans immediately after they were
funded. The secondary market's refusal to purchase these
loans in 2008 then caused WAMU to collapse.” (ECF No.
Federal Deposit Insurance Corporation (“FDIC”)
put WAMU into receivership on September 25, 2008. However,
Plaintiffs allege on information and belief that WAMU was no
longer the beneficiary of the loan at the time it was placed
into receivership by the FDIC “because it previously
sold the loan on or before December 31, 2004.”
(Id. at ¶11.) Thus, according to Plaintiffs,
the FDIC never acquired any interest in their Loan.
16, 2015, Chase, as attorney-in-fact for the FDIC as receiver
of WAMU, executed a Corporate Assignment of Deed of Trust to
Chase (“Assignment 1”). Assignment 1 transferred
the DOT on Sylvia Brown's property to Chase, thereby
purporting to “further memorialize the transfer that
occurred by operation of law on September 25, 2008, as
authorized by Section 11(d)(2)(G)(i)(II) of the Federal
Deposit Insurance Act, 12 U.S.C. §
1821(d)(2)(G)(i)(II).” (Exhibit C to Plaintiffs'
same day, Chase executed another Corporate Assignment of Deed
of Trust, this time purporting to transfer whatever interest
it had in the DOT to WTC in its individual capacity but
solely as successor Trustee to U.S. Bank, N.A. as Trustee to
MASTR Asset Securitization Trust 2004-11 (“Assignment
2”) (Exhibit D to Plaintiffs' Complaint).
August 3, 2015, Assignment 1 was recorded with the Calaveras
County Recorder's Office as Document No. 2015-8589. On
the same day, Assignment 2 was recorded with the Calaveras
County Recorder's Office as Document No. 2015-8590.
about October 6, 2015, Chase as alleged attorney-in-fact for
WTC, executed a Substitution of Trustee (“SOT”)
purporting to name Quality as the successor Trustee under the
DOT. On or about October 13, 2015, Quality as the purported
successor Trustee, executed a Notice of Default and Election
to Sell Under Deed of Trust (“NOD”) alleging that
Plaintiffs were in default in the amount of $56, 732.55.
October 15, 2015, the SOT was recorded with the Calaveras
County Recorder's Office as Document No. 2015-11499. On
July 18, 2018, Quality executed a Notice of Trustee's
Sale (“NOTS”) which set a foreclosure sale for
August 21, 2018, and a sale amount of $525, 674.65.
20, 2018, the NOTS was recorded with the Calaveras County
Recorder's Office as Document No. 2018-008258.
December 11, 2018, Defendants completed a foreclosure sale of
the Property through which the Property was sold to Guaranty
December 14, 2018, Quality executed a Trustee's Deed Upon
Sale (“TDUS”) purportedly transferring title in
the Property to Guaranty Holdings.
December 19, 2018, the TDUS was recorded with the Calaveras
County Recorder's Office as Document No. 2018-013873.
Brown 1 and the Instant Suit
originally filed suit against Defendants in Calaveras County
on December 18, 2018, alleging causes of action relating to
Plaintiffs' failure to secure a loan modification from
Chase. (Chase and WTC refer to this suit as Brown I,
and the Court adopts that reference herein). Defendants
removed the case to this Court and filed a motion to dismiss
for failure to state a claim. (ECF No. 10 in Case No.
1:19-cv-00042-LJO-BAM.) Plaintiffs then filed a First Amended
Complaint adding causes of action for cancellation of
instruments and quiet title. (ECF No. 12 in Case No.
1:19-cv-00042-LJO-BAM.) Defendants again moved to dismiss.
Plaintiffs voluntarily dismissed Brown 1 on April
26, 2019, the same day they filed this suit in state court.
(ECF No. 28. in Case No. 1:19-cv-00042-LJO-BAM.)
removed the instant suit to this Court on June 3, 2019. (ECF
No. 1.) The crux of Plaintiffs' allegations are that
Defendants lacked an interest in their Loan because WAMU
allegedly sold it to an unidentified third party before being
acquired by the FDIC. Thus, the foreclosure was illegal, and
the instruments executed in furtherance of the foreclosure-
particularly Assignments 1 and 2-are void and subject to
Motion to Dismiss
10, 2019, Chase and WTC filed a motion to dismiss
Plaintiffs' Complaint. (ECF No. 3.) Chase and WTC also
filed a request for judicial notice on that same date. (ECF
No. 4.) The assigned district judge referred the motion to
the undersigned for findings and recommendations on June 20,
2019. (ECF No. 7.)
motion to dismiss, Chase and WTC claim that WAMU did sell the
Loan in 2004, but it was sold to the MASTR Asset
Securitization Trust 2004-11 (“Trust”), the
beneficiary that ultimately foreclosed on the Loan in 2018,
with WAMU retaining the servicing rights. Chase claimed that
it then acquired those servicing rights from the FDIC after
the FDIC had placed WAMU into receivership. The documents
susceptible of judicial notice (see below) establish the
• Several WAMU-originated loans were transferred to the
Trust in 2004. (Request for Judicial Notice
(“RJN”), Ex. A. at 23, 27 & § 3.14.)
Under the Trust's Pooling and Servicing Agreement, WAMU
remained the servicer for all WAMU-originated loans, with the
power to conduct foreclosure in the event of
• On September 25, 2008, Chase acquired WAMU's
assets from the FDIC through a Purchase and Assumption
Agreement. (RJN, Ex. B.) The Purchase and Assumption
Agreement explains that Chase acquired, with limited
exceptions, “all of the assets” of WAMU, and it
“specifically purchases all mortgage servicing rights
and obligations.” (Id. at § 3.1.)
• On September 17, 2014, the Trust, at that point having
U.S. Bank N.A. as Trustee, also executed a limited Power of
Attorney further establishing Chase's ability to
foreclose on WAMU-originated loans that had been sold to the
Trust. (RJN, Ex. C.)
setting forth their explanation for their legal right to
foreclose on Plaintiffs' property, Chase and WTC argue
that Plaintiffs' Complaint should be dismissed because
each cause of action rests on the single “information
and belief” allegation that Plaintiffs' original
lender, WAMU, “sold and/or transferred
[Plaintiffs'] Loan to a third party” in 2004, and
that, as a result of this sale, Chase never acquired any
interest in Plaintiffs' Loan and that all recorded
instruments associated with the foreclosure are thus void.
Chase and WTC argue that Plaintiffs lack sufficient basis for
this assertion and that, more importantly, that allegation is
consistent with Chase's basis for foreclosure, which
stems from WAMU's sale of the Loan to the Trust. Because
Plaintiffs do not, and cannot, ...