Mortgage Resolution Servicing, LLC v. Jpmorgan Chase Bank, N.A., 102815 NYSDC, 15 Civ. 0293 (LTS) (JCF)

Docket Nº15 Civ. 0293 (LTS) (JCF)
Opinion JudgeJAMES C. FRANCIS, IV, Magistrate Judge.
Party NameMORTGAGE RESOLUTION SERVICING, LLC, 1ST FIDELITY LOAN SERVICING, LLC, and S&A CAPITAL PARTNERS, INC., Plaintiffs, v. JPMORGAN CHASE BANK, N.A., CHASE HOME FINANCE LLC, and JPMORGAN CHASE & CO., Defendants.
Case DateOctober 28, 2015
CourtUnited States District Courts, 2nd Circuit, Southern District of New York

MORTGAGE RESOLUTION SERVICING, LLC, 1ST FIDELITY LOAN SERVICING, LLC, and S&A CAPITAL PARTNERS, INC., Plaintiffs,

v.

JPMORGAN CHASE BANK, N.A., CHASE HOME FINANCE LLC, and JPMORGAN CHASE & CO., Defendants.

No. 15 Civ. 0293 (LTS) (JCF)

United States District Court, S.D. New York.

October 28, 2015

MEMORANDUM AND ORDER

JAMES C. FRANCIS, IV, Magistrate Judge.

On separate occasions, the plaintiffs - Mortgage Resolution Servicing, LLC ("MRS"), 1st Fidelity Loan Servicing, LLC ("1st Fidelity"), and S&A Capital Partners, Inc. ("S&A") - purchased residential mortgage debt from the defendants. The plaintiffs bring this action alleging breach of contract claims and related tort actions, as well as one civil RICO claim. The defendants JPMorgan Chase Bank, N.A. ("the Bank"), Chase Home Finance LLC ("Chase Home Finance"), 1 and JPMorgan Chase & Company ("JPMC"), now move pursuant to 28 U.S.C. § 1404(a) to have this case transferred to the United States District Court for the District of Columbia ("the D.C. Court"). For the reasons that follow, the motion is denied.

Background

Each of the plaintiffs is in the business of buying residential mortgage loans that "are not performing according to their original terms." (3d Am. Compl., ¶ 11). Upon purchasing the mortgages, the plaintiffs negotiate payment terms with the borrowers with the goal of avoiding further payment defaults. (3d Am. Compl., ¶ 12). Between 2005 and 2010, S&A and 1st Fidelity respectively acquired from Chase Home Finance approximately 650 and 350 mortgages. (3d Am. Compl., ¶¶ 14-15). Additionally, in February 2009, after months of communications between the parties, Chase Home Finance sold MRS 3, 529 mortgage loans (with an outstanding balance of $156 million) for $200, 000. (3d Am. Compl., ¶¶ 19-39). The Third Amended Complaint asserts nine causes of action: (1) breach of contract on behalf of MRS; (2) breach of contract on behalf of S&A; (3) breach of contract on behalf of 1st Fidelity; (4) conversion on behalf of all plaintiffs; (5) tortious interference with prospective economic advantage on behalf of all plaintiffs; (6) fraud and fraudulent inducement on behalf of MRS; (7) negligent misrepresentation on behalf of MRS; (8) slander of title on behalf of all plaintiffs; and (9) a civil RICO claim on behalf of all plaintiffs. (3d Am. Compl., ¶¶ 148-220). In one way or another, the plaintiffs' claims all stem from their purchase of mortgage loans from the defendants.

The allegation that ties the plaintiffs' breach of contract, tort, and civil RICO causes of action2 together is that the defendants, after selling mortgage loans to the plaintiffs, released liens securing those loans, purported to forgive debt on mortgages they sold, and accepted and retained payments on loans they no longer owned. (3d Am. Compl., ¶¶ 152, 157, 162, 168, 172, 194, 204). Those claims pursued by MRS alone3 include allegations that the defendants sold it loans that were defective and that the defendants fraudulently and negligently misrepresented the nature and quality of those loans. (3d Am. Compl., ¶¶ 177-181, 186-191). The plaintiffs originally filed suit in New York state court, but, in January 2015, the defendants removed the case here. (Notice of Removal, ¶ 1).

Looming in the background of this case are two somewhat related matters. First, in March 2012, the United States and forty-nine states filed suit in the D.C. Court against numerous financial institutions (including the defendants) for "misconduct related to their origination and servicing of single family residential mortgages." (Complaint, United States v. Bank of America Corp., No. 12-CV-361 (D.D.C. March 12, 2012), attached as Exh. A to Declaration of Michael M. Maya dated May 22, 2015 ("Maya Decl."), ¶ 1). On April 4, 2012, all parties agreed to settle the matter; the Honorable Judge Rosemary M. Collyer, U.S.D.J., approved the settlement in the form of separate consent judgments against the various defendants. See United States v. Bank of America, 922 F.Supp.2d 1, 4 (D.D.C. 2013); (Chase Consent Judgment, Bank of America Corp., No. 12-CV-361 (D.D.C. April 4, 2012) ("Consent Judgment"), attached as Exh. B to Maya Decl.). The consent judgment entered against these defendants required, among other things, that they provide refinancing and other relief to consumers who satisfied eligibility criteria. (Consent Judgment, ¶ 5). Judge Collyer retained jurisdiction to enforce the judgment. (Consent Judgment, ¶ 13).

More recently, in May 2013, Laurence Schneider brought a qui tam action against the defendants in the U.S. District Court for the District of South Carolina. (Complaint, United States ex rel. Schneider v. JPMorgan Chase Bank, No 3:13-CV-1223 (D.S.C. May 6, 2013) ("Schneider Compl."), attached as Exh. D to Maya Decl.). Mr. Schneider is the president of plaintiff S&A and of Real Estate and Finance, Inc., which in turn is the managing member of plaintiffs MRS and 1st Fidelity. (3d Am. Compl., ¶¶ 2-4). In essence, Mr. Schneider's qui tam complaint asserts that the defendants violated the terms of the consent judgment by, among other things, improperly claiming credit for forgiving mortgage debt that they no longer owned. (Schneider Compl., ¶¶ 4-13). Mr. Schneider subsequently moved to have that case transferred to the D.C. Court and marked as related to the prior litigation, pursuant to Judge Collyer's retention of jurisdiction over the consent judgment. (Memorandum in Support of Motion to Transfer Venue, United States ex rel. Schneider, No. 3:13-CV-1223 (May 27, 2014), attached as Exh. H to Maya Decl., at 3). That motion was granted. (Order Granting Motion to Transfer, United States ex rel. Schneider, No. 3:13-cv-1223 (June 19, 2014), attached as Exh. I to Maya Decl.).

In light of the "common questions of law and fact" raised in this complaint and Mr. Schneider's qui tam action, the defendants now move to have the plaintiffs' case transferred to the D.C. Court "so that the two related cases can be coordinated before a single court." (Defendants' Memorandum of Law in Support of Their Motion to Transfer Venue to United States District Court for the District of Columbia ("Def. Memo.") at 2). The plaintiffs oppose the motion primarily on the grounds that a forum selection clause contained in a purchase agreement between MRS and Chase Home Finance identifies New York as the forum for resolving disputes arising under that agreement. (Plaintiffs' Memorandum in Opposition to Defendants' Motion to Transfer Venue ("Pl. Memo.") at 1, 3-4).

Discussion

A. Legal Standard

A district court may transfer an action "[f]or the convenience of parties and witnesses, in the interest of justice, " to any district "where [the action] might have been brought." 28 U.S.C. § 1404(a). Congress intended § 1404(a) "to prevent the waste of time, energy and money' and to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting...

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