Gilbert v. Chase Home Fin., LLC
| Decision Date | 31 July 2013 |
| Docket Number | 1:13-CV-265 AWI SKO |
| Court | U.S. District Court — Eastern District of California |
| Parties | JAMES D. GILBERT, Plaintiff, v. CHASE HOME FINANCE, LLC, JPMORGAN CHASE BANK, N.A., and DOES 1-100 inclusive, Defendants. |
ORDER ON DEFENDANTS'
MOTION TO DISMISS
This is a mortgage related case that was removed from the Stanislaus County Superior Court. Plaintiff James Gilbert ("Gilbert") has brought suit against Chase Home Financing ("CHF") and JPMorgan Chase Bank ("JP Morgan"), collectively "Defendants." The active complaint is the Third Amended Complaint ("TAC"), which was filed following the Court's order granting a motion to dismiss. Gilbert alleges causes of action for breach of express and implied contract, slander of title, California Business & Professions Code § 17200 ("UCL"), money had and received, 18 U.S.C. § 1962 ("RICO"), and 15 U.S.C. § 1601 ("TILA"). Defendants now move to dismiss the TAC. For the reasons that follow, the motion will be granted and this case will close.
From the TAC and judicially noticed documents, Gilbert obtained title to property located at Nicklaus Drive in Turlock, California ("the Property") in 2003. See Defendants' Request ofJudicial Notice ("RJN") Ex. 1.1 In February 2007, Gilbert obtained a residential loan in the amount of $328,500 on the Property, which was secured by a deed of trust. See RJN Ex. 2. The deed of trust was recorded in March 2007. See id. The deed of trust identifies the lender and beneficiary as JP Morgan and identifies the trustee as Maryanne Day And Home Office. See id.
Later in 2007, and after it had recorded the deed of trust, JP Morgan securitized and sold the deed of trust to Freddie Mac. Gilbert alleges that the Defendants did not securitize the note and deed of trust in accordance with the applicable Pooling Servicing Agreement ("PSA").
On April 29, 2011, CHF informed Gilbert that he was eligible for a loan modification. The letter also indicates that CHF is the current lender of the deed of trust.
On June 21, 2012, Gilbert filed this lawsuit in state court, and on July 5, 2012, filed a lis pendens notice in the Stanislaus County Recorder's Office.
After filing an amended complaint, Defendants filed a demurrer. The state court granted the demurrer with leave to amend.
Gilbert then filed a second amended complaint. Defendants removed the case to this Court on February 21, 2013, due to inclusion of a RICO claim.
In May 2013, this Court granted Defendants' Rule 12(b)(6) motion dismiss, and dismissed the second amended complaint with leave to amend.
Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011); Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008). In reviewing a complaint under Rule 12(b)(6), all allegations ofmaterial fact are taken as true and construed in the light most favorable to the non-moving party. Faulkner v. ADT Sec. Servs., 706 F.3d 1017, 1019 (9th Cir. 2013); Johnson, 534 F.3d at 1121. However, the Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Willson v. Hewlett-Packard Co., 668 F.3d 1136, 1145 n. 4 (9th Cir. 2012); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). To "avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. The Ninth Circuit has distilled the following principles from Iqbal and Twombly:
First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.
Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited to reviewing only the complaint, but it may take judicial notice of public records outside the pleadings, review materials which are properly submitted as part of the complaint, and review documents that are incorporated by reference in the Complaint if no party questions authenticity. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a motion to dismiss is granted, "[the] district court should grant leave to amend even if no request to amend the pleading was made . . . ." Henry A. v. Willden, 678 F.3d 991, 1005 (9th Cir. 2012). However, leave to amend need not be granted if amendment would be futile or if the plaintiff has failed to cure deficiencies despite repeated opportunities. See Mueller v. Aulker, 700 F.3d 1180, 1191 (9th Cir. 2012); Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010).
Defendants argue that the first and second causes of action remain centered on vague allegations relating to purported breaches of the deed of trust, the PSA, and the loan modification agreement. However, the TAC fails to allege that there actually existed a loan modification agreement, and continues to rely on a letter that stated that Gilbert was merely eligible for a modification. As to the deed of trust, Gilbert's reliance on Paragraph 22 is inapplicable because he is not in default and foreclosure proceedings have not occurred. As to the PSA, reliance on the PSA and securitization is inappropriate because the Court rejected these theories in the previous order. Finally, the damages identified are prospective and speculative.
Gilbert argues that he has standing to make challenges based on violations of the PSA. JP Morgan breached the terms of the PSA in that the loan was not assigned to the Freddie Mac Trust within 90 days of the trust's closing. Gilbert also appears to argue that the deed of trust requires a trustee to record a notice of default, and that a lender may appoint a successor trustee. Because no successor trust was named following securitization, the deed of trust was not followed and no one has authority to record a notice of default.
Under California law, contracts may be either express or implied. Marvin v. Marvin, 18 Cal.3d 660, 678 n.16 (1976). The difference between an express contract and an implied contract is the mode of proof by which they are established. See Crawford v. Gould, 56 F.3d 1162, 1168 (9th Cir. 1994); Marvin, 18 Cal.3d at 678 n.16. An express contract is shown through the direct spoken or written words of the parties, while an implied contract is shown by the acts and conduct of the parties. See Crawford, 56 F.3d at 1168; Marvin, 18 Cal.3d at 678 n.16; Cal. Civ. Code §§ 1620, 1621. The elements of a cause of action for either breach of an express contract or breach of an implied contract are the same. See Gomez v. Lincare, Inc., 173 Cal.App.4th 508, 525 (2009); Division of Labor Law Enforcement v. Transpacific Transp. Co., 69 Cal.App.3d268, 275 (1977). The elements of a breach of contract cause of action under California law are: (1) the existence of a contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) resulting damage to the plaintiff. Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011); Reichert v. General Ins. Co., 68 Cal.2d 822, 830 (1968).
In the previous dismissal order, the Court informed Gilbert that a violation of the PSA could not form the basis of any claim. See Gilbert v. Chase Home Finance, LLC, 2013 U.S. Dist. LEXIS 74772, *10 (E.D. Cal. May 28, 2013). The Court cited numerous district court cases that had rejected a litigant's reliance on PSA violations. See id. at *9 (citing Elliot v. Mortgage Elec. Registration Sys., 2013 U.S. Dist. LEXIS 61820, *7-*10 (N.D. Cal. Apr. 25, 2013); Newman v. Bank of New York Mellon, 2013 U.S. Dist. Lexis 52487, *8 (E.D. Cal. Apr. 10, 2013); Sabherwal v. Bank of N.Y. Mellon, 2013 U.S. Dist. LEXIS 2930, *20-*21 (S.D. Cal. Jan. 7, 2013); Dinh v. Citibank, N.A., 2013 U.S. Dist. LEXIS 2312, *8-*11 (C.D. Cal. Jan. 7, 2013); Ramirez v. Kings Mortg. Servs., 2012 U.S. Dist. LEXIS 160583, *13-*14 (E.D. Cal. Nov. 8, 2012); Armstrong v. Chevy Chase Bank, FSB, 2012 U.S. Dist. LEXIS 144125, *6-*7 (N.D. Cal. Oct. 3, 2012); Hale v. World Sav. Bank, 2012 U.S. Dist. LEXIS 141917, *17-*18 (E.D. Cal. Oct. 1, 2012); Almutarreb v. Bank of N.Y. Trust Co., N.A., 2012 U.S. Dist. LEXIS 137202, *3-*7 (N.D. Cal. Sept. 24, 2012); Junger v. Bank of Am., 2012 U.S. Dist. LEXIS 23917, *7-*8 (C.D. Cal. Feb. 24, 2012)). The Court's position has not changed. No claim based on the PSA is viable.
The TAC remains unclear. The basis of the cause of action appears to be alleged flaws in the securitization process and a resultant violation of Paragraph 22 of the deed of trust.
In terms of securitization, securitization does not affect the ability...
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