Jenkins v. JP Morgan Chase Bank, N.A.

Citation156 Cal.Rptr.3d 912,216 Cal.App.4th 497
Decision Date12 June 2013
Docket NumberG046121
CourtCalifornia Court of Appeals
PartiesDiane JENKINS, Plaintiff and Appellant, v. JP MORGAN CHASE BANK, N.A. et al., Defendants and Respondents.


See 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security Transactions in Real Property, § 144 et seq.

Appeal from a judgment of the Superior Court of Orange County, William M. Monroe, Judge. Affirmed. (Super.Ct. No. 30–2011–00438159)

Law Offices of Patricia Rodriguez and Patricia Rodriguez for Plaintiff and Appellant.

Bryan Cave, Stuart W. Price, Sean D. Muntz and Brett N. Taylor for Defendants and Respondent JP Morgan Chase Bank N.A. and Bank of America N.A.

McCarthy & Holthus, Matthew Podmenik and Melissa Robbins Coutts for Defendant and Respondent Quality Loan Service Corporation.



Diane Jenkins (Jenkins) requests the reversal of the trial court's dismissal of her lawsuit after it sustained the two separate demurrers of (1) JPMorgan Chase Bank N.A. (Chase) and Bank of America, N.A. (B of A) and (2) Quality Loan Service Corporation (Quality). (These entities will collectively be referred to as Defendants, unless the context indicates otherwise.) In 2007, Jenkins executed a promissory note and deed of trust in order to refinance her condominium. After she failed to obtain refinancing for the same loan in 2008 and 2009, she defaulted on the loan and thereafter brought suit to avoid nonjudicial foreclosure and collect monetary damages.

Jenkins voluntarily amended her initial complaint, which she filed in propria persona, after she retained counsel. The court sustained Defendants' demurrers to Jenkins's first amended complaint (FAC) with leave to amend four of her five causes of action. Jenkins's second amended complaint (SAC) raised five causes of action. Two of the causes of action relate to her overarching assertion the secured interest created by her execution of the deed of trust in 2007 was extinguished by purportedly improper actions taken by Defendants and, consequently, Defendants should be prevented from foreclosing on her home. The other three causes of action relate to her allegations Defendants violated numerous state and federal laws with regard to the origination and servicing of her loan and the initiation of nonjudicial foreclosure. The court, finding Jenkins's SAC failed to allege a valid cause of action, sustained Defendants' demurrers without leave to amend. None of Jenkins's contentions have merit and we affirm the judgment.


In March 2007, Jenkins obtained an adjustable rate loan in the amount of $375,500 from Washington Mutual Bank, F.A. (WaMu). She executed a promissory note for this amount. The loan was secured by a deed of trust, which encumbered her residence located in Laguna Niguel, California. The deed of trust identified WaMu as the beneficiary and California Reconveyance Company as the trustee. In January 2008, Jenkins requested WaMu refinance the loan. She alleges Chris Rogella, a WaMu loan officer, gave her “the run around” for nearly two years and failed to assist her with refinancing her loan.

Meanwhile, in September 2008, WaMu financially collapsed and the United States Office of Thrift Supervision (OTS) seized the defunct bank and placed it into the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC succeeded to “all rights, titles, powers, and privileges” of the bank. (12 U.S.C. § 1821(d)(2)(A)(i).) Soon thereafter, the FDIC, by way of a purchase and assumption agreement executed on September 25, 2008, transferred certain assets and liabilities of WaMu, including the defunct bank's loan portfolio, to Chase. Under the terms of the purchase and assumption agreement, Chase did not assume any liability for WaMu's lending or loan purchasing activities prior to September 25, 2008.

Jenkins alleges Rogella advised her, sometime after September 2009, to cease making payments on her loan to qualify for a loan modification and to obtain a more favorable interest rate. Subsequently, Jenkins defaulted on her loan, and on April 30, 2010, Quality recorded a notice of default. At this point in time, Jenkins was more than $9,199 in arrears. Her extensive efforts to negotiate a reduction of her loan payments were unsuccessful.

On June 11, 2010, Chase, acting as the “present Beneficiary” of the deed of trust, recorded a substitution of trustee designating Quality as trustee. Two months later, Quality recorded a notice of trustee's sale, seeking the unpaid balance of $392,314.77. The foreclosure sale was subsequently postponed and has not been rescheduled.

On January 5, 2011, Jenkins, acting in propria persona, filed her initial complaint against Chase, WaMu, and Quality. Chase, on behalf of itself and as the acquirer of WaMu, responded by filing a demurrer. Before the matter could be heard, Jenkins hired an attorney and filed her FAC on April 20, 2011. The FAC alleged five causes of action: (1) lack of standing to foreclose; (2) unfair business practices in violation of Business and Professions Code section 17200 et seq., and Penal Code section 115.5 [fraudulently procured documents] (hereafter unfair business practices); (3) contractual breach of good faith and fair dealing; (4) violation of the Truth in Lending Act, 15 United States Code section 1601 et seq. (TILA); and (5) violations of the Real Estate Settlement and Procedures Act of 1974, 12 United States Code section 2601 et seq...(RESPA).

The crux of Jenkins's lawsuit is based on her theory her loan was pooled with other home loans in a securitized investment trust, which is purportedly now managed by B of A, as the acting trustee, without proper compliance with the investment trust's pooling and servicing agreement. Her FAC alleged the failure to comply with the pooling and servicing agreement extinguished the security interest created by her execution of the deed of trust in 2007 and, therefore, Defendants now have no secured interest to foreclose upon. Additionally, Jenkins's FAC alleged Defendants violated numerous state and federal laws with regard to the servicing of her loan and the initiation of nonjudicial foreclosure.

Chase demurred to the FAC, asserting Jenkins had not stated a valid claim as a matter of law. The court sustained the demurrers to the first, second, third, and fifth causes of action, but gave Jenkins leave to amend these four claims. The court also sustained the demurrer to the TILA cause of action without leave to amend.

Jenkins filed her SAC on July 20, 2011, which again alleged causes of action for (1) unfair business practices; (2) breach of good faith and fair dealing; and(3) violations of RESPA. She replaced the cause of action for lack of standing to foreclose in her FAC with claims for declaratory relief and a violation of Civil Code section 2932.5.1

Jenkins's SAC, like her FAC, focused on the alleged improper securitization and lack of compliance with the securitized investment trust's pooling and servicing agreement. Chase and B of A filed a joint demurrer and Quality filed its own separate demurrer to the SAC. The court sustained both demurrers without leave to amend.

The court offered several reasons for its ruling. It explained Jenkins failed to state a basis for declaratory relief because: (1) production of the note is not required to perfect foreclosure; (2) Jenkins was not a party or a third party beneficiary to the securitized investment trust's pooling and servicing agreement; and (3) California does not recognize a preemptive suit challenging a foreclosing party's right or ability to foreclose.

The court reasoned Jenkins's claim for violation of section 2932.5 lacked merit because the statute applies only to a mortgage and not to a deed of trust. In light of Jenkins's admission the note was secured by a deed of trust on her property and not a mortgage, the court concluded the statute was inapplicable.

The court determined Jenkins's claim for breach of the implied covenant of good faith and fair dealing lacked merit because Jenkins failed to allege the existence of a contract. Moreover, the court found there is generally no implied covenant relating to the decision to extend or not to extend (i.e., refinance) a loan. And to the extent the alleged breach related to underwriting, lending, and/or servicing errors by WaMu, those alleged liabilities were never assumed by Chase or Quality.

The court rejected Jenkins's Business and Professions Code section 17200 cause of action on the grounds she failed to allege facts to support her claim Defendants prepared and publicly recorded false documents. Finally, the court sustained the demurrer to Jenkins's RESPA claim because she failed to allege damages from Chase's delayed response, or a pattern or practice of noncompliance to support the statutory de minimis penalty.

A. Defendants' Demurrers Were Properly Sustained Without Leave to Amend.
1. Standard of Review

When reviewing a court's dismissal of a lawsuit following an order sustaining a demurrer without leave to amend, we initially review the complaint de novo to determine whether, as a matter of law, the complaint alleges a valid cause of action. (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1153, 121 Cal.Rptr.3d 819 (Gomes ).) We assume the truth of all properly pleaded and judicially noticeable material facts within the complaint, but we do not assume ‘contentions, deductions or conclusions of fact or law.’ ' (Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1501, 141 Cal.Rptr.3d 326 (Herrera ).) We must read the complaint ‘as a whole and its parts in their context’ ' in order to ensure that we give the complaint a reasonable interpretation.’ ' ( Ibid.)

If we conclude the complaint fails on any grounds stated in the demurrer, we must then consider whether there is a ‘reasonable possibility’...

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