Johnson v. JP Morgan Chase Bank N.A.
| Decision Date | 11 August 2015 |
| Docket Number | CASE NO. 14-5607 RJB |
| Court | U.S. District Court — Western District of Washington |
| Parties | ALAN JOHNSON and STACEY URNER, individually and as husband and wife, Plaintiffs, v. JP MORGAN CHASE BANK N.A., a foreign corporation, SELECT PORTFOLIO SERVICING INC., a foreign corporation, and all persons claiming any interest in the property described in the Deed of Trust or in the Obligation secured thereby, DOES 1-50, inclusive, Defendants. |
This matter comes before the Court on Defendant JP Morgan Chase Bank N.A.'s ("Chase") Motion for Summary Judgment (Dkt. 72) and Defendant Select Portfolio Servicing, Inc.'s ("SPS") Motion for Summary Judgment (Dkt. 76). The Court has considered the pleadings filed in support of and in opposition to the motions and the file herein.
This cases arises from a mortgage Plaintiffs took out on real property located in Gig Harbor, Washington and their various attempts at getting a loan modification. Dkts. 1. For the reasons set forth below, Chase's Motion for Summary Judgment (Dkt. 72) should be granted, in part, and denied, in part and SPS's Motion for Summary Judgment (Dkt. 76) should be granted.
In May of 2007, Plaintiff Johnson obtained an $848,000.00 refinance loan from Washington Mutual Bank, F.A. ("WaMu") by executing a Note. Dkt. 75-1. The loan was secured by a Deed of Trust on property located at 1426 Cascade Place Northwest, Gig Harbor, WA 98332. Dkt. 75-2. The Note provides that if the full amount of each monthly payment is not made on the day it is due, then Plaintiff Johnson is in "default." Dkt. 75-1. The Deed of Trust states that "[i]f the default is not cured . . ., Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and/or any other remedies permitted by Applicable Law." Dkt. 75-2.
The loan was securitized and sold to a trust, "WaMu Mortgage Pass-Through Certificates Series 2007-OA6 Trust," WaMu was the Initial Custodian, and the servicer. Dkt. 75-3.
In 2008 WaMu was placed in receivership and Defendant Chase acquired Plaintiff Johnson's loan and the rights to service the loan. Dkt. 75, at 3. Although Chase executed an Assignment of Deed of Trust on August 1, 2009. (transferring its beneficial interest to Bank of America, N.A.) regarding this loan, it remained the servicer of the loan. Dkt 75, at 3.
Starting in November of 2008, Plaintiffs started having difficulty in making payments due to both of them losing their jobs, and in August of 2009 began applying for a loanmodification. Dkt. 74-1, at 9. From 2009-2012, Plaintiffs applied for a series of loan modifications from Chase. Dkts. 67-19 and 67-20. These modifications were denied for a variety of reasons including insufficient income and failure to provide documents, although Plaintiffs repeatedly (more than 10 times) provided those documents. Id.
The Third Amended Complaint asserts that on March 7, 2012 and on November 19, 2012, Plaintiffs sent a letters to Chase, entitled "Qualified Written Request." Dkt. 67. These documents are attached to the Third Amended Complaint. Dkt. 67-6. The March 7, 2012 letter makes requests for 45 different sets of documents. Id. Plaintiffs also attach another letter to their Third Amended Complaint, also dated March 7, 2012 and addressed to Chase which uses the phrase "qualified written request." Id. The November 19, 2012 letter was also attached. Id. No response was sent to any of these letters, and Plaintiffs continued to try to get a loan modification. See Generally Dkts. 67-19 and 67-20.
On July 26, 2012, a Notice of Default was issued by the successor trustee and former defendant in this case, Quality Loan Services, Inc. Dkt. 67-8. Plaintiffs and Chase were referred to Foreclosure Fairness Act ("FFA") mediation and participated in two sessions (in November 2012 and March 2013). Dkt. 67-9. After the second session, Chase told Plaintiffs that they could receive a modification if they timely made three trial payments. Id. Plaintiffs made the payments and Chase provided the final loan documents. Id. The terms in the final documents were different than the terms agreed upon. In July of 2013, the mediator issued a certificate regarding the mediation. Id. She found that in the final loan documents the interest rates had changed, there was no principal forgiveness and the balloon payment was different than what Chase agree to in the mediation. Id. Accordingly she determined that "Chase, through its underwriter induced the borrowers to take the trial modification with the underwriter's statementsand has engaged in a 'bait and switch' practice." Id. She concluded Chase had acted in bad faith, and so certified as provided by RCW 61.24.163. Id.
On August 1, 2013, Chase transferred servicing of the loan to Defendant SPS. Dkt. 75, at 4. SPS reported Plaintiffs as 180 days past due on their loan payments from April 2014 to August 2014. Dkt. 78. Plaintiffs' Third Amended Complaint alleges that "[i]nstead of addressing the 'bait and switch' issues with the modification . . . SPS continued to negatively report plaintiffs' credit to credit bureaus." Dkt. 67. Plaintiffs complain that SPS has been reporting the debt with Chase. Dkt. 67-19, at 11. The credit reports to which Plaintiffs refer are dated November 9, 2014 (Dkt. 67-2, at 7) and April - August 2014 (Dkt. 67-10).
In January of 2015, Plaintiffs received a loan modification through SPS. Dkt. 74-1, at 11. The first payment was due on February 1, 2015. Dkt. 78-2, at 2. Plaintiffs state that they are pleased with their modification, even though they assert that the principal balance is higher in this modification than in the modification they negotiated in March of 2013 with Chase at the mediation. Dkt. 74-1., at 13.
Plaintiffs assert in their Complaint that SPS received Plaintiff's first payment under the modification on February 5, 2015, but failed to post the payment until February 24, 2015. Dkt. 67, at 14. The Third Amended Complaint alleges that SPS's statements do not match when the payments are received, and that SPS is not correctly applying payments in accord with the Deed of Trust. Id. They refer to their March and April statements, which are also attached to the Third Amended Complaint (Dkts. 67-13 and 67-14).
SPS states that when it receives payment on a loan that is in litigation, it holds the payment, reviews the payment and file, and then credits the payments. Dkt. 78. SPS has notcharged Plaintiffs any interest, late fees or any other charges in connection with these payments. Dkt. 78, at 3. SPS suspended all credit reporting with respect to the Plaintiffs from January 2015 to March of 2015. Dkt. 78, at 3. SPS has reported the loan as current since March of 2015. Dkt. 78, at 3. Plaintiffs' May and June 2015 account statements show payments applied and no fees charged. Dkts. 78-3, at 2-4 and 78-4 at 2-4.
The Third Amended Complaint argues that in delaying crediting Plaintiffs' timely payments "and falsely maintain a delinquency as 'Past Due 180 Days' even after modification of the loan, SPS predestines the modification's deferred balance forgiveness clause to fail rendering the stated principal forgiveness impossible to achieve." Id. The credit reports attached to the Third Amended Complaint, however, are dated before the modification, November 9, 2014 (Dkt. 67-2) and April - July of 2014 (Dkt. 67-10).
Plaintiffs sent SPS a letter referenced as a "Qualified Written Request" on April 24, 2015. SPS sent an acknowledgement on April 29, 2015 and a response on May 11, 2015. Dkts. 78-5, at 2-3; and 78-6 at 2-3.
This case was originally filed on July 28, 2014. Dkt. 1. On October 30, 2014, the claims asserted against Quality Loan Services Corp. of Washington were dismissed. Dkt. 33. Plaintiffs filed their Second Amended Complaint on March 6, 2015 (Dkt. 54) and their Third Amended Complaint on June 18, 2015 (Dkt 67).
Plaintiffs make claims against Defendants Chase and SPS for: 1) the breach of the implied duty of good faith and fair dealing, 2) negligence and wrongful foreclosure, 3) violation of the Washington Consumer Protection Act, RCW 19.86, et. seq., 4) violation of the Washington Collection Agency Act, RCW 19.16.250, et. seq, 5) violation of the WashingtonConsumer Loan Act, RCW 31.04, et. seq., 6) violation of the Washington Lending and Homeownership Act, RCW 19.144.080, 7) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq, 8) violation of the Truth-in-Lending Act ("TILA"), 12 U.S.C. § 1635, et seq, and 9) violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, et seq. Dkt. 61-1. Plaintiffs seek damages, costs, attorneys' fees and other statutory relief. Dkt. 61-1.
Trial is set to begin on September 28, 2015. Dkt. 53.
Chase moves for summary dismissal of the claims asserted against it, arguing that Plaintiffs' state law claims (claims 1-6 in the Third Amended Complaint) are preempted by the Home Owners' Loan Act, 12 U.S.C. § 1461-1470, ("HOLA"), and so should be dismissed. Dkts. 72 and 80. It also argues that, on the merits, each of the state law claims should be dismissed: 1) Plaintiffs' claim for the breach of the implied duty of good faith and fair dealing should be dismissed because their claim is barred by the statute of limitations and Plaintiffs cannot point to contract provision which Chase breached, causing them damage; 2) Plaintiffs' claim for negligence and wrongful foreclosure should be dismissed because Chase did not owe them a duty of care, nor can they show proximate cause or damages, and there is no cause of action for wrongful foreclosure if the foreclosure sale has not been completed, 3) Plaintiffs' claims under the Consumer Protection Act should be dismissed because Plaintiffs cannot prove...
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