Lester v. J.P. Morgan Chase Bank

• Citation: 926 F.Supp.2d 1081
• Decision Date: 20 February 2013
• Docket Number: No. C 12–05491 LB.,C 12–05491 LB.
• Parties: Mark LESTER, Plaintiff, v. J.P. MORGAN CHASE BANK, et al., Defendants.
• Court: U.S. District Court — Eastern District of California

926 F.Supp.2d 1081

Mark LESTER, Plaintiff,

v.J.P. MORGAN CHASE BANK, et al., Defendants.

No. C 12–05491 LB.

United States District Court,

N.D. California,

San Francisco Division.

Feb. 20, 2013.

Vernon L. Bradley, Law Offices of Vernon L. Bradley, Sausalito, CA, for Plaintiff.

Thomas Simmons Lee, San Francisco, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT

LAUREL BEELER, United States Magistrate Judge.

INTRODUCTION

Plaintiff Mark Lester instituted this action against defendants J.P. Morgan Chase Bank, N.A. (“Chase”) and Washington Mutual Bank (“WaMu”) to, among other things, stop Chase from foreclosing on his home. See generally Complaint, ECF No. 1.¹ Chase now moves to dismiss Mr. Lester's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). See Motion, ECF No. 8.² Pursuant to Civil Local Rule 7–1(b), the court finds this matter suitable for determination without oral argument and vacates the March 7, 2013 hearing. For the reasons stated below, the court GRANTS IN PART and DENIES IN PART Chase's motion.

STATEMENT

On April 30, 2007, Mr. Lester borrowed $2,292,500 from WaMu to purchase property located at 934 Baileyana Road in Hillsborough, California (the “Property”). Complaint, ECF No. 1 ¶¶ 20–21. Mr. Lester and WaMu executed two documents: a promissory note in the amount of $2,292,500 that names Mr. Lester as “Borrower” and WaMu as “Lender” (the “Note”), and a deed of trust that secures the Note and names Mr. Lester as “Borrower,” WaMu as “Lender,” and California Reconveyance Corporation (“CRC”) as “Trustee” (the “Deed of Trust”). Id., Exh. A (Note and Deed of Trust); Request for Judicial Notice (“RJN”), ECF No. 8–1, Exh. A (Deed of Trust).³ The Deed of Trust states, in relevant part, that “the Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower [Mr. Lester]” and that “Borrower [Mr. Lester] irrevocably grants and conveys to Trustee [CRC], in trust, with power of sale,” the Property. RJN, ECF No. 8–1, Exh. A.

Mr. Lester alleges that WaMu “thereafter sold (or securitized) [his] loan into the Wa[M]u Mortgage Pass–Through Certificates Series 2007–HY7 Trust” (the “WaMu 2007–HY7 Trust”). Complaint, ECF No. 1 ¶ 22. WaMu “remained the server” of the WaMu 2007–HY7 Trust, and “LaSalle Bank (Bank of America)” is the “Trustee” of the WaMu 2007–HY7 Trust. Id. Mr. Lester further alleges that the pooling and service agreement that created the WaMu 2007–HY7 Trust names “LaSalle Bank National Association” as “Trustee,” and states that “[t]he assets of the [WaMu 2007 HY7 Trust] shall remain in the custody of the Trustee of the Custodian, on behalf of the [WaMu 2007 HY7 Trust], and shall be owned by the [WaMu 2007 HY7 Trust].” Id. ¶ 23. He further alleges that the “closing date” for assets to be transferred to the WaMu 2007–HY7 Trust was June 25, 2007. Id. ¶ 24.

On September 25, 2008, the Office of Thrift Supervision closed WaMu and appointed the FDIC as receiver. See id. ¶ 24 & n. 1. On the same date, Chase entered into a purchase and assumption agreement with the FDIC by which Chase acquired certain assets and assumed certain liabilities of WaMu. See id.

Concerned about declining property values and the increase in his mortgage payments that was scheduled to take place in 2014, Mr. Lester contacted Chase, who apparently represented that it was the lender, in November 2008 to inquire about receiving a loan modification. Id. ¶ 62. At some point between then and March 2010, it appears that Mr. Lester received a trial loan modification, pursuant to which Mr. Lester made three partial payments. See id. ¶ 65. Thereafter, Mr. Lester alleges that he “was told by Chase representatives that they could not modify his loan unless he was behind in [his] payments.” Id. “[I]n reliance o[n] this representation, [he] stopped making payments because no one at Chase would contact him modification unless he was in arrears.” Id. Chase “eventually contacted [him] and told him to submit financial information for a loan modification.” Id. On March 10, 2010, Mr. Lester “faxed to Betty of Chase at (866) 282–5682 all requested information for loan modification.” Id. On June 12, 2010, Mr. Lester “received a letter from Chase stating that [it] could not continue to review his modification because [he] was in a middle of a ‘Trial Period Plan,’ ” although “in the same letter Chase again requested addition information within 30 days.” Id. On June 29, 2010, Mr. Lester “faxed to Tamura Croslin of Chase at (866) 221–1019 a new package with all supporting document[s].” Id. Chase, however, “claimed [it] never received the information.” Id. On July 7, 2010, Mr. Lester “sent to Tamura Croslin at (866) 221–1019 information as specified,” and he “later ended up hand delivering the file to the Walnut Creek Home Loan Modification Center and meeting with Christine Dreu of Chase and going through all of the information with her because Chase claimed to have lost the information and would not accept the information by email.” Id. Finally, on September 23, 2010, the trial loan modification expired “due to [Mr. Lester's] alleged failure to provide needed information, the same information Plaintiff sent to Chase on at least 4 separate occasions, with numerous updates as time went on.” Id.

On November 18, 2010, apparently at the request of CRC, an Assignment of Deed of Trust was recorded in the official records of San Mateo County (the “Assignment”). Id. ¶ 25, Exh. D; Plaintiff's RJN, ECF No. 11–1, Exh. A. It is signed by “Colleen Irby, Officer” of Chase (as successor in interest to WaMu) and states, in relevant part, that “the undersigned hereby grants, assigns and transfer to Bank of America, National Association successor by merger to LaSalle Bank NA as trustee for WaMu Mortgage Pass–Through Certificates Series 2007–HY7 Trust all beneficial interest under” the Deed of Trust, “as Trustor.” Complaint, ECF No. 1, Exh. D; Plaintiff's RJN, ECF No. 11–1, Exh. A. Mr. Lester, however, alleges that Ms. Irby was an employee of CRC, and not Chase, at the time she signed the Assignment. Complaint, ECF No. 1 ¶ 26.

On that same date, CRC, “as Trustee,” recorded a notice of default in the official records of San Mateo County which indicated that Mr. Lester was $105,745.40 in arrears on his loan. Id. ¶ 25; RJN, ECF No. 8–1, Exh. B.

Thereafter, Mr. Lester “sent in another loan modification packet at the request of Chase.” Complaint, ECF No. 1 ¶ 65. On January 5, 2011, Mr. Lester “received a letter stating that he was not qualified for [the Home Affordable Modification Program (“HAMP”) ] because his loan was too large,” information that, Mr. Lester alleges, “Chase obviously knew at the time [he] first submitted the loan modification information.” Id.

On February 22, 2011, CRC, “as Trustee” under the Deed of Trust, recorded a notice of trustee's sale in the official records of San Mateo County. Id. ¶ 25; RJN, ECF No. 8–1, Exh. C. The notice states, in relevant part, that “the present beneficiary under such Deed of Trust, has executed and delivered to said Trustee [CRC], a written Declaration and Demand for Sale, and has deposited with said duly appointed Trustee [CRC], such Deed of Trust and all documents evidencing the obligations secured thereby, and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.” RJN, ECF No. 8–1, Exh. C.

In May 2011, Mr. Lester “immediately applied once again for loan modification” and continued “to make regular payments.” Complaint, ECF No. 1 ¶ 65.

On May 20, 2011, CRC, again “as Trustee” under the Deed of Trust, recorded a notice of rescission of the February 22, 2011 notice of trustee's sale. Id. ¶ 25; RJN, ECF No. 8–1, Exh. D. The notice of rescission lists the “Beneficiary” of the Deed of Trust as WaMu and states, in relevant part, that “[t]he Beneficiary under that certain Deed of Trust hereinabove described [WaMu], heretofore delivered to the Trustee thereunder written Declaration of Default and Demand for Sale” and that “[n]otice was heretofore given by the Beneficiary [WaMu], of breach of the obligations for which said Deed of Trust is security and of electrion to cause to be sold the property therein described.” RJN, ECF No. 8–1, Exh. D.

On June 24, 2011, Mr. Lester “received a letter declining his eligibility for HAMP.” Complaint, ECF No. 1 ¶ 65. After that, Mr. Lester “was told once again that he could not modify his loan or get any attention from Chase while he was making payments,” so he “stopped making payments in November 2011.” Id.

On January 30, 2012, Mr. Lester “received a letter notifying him that he was in default on the loan and $22,000 in arrears on his loan.” Id. He then “once again submitted all of the financial statements as requested,” and on March 30, 2012, he “submitted another loan modification application with permissions to look at tax returns, credit report authorization, insurance information and property tax bills.” Id.

On May 4, 2012, Mr. Lester “submitted his fourth loan modification request.” Id. On July 12, 2012, Mr. Lester “received a letter requesting additional financial information,” and on July 14, 2012, he submitted the requested information. Id. On July 20, 2012, he “received a letter from Chase notifying him that he would [receive] an answer to the loan modification by August 2, 2012.” Id. Mr. Lester “agreed and made an appointment with a Chase appraiser to come to his home to appraise the property for the loan modification,” but “[a]fter the appointment was set, the appraiser called [him] and told him that she [the appraiser] was not qualified to appraise the property because the value of the loan was over $1,000,000 and that Chase would reschedule with another appraiser.” Id...