Palmisano v. Jpmorgan Chase Bank Nat'Lass'N

• Decision Date: 12 July 2017
• Docket Number: No. CV-16-03026-PHX-JAT,CV-16-03026-PHX-JAT
• Parties: Joseph Palmisano, Plaintiff, v. JPMorgan Chase Bank National Association, Defendant.
• Court: U.S. District Court — District of Arizona

Joseph Palmisano, Plaintiff, v. JPMorgan Chase Bank National Association, Defendant.

No. CV-16-03026-PHX-JAT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

July 12, 2017

ORDER

Pending before the Court are: (1) Defendant's Motion to Dismiss Plaintiff's First Amended Complaint ("Motion to Dismiss"), (Doc. 19); (2) Plaintiff's Response to Defendant's Motion to Dismiss ("Response"), (Doc. 22); and (3) Defendant's Reply in Support of Defendant's Motion to Dismiss ("Reply"), (Doc. 23).

I. Background

The Court assumes the facts alleged in the First Amended Complaint ("FAC"), (Doc. 16), are true for purposes of deciding the pending Motion to Dismiss. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). For an unspecified amount of time, Defendant held a promissory note, the repayment of which was secured by a Deed of Trust recorded against Plaintiff Joseph Palmisano's Gilbert, Arizona property. (FAC at ¶ 5). Around June 28, 2013, Plaintiff attempted to sell the property to a third-party for $850,000.00.¹ (Id. at ¶ 6; see also Doc. 22 at 1) ("Palmisano . . . attemptedto sell his residence."). Plaintiff requested a payoff demand statement to Jason P. Sherman, counsel for Defendant in a Chapter 11 Bankruptcy Case in which Plaintiff was the debtor. (FAC at ¶¶ 7, 13). Plaintiff alleges that his attorney believed that he was ethically prohibited from issuing a payoff demand directly to Defendant. (Id. at ¶ 14). After at least four written requests to Mr. Sherman between July and August 2013, (id. at 19), Plaintiff never received a payoff demand statement, (id. at ¶ 12). Plaintiff was unable to sell the property until May 2016 for $720,000.00. (Id. at ¶ 15). As a result, Plaintiff alleges that he has suffered damages in the amount of $130,500.00. (Id. at ¶¶ 16, 25).

On November 2, 2016, Plaintiff filed his FAC alleging that Defendant violated Ariz. Rev. Stat. Ann. § 33-715(A) and 15 U.S.C. § 1639g by not delivering a timely payoff demand statement and further asserting claims of negligence and negligence per se against Defendant for violating the state and federal statutes. (Id. at ¶¶ 17-36).

II. Motion to Dismiss

Defendant moves to dismiss Plaintiff's FAC for failing to state a claim under Federal Rule of Civil Procedure ("Federal Rule") 12(b)(6) because Plaintiff failed to comply with the Arizona statute for requesting a payoff demand statement, Section 1639g took effect after the events occurred, and the negligence claims are untimely. (Doc. 19 at 1-5).

A. Legal Standard

The Court may grant a motion to dismiss a complaint for failure to state a claim under Federal Rule 12(b)(6) for two reasons: (1) lack of cognizable legal theory; or (2) insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a Federal Rule 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Federal Rule 8(a)(2), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief," so that the defendant has "fair notice of what the . . . claim is and the Docs. 19 at 2-3; 22 at 1).grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

Although a complaint does not need detailed factual allegations, the pleader's obligation to provide grounds for relief requires "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (internal citations omitted). Federal Rule 8(a)(2) "requires a 'showing,' rather than a blanket assertion, of entitlement to relief. Without some factual allegations in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests." Id. at 555 n.3 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1202 at 94, 95 (3d ed. 2004)). Thus, Federal Rule 8's pleading standard demands more than "an unadorned, the defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).

In deciding a motion to dismiss under Federal Rule 12(b)(6), the Court must construe the facts alleged in the complaint in the light most favorable to the drafter of the complaint and the Court must accept all well-pleaded factual allegations as true. See Shwarz, 234 F.3d at 435. Nonetheless, the Court does not have to accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286 (1986).

B. Analysis

Defendant argues that the Court should grant Defendant's Motion to Dismiss because Plaintiff's "claims fail under the terms of the statutes themselves." (Doc. 19 at 1, 5). Specifically, Defendant contends that (1) the payoff demand was not filed with the branch as required under Ariz. Rev. Stat. Ann. § 33-715(G); (2) the payoff statement provision in 15 U.S.C. § 1639g took effect after the events giving rise to this case occurred; and (3) Plaintiff's negligence and negligence per se claims are untimely. (Id. at 3-5).

1. Ariz. Rev. Stat. Ann. § 33-715 Claim

Count One of the FAC asserts a violation of Ariz. Rev. Stat. Ann. § 33-715(A) byDefendant for failing to produce a payoff demand statement in response to Plaintiff's requests. (FAC at ¶¶ 18, 22). The Arizona statute provides that "[o]n the written demand of an entitled person or that person's authorized agent, a secured lender shall prepare and deliver a payoff demand statement to the person who has requested it within fourteen days after receipt of the demand." Ariz. Rev. Stat. Ann. § 33-715(A) (2014). The statute requires that "[i]f the secured lender has more than one branch, office or other place of business, the payoff statement demand shall be made to the branch or office address provided in the payment billing notice or payment book." Id. at § 33-715(G). A lender who fails to the deliver the statement within fourteen days is liable "for all damages sustained for failure to deliver the statement" and "for five hundred dollars whether or not actual damages were sustained." Id. at § 33-715(F).

First, the Court must determine whether an Exhibit attached to the Response (the "Exhibit") can be considered in this Motion to Dismiss. (Doc. 22-1 at 2-5). The Exhibit contains emails between the parties' attorneys in the bankruptcy matter that discuss the status of the "payoff information." (Id.). Plaintiff relies on the Exhibit to argue that Plaintiff made an adequate payoff demand giving rise to this case. (Doc. 22 at 3-4 ("[Defendant's] Counsel received the request. Counsel conveyed it. Counsel confirmed that management was reviewing it, and that he anticipated a response soon. At no point did Chase or its counsel inform Palmisano that it could not accept his payoff request because it did not comply with the statute."); see also FAC at ¶¶ 19-22)). On a motion to dismiss for failure to state a claim, the scope of review is generally "limited to the contents of the complaint." Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (citing Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1141 n.5 (9th Cir. 2003)). However, the Court may also consider any evidence upon which the complaint "necessarily relies." Id. (citing Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994), overruled on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)). A complaint "necessarily relies" on evidence if: "(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and(3) no party questions the authenticity of the copy attached to the [Federal Rule] 12(b)(6) motion." Id.

Having reviewed the FAC and the Exhibit, (Doc. 22-1 at 2-5), the Court finds that the FAC "necessarily relies" on the Exhibit. First, the FAC explicitly refers to the Exhibit, asserting "Palmisano or his authorized agent, Brown, demanded, in writing, a written payoff demand statement multiple times in July and August of 2013." (FAC at ¶ 19). Second, the written payoff demands are central to Plaintiff's claim. The Arizona statute requires that once a payoff demand is issued, a lender has fourteen days to respond. Ariz. Rev. Stat. Ann. § 33-715(A). Plaintiff relies on the Exhibit to allege that Defendant received the payoff demand through counsel and asserts it proves adequate notice, such that Plaintiff is entitled to relief. (FAC at ¶¶ 19-22, 25). The case turns on whether the Exhibit suffices as a payoff demand under the Arizona statute. Without an adequate payoff demand, no Arizona claim would remain. Finally, neither party questions the authenticity of the Exhibit attached to the Response. Defendant's Reply does not admit that Defendant received the notice stating "Chase allegedly received the payoff statement request." (Doc. 23 at 4). However, Defendant does not question the authenticity of the emails that were sent between Plaintiff's counsel and Mr. Sherman. (Doc. 22-1 at 2-5). Accordingly, the FAC necessarily relies upon the Exhibit, and the Court will consider it. See Kachlic v. Bursey & Assoc., P.C., CV-12-1111-PHX-JAT, 2013 WL 820375, at *3 n.3 (D. Ariz. Mar. 5, 2013) (considering a defendant's letter referred to in the complaint in adjudicating a Federal Rule 12(b)(6) motion to dismiss).

As noted above, the Arizona statute requires that the payoff statement demand be made to the branch or office address provided in the payment billing notice or payment book. Ariz. Rev. Stat. Ann. § 33-715(G). Plaintiff claims in his FAC that all demands for a payoff statement were sent from Plaintiff's authorized agent, James E. Brown, to Defendant's attorney in a bankruptcy action between the same parties, Mr. Sherman. (FAC at ¶¶ 7-14). Plaintiff claims his counsel was ethically prohibited from issuing thedemand directly to Defendant because of the pending bankruptcy...