Shkolnikov v. JPMorgan Chase Bank, Case No.: 12-03996 JCS

• Decision Date: 14 December 2012
• Docket Number: Case No.: 12-03996 JCS
• Parties: ALEXANDER L. SHKOLNIKOV, et al., Plaintiffs, v. JPMORGAN CHASE BANK, et al., Defendants.
• Court: U.S. District Court — Northern District of California

ALEXANDER L. SHKOLNIKOV, et al., Plaintiffs,

v.JPMORGAN CHASE BANK, et al., Defendants.

Case No.: 12-03996 JCS

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: December 14, 2012

ORDER GRANTING DEFENDANTS'

MOTION TO DISMISS AND

DISMISSING PLAINTIFFS'

COMPLAINT WITH LEAVE TO

AMEND

I. INTRODUCTION

Plaintiffs Alexander and Eugenia Shkolnikov ("Plaintiffs") brought this action against Defendants JPMorgan Chase Bank, N.A. and U.S. Bank, N.A.¹ (individually "Chase" and "U.S. Bank," collectively "Defendants") for wrongful foreclosure, negligence, restitution, violation of the Fair Debt Collection Practices Act ("FDCPA"), violation of the Real Estate Settlement Procedures Act ("RESPA"), unfair competition in violation of the California Business and Professions Code ("UCL"), accounting, breach of the implied covenant of good faith and fair dealing, and declaratory judgment. Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' Complaint ("Motion to Dismiss" or "Motion"). The parties have consented to the jurisdiction of the undersigned magistrate judge pursuant to 28 U.S.C. § 636(c). A hearing on the Motion was held on December 7, 2012 at 9:30 a.m. For the reasons stated below, the Motion to Dismiss is GRANTED and the Plaintiffs' Complaint is dismissed with leave to amend.

II. REQUESTS FOR JUDICIAL NOTICE

Defendants request that the Court take judicial notice of eight documents. Request for Judicial Notice in Support of Defendants' Motion to Dismiss ("RJN"), 2-3. Plaintiffs object to each document. In their Opposition, Plaintiffs request judicial notice of one document. Plaintiffs' Opposition to Motion to Dismiss Complaint ("Opposition"), 6-7. Defendants object.

First, Plaintiffs object to four documents from the court record of a complaint Plaintiffs filed against Defendants in the Superior Court of California for the County of San Mateo. Id. at 11; RJN, Ex. 1-4. Plaintiffs contend that the documents are irrelevant. Opposition, 11. Second, Plaintiffs object to each of the following: (1) the 2006 Pooling and Servicing Agreement ("PSA") governing the WaMu Mortgage Pass-Through Certificates Series 2006-AR19 Trust ("2006-AR19 Trust"), (2) the 2008 Purchase and Assumption Agreement ("P&A Agreement"), (3) the August 20, 2009 San Mateo County Recording of a Notice of Default ("NOD"), and (4) the January 1, 2010 San Mateo County Recording of a Notice of Trustee's Sale. Id. Plaintiffs argue that the validity and veracity of each document is under dispute, and that the documents contain inadmissible hearsay. Id. In turn, Defendants object to an undated printout of Deborah Brignac's LinkedIn profile because it is not capable of accurate and ready determination, not properly authenticated, irrelevant, and constitutes inadmissible hearsay. Defendants Objections to Plaintiffs' Evidence Submitted in Support of Their Opposition to Defendants' Motion to Dismiss, 1; Opposition, Ex. A.

The standard for judicial notice is set forth in Rule 201 of the Federal Rules of Evidence, which allows a court to take judicial notice of an adjudicative fact not subject to "reasonable dispute," either because it is "generally known within the territorial jurisdiction of the trial court" or it is "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201. As a general rule, the court "may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." U.S. v. Corinthian Colleges, 655 F.3d 984, 998-99 (9th Cir. 2011) (quoting Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). However, the court may consider unattached evidence on which the complaint "necessarily relies" if: "(1) the complaint refers to the document; (2) the document is central to plaintiff's claim; and (3) noparty questions the authenticity of the document." Id. at 999 (citing Marder v. Lopez, 540 F.3d 445, 448 (9th Cir. 2006)). In addition, the court may take judicial notice of "matters of public record," but not facts that may be "subject to reasonable dispute." Id. (citing Lee, 250 F.3d at 689).

First, the Court takes judicial notice of the San Mateo County Superior Court documents because they are a matter of the public record and they establish the procedural history of this case, although the Court does not rely on those documents in deciding this Motion. Second, the Court will consider the PSA and the P&A Agreement because they are explicitly referenced in the Complaint, they are central to Plaintiffs' claim, and Plaintiffs do not contest the authenticity of the documents although they challenge their validity and veracity. Moreover, the PSA and P&A Agreement are matters of the public record.² Third, the Court will consider of the NOD and Notice of Trustee Sale as both are matters of public record and are relevant to Plaintiffs' loan and foreclosure process. Finally, the Court does not take judicial notice of Deborah Brignac's LinkedIn profile because its contents are not capable of ready and accurate determination by resort to sources whose accuracy cannot reasonably be questioned.

III. BACKGROUND

A. The Complaint

Plaintiffs allege that Defendants are not parties to their mortgage loan and have no ownership interest entitling them to collect payment, declare a default, or initiate a foreclosure. Complaint, ¶¶ 1, 75.³ On October 24, 2006, Plaintiffs obtained an adjustable rate mortgage on their property located at 2876 Adeline Drive, Burlingame, CA ("the Property") secured by a mortgage note ("Note") and a Deed of Trust ("DOT"). Id. at ¶ 25 (citing Exs. A and B). The California Reconveyance Company ("CRC") was the trustee of the agreement, and Washington Mutual Bank, F.A. ("WaMu") was the lender. Id. at Exs. A and B. WaMu entered the PSA governing the 2006-AR19 Trust and naming LaSalle Bank, N.A. ("LaSalle") as trustee. Id. at ¶ 28; RJN, Ex. 6. Bank of America, N.A. ("Bank of America") succeeded to LaSalle's interest by merger. At some point thereafter, U.S. Bank became the trustee of the 2006-AR19 Trust.

The PSA's closing date was December 1, 2006. RJN, Ex. 6. Plaintiffs allege that their mortgage loan was not properly endorsed, transferred, accepted, and deposited to the trust prior to the closing date. Complaint, ¶ 34; RJN, Ex. 6. Thus, Plaintiffs allege that the 2006-AR19 Trust never obtained any beneficial interest in their mortgage loan. Complaint, ¶ 34. Moreover, Plaintiffs allege that neither U.S. Bank, nor any of its predecessors in interest, ever acted as a trustee with any authority over their loan. Id. Alternatively, Plaintiffs allege that because CRC was not named in any capacity under the 2006-AR19 Trust, it lost all interest in their mortgage loan. Id. at ¶ 29.

Plaintiffs also allege that WaMu attempted to securitize the mortgage loan in another unidentified trust. Id. at ¶ 32. Further, Plaintiffs allege that WaMu's interest in their mortgage loan was sold to an unidentified entity prior to WaMu's default. Id. at ¶ 88. In the alternative, Plaintiffs allege that "the Trust that purportedly owns Plaintiffs' Note and Mortgage has been dissolved due to the disbursement and receipt of insurance payouts to BofA... As a result if these payouts, BofA has been paid in full on Plaintiffs' debt obligation." Id. at ¶ 21.

WaMu failed on September 25, 2008, and thereafter entered the P&A Agreement with Chase whereby Chase acquired the bulk of WaMu's assets. Id. at ¶¶ 2(2)-3(2); RJN, Ex. 5. Plaintiffs allege that any mortgage loan that originated with WaMu that was not owed to or held by WaMu on September 25, 2008, due to prior securitization or resale, did not pass to Chase. Id. at ¶ 8(2). Further, Plaintiffs allege that Chase has never produced a schedule of the assets it purchased from WaMu that contains Plaintiffs' mortgage loan or other proof of ownership. Id. at ¶ 14(2). Thus, Plaintiffs allege that Chase has no interest in their mortgage loan. Id. at ¶¶ 38, 49. Alternatively, Plaintiffs point to an affidavit filed in other litigation in which Plaintiffs quote Chase as stating, "Under the plain terms of that agreement, [Chase] did not become [WaMu's] successor in interest. Since its closure, the FDICas receiver has controlled [WaMu]." Id. at ¶ 10(2). Plaintiffs do not provide the remainder of the affidavit or any other context.

Plaintiffs further challenge an Assignment of Deed of Trust, dated August 20, 2009, ("2009 Assignment") in which Chase purported to securitize Plaintiffs' mortgage loan in the 2006-AR19 Trust, of which Bank of America was then still acting as trustee. Id. at ¶¶ 35-36, 41. Plaintiffs characterize the 2009 Assignment as an attempt to "paper over" alleged securitization defects. Id. at ¶¶ 35-36, 41 (citing Ex. D). Plaintiffs allege that the signer, Deborah Brignac ("Brignac"), lacked the corporate authority and personal knowledge to sign such documents. Id. at ¶¶ 41-42, 44. Plaintiffs also allege that the assignment lacks consideration. Id. at ¶ 41. Further, Plaintiffs allege that the 2009 Assignment was invalid or the trust to which the transfer was made no longer exists because the assignment inappropriately identified the "WaMu Mortgage Pass-Through Certificates Series 20006-AR19 Trust" instead of "WaMu Mortgage Pass-Through Certificates Series 2006-AR19 Trust." Id. at ¶ 35. Thus, Plaintiffs contend that U.S. Bank, Bank of America's successor in interest as the trustee of the 2009-AR19 Trust, never obtained any interest in their mortgage loan. Id. at ¶¶ 38, 49.

Further, Plaintiffs rely on California Commercial Code Section 3301 et seq. for the propositior that their mortgage loan can only be enforced by a holder in due course, an entity that can establish a pecuniary, legal, and equitable interest in the property and provide an unbroken chain of title to the Plaintiffs' note and mortgage. Id. at ¶ 51. Plaintiffs state that they are willing and able to unconditionally tender their obligation pursuant to...