JUDGE WRIGHT DENIES CHASE'S (WAMU) MOTION TO DISMISS 5 CAUSES OF ACTION-JAVAHERI CASE - FEDERAL COURT CALIF. - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief.

Case 2:10-cv-08185-ODW -FFM Document 29 Filed 04/12/11 Page 1 of 101 Page ID #:560
Case 2:10-cv-08185-ODW -FFM Document 34
Filed 05/23/11 Page 1 of 6 Page ID #:920
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A PROFESSIONAL CORPORATION LOS ANGELES
THEODORE E. BACON (CA Bar No. 115395) tbacon@AlvaradoSmith.com FRANCES Q. JETT (CA Bar No. 175612) fjett@AlvaradoSmith.com
ALVARADOSMITH
A Professional Corporation 633 W. 5th Street, Suite 1100 Los Angeles, California 90071 Tel: (213) 229-2400 Fax: (213) 229-2499 Attorneys for Defendant JPMORGAN CHASE BANK, N.A., UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
DARYOUSH JAVAHERI, Plaintiff, v. JPMORGAN CHASE BANK, N.A., CALIFORNIA RECONVEYANCE CO., and DOES 1-150, inclusive, Defendants.
CASE NO.: CV-10 8185 ODW (FFMx) JUDGE: Hon. Otis D. Wright II
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DEFENDANT JPMORGAN BANK, N.A.S REPLY TO PLAINTIFFS OPPOSITION TO MOTION TO DISMISS SECOND AMENDED COMPLAINT Courtroom: DATE: TIME: Action Filed: 11 June 6, 2011 1:30 P.M. October 29, 2010
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Defendant JPMorgan Chase Bank, N.A., (JPMorgan) hereby replies to the Opposition (Opposition) of plaintiff Daryoush Javaheri (Plaintiff) to Defendants Motion to Dismiss Plaintiffs Second Amended Complaint (SAC). /// /// /// ///
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MEMORANDUM OF POINTS AND AUTHORITIES I. SUMMARY OF ARGUMENT Plaintiffs Opposition fails to resolve any of the deficiencies identified in the Motion to Dismiss (Motion). In fact, Plaintiffs Opposition does nothing more than demonstrate that he has not pled sufficient facts to support his claims and that his claims are not supported by the law. Plaintiff has now had three attempts to plead his claims. It is obvious that no matter how many attempts Plaintiff is given, he simply cannot sufficiently plead any of his claims. The gravamen of Plaintiffs SAC, as well as his Opposition, continues to be based on Plaintiffs argument that Defendant has not proved that JPMorgan acquired Washington Mutual Banks interest in the subject loan. Such argument is disingenuous at best. While ignoring the fact, as admitted to by Plaintiff himself, that he is in default on his $2.6 million loan, Plaintiff unsuccessfully hinges his Opposition on his claim that JPMorgan is not the original lender, has not produced an original promissory note, and therefore not entitled to foreclose. Rather than addressing the actual shortcomings of his claims, Plaintiff spends a great deal of time in his Opposition discussing entirely irrelevant acronyms and reports. (See, Opposition generally.) Plaintiffs lengthy recitation of what CUSIP stands for and reference to consent orders that have no bearing on the Subject Loan, is again of no consequence to Plaintiffs actual claims. Nor can Plaintiff escape the fact that he has defaulted on a $2.6 million loan. Rather than curing the defects in Plaintiffs SAC, Plaintiffs Opposition only serves to demonstrate the weaknesses of Plaintiffs claims. As set forth below, Plaintiffs arguments fail, and JPMorgans Motion to Dismiss should be granted in its entirety without leave to amend. /// ///
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II.
PLAINTIFFS FIRST, SECOND, AND FIFTH CLAIMS FAIL SINCE JPMORGAN HAD THE RIGHT TO FORECLOSE AND COMPLIED WITH STATE LAW A. JPMorgan Acquired the Loan from the FDIC
This Court has already clearly opined that the transfer of interest to JPMorgan, however, is evidenced in documents of which the Court has already taken judicial notice namely, the OTS Order and P&A Agreement. JPMorgans Request for Judicial Notice (RJN), Exhibit C, p. 3. Despite this unequivocal ruling from the Court, Plaintiff continues to desperately cling to his argument that JPMorgan is not the Lender and has no right to foreclose. (Opposition, pp. 1, 2.) Nothing has changed since the last time the Court considered and rejected this argument. Further, this Court has already found that Plaintiffs claims based on the allegation that JPMorgan does not own the note are without merit. RJN, Exhibit C, p. 4. This confirms that JPMorgan had the right to foreclose on default and had the right to appoint CRC as the trustee in commencing foreclosure. Accordingly, the Court should disregard Plaintiffs attempts to paint JPMorgan as a party out to steal from Plaintiff. Plaintiff borrowed $2.6 million from Washington Mutual Bank and now seeks to avoid having to pay these monies back to the current beneficiary under the Deed of Trust. Plaintiff can expend pages and pages of his Opposition citing to irrelevant acronyms and reports this will not change the basic fact that JPMorgan acquired Washington Mutual Banks interest in the subject Loan, that Plaintiff defaulted and now seeks to avoid the effects of that default by continuing to insist that JPMorgan is not the holder of the Note. JPMorgan properly acquired the rights to the DOT from the FDIC when WaMu was placed into receivership, so the claim that Defendant does not have the right to foreclose is without merit. /// ///
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B.
JPMorgan Complied with State Law
Plaintiffs attempts to salvage his claim for alleged violations of California Civil Code 2923.5 by allegations of forgery and citations to documents which have no relation whatsoever to the Subject Loan are entirely unpersuasive. As set forth in the Motion to Dismiss, the Court has already addressed and dismissed Plaintiffs allegation that JPMorgan violated 2923.5, because the person who signed the declaration attesting to compliance with 2923.5 did not have personal knowledge of the facts. SAC, 26. Specifically, the Court previously found that nothing in this statute requires that a declaration be signed by a person with personal knowledge. RJN, Exhibit C, pp.4-5. Despite the Courts previous ruling, Plaintiff yet again spends a significant portion of his Opposition opining on how CRCs declaration, when compared with a form declaration from a Continuing Education of the Bar publication, is cryptic, ambiguous, form-language. (Opposition, pp. 10-11.) Plaintiffs recitation of what Continuing Education for the Bar recommends for a form declaration under Civil Code 2923.5 is of no matter. As to the alleged violations of California Civil Code 2923.5, the law is clear that foreclosure can be commenced by the trustee, mortgagee or beneficiary or any of their authorized agents and a person authorized to record the notice of default or the notice of sale. (See California Civil Code 2924(a)(1) and 2924b(b)(4).) Accordingly, Plaintiffs effort to salvage his claims clearly fails. Plaintiffs first, second and fifth claims have no merit and should be dismissed. III. THERE IS NO LEGAL BASIS FOR THE THIRD CLAIM OF QUASI CONTRACT In his Opposition, p. 18, Plaintiff erroneously claims that Chase does not have standing to enforce the Note because Chase is not the owner of the Note, Chase is not a holder of the Note, and Chase is not a beneficiary under the Note. This claim is without merit because, as set forth above, JPMorgan is entitled to enforce the terms of
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the Note pursuant to Section 3.1 of Article III of the P & A Agreement. See also Caravantes v. CRC, 2010 WL 4055560, 9 (S.D.Cal., 2010). IV. THERE IS NO CLAIM ALLEGED FOR NO CONTRACT In defending his claim for no contract, Plaintiff entirely ignores the arguments raised by JPMorgan in its Motion. In fact, Plaintiffs arguments in defense of his claim such as his argument that Chase asserts that the one-year Statute of Limitations has expired (Opposition p. 21) are entirely nonsensical given that JPMorgan does not make this argument in its Motion to Dismiss the SAC. Plaintiff does not even attempt to address JPMorgans arguments regarding Plaintiffs failure to offer tender in the FAC. Accordingly, Plaintiffs claim for no contract is insufficiently pled and subject to dismissal. V. THERE IS NO BASIS FOR EQUITABLE RELIEF Plaintiffs claims for equitable belief are based on nothing more than Plaintiffs allegations that JPMorgan is not the holder of the Note and therefore has no standing to enforce the DOT. However, whether or not the Defendants are a holder of the original note is irrelevant as [t]here is no requirement that the party initiating foreclosure be in possession of the original note. Nool v. HomeEquity Servicing, 2009 U.S. Dist. LEXIS 80640, *12 (E.D. Cal. Sept. 3, 2009); Pagtalunan, supra, 2009 U.S. Dist. LEXIS 80640, *6 (N.D. Cal. Apr. 8, 2009) and Caravantes, supra. Plaintiff is unable to state any basis for contending that declaratory relief would be necessary or useful. See Sanchez United States Bancorp, 2009 U.S. Dist. LEXIS 87952 at *20 (S.D. Cal. Aug, 4, 2009); Ricon v. Reconstruction Trust, 2009 U.S. Dist. LEXIS 67807 at *16 (S.D. Cal. Aug, 4, 2009); Mohammad, supra, 2009 U.S. Dist. LEXIS 61796 at *14; Pagtalunan, 2009 U.S. Dist. LEXIS 34811 at *6 -*7. Accordingly, this cause of action should be dismissed. VI. PLAINTIFF FAILS TO PLEAD OUTRAGEOUS CONDUCT The weakness of Plaintiffs defense of his emotional distress claim can be found in one line in Plaintiffs Opposition [t]imes have changed since 1989. This is not a
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legal defense. This is merely Plaintiffs opinion and not a legitimate reason for the denial of JPMorgans motion to dismiss which is based on actual law. Because Plaintiff fails to plead any of the elements of the claim for intentional infliction of emotional distress, and activities in the pursuit of ones own economic interest do not qualify as outrageous, the seventh claim must be dismissed without leave to amend. VII. CONCLUSION Based on the foregoing reasons, JPMorgan respectfully requests that the Court grant this motion to dismiss in its entirety. Respectfully submitted, DATED: May 23, 2011 ALVARADOSMITH A Professional Corporation
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2087195.1
By: /s/ Frances Q. Jett THEODORE E. BACON FRANCES Q. JETT Attorneys for Defendant JPMORGAN CHASE BANK, N.A
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Second Amended Complaint INTRODUCTION PARTIES AND JURISDICTION JURY TRIAL DEMAND CLAIM FOR RELIEF BACKGROUND FACTS
INDEX
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FIRST CAUSE OF ACTION VIOLATION OF CAL CIV CODE 2923.5 SECOND CAUSE OF ACTION WRONGFUL FORECLOSURE THIRD CAUSE OF ACTION QUASI CONTRACT FOURTH CAUSE OF ACTION - NO CONTRACT FIFTH CAUSE OF ACTION - QUIET TITLE SIXTH CAUSE OF ACTION - DECLARATORY & INJUNCTIVE RELIEF SEVENTH CAUSE OF ACTION - INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS PRAYER VERIFICATION PLAINTIFF'S EXHIBITS
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INTRODUCTION 1. During the past decade, Washington Mutual Bank (WaMu) and JPMorgan Chase Bank (Chase) abandoned traditional underwriting practices and contributed to a frenzy of real estate speculation by issuing predatory loans that ultimately lowered property values in the United States by 30-60%. Kerry Killinger, CEO of Washington Mutual, took home more than $100 million during the seven years he steered WaMu into bankruptcy. In March 2011, the FDIC filed a sixty-page complaint against Killinger and Stephen Rotella, a former WaMU COO, alleging gross negligence, breach of fiduciary duty, and fraudulent conveyance. FDIC v. Kerry Killinger, Stephen Rotella, et. al., Case No. 2:11-cv-00459 USDC (WD WA Mar. 16, 2011) . 2. WaMu issued millions of predatory loans between 2001 and 2008 with the knowledge that borrowers, including Plaintiff, would default and lose their homes. WaMu filled in fictitious figures on Plaintiff's loan application so that it would meet underwriting standards and WaMu could earn fees when it sold the loan to investors and then acted as serviver without any risk of loss when the borrower defaulted. Such blatant, systematic, and inexcusable acts of fraud constituted a criminal enterprise. As a direct, foreseeable result of WaMu's illegal behavior, over a million families will lose their homes if the courts do not intervene and permit the borrowers to conduct discovery in order to determine who owns their loans. 3. Plaintiff DARYOUSH JAVAHERI is facing illegal foreclosure of his home at a Trustee's Sale, currently scheduled for April 26, 2011. The loan application he submitted to Washington Mutual, attached as Exhibit 1, shows that his loan application consisted only of his name and address and three account numbers. The rest of the application was filled in by unknown employees of WaMu on or about September 8, 2006, to meet underwriting standards so that WaMu would collect fees when it sold the loan to unsuspecting investors in mortgage-backed securities and collateralized debt obligations.
Second Amended Complaint -3-
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PARTIES AND JURISDICTION 4. Plaintiff DARYOUSH JAVAHERI is the owner of the single-family residence located at 10809 Wellworth Avenue, Los Angeles, California 90024, APN 4325-005-014 (the Wellworth Property). He acquired it by a Grant Deed recorded on December 11, 2006. The legal description is: Lot 8 in Block 31 of Tract No 7803 in the City of Los Angeles, County of Los Angeles, State of California, as per map recorded in Book 88, Pages 73 to 75 inclusive of Maps, in the Office of the County Recorder of said County. 5. Defendant JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, (Chase), a New York corporation licensed to do business in California, claims to be a note holder, beneficiary, or servicer for investment trusts of a Note secured by the Wellworth Property. 6. Defendants Does 1-50, inclusive, are sued under fictitious names. When their true names and capacities are known, Plaintiff will amend this Complaint and insert their names and capacities. Plaintiff is informed and believes and thereon alleges that each of these fictitiously named defendants is legally responsible, negligently or in some other actionable manner, for the events and happenings hereinafter referred to and proximately thereby caused the injuries and damages to plaintiff as hereinafter alleged, or claims some right, title, estate, lien, or interest in the residence adverse to Plaintiffs title and their claims constitute a cloud on Plaintiffs title to the property, or participated in unlawful or fraudulent acts that resulted in injury to Plaintiff's person or property. Upon information and belief, Does 1-30 claim to have become successors in interest to the Subject Mortgage by virtue of Plaintiff's loan having been made a part of a securitization process wherein certain residential mortgages and the promissory notes based thereon were securitized by aggregating a large number of promissory notes into a mortgage loan pool, then selling security interests in that pool of mortgages to investors by
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way of items called Secondary Vehicles. 7. There is diversity of citizenship between Plaintiff and Defendant Chase, and the matter in controversy exceeds, exclusive of interest and costs, the sum of $75,000. This court has jurisdiction of the action pursuant to 28 U.S.C. 1332(a). Declaratory relief is authorized under 28 U.S.C. 2210. JURY TRIAL DEMAND 8. Plaintiff demands a jury trial on all issues. CLAIM FOR RELIEF 9. Plaintiff brings this action against JPMorgan Chase Bank, NA ("Chase") and Does 1 through 50 for attempting to sell Plaintiff's Wellworth Property at a trustee's sale and deprive Plaintiff of his residence without a lawful claim to the Property. Plaintiff seeks to clear his title of Chase's claim. BACKGROUND FACTS 10. Plaintiff is the owner of the Wellworth Property under the terms of a Grant Deed executed by Helene Caron in favor of Daryoush Javaheri dated October 19, 2006 (Exhibit 1). 11. To finance his purchase of the Wellworth Property, Plaintiff submitted a loan application to Washington Mutual Bank ("WaMu") on September 8, 2006. A copy of Plaintiff's Uniform Residential Loan Application, furnished to him by WaMu with instructions to leave virtually all of the items blank, is attached hereto as Exhibit 2. 12. Plaintiff purportedly signed an Adjustable Rate Note (Exhibit 3) (hereinafter "Note") and a Deed of Trust (Exhibit 4) on November 14, 2006, at Chicago Title Company. He was not given an opportunity to review the documents, other than to quickly initial or sign some pages. After he signed, a
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Chicago Title Company employee informed Plaintiff that WaMu would forward the final documents to him. Plaintiff did not receive any documents from Chicago Title or WaMu. 13. Plaintiff is named as Borrower on the Note and on the Deed of Trust dated November 14, 2007 ("DOT"). Washington Mutual Bank, FA is identified on the DOT as "Lender" as well as "the beneficiary under this security agreement." Chicago Title Company is named as Trustee. 14. Plaintiff is informed and believes that between November 15 and November 30, 2007, WaMu transferred Plaintiff's Note to Washington Mutual Mortgage Securities Corporation. The Note was then sold to an investment trust and became a part of, or was subject to, a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage Pass-Through Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. The security is identified as Standard & Poor CUSIP # 31379XQC2, Pool Number 432551. Thereafter, WaMu acted solely as a servicer of the loan, and was neither Lender nor Beneficiary after November 2007. 15. CHASE claims to be the note holder, lender, beneficiary, and servicer for investment trusts of the Subject Mortgage. Chase has not recorded its claim of ownership of the purported mortgage. 16. Plaintiff is informed and believes that California Reconveyance Company (CRC) is a wholly owned subsidiary of Chase. 17. On August 16, 2010, CRC recorded a Notice of Trustee's Sale ("NOTS") stating that the Wellworth Property would be sold at public auction on September 7, 2010. The NOTS bears the purported signature of Deborah Brignac, Vice President of California Reconveyance Company, as Trustee. The NOTS included an unsigned "declaration" pursuant to Cal. Civil Code Section 2923.54 bearing the name of Ann Thorn, First Vice President, JPMorgan Chase Bank, National Association. Chase is identified as a servicer on the NOTS.
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FIRST CAUSE OF ACTION VIOLATION OF CAL CIV CODE 2923.5 18. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 17. 19. On or about March 22, 2010, Chase Home Finance LLC in Jacksonville FL mailed to Plaintiff a Notice of Collection Activity, attached hereto as Exhibit 5, stating that Plaintiff had not made his monthly payments since November 2009. It stated, "You may cure this default within thirty (30) days from date of letter" (sic) and "your home loan may be eligible for a loan modification program." 20. Within 30 days, Plaintiff's lawyer, Fariba Banayan, faxed a letter to Chase offices in Jacksonville FL, Columbus OH, and Glendale CO requesting the bank's assistance to rectify the account. It stated, in part, "This office has been retained to represent Daryoush Javaheri in reference to the above stated loan. All future communications with Mr. Javaheri in this regard should be conducted through this office. Please provide my client with the alternatives available to him at this time regarding this loan." The letter is attached as Exhibit 6. Chase did not respond to Mr. Banayan's timely request for assistance. 21. California Civil Code 2923.5 provides that a borrower may designate an attorney to discuss options with the mortgagee, beneficiary, or authorized agent, on the borrower's behalf, to avoid foreclosure. 2923.5 (a) states: (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (g). (2) A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower's financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled
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for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically. 22. Chase did not contact Plaintiff or Mr. Banayan, either in person or by telephone, to discuss Plaintiff's financial condition and the impending foreclosure. Chase did not call, it did not write, and it did not provide a toll-free HUD number to Plaintiff or his lawyer. Chase did not offer to meet with Plaintiff or his lawyer and did not advise them that Plaintiff had a right to request a subsequent meeting within 14 days. 23. California Civil Code 2923.5(g) states that a notice of default may be filed pursuant to 2924 when a mortgagee, beneficiary, or authorized agent has not contacted a borrower provided that the failure to contact the borrower occurred despite the due diligence of the mortgagee, beneficiary, or authorized agent. Due diligence is defined in (g) as: (1) A mortgagee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency. (2) (A) After the letter has been sent, the mortgagee, beneficiary, or authorized agent shall attempt to contact the borrower by telephone at least three times at different hours and on different days. Telephone calls shall be made to the primary telephone number on file. (B) A mortgagee, beneficiary, or authorized agent may attempt to contact a borrower using an automated system to dial borrowers, provided that, if the telephone call is answered, the call is connected to a live representative of the mortgagee, beneficiary, or authorized agent. (C) A mortgagee, beneficiary, or authorized agent satisfies the telephone contact requirements of this paragraph if it determines, after attempting contact pursuant to this paragraph, that the borrower's primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected. (3) If the borrower does not respond within two weeks after the
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telephone call requirements of paragraph (2) have been satisfied, the mortgagee, beneficiary, or authorized agent shall then send a certified letter, with return receipt requested. (4) The mortgagee, beneficiary, or authorized agent shall provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours. (5) The mortgagee, beneficiary, or authorized agent has posted a prominent link on the homepage of its Internet Web site, if any, to the following information: (A) Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options. (B) A list of financial documents borrowers should collect and be prepared to present to the mortgagee, beneficiary, or authorized agent when discussing options for avoiding foreclosure. (C) A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with their mortgagee, beneficiary, or authorized agent. (D) The toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency. 24. Chase did none of the above. Chase Fulfillment Center sent Plaintiff a "Request Disqualification" on September 1, 2010, attached as Exhibit 7. It said, "Unfortunately, because your initial request was less than seven (7) business days from the date of the scheduled foreclosure sale on your home, you are no longer eligible under Making Home Affordable ("MHA") Program guidelines." A second copy was sent on September 7. 25. Chase and CRC recorded a Notice of Default against the Wellworth Property in the Los Angeles County Recorder's Office on May 14, 2010 (Exhibit 9). Attached to the NOD was a Declaration of Compliance with Cal. Civil Code 2923.5 certified under penalty of perjury by Renee Daniels on behalf of Chase. She checked off a box that read, "The mortgagee, beneficiary or authorized agent
Second Amended Complaint
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tried with due diligence but was unable to contact the borrower to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure as required by Cal. Civ. Code Section 2923.5. Thirty days or more have elapsed since these due diligence efforts were completed." 26. Renee Daniels either misrepresented the facts, if and when she signed the declaration, or she did not have personal knowledge of the matters described in her declaration when she asserted that Chase attempted to contact Plaintiff as required by 2923.5. Since the contacts required by 2923.5 did not occur, the foreclosure is illegal. SECOND CAUSE OF ACTION WRONGFUL FORECLOSURE 27. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 26. 28. Soon after WaMu originated the loan, Plaintiff is informed and believes that WaMu transferred all beneficial interest in the loan to a private investor. 29. Neither WaMu, Chicago Title, CRC, nor Chase has recorded a transfer of beneficial interest in the Note to Chase. 30. Chase does not have standing to enforce the Note because Chase is not the owner of the Note, Chase is not a holder of the Note, and Chase is not a beneficiary under the Note. Chase does not claim to be a holder of the Note or a beneficiary. Chase describes itself as a loan servicer in the Notice of Trustee's Sale. If Chase can prove that it is a servicer, Chase cannot foreclose on Plaintiff's property without authorization from the Lender under the terms of the Deed of Trust. 31. Plaintiff is informed and believes that Chase cannot produce an original Note. Chase does not own the loan and cannot identify the owner of the loan. Chase did not purchase the loan when it took over WaMu in September 2008 because WaMu had sold its beneficial interest in the loan two years earlier.
Second Amended Complaint - 10 -
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32. A power of sale is conferred by the mortgage under Cal. Civ. Code 2924. The Adjustable Rate Note attached as Exhibit 3 states, "Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." The Note states in paragraph 7(C): "Notice of Default. If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount." The Note gives the right to collect, if timely payments are not made, to the Lender and anyone who takes the Note by transfer. This does not include a servicer who is not the Note Holder. 33. According to Plaintiff's Deed of Trust, the "Lender" is WASHINGTON MUTUAL BANK, FA, and the "Trustee" is Chicago Title Company. Consistent with the language of the Note, only the Lender is authorized under paragraph 22 of the DOT to accelerate the loan: "Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant of agreement in this Security Instrument "If Lender invokes the power of sale, Lender shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Lender's election to cause the Property to be sold. Trustee shall cause this notice to be recorded in each county in which any part of the Property is located." (DOT page 13, paragraph 22). 34. Washington Mutual Bank remained the Lender for no more than a few days until it sold the loan. Thereafter, it was a servicer of the loan. The Note Holder or Lender was the Investment Trust or that funded the loan. 35. Paragraph 24 of the DOT (Plaintiff's Exhibit 4) states: 24. Substitute Trustee. Lender, at its option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the property is located.
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Courts are putting a stop to the epidemic of forgery and robo-signing that infected the banking industry during the past ten years. Deborah Brignac's diverse signatures and Loren Lopez's acknowledgment of them are fraudulent and illegal. 38. On May 14, 2010, CRC recorded a Notice of Default ("NOD"), attached hereto as Exhibit 9, describing the Wellworth Property with instructions that Plaintiff contact JPMORGAN CHASE BANK, NATIONAL ASSOCIATION to stop the foreclosure. The NOD was signed by Silvia Freeberg, Assistant Secretary. The "Declaration of Compliance (Cal Civil Code Section 2923.5(b)" attached to the NOD was signed under penalty of perjury by Renee Daniels on behalf of JPMorgan Chase Bank, National Association. Chase is described in the Declaration of Compliance as "The undersigned mortgagee, beneficiary or authorized agent." Washington Mutual is described in the body of the NOD as beneficiary. However, Chase's interest, if any, was acquired from WaMu in September 2008, and WaMu's beneficial interest had terminated when WaMu sold the Note to investors in 2006. 39. Chase was not the beneficiary and Brignac had no authority to act on behalf of the beneficiary when someone forged her signature to the Substitution of Trustee. The Substitution of Trustee was unauthorized and fraudulent, so CRC was not authorized to initiate foreclosure against Plaintiff on May 14, 2010, when it recorded the Notice of Default, and it was not acting for the Lender when it filed the Notice of Trustee's Sale on August 16, 2010. THIRD CAUSE OF ACTION QUASI CONTRACT 40. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 39. 41. Chase demanded monthly mortgage payments from Plaintiff starting in October 2008, and continued to collect payments from Plaintiff for twelve months. Plaintiff reasonably relied upon Chase's assertion that it was entitled to payments
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for the reason that it had acquired certain assets from WaMu under an agreement with the FDIC. 42. Chase knowingly accepted the payments and retained them for its own use knowing that WaMu was not a beneficiary under Plaintiff's Note on the date that its assets were transferred to Chase and therefore Chase did not acquire any right from WaMu to accept or keep Plaintiff's payments. It would be inequitable for Chase to retain the payments it received from Plaintiff. The equitable remedy of restitution when unjust enrichment has occurred is an obligation created by the law without regard to the intention of the parties, and is designed to restore the aggrieved party to his or her former position by return of the thing or its equivalent in money. 43. The DOT states in Paragraph 23: "Upon payment of all sums secured by this Security Instrument, Lender shall request Trustee to reconvey the Property and shall surrender this Security Instrument and all notes evidencing debt secured by this Security Instrument to Trustee." The obligations to WaMu under the DOT were fulfilled when WaMu received the balance on the Note as proceeds of sale through securitization to private investors. Chase has been unjustly enriched by collecting monthly payments from Plaintiff. 44. Plaintiff seeks restitution for any payments he made to Chase that were not paid to the lender or beneficiary, if any. FOURTH CAUSE OF ACTION - NO CONTRACT 45. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 44. 46. Plaintiff is informed and believes that WaMu routinely approved predatory real estate loans to unqualified buyers in 2006 and 2007 and implemented unlawful lending practices by encouraging brokers and loan officers to falsify borrowers' income and assets to meet underwriting guidelines when
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borrowers were not qualified. 47. Plaintiff followed WaMu's instructions when he submitted a Uniform Residential Loan Application to WaMu that contained only his basic identifying information, such as name, address, phone number, social security number, and bank account number. WaMu employees filled out the application. 48. Plaintiff is informed and believes that WaMu pre-sold Plaintiff's mortgage. Immediately after he signed the Note, WaMu transferred all of its interest in the Note to an investment bank that bundled Plaintiff's Note with numerous other residential mortgages into residential mortgage-backed securities ("RMBS") which were structured into synthetic collateralized debt obligations ("CDOs") and sold to investors in Pool Number 432551 identified in Standard & Poor's registry as CUSIP # 31379XQC2. 49. Plaintiff is informed and believes that the investment bank intended to short the portfolio it helped to select by entering into credit default swaps to buy protection against the certain event that the promissory notes would default. WaMu expected that Plaintiff would not have the ability to repay the loan. It was not a matter of being unconcerned with the possible outcome that Plaintiff would default; WaMu expected he would default. 50. Washington Mutual Bank, the sponsor of the securitization transaction, was a wholly owned subsidiary of Washington Mutual Inc. Securitization of mortgage loans was an integral part of Washington Mutual Inc.'s management of its capital. It engaged in securitizations of first lien single-family residential mortgage loans through Washington Mutual Mortgage Securities Corporation, as depositor, beginning in 2001. WaMu acted only as a servicer of Plaintiff's loan. 51. WaMu failed to disclose to Plaintiff that its economic interests were adverse to Plaintiff and that WaMu expected to profit when Plaintiff found it impossible to perform and defaulted on his mortgage. 52. A necessary element in the formation of an enforceable contract under
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the common law is a meeting of the minds. Two or more parties must share some expectation that a future event will occur. Plaintiff expected that he would borrow money from WaMu, he would pay it back, and then he would own the Property. WaMu expected that Plaintiff would borrow money, he would not be able to pay it back, and then WaMu or the investors would own the Property. Since there was no shared expectationno meeting of the mindsno contract was formed between Plaintiff and WaMu. 53. In addition to WaMu's expectation that Plaintiff would lose title to the Wellworth Property through foreclosure, WaMu anticipated transferring the Note to investors immediately after Plaintiff signed the Note. Plaintiff is informed and believes that WaMu purchased credit default insurance so that WaMu would receive the balance on the Note when Plaintiff defaulted, in addition to any money WaMu received when it securitized the Note. 54. Not only did WaMu dispense with conventional underwriting practices in 2006, it also paid premium fees and other incentives to mortgage brokers who signed up the riskiest borrowers. Fueled by spiraling profits to Chase, WaMu, and other bankers, common law principles of contract formation, customary underwriting practices, and statutory procedures for transferring interests in real property, including the recordation of transfers of interests in real property, disintegrated and the system collapsed. 55. WaMu expected that Plaintiff would not perform as merely one victim in a scheme in which: (1) WaMu's fees as servicer would be greater as the number of loans increased; (2) WaMu's fees as servicer would be greater as the balances of loans increased; (3) WaMu would recover the unpaid balance of Plaintiff's loan through credit default insurance when Plaintiff inevitably defaulted; and (4) All risk of loss in the event of Plaintiff's default would be borne by investors, not WaMu as the servicer.
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56. Plaintiffs participation in the mortgage contract was procured by overt and covert misrepresentations and nondisclosures. The parties did not share a single expectation with respect to any of the terms of the mortgage contract and therefore the contract was void ab initio. 57. No enforceable contract was formed between Plaintiff and WaMu, so his DOT and Promissory Note were not assets of WaMu that could be acquired or assumed by Chase from the Federal Deposit Insurance Corporation (FDIC) as receiver after WaMu was closed by the Office of Thrift Supervision on September 25, 2008. 58. Chase Bank has no right to receive payment under Plaintiffs mortgage loan and has no right to foreclose on his Wellworth Property. Plaintiff does not seek rescission of the contract. He alleges that the contract was void ab initio. FIFTH CAUSE OF ACTION - QUIET TITLE 59. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 58. 60. Plaintiff seeks to quiet title against the claims of Defendants and all persons claiming any legal or equitable right, title, estate, lien, or adverse interest in the Wellworth Property as of the date the Complaint was filed (Cal Code Civil Procedure 760.020) 61. Plaintiff is the titleholder of the Wellworth Property according to the terms of the Grant Deed recorded on December 11, 2006. 62. WaMu securitized Plaintiff's single-family residential mortgage loan through Washington Mutual Mortgage Securities Corp. Plaintiff is informed and believes that the lawful beneficiary has been paid in full. The DOT states in paragraph 23: 23. Reconveyance. Upon payment of all sums secured by this Security Instrument, lender shall request Trustee to reconvey the Property and
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shall surrender this Security Instrument and all notes evidencing debt secured by this Security Instrument to trustee. Trustee shall reconvey the Property without warranty to the person or persons legally entitled to it 63. The DOT does not state that Plaintiff must pay all sums, only that all secured sums must be paid. Plaintiff alleges that the obligations owed to WaMu under the DOT were fulfilled and the loan was fully paid when WaMu received funds in excess of the balance on the Note as proceeds of sale through securitization(s) of the loan and insurance proceeds from Credit Default Swaps. 64. Defendants claims are adverse to Plaintiff because Plaintiff is informed and believes that none of the defendants is a holder of the Note, none of them can prove any interest in the Note, and none of them can prove that the Note is secured by the DOT, as well as for the reasons set forth in the preceding causes of action. As such, Defendants have no right, title, lien, or interest in the Wellworth Property. 65. Plaintiff therefore seeks a judicial declaration that the title to the Wellworth Property is vested solely in Plaintiff and that Defendants have no right, title, estate, lien, or interest in the Property and that Defendants and each of them be forever enjoined from asserting any right, title, lien or interest in the Property adverse to Plaintiff. SIXTH CAUSE OF ACTION - DECLARATORY & INJUNCTIVE RELIEF 66. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 65. 67. An actual controversy has arisen and now exists between Plaintiff and Defendants concerning their respective rights and duties. Plaintiff contends: (a) that Chase is not the present holder in due course or beneficiary of a Promissory Note executed by Plaintiff. However, Defendants contend that Chase is the present owner and beneficiary of a Promissory Note executed by Plaintiff.
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(b) that Defendants are not real parties in interest, do not have standing, and are not entitled to accelerate the maturity of any secured obligation and sell the Wellworth Property because they are not a beneficiary or authorized agent of beneficiaries under the purported Note. However, Defendants assert that they are entitled to sell the Property. (c) that the Substitution of Trustee recorded in Los Angeles County on May 3, 2010, which purports to substitute CRC in place of Chicago Title Co. as Trustee under the Deed of Trust dated 11-14-2007, was subscribed with a forged signature of Deborah Brignac and fraudulently acknowledged, and therefore CRC is not a trustee authorized to file a Notice of Default or a Notice of Trustee's Sale on the Wellworth Property. However, Defendants contend that CRC is a trustee duly authorized to file said Notices. 68. Plaintiff desires a judicial determination of his rights and duties as to the validity of the Note and DOT, and Defendants' rights to proceed with nonjudicial foreclosure on the Wellworth Property. Unless restrained, Defendants will sell Plaintiffs residence, or cause it to be sold, to Plaintiffs great and irreparable injury, for which pecuniary compensation would not afford adequate relief. 69. Defendants wrongful conduct, unless and until restrained by order of this court, will cause great irreparable injury to Plaintiff as the value of the residence declines under threat of foreclosure and Plaintiff faces the prospect of eviction from his residence. Plaintiff designed and built this home himself. It is unique and cannot be replicated. 70. If the foreclosure sale is allowed to proceed, the burden on Plaintiff significantly outweighs the benefit to Defendants, and each of them. By contrast, if the foreclosure sale is enjoined, the burden to defendants is minimal and is not outweighed by the benefit to Plaintiff. 71. Plaintiff has no adequate remedy at law for the injuries currently being suffered and that are threatened. It will be impossible for Plaintiff to determine the
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precise amount of damage that he will suffer if Defendants conduct is not restrained and Plaintiff must file a multiplicity of suits to obtain compensation for his injuries. SEVENTH CAUSE OF ACTION - INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS 72. Plaintiff re-alleges and incorporates by reference the allegations contained in paragraphs 1 through 71. 73. Between October 2008 and November 2009 Chase cashed Plaintiff's monthly checks and kept the money when a cursory review of WaMu's records, under Chase's control, would have revealed that Chase had no right to keep the money. When Plaintiff stopped paying, Chase notified Plaintiff in 2010 that it would take his family homea house that he had built himself. There was no signature or name on Chase's correspondence, so Plaintiff cannot identify the authors prior to commencement of discovery. 74. In March 2010, Plaintiff hired a lawyer to negotiate with Chase and explore options to foreclosure. Chase ignored his lawyer's letters, which were faxed to Chase's offices in three states. 75. Knowing that it was a servicer, not a beneficiary or lender of Plaintiff's loan, Chase pretended to transfer the deed of trust to its subsidiary, CRC, on April 30, 2010, so CRC could record a fraudulent Notice of Default on May 14, 2010. 76. Plaintiff contends that the acts and omissions of the Defendants, and each of them, constitute extreme and outrageous conduct. 77. Plaintiff further contends that Defendants, and each of them, engaged in such conduct either intentionally or with reckless disregard as to the effect on Plaintiff. 78. As a result of said extreme and outrageous conduct by Defendants, and each of them, Plaintiff has suffered severe emotional distress in the amount of
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$5,000,000.00. /// PRAYER WHEREFORE, Plaintiff requests judgment as follows: 1. That this court issue an Order to Show Cause and, after a hearing, issue a Temporary Restraining Order and Preliminary Injunction restraining Defendants, and each of them, during the pendency of this action, from continuing with their efforts to conduct a Trustee's Sale of the Wellworth Property. 2. That the attempted foreclosure of the Wellworth Property be declared illegal and that Defendants be forever enjoined and restrained from selling the Property or attempting to sell it or causing it to be sold, either under power of sale pursuant to trust deed or by foreclosure action, and from posting, publishing, or recording any notice of default or notice of trustee's sale contrary to state or federal law. 3. That the underlying loan transaction be declared void as a result of Defendants' and WaMu's misrepresentations, fraud, concealment, and predatory loan practices. 4. That Defendants make restitution to Plaintiff according to proof. 5. For a judgment determining that Plaintiff is the owner in fee simple of the Wellworth Property against the adverse claims of Defendants and that Defendants have no interest in the subject property adverse to Plaintiff. 6. For damages in an amount of $5,000,000.00. 6. For costs of suit and reasonable attorney fees. 7. For any and all other and further relief that may be just in this matter. Date: April 11, 2011 ______________________________ Douglas Gillies, Attorney for Plaintiff
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PLAINTIFF'S EXHIBITS Exhibit 1 2 3 4 5 6 7 8 9 10 11-14 Description Grant Deed recorded 12/11/2006 Uniform Residential Loan Application 9/8/2006 Adjustable Rate Note 11/14/2007 Deed of Trust 11/14/2007 Notice of Collection Activity 3/22/2010 Attorney Fariba Banayan's fax to Chase 4/19/2010 Request Disqualification (Chase) 9/1/2010 and 9/7/2010 Substitution of Trustee 4/30/2010 Notice of Default 5/14/2010 Notice of Trustee's Sale 8/16/2010 Deborah Brignac's signatures 10/2/2009 9/29/2010
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THEODORE E. BACON (CA Bar No. 115395) tbacon@AlvaradoSmith.com SCOTT J. STILMAN (CA Bar No. 120239) sstilman@AlvaradoSmith.com FRANCES Q. JETT (CA Bar No. 175612) fjett@AlvaradoSmith.com
ALVARADOSMITH
A Professional Corporation 633 W. 5th Street, Suite 1100 Los Angeles, California 90071 Tel: (213) 229-2400 Fax: (213) 229-2499 Attorneys for Defendant JPMORGAN CHASE BANK, N.A., UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

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DARYOUSH JAVAHERI,
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A PROFESSIONAL CORPORATION SANTA ANA
CASE NO.: CV-10-8185 ODW (FFMx) JUDGE: Hon. Otis D. Wright II
Plaintiff,
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v.
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JPMORGAN CHASE BANK, N.A., CALIFORNIA RECONVEYANCE COMPANY and DOES 1-150, inclusive, Defendant.
NOTICE OF MOTION AND MOTION BY DEFENDANT JPMORGAN BANK, N.A., TO DISMISS PLAINTIFFS SECOND AMENDED COMPLAINT
{Request for Judicial Notice Efiled and Proposed Order Submitted Concurrently Herewith}
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Courtroom: DATE: TIME: Trial Date: Action Filed:
11 June 6, 2011 1:30 P.M. None Set October 29, 2010
TO ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD: NOTICE IS GIVEN that on June 6, 2011, at 1:30 P.M., in Courtroom 11, of the above-entitled court located at 312 N. Spring Street, Los Angeles, California 90012, Defendant JPMorgan Chase Bank, N.A., (JPMorgan) will move the Court to dismiss the action without leave to amend, pursuant to Federal Rule of Civil
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Procedure (FRCP) 12(b)(6) on the grounds that the Second Amended Complaint of plaintiff Daryoush Javaheri (Plaintiff) fails to state a claim upon which relief can be granted. This motion is based on the following grounds: 1. The first cause of action for Violation of California Civil Code 2923.5
fails to state facts sufficient to constitute a claim for relief pursuant to FRCP 12(b)(6). 2. The second cause of action for Wrongful Foreclosure fails to state
facts sufficient to constitute a claim for relief pursuant to FRCP 12(b)(6). 3. The third cause of action for Quasi Contract fails to state facts sufficient
to constitute a claim for relief pursuant to FRCP 12(b)(6). 4. The fourth cause of action for No Contract fails to state facts sufficient
to constitute a claim for relief pursuant to FRCP 12(b)(6). 5. The fifth cause of action for Quiet Title fails to state facts sufficient to
constitute a claim for relief pursuant to FRCP 12(b)(6). 6. The sixth cause of action for Declaratory and Injunctive Relief fails to
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state facts sufficient to constitute a claim for relief pursuant to FRCP 12(b)(6). 7. The seventh cause of action for Intentional Infliction of Emotional
Distress fails to state facts sufficient to constitute a claim for relief pursuant to FRCP 12(b)(6). The motion will be based on this Notice of Motion, the Memorandum of Points and Authorities, the Request for Judicial Notice, and the pleadings and papers filed. /// /// /// /// /// /// /// ///
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Counsel for JPMorgan met and conferred with Plaintiffs counsel on April 21, 2011, via letter. Therefore, Defendant has met the requirements of Local Rule 73. See, Local Rule 7-3. Respectfully submitted, DATED: April 28, 2011 ALVARADOSMITH A Professional Corporation
By:
/s/ Frances Q. Jett THEODORE E. BACON SCOTT J. STILMAN FRANCES Q. JETT Attorneys for Defendant JPMORGAN CHASE BANK, N.A.
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TABLE OF CONTENTS
Page
MEMORANDUM OF POINTS AND AUTHORITIES ............................................ 1 I. II. III. IV. SUMMARY OF ARGUMENT ....................................................................... 1 SUMMARY OF FACTS ................................................................................. 2 STANDARD FOR A MOTION TO DISMISS .............................................. 3 PLAINTIFFS FIRST, SECOND, AND FIFTH CLAIMS FAIL SINCE JPMORGAN HAD THE RIGHT TO FORECLOSE AND COMPLIED WITH STATE LAW ....................................................................................... 4 A. B. V. JPMorgan Acquired the Loan from the FDIC ...................................... 4 JPMorgan Complied with State Law .................................................... 5
THERE IS NO LEGAL BASIS FOR THE THIRD CLAIM OF QUASI CONTRACT .................................................................................................. 7
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VI.
THERE IS NO CLAIM ALLEGED FOR NO CONTRACT...................... 8
VII. THERE IS NO BASIS FOR EQUITABLE RELIEF...................................... 9 VIII. PLAINTIFF FAILS TO PLEAD OUTRAGEOUS CONDUCT .................. 10 IX. CONCLUSION ............................................................................................. 11
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TABLE OF AUTHORITIES Federal Cases
Page
Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007) ................................................................................................. 3 Bustamante v. First Fed. Sav. & Loan Assn, 619 F.2d 360, 365 (5th Cir. 1980)............................................................................... 8 In re Wepsic, 231 B.R. 768 (S.D. Cal. 1998) .................................................................................... 8 Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001)....................................................................................... 3 MGIC Indem. Corp. v. Weisman, 803 F. 2d 500 (9th Cir. 1986)...................................................................................... 3 Molina v. Wash. Mut. Bank, 2010 U.S. Dis. LEXIS 8056 (W.D. Cal. Jan. 29, 2010) ............................................. 3 Wietschner v. Monterey Pasta Co., 294 F. Supp. 2d 1117 (N.D. Cal. 2003) ...................................................................... 3 Yamamoto v. Bank of New York, 329 F.3d 1167 (9th Cir. 2003)................................................................................. 8, 9 Federal Rules Federal Rule Civil Procedure 12(b)(6) ................................................................... 1, 2, 3 Federal Rule of Civil Procedure 9(b).............................................................................. 8
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Federal Rule of Evidence 201(d) .................................................................................... 3

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State Cases Adler v. Sargent 109 Cal. 42 (1895)....................................................................................................... 6 Alturas v. Gloster, 16 Cal.2d 46 (1940)..................................................................................................... 9 Bachis v. State Farm Mutual Auto. Ins. Co., 265 Cal.App.2d 722 (1968)........................................................................................ 9 Cardellini v. Casey, 181 Cal.App.3d 389 (1986)......................................................................................... 9 Christensen v. Superior Court, 54 Cal.3d 868 (1991) ................................................................................................ 10 Davidson v. City of Westminster, 32 Cal.3d 197 (1982) ................................................................................................ 10 ii
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TABLE OF AUTHORITIES
Page
Jogani v. SuperiorthCourt of Los Angeles County, 165 Cal. App. 4 901 (2008)....................................................................................... 7 KORV-TV, Inc. v. Sup. Ct., 31 Cal.App.4th 1023 (1995) ..................................................................................... 10 Kruse v. Bank of America, 202 Cal.App.3d 38 (1988)......................................................................................... 11 Mabry v. Superior Court, 185 Cal.App.4th 208 (2010) ....................................................................................... 5 Melchior v. New Line Productions, Inc., 206 Cal. App. 4th, 779 (2003) .................................................................................... 8 Ricard v. Pacific Indemnity Co., 132 Cal.App.3d 886 (1982)....................................................................................... 10 Santens v. Los Angeles Finance Co. 91 Cal.App.2d 197 (1949)........................................................................................... 6 Tiburon v. Northwestern Pacific Railroad Co., 4 Cal.App.3d 160 (1970)............................................................................................. 9 Trerice v. Blue Cross of California, 209 Cal.App.3d 878 (1989)....................................................................................... 11 State Statutes Civil Code 1216 ........................................................................................................... 7 Civil Code 2924(a)(1) .................................................................................................. 5 Civil Code 2924b(b)(4)................................................................................................ 5 Civil Code 2934 ........................................................................................................... 6 Civil Code 2923.5.......................................................................................................... 5
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MEMORANDUM OF POINTS AND AUTHORITIES I. SUMMARY OF ARGUMENT On March 24, 2011, this Court granted defendant JPMorgan Chase Bank, N.A.s (JPMorgan or Defendant) Motion to Dismiss Plaintiff Daryoush Javaheris First Amended Complaint (FAC) as to all claims with leave to amend. In so doing, the Court specifically addressed the deficiencies in each and every of Plaintiffs claims. Plaintiff has now filed a Second Amended Complaint (SAC) which not only fails to cure any of the deficiencies in the FAC, but also succeeds in creating a whole new set of deficiencies. Plaintiffs SAC against defendant JPMorgan Chase Bank, N.A., fails primarily because JPMorgan is not the same entity as Washington Mutual Bank (WaMu) and did not assume its liabilities when it acquired WaMus assets from the Federal Deposit Insurance Corporation (FDIC). The crux of Plaintiffs entire SAC remains that he believes he is entitled to rescind a $2.6 million loan he received from WaMu on or about November 14, 2007, to refinance a house located at 10809 Wellworth, Los Angeles California, (Subject Property) without having to tender anything back to the lender because of the alleged bad acts of the WaMu at the loan origination, because of alleged discrepancies in the acquisition of the loan by JPMorgan from the FDIC, and due to alleged improprieties in the non-judicial foreclosure process. Plaintiffs SAC fails simply because it does not establish any facts to support his claims and is not supported by the law. In particular, Plaintiffs first and second claim for wrongful foreclosure, as well as the fifth claim for quiet title, allege that Defendants have no right to foreclose, because they do not own the note, but as the SAC itself alleges and the documents attached to Defendants Request for Judicial Notice (RJN) confirm, JPMorgan acquired the Loan from the FDIC when the FDIC was appointed receiver for WaMu. ///
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Exhibit 2 to the FAC also shows full compliance by Defendants with California Civil Code 2923.5. The third claim for quasi contract is not a legal claim. The fourth claim of No Contract claim is essentially a rescission claim which fails, because there is no mistake or fraud alleged and no offer to restore the consideration Plaintiff obtained. The sixth claim for declaratory and injunctive relief mirrors the prior claims and fails for the reasons set forth above. The seventh claim for intentional infliction of emotional distress fails to allege virtually all the elements of that claim. Accordingly, as none of Plaintiffs claims against JPMorgan are properly pled and cannot be amended, the SAC must be dismissed. II. SUMMARY OF FACTS Plaintiff obtained a mortgage loan in the amount of $2,660.000.00 (Loan) secured by a Deed of Trust (DOT) encumbering the Subject Property. SAC, 12, 13, Exhibits 3, 4. The DOT was recorded on or about November 30, 2007, with the Los Angeles County Recorders Office as instrument number 20072634177. The DOT identifies Washington Mutual Bank, FA (WaMu) as the lender beneficiary, and the FAC confirms California Reconveyance Company (CRC) is the current trustee of the DOT. SAC, 13, Exhibit 4. The Office of Thrift Supervision (OTS) assumed control of WaMu on September 25, 2008. RJN, Exhibit A. On that same day, JPMorgan acquired WaMus banking operations from the FDIC, including the interest in the Loan on the Subject Property, under the Purchase and Assumption Agreement (P&A Agreement) between the FDIC and JPMorgan dated September 25, 2008. See RJN, Exhibit B. Plaintiff failed to comply with the Loan obligations and Notice of Default was recorded May 14, 2010, and confirms that $141,558.18 is in arrears. Exhibit 9. The SAC does not deny this amount is due and owing as of May 13, 2010. On August 16, ///
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2010, a Notice of Trustees sale was recorded with the Los Angeles County Recorders Office. SAC, 17, Exhibit 10. III. STANDARD FOR A MOTION TO DISMISS A motion to dismiss under FRCP 12(b)(6) may be brought when a plaintiff fails to state a claim upon which relief can be granted. While a complaint attacked by a FRCP 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of actions elements will not do. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1959 (2007). Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaints allegations are true. Id. On a motion to dismiss, a court may take judicial notice of matters of public record in accordance with Federal Rules of Evidence (FRE) 201 without converting the motion to dismiss to a motion for summary judgment. Lee v. City of Los Angeles, 250 F.3d 668, 688-689 (9th Cir. 2001) (citing Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir. 1986)). Courts may take judicial notice of documents outside of the complaint that are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. FRE 201(d); Wietschner v. Monterey Pasta Co., 294 F. Supp. 2d 1117, 1109 (N.D. Cal. 2003). Courts can take judicial notice of such matters when considering a motion to dismiss. Id.; MGIC Indem. Corp. v. Weisman, 803 F. 2d 500, 504 (9th Cir. 1986). The Court may take judicial notice of a matter that is data stored on-line at a federal agencys website. See Molina v. Wash. Mut. Bank, 2010 U.S. Dis. LEXIS 8056 (W.D. Cal. Jan. 29, 2010) (taking judicial notice of data on web sites of federal agencies). /// /// ///
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IV.
PLAINTIFFS FIRST, SECOND, AND FIFTH CLAIMS FAIL SINCE JPMORGAN HAD THE RIGHT TO FORECLOSE AND COMPLIED WITH STATE LAW A. JPMorgan Acquired the Loan from the FDIC
JPMorgan obtained its rights under the Loan from the FDIC. See RJN, Exhibit B, Complaint 2. In his SAC Plaintiff continues to assert that JPMorgan has not recorded its claim of ownership of the purported mortgage and does not have standing to enforce the Note because Chase is not the owner of the Note, Chase is not the holder of the Note, and Chase is not a beneficiary under the Note. SAC, 15, 30. However, this is contrary to the Courts specific ruling on the Motion to the Dismiss the FAC whereby the Court specifically noted that the transfer of interest to JPMorgan, however, is evidenced in documents of which the Court has already taken judicial notice namely, the OTS Order and P&A Agreement. RJN, Exhibit C, p. 3. Further this Court has already found that Plaintiffs claims based on the allegation that JPMorgan does not own he note are without merit. RJN, Exhibit C, p. 4. This confirms that JPMorgan had the right to foreclose on default and had the right to appoint CRC as the trustee in commencing foreclosure. The facts alleged in this case and those subject to judicial notice establish that the Loan was an asset of WaMu when the P&A Agreement went into effect on September 25, 2008. See, e.g., RJN, Exhibit B. Consequently, the Loan was one of the deeds and mortgages that was assigned, transferred, conveyed and delivered to JPMorgan pursuant to the P&A Agreement. JPMorgans rights under the DOT derives from the terms and conditions of the P&A Agreement with the FDIC, which transferred to JPMorgan the ownership of the beneficial and servicing rights, and all other interests that WaMu owned and possessed on September 25, 2008. Id. Thus, JPMorgans power to exercise the power of sale under the DOT derives from the P&A Agreement with the FDIC acting as receiver and pursuant to its federal powers. ///
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Accordingly, JPMorgan properly acquired the rights to the DOT from the FDIC when WaMu was placed into receivership, so the claim that Defendant does not have the right to foreclose is without merit. B. JPMorgan Complied with State Law
As to the alleged violations of California Civil Code 2923.5, the law is clear that foreclosure can be commenced by the trustee, mortgagee or beneficiary or any of their authorized agents and a person authorized to record the notice of default or the notice of sale. (See California Civil Code 2924(a)(1) and 2924b(b)(4).) Plaintiff continues to claim that JPMorgan violated 2923.5, because the person who signed the declaration attesting to compliance with 2923.5 did not have personal knowledge of the facts. SAC, 26. However, again, the Court has already addressed this allegation and found that nothing in this statute requires that a declaration be signed by a person with personal knowledge. RJN, Exhibit C, pp.4-5. Moreover, Mabry v. Superior Court, 185 Cal.App.4th 208 (2010) makes it clear that 2923.5 does not require one individual having personal knowledge of all facts in the declaration: And, finally-back to our point about the inherent individual operation of the statute-the very structure of subdivision (b) belies any insertion of a penalty of perjury requirement. The way section 2923.5 is set up; too many people are necessarily involved in the process for any one person to likely be in the position where he or she could swear that all three requirements of the declaration required by subdivision (b) were met. We note, for example, that subdivision (a)(2) requires any one of three entities (a mortgagee, beneficiary, or authorized agent) to contact the borrower, and such entities may employ different people for that purpose. And the option under the statute of no contact being required (per subdivision (h) FN18) further involves individuals who would, in any commercial operation, probably be different from the people employed to do the contacting. For example, the person who would know that the borrower had surrendered the keys would in all likelihood be a different person than the legal officer who would know that the borrower had filed for bankruptcy. Id, 234, 110 Cal. Rptr. 3d 201, 220. In an obvious last ditch effort to salvage his claims of wrongful foreclosure, Plaintiff tries something new in his SAC by asserting that the Substitution of Trustee was forged and therefore cannot be used to facilitate the subject foreclosure. SAC, 36-39.
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First and foremost, the so-called exhibits Plaintiff has attached to his SAC as evidence that Ms. Brignacs signature is forged have nothing whatsoever to do with Plaintiff or the subject Loan. See, Exhibits 11, 12, 13 to SAC. These exhibits clearly concern entirely different properties and loans and have no relevance whatsoever to the claims at issue. Moreover, the signatures which Plaintiff has cited examples of the so-called forgery each clearly have initials of someone other than Ms. Brignac after the signature indicating that there was no actual forgery involved, but rather as clearly indicated, that these (irrelevant) documents were signed with Ms. Brignacs authority. Accordingly, Plaintiffs effort to salvage his claim clearly fails. Finally, Plaintiffs insistence that JPMorgan does not have standing to enforce the DOT, because there is no recorded assignment, is without any legal support. Any assignment of a deed of trust may be recorded, but it is not required to be recorded in order to provide constructive notice of the contents of the deed of trust. See California Civil Code 2934 and Santens v. Los Angeles Finance Co., 91 Cal.App.2d 197, 201202 (1949) : Defendant argues that since the assignment of the note and trust deed to Graham was not recorded that defendant was a bona fide purchaser at the execution sale and is not bound by the assignment. He relies on the provision of section 2934 of the Civil Code that any assignment of the beneficial interest under a deed of trust may be recorded, and from the time the same is filed for record operates as constructive notice of the contents thereof to all persons. We see nothing in the wording of the section which would operate to defeat the title to Graham of the note and trust deed as the transfer of the note carried with it the security and the trust deed is a mere incident of the debt and could only be foreclosed by the owner of the note. Santens, supra 91 Cal.App.2d at 201-202. (Emphasis added.) See also Adler v. Sargent, 109 Cal. 42 (1895) . /// ///
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(In a case where neither the note nor deed of trust had been recorded by the true assignee, California Supreme Court held that a mortgage, being a mere incident to the debt, belongs to the holder of the collateral note, and can be foreclosed only by him.)1 Accordingly, even in the absence of a recorded assignment and/or substitution of trustee, Plaintiffs wrongful foreclosure claims fail. In short, the first, second and fifth claims have no merit and should be dismissed. V. THERE IS NO LEGAL BASIS FOR THE THIRD CLAIM OF QUASI CONTRACT Plaintiff has amended his FAC in part by replacing his previously dismissed claim for restitution with a claim for quasi contract. However, the end result sought by Plaintiff in this new claim remains the same restitution. SAC, 44. In fact, Plaintiff asserts that the equitable remedy of restitution when unjust enrichment has occurred in an obligation created by the law without regard to the intention of the parties. SAC, 42. Plaintiffs third claim for quasi contract is essentially a claim for unjust enrichment and as such it fails because unjust enrichment is not a cause of action. Jogani v. Superior Court of Los Angeles County, 165 Cal. App. 4th 901, 911(2008), citing Melchior v. New Line Productions, Inc., 106 Cal. App. 4th 779, 793 (2003) ([T]here is no cause of action in California for unjust enrichment.). Unjust enrichment is a general principle, underlying various legal doctrines and remedies, rather than a remedy itself. Melchior v. New Line
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Generally, only certain documents have no legal effect until recorded. See, for example, California Civil Code 1216, which requires that revocation of a power of attorney to convey or execute instruments must be recorded to be effective: No power contained in an instrument to convey or execute instruments affecting real property which has been recorded is revoked by any act of the party by whom it was executed, unless the instrument containing such revocation is also acknowledged or proved, certified and recorded, in the same office in which the instrument containing the power was recorded.
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Productions, Inc., 206 Cal. App. 4th 779, 793 (2003) , citing Dinosaur Development, Inc. v. White, 216 Cal. App. 3d 1310, 1315 (1989) (internal citations omitted). Even if it were a claim, Plaintiff pleads no facts indicating how JPMorgans mere receipt of payments from Plaintiff on the Subject Loan a debt he voluntarily incurred is somehow unjust. Additionally, Plaintiff does not and cannot plead that CRC as trustee under the DOT, respectively, were unjustly enriched in any way. VI. THERE IS NO CLAIM ALLEGED FOR NO CONTRACT In support of his claim for No Contract, which is essentially a claim for fraud, Plaintiff continues to assert conclusory allegations with regard to WaMus alleged fraudulent scheme. SAC, 47, 51, 56. In fact, Plaintiff specifically alleges that his participation is the mortgage contract was procured by overt and covert misrepresentations and nondisclosures. SAC, 56. This Court has already ruled that Plaintiff must meet the standards for pleading fraud found in Federal Rule of Civil Procedure Rule 9(b). See, RJN Exhibit C, p. 6. Plaintiff has not cured this deficiency in his SAC. Accordingly, this claim is subject to dismissal. Plaintiff also continues to allege that he is not seeking rescission (SAC, 58), but he cannot escape the fact that he received $2.6 million dollars and, in order to void the agreement, must still offer tender in the FAC. A borrower is required to make a tender offer to pay the lender what he or she received in the original mortgage transaction (minus interest, finance charges, etc). See, Yamamoto v. Bank of New York, 329 F.3d 1167, 1172 (9th Cir. 2003); see, e.g., Bustamante v. First Fed. Sav. & Loan Assn, 619 F.2d 360, 365 (5th Cir. 1980) (creditors TILA obligations were not triggered until obligor tendered repayment); In re Wepsic, 231 B.R. 768, 776 (S.D. Cal. 1998) (conditioning rescission on borrowers tender of her duty of repayment under the statute.). Moreover, as was held by the Yamamoto court, rescission may not be enforced unless there is a determination that a borrower can also comply with his rescission obligations. See, Yamamoto, 329 F.3d at 1173. That is, the borrower ///
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must show that he or she has the capacity to pay back what he received from the lender, because rescission is a remedy that restores the status quo ante. Id. The obligation to rescind has not been triggered, because Plaintiff has failed to make a tender offer in the FAC. Plaintiff has made no claim that he can pay the amount borrowed pursuant to the mortgage transactions. See generally, FAC. The statutory obligation to rescind will only be triggered when, and only when, this Court renders a decision that Plaintiff is entitled to rescission, and Plaintiff proves that he has the capacity to pay back what he received under the Loan. For the foregoing reasons, the motion to dismiss Plaintiffs no contract claim must be granted. VII. THERE IS NO BASIS FOR EQUITABLE RELIEF In pleading the sixth cause of action for declaratory relief, the Plaintiff must specifically allege (1) whatever rights or duties the parties have with respect to the property and (2) the existence of an actual and present controversy. General statements about a controversy are unavailing. Alturas v. Gloster, 16 Cal.2d 46, 48 (1940). An actual controversy involving justiciable questions relating to the rights or obligations of a party must exist. See Tiburon v. Northwestern Pacific Railroad Co., 4 Cal.App.3d 160, 170 (1970). Thus, it is axiomatic that a cause of action for declaratory relief serves the purpose of adjudicating future rights and liabilities between parties who have some sort of relationship, either contractual or otherwise. See Cardellini v. Casey, 181 Cal.App.3d 389 (1986); Bachis v. State Farm Mutual Auto. Ins. Co., 265 Cal.App.2d 722 (1968). The sixth claim also seeks injunctive relief based on the allegations of improper foreclosure. The sixth claim simply incorporates the prior causes of action and seeks equitable relief on the same flawed claims. Consequently, for the same reasons set forth in regard to the prior causes of action, Defendants request that the sixth claim be dismissed without leave to amend. /// ///
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VIII. PLAINTIFF FAILS TO PLEAD OUTRAGEOUS CONDUCT Plaintiff fails to state a claim for Intentional Infliction of Emotional Distress against JPMorgan. The elements of the tort of intentional infliction of emotional distress are: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the Plaintiffs suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendants outrageous conduct. Christensen v. Superior Court, 54 Cal.3d 868, 903 (1991). A claim for intentional infliction of emotion distress requires a showing of outrageous conduct which is so extreme as to exceed all bounds of that usually tolerated in a civilized community. Davidson v. City of Westminster, 32 Cal.3d 197, 209 (1982). A plaintiff must plead and prove with great specificity acts that are outrageous. Outrageous conduct has been defined as conduct so extreme as to exceed all bounds of that usually tolerated in a civilized community. Ricard v. Pacific Indemnity Co., 132 Cal.App.3d 886, 894 (1982) (emphasis added). Conduct will be found to be actionable only where the recitation of the facts to an average member of the community would arouse his resentment against the actor, and leave him to exclaim, Outrageous! KORV-TV, Inc. v. Sup. Ct., 31 Cal.App.4th 1023, 1028 (1995). In the SAC, Plaintiff seeks recovery for emotional distress; however, he fails to plead any of the elements of the emotional distress claim. Instead, Plaintiff pleads conclusions of law and damages. Indeed, there are absolutely no allegations of outrageous conduct anywhere in the FAC with respect to JPMorgan. Moreover, the only conduct that can be asserted against JPMorgan is the enforcement of the payment of the Loan and foreclosure for Plaintiffs failure to comply with his payment obligation under the Loan, and his failure to make all required payments. See generally, SAC. An assertion of legal rights in pursuit of ones own economic interests does not qualify as outrageous under this standard. Trerice v. Blue
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Cross of California, 209 Cal.App.3d 878, 883 (1989); Kruse v. Bank of America, 202 Cal.App.3d 38, 67 (1988). Assuming that the outrageous conduct Plaintiff refers to against JPMorgan is the foreclosure of the Subject Property, such activities were simply done in the pursuit of the economic interests of the lender in enforcing the security instrument encumbering the Subject Property. See Kruse, 202 Cal.App.3d at 67 (no claim for intentional infliction of emotional distress where lender simply attempted to collect debt due under security interest). Thus, a foreclosure sale cannot be considered outrageous and cannot support an action for intentional infliction of emotional distress. Because Plaintiff fails to plead any of the elements of the claim for intentional infliction of emotional distress, and activities in the pursuit of ones own economic interest do not qualify as outrageous, the seventh claim must be dismissed without leave to amend. IX. CONCLUSION Based on the foregoing reasons, JPMorgan respectfully requests that the Court grant this motion to dismiss in its entirety. Respectfully submitted, DATED: April 28, 2011 ALVARADOSMITH A Professional Corporation
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By: /s/ Frances Q. Jett THEODORE E. BACON SCOTT J. STILMAN FRANCES Q. JETT Attorneys for Defendant JPMORGAN CHASE BANK, N.A
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DOUGLAS GILLIES, ESQ. (CA Bar No. 53602) douglasgillies@gmail.com 3756 Torino Drive Santa Barbara, CA 93105 (805) 682-7033 Attorney for Plaintiff DARYOUSH JAVAHERI UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DARYOUSH JAVAHERI, Plaintiff, v. JP MORGAN CHASE BANK N.A., and DOES 1-50, inclusive, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 10-8185-ODW (FFMx) JUDGE: HON. OTIS D. WRIGHT II OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT DATE: June 6, 2011 TIME: 1:30 PM COURTROOM: 11 Trial Date: None Set Action Filed: October 29, 2010
Plaintiff DARYOUSH JAVAHERI opposes Defendant's Motion to Dismiss Plaintiff's Second Amended Complaint on the grounds that the SAC contains sufficient facts to state plausible claims for relief. /// ///
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint -i-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES THE FACTS
Table of Contents
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1. CAL CIVIL CODE 2923.5 FIRST CAUSE OF ACTION 2. WRONGFUL FORECLOSURE SECOND CAUSE OF ACTION 3. QUASI CONTRACT THIRD CAUSE OF ACTION 4. NO CONTRACT FOURTH CAUSE OF ACTION 5. QUIET TITLE FIFTH CAUSE OF ACTION 6. DECLARATORY/INJUNCTIVE RELIEF SIXTH CAUSE OF ACTION 7. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS SEVENTH CAUSE OF ACTION 8. CONCLUSION
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Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint - ii -
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Cases
TABLE OF AUTHORITIES
Barker v. Riverside County Office of Education, 584 F.3d 821, 824 (9th Cir. 2009)..............................9 Burgess v. Rodom, 121 Cal. App. 2d 71 (1953) ...................................................................................23 Caravantes v. California Reconveyance Co., 2010 WL 4055560, 9 (S.D.Cal. 2010)..........................16 Carpenter v. Longan, 83 U.S. 271, 274 (1872) ....................................................................................18 Cook v. Mielke, 3 Cal. App. 2d 736 (1935) ..........................................................................................23 Das v. WMC Mortgage Corp., 2010 U.S. Dist. LEXIS 122042, 10-25 (N.D. Cal. Oct. 28, 2010) ..9, 13 Dillingham v. Dahlgren, 52 Cal.App. 322, 326-327 (1921).................................................................24 Dunkin v. Boskey, 82 Cal. App. 4th 171, 195 (2000) ...........................................................................19 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003)....................................29 Estes v. Hardesty, 66 Cal. App. 2d 747 (1944).....................................................................................23 German Sav. & Loan Soc. v. McLellan, 154 Cal. 710 (1908) ..............................................................23 Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002) ....................................................................9 Halperin v. Raville, 176 Cal. App. 3d 765, 774, 222 Cal. Rptr. 350 (1986) ........................................19 Hirsch v. Bank of America, 107 Cal.App.4th 708 (2003).....................................................................20 Holland v. McCarthy, 173 Cal. 597 (1916) ..........................................................................................23 Iusi v. Chase, 169 Cal. App. 2d 83, 87, 337 P.2d 79 (1959) ................................................................19 Kruse v. Bank of America, 202 Cal.App.3d 38, 67 (1988) ...................................................................29 Lectrodryer v. SeoulBank, 77 Cal.App.4th 723, 726 (2000) ................................................................20 Lonergan v. Scolnick, 129 Cal. App. 2d 179 (1954).............................................................................23 Mabry v. Aurora Loan Services, 185 Cal.App.4th 208 (2010)..........................................................9, 25 Martin Deli v. Schumacher, 52 N.Y.2d 105, 109, 436 N.Y.S.2d 247, 417 N.E.2d 541 (1981) ...........24 Melchior v. New Line Productions, 106 Cal.App.4th 779 (2003) ........................................................20 MERSCORP, Inc. v. Romaine, 861 N.E. 2d 81 (N.Y. 2006) ................................................................16 Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)...............................29 Morton v. Foss, 48 Cal. App. 2d 117 (1941) ........................................................................................23 North Star Int'l v. Arizona Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983) ......................................9
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint - iii -
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Patterson v. Clifford F. Reid, Inc., 132 Cal. App. 454 (1933)..............................................................23 Salomon v. Cooper, 98 Cal.App.2d 521, 522-523 (1950) ....................................................................24 Santa Clara County v. Robbiano, 180 Cal. App. 2d 845, 848, 5 Cal. Rptr. 19 (1960) ........................19 Santens v. Los Angeles Finance Co., 91 Cal.Ap.2d 197, 201 (1949) ...................................................27 Saxon Mortgage v. Hillery, Case No. C-08-4357 (N.D. Cal. 2008).....................................................17 Scott v. Los Angeles Mountain Park Co., 92 Cal. App. 258 (1928) .....................................................23 Trerice v. Blue Cross, 209 Cal.App3d 878 (1989) ...............................................................................28 Ussery v. Jackson, 78 Cal. App. 2d 355 (1947)....................................................................................23 Walleri v. Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996) .................................9 Wells Fargo v. Jordan, 914 N.E.2d 204 (Ohio 2009)...........................................................................16
Statutes Cal. Civ. Code 1428............................................................................................................................25 Cal. Civ. Code 2920..............................................................................................................................1 Cal. Civ. Code 2920(a) .......................................................................................................................25 Cal. Civ. Code 2923.5.........................................................................................................................13 Cal. Civ. Code 2923.5(g) ....................................................................................................................12 Cal. Civ. Code 2924............................................................................................................................25 Cal. Civ. Code 2934............................................................................................................................26 Cal. Civ. Code 2934a ..........................................................................................................................27
Other Authorities CEB Mortgages, Deeds of Trust, and Foreclosure Litigation, (4th ed. 2011) .....................................11 Congressional Oversight Panel November Oversight Report, Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation (November 16, 2010) 7 David Horton, "The Shadow Terms: Contract Procedure and Unilateral Amendments," 57 UCLA Law Review 605 (February, 2010) ..................................................................................................24
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint - iv -
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Wall Street and the Financial Crisis - Anatomy of a Financial Collapse, the U.S. Senate Permanent Subcommittee on Investigations (April 13, 2011) .....................................................................14, 23 William Hubbard, "Efficient Definition and Communication of Patent Rights: the Importance of Ex Post, Santa Clara Computer and High Technology Law Journal (January, 2009)...........................24
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint -v-
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MEMORANDUM OF POINTS AND AUTHORITIES THE FACTS The facts recited in Plaintiff's Second Amended Complaint ("SAC") show that Chase is not the Lender. Only the Lender can invoke the power of sale under paragraph 22 of the Deed of Trust (Exhibit 4). If Chase is not the Lender, Chase has no right to initiate foreclosure under paragraph 22 of the Deed of Trust unless it can show that it is acting as an authorized agent of the Lender, and this they must prove. According to Cal. Civ. Code 2920, a mortgage is a contract. The contract is the controlling authority. The Civil Code does not invalidate the Deed of Trust so that anybody can take a home. Chase asserts on the first page of its Memorandum of Points & Authorities that the SAC "fails primarily because JPMorgan Chase is not the same entity as Washington Mutual Bank." Plaintiff does not make such an allegation, but that is actually a primary reason that the SAC succeeds. Chase is not WaMu. Chase does not have privity with Plaintiff. Chase is a third party purchaser of certain assets. Plaintiff alleges that WaMu was not the Lender in September 2008, so Chase did not become the Lender when it assumed certain assets and liabilities of WaMu. Contrary to defendants' assertion, the SAC does not allege that Chase acquired Plaintiff's loan from the FDIC. The SAC states that Chase asserted that it acquired certain assets, and Plaintiff relied on Chase's assertion when he made payments to Chase. Paragraph 41 of the SAC states: "Chase demanded monthly mortgage payments from Plaintiff starting in October 2008, and continued to collect payments from Plaintiff for twelve months. Plaintiff reasonably relied upon Chase's assertion that it was entitled to payments for the reason that it had acquired certain assets from WaMu under an agreement with the FDIC." Now Plaintiff wants his money back, since Chase is not the Lender and apparently was keeping his payments. Plaintiff does not seek to rescind his loan. He seeks to ascertain the identity of
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint -1-
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the Lender, if indeed the court rules or a jury finds that he entered into a contract with WaMu. Defendants argue that the SAC does not deny that Plaintiff is in arrears in a certain amount. Denials are customary in Answers rather than Complaints. Plaintiff cannot know if the amount generated by Defendant in its memorandum has any basis in fact until discovery commences. It is a figure posed by Defendant as it seeks to take Plaintiff's property with no substantiation. Plaintiff alleges plainly and unequivocally that Chase is not the Lender, and therefore Chase cannot foreclose according to the express terms of the Deed of Trust and the Promissory Note. This is not a legal conclusion. Taking something that isn't yours is stealing. Chase is not the Lender, a fact that is alleged in the SAC. When a plaintiff alleges that defendant is attempting to take plaintiff's property, the courts provide a forum for the plaintiff to challenge the thief and get the property back, or otherwise be compensated. In recent years, banks got into the business of taking property without offering valid documentary evidence to support their claims. If documents can prove that Chase is the Lender and that WaMu was the Lender on September 25, 2008, those documents are in Chase's possession and can be disclosed. Chase holds its cards tight, but that won't gain it clear title. Plaintiff alleges in 14 of the SAC specifically that between November 15 and November 30, 2007, WaMu transferred Plaintiff's Note to Washington Mutual Mortgage Securities Corporation. The Note was then sold to an investment trust and became a part of, or was subject to a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage PassThrough Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. The security that started as Plaintiff's Note is listed in Standard & Poor's registry as CUSIP # 31379XQC2, Pool Number 432551. Thereafter, WaMu acted solely as a servicer of the loan, and was neither a Lender nor Beneficiary after November 2007. These are facts, not legal conclusions.
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The acronym CUSIP refers to the Committee on Uniform Security Identification Procedures, which was founded in 1964. The 9-character alphanumeric code identifies any North American security for the purposes of facilitating clearing and settlement of trades. The CUSIP distribution system is owned by the American Bankers Association and is operated by Standard & Poor's. The CUSIP Service Bureau acts as the National Numbering Association (NNA) for North America, and the CUSIP number serves as the National Securities Identification Number for products issued from both the United States and Canada. Plaintiff's Note could not have been assigned a CUSIP number unless and until it was converted into a security. Of course, these are matters readily ascertainable at trial. Chase's counsel appears before this Court as a handwriting expert to testify to the authenticity of the diverse signatures of "Deborah Brignac." Chase's P&A offers testimony describing office practices of California Reconveyance Company. The many varied signatures attached to the SAC "clearly have initials of someone other than Ms. Brignac after the signature indicating that there was no actual forgery involved, but rather as clearly indicated" (Defendant's P&A 6:6-8). Mr. Jett may make a fine witness at a later stage in the proceedings, but Plaintiff objects to the testimony and expert opinions offered in Defendants' Motion to Dismisslacks foundation, and isn't all that clear. There was a time when banks expressed concern about forged documents. Now, when Plaintiff calls attention to a series of fake signatures, Chase calls it "an obvious last ditch effort to salvage his claims" (P&A 5:25). Times have changed. Plaintiff's factual allegations are not far-fetched. Last month, U.S. regulators slapped the nation's largest banks with unprecedented penalties for improper homeforeclosure practices, issuing detailed orders to revamp the way they deal with troubled borrowers. The orders were issued on April 13, 2011, to Chase and thirteen other financial institutions by the Federal Reserve, the Office of Thrift Supervision (OTS), and the Comptroller of the Currency.
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Under the Consent Order, Chase has sixty days to establish plans to clean up its mortgage-servicing processes to prevent documentation errors. The Order directs Chase to take steps to ensure it has enough staff to handle the flood of foreclosures, that foreclosures don't happen when a borrower is receiving a loan modification, and that borrowers have a single point of contact throughout the loan-modification and foreclosure process. Chase must hire an independent consultant to conduct a "look back" of all foreclosure proceedings from 2009 and 2010, including Plaintiff's foreclosure, to evaluate whether Chase improperly foreclosed on any homeowners. Chase must establish a process to consider whether to compensate borrowers who have been harmed. The Federal Reserve has ordered Chase and other big banks to clean up their illegal foreclosure practices. This is the context in which Plaintiff filed suit. The New York Times reported on April 14, 2011: Regulators said the enforcement actions were tough measures that would make the banks accountable. "The banks are going to have to do substantial work, bear substantial expense, to fix the problem," the Acting Comptroller of the Currency, John Walsh, told reporters in a conference call. JPMorgan Chase, one of the servicers signing the agreement, said that it was adding as many as 3,000 employees to meet the new regulatory demands. Jamie Dimon, its chief executive, called it "a lot of intensive manpower and talent to fix the problems of the past." http://www.nytimes.com/2011/04/14/business/14foreclose.html Chase signed the Consent Order with the Board of Governors of the Federal Reserve System on April 13, 2011. Plaintiff requests that the court take judicial notice of the Federal Reserve Consent Order, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Docket No. 11-023-B-HC, attached as Exhibit 15, which is summarized below and is available for download on the Fed's website at: www.federalreserve.gov/newsevents/press/enforcement/enf20110413a5.pdf
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The Consent Order, signed by Frank Bisignano, Chief Administrative Officer of Chase, includes the following allegations against Chase, which, according to the Order, initiated more than a quarter of a million foreclosure actions in 2009-2010. The Consent Order has been abbreviated (but not changed) in the following: WHEREAS, in connection with the process leading to certain foreclosures involving the Servicing Portfolio, the Mortgage Servicing Companies (Chase) allegedly: (a) Filed or caused to be filed in state courts and in connection with bankruptcy proceedings in federal courts numerous affidavits executed by employees making various assertions, such as the ownership of the mortgage note and mortgage, the amount of principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such knowledge or review; (b) Filed or caused to be filed in state courts, in federal courts or in the local land record offices, numerous affidavits and other mortgage-related documents that were not properly notarized, including those not signed or affirmed in the presence of a notary; (c) Litigated foreclosure and bankruptcy proceedings and initiated nonjudicial foreclosures without always confirming that documentation of ownership was in order at the appropriate time, including confirming that the promissory note and mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party; WHEREAS, the practices set forth above allegedly constitute unsafe or unsound banking practices; NOW, THEREFORE, Chase shall cease and desist and take affirmative action, as follows The forged signatures of Deborah Brignac, attached to the SAC as Exhibits 8 and 10-14 and included in 37 of the SAC, fit into a national pattern that prompted the Federal Reserve to impose a Consent Order on our nation's biggest banks, including Chase. Defendants' Motion to Dismiss protests that the forgeries have nothing to do with Plaintiff's loan. Only the trier of fact can determine whether the
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very different signatures of Deborah Brignac on the Substitution of Trustee (Exhibit 8), the Notice of Trustee's Sale (Exhibit 10), and countless other recorded documents were truly signed by Ms. Brignac based on her personal knowledge. If the signature on the Substitution of Trustee is a forgery, the foreclosure is illegal. CRC cannot become the Trustee based on the forged signature of its own employee. Defendants assert that calling attention to a forged Substitution of Trustee is a "last ditch effort" by Plaintiff. The banks dug plenty of ditches, and the Fed is not taking them lightly. Defendants may seek to place a cloud on Plaintiff's title by gaining a dismissal on the pleadings and then conducting an illegal foreclosure sale, but the cloud will not go away so easily. The presumption of infallibility where big banks are concerned no longer applies. Chase and other banks have adopted a nationwide strategy of defeating homeowners in foreclosure on the basis of challenging the language of the complaints. While possessing all the evidence, the banks stonewall plaintiffs in court and then presume they can take whatever property they fancy. This is a shortsighted and self-destructive legal strategy that will lead to endless litigation and result in a cascading plunge in real property values for decades in the United States. A judgment resulting from dismissal based on alleged defects in the complaint does not resolve the underlying issue as to who owns the property. A demurrer or dismissal is no more that an editorial rebuke of the draftsman when it concerns title to real property. If the bank gets a judgment, sells the property, takes the money, and pays another billion-dollar round of bonuses to its executives, the unlucky buyer of REO or Deed Upon Trustee's Sale will not get clear title. New facts and new theories will support an endless succession of lawsuits as holders of grant deeds, such as Plaintiff Daryoush Javaheri, their successors and assigns, hammer away at the mountain of securitization documents that will continue to percolate to the surface in lawsuits for years to come. Better to get it out in the open now, rather than plow these controversies under a rising pile of toxic title defects that will be passed back
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and forth between banks, title companies, and the holders of grant deeds. It's a big mess now, but it will only get bigger the longer it is perpetuated. This may seem like the bold pronouncement of some lawyer fighting to save his client's family home, but it is a finding of the Congressional Oversight Panel, a body convened by Congress to keep an eye on the initial $700-billion bailout.1 Plaintiff renews his Request for Judicial Notice of the Congressional Oversight Panel (COP) Report, Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation (November 16, 2010). The COP report is attached to Plaintiff's current Request for Judicial Notice as Exhibit "15." It states on pages 4-8: In the fall of 2010, reports began to surface alleging that companies servicing $6.4 trillion in American mortgages may have bypassed legally required steps to foreclose on a home. Employees or contractors of Bank of America, GMAC Mortgage, and other major loan servicers testified that they signed, and in some cases backdated, thousands of documents claiming personal knowledge of facts about mortgages that they did not actually know to be true. Allegations of robo-signing are deeply disturbing and have given rise to ongoing federal and state investigations. At this point the ultimate implications remain unclear. It is possible, however, that robo-signing may have concealed much deeper problems in the mortgage market that could potentially threaten financial stability and undermine the government's efforts
1
In response to the escalating financial crisis, on October 3, 2008, Congress provided Treasury with the authority to spend $700 billion to stabilize the U.S. economy, preserve home ownership, and promote economic growth. Congress created the Office of Financial Stability (OFS) within Treasury to implement the TARP. At the same time, Congress created the Congressional Oversight Panel to review the current state of financial markets and the regulatory system. The Panel is empowered to hold hearings, review official data, and write reports on actions taken by Treasury and financial institutions and their effect on the economy (COP Report, Nov. 16, 2010, p. 124)
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to mitigate the foreclosure crisis. If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe. Clear and uncontested property rights are the foundation of the housing market. If these rights fall into question, that foundation could collapse. Borrowers may be unable to determine whether they are sending their monthly payments to the right people (COP Report, Nov. 16, 2010, pp. 4-5). If irregularities in the foreclosure process reflect deeper failures to document properly changes of ownership as mortgage loans were securitized, then it is possible that Treasury is dealing with the wrong parties in the course of the Home Affordable Modification Program (HAMP). This could mean that borrowers either received or were denied modifications improperly. Some servicers dealing with Treasury may have no legal right to initiate foreclosures, which may call into question their ability to grant modifications or to demand payments from homeowners, whether they are part of a foreclosure mitigation program or otherwise. The servicers' tendency to cut corners may also have affected the determination to modify or foreclose upon individual loans. Many of the entities implicated in the recent document irregularities, including Ally Financial, Bank of America, and JPMorgan Chase, are current or former TARP recipients (p. 8) (emphasis added). Chase wants to take real property without offering any real proof that will tend to show who is the Lender or who holds a beneficial interest in the promissory note. It stands on the hollow stump of a belated Purchase and Assumption Agreement. Plaintiff did not contract with Chase. WaMu assigned its rights as Lender to a third party two years before the OTS stepped in and FDIC took over. If Chase did not forward Plaintiff's payments to the Lender, Chase has been unjustly enriched.
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The material allegations in the SAC present triable issues. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the complaint's sufficiency. North Star Int'l v. Arizona Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, "even if doubtful in fact," are assumed to be true. The court must assume the truth of all factual allegations and must "construe them in a light most favorable to the nonmoving party." Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); Walleri v. Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996). The court must accept as true all reasonable inferences to be drawn from the material allegations in the complaint. Barker v. Riverside County Office of Education, 584 F.3d 821, 824 (9th Cir. 2009). 1. CAL CIVIL CODE 2923.5 FIRST CAUSE OF ACTION Defendant cites Mabry v. Aurora Loan Services, 185 Cal.App.4th 208 (2010) in support of the proposition that the NOD satisfies the requirements of Cal. Civil Code 2923.5 since it recites the form language of the statute. However, this misses the point of the statute. Section 2923.5 requires contact with the borrower, not form language stapled to a form. If the party sending the Notice attaches a declaration signed by a robo-signer who has no personal knowledge whether contacts were made, the NOD does not prove compliance with the notice requirements. Mabry has been followed by various federal district courts in California. In Das v. WMC Mortgage Corp., 2010 U.S. Dist. LEXIS 122042, 10-25 (N.D. Cal. Oct. 28, 2010), the magistrate found that tender was not required, in contrast to Defendant's assertion that a borrower is required to make a tender offer (P&A 18-20). The whole purpose of this section (Cal. Civ. Code 2923.5) is to allow a homeowner an opportunity to at least discuss with the lender the possibility of loan modification. Where such communication does result in loan modification, the homeowner can avoid foreclosure even if he or she would not otherwise be in a position to fully redeem the property at a foreclosure sale. In situations like this, a requirement that the homeowner tender the entire amount of the secured indebtedness would actually defeat the purpose of the statute (p. 5-6).
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Civ. Code 2923.5 has been narrowly construed, but where the defendants failed to access the financial situation and explore options, didn't call and didn't write, the Complaint will defeat a motion to dismiss. As an example of a 2923.5 declaration that makes sense in light of the language of the statute, California Continuing Education for the Bar (CEB) recommends the following form for a Notice of Default in its practice guide, CEB Mortgages, Deeds of
Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint - 10 -
In Argueta v. Chase, 2011 U.S. Dist. LEXIS 41300 (E.D. Cal. Apr. 11, 2011), the District Court refused to grant a motion to dismiss where borrower alleged in the Complaint that defendants did not contact him. The order states in part: A notice of default may be filed only thirty days after the initial contact with the borrower or satisfying the due diligence requirements. Civ. Code 2923.5(a)(1). A notice of default must be accompanied by a declaration stating that the buyer has been contacted or could not be reached despite due diligence. Id. 2923.5(b). The only remedy for violation of this statute is postponement of a foreclosure sale until there has been compliance with the statute. Paik v. Wells Fargo Bank, N.A., No. C 10-04016, 2011 U.S. Dist. LEXIS 3979, 2011 WL 109482, at *3 (N.D. Cal. Jan. 13, 2011); Mabry v. Super. Ct., 185 Cal. App. 4th 208, 223, 110 Cal. Rptr. 3d 201 (4th Dist. 2010) ("If section 2923.5 is not complied with, then there is no valid notice of default, and without a valid notice of default, a foreclosure sale cannot proceed. The available, existing remedy is . . . to postpone the sale until there has been compliance with section 2923.5."). Plaintiff alleges that all defendants failed "to assess the financial situation and explore options for plaintiff to avoid foreclosure, thirty (30) days prior to filing the Default." (Compl. 96.) Plaintiff allegedly received "no phone calls, phone messages, or letters via first class or certified mail either before or after the Notice of Default was recorded." (Id. 100.) While the moving defendants' provided the Notice of Default in which Quality Loan declares that it complied with the statute, the Complaint's allegations to the contrary are sufficient to defeat a motion to dismiss. See Caravantes v. Cal. Reconveyance Co., No. 10-CV-1407, 2010 U.S. Dist. LEXIS 109842, 2010 WL 4055560, at *8 (S.D. Cal. Oct. 14, 2010). Accordingly, the court will deny the motion to dismiss this claim.
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Trust, and Foreclosure Litigation, (4th ed. 2011):

DECLARATION UNDER CC 2923.5 I declare that: I am _ _[the beneficiary/an authorized agent of the beneficiary]_ _ of the foregoing deed of trust. I initially attempted to contact the borrower (trustor under the deed of trust) by sending a first-class letter that included the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. I contacted the borrower _ _[in person/by telephone]_ _ on _ _[date]_ _ to assess the borrowers financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, I advised the borrower that he or she had the right to request a subsequent meeting and, if requested, that it would be scheduled within fourteen (14) days. The borrower _ _[did/did not]_ _ request the subsequent meeting. I also gave the borrower the toll-free telephone number made available by HUD to find a HUDcertified housing counseling agency. I attempted to contact the borrower _ _[in person/by telephone]_ _ on the following dates _ _[list all dates of attempted contact and results of each attempt]_ _. This was done to assess the borrowers financial situation and explore options for the borrower to avoid foreclosure. I exercised due diligence to further contact the borrower as follows: _ _[list all actions taken to contact borrower and results as required by CC 2923.5(g)]_ _. No contact with the borrower was required because the borrower surrendered the property on _ _[date]_ _ to the _ _[trustee/beneficiary/authorized agent]_ _, the borrower contracted with an organization, person, or entity whose primary business is advising how to extend the foreclosure process, or the borrower filed a bankruptcy petition and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case or granting stay relief. ___[Signature of declarant]___ [Declarants typed name]
Compare the above CEB form to CRC's cryptic, ambiguous, form-language 2923.5 declaration on the Notice of Default attached to the SAC as Exhibit 9:
The mortgagee, beneficiary or authorized agent tried with due diligence but was unable to contact the borrower to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure as required by Cal. Civ. Code Section 2923.5. Thirty days or more have elapsed since these due diligence efforts were completed.
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Cal. Civ. Code 2923.5(g) defines due diligence: (g) A notice of default may be filed pursuant to Section 2924 when a mortgagee, beneficiary, or authorized agent has not contacted a borrower as required by paragraph (2) of subdivision (a) provided that the failure to contact the borrower occurred despite the due diligence of the mortgagee, beneficiary, or authorized agent. For purposes of this section, "due diligence" shall require and mean all of the following: (1) A mortgagee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency. (2) (A) After the letter has been sent, the mortgagee, beneficiary, or authorized agent shall attempt to contact the borrower by telephone at least three times at different hours and on different days. Telephone calls shall be made to the primary telephone number on file. (B) A mortgagee, beneficiary, or authorized agent may attempt to contact a borrower using an automated system to dial borrowers, provided that, if the telephone call is answered, the call is connected to a live representative of the mortgagee, beneficiary, or authorized agent. (C) A mortgagee, beneficiary, or authorized agent satisfies the telephone contact requirements of this paragraph if it determines, after attempting contact pursuant to this paragraph, that the borrower's primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected. (3) If the borrower does not respond within two weeks after the telephone call requirements of paragraph (2) have been satisfied, the mortgagee, beneficiary, or authorized agent shall then send a certified letter, with return receipt requested. (4) The mortgagee, beneficiary, or authorized agent shall provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours. (5) The mortgagee, beneficiary, or authorized agent has posted a prominent link on the homepage of its Internet Web site, if any, to the following information: (A) Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options. (B) A list of financial documents borrowers should collect and be prepared to present to the mortgagee, beneficiary, or authorized agent when discussing options for avoiding foreclosure. (C) A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with their mortgagee, beneficiary, or authorized agent. (D) The toll-free telephone number made available by HUD to find a HUDPlaintiff's Opposition to Motion to Dismiss Second Amended Complaint - 12 -
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certified housing counseling agency. No evidence has been introduced to show that Chase or CRC used due diligence to contact Plaintiff. On the contrary, Chase ignored the request of Plaintiff's lawyer to explore options (Exhibit 6). The SAC alleges: 22. Chase did not contact Plaintiff or Mr. Banayan, either in person or by telephone, to discuss Plaintiff's financial condition and the impending foreclosure. Chase did not call, it did not write, and it did not provide a toll-free HUD number to Plaintiff or his lawyer. Chase did not offer to meet with Plaintiff or his lawyer and did not advise them that Plaintiff had a right to request a subsequent meeting within 14 days. Attached to the NOD was a "Declaration of Compliance with Cal. Civ. Code 2923.5" signed under penalty of perjury by Renee Daniels for Chase. Ms. Daniels could not have had personal knowledge of the matters described in her declaration, which stated that the mortgagee, beneficiary or authorized agent was unable to contact the borrower to explore options to avoid foreclosure (SAC 26). Das v. WMC Mortgage Corp., 2010 U.S. Dist. LEXIS 122042, 10-25 (N.D. Cal. Oct. 28, 2010) resolved a similar issue and refused to dismiss: The court may take judicial notice of the fact that the declaration signed by Natalie McClendon on April 18, 2009 was recorded. However, the court may not take notice of the content of the declaration because Defendants have not shown that Ms. McClendon is a source "whose accuracy cannot reasonably be questioned." See e.g., Reusser v. Wachovia Bank, N.A., 525 F.3d 855, 858 n. 3 (9th Cir. 2008); and Turnacliff v. Westly, 546 F.3d 1113, 1120 n. 5 (9th Cir. 2008). The fact that the declaration was recorded is not indisputable proof that Defendants actually contacted Plaintiffs to discuss their financial situation and the impending foreclosure. Further, courts may not take notice of any matter that is in dispute. U.S. v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003); Walker v. Woodford, 454 F. Supp. 2d 1007, 1022 (S.D.Cal. 2006). California Attorney General Edmund G. Brown was so annoyed with Chase's
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cavalier attitude towards 2923.5 that he wrote to Chase on September 30, 2010: "JP Morgan Chase has now admitted that employees assigned to handling foreclosures signed affidavits without first personally reviewing the contents of borrowers' loan files. Thus, borrowers suffered the foreclosure of their homes based on affidavits that JP Morgan Chase had not confirmed to be accurate. This admission strongly suggests that any purported verification by JP Morgan Chase that it complied with section 2923.5 before commencing a foreclosure in California is similarly suspect." (SAC Exhibit 3.) - Attorney General Brown's letter to Chase, September 30, 2010
http://ag.ca.gov/cms_attachments/press/pdfs/n1996_jp_morgan_chase_letter.pdf
2. WRONGFUL FORECLOSURE SECOND CAUSE OF ACTION Chase offers no proof that it acquired an interest in Plaintiff's residence. In this Motion to Dismiss, once again the only document offered to support its claim is the P&A Agreement. Chase asks the court to leap to the conclusion that WaMu was the Lender on September 25, 2008, when the P&A Agreement was signed, even though the likelihood of that, given WaMu's history of securitization, is less than 50%. The challenge facing homeowners is to prove facts to trial courts at the pleading stage. Wall Street and the Financial Crisis - Anatomy of a Financial Collapse, the U.S. Senate Permanent Subcommittee on Investigations (April 13, 2011) 650-page report, was released following an 18-month investigation into the causes of the financial crisis. WaMu was the leading case study in the report183 pages (28%) of the report were devoted to WaMuthe worst of the worst. The report is readily available for download at the Senate Subcommittee's website. 2 Over a four-year period, high-risk loans grew from 19% of WaMus loan originations in 2003, to 55% in 2006, while its lower risk, fixed rate loans fell from 64% to 25% of its originations. At the same time, WaMu increased its
2
http://levin.senate.gov/newsroom/supporting/2011/PSI_WallStreetCrisis_041311.pdf
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securitization of subprime loans six fold, primarily through its subprime lender, Long Beach Mortgage Corporation, increasing such loans from nearly $4.5 billion in 2003, to $29 billion in 2006. From 2000 to 2007, WaMu and Long Beach together securitized at least $77 billion in subprime loans. WaMu originated an increasing number of its flagship product, Option Adjustable Rate Mortgages (Option ARMs), which created high risk, negatively amortizing mortgages and, from 2003 to 2007, represented as much as half of all of WaMus loan originations. In 2006 alone, Washington Mutual originated more than $42.6 billion in Option ARM loans and sold or securitized at least $115 billion to investors. Wall Street and the Financial Crisis, page 2. Chase knows whether Plaintiff's loan was on the books of WaMu on September 25, 2008, when Chase "acquired certain assets." If the property was not listed as an asset, then Chase did not acquire a beneficial interest in Plaintiff's loan and must show that it is acting as an authorized agent of the Lender, whomever that may be, in initiating foreclosure. If they don't know, they misappropriated Plaintiff's payments for an entire year and must make restitution. Defendant alleges in its P&A, "JPMorgan obtained its rights under the loan from the FDIC" (P&A 4:5). Whether or not the Loan was an asset of WaMu on September 25, a key issue in this case, is not mentioned. Chase asks the court to find, without evidence, a fact that it must prove in order to take the property. Nothing in the P&A Agreement shows whether WaMu had any beneficial interest in Plaintiff's loan on September 25, 2008. The court is asked to guess the answer and dismiss the case. Then Plaintiff will lose his house. Where factual findings or the contents of the documents are in dispute, those matters of dispute are not appropriate for judicial notice. Caravantes v. California Reconveyance Co., 2010 WL 4055560, 9 (S.D.Cal. 2010) citing Darensburg v.
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Metropolitan Transp. Comm'n, 2006 WL 167657, at *2 (N.D.Cal. 2006). WaMu sold its beneficial interest in Plaintiff's property to fund the loan, receiving the balance on Plaintiff's note from the investors, and retained, if anything, merely a duty to service the loan. Even if Chase acquired WaMu' servicing interests on September 25, Chase acquired no beneficial interest in Plaintiff's loan. There was a time, about ten ago, when servicers were trusted bankers. Times have changed. Stated in the Congressional Oversight Panel's report at page 14: Effective transfers of real estate depend on parties being able to answer seemingly straightforward questions: who owns the property? How did they come to own it? Can anyone make a competing claim to it? The irregularities have the potential to make these seemingly simple questions complex. As a threshold matter, a party seeking to enforce the rights associated with the mortgage must have standing in court, meaning that a party must have an interest in the property sufficient that a court will hear their claim and can provide them with relief. See Stephen R. Buchenroth and Gretchen D. Jeffries, Recent Foreclosure Cases: Lenders Beware (June 2007); Wells Fargo v. Jordan, 914 N.E.2d 204 (Ohio 2009) (If plaintiff has offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law.); Christopher Lewis Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, University of Cincinnati Law Review, Vol. 78, No. 4, at 1368-1371 (Summer 2010); MERSCORP, Inc. v. Romaine, 861 N.E. 2d 81 (N.Y. 2006) (URL's redacted per local rule). Accordingly, a second set of problems relates to the chain of title on mortgages and the ability of the foreclosing party to prove that it has legal standing to foreclose. While these problems are not limited to the securitization market, they are especially acute for securitized loans because there are more complex chain of title issues involved. The investors who purchased the security identified as CUSIP # 31379XQC2 in Pool Number 432551 can make a competing claim to Plaintiff's property and the payments he made to Chase. Chase has offered no evidence that it owned the Note and Deed of Trust when the NOD and NOTS were filed, so it lacks standing. Chase argues that it obtained the right to sell Plaintiff's property when it acquired
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WaMu's assets through the P&A Agreement for $1.9 billion. Chase could only acquire what WaMu owned. WaMu no longer owned Plaintiff' mortgage. Perhaps the identity of the Lender can be tracked down, but it remains unknown. Defendant argues that Chase assumed no liability for actions taken by WaMu prior to September 25, 2008 in regard to the subject loan. This obscures the issue. Plaintiff alleges that WaMu did not have any interest in Plaintiff's residence on September 25, 2008. His property was not an asset of WaMu, and therefore Chase could not acquire any interest in Plaintiff's residence. This is not a liability issue. Chase seems to assert that it can foreclose on any property under the P&A Agreement on the grounds that WaMu might have had a beneficial interest in the property at some time, even though WaMu sold most of its mortgages to investors. Plaintiff alleges in 62 of the SAC that WaMu securitized Plaintiff's singlefamily residential mortgage loan through Washington Mutual Mortgage Securities Corp. If WaMu retained no beneficial interest in the promissory note when it brokered the deal, Chase cannot acquire what WaMu never had. If WaMu transferred all of its beneficial interest in the note at the inception of the loan and never entered it in its books as an asset, and entered no corresponding reserve on its ledger as a liability in the event of Plaintiff's default, then Chase did not acquire ownership of the note by purchasing WaMu's assets because WaMu had nothing to sell. This is a question of fact. Plaintiff alleges in 30 of the SAC that Chase does not have standing to enforce the Note because Chase is not the owner of the Note, not a holder of the Note, and not a beneficiary under the Note. If Chase has no beneficial interest in the note, Chase can only proceed if it proves that it is the servicer and joins the owner of the note in this action. To dismiss this lawsuit before ascertaining the truth of these allegations is unwarranted. Chase could produce evidence in its files, but it prefers to rob Plaintiff of his day in court. In Saxon Mortgage v. Hillery, Case No. C-08-4357 (N.D. Cal. 2008), the court ruled that the foreclosing party must demonstrate that it is the holder of the deed of
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trust and the promissory note. The Saxon court cited In re Foreclosure Cases, 521 F.Supp.2d 650, 653 (S.D. Ohio, 2007), which held that to show standing in a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed. For a valid assignment, there must be more than just an assignment of the deed alone; the note must also be assigned. "The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity." Carpenter v. Longan, 83 U.S. 271, 274 (1872). In re Foreclosure Cases involved 27 foreclosure actions filed in the Southern District of Ohio, in which the court questioned whether the plaintiff lenders had standing and whether the court had subject matter jurisdiction to hear the cases at the time the foreclosure complaint was filed. Judge Thomas M. Rose wrote, "It is the creditor's responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower's or the Court's responsibility to ferret out the truth." In re Foreclosure Cases, 521 F.Supp.2d 650, 652 (S.D. Ohio, 2007). 3. QUASI CONTRACT THIRD CAUSE OF ACTION Defendant argues that Plaintiff pleads no facts indicating that JPMorgan's receipt of payments from Plaintiff on the Subject Loan is unjust. The SAC alleges that when WaMu originated the loan, it transferred all beneficial interest in the note to an investment bank (SAC 28). Neither WaMu, Chicago Title, CRC, Chase, nor anyone else has recorded a transfer of a beneficial interest in the Note (or any other interest in the) Property to Chase. (SAC 29). Chase does not have standing to enforce the Note because Chase is not the owner of the Note, Chase is not a holder of the Note, and Chase is not a beneficiary under the Note. Chase does not have capacity to exercise a power of sale. Chase does not claim to be a holder of the note
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or a beneficiary. Chase merely describes itself as a loan servicer in the Notice of Trustee's Sale (SAC 30). Implied contracts under Cal. Civ. Code 1619 - 1621 refer to implied-in-fact contracts that arise from the mutual agreement of the parties. Iusi v. Chase, 169 Cal. App. 2d 83, 87, 337 P.2d 79 (1959). Courts recognize contracts called implied-bylaw contracts or quasi-contracts to prevent the unjust enrichment of one party, who has no intent, either express or implied, to pay or to make reimbursement for something of value received by that party. The law imposes an obligation to pay or reimburse because good conscience dictates that the party benefited should make the payment reimbursement. Santa Clara County v. Robbiano, 180 Cal. App. 2d 845, 848, 5 Cal. Rptr. 19 (1960); see Halperin v. Raville, 176 Cal. App. 3d 765, 774, 222 Cal. Rptr. 350 (1986) (imposing liability to repay loan to family business on equitable ground when no express promise was made). The equitable doctrine of unjust enrichment applies where the plaintiff, while having no enforceable contract, nonetheless has conferred a benefit on the defendant, which the defendant has knowingly accepted in circumstances in which it would be inequitable for the defendant to retain the benefit without paying for its value. The phrase unjust enrichment does not describe a theory of recovery but describes the effect that would result from a failure to make restitution in circumstances where it is equitable to do so. Therefore, no particular form of pleading is necessary to invoke the doctrine of restitution, and a well-pleaded claim for breach of contract can be sufficient. While the measure of damages for unjust enrichment is essentially restitution, that concept that has been expanded in modern jurisprudence to include, not only the restoration of something, but also compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another. Dunkin v. Boskey, 82 Cal. App. 4th 171, 195 (2000). It is not the receipt of payments that makes them unjust, but rather the unjust retention of the payments coupled with repeated threats of foreclosure and eviction.
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The elements of an unjust enrichment claim are the receipt of a benefit and [the] unjust retention of the benefit at the expense of another. Lectrodryer v. Seoul Bank, 77 Cal.App.4th 723, 726 (2000). Hirsch v. Bank of America, 107 Cal.App.4th 708 (2003) held that the plaintiffs there stated a valid cause of action for unjust enrichment based on [the defendants] unjustified charging and retention of excessive fees which were passed on to the plaintiffs. (Id. at p. 722.) Hirsch involved plaintiffs who alleged they paid overcharges in the form of excessive fees that were unjustly retained by the defendant at the plaintiffs expense. If Chase can show that it obtained "servicing interests" in Plaintiff's loan, then perhaps Chase can also prove that it actually forwarded payments from Plaintiff to the beneficial owner of the loan. If Chase kept the money, it was unjustly enriched at Plaintiff's expense. Defendant cites Melchior v. New Line Productions, 106 Cal.App.4th 779 (2003) for the proposition that unjust enrichment is not a cause of action. Unjust enrichment would be the result if Chase is not the Lender and it were to retain the payments, but the Third Cause of Action is brought under a theory of Quasi Contract. Melchior was a screenwriter who alleged that defendants converted his script to produce an episode of the Columbo television series. The court wrote, The phrase Unjust Enrichment does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so (citation). Unjust enrichment is a general principle, underlying various legal doctrines and remedies, rather than a remedy itself. (citing Dinosaur Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1315, 265 Cal.Rptr. 525.) It is synonymous with restitution. The court continues, "Melchior suggests he is entitled to restitution under a quasi-contract theory. He did not plead this theory of recovery, and he points to nothing in the record that suggests it was before the trial court in ruling on the summary judgment motion. It consequently cannot serve as a basis for reversing the summary judgment." 106 Cal.App.4th 779, 793. So the Melchior court
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recognized quasi contract as a valid theory of recovery which had not been pled. 4. NO CONTRACT FOURTH CAUSE OF ACTION Contracts are not formed every time two people shake hands, or exchange things of value, or talk about how they expect things to turn out. If a trader sells a diseased camel to an unsuspecting buyer on a promise to pay over time and the camel dies the following day, there is no contract. They buyer doesn't have to pay. No contract was formed between WaMu and Plaintiff because there was no meeting of the minds and no shared expectation. A contract is not simply words on paper. WaMu did not disclose to Plaintiff that it committed underwriting fraud by altering Plaintiff's loan application to satisfy underwriting requirements for the loans. WaMu's intent was evidenced by WaMu's failure to provide Plaintiff with copies of documents as required by Section 17 of the Deed of Trust and provisions of TILA. WaMu did not inform Plaintiff that his loan had already been sold to investors and that WaMu would not have any beneficial interest in the loan. Chase asserts that the one-year Statute of Limitations has expired, but the failure of WaMu to provide documents at closing, a clear violation of federal law, serves a different evidentiary purpose. It shows motive. WaMu didnt fund the mortgage from its own assets, but rather brokered the loan with funds provided by institutional investors. WaMu did not provide the borrower with a copy of the loan application because it didnt want to alert the borrower to the fact that it was pooling toxic waste for unsuspecting investors. This is not a question of whether Chase assumed a liability in the P&A Agreement with FDIC. It shows that Plaintiff and WaMu never came to a mutual understanding. Some decisions have suggested that lenders do not have a duty to ascertain the ability of borrowers to repay home loans. If lenders have no duty to weigh the likelihood that borrowers can demonstrate even a remote ability to repay bank loans, then our time-tested system governing transfers of interest in real estate is
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collapsing. Title companies are beginning to refuse to guarantee title. Evaporation of the duty of the lender to follow commonly accepted underwriting practices resulted in the current economic crisis. It was not just that banks didn't care if the homeowners could pay back their loans that crippled our economy. They made loans knowing that the borrowers could never possibly pay them back. If one party enters into an agreement knowing full well that the other party will default, there is no contract. It is not a question of duty or liability. There is no contract because there is no shared expectation. It is void ab initio. At the same time that WaMu was implementing its high risk lending strategy, WaMu and Long Beach engaged in a host of shoddy lending practices that produced billions of dollars in high risk, poor quality mortgages and mortgage backed securities. Those practices included qualifying high risk borrowers for larger loans than they could afford; steering borrowers from conventional mortgages to higher risk loan products; accepting loan applications without verifying the borrowers income; using loans with low, short term teaser rates that could lead to payment shock when higher interest rates took effect later on; promoting negatively amortizing loans in which many borrowers increased rather than paid down their debt; and authorizing loans with multiple layers of risk. In addition, WaMu and Long Beach failed to enforce compliance with their own lending standards; allowed excessive loan error and exception rates; exercised weak oversight over the third party mortgage brokers who supplied half or more of their loans; and tolerated the issuance of loans with fraudulent or erroneous borrower information. They also designed compensation incentives that rewarded loan personnel for issuing a large volume of higher risk loans, valuing speed and volume over loan quality. As a result, WaMu, and particularly its Long Beach subsidiary, became known by industry insiders for its failed mortgages and poorly performing residential mortgage backed securities (RMBS). Among sophisticated investors, its securitizations were understood to be some of the worst performing in the marketplace. Documents obtained by the Subcommittee reveal that WaMu launched its high risk lending strategy primarily because higher risk loans and mortgagebacked securities could be sold for higher prices on Wall Street. They garnered higher prices because higher risk meant the securities paid a higher coupon rate than other comparably rated securities, and investors paid a higher
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price to buy them. Selling or securitizing the loans also removed them from WaMus books and appeared to insulate the bank from risk. Wall Street and the Financial Crisis - Anatomy of a Financial Collapse, the U.S. Senate Permanent Subcommittee on Investigations (April 13, 2011)p. 2-4 Meeting of the minds is a necessary element in the formation of a contract, a notion that dates back to the origins of contract law. Consent of the parties is one of the requisites of a valid contract for the sale of realty. Ussery v. Jackson, 78 Cal. App. 2d 355 (1947). It is essential to the creation of such a contract that there be a meeting of the minds of the parties and a mutual agreement on the terms of the contract. Holland v. McCarthy, 173 Cal. 597 (1916); German Sav. & Loan Soc. v. McLellan, 154 Cal. 710 (1908); Lonergan v. Scolnick, 129 Cal. App. 2d 179 (1954); Cook v. Mielke, 3 Cal. App. 2d 736 (1935). The writing must evince a free and mutual understanding of the parties and show that they both agreed on the same thing in the same sense, Estes v. Hardesty, 66 Cal. App. 2d 747 (1944), or the writing has no binding effect on either. Patterson v. Clifford F. Reid, Inc., 132 Cal. App. 454 (1933); Scott v. Los Angeles Mountain Park Co., 92 Cal. App. 258 (1928). When the writing shows that there was no meeting of the minds on the material terms of the proposed agreement, no contract exists, no obligation to convey rests on the vendor, and the purchaser is under no duty to accept the property or pay for it. Burgess v. Rodom, 121 Cal. App. 2d 71 (1953); Salomon v. Cooper, 98 Cal. App. 2d 521 (1950). In such a case it is immaterial that the signature of the party charged, or of both parties, is affixed. Patterson v. Clifford F. Reid, Inc., 132 Cal. App. 454 (1933); Morton v. Foss, 48 Cal. App. 2d 117 (1941). It is indispensable to a valid memorandum of an agreement to sell and convey land that it be complete evidence of the terms to which the parties have assented. If it establishes that there was in fact no contract, if it discloses that upon essential and material terms the minds of the parties did not meet and that such terms were left
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open for future settlement, then there is no binding obligation upon the seller to convey or the buyer to accept and pay for the land. It will be regarded as merely an inchoate effort. Implications will not be indulged. Salomon v. Cooper, 98 Cal.App.2d 521, 522-523 (1950). An action for damages for breach of contract for the purchase or sale of real property will not lie unless the writing contains the essential terms and material elements of such an agreement without recourse to parole evidence of the intention of the contracting parties. Dillingham v. Dahlgren, 52 Cal.App. 322, 326-327 (1921). "Plaintiff's evidence does not establish the indispensable 'meeting of the minds' regarding the material terms of this transaction and, therefore, the existence of an enforceable contract." Martin Deli v. Schumacher, 52 N.Y.2d 105, 109, 436 N.Y.S.2d 247, 417 N.E.2d 541 (1981). David Horton wrote in the UCLA Law Review, "The perception that adherents (to standard form contracts) did not read and could not understand fine-print terms made it difficult to identify the requisite 'meeting of the minds' or 'mutual assent' of contract formation." David Horton, "The Shadow Terms: Contract Procedure and Unilateral Amendments," 57 UCLA Law Review 605 (February, 2010). William R. Hubbard wrote, "(T)he core of a contract is the parties' meeting of the minds, which both parties will want to memorialize clearly. If a dispute arises regarding the meaning of a contract term, both parties can provide evidence regarding the meeting of the minds. William Hubbard, "Efficient Definition and Communication of Patent Rights: the Importance of Ex Post, Santa Clara Computer and High Technology Law Journal (January, 2009). 5. QUIET TITLE FIFTH CAUSE OF ACTION Defendant argues that tender of the full amount of the debt is necessary, citing Nool, Pagtalunan, Miller, and Caravantes. However, if Chase has no enforceable claim to the Property, and cannot produce any evidence that it acquired or possesses
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any rights to the property, then full tender would be an onerous requirement to stop their frivolous claim. Any crook could file a Notice of Trustee's Sale and evict a homeowner. If lack of resources prevented the homeowner from having his day in court, how would he prove that the thief had an illegitimate claim? Mabry states that a requirement of tender would defeat the purpose of Civ. Code 2923.5. Mabry v. Aurora Loan Services, 185 Cal.App.4th 208 (2010). The same principle applies where the foreclosing party can offer no evidence that it is authorized to foreclose. The core issue in this case is to ascertain who is the Lender. Plaintiff did not borrow money from Chase. Plaintiff's pre-discovery inquiries indicate that WaMu did not own the loan on September 25, 2008, and therefore Chase is not the Lender. This issue cannot be brushed aside because California is a non-judicial state. In California, an obligation arises either from the contract of the parties or by operation of law. Cal. Civ. Code 1428; Cal. Code Civ. Proc. 26. A mortgage is a contract. Cal. Civ. Code 2920(a). A power of sale is conferred on the mortgagee, trustee, or other person by the mortgage. Cal. Civ. Code 2924. The Adjustable Rate Note attached to the SAC as Exhibit 3 identifies Washington Mutual Bank as the Lender in 1, which then says, "Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." The Note states in 7(C): "Notice of Default. If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount" So the Note gives the right to collect, if timely payments are not made, to the Lender and anyone who takes the Note by transfer. This does not include a servicer who is not the holder of the Note. In Plaintiff's Deed of Trust (SAC Exhibit 4) the "Lender" is WASHINGTON MUTUAL BANK, FA (page 1, C). The "Trustee" is CHICAGO TITLE COMPANY (page 2, D).
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Consistent with the Note, only the Lender is authorized under 22 of the DOT to accelerate the loan: "Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant of agreement in this Security Instrument "If Lender invokes the power of sale, Lender shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Lender's election to cause the Property to be sold. Trustee shall cause this notice to be recorded in each county in which any part of the Property is located." (DOT page 13, 22). Washington Mutual Bank remained the Lender for no more than a few days until it sold the loan. Thereafter, it was, at best, a servicer of the loan. The Lender was the investment trust that put up the money. Foreclosure of the Wellworth Property was commenced by CRC, having been appointed trustee on April 30, 2010, by Chase. Chase was not the Lender. The DOT (SAC Exhibit 4) states on page 13, paragraph 24: "Lender, at its option, may from time to time appoint a successor Trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the Property is located." (SAC Exhibit 8, 24). Defendant asks the Court's approval to proceed with foreclosure of Plaintiff's property on the basis of a NOD and NOTS filed by CRC, a wholly owned subsidiary of Chase (SAC 16) that was appointed as successor Trustee by Chase even though Chase is not the Lender and has not revealed who the Lender might possibly be. Defendant cites Cal. Civ. Code 2934 for the proposition that an assignment of a deed of trust is not required to be recorded in order to provide constructive notice of the contents of the deed of trust. (P&A 6:11-14). That section actually says: "Any assignment of a mortgage and any assignment of the beneficial interest under a deed
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of trust may be recorded, and from the time the same is filed for record operates as constructive notice of the contents thereof to all persons;" The case cited by Defendant, Santens v. Los Angeles Finance Co., 91 Cal.Ap.2d 197, 201 (1949) was concerned with whether a bona fide purchaser at an execution sale was bound by an assignment of the note if the deed of trust was not recorded. Cal. Civ. Code 2934a provides: (a) (1) The trustee under a trust deed upon real property or an estate for years therein given to secure an obligation to pay money and conferring no other duties upon the trustee than those which are incidental to the exercise of the power of sale therein conferred, may be substituted by the recording in the county in which the property is located of a substitution executed and acknowledged by: (A) all of the beneficiaries under the trust deed, or their successors in interest Nowhere does the Civil Code allow for assignment of a Deed of Trust by the assignee acting on its own behalf. Since Chase is not the Lender, it would violate the terms of the Note and the Deed of Trust to dismiss the SAC and allow Chase to foreclose as a result of a forged Assignment of Deed of Trust signed by someone working for the Assignee. Plaintiff holds a grant deed. Chase has a contested Purchase and Assumption Agreement that has generated millions of dollars in lawyers' fees every month. Plaintiff is ready, willing and able to resume monthly payments to the owner of the note, but is Chase legally entitled to receive these funds from Plaintiff? Chase must show that it is the beneficiary of the note, or that it is acting on behalf of the beneficiary with the beneficiary's blessing. Plaintiff is informed and believes that Chase cannot produce the necessary instruments. Plaintiff will show at trial that the promissory note was bundled into a presold Trust which was then pooled and sold to investors many times over. The note was separated from the deed of trust and atomized. It no longer exists as an enforceable mortgage document.
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Multiple banks may attempt to foreclose upon the same property. Borrowers who have already suffered foreclosure may seek to regain title to their homes and force any new owners to move out. Would-be buyers and sellers could find themselves in limbo, unable to know with any certainty whether they can safely buy or sell a home. If such problems were to arise on a large scale, the housing market could experience even greater disruptions than have already occurred, resulting in significant harm to major financial institutions. For example, if a Wall Street bank were to discover that, due to shoddily executed paperwork, it still owns millions of defaulted mortgages that it thought it sold off years ago, it could face billions of dollars in unexpected losses. (COP Report, p. 4-5) 6. DECLARATORY/INJUNCTIVE RELIEF SIXTH CAUSE OF ACTION Plaintiff's home was scheduled by CRC to be sold on the Courthouse steps on November 8, 2010. A Trustee's Sale of Plaintiff's home is currently scheduled for June 10, 2011. There is a significant and grueling controversy brewing between the parties and a pressing need for a judicial determination of the parties' rights and duties concerning the validity of the Promissory Note and Deed of Trust. Plaintiff requests a Temporary Restraining Order and Preliminary Injunction restraining defendant from conducting a Trustee's Sale of the Property during the pendency of this action. 7. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS SEVENTH CAUSE OF ACTION "An assertion of legal rights based on one's own economic interests does not qualify as 'outrageous' under this standard" argues defendant, citing Trerice v. Blue Cross, 209 Cal.App3d 878, 883 (1989). Times have changed since 1989. The mortgage meltdown in the past decade was outrageous, devastating, and extremely distressful for the millions of families who lost their homes. To Chase it may seem to be business-as-usual, but Defendant's conduct as alleged in the SAC was so outrageous that it exceeded all bounds
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tolerated in a civilized societyforged documents, systemic perjury, underwriting fraud, selling worthless junk to unsuspecting retirement funds, and attempting to take a family's home without any legal claim to the property. Defendant concludes by citing Kruse v. Bank of America, 202 Cal.App.3d 38, 67 (1988), which states there is no claim for intentional infliction of emotional distress where the lender simply attempted to collect a debt due under a security interest. That depends on whether the interloper is the Lender, and that is why Defendant's motion to dismiss must be denied. Public Faith in Due Process Could Suffer. If the public gains the impression that the government is providing concessions to large banks in order to ensure the smooth processing of foreclosures, the people's fundamental faith in due process could suffer (COP Report, p. 84). 8. CONCLUSION For the foregoing reasons, Plaintiff Daryoush Javaheri respectfully requests that the Court deny Defendant's Motion to Dismiss. If any claims are insufficiently plead, Plaintiff requests leave to amend. Where a motion to dismiss is granted, a district court should provide leave to amend unless it is clear that the Complaint could not be saved by any amendment. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). The Ninth Circuit requires that this policy favoring amendment be applied with extreme liberality. Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). Date: May 16, 2011 /s/___________________________ DOUGLAS GILLIES Attorney for Plaintiff DARYOUSH JAVAHERI
O UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Case No. Title CV10-08185 ODW (FFMx) Javaheri v. JPMorgan Chase Bank, N.A., et al. Date June 2, 2011
Present:
The Honorable Otis D. Wright II, United States District Judge Not Present Court Reporter n/a Tape No.
Sheila English Deputy Clerk Attorneys Present for Plaintiff(s): Not Present Proceedings (In Chambers):
Attorneys Present for Defendant(s): Not Present
Order GRANTING in Part and DENYING in Part Defendants Motion to Dismiss Plaintiffs Second Amended Complaint [30] (Filed 04/28/11)
I.
INTRODUCTION
Pending before the Court is Defendant JPMorgan Chase Bank, N.A.s (JPMorgan) Motion to Dismiss Plaintiff Daryoush Javaheris (Plaintiff) Second Amended Complaint (SAC). (Dkt. No. 30.) Plaintiff filed an Opposition on May 16, 2011, to which JPMorgan filed a Reply on May 23, 2011. (Dkt. Nos. 32, 34.) Having considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument. FED. R. CIV. P. 78; L.R. 7-15. For the following reasons, JPMorgans Motion is GRANTED in Part and DENIED in Part. II. FACTUAL AND PROCEDURAL BACKGROUND
On November 14, 2007, Plaintiff obtained a mortgage loan in the amount of $2,660,000 from Washington Mutual Bank (WaMu) to finance his property located at 10809 Wellworth Los Angeles, California (the Subject Property). (SAC 4, 11-13.) In conjunction therewith, Plaintiff executed a promissory note (the Note) and a deed of trust (the DOT), which encumbered the Subject Property. The DOT identifies WaMu as the lender and beneficiary under the Note. (SAC 13.)
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Plaintiff alleges that between November 15 and November 30, 2007, WaMu transferred Plaintiffs Note to Washington Mutual Mortgage Securities Corporation and that the Note was subsequently sold to an investment trust and became part of, or was subject to, a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage Pass-Through Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. (SAC 14.) Plaintiff identifies this security as Standard & Poor CUSIP # 31379XQC2, Pool Number 432551. (SAC 14.) Because of this alleged transaction in which Plaintiffs Note was sold as an investment security, Plaintiff claims that JPMorgan is not the owner, holder, or beneficiary of the Note, and therefore cannot legally foreclose on the Subject Property. Plaintiff also alleges that JPMorgan failed to properly record its claim of ownership in the Subject Property, further evidencing its lack of ownership. (SAC 15.) JPMorgan, however, contends that it is the rightful owner, holder, and beneficiary of Plaintiffs Note. In support, JPMorgan points to its September 25, 2008 acquisition of WaMus assets by virtue of a Purchase and Assumption Agreement (P & A Agreement) executed by JPMorgan and the Federal Deposit Insurance Corporation (FDIC), who at the time was acting as Receiver for WaMu. (Dkt. No. 10, Exhs. 1-2.) JPMorgan, therefore, maintains that it succeeded to all of WaMus assets, including Plaintiffs Note. On or about March 22, 2010, Plaintiff received a letter stating that he had not made his monthly payments since November of 2009. (SAC 19.) Plaintiff alleges that, within thirty days of receiving this letter, his attorney faxed a letter in response, but that JPMorgan did not contact Plaintiff or [his attorney], either in person or by telephone, to discuss Plaintiffs financial condition and the impending foreclosure. [JPMorgan] did not call, it did not write, and it did not provide a toll-free HUD number to Plaintiff or his lawyer. [JPMorgan] did not offer to meet with Plaintiff or his lawyer and did not advise them that Plaintiff had a right to request a subsequent meeting within 14 days. (SAC 22.) Nevertheless, on May 14, 2010, JPMorgan and CRC recorded a Notice of Default (NOD) and a Declaration of Compliance, which identified JPMorgan as the undersigned mortgagee, beneficiary, or authorized agent. (SAC 25.) Subsequently, on August 16, 2010, California Reconveyance Company (CRC) recorded a Notice of
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Trustees Sale. (SAC 17.) As a result of the foregoing events, on October 29, 2010, Plaintiff filed a Complaint in this Court against JPMorgan and CRC. Subsequently, on January 11, 2011, the Court granted JPMorgan and CRCs joint Motion to Dismiss the Complaint. (Dkt. No. 20.) Plaintiff then filed a First Amended Complaint (FAC) against JPMorgan on January 3, 2011. (Dkt. No. 22.) The Court granted JPMorgans Motion to Dismiss Plaintiffs FAC on March 24, 2011. (Dkt. No. 28.) On April 12, 2011, Plaintiff filed a Second Amended Complaint against JPMorgan, asserting claims for: (1) violation of California Civil Code section 2923.5; (2) wrongful foreclosure; (3) quasi contract; (4) no contract; (5) quiet title; (6) declaratory and injunctive relief; and (7) intentional infliction of emotional distress. (SAC at 1.) JPMorgan now brings the instant Motion to Dismiss the SAC in its entirety. III. LEGAL STANDARD
To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint generally must satisfy only the minimal notice pleading requirements of Rule 8(a)(2). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). Rule 8(a)(2) requires a short and plain statement of the claim showing that the pleader is entitled to relief. FED. R. CIV. P. 8(a)(2). For a complaint to sufficiently state a claim, its [f]actual allegations must be enough to raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Mere labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Id. Rather, to overcome a 12(b)(6) motion, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation and citation omitted). The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendants liability, it stops short of the line between possibility and plausibility of entitlement of relief. Id. (internal quotation and citation omitted). When considering a 12(b)(6) motion, a court is generally limited to considering materials within the pleadings and must construe [a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]. See Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001) (citing Epstein v. Washington Energy Co., 83 F.3d
1136, 1140 (9th Cir. 1996)). A court is not, however, required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). IV. DISCUSSION
The Court will discuss Plaintiffs seven claims in the following order. First, the Court will analyze Plaintiffs fourth claim for no contract, which is predicated on events allegedly occurring during the loan origination process. Second, the Court will address Plaintiffs first claim for violation of California Civil Code section 2923.5, which is predicated on JPMorgans alleged failure to contact Plaintiff before filing a notice of default. Third, the Court will examine Plaintiffs second claim for wrongful foreclosure, fifth claim for quiet title, third claim for quasi contract, and sixth claim for declaratory and injunctive relief, all of which can be resolved by examining the parties dispute as to who properly owns the Note. Finally, the Court will discuss Plaintiffs seventh claim for intentional infliction of emotional distress. A. Plaintiffs Fourth Claim for No Contract
Plaintiff alleges that no enforceable contract was formed between WaMu and Plaintiff because there was no meeting of the minds. (SAC 52.) Specifically, Plaintiff contends that he expected that he would borrow money from WaMu, . . . pay it back, and then . . . own the Property, while WaMu expected that Plaintiff . . . would not be able to pay it back, and then WaMu or the investors would own the Property. (SAC 52.) When ruling on Defendants previous Motion to Dismiss Plaintiffs FAC, the Court found that [w]hile Plaintiff frames his claim as one based on the absence of a contract, his allegations indicate that he is, in fact, alleging fraud. (Dkt. No. 28 at 5.) In this respect, Plaintiffs SAC is virtually identical to his FAC and indeed his no contract claim sounds in fraud. Consequently, Plaintiff must meet the heightened pleading standards under Federal Rule of Civil Procedure 9(b), which require him to state with particularity the circumstances constituting fraud or mistake. FED. R. CIV. P. 9(b). Plaintiffs allegations must enable the defendant to prepare an adequate answer[.] Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400 (9th Cir. 1986); see Bosse v. Crowell Collier & MacMillan, 565
F.2d 602, 611 (9th Cir. 1977); Walling v. Beverly Enter., 476 F.2d 393, 397 (9th Cir. 1973). In that regard, proper identification of the circumstances entails specif[ication of] such facts as the times, dates, places, and benefits received, and other details of the alleged fraudulent activity. Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993). Additionally, [i]n a fraud action against a corporation, a plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. Saldate v. Wilshire Credit Corp., 686 F. Supp. 2d 1051, 1065 (2010) (citing Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 157 (1991)). Here, Plaintiffs allegations with regard to WAMUs alleged fraudulent scheme fall exceedingly short of the Rule 9(b) requirements. Plaintiff fails to identify any particular facts regarding WaMus supposed expectations or misrepresentations as they relate to Plaintiffs loan. Instead, Plaintiff generally asserts that WaMu engaged in a predatory lending scheme with respect to unqualified borrowers in 2006 and 2007. (SAC 46, 55.) As to Plaintiffs specific loan, Plaintiff only alleges, in a conclusory fashion, that WaMu expected he would default, that WaMu pre-sold Plaintiffs mortgage[,] and that WaMus economic interests were adverse to Plaintiffs interests. (See SAC 48, 49, 51.) These allegations do not meet the requisite heightened pleading standard under Federal Rule of Civil Procedure 9(b) because they do not set forth the times, dates, places, benefits received, and other details of the alleged fraudulent activity nor do they allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. See Neubronner, 6 F.3d at 672; Saldate, 686 F. Supp. at 1065. Furthermore, Plaintiffs allegation that the investment bank intended to short the portfolio is irrelevant as the investment bank, which Plaintiff fails to identify, is not a party to this action. (SAC 49.) Without specific information regarding WaMus alleged fraudulent activity, under Federal Rule of Civil Procedure 9(b), Plaintiffs claim must fail. Accordingly, the Court GRANTS Defendants Motion to Dismiss Plaintiffs fourth claim for No Contract. Because Plaintiff has previously been granted leave to amend this claim, has again failed to sufficiently plead his allegations, and it appears that further leave to amend will likely prove futile, Plaintiffs fourth claim for No Contract is hereby DISMISSED WITH PREJUDICE. B.
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Plaintiffs First Claim for Violation of California Civil Code 2923.5

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California Civil Code section 2923.5 requires a declaration that the mortgagee, beneficiary, or authorized agent has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (h). CAL. CIV. CODE 2923.5(b). Courts agree that nothing in this statute requires that a declaration of compliance with section 2923.5 be signed by a person with personal knowledge. See Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1186 (N.D. Cal. July 9, 2009). Therefore, to the extent that Plaintiffs claim under section 2923.5 is predicated on the fact that the person who signed the Declaration of Compliance did not have personal knowledge of the facts contained therein, it is insufficient. Indeed, the Court previously dismissed Plaintiffs claim in his FAC on this very ground. (See Dkt. No. 28 at 4-5.) However, Plaintiffs SAC cures the remaining deficiencies with respect to this claim. Rather than solely attacking the personal knowledge of the signer of the Declaration of Compliance, Plaintiff alleges that JPMorgan did not contact Plaintiff or [his attorney], either in person or by telephone, to discuss Plaintiffs financial condition and the impending foreclosure. [JPMorgan] did not call, it did not write, and it did not provide a toll-free HUD number to Plaintiff or his lawyer. [JPMorgan] did not offer to meet with Plaintiff or his lawyer and did not advise them that Plaintiff had a right to request a subsequent meeting within 14 days. (SAC 22.) JPMorgan attempts to controvert Plaintiffs assertion with the Declaration of Compliance itself. However, Plaintiff claims that the person who signed the Declaration of Compliance either had no personal knowledge or misrepresented the facts. Taking the facts as alleged in Plaintiffs SAC as true, which the Court must do when deciding a motion to dismiss, Plaintiffs first claim for violation of California Civil Code section 2923.5 is sufficient. Accordingly, Defendants Motion is DENIED as to Plaintiffs first claim. C. Plaintiffs Second Claim for Wrongful Foreclosure and Fifth Claim to Quiet Title
Plaintiffs second claim for wrongful foreclosure and fifth claim to quiet title are based on his allegations that JPMorgan does not own the note and that JPMorgan cannot produce an original promissory note. (SAC 17, 18.) In his FAC, Plaintiff simply concluded that WaMu transferred all beneficial interest in the loan to a private investor. (FAC 15.)
Standing alone, the Court found that this allegation was merely a legal conclusion and did not raise a right to relief above the speculative level. (See Dkt. No. 28 at 3 (citing Twombly, 550 U.S. at 555).) Plaintiff, however, has cured this deficiency by alleging facts in his SAC to support these claims. Specifically, Plaintiff alleges that between November 15 and November 30, 2007, WaMu transferred Plaintiffs Note to Washington Mutual Mortgage Securities Corporation. (SAC 14.) Plaintiff claims that the Note was then sold to an investment trust and became part of, or was subject to, a Loan Pool, a Pooling and Servicing Agreement, a Collateralized Debt Obligation, a Mortgage-Backed Security, a Mortgage Pass-Through Certificate, a Credit Default Swap, an Investment Trust, and/or a Special Purpose Vehicle. (SAC 14.) Plaintiff identifies the security as Standard & Poor CUSIP # 31379XQC2, Pool Number 432551. (SAC 14.) The Court must accept these facts as true when deciding a motion to dismiss. Iqbal, 129 S. Ct. at 1949. Coupled with Plaintiffs allegation that JPMorgan never properly recorded its claim of ownership in the Subject Property, (SAC 16), the abovementioned facts regarding the transfer of Plaintiffs Note prior to JPMorgans acquisition of WaMus assets raise Plaintiffs right to relief above a speculative level. Furthermore, in the face of these specific factual allegations, JPMorgans assertion that the P&A Agreement suffices to establish their ownership of the Note is no longer viable. Indeed, the P&A Agreement does not specifically identify Plaintiffs Note. (See Dkt. No. 10, Exh. 2.) The Court finds that Plaintiff has now sufficiently alleged that JPMorgan did not own his Note and therefore did not have the right to foreclose. Accordingly, the Court DENIES Defendants Motion to Dismiss with respect to Plaintiffs second claim for wrongful foreclosure and fifth claim to quiet title. D. Plaintiffs Third Claim for Quasi Contract
Plaintiff seeks restitution by alleging that JPMorgan was unjustly enriched by any payments he made to [JPMorgan] that were not paid to the lender or beneficiary, if any. (SAC 44.) The Court previously dismissed Plaintiffs claim for restitution because Plaintiffs argument [was] based on his assertion that JPMorgan is not the owner, a holder, or a beneficiary under the note. (See Dkt. No. 28 at 5.) As the Court noted above, however, Plaintiff has cured any deficiencies with respect to this assertion. While JPMorgan correctly contends that unjust enrichment, restitution, or quasi contract are not independent causes of action, (Mot. at 7), as previously discussed, Plaintiffs allegations that JPMorgan did not own
his Note have been sufficiently alleged. Consequently, if indeed JPMorgan did not own the Note yet received payments therefrom, those payments may have been received unjustly. Accordingly, Defendants Motion is DENIED as to Plaintiffs third claim for quasi contract. E. Plaintiffs Sixth Claim for Declaratory and Injunctive Relief
Plaintiffs sixth claim for declaratory and injunctive relief seeks a judicial determination of his rights and duties as to the Note and DOT, and JPMorgans rights to proceed with a non-judicial foreclosure on the Subject Property. (SAC 68.) Additionally, Plaintiff seeks a Temporary Restraining Order and Preliminary Injunction restraining JPMorgan from conducting a Trustees Sale of the Subject Property during the pendency of this action. (SAC, Prayer 1.) As to Plaintiffs claim for declaratory relief, the Declaratory Judgment Act states that [i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration. 28 U.S.C. 2201(a). Jurisdiction to award declaratory relief exists only in a case of actual controversy. Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994). Consequently, the Ninth Circuit instructs district courts to first determine whether there is an actual controversy within its jurisdiction. Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). If the court finds that an actual controversy exists, it must next decide whether to exercise its jurisdiction by analyzing the factors enumerated in Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942). The Brillhart factors require the Court to (1) avoid needless determination of state law issues; (2) discourage litigants from filing declaratory actions as a means of forum shopping; and (3) avoid duplicative litigation. Brillhart, 316 U.S. at 495. Here, Plaintiff contends an actual controversy has arisen in whether: (1) JPMorgan is the present owner and beneficiary of the note; (2) JPMorgan is entitled to sell the Property; and (3) CRC is a trustee duly authorized to file a Notice of Default or a Notice of Trustees Sale. (SAC 67.) As the Court noted above, Plaintiff has cured the deficiencies with respect to these allegations. Consequently, the Court finds that an actual controversy exists. Furthermore, none of the Brillhart factors suggest that the Court should refrain from entertaining Plaintiffs claim for declaratory relief. Accordingly, Defendants Motion to Dismiss is DENIED as to Plaintiffs sixth claim for declaratory relief.
As to Plaintiffs claim for injunctive relief, the Court was already presented with this issue on October 29, 2010 and denied Plaintiffs ex parte application for temporary restraining order and preliminary injunction. (Dkt. No. 6.) Plaintiff, however, has now pleaded additional facts that may support such a request. Therefore, Plaintiff is not precluded from bringing another ex parte application if he so chooses. Additionally, Plaintiff seeks that JPMorgan be forever enjoined and restrained from selling the Subject Property. (SAC, Prayer 2.) As a general rule, a permanent injunction will be granted when liability has been established and there is a threat of continuing violations. MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 520 (9th Cir. 1993). Here, Plaintiff has properly pleaded his underlying claims and Defendant may therefore be found liable at a later stage of the litigation. Consequently, Defendants Motion is DENIED as to Plaintiffs sixth claim for injunctive relief. F. Plaintiffs Seventh Claim for Intentional Infliction of Emotional Distress
To successfully plead a claim for intentional infliction of emotional distress under California law, Plaintiff must allege (1) [JPMorgan]s extreme and outrageous conduct; (2) that [JPMorgan] intended to cause, or recklessly disregarded the probability of causing, emotional distress; (3) that [P]laintiff suffered severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by [JPMorgan]s outrageous conduct. Davenport v. Litton Loan Servicing, LP, 725 F. Supp. 2d 862, 883-84 (N.D. Cal. 2010); see also Corales v. Bennett, 567 F.3d 554, 571 (9th Cir. 2009) (setting forth the same elements). Outrageous conduct is that which is so extreme as to exceed all bounds of that usually tolerated in a civilized community. Id. at 884. Moreover, [f]or emotional distress to be severe, it must be of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it. Grant v. WMC Mortg. Corp., No. CIV 2:10-1117 WBS KJN, 2010 WL 2509415 at *2 (E.D. Cal., June 17, 2010). In support of his intentional infliction of emotional distress claim, Plaintiff alleges that JPMorgan cashed Plaintiffs monthly checks and kept the money when it had no right to do so. (SAC 73.) Plaintiff further alleges that JPMorgan ignored Plaintiffs letters requesting alternative options to foreclosure and that JPMorgan fraudulently transferred the DOT. (SAC 74, 75.) While Plaintiff concludes that these acts and omissions . . .
constitute extreme and outrageous conduct, and that JPMorgan engaged in such conduct either intentionally or with reckless disregard as to the effect on Plaintiff[,](SAC 76, 77), Plaintiff fails to point the Court to any case law to support his contention that such acts associated with foreclosure, even if wrongful, are so extreme as to exceed all bounds of that usually tolerated in a civilized community. See Davenport, LP, 725 F. Supp. 2d at 884. Moreover, [f]or emotional distress to be severe, it must be of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it. Grant v. WMC Mortg. Corp., No. CIV 2:10-1117 WBS KJN, 2010 WL 2509415 at *2 (E.D. Cal., June 17, 2010). Plaintiff makes absolutely no factual allegations with respect to the severity of his emotional distress in terms of either quantity or quality. Rather, Plaintiff merely states that he has suffered emotional distress in the amount of $5,000,000. (SAC 78.) Such labels and conclusions are insufficient. See Twombly, 550 U.S. at 555. Ultimately, Plaintiffs claim for intentional infliction of emotional distress is nothing more than a formulaic recitation of the elements[,] which simply will not do. See id. Accordingly, Defendants Motion to Dismiss is GRANTED as to Plaintiffs seventh claim for intentional infliction of emotional distress. Because Plaintiff has previously been granted leave to amend this claim, has again failed to sufficiently plead his allegations, and it appears that further leave to amend will likely prove futile, Plaintiffs seventh claim for intentional infliction of emotional distress is hereby DISMISSED WITH PREJUDICE. V. CONCLUSION
For the foregoing reasons, Defendants Motion to Dismiss is GRANTED in Part and DENIED in Part. Plaintiffs second claim for wrongful foreclosure, fifth claim for quiet title, first claim for violation of California Civil Code section 2923.5, third claim for quasi contract, and sixth claim for declaratory and injunctive relief survive Defendants Motion to Dismiss. Conversely, Plaintiffs fourth claim for no contract and seventh claim for intentional infliction of emotional distress are DISMISSED WITH PREJUDICE. IT IS SO ORDERED. : ---00
CV-90 (06/04)
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O UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Case No. Title CV10-08185 ODW (FFMx) Javaheri v. JPMorgan Chase Bank, N.A., et al. SE Initials of Preparer Date June 2, 2011
CV-90 (06/04)
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JUDGE WRIGHT DENIES CHASE&#39;S (WAMU) MOTION TO DISMISS 5 CAUSES OF ACTION-JAVAHERI CASE - FEDERAL COURT CALIF. - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief.

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JUDGE WRIGHT DENIES CHASE&#39;S (WAMU) MOTION TO DISMISS 5 CAUSES OF ACTION-JAVAHERI CASE - FEDERAL COURT CALIF. - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief.

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JPMorgan Complied with State Law

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Second Amended Complaint

Second Amended Complaint

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CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

CASE NO.: CV-10-8185 ODW (FFMx) JUDGE: Hon. Otis D. Wright II

Courtroom: DATE: TIME: Trial Date: Action Filed:

11 June 6, 2011 1:30 P.M. None Set October 29, 2010

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THERE IS NO CLAIM ALLEGED FOR NO CONTRACT...................... 8

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TABLE OF AUTHORITIES Federal Cases

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Plaintiff's Opposition to Motion to Dismiss Second Amended Complaint -i-

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JUDGE WRIGHT DENIES CHASE'S (WAMU) MOTION TO DISMISS 5 CAUSES OF ACTION-JAVAHERI CASE - FEDERAL COURT CALIF. - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief.

JUDGE WRIGHT DENIES CHASE'S (WAMU) MOTION TO DISMISS 5 CAUSES OF ACTION-JAVAHERI CASE - FEDERAL COURT CALIF. - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief.