(PS) Miller v. JPMorgan Chase Bank, N.A. ( 2021 )

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 HERBERT EDWARD MILLER, No. 2:21-cv-00061-JAM-KJN 9 Plaintiff, 10 v. ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ 11 JP MORGAN CHASE BANK, N.A. et MOTION TO DISMISS al, 12 Defendant. 13 14 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND1 15 In November 2007, Plaintiff borrowed $440,000.00 from 16 Washington Mutual Bank, FA (“WAMU”), secured by a Deed of Trust 17 (“DOT”), to finance his purchase of real property located at 305 18 Hilton Drive, Applegate, California (the “Property”). Compl. 19 ¶¶ 15, 103, ECF No. 1; Defendants’ Req. for Judicial Notice 20 (“RJN”), ECF No. 9, Ex. A. Plaintiff, however, contends that 21 WAMU was not the actual lender, despite being so named, rendering 22 the promissory note and DOT void. Compl. ¶ 15. Additionally, 23 Plaintiff alleges that the DOT is void because he could not have 24 conveyed any interest or title as security since he did not 25 receive the grant deed until the day after such purported 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for April 20, 2021. 1 transfer. Id. 2 In August 2011, WAMU transferred its interest in the loan to 3 JP Morgan Chase Bank, N.A. (“Chase”). Compl. ¶¶ 38-39. 4 Plaintiff alleges that this assignment was void for a variety of 5 reasons. Compl. ¶¶ 43-49. Plaintiff defaulted on his loan and 6 Chase initiated foreclosure proceedings in August 2011 with the 7 recordation of a notice of default. RJN Ex. D. Plaintiff then 8 filed suit on July 2, 2012, in Placer County Superior Court 9 against Chase, California Reconveyance, and Does 1 through 10. 10 RJN Ex. E. Plaintiff asserted claims for (1) breach of trust 11 instrument; (2) wrongful foreclosure; (3) unfair business 12 practices; (4) negligent misrepresentation; and (5) quiet title. 13 Id. All of these claims arose out of the alleged wrongful 14 pending foreclosure proceeding of the Property by the defendants. 15 In sum, Plaintiff alleged that defendants lacked the legal right 16 to foreclose upon the property because defendants had no interest 17 in the property as Plaintiff received the grant deed to the 18 Property a day after the deed of trust, WAMU did not fund his 19 loan, and no consideration was paid for the assignment of the 20 lien. On December 13, 2012 the State Court dismissed with 21 prejudice all of Plaintiff’s claims. RJN Ex. G. 22 In March 2013, before the Property sold at foreclosure, 23 Plaintiff filed for Chapter 11 Bankruptcy. RJN Ex. K. As a 24 result, the foreclosure sale was cancelled, and the notice of 25 default was rescinded. RJN Ex. J. After termination of the 26 bankruptcy, Chase transferred its interest in the lien to U.S. 27 Bank Trust, N.A. as trustee for LSF9 Master Participation Trust 28 (“LSF9 MPT”). RJN Ex. L. In August 2015, foreclosure 1 proceedings were reinitiated with the recordation of a new notice 2 of default. RJN Ex. M. Plaintiff filed a second suit against 3 LSF9 MPT and Chase, among others, in the County of Placer 4 Superior Court. RJN Ex. N. The case was removed to this Court 5 and dismissed for lack of prosecution. RJN Ex. O-R. 6 Thereafter, the foreclosure trustee proceeded with non- 7 judicial foreclosure by recording a notice of trustee’s sale on 8 May 12, 2017, specifying the date of sale as June 15, 2017. RJN 9 Ex. S. On June 14, 2017, one day before the scheduled sale, 10 Plaintiff filed his third complaint in State Court. RJN Ex. T. 11 He named Caliber as the defendant because Caliber had replaced 12 Chase as the loan servicer, suing for: (1) intentional 13 interference with contractual relationship; (2) intentional 14 misrepresentation; and (3) violation of California Civil Code 15 2924.17. Id. Again, the gravamen of his complaint was that 16 defendants had no interest in the Property and could not 17 foreclose because he received the grant deed to the Property a 18 day after the deed of trust, WAMU did not fund his loan, and no 19 consideration was paid for the assignment of the lien. Id. 20 Despite this, the trustee’s sale was held on June 15, 2017, as 21 planned, at which LSF9 MPT received title by way of a trustee’s 22 deed upon sale recorded on June 26, 2017. RJN Ex. U. Following 23 the sale, Caliber demurred the 2017 complaint and the case was 24 dismissed with prejudice. RJN Ex. V. 25 After foreclosure in July 2017, LSF9 MPT filed an unlawful 26 detainer action. RJN Ex. W. Plaintiff failed to timely respond 27 to the complaint and on September 22, 2017, judgment was entered 28 in LSF9 MPT’s favor against Plaintiff. RJN Ex. X. Plaintiff 1 fought to overturn the judgment but was unsuccessful. RJN Ex. Y. 2 On March 26, 2018, Plaintiff was served with an unlawful detainer 3 eviction notice. RJN Ex. Z. The notice explained that if the 4 premises were not vacated within five days after service of the 5 notice, the levying officer would remove the occupants from the 6 Property and place the judgment creditor in possession. Id. at 7 4. The notice also warned that personal property remaining on 8 the premises would be sold or otherwise disposed of unless the 9 owner paid the judgment creditor the reasonable cost of storage 10 and took possession of the personal property no later than 11 fifteen days after the judgment creditor took possession of the 12 premises. Id. Plaintiff alleges that sometime in June or July 13 2018, LSF9 MPT took possession of the Property and his personal 14 possessions were removed. Compl. ¶ 139. Around July 3, 2018, 15 Plaintiff demanded the return of his personal property, but LSF9 16 MPT refused. Id. ¶ 140. 17 In January 2020, Plaintiff filed a Chapter 11 bankruptcy 18 petition and a related adversary complaint. RJN Ex. BB. In 19 November 2020, the bankruptcy court dismissed the petition. RJN 20 Ex. CC. In January 2021, Plaintiff then filed the instant action 21 against Chase, Caliber, LSF9 MPT, and Does 1-20 inclusive 22 alleging: (1) intentional interference with economic 23 relationship; (2) negligent interference with economic 24 relationship; (3) wrongful foreclosure; (4) negligent 25 misrepresentation; (5) quiet title; (6) conversion; and (7) 26 violation of the automatic stay. See generally Compl. As in the 27 prior suits, Plaintiff alleges Defendants had no interest in the 28 property because he received the grant deed to the Property a day 1 after the deed of trust, WAMU did not fund his loan, and no 2 consideration was paid for the assignment of the lien. Compl. 3 ¶¶ 14-26. Caliber and LSF9 MPT (“Defendants”) then brought this 4 motion to dismiss all of Plaintiff’s claims. Mot. to Dismiss 5 (“Mot.”), ECF No. 8. Plaintiff opposed this motion. Opp’n, ECF 6 No. 14. Defendants replied. Reply, ECF No. 19. For the reasons 7 stated below the Court GRANTS IN PART AND DENIES IN PART 8 Defendants’ Motion to Dismiss. 9 II. OPINION 10 A. Legal Standard 11 Dismissal is appropriate under Rule 12(b)(6) of the Federal 12 Rules of Civil Procedure when a plaintiff’s allegations fail “to 13 state a claim upon which relief can be granted.” Fed. R. Civ. 14 P. 12(b)(6). “To survive a motion to dismiss [under Rule(b)(6)] 15 a complaint must contain sufficient factual matter, accepted as 16 true, to state a claim for relief that is plausible on its 17 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal 18 quotation marks and citation omitted). While “detailed factual 19 allegations” are unnecessary, the complaint must allege more 20 than “[t]hreadbare recitals of the elements of a cause of 21 action, supported by mere conclusory statements.” Id. “In sum, 22 for a complaint to survive a motion to dismiss, the non- 23 conclusory ‘factual content,’ and reasonable inferences from 24 that content, must be plausibly suggestive of a claim entitling 25 the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 26 962, 969 (9th Cir. 2009). 27 B. Judicial Notice 28 Generally, a district court may not consider any material 1 beyond the pleadings when ruling on a 12(b)(6) motion. Lee v. 2 City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). 3 However, the court may consider material which is properly 4 submitted as part of the complaint or those subject to judicial 5 notice, without converting a motion to dismiss into a motion for 6 summary judgment. Id. at 688-69. Additionally, the court may 7 consider a document not attached to the complaint if it is 8 referred to extensively in the complaint or forms the basis of a 9 claim. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 10 2003). 11 Defendants have requested the Court take judicial notice of 12 exhibits A through CC. See RJN. Because these are all matters 13 of public record, they are proper subjects of judicial notice. 14 Lee, 250 F.3d at 689. Accordingly, Defendants’ requests for 15 judicial notice is GRANTED. 16 C. Analysis 17 1. Claim Preclusion 18 Under the Full Faith and Credit Act, federal courts must 19 give state judicial proceedings “the same full faith and credit 20 . . . as they have by law or usage in the court of [the] State 21 . . . from which they are taken.” Parsons Steel, Inc. v. First 22 Alabama Bank, 474 U.S. 518, 519 (1986) (quoting 28 U.S.C. 23 § 1738). This requires federal courts apply the state’s 24 preclusion rules to judgments issued by courts of that state. 25 Id. at 523. Accordingly, California law applies in determining 26 the preclusive effect of the prior California judgements. Robi 27 v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988). 28 In California claim preclusion “prevents relitigation of 1 the same cause of action in a second suit between the same 2 parties or parties in privity with them.” Mycogen Corp. v. 3 Monsanto Co., 28 Cal.4th 888, 896 (2002). Claim preclusion 4 arises when: “(1) [a] claim [. . .] raised in the present action 5 is identical to a claim [. . .] litigated in a prior proceeding; 6 (2) the prior proceeding resulted in a final judgment on the 7 merits; and (3) the party against whom the doctrine is being 8 asserted was a party or in privity with a party to the prior 9 proceeding.” Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788, 10 797 (2010) (internal quotation marks omitted). 11 Identical Claims 12 To determine whether prior proceedings involve the same 13 claim or cause of action “California has consistently applied 14 the ‘primary rights’ theory, under which the invasion of one 15 primary right gives rise to a single cause of action.” Kay v. 16 City of Rancho Palos Verdes, 505 F.3d 803, 809 (9th Cir. 2007) 17 (internal quotation marks and citation omitted). “[I]f two 18 actions involve the same injury to the plaintiff and the same 19 wrong by the defendant then the same primary right is at stake 20 even if in the second suit the plaintiff pleads different 21 theories of recovery, seeks different forms of relief and/or 22 adds new facts supporting recovery.” San Diego Police Officers’ 23 Ass’n v. San Diego City Emps. Ret. Sys., 568 F.3d 725, 734 (9th 24 Cir. 2009) (quoting Eichman v. Fotomat Corp., 147 Cal.App.3d 25 1170, 1174 (1983)). 26 Here, Plaintiff filed suit on July 27, 2012, in Placer 27 County Superior Court against JP Morgan Chase, California 28 Reconveyance Co., and Does 1 through 10 for: (1) breach of trust 1 instrument; (2) wrongful foreclosure; (3) unfair business 2 practices; (4) negligent misrepresentation; and (5) quiet title. 3 RJN Ex. E. The Superior Court, finding all the causes of action 4 failed to state a claim, dismissed it with prejudice on December 5 13, 2012. RJN Ex. G. Plaintiff filed another complaint in 6 Placer County Superior Court on June 14, 2017 against Caliber 7 Home Loans Inc., its officers and directors, and Does 1-10 for 8 (1) intentional interference with contractual relationship; 9 (2) intentional misrepresentation; and (3) violation of 10 California Civil Code § 2924.17. RJN Ex. T. On October 30, 11 2017 the Court again dismissed all the claims with prejudice 12 finding them to be barred by the doctrine of res judicata. RJN 13 Ex. V. 14 Defendants argue that other than Plaintiff’s sixth claim 15 for conversion, Plaintiff’s claims are barred by claim 16 preclusion. Mot. at 6-8; Reply at 3. Plaintiff relying on 17 Fullington v. Equilon Enterprises, 210 Cal.App.4th 667 (2012), 18 argues that because new facts have occurred, mainly the 19 recording and notice of the actual foreclosure, his claims are 20 not barred by claim preclusion. Opp’n at 2. But Plaintiff’s 21 reliance on Fullington is misplaced, as that case involved a 22 prior Texas judgment. Accordingly, the Court in Fullington 23 applied the preclusion law of Texas, which defines a cause of 24 action under the transactional rather than primary rights 25 approach. See Fullington, 210 Cal.App.4th at 675-76. 26 Many district courts have found that pre-foreclosure suits 27 challenging the rights of defendants to foreclose on a property 28 involve the same primary right as those brought after 1 foreclosure has occurred, namely the right to be free from 2 unlawful foreclosure. See e.g. Harold v. Wells Fargo Bank, 3 N.A., No. 19-CV-08020-JST, 2020 WL 3867203, at *4 (N.D. Cal. May 4 29, 2020); Turner v. Bank of New York, 2019 WL 4040139 (N.D. 5 Aug. 26, 2019); Lomeli v. JPMorgan Chase Bank, N.A., No. 6 CV1504022-MWF, 2015 WL 12746210, at *6 (C.D. Cal. Oct. 5, 2015). 7 As one Court explained: 8 [T]he primary right for which Plaintiff seeks redress is 9 her right to the foreclosed property. The harm for which Plaintiff sought relief in state court is the same harm for 10 which she now seeks to hold Defendants liable—the allegedly 11 wrongful foreclosure of her property. The actions in state court and this Court concern the same property, same deeds, 12 and same foreclosure sale. Because Plaintiff has already filed an action challenging Defendants’ authority to 13 foreclose, she may not file another seeking to challenge the foreclosure on different grounds. Lomeli, 2015 WL 14 12746210, at *6. 15 Recently, a California Court of Appeals also found that a 16 post-foreclosure action involved the same primary right as a 17 prior pre-foreclosure suit. Colebrook v. CIT Bank, N.A., 2021 18 WL 1960404 at *3 (Cal. Ct. App. May 17, 2020). In so holding, 19 the Court rejected plaintiff’s argument that res judicata did 20 not apply because the factual and legal issues in the later 21 lawsuit differed, noting that “all of her claims [were] premised 22 upon and flow[ed] from respondent’s allegedly wrongful 23 interference with her ownership rights in the property.” Id. 24 The Court explained that the later action involved the same 25 injury—her loss of interest in the property—as the prior suits, 26 which arose out of the same loan and involved the same property. 27 Id. Accordingly, claim preclusion barred her subsequent causes 28 1 of action challenging the foreclosure. Id. 2 Similarly, here, Plaintiff’s first, second, third, fourth, 3 fifth, and seventh causes of action all challenge the validity 4 of the foreclosure based on an invalid deed of trust and 5 promissory note. See Compl. ¶¶ 102- 135. This involves the 6 same primary right as that involved in the prior actions, his 7 right to the foreclosed property. “Because Plaintiff has 8 already filed an action challenging Defendants’ authority to 9 foreclose, [he] may not file another seeking to challenge the 10 foreclosure on different grounds.” Lomeli, 2015 WL 12746210 at 11 *6. Accordingly, the Court finds Plaintiff’s first, second, 12 third, fourth, fifth, and seventh claims involve the same cause 13 of action as the prior suits and the first element of res 14 judicata is met. However, Plaintiff’s sixth claim for 15 conversion involves a different primary right, his right to 16 those personal possessions taken during the foreclosure. See 17 McNulty v. Copp, 125 Cal.App.2d 698, 709 (1954) (“In the instant 18 case we have the violation of two separate rights—the one 19 concerned with real property, the other with personal 20 property.”) 21 Final Judgement on the Merits 22 A dismissal with prejudice is the equivalent of a final 23 judgment on the merits, barring the entire cause of action. 24 Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788, 793 (2010). 25 Here, all of Plaintiff’s claims in his first and third suit were 26 dismissed with prejudice. RJN Ex. G, V. Accordingly, there was 27 a final judgment on the merits in each case, precluding suit on 28 the same causes of action. 1 Same Parties or Those in Privity 2 For the final element of res judicata, the defendants in 3 the present action must be identical to, or in privity with, the 4 defendants in the prior action. Boeken, 48 Cal.4th at 797. 5 Privity may be established by “a mutual or successive 6 relationship to the same rights of property, or to such an 7 identification in interest of one person with another as to 8 represent the same legal rights.” Citizens for Open Access to 9 Sand & Tide, Inc. v. Seadrift Ass’n, 60 Cal.App.4th 1053, 1069 10 (1998). “In the context of home foreclosures, courts have found 11 that assignors and assignees of a mortgage are in privity with 12 one another.” Lomeli v. JPMorgan Chase Bank, N.A., No. 15-cv- 13 04022-MWF(PJWx), 2015 WL 12746210, at *6 (C.D. Cal. Oct. 5, 14 2015) (internal citations omitted). Loan servicers are also in 15 privity with the owners of the loan they service. See Keo v. 16 Fed. Home Loan Mortg. Corp., No. 19-cv-02688-RS, 2019 WL 17 4394372, at *6 (N.D. Cal. Sept. 13, 2019); see also Tobin v. 18 Nationstar Mortg., Inc., No. 16-cv-00836-CAS(ASx), 2016 WL 19 1948786, at *8 (C.D. Cal. May 2, 2016). 20 Plaintiff’s first suit, the 2012 suit, was brought against 21 JP Morgan Chase Bank, N.A. and California Reconveyance Co. RJN 22 Ex. E. Plaintiff’s third suit, the June 2017 suit, was brought 23 against Caliber Home Loans, Inc. RJN Ex. T. Caliber, the 24 foreclosing servicer, and LSF9 MPT, the foreclosing owner of the 25 loan, have a successive relationship to Chase, the prior loan 26 owner and loan servicer that transferred its interest to Caliber 27 and LSF9 MPT. Thus, the parties here are in privity with Chase 28 and the judgment entered in Chase’s favor from the first case 1 precludes Plaintiff from raising the same claims against Caliber 2 and LSF9 MPT. See Lomeli, 2015 WL 12746210 at *6. 3 Additionally, Caliber was a defendant in the third Miller case. 4 Accordingly, the judgment entered in that action also bars 5 Plaintiff from recovering against Caliber or LSF9 MPT here. See 6 Keo, 2019 WL 4394372 at *6. 7 Because claims one, two, three, four, five, and seven 8 involve the same causes of action brought in Plaintiff’s first 9 and second suit, which resulted in a final judgment on the 10 merits comprised of the same parties or those in privity with 11 Defendants, the Court finds they are barred under the doctrine 12 of claim preclusion. Boeken v. Philip Morris USA, Inc., 48 13 Cal.4th 788, 797 (2010) (internal quotation marks omitted). 14 These claims are DISMISSED WITH PREJUDICE as amendment would be 15 futile. 16 2. Conversion Claim 17 To state a cause of action for conversion, a plaintiff must 18 show: (1) plaintiff’s ownership or right to possession of 19 personal property at the time of conversion; (2) the defendant’s 20 conversion by a wrongful, intentional act; and (3) damages. 21 Shopoff & Cavallo LLP v. Hyon, 167 Cal.App.4th 1489, 1507 22 (2008). 23 Defendant LSF9 MPT argues Plaintiff has failed to state a 24 claim of conversion as his allegations, coupled with the 25 judicially noticeable facts, show that he did not have ownership 26 or the right to possession of the personal property at the time 27 of the conversion. MTD at 14-15. Defendant notes that the writ 28 of possession issued in the unlawful detainer action included a 1 notice to Plaintiff that LSF9 MPT could dispose of all items 2 left at the Property pursuant to California Code of Civil 3 Procedure § 1174, unless Plaintiff paid to store the items and 4 took possession of the items within fifteen days after Defendant 5 possessed the Property. Id. at 14. Defendant argues that 6 because they took possession of the Property on May 16, 2018 and 7 Plaintiff alleges he did not demand return of his belongings 8 until July 3, 2018, well beyond the fifteen-day deadline, he has 9 failed to state a claim. Id. 10 But as Plaintiff points out, this argument relies on a 11 refutation of the facts pled in the complaint, which is not 12 appropriate at the motion to dismiss stage. Opp’n at 15. While 13 the Court can take judicial notice of the existence of the 14 application for the order to vacate judgment as a public record, 15 it cannot take judicial notice of the fact that the Sheriff 16 completed a lockout at the Property on May 16, 2018. See Lee v. 17 City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) 18 (explaining that the district court could take judicial notice 19 of the fact of the extradition hearing and the fact that a 20 Waiver of Extradition was signed but not the disputed facts 21 stated within those public records.) In his complaint Plaintiff 22 alleges that during either June or July 2018, Defendant LSF9 MPT 23 took possession of the Property and caused the taking of his 24 personal property. Compl. ¶ 139. Then around July 3, 2018 25 Plaintiff sought the return of his property but Defendant LSF9 26 MPT refused. Id. ¶ 140. As pled, Plaintiff could have 27 requested the personal property within the fifteen-day period. 28 Thus, he could have had ownership rights to the personal 1 property at the time of conversion. 2 Accordingly, Defendants’ motion to dismiss the sixth claim 3 for conversion is DENIED. If LSF9 MPT did take possession of 4 the Property on May 16, 2018, they may seek summary judgment on 5 this claim. 6 III. SANCTIONS 7 The Court’s Order re Filing Requirements (“Order”), ECF No. 8 3-2, limits memoranda in support of and opposition to motions to 9 dismiss to fifteen pages. Order at 1. It limits reply memoranda 10 to five pages. Id. A violation of the Order requires the 11 offending counsel (not the client) to pay $50.00 per page over 12 the page limit to the Clerk of Court. Id. Moreover, the Court 13 does not consider arguments made past the page limit. Id. 14 Plaintiff’s opposition brief exceeded the page limit by six 15 pages. Plaintiff’s counsel must therefore send a check payable 16 to the Clerk for the Eastern District of California for $300.00 17 no later than seven days from the date of this Order. 18 Defendants’ reply brief also exceeded the page limit by six 19 pages. 20 Defendants’ counsel must therefore send a check payable to 21 the Clerk for the Eastern District of California for $300.00 no 22 later than seven days from the date of this Order.2 23 IV. ORDER 24 For the reasons set forth above, the Court GRANTS 25 26 2 While the Court acknowledges Defendants claimed they needed to violate the Order so that they could address all the arguments 27 Plaintiff made going over the page limit, see Reply at 6, Defendants still did not seek leave of Court to do so and thus 28 are also sanctioned. Order at 1. em REI I OS MII II II IEEE IGE EINE I EE Oe 1 Defendants’ request to dismiss claims one, two, three, four, 2 five, and seven. These claims are dismissed WITH PREJUDICE. 3 Defendants’ request to dismiss claim six for conversion is 4 DENIED. 5 IT IS SO ORDERED. 6 Dated: June 9, 2021 kA teiren staves odermacr 7008 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15