Diunugala v. JP Morgan Chase Bank, N.A.

81 F.Supp.3d 969

Nimal Susantha DIUNUGALA, an individual, on behalf of himself and all others similarly situated, Plaintiff

v.JP MORGAN CHASE BANK, N.A.; The Bank of New York Mellon Trust Company, N.A; American Home Mortgage Servicing, Inc.; Power Default Services, Inc. ; and Does 1 through 10, inclusive, Defendants.

Case No. 12cv2106–WQH–KSC.

United States District Court, S.D. California.

Signed Jan. 21, 2015.

Lenore Albert, Law Offices of Lenore Albert, Huntington Beach, CA, for Plaintiff.

Nina Huerta, Stephanie Ann Wraight, Locke Lord Bissell & Liddell LLP, Los Angeles, CA, for Defendants.

ORDER

HAYES, District Judge:

The matters before the Court are the Motion to Dismiss Plaintiff's Second Amended Complaint for Failure to State a Claim (ECF No. 56), and the Motion to Vacate Motion to Certify Class and All Class–Related Dates (ECF No. 65) filed by all Defendants.

BACKGROUND

On July 25, 2012, Plaintiff Nimal Susantha Diunugala initiated this action by filing the Complaint with the San Diego County Superior Court. (ECF No. 1–2). On August 24, 2012, all Defendants jointly filed a Notice of Removal to this Court, alleging diversity jurisdiction. (ECF No. 1). On August 31, 2012, Defendants filed a motion to dismiss the Complaint. (ECF No. 6). On January 18, 2013, the Court granted Defendants' motion to dismiss the Complaint. (ECF No. 15).

On May 19, 2013, Plaintiff filed the First Amended Complaint. (ECF No. 19). On June 6, 2013, Defendants filed a motion to dismiss the First Amended Complaint. (ECF No. 20). On October 3, 2013, the Court granted in part and denied in part Defendants' motion to dismiss, and dismissed all claims without prejudice except for the cause of action for violation of the Truth in Lending Act, 15 U.S.C. § 1641(g). (ECF No. 29).

On January 21, 2014, the Magistrate Judge issued an Order stating that “[a]ny motion to join other parties, to amend the pleadings, or to file additional pleadings shall be filed on or before February 21, 2014. Fact and class discovery are not bifurcated but class discovery shall be completed by all parties on or before April 25, 2014.... Plaintiff shall file a motion for class certification no later than June 27, 2014.” (ECF No. 43 at 1–2).

On May 29, 2014, the Court issued an Order granting Plaintiff's amended motion for leave to file a second amended complaint. (ECF No. 54).

On June 6, 2014, Plaintiff filed the Second Amended Complaint. (ECF No. 55). On June 26, 2014, Defendants American Home Mortgage Servicing, Inc. (“AHMSI”), JP Morgan Chase Bank, N.A. (“JP Morgan”), Power Default Services, Inc. (“Power Default”), and The Bank of New York Mellon Trust Company, N.A. (“BONY”) filed the motion to dismiss the Second Amended Complaint. (ECF No. 56). On August 20, 2014 Plaintiff filed an opposition to the motion to dismiss the Second Amended Complaint. (ECF No. 75).

The Second Amended Complaint asserts the following causes of action: (1) negligence; (2) violation of Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605 ; (3) violation of Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g) ; (4) cancellation of documents to set aside the foreclosure sale; (5) fraud; and (6) violation of California Business & Professions Code § 17200. The Second Amended Complaint asserts a class action pursuant to California Business & Professions Code § 17203 on behalf of the following putative class: “[a]ll California residential loan borrowers with loans that originated with American Brokers Conduit that were serviced by AHMSI at the time of their bankruptcy on or about August 6, 2007 and were performing loans;” “[a]ll ... borrowers who received conflicting notifications from defendant AHMSI, BONY or JP Morgan of the identity of their investor, or creditor as required under 15 U.S.C. § 1641(g) after May 5, 2009;” and “[a]ll ... borrowers who received conflicting notifications from defendant AHMSI of the identity of their investor, or creditor as required under 12 U.S.C. § 2605 within the past two years.” (ECF No. 55 ¶ 102).

On August 26, 2014, Defendants AHMSI, JP Morgan, Power Default, and BONY filed a reply to the Plaintiff's opposition to the motion to dismiss the Second Amended Complaint. (ECF No. 76).

On June 27, 2014, Plaintiff filed a motion to certify class. (ECF No. 57). On July 21, 2014, Defendants filed the motion to vacate motion to certify class and all class-related dates. (ECF No. 65).

ALLEGATIONS OF THE SECOND AMENDED COMPLAINT

American Home Mortgage Corp., doing business as American Brokers Conduit, and American Home Mortgage Servicing, Inc. (“AHMSI”) are wholly owned subsidiaries of American Home Mortgage Holdings, Inc., which, in turn, is a wholly owned subsidiary of American Home Investment Corp. (ECF No. 55 ¶ 4)

“In early 2006, Plaintiff purchased real property at 987 Merced River Road in Chula Vista, California, 91913 ... as his personal residence.” Id. ¶ 13. “Plaintiff used approximately $206,458.33 of his cash savings as a down payment on the home to be secured by a conventional loan from American Broker Conduit.” Id. ¶ 14. “[P]laintiff was not put in a conventional loan product.... Instead he was given a predatory LIBOR loan ... which did not accurately reflect the full amortizing monthly mortgage obligation.” Id. ¶ 15. “[Plaintiff's] initial monthly payments were $1,752.06 per month.” Id. ¶ 15.

“JP Morgan [ ] and American Home Mortgage Investment Corp. and American Mortgage Corp. entered into a secured revolving warehouse facility on January 24, 2006 with JP Morgan as Administrative Agent and sole Lender pursuant to a Secured Credit Agreement granting a first lien and security interest in ... the pledged residential loans upon which the warehousing financing was to be extended.” Id. ¶ 18. “On August 1, 2007, JP Morgan sent a Notice of Default to American Home Mortgage Interest Corp. and American Home Mortgage Corp. declaring a default under the [w]arehouse [f]acility.” Id. ¶ 19. “[O]n or about August 3, 2007[,] American Broker Conduit (including AHMSI) was ordered to cease and desist all mortgage operations in California.” Id. ¶ 35. “On August 6, 2007, American Home Mortgage Interest Corp. and American Home Mortgage Corp. filed bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.” Id. ¶ 20.

“After [Plaintiff] returned [from active military duty], ... [P]laintiff contacted [American Home Mortgage Servicing, Inc. (“AHMSI”) ] at phone number 1–877–3043100 where he was directed to the Loan Administration—Research Department and explained that he wanted to modify his loan.” Id. ¶ 28. “Plaintiff ... wanted a fixed rate conventional loan which he expected to receive when he originally bought the home.” Id. ¶ 29. “In or about November 27, 2007, the AHMSI representative on the telephone, who did not disclose his name, told [P]laintiff he could obtain a fixed rate loan with payments similar to the monthly payment of $1,752.06 he was making per month, if he sent in an additional $31,752.06 to pay towards his principal.” Id. ¶ 30. “AHMSI never informed Plaintiff of their bankruptcy filing that preceding August; and AHMSI never submitted a “Goodbye” letter to [P]laintiff to inform Plaintiff of any change in servicing or ownership.” Id. ¶ 31. “So on November 27, 2007 [,] [P]laintiff withdrew $30,000 from his IRA account and sent AHMSI an additional $31,752.06 ... in reliance on the statements made to him by AHMSI on the phone...” Id. ¶ 32. “AHMSI accepted and cashed the check, but AHMSI did not then offer [P]laintiff the refinancing of his loan as promised.” Id. ¶ 33.

“In late 2010, Plaintiff sought legal advice and hired the Law Offices of Shahnaz Hussain to assist him with negotiating a more favorable loan.” Id. ¶ 71. “The law firm sent a Qualified Written Request (“QWR”) to [P]laintiff's servicer, [D]efendant AHMSI.” Id. ¶ 72. “By way of a letter dated January 11, 2011[D]efendant AHMSI responded to the QWR and represented to [P]laintiff that the owner/servicer of his loan was ‘Structured Asset Mortgage Investments II Trust 2006–AR5, Mortgage Pass–Through Certificates, Series 2006–AR5’ (hereinafter the ‘MBS trust’).” Id. ¶ 73. The same letter also represented that ‘The Bank of New York Mellon Corporation’ [ (“BONY”) ]was the trustee of the MBS trust.” Id. ¶ 74.

“Plaintiff was attempting to obtain a loan modification to allow [P]laintiff to remain in his home with an affordable mortgage. Plaintiff's loan applications were being denied based on ‘missing paperwork’ although [P]laintiff used a HUD approved agency, Community Housing Works to prepare and send his application in with all required documents.” Id. ¶ 120.

“Six months after AHMSI represented that BONY was the trustee of the MBS trust and as such was the creditor of Plaintiff's loan, on June 15, 2011, [Defendant] Power Default [Services, Inc. (Power Default”) ] caused a Notice of Default and Election to Sell Under Deed of Trust ... to be recorded which stated it was for the benefit of ... JP Morgan ... as trustee for the holders of Structured Asset Mortgage Investments II Inc., Mortgage Pass–Through Certificates, Series 2006–AR5.” Id. ¶ 174. “The [Notice of Default] stated Plaintiff was in default in the amount of $27,388.55 as of June 21, 2011,” and the “Beneficiary was named ‘JP Morgan [ ] as trustee of the MBS trust.” Id. ¶¶ 175–76.

“Plaintiff ... alleges ... that his loan was not transferred to the SAMI 2006–AR5 mortgage backed securitized trust in 2006 or at any time prior to October 11, 2007.” Id. ¶ 38. “American Broker[ ] Conduit's license was revoked on October 11, 2007 in California,” and therefore “American Broker Conduit did not and could not authorize any assignment of the Plaintiff's deed of trust or note after this time period.” Id. ¶ 37. “Plaintiff ... further ... alleges ... that none of the loans ‘originated’ or ‘sold’ by American Broker Conduit that were earmarked for the SAMI 2006–[AR]5 and the sister Bear Sterns 2006–[AR]5 trust were ever executed, endorsed, properly transferred or otherwise...