Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00350/USCOURTS-casd-3_10-cv-00350-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GEOFFREY MONCRIEF, LEILA

MONCRIEF, individuals,

Plaintiffs,

CASE NO. 10CV350 DMS (RBB)

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS PLAINTIFFS’ FIRST

AMENDED COMPLAINT

[Docket No. 16]

vs.

WASHINGTON MUTUAL, F.A., et al.,

Defendants.

This case comes before the Court on Defendants JP Morgan Chase Bank N.A. and California

Reconveyance Company’s motion to dismiss Plaintiffs’ First Amended Complaint (“FAC”). Plaintiffs

filed an opposition to the motion, and Defendants filed a reply. For the reasons discussed below, the

Court grants Defendants’ motion.

I. 

BACKGROUND

On or about July 20, 2007, Plaintiff Geoffrey Moncrief refinanced the property located at 417

Sea Ridge Drive, La Jolla, California. (FAC ¶ 6.) Defendant La Jolla Finance brokered the loan and

Defendant Washington Mutual, FA (“WaMu”) financed the loan. (Id. ¶ 7.) 

Plaintiff alleges he applied for a fixed rate mortgage with a 2.4% interest rate. (Id. ¶ 11.) As

part of the application process, Plaintiff executed a release form that enabled Defendants La Jolla

Finance and WaMu to obtain a copy of his tax returns. (Id. ¶ 15.) Plaintiff also told Defendant La

Case 3:10-cv-00350-DMS-RBB Document 23 Filed 06/28/10 Page 1 of 5
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 The Court takes judicial notice of this document pursuant to Federal Rule of Evidence 201.

See Peruta v. Country of San Diego, 678 F.Supp.2d 1046, 1054 n.8 (S.D. Cal. 2010) (stating court

may properly take judicial notice of documents appearing on governmental website). 

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Jolla Finance about his monthly income. (Id. ¶ 17.) Plaintiff alleges Defendants did not obtain a copy

of his tax return, and thus did not learn that Plaintiff did not qualify for the loan. (Id.) Plaintiff also

alleges Defendant La Jolla Finance did not use the monthly income Plaintiff provided, but instead

inflated Plaintiff’s monthly income so he would qualify for a different loan. (Id.) 

Plaintiff alleges Defendants La Jolla Finance and WaMu “conspired” to place Plaintiff into

a loan that was more expensive than the one he applied for to increase their profit on the transaction.

(Id. ¶ 9.) Plaintiff alleges Defendant WaMu enticed Defendant La Jolla Finance to place Plaintiff into

the more expensive loan through payment of an unlawful yield spread premium. (Id. ¶ 10.) As part

of the ruse, Defendant La Jolla Finance misrepresented to Plaintiff the affordability of the loan and

the amount of the monthly payments. (Id. ¶¶ 19-20.) It also provided Plaintiff with an inaccurate

Good Faith Estimate. (Id. ¶ 18.) 

The loan Plaintiff ultimately received was not a fixed rate loan, but rather was an adjustable

rate mortgage, and the interest rate was much higher than 2.4%. (Id. ¶¶ 8, 11, 13.) As a result,

Plaintiff began having difficulty making his monthly payments. (Id. ¶ 25.) As a result, Defendant

California Reconveyance Company (“CRC”) recorded a Notice of Default against Plaintiff’s property

on October 27, 2009. (Id. ¶ 26.) 

After the loan closed, but before the Notice of Default was recorded, Defendant WaMu failed

and was placed into receivership with the Federal Deposit Insurance Corporation (“FDIC”). On

September 25, 2008, Defendant JPMorgan Chase (“JPMorgan”) entered into a Purchase and

Assumption Agreement (“PAA”) with the FDIC pursuant to which JPMorgan purchased certain assets

of Defendant WaMu, including Plaintiff’s mortgage. (See Defs.’ Req. for Judicial Notice in Supp. of

Mot., Ex. 4.)1

 Defendant JPMorgan assumed certain liabilities of Defendant WaMu, subject to the

following: 

Notwithstanding anything to the contrary in the Agreement, any liability associated

with borrower claims for payment of or liability to any borrower for monetary relief,

or that provide for any other form of relief to any borrower, whether or not such

liability is reduced to judgment, liquidated or unliquidated, fixed or contingent,

matured or unmatured, disputed or undisputed, legal or equitable, judicial or extraCase 3:10-cv-00350-DMS-RBB Document 23 Filed 06/28/10 Page 2 of 5
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judicial, secured or unsecured, whether asserted affirmatively or defensively, related

in any way to any loan or commitment to lend made by [WaMu] prior to failure, or to

any loan made by a third party in connection with a loan which is or was held by

[WaMu], or otherwise arising in connection with [WaMu’s] lending or loan purchase

activities are specifically not assumed by [JPMorgan]. 

(Id. ¶ 2.5.) Plaintiff alleges Defendant JPMorgan is liable in this case as “the successor in interest to

Defendant Washington Mutual.” (FAC ¶ 42.) 

Plaintiff Geoffrey Moncrief and his wife, Leila Moncrief, filed the present case on February

12, 2010. After Defendants JPMorgan and CRC filed a motion to dismiss, Plaintiffs filed a First

Amended Complaint, along with a motion for a temporary restraining order (“TRO”) to halt the

foreclosure sale of their property. The Court denied Plaintiff’s motion for a TRO, after which

Defendants JPMorgan and CRC filed a motion to dismiss the FAC. Plaintiffs thereafter filed a motion

for a preliminary injunction to again prevent the foreclosure sale of their property, which the Court

denied. 

The FAC alleges seven claims for relief: (1) intentional misrepresentation, (2) fraudulent

concealment, (3) breach of fiduciary duty, (4) constructive fraud, (5) quiet title, (6) violation of the

Truth in Lending Act (“TILA”), and (7) violation of the Real Estate Settlement Procedures Act

(“RESPA”).

II. 

DISCUSSION

Defendants move to dismiss the FAC in its entirety. They raise several arguments in support

of their motion to dismiss, most notably, that the PAA relieves them of any liability for WaMu’s

conduct. The Court addresses these arguments below. 

A. Standard of Review

In two recent opinions, the Supreme Court established a more stringent standard of review for

12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v.

Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, “a complaint

must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on

its face.’” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility

/ / /

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when the plaintiff pleads factual content that allows the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). 

“Determining whether a complaint states a plausible claim for relief will ... be a contextspecific task that requires the reviewing court to draw on its judicial experience and common sense.”

Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this

task “by identifying the allegations in the complaint that are not entitled to the assumption of truth.”

Id. at 1951. It then considered “the factual allegations in respondent’s complaint to determine if they

plausibly suggest an entitlement to relief.” Id. at 1951.

B. Defendant JPMorgan

As stated above, the PAA limits JPMorgan’s liability for certain claims against WaMu.

Specifically, JPMorgan did not assume any liability for borrower claims “related in any way to any

loan or commitment to lend made by [WaMu] prior to failure, ... or otherwise arising in connection

with [WaMu’s] lending or loan purchase activities ....” (See Defs.’ Req. for Judicial Notice in Supp.

of Mot., Ex. 4 ¶ 2.5.) Liability for those claims rests with the FDIC. See Yeomalakis v. Federal

Deposit Ins. Corp., 562 F.3d 56, 60 (1st Cir 2009) (stating FDIC is appropriate party in interest for

claim against WaMu’s credit card practices). Accordingly, Plaintiffs’ claims against Defendant

JPMorgan are dismissed. See Molina v. Washington Mutual Bank, No. 09-CV-00894-IEG (AJB),

2010 WL 431439, at *3-5 (S.D. Cal. Jan. 29, 2010) (dismissing claims against JPMorgan in light of

PAA); Federici v. Monroy, No. C 09-4025 PVT, 2010 WL 1345276, at *1 (N.D. Cal. Apr. 6, 2010)

(same). 

C. Defendant CRC

The Court also dismisses Plaintiffs’ claims against Defendant CRC for failure to set forth facts

supporting its liability. The only facts in the FAC relating to Defendant CRC are that it “recorded a

Notice of Default (hereinafter ‘NOD’) against the Property on October 27, 2009[,]” (FAC ¶ 26), and

that Plaintiffs’ loan eventually “fell under a service contract with Defendant [CRC], as Trustee on the

Deed in Trust and as trustee for unknown noteholder(s).” (Id. ¶ 43.) Neither of these allegations

“allows the court to draw the reasonable inference that the defendant is liable for the misconduct

/ / /

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 In light of these conclusions, the Court declines to address the balance of Defendants’

arguments.

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alleged.” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). Accordingly, Plaintiffs’ claims

against Defendant CRC are also dismissed.2 

III.

CONCLUSION AND ORDER

For these reasons, the Court grants Defendants’ motion to dismiss. Defendants JPMorgan and

CRC are hereby dismissed from this case without prejudice. Plaintiffs are granted leave to file a

Second Amended Complaint that cures the pleading deficiencies set out in this Order. Plaintiffs are

cautioned that if their Second Amended Complaint does not cure these deficiencies, their claims will

be dismissed with prejudice and without leave to amend. The Second Amended Complaint shall be

filed on or before July 2, 2010.

IT IS SO ORDERED.

DATED: June 28, 2010

HON. DANA M. SABRAW

United States District Judge

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