DWT 29626063v5 0036234-000408

REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

KEVIN H. KONO, OSB #023528 

kevinkono@dwt.com 

KALEY L. FENDALL, OSB # 093509 

kaleyfendall@dwt.com 

DAVIS WRIGHT TREMAINE LLP

1300 S.W. Fifth Avenue, Suite 2400 

Portland, Oregon 97201-5610 

Telephone: (503) 241-2300 

Facsimile: (503) 778-5299 

FREDERICK B. BURNSIDE, OSB #096617 

fredburnside@dwt.com 

DAVIS WRIGHT TREMAINE LLP

1201 Third Avenue, Suite 2200 

Seattle, WA 98101 

Telephone: (206) 757-8016 

Facsimile: (206) 757-7016 

Attorneys for JPMorgan Chase Bank, N.A. 

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

AT EUGENE

WILLIAM J. PAATALO,

PLAINTIFF, 

v. 

WASHINGTON MUTUAL BANK, F.A.

JPMORGAN CHASE BANK NA, 

DEFENDANTS. 

Case No. 15-cv-01420-AA

REPLY IN SUPPORT OF DEFENDANT 

JPMORGAN CHASE BANK N.A.’S 

MOTION FOR SUMMARY 

JUDGMENT

Case 6:15-cv-01420-AA Document 44 Filed 06/03/16 Page 1 of 8
DWT 29626063v5 0036234-000408

Page 1 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

I. INTRODUCTION

In his response to the motion for summary judgment filed by defendant JPMorgan Chase 

Bank, NA (“Chase”) on its affirmative defenses of release and waiver, Paatalo relies on 

irrelevant arguments regarding “TILA Rescission,” “bilateral mistake,” and when his rights 

“accrued.” Paatalo’s arguments are irrelevant because the undisputed facts show that, after 

challenging Chase’s right to occupy the property at issue in this case (the “Property”) and after 

seeking a declaratory judgment that, among other things, Paatalo was the rightful owner of the 

Property and Chase had no interest in the Property—the very declaratory judgment Paatalo seeks 

in this case—

the Court should 

grant summary judgment in Chase’s favor and dismiss Paatalo’s complaint with prejudice.

II. ARGUMENT

A. Paatalo offers no evidence in opposition to Chase’s motion. 

Paatalo did not offer any evidence in response to Chase’s motion for summary judgment 

and has not shown the existence of any issue of fact. Paatalo does not (and cannot) dispute the 

subject matter or scope of Paatalo’s counterclaims in the prior action (the “Lincoln County 

Action”). Paatalo does not dispute he executed the Settlement Agreement, 

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Page 2 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

.

1

 Declaration of Kaley L. Fendall (“Fendall Decl.”) (Dkt. No. 38), Ex. F, Ex. 1, p. 1-3. 

There are no issues of fact. 

 Paatalo’s opposition focuses 

on the irrelevant argument that “TILA Rescission is not a cause of action.” Pl. Resp., pp. 2, 4. 

 As Chase demonstrated in its motion 

for summary judgment—and which Paatalo does not directly dispute—Paatalo’s “Complaint for 

Declaratory Judgment” in this case seeks a declaration that he “be put back in title to the subject 

property as sole owner as is his right,” that “the foreclosure of Plaintiff’s void Deeds of Trust be 

deemed null and void,” and that “all documents recorded on or against title to the subject 

property...be declared null and void.” Compl., p. 9 (prayer). Paatalo disclaims any intent to 

assert a TILA Rescission claim. Pl. Resp., p. 3. Either Paatalo’s declaratory judgment action 

constitutes a “claim” or “cause of action,” or Paatalo has no cognizable claim and the Court 

should dismiss his complaint for that reason. 

2

 

 

1

 Paatalo purports to “incorporate[] the arguments in its fully briefed motion for summary 

judgment in opposing Defendant’s motion.” Pl. Resp., p. 1. Those arguments fail for the 

reasons set forth in Chase’s opposition and sur-reply to Paatalo’s motion, but they are in any 

event irrelevant to Chase’s motion for summary judgment. The point of the present motion is 

that even if Paatalo otherwise could prevail on his affirmative claim (which is the subject of 

Paatalo’s motion), Nonetheless, to the extent the Court 

deems any argument in connection with Paatalo’s motion to be relevant to Chase’s motion, 

Chase hereby incorporates its opposition and sur-reply to Paatalo’s motion, and specifically 

notes that whereas Paatalo asserts rescission “indisputably occurred on March 29, 2008,” Pl. 

Resp., p. 2, Paatalo has put forth no evidence of any failure to provide a material disclosure or 

accurate Notice of Right to Cancel with respect to Loan No. XXXXXX9299. Chase Opp. to Pl. 

SJ, pp. 9-10. 

2 Paatalo says Chase “falsely asserts” Paatalo’s present declaratory judgment action arises out of 

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Page 3 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

Indeed, this Court has already recognized the distinction between the underlying factual 

allegations relating to TILA rescission and Paatalo’s ability to assert his present claims: “Even 

assuming the questions of fact related to rescission are resolved in plaintiff’s favor, such a 

release might bar plaintiff from asserting his claims in this action.” Opinion and Order (Dkt. No. 

21), p. 6 (emphasis added). Moreover, it is beyond dispute that Paatalo’s present claim for a 

declaratory judgment declaring that he “be put back in title to the subject property as sole owner 

as is his right” and that “the foreclosure of Plaintiff’s void Deeds of Trust be deemed null and 

void,” Compl., p. 9, was available to Paatalo prior to signing the Settlement Agreement—

Paatalo in fact actually sought the very same declaratory judgment in the prior action. See

Chase Mot., pp. 4-5. 

 Paatalo did allege the same claim in that action. 

just because Paatalo thinks he 

now has better case law on which to base the claim.3

C. No exception to enforcement of the Settlement Agreement exists.

As Chase set forth in its motion, releases are to be enforced in all but very limited 

 disputes with Chase regarding loans involving Washington Mutual Bank (“WaMu”) in an 

“attempt to manufacture standing.” Pl. Resp., p. 4. Of course, Paatalo has sued Chase here, sued 

Chase previously and purported to “memorialize” his “formal rescission” with Chase Chase, as defendant, does not need to show standing, but Paatalo s disputes are and have been 

with Chase, as reflected by Paatalo’s Settlement Agreement with Chase.

3 Paatalo asserts the “Court has already recognized that Plaintiff was barred from asserting the 

relief he now seeks prior to Jesinoski.” Pl. Resp., p. 3. In its Opinion and Order denying 

Chase’s motion to dismiss, the Court found that had Paatalo “made the arguments he now makes 

at the time of the trustee’s sale, they would have been foreclosed by Ninth Circuit precedent.” 

Dkt. No. 12, p. 17. The Court did not cite any such precedent, and in fact it was not until 2012—

years after the 2009 trustee’s sale—that the Ninth Circuit held a borrower had to file a lawsuit 

within three years of a purported rescission in order to enforce his rights. See McOmie-Gray v. 

Bank of Am. Home Loans, 667 F.3d 1325, 1326 (9th Cir. 2012) (whether a borrower who gave “timely notice of rescission ... was not required to bring suit within the three-year period ... is a 

matter of first impression”). Prior Ninth Circuit precedent dealt with the situation where no 

notice of rescission was given within the three years following loan consummation. McOmie- Gray, 667 F.3d at 1329-30 (discussing Miguel v. Country Funding Corp., 309 F.3d 1161 (9th 

Cir. 2002). Nothing prevented Paatalo from pursuing a TILA rescission claim after expiration of 

three years from the date of consummation, 

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Page 4 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

circumstances. Chase Mot., pp. 13-15. Paatalo does not argue that any of those circumstances 

exists. Instead, Paatalo argues the Settlement Agreement was based on a “bilateral mistake” 

consisting of the state of Ninth Circuit law prior to Jesinoski and the supposedly mistaken belief 

that Chase “had a legal interest in Plaintiff’s property.” Pl. Resp., p. 3. Although “mutual 

mistake” proven by clear and convincing evidence may be a ground to rescind a settlement 

agreement generally, Union Cemetery Ass’n of Crawfordsville Linn Cty. Oregon v. Coyer, 214 

Or. App. 24, 30 (2007), “mutual mistake is not a basis on which to void a release agreement.” 

Graves v. Tulleners, 205 Or. App. 267, 278-79 (2006) (emphasis added); see also Raymond v. 

Feldmann, 120 Or. App. 452, 455 (in banc), opinion adhered to as mod. on recon., 124 Or. App. 

543 (1993) (“In Oregon, mutual mistake is not a basis on which to void a release agreement.”). 

4

 Pl. Resp., p. 3. 

 Fendall Decl., Ex. F, Ex. 1, pp. 1-3 (emphasis added). The 

intervening U.S. Supreme Court opinion did not give rise to a “mistake.”5

 

 

4

 Paatalo offers only a single Montana case in support of his “mistake” argument. Pl. Resp., p. 3. 

That involved a sale of property and a mutual mistake regarding when restrictions on subdividing 

and building on the property would be removed. Mitchell v. Boyer, 237 Mont. 434, 437, 774 

P.2d 384 (1989). The case has no application here.

5 As Paatalo notes, in connection with denying Chase’s motion to dismiss, this Court described 

Jesinoski as explaining what the law had always meant, and thus there was no retroactive 

application of the law. Pl. Resp., p. 5; Opinion and Order (Dkt. No. 12), p. 13 (citing Rivers v. 

Roadway Exp., Inc., 511 U.S. 298, 313 n.12 (1994)). In striking Chase’s res judicata defense, 

however, the Court called Jesinoski “an intervening change in the law” which “bars a preclusion 

defense.” Opinion and Order (Dkt No 21), p. 5. Either way, there was no “mistake” in the 

2012 Settlement Agreement arising from the 2015 Jesinoski opinion. 

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Page 5 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

 

 Just as Paatalo has never addressed whether and how he can return the nearly 

$1 million he received in connection with the loans he claims he rescinded, 

 See Union Cemetery, 214 Or. App. at 29 (where an agreement is based on 

a mutual mistake that is fundamental to the agreement, the remedy is rescission); Daugherty v. 

Young, 47 Or. App. 585, 589 (1980) (“the purpose of rescission is to unwind the transaction and 

to put the parties in the same position they would have been in if the transaction had not been 

entered into”). 

D. The Settlement Agreement does not “reverse” the alleged rescission. 

Paatalo’s argument that the Settlement Agreement cannot “reverse” or “negate” Paatalo’s

alleged prior rescission, Pl. Resp., pp. 3-4, is similarly irrelevant. 

Chase does not seek to “reverse” or “negate” the 

alleged rescission. When he signed the Settlement Agreement 

, Paatalo would have known whether he sent a notice of rescission (if he did, in fact, do 

so). Paatalo also knew when he signed the Settlement Agreement 

that Chase disagreed with Paatalo’s contention that he had effectively rescinded his 

loans. 

 

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Page 6 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

The following hypothetical demonstrates the point. Assume Paatalo timely and properly 

exercises his unconditional right to rescind, and WaMu refuses to honor the rescission and 

instead sued to foreclose. Assume Paatalo counterclaims for a declaration that WaMu has no 

interest in the Property. 

 In that scenario, Paatalo’s

rescission was effective—

 

Likewise, here, even if Paatalo’s rescission were effective as he asserts, 

 Regardless whether Chase had any interest to foreclose in light of the 

purported rescission, 

 

E. Paatalo’s “counterclaim” argument is another red herring.

Paatalo appears to argue Chase had some burden to assert a counterclaim to “vacate or 

set-aside the rescission.” Pl. Resp., p. 6. Paatalo again bases his argument on the incorrect 

premise that Chase must defeat Paatalo’s TILA rescission arguments 

 As described above, that is plainly wrong. See, e.g., Opinion and Order (Dkt. No. 21), p. 

6 (“Even assuming the questions of fact related to rescission are resolved in plaintiff’s favor, 

such a release might bar plaintiff from asserting his claims in this action.”). 

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Page 7 – REPLY – JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT

DAVIS WRIGHT TREMAINE LLP

1300 S W Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610

(503) 241-2300 main  (503) 778-5299 fax

III. CONCLUSION

For the foregoing reasons and the reasons set forth in Chase’s opening memorandum, the 

Court should grant Chase’s Motion for Summary Judgment and dismiss Paatalo’s Complaint 

with prejudice. 

DATED this 3rd day of June, 2016. 

DAVIS WRIGHT TREMAINE LLP

By s/ Kaley L. Fendall

Kevin H. Kono, OSB #023528 

kevinkono@dwt.com 

Kaley L. Fendall, OSB # 093509 

kaleyfendall@dwt.com 

Telephone: (503) 241-2300 

Facsimile: (503) 778-5299 

Frederick B. Burnside, OSB #096617 

fredburnside@dwt.com 

Telephone: (206) 757-8016 

Facsimile: (206) 757-7016 

Attorneys for JPMorgan Chase Bank, NA

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