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JPMorgan Chase Bank, N.A. v. Moniz

United States District Court, D. Hawaii

October 25, 2016

JPMORGAN CHASE BANK, N.A., Plaintiff,
v.
STACY MONIZ, Defendant.

          AMENDED ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

          Derrick K. Watson, United States District Judge.

         Plaintiff JPMorgan Chase Bank, N.A. filed a breach of contract claim against Defendant Stacy Moniz on December 11, 2015, alleging that Moniz defaulted on a 2005 loan agreement. Dkt. No. 1. Because this breach of contract claim arises out of the same transaction or occurrence that is the subject of Moniz's still-pending state court complaint filed four years ago, it is a compulsory counterclaim that must be brought, if at all, in that prior proceeding. Accordingly, the Court GRANTS Moniz's Motion to Dismiss, but it does so without prejudice to Chase bringing its breach of contract claim as a compulsory counterclaim in the state court action. Because the Court dismisses Chase's Complaint on procedural grounds, this order does not operate as an adjudication on the merits.

         BACKGROUND

         I. State Court Action (Civil No. 11-1-2733-11 KTN)

         On April 9, 2012, Moniz and his wife, Bonny Moniz, filed an Amended Verified Complaint (“AVC”) in the First Circuit Court for the State of Hawaii (“Circuit Court): Moniz v. Chase, et al., Civil No. 11-1-2733-11 KTN. Exh. A, Dkt. No. 10-3.[1] In the AVC, Mr. and Mrs. Moniz allege various claims, including fraud, unjust enrichment, quiet title, and declaratory relief. Id. The claims stem from allegations that certain Mortgage Loan Documents that the Moniz's executed on November 9, 2005 with Chase's predecessor-in-interest are void and unenforceable. See Id. at 30. The AVC defines the “Mortgage Loan Documents” as including “the Mortgage, the Fixed Rate Rider, the Note and the Signature Name Affidavit.” Id. at 4. Among the named defendants in that action is Chase Home Finance LLC, now JPMorgan Chase Bank, N.A. Dkt. No. 10-1 at 4.

         After an entry of default was entered against Chase for failure to reply in a timely fashion, Chase moved to set aside the default. Exh. B, Dkt. No. 10-4. By order dated October 2, 2012, the state court ordered Chase to file its responsive pleading and “any counterclaims” by October 4, 2012. Id. at 2. Chase filed its responsive pleading on October 4, 2012, but did not allege any counterclaims against Mr. and Mrs. Moniz. Exh. C, Dkt. No. 10-5.

         On April 22, 2014, Chase filed a Motion for Leave to file Counterclaim and Third Party-Complaint for Foreclosure, Quantum Meruit, and Equitable Lien, which the state court denied without prejudice. Exhs. D, E, Dkt. Nos. 10-6, 10-7. The state court action remains pending.

         II. Federal Court Action (Civil No. 15-00512 DKW-BMK)

         On December 11, 2015, during the pendency of the state court action, Chase filed a one-count breach of contract claim in this Court against Moniz, alleging that Moniz had defaulted on a 2005 loan that was memorialized by an Interest First Adjustable Rate Note, the same promissory note referenced in Moniz's state court action as among the Mortgage Loan Documents. Dkt. No. 1 (“Complaint”). Specifically, the Complaint alleges in relevant part:

6. On or around November 9, 2005, Mr. Moniz obtained a $483, 000 loan (“Subject Loan”) from lender PHH Mortgage Corporation (“PHH”). The Subject Loan was memorialized by an Interest First Adjustable Rate Note (“Subject Note”), which was executed by Mr. Moniz. The Subject Note details Mr. Moniz's repayment obligations and the consequences that may result from default. . . .
7. Chase (or its duly-authorized agent) currently possesses the original Subject Note. The original Subject Note bears a blank endorsement from PHH. As the bearer of the original Subject Note, Chase is entitled to enforce the contract.
8. Mr. Moniz made payments on the Subject Note for more than four years, but has not made any payments on the Subject Note since on or about March 1, 2010. Mr. Moniz is in default, as he has failed to make payments as required by the Subject Note for the past five years and nine months.

         Complaint ¶¶ 6-8 ...


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