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

United States District Court, D. Hawaii

May 24, 2017

ROSITA FOUNTAIN et al., Plaintiffs,
v.
JP MORGAN CHASE BANK, N.A.; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE ENTITIES 1-50; AND DOE GOVERNMENTAL UNITES 1-50, Defendants.

          ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

          SUSAN OKI MOLLWAY, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION.

         Defendant JP Morgan Chase Bank, N.A., initiated, then voluntarily dismissed, a state judicial foreclosure action against Plaintiffs Rosita and Leslie Fountain, (collectively, the “Fountains”). The Fountains ultimately sold their house and paid the balance of the loan owed to Chase. The Fountains now assert claims against Chase concerning their unsuccessful attempt to modify their loan before the foreclosure action was filed. See First Amended Complaint, ECF No. 16.

         On September 21, 2015, this court stayed this action before ruling on the present motion to allow the Hawaii Supreme Court to rule on an issue at the heart of this action. On April 10, 2017, the court reopened the case in light of the Hawaii Supreme Court's issuance of its ruling in Hungate v. Law Office of David B. Rosen, 139 Haw. 394, 411, 391 P.3d 1, 18 (2017).

         Pursuant to Local Rule 7.2(d), the court, proceeding without a hearing, grants Chase's motion to dismiss.

         II. BACKGROUND.

         The Fountains got a loan from Long Beach Mortgage Company, secured by a mortgage on their home in Mililani on the west side of Oahu. Chase allegedly purchased the loan and accompanying mortgage, and thereafter collected payments from the Fountains. See ECF No. 16, PageID #s 302, 304.

         It appears that, in 2010, the Fountains ran into financial difficulties. They applied for a mortgage modification through the federally funded Making Home Affordable Program. See ECF No. 16-1, PageID #s 340-42, 345. They describe that program as offering incentives for modifying certain mortgages by reducing a borrower's monthly loan payments to an affordable level. See Complaint, ECF No. 16, PageID # 305.

         The Fountains' mortgage was not modified, and on April 15, 2013, Chase filed a foreclosure action against them in Hawaii state court. See Docket Sheet, U.S. Bank Nat'l Ass'n v. Fountain, et al., 1CC13-1-001123, ECF No. 22-2, PageID # 459. The foreclosure action was voluntarily dismissed after the Fountains sold their home and paid off the loan. See ECF No. 22- 2, PageID # 460 (docket sheet indicating dismissal); ECF No. 22-3 (warranty deed from the Fountains).

         The Fountains now allege that, in handling their loan modification application, Chase failed to meet its obligations as lender and servicer of their mortgage. They claim that Chase breached industry standards established in the “National Mortgage Settlement, ” an agreement that the attorneys general of Hawaii and 48 other states and the District of Columbia reached with the five largest banks and mortgage servicers, including Chase (collectively, the “Banks.”). See First Amended Complaint, ECF No. 16, PageID # 310-13.

         The Fountains say that the National Mortgage Settlement was memorialized in a Consent Judgment filed in the United States District Court for the District of Columbia in 2012. The agreement allegedly provided various benefits and relief to borrowers whose loans were owned or serviced by the Banks. The Settlement also allegedly required the Banks to adhere to various servicing standards. See First Amended Complaint, ECF No. 16, PageID # 307-08; ECF No. 16-2 (copy of Consent Judgment).

         The First Amended Complaint contains three counts: breach of the implied covenant of good faith and fair dealing (Count I); tortious breach of the covenant of good faith and fair dealing (Count II), and unfair and deceptive consumer practices (Count III). See ECF No. 16, PageID #s 310-15. The Fountains claim that the wrongdoing alleged in all three counts involved violations of the terms of the National Mortgage Settlement.[1]See id., PageID #s 312-15.

         The Fountains seek money damages, punitive damages, attorneys' fees and costs, and other unspecified relief. See id., PageID #s 315-16.

         III. STANDARD.

         Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court's review is generally limited to the contents of a complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). If matters outside the pleadings are considered, the Rule 12(b)(6) motion is treated as one for summary judgment. See Keams v. Tempe Tech. Inst., Inc., 110 F.3d 44, 46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996). However, the court may take judicial notice of and consider matters of public record without converting a Rule 12(b)(6) motion to dismiss into a motion for summary judgment. See Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1198 (9th Cir. 1988).

         On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Fed'n of African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a ...


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