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St. James v. JP Morgan Chase Bank Corp.

United States District Court, D. Hawaii

September 29, 2017

SAMUEL ST. JAMES, Plaintiff,
v.
JP MORGAN CHASE BANK CORPORATION, ETC., ET AL., Defendants.

         ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS JP MORGAN CHASE BANK, N.A.; WELLS FARGO BANK, N.A.; CALIFORNIA RECONVEYANCE COMPANY; AND U.S. BANK NATIONAL ASSOCIATION'S “MOTION TO DISMISS [10] FIRST AMENDED COMPLAINT”; AND GRANTING DEFENDANT DEBORAH BRIGNAC'S “MOTION TO DISMISS [ECF NO. 10] FIRST AMENDED COMPLAINT FILED OCTOBER 24, 2016”

          Leslie E. Kobayashi United States District Judge

         On November 14, 2016, Defendants JP Morgan Chase Bank, N.A. (“JP Morgan”); Wells Fargo Bank, N.A. (“Wells Fargo”); California Reconveyance Company (“CRC”); U.S. Bank National Association, as Trustee, Successor in Interest to Wachovia Bank, National Association, as Trustee, for Merrill Lynch Mortgage Investors Inc. Mortgage Pass-through Certificates, Series MLMI 2005-A5 (“U.S. Bank, ” collectively “Bank Defendants”) filed their “Motion to Dismiss [10] First Amended Complaint” (“Bank Motion”). [Dkt. no. 14.] On February 24, 2017, Defendant Deborah Brignac (“Brignac”) filed her “Motion to Dismiss [ECF No. 10] First Amended Complaint Filed October 24, 2016” (“Brignac Motion”). [Dkt. no. 32.] Pro se Plaintiff Samuel St. James (“Plaintiff”) Filed his response to the Bank Motion on February 13, 2017, and the Bank Defendants filed their reply on February 17, 2017. [Dkt. nos. 25, 27.] Plaintiff did not respond to the Brignac Motion. On July 31, 2017, this Court ordered Plaintiff to file a supplemental memorandum and allowed any defendant to file a response. [Dkt. no. 39.] Plaintiff filed his supplemental memorandum on August 28, 2017, and the Bank Defendants and Brignac filed a joint position statement on September 6, 2017. [Dkt. nos. 43, 44.]

         The Court finds these matters suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i (“Local Rules”). The Bank Motion is hereby granted in part and denied in part, and the Brignac Motion is hereby granted in its entirety, for the reasons set forth below.

         BACKGROUND

         Plaintiff filed his original Complaint on September 26, 2016. [Dkt. no. 1.] On October 24, 2016, Plaintiff filed his First Amended Complaint, pursuant to Fed.R.Civ.P. 15(a)(1). [Dkt. no. 10.] This case arises from Plaintiff's unsuccessful attempt to obtain a loan modification for the mortgage on his home in San Diego, California (“the Property”) under the Home Affordable Modification Program (“HAMP”). [First Amended Complaint at ¶¶ 2, 27, 36, 37, 84.] According to Plaintiff, during the loan modification process, his attorney worked with JP Morgan to have Plaintiff placed in a HAMP three-month trial period plan (“TPP”). The TPP, however, only reduced Plaintiff's monthly mortgage payment by $79.00, and, sometime in June 2010, JP Morgan denied him a permanent HAMP loan modification. [Id. at ¶¶ 71-73.]

         Plaintiff entered into his “mortgage loan contract . . . on approximately 04/07/2005.” [Id. at ¶ 84 (quotation marks omitted).] According to Plaintiff, on May 2, 2005, Washington Mutual Bank (“WaMu”) assigned its interest in his loan to the Merrill Lynch Mortgage Investors Inc. Mortgage Pass-Through Certificates, Series MLMI 2005-A5, Trust (“Merrill Lynch”). [Id. at ¶ 53(A).] Plaintiff states that WaMu was his “personal bank, ” but it had “changed over to” JP Morgan by June 2009. [Id. at ¶ 58.] Apparently, while Plaintiff was attempting to secure the loan modification from JP Morgan, he received a notice from Brignac, CRC's vice president, of a trustee's foreclosure sale scheduled for August 27, 2009. He alleges that Brignac robo-signed the notice.[1] [Id. at ¶ 61.] Plaintiff alleges that, because of the assignment to Merrill Lynch, neither CRC[2] nor JP Morgan was the legal trustee of the Property, and neither held any ownership interest in the Property. Thus, he contends that they did not have any authority to foreclose on the Property. [Id. at ¶ 43.d.]

         In 2010, Plaintiff filed suit in the United States District Court for the Southern District of California against JP Morgan and CRC, Civil Number 10-01893 IEG-NLS (“California Case”). The purpose of the California Case was to halt the foreclosure of the Property, which had been Plaintiff's home since 2001. Plaintiff filed his first amended complaint in the California Case on October 1, 2010. [Id. at ¶¶ 82-83.] According to Plaintiff, the district court in the California Case granted a motion to dismiss the case because the district court “believed [JP Morgan] had bought and did own [Plaintiff's] home as an asset from WaMu.” [Id. at ¶ 88.] Plaintiff alleges that JP Morgan accomplished this through a fraud upon the court. [Id.]

         Plaintiff later relocated to Hawai`i “because of fear of Foreclosure.” [Id. at ¶ 27.] Plaintiff entered into bankruptcy proceedings in the United States Bankruptcy Court for the District of Hawai`i, In re Samuel St. James, et al., Case No. 13-00138 (“Bankruptcy Case”). He alleges that fraud by JP Morgan and U.S. Bank in the Bankruptcy Case resulted in the illegal foreclosure of his home by U.S. Bank in 2015. [Id. at ¶ 18.]

         Plaintiff alleges the following claims: a fraud claim against the Bank Defendants, Brignac, and WMHI[3] based on misrepresentations in the loan modification process (“Count I”); [id. at ¶¶ 48-69;] a breach of contract against JP Morgan based upon its alleged failure to comply with the TPP agreement (“Count II”); [id. at ¶¶ 70-80;] a fraud claim against JP Morgan, Wells Fargo, and CRC based on misrepresentations in the California Case (“Count III”); [id. at ¶¶ 81-90;] an unclean hands claim against the Bank Defendants and Defendant Alaw[4] based on their alleged actions and omissions related to the Bankruptcy Case (“Count IV”); [id. at ¶¶ 91-111;] violation of the California Unfair Competition Law, Business and Professions Code § 17200, et seq., and other Hawai`i and California consumer protection laws, against the Bank Defendants and Alaw (“Count V”); [id. at ¶¶ 112-18;] a claim against the Bank Defendants seeking to set aside or vacate the sale of his home and to have title restored to him (“Count VI”); [id. at ¶¶ 119-26;] and intentional infliction of emotional distress (“IIED”) against all of the defendants (“Count VII”), [id. at ¶¶ 127-42].

         Plaintiff prays for, inter alia: general, special, compensatory, statutory, exemplary, and punitive damages; attorneys' fees and costs; an order voiding the assignment of Plaintiff's mortgage; restitution and disgorgement; prejudgment interest; an order requiring that the Property be reconveyed to him; an order voiding any document signed by Plaintiff in connection with his mortgage loan; an injunction against future violations of the statutes cited in the First Amended Complaint; and any other appropriate relief. [Id. at pgs. 101-02.]

         The Bank Defendants and Brignac seek dismissal of the First Amended Complaint with prejudice for lack of subject matter jurisdiction and because the claims against them are all time barred. In addition, the Brignac Motion contends that Plaintiff's claims against her are not sufficiently pled.

         DISCUSSION

         I. Jurisdiction

         The Bank Defendants first argue that this Court does not have jurisdiction over the claims in Plaintiff's First Amended Complaint. This district court has stated:

“Federal courts are courts of limited jurisdiction, ” possessing “only that power authorized by Constitution and statute.” United States v. Marks, 530 F.3d 799, 810 (9th Cir. 2008) (quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)). At the pleading stage, a plaintiff must allege sufficient facts to show a proper basis for the Court to assert subject matter jurisdiction over the action. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Johnson v. Columbia Props. Anchorage, L.P., 437 F.3d 894, 899 (9th Cir. 2006); Fed.R.Civ.P. 8(a)(1).
In general, a plaintiff may establish subject matter jurisdiction in one of two ways. First, he may assert “federal question jurisdiction, ” based on allegations that a defendant violated the Constitution, a federal law, or treaty of the United States. See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”). The United States Supreme Court has recognized that a “plaintiff properly invokes § 1331 jurisdiction” by pleading “a colorable claim ‘arising' under the Constitution or laws of the United States.” Arbaugh v. Y & H Corp., 546 U.S. 500, 513 (2006). Second, a plaintiff may invoke the court's “diversity jurisdiction, ” which applies “where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1). In order to establish diversity jurisdiction, a plaintiff must establish complete diversity of the parties. See Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) (explaining that § 1332(a) “requires complete diversity of citizenship; each of the plaintiffs must be a citizen of a different state than each of the defendants”). [The plaintiff] has the burden of establishing this Court's subject matter jurisdiction. See Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996) (“A party invoking the federal court's jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.”). . .

Sameshima v. United States, CIVIL NO. 15-00422 DKW-BMK, 2015 WL 6453104, at *2 (D. Hawai`i Oct. 23, 2015) (some alterations in Sameshima).

         Plaintiff asserts federal question jurisdiction based on: 12 U.S.C. §§ 2603 and 2614, which are part of the Real Estate Settlement Procedures Act (“RESPA”); interstate banking laws and regulations; and bankruptcy law. [First Amended Complaint at ¶ 18.] However, Plaintiff's claims are not based upon any of these - he asserts claims arising under California law and Hawai`i law. Plaintiff has not asserted a colorable claim arising under either RESPA, banking laws and regulations, or bankruptcy law. The First Amended Complaint's citation to these federal authorities appears to be immaterial and made solely in an attempt to obtain federal jurisdiction. See Flores v. Rodham Clinton, CIVIL NO. 16-00573 DKW-KJM, 2016 WL 6542708, at *5 (D. Hawai`i Nov. 3, 2016) (“A claim is not colorable if: (1) the alleged claim under the Constitution or federal statutes appears to be immaterial and made solely for the purpose of obtaining jurisdiction; or (2) such a claim is wholly insubstantial and frivolous.” (citing Bell v. Hood, 327 U.S. 678, 682 (1946))). The First Amended Complaint therefore fails to “allege sufficient facts to show a proper basis for the Court to assert” federal question jurisdiction over this case. See McNutt, 298 U.S. at 189.

         The First Amended Complaint does not assert jurisdiction based on diversity. However, because Plaintiff is proceeding pro se, this Court liberally construes the First Amended Complaint as asserting diversity jurisdiction. See, e.g., Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (“The Supreme Court has instructed the federal courts to liberally construe the ‘inartful pleading' of pro se litigants.” (citing Boag v. MacDougall, 454 U.S. 364, 365, 102 S.Ct. 700, 701, 70 L.Ed.2d 551 (1982) (per curiam))). Plaintiff does not clearly allege the amount in controversy, but he is seeking the return of the Property, which he lost in foreclosure, and the First Amended Complaint alleges that the Property was worth more than $75, 000. See First Amended Complaint at ¶ 56 (describing a notice he received on May 21, 2009 regarding his mortgage, which stated that JP Morgan was his “Lender of $417, 000.00”). This Court therefore concludes that the First Amended Complaint satisfies the amount in controversy requirement for diversity jurisdiction.

         Plaintiff must also allege that there is complete diversity of citizenship, i.e., that he is a citizen of a different state from each of the defendants. See Morris, 236 F.3d at, 1067. Plaintiff asserts that, “at all relevant times [he] was a citizen of the United States and a resident of the state of California and Hawaii.” [First Amended Complaint at pg. 2.] He also alleges that: JP Morgan is a national banking association with its headquarters in Columbus, Ohio; [id. at ¶ 9;] and Wells Fargo is a national banking association and a subsidiary of Wells Fargo & Company, which is a Delaware corporation with its headquarters in California [id. at ¶ 11]. He does not allege the citizenship of U.S. Bank - which is a national banking association, CRC, or Brignac. [Id. at ¶¶ 12-13, 15.]

         “For diversity purposes, a national association is a citizen of the state where its main office is located.” Lopez v. JPMorgan Chase Bank, N.A., Case No. SACV 15-02030 JVS (JCGx), 2016 WL 320105, at *2 (C.D. Cal. Jan. 25, 2016) (citing Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006)). The First Amended Complaint alleges that JP Morgan is a citizen of Ohio, but there are insufficient factual allegations to determine the citizenship of the other defendants who have appeared in this case. Further, there are insufficient factual allegations to determine the citizenship of the defendants who have not appeared. The First Amended Complaint therefore fails to allege sufficient facts to show a basis for diversity jurisdiction in this case. Because Plaintiff has failed to allege a sufficient basis for either federal question jurisdiction or diversity jurisdiction, this Court does not have subject matter jurisdiction over the claims in Plaintiff's First Amended Complaint. The Bank Motion and the Brignac Motion are granted insofar as the First Amended Complaint must be dismissed in its entirety.

         However, “[u]nless it is absolutely clear that no amendment can cure the defect, ” in other words, unless amendment would be futile, “a pro se litigant is entitled to notice of the complaint's deficiencies and an opportunity to amend prior to dismissal of the action.” Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995). Based on the representations in Plaintiff's supplemental memorandum, this Court concludes that it is possible to for Plaintiff to cure the jurisdictional defect in the First Amended Complaint by amendment. This Court next turns to the issue of whether allowing Plaintiff to file a second amended compliant would be futile because his claims against the Bank Defendants and Brignac are time barred.

         II. Applicable Law

         Some of the events at issue in this case occurred in California, and some occurred in Hawai`i.[5] The First Amended Complaint appears to invoke both California law and Hawai`i law. See, e.g., First Amended Complaint at pg. 5. If Plaintiff can cure the jurisdictional defects in his complaint by pleading a basis for diversity jurisdiction, this Court would apply Hawai`i substantive law, including the Hawai`i choice of law analysis. See First Intercontinental Bank v. Ahn, 798 F.3d 1149, 1153 (9th Cir. 2015). The Hawai`i Supreme Court

has “moved away from the traditional and rigid conflict-of-laws rules in favor of the modern trend towards a more flexible approach looking to the state with the most significant relationship to the parties and subject matter.” Lewis v. Lewis, 69 Haw. 497, 499, 748 P.2d 1362, 1365 (1988) (citing Peters [v. Peters], [63 Haw. 653');">63 Haw. 653, 660, 634 P.2d 586, 591 (1981)]). This flexible approach places “[p]rimary emphasis . . . on deciding which state would have the strongest interest in seeing its laws applied to the particular case.” Id. Hence, this court has said that the interests of the states and applicable public policy reasons should determine whether Hawai`i law or another state's law should apply. See Peters, 63 Haw. at 667-68, 634 P.2d at 595. “The preferred analysis, [then] in our opinion, would be an assessment of the interests and policy factors involved with a purpose of arriving at a desirable result in each situation.” Id. at 664, 634 P.2d at 593.

Mikelson v. United Servs. Auto. Ass'n, 107 Hawai`i 192, 198, 111 P.3d 601, 607 (2005) (some alterations in Mikelson).

         Based on the allegations of the First Amended Complaint, [6] and for purposes of the instant Motions only, this Court concludes that:

-California has the strongest interest in seeing its laws applied to Plaintiff's claims in Counts I, II, and III because those claims center around the loan modification process for the Property - which is located in California, Plaintiff was residing on the Property when the events giving rise to these claims occurred, and it appears from the factual allegations of the First Amended Complaint that the events giving rise to these claims occurred in California;
-Hawai`i has the strongest interest in seeing its laws applied to Plaintiff's claims in Count IV because the Bankruptcy Case was litigated in Hawai`i - where Plaintiff was residing at that time - and, to the extent that there were allegedly improper actions and omissions during the Bankruptcy Case, the bankruptcy court in Hawai`i and Plaintiff were most directly affected;
-California has the strongest interest in seeing its laws applied to the apparent wrongful foreclosure claim in Count VI, because, although Plaintiff ultimately lost the Property during the Bankruptcy Case, the factual allegations supporting Count VI arise from the noticed trustee's sale and the ...

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