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James v. JP Morgan Chase Bank Corp.

United States District Court, D. Hawaii

October 31, 2018

SAMUEL ST. JAMES, Plaintiff,


          Leslie E. Kobayashi United States District Judge

         On May 25, 2018, Defendants JPMorgan Chase Bank, N.A. (“JPMorgan”); Wells Fargo Bank, N.A. (“Wells Fargo”); California Reconveyance Company (“CRC”); and 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, ” and all collectively “Moving Defendants”), filed their Motion to Dismiss [Dkt. No. 58] Plaintiff Samuel St. James's Second Amended Complaint (“Motion”). [Dkt. no. 65.]

         Plaintiff Samuel St. James (“Plaintiff”) filed his memorandum in opposition on July 9, 2018, and the Moving Defendants filed their reply on September 17, 2018. [Dkt. nos. 67, 70.] On September 27, 2018, this Court issued an entering order finding the Motion suitable for disposition without a hearing, pursuant to Rule LR7.2(d) of the Local Rules of Practice for the United States District Court for the District of Hawaii (“Local Rules”), and ruling that the Motion was denied. [Dkt. no. 72.] The instant Order supersedes that ruling. The Motion is hereby denied for the reasons set forth below.


         The factual and procedural background of this case is set forth in this Court's September 29, 2017 “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'” (“9/29/17 Order”). [Dkt. no. 45.[1]

         Plaintiff filed his First Amended Complaint pro se. The 9/29/17 Order described this case as “aris[ing] 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').” 2017 WL 4392040, at *1.

         The First Amended Complaint alleged the following claims: a fraud claim against the Bank Defendants, Brignac, and Washington Mutual Holding, Inc. (“WMHI”)[2] based on misrepresentations in the loan modification process (“Count I”); [First Amended Complaint at ¶¶ 48-69;] a breach of contract claim against JP Morgan, based upon its alleged failure to comply with the HAMP three-month trial period plan (“TPP”) agreement (“Count II”); [id. at ¶¶ 70-80;] a fraud claim against JP Morgan, Wells Fargo, and CRC based on misrepresentations in a case Plaintiff filed in a California federal court (“Count III”); [id. at ¶¶ 81-90;] an unclean hands claim against the Bank Defendants and Defendant Alaw[3] based on their alleged actions and omissions during Plaintiff's bankruptcy proceedings in the District of Hawai`i (“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 against all of the defendants (“Count VII”), [id. at ¶¶ 127-42].

         This Court granted the Bank Motion and the Brignac Motion insofar as the First Amended Complaint was dismissed for lack of jurisdiction. Because this Court concluded that it was possible for Plaintiff to cure the jurisdictional defect, this Court also addressed whether amendment of Plaintiff's claims would be futile because they were time-barred. 9/29/17 Order, 2017 WL 4392040, at *4. Specifically, this Court ruled as follows:

-California law applied to Counts I and III, and the claims could be amended to allege a basis for tolling of the statute of limitations; id. at *5-6; -California law applied to Count II; id. at *5; and the dismissal of Count II had to be with prejudice because the claim was time-barred; id. at *7;
-Hawai`i law applied to Count IV; id. at *5; and the claim was not time-barred; id. At *8;
-Count V was “liberally construed to allege both that the challenged conduct which occurred in California violated California consumer protection laws and the challenged conduct which occurred in Hawai`i violated Hawai`i consumer protection laws”; id. at *5; Plaintiff's Haw. Rev. Stat. Chapter 480 claims would be timely if he cured the jurisdictional defect; id. at *8; and Plaintiff's Cal. Bus. & Prof. Code § 17200 claims could be amended to allege a basis for tolling of the statute of limitations; id.; -California law applied to Count VI; id. at *5; and the claim could be amended to allege a basis for tolling of the statute of limitations; id. at *9; and
-California law applied to Count VII; id. at *5; and the claim could be amended to allege a factual basis for a ruing that the claim “did not accrue until [Plaintiff] knew or should have known that his emotional distress was caused by defendants' outrageous conduct, ” id. at *10 (emphasis in original).

         This Court also dismissed Plaintiff's claims in Counts I and VII against Brignac - the only claims against her - with prejudice because, even if Plaintiff could cure the jurisdictional defect, he could not cure the substantive defects in his claims against her. Id. at *11. The Clerk's Office was directed to terminate Brignac as a party unless Plaintiff filed a motion for reconsideration of the 9/29/17 Order. Id. at *12. Plaintiff did not file a motion for reconsideration, and Brignac was terminated as a party on October 20, 2017.

         Because Counts I and III through VII were dismissed without prejudice as to the Bank Defendants, Plaintiff was allowed to file a motion seeking leave to file a second amended complaint. Id.

         On January 8, 2018, Plaintiff's counsel filed his notice of appearance, and Plaintiff filed his Motion for Leave to File Second Amended Complaint (“Motion for Leave”) on January 11, 2018. [Dkt. nos. 48, 49.] The magistrate judge orally granted the Motion for Leave at the hearing on the motion.[4] [Minutes, filed 2/26/18 (dkt. no. 57).] Plaintiff filed his Second Amended Complaint on March 5, 2018. [Dkt. no. 58.]

         The Second Amended Complaint names JPMorgan, CRC, Albertelli, and U.S. Bank as defendants. [Id. at ¶¶ 3-5.] Although Wells Fargo is listed among the Moving Defendants, Wells Fargo is not named as a defendant in the Second Amended Complaint. See id. at ¶ 17 (“In October, 2008, Wachovia Bank merged into Wells Fargo Bank N.A.”); id. at ¶ 5 (naming U.S. Bank as a defendant in its capacity as “successor in interest to Wachovia Bank, N.A. as trustee” (“Wachovia”) (emphasis omitted)). All subsequent references to the “Moving Defendants” will refer to only JPMorgan, CRC, and U.S. Bank. The Moving Defendants and Albertelli will be referred to collectively as “Defendants.” Jurisdiction is based on diversity. [Id. at ¶ 7.] Plaintiff is a Hawai`i citizen; JPMorgan is a national association with its main office in New York; U.S. Bank is a national association with its main office in Minnesota; Albertelli is a Florida limited liability company with its main office in Florida; and Plaintiff does not give citizenship information regarding CRC. [Id. at ¶¶ 1, 3-5.] However, there is nothing in the Second Amended Complaint which suggests that CRC may be considered a Hawai`i citizen for diversity purposes.

         According to the Second Amended Complaint, on April 7, 2005, Plaintiff obtained a $417, 000 loan from Washington Mutual Bank, FA (“WaMu”). In connection with the loan, he executed: a Fixed/Adjustable Rate Note (“Note”); and a Deed of Trust for the Property in favor of WaMu, with CRC as the trustee. The Deed of Trust gave CRC the power to sell the Property if Plaintiff committed a material default. [Id. at ¶¶ 9-12.] Plaintiff alleges that, on or about September 25, 2008, JPMorgan obtained the majority of WaMu's residential mortgage loans. [Id. at ¶ 16.] According to Plaintiff, however, WaMu's receiver did not assign Plaintiff's Deed of Trust to U.S. Bank until on or about March 19, 2013, and Albertelli purchased CRC's assets from JPMorgan in December 2013. [Id. at ¶¶ 27, 30.]

         From February to May 2009, Plaintiff received letters from JPMorgan that advised him to apply for a loan modification, and Plaintiff entered into the TPP with JPMorgan, on or about September 17, 2009. Plaintiff alleges JPMorgan made false representations about its interest in Plaintiff's loan and its authority to negotiate a loan modification during Plaintiff's application process and in connection with the TPP. In June 2010, JPMorgan informed Plaintiff he did not qualify for a permanent loan modification. [Id. at ¶¶ 18-21.]

         On or about September 1, 2010, CRC recorded and sent Plaintiff a notice that his loan was in default and that it intended to sell the Property if he did not cure the default (“Trustee's Notice”). Plaintiff alleges the Trustee's Notice was wrongful because, at that time, it was Wachovia that held the Note and was the assignee of the Deed of Trust. [Id. at ¶¶ 22-23.] On September 10, 2010, Plaintiff filed a wrongful foreclosure action in a the United States District Court for the Southern District of California against, inter alia, JPMorgan and CRC (“California Case”). According ...

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