Nieves v. JPMorgan Bank, N.A. et al, No. 3:2011cv05260 - Document 43 (N.D. Cal. 2012)
Court Description: ORDER DENYING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT, GRANTING REQUEST FOR JUDICIAL NOTICE, AND VACATING HEARING by Hon. William Alsup denying 38 Motion to Amend/Correct ;.(whalc2, COURT STAFF) (Filed on 7/12/2012)
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Nieves v. JPMorgan Bank, N.A. et al Doc. 43 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 DOLORES NIEVES, individually and as Trustee of the Dolores L. Nieves Family Living Trust Dated March 10, 2000, 12 13 14 15 16 17 18 19 20 21 22 23 No. C 11-05260 WHA Plaintiff, v. JP MORGAN BANK, N.A., a Delaware Corporation, CHASE HOME FINANCE LLC, a New Jersey Limited Liability Company, CALIFORNIA RECONVEYANCE COMPANY, a California Corporation, ORDER DENYING MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT, GRANTING REQUEST FOR JUDICIAL NOTICE, AND VACATING HEARING Defendants. / INTRODUCTION In this mortgage-loan dispute, plaintiff moves for leave to file a second amended complaint. For the reasons stated below, the motion is DENIED. STATEMENT Plaintiff Dolores L. Nieves, who is represented by counsel, is the owner of real property 24 in Fremont, California. Defendants are JP Morgan Chase Bank, N.A., successor in interest to 25 Washington Mutual Bank, who issued the subject loan, Chase Home Finance, LLC, the current 26 beneficiary of the loan, and California Reconveyance Company, the trustee of the loan. Plaintiff 27 alleges that she was a victim of financial elder abuse, which resulted in her obtaining a $250,000 28 loan against her residence, which was not previously subject to a mortgage. Dockets.Justia.com 1 The facts have been set forth in previous orders (Dkt. Nos. 21, 36). The gist of the 2 complaint is that plaintiff entered into a loan transaction with Washington Mutual and the loan 3 documents she received were defective, namely, they did not comply with numerous TILA 4 requirements. For example, the loan documents did not contain a “clear and conspicuous 5 disclosure of the date of the transaction and the date upon which the rescission right terminates,” 6 and the right-to-cancel notice omitted the date the cancellation period began and the final date to 7 cancel (Second Amd. Compl. ¶¶ 22–25). Due to these alleged deficiencies, among others, 8 plaintiff sought to rescind the loan on numerous occasions. Defendants JP Morgan Chase and 9 Chase Home Finance refused to accept the rescission. Plaintiff’s first amended complaint, like her proposed second amended complaint seeks: 11 For the Northern District of California United States District Court 10 (1) rescission pursuant to TILA Section 1635; (2) quiet title and expungement of liens; 12 (3) cancellation of written instruments; (4) declaratory relief; (5) damages for financial abuse of 13 an elder pursuant to the California Elder Abuse and Dependent Adult Civil Protection Act 14 (“EADACPA”); and (6) rescission pursuant to California Civil Code Section 1689(b). What is at 15 issue in the instant motion is whether plaintiff should be allowed to amend the complaint to 16 include additional allegations in support of her request for punitive damages. 17 On April 25, 2012, all three defendants moved to dismiss plaintiff’s request for punitive 18 damages for the financial elder abuse claim. The complaint sought punitive damages under 19 California Civil Code Section 3294 and the EADACPA. In the briefing on the motion to 20 dismiss, plaintiff dropped her argument under Section 3294 and only addressed her request for 21 damages under the EADACPA. By order dated June 1, 2012, the motion to dismiss the request 22 for punitive damages was granted. The order stated (Dkt. No. 36 at 4): 23 24 25 26 Currently, the complaint contains a dearth of factual allegations and instead relies on conclusory statements to support the claim that defendants have been reckless in denying plaintiff’s request for rescission. Merely noting that defendants have refused to grant rescission and claiming that this refusal was harmful to plaintiff is not enough to state a claim for recklessness. Plaintiff has not provided specific factual allegations that might demonstrate why defendants’ refusal to rescind was reckless rather than legitimate. 27 In the motion for leave to file a second amended complaint, plaintiff seeks to revive her 28 request for punitive damages based on California Civil Code Section 3294, arguing that the 2 1 newly alleged facts support a request for punitive damages thereunder. 2 ANALYSIS STANDARD. 3 1. 4 Pursuant to FRCP 15(a)(2), a district court should freely give leave to amend when 5 justice so requires, absent a showing of bad faith, dilatory motive, or undue prejudice to another 6 party. Foman v. Davis, 371 U.S. 178, 182 (1962). Leave to amend may be denied, however, if 7 the proposed amendment is futile or would be subject to dismissal. Saul v. United States, 928 8 F.2d 829, 843 (9th Cir. 1991). To survive a motion to dismiss, a complaint must contain 9 sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). A claim is facially plausible when there are 11 For the Northern District of California United States District Court 10 sufficient factual allegations to draw a reasonable inference that the defendants are liable for the 12 misconduct alleged. “[C]onclusory allegations of law and unwarranted inferences are 13 insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy 14 Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (citation omitted). 15 2. PUNITIVE DAMAGES. 16 Throughout the course of litigation, plaintiff has vacillated between two theories in 17 support of her request for punitive damages. The first theory is based on the EADACPA and the 18 second on California Civil Code Section 3294. To recover punitive damages for financial abuse 19 of an elder under the EADACPA, plaintiff must prove “by clear and convincing evidence” that 20 defendants have been guilty of “recklessness, oppression, fraud, or malice in the commission of 21 the abuse.” CAL. WELF. & INST. CODE § 15657.5(b). In the context of elder abuse, recklessness 22 involves “deliberate disregard of the high degree of probability that an injury will occur” and 23 “rises to the level of a conscious choice of a course of action . . . with knowledge of the serious 24 danger to others involved in it.” Delaney v. Baker, 20 Cal. 4th 23, 31–32 (1999). The previous 25 dismissal order explained that plaintiff is not entitled to rescission “without regard to whether the 26 law permits her to rescind on the grounds asserted.” Yamamoto v. Bank of New York, 329 F.3d 27 1167, 1172 (9th Cir. 2003). Thus, the order held that “[d]efendants cannot be said to have acted 28 recklessly merely because they have contested the grounds for plaintiff’s notice of rescission,” 3 1 2 which was plaintiff’s allegation (Dkt. No. 36 at 4). Under Section 3294, punitive damages are permitted only “where defendant has been 3 guilty of oppression, fraud, or malice.” Malice is “despicable” conduct of the defendant with a 4 “willful and conscious disregard of the rights or safety of others.” Oppression is “despicable 5 conduct that subjects a person to cruel and unjust hardship in conscious disregard of that 6 person’s rights.” Fraud is “an intentional misrepresentation, deceit, or concealment of a material 7 fact known to the defendant with the intention on the part of the defendant of thereby depriving a 8 person of property or legal rights or otherwise causing injury.” CAL. CIV. CODE §§ 9 3294(c)(1)–(3). In the previous motion to dismiss, plaintiff did not address the complaint’s request for damages under Section 3294. 11 For the Northern District of California United States District Court 10 The second amended complaint contains new allegations. Plaintiff alleges that 12 defendants knowingly enforced their predecessor’s unconscionable loan contract with plaintiff. 13 In her moving papers plaintiff argues that the claims for punitive damages (Br. 3): 14 arise[] form [sic] the facts that Defendants continued to enforce a contract that they knew or should have known was prima facially unconscionable even after Defendants were notified of the facts of the underlying mortgage agreement. It is not the Defendants’ refusal to grant rescission that is the basis of the punitive damages claim but Defendants’ continued and knowing enforcement of the unconscionable contract . . . . 15 16 17 18 The dismissal order specifically instructed that plaintiff must explain in her motion for leave to 19 amend how the proposed amendments cure the deficiencies identified therein. Plaintiff does not 20 explain how this new theory of unconscionability is supported in the complaint, which alleges 21 various TILA violations, namely that the loan documents she received did not comply with TILA 22 provisions that required the loan documents to contain a “clear and conspicuous disclosure of the 23 date of the transaction and the date upon which the rescission right terminates,” that the right-to- 24 cancel notice she received omitted the date the cancellation period began and the final date to 25 cancel, and that she only received one copy of the right-to-cancel notice, not two, as is required 26 by statute (Second Amd. Compl. ¶¶ 17, 22–25). 27 28 Specifically, in support of the request for punitive damages, the proposed second amended complaint alleges, that defendants are (id. ¶ 96): 4 1 guilty of oppression, fraud and/or malice pursuant to Civ. Code § 3294(a) by (a) knowingly enforcing an unconscionable contract both before and after Plaintiff tendered payment of the loan balance, and (b) entered into a tolling agreement with Plaintiff that Defendants had no intention of honoring at the time it was entered into. 2 3 4 This conduct allegedly caused plaintiff, a senior citizen to “suffer loss or encumbrance of a 5 primary residence.” Said conduct is alleged to be “despicable and subjected Plaintiff to cruel 6 and unjust hardship in conscious disregard of Plaintiff’s rights by forcing an elderly woman to 7 withstand years of unnecessary litigation in order to protect her basic rights” (id. ¶¶ 98, 101). 8 Still, the facts alleged are conclusory, reciting the language of the statute. Plaintiff has 9 not sufficiently alleged why defendants actions were malicious, oppressive, or fraudulent. 10 theory that defendants can be liable for punitive damages based on “knowingly enforcing an For the Northern District of California United States District Court Neither has plaintiff alleged (or explained in her moving papers) how the complaint supports her 11 12 unconscionable contract.” Here, the claim for rescission arises primarily from the alleged TILA 13 violations; plaintiff does not raise unconscionability as a defense to enforcement of the contract 14 itself or as a basis for rescission. The heart of the dispute, as alleged in the complaint is about 15 whether defendants violated TILA. Furthermore, as stated in the previous dismissal order, 16 defendants cannot be said to have acted recklessly because they contested the grounds for 17 plaintiff’s notice of rescission, namely the alleged TILA violations. Allowing the proposed 18 amendments would be futile as the request for punitive damages would be subject to dismissal. 19 Thus, the motion for leave to file a second amended complaint is DENIED. The deadline 20 to amend the complaint set in the case management order has passed. Thus, no further 21 amendments will be permitted. 22 3. REQUEST FOR JUDICIAL NOTICE. 23 Defendants request judicial notice of: (1) a copy of the deed of trust recorded by the 24 Alameda County Recorder’s Office as instrument number 2007050041; (2) a copy of the 25 Purchase and Assumption Agreement dated September 25, 2008; and (3) the Court’s order dated 26 February 14, 2012, and (4) the Court’s order dated June 1, 2012. Plaintiff did not oppose. The 27 request for judicial notice is GRANTED. FRE 201. 28 5 1 2 3 CONCLUSION For the above-stated reasons, the motion for leave to file a second amended complaint is DENIED. The hearing set for July 26, 2012, is hereby VACATED. 4 5 IT IS SO ORDERED. 6 7 Dated: July 12, 2012. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6
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