Blanchard v. JP Morgan Chase Bank et al, No. 2:2011cv01127 - Document 74 (D. Nev. 2012)
Court Description: ORDER Granting 41 Motion to Dismiss. IT IS FURTHER ORDERED that 62 Motion for Order to Show Cause is DENIED. IT IS FURTHER ORDERED that 63 Motion to Amend/Correct Complaint DENIED. Signed by Judge James C. Mahan on 10/18/2012. (Copies have been distributed pursuant to the NEF - EDS)
Download PDF
<![CDATA[
Blanchard v. JP Morgan Chase Bank et al Doc. 74 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 RICHARD BLANCHARD, 8 9 2:11-CV-1127 JCM (PAL) Plaintiff(s), 10 v. 11 JP MORGAN CHASE BANK, et al., 12 Defendant(s). 13 14 ORDER 15 Presently before the court is defendant Quality Loan Services Corp.’s second motion to 16 dismiss. (Doc. # 41). Defendants Mortgage Electronic Registration Systems, Inc., MERSCORP, Inc., 17 and US Bank have joined Quality Loan’s motion. (Docs. # 43, 45).1 Plaintiff Richard Blanchard filed 18 an untimely opposition to defendants’ motion, (doc. # 48), and defendants replied (docs. # 49, 50, 19 51). 20 Also before this court is plaintiff’s motion for an order to show cause. (Doc. # 62). 21 Defendants have responded, (docs. # 65, 67, 68), and plaintiff has replied (doc. # 70). Also before 22 the court is plaintiff’s motion for leave to amend complaint. (Doc. # 63). Defendants have responded, 23 (docs. # 64, 66, 69), and plaintiff has replied (doc. # 71). 24 I. 25 Background Plaintiff Richard Blanchard is the owner of property located at 2503 Vegas Vic Street, 26 27 28 1 This constitutes all defendants in this action as JP Morgan Chase was terminated from ths action on July 10, 2012, for plaintiff’s failure to effect timely service pursuant to FRCP 4(m). James C. Mahan U.S. District Judge Dockets.Justia.com 1 Henderson, Nevada. (Doc. # 1-2, 4). The property was financed through the execution of a note and 2 deed of trust promising to repay $360,000.00 in monthly installments to the Mortgage Store of 3 Denver. (Doc. # 7-1).2 On September 8, 2006, the deed of trust was recorded. (Doc. # 7-1). On 4 September 26, 2006, the Mortgage Store of Denver recorded an assignment in favor of JP Morgan 5 Chase Bank. (Doc. # 7-2). 6 On March 30, 2010, plaintiff filed a voluntary Chapter 7 bankruptcy petition. (Doc. # 7-3). 7 On October 29, 2011, an order terminating an automatic stay as to the property was filed. (Doc. # 8 7-3). On December 8, 2011, plaintiff’s Chapter 7 bankruptcy was closed. 9 On November 15, 2010, JP Morgan Chase Bank recorded an assignment of the deed of trust 10 in favor of Mortgage Electronic Systems, Inc. (“MERS”). (Doc. # 7-4). On February 4, 2011, MERS 11 recorded an assignment of the deed of trust in favor of Fannie Mae. (Doc. # 7-5). 12 On February 14, 2011, Fannie Mae recorded a substitution of trustee and appointed Quality 13 Loan Services Corp. as the foreclosure trustee. (Doc. # 7-6). On February 18, 2011, Quality Loan 14 recorded a notice of default and election to sell. (Doc. # 7-7). On June 2, 2011, Quality Loan 15 recorded a notice of sale, scheduling a sale for June 23, 2011. (Doc. # 7-8). The sale was postponed. 16 On June 9, 2011, plaintiff filed this action in state court. (Doc. # 1-2). On July 7, 2011, 17 defendants removed the action to this court. (Doc. # 1). 18 II. 19 Motions A. 20 Motion to dismiss (doc. # 41) i. Dismissal pursuant to 7-2 21 Pursuant to Local Rule 7-2(d), an opposing party’s failure to file a timely response to any 22 motion constitutes the party’s consent to the granting of the motion and is proper grounds for 23 dismissal. U.S. v. Warren, 601 F.2d 471, 474 (9th Cir. 1979). However, prior to dismissal, the 24 district court is required to weigh several factors: “(1) the public's interest in expeditious resolution 25 26 27 28 James C. Mahan U.S. District Judge 2 Defendants request that the court take judicial notice of exhibits attached to their second motion to dismiss. (Doc. # 41). Under Fed. R. of Evid. 201, a court may judicially notice matters of public record. Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986); see also Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004). Therefore, the court takes judicial notice of these public records. -2- 1 of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants; (4) 2 the public policy favoring disposition of cases of their merits; and (5) the availability of less drastic 3 sanctions.”Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995) (citing Henderson v. Duncan, 779 F.2d 4 1421, 1423 (9th Cir. 1986)). 5 Here, plaintiff failed to file a timely response to defendants’ motion to dismiss. (See doc. # 6 46). Plaintiff filed his response 3 days late. The court does not take lightly litigants’ failure to 7 observe local rules and court orders; however, given plaintiff’s pro se status the court moves to the 8 merits of defendants’ motion. 9 ii. Legal standard 10 A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which relief can 11 be granted.” FED. R. CIV. P. 12(b)(6). A properly pled complaint must provide “[a] short and plain 12 statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2); Bell 13 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual 14 allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements 15 of a cause of action.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). 16 “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. 17 at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to 18 “state a claim to relief that is plausible on its face.” Iqbal, 129 S.Ct. at 1949 (citation omitted). 19 In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when 20 considering motions to dismiss. First, the court must accept as true all well-pled factual allegations 21 in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. 22 Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not 23 suffice. Id. at 1949. 24 Second, the court must consider whether the factual allegations in the complaint allege a 25 plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint 26 alleges facts that allows the court to draw a reasonable inference that the defendant is liable for the 27 alleged misconduct. Id. at 1949. 28 James C. Mahan U.S. District Judge -3- 1 Where the complaint does not permit the court to infer more than the mere possibility of 2 misconduct, the complaint has “alleged – but not shown – that the pleader is entitled to relief.” Id. 3 (internal quotations omitted). When the allegations in a complaint have not crossed the line from 4 conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570. 5 The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 6 1216 (9th Cir. July 25, 2011). The Starr court stated, “First, to be entitled to the presumption of 7 truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of 8 action, but must contain sufficient allegations of underlying facts to give fair notice and to enable 9 the opposing party to defend itself effectively. Second, the factual allegations that are taken as true 10 must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party 11 to be subjected to the expense of discovery and continued litigation. “Id.” 12 Generally, a district court may not consider any material beyond the pleadings in ruling on 13 a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the complaint 14 may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 15 F.2d 1542, 1555 n.19 (9th Cir.1990) (citations omitted). Similarly, “documents whose contents are 16 alleged in a complaint and whose authenticity no party questions, but which are not physically 17 attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without 18 converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 19 449, 454 (9th Cir. 1994). Under Fed. R. Evid. 201, a court may take judicial notice of “matters of 20 public record.” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the 21 district court considers materials outside of the pleadings, the motion to dismiss is converted into 22 a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 23 (9th Cir. 2001). 24 iii. Discussion 25 Defendants contend that plaintiff is judicially estopped from bringing his prepetition causes 26 of action due to failure to disclose these causes of action during his bankruptcy proceeding. All of 27 plaintiff’s claims, with the exception of the third cause of action for wrongful foreclosure, the eighth 28 James C. Mahan U.S. District Judge -4- 1 cause of action for quiet title, the tenth cause of action for injunctive relief, and the fourteenth cause 2 of action for negligent infliction of emotional distress, are based on allegations of predatory lending 3 occurring at the time the loan was originated. The loan at issue in those causes of action originated 4 prior to the filing of the bankruptcy petition. 5 At the commencement of bankruptcy, a debtor must disclose all of his assets to be included 6 in the bankruptcy estate for the potential benefit of creditors. 11 U.S.C. § 521(1); see also Cusano 7 v. Klein, 264 F.3d 936, 945–46 (9th Cir. 2001). The bankruptcy estate includes all the debtor’s 8 potential claims or causes of action that existed at the time he or she filed for bankruptcy. 11 U.S.C. 9 § 541(a)(1); see also In re Swift, 129 F.3d 792, 795 (5th Cir.1997); In re Coastal Plains, Inc., 179 10 F.3d 197, 208–208 (5th Cir. 1999) (“[i]t goes without saying that the Bankruptcy Code and Rules 11 impose upon bankruptcy debtors an express, affirmative duty to disclose all assets, including 12 contingent and unliquidated claims.”) (italics in original). A debtor need only have “knowledge 13 enough of the facts to know that a cause of action exists during the pendency of the bankruptcy.” 14 Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001). 15 A party’s failure to disclose causes of action results in judicial estoppel. “[I]n the bankruptcy 16 context, a party is judicially estopped from asserting a cause of action not raised in a reorganization 17 plan or otherwise mentioned in the debtor’s schedules or disclosure statements.” Id. at 783; see also 18 Hay v. First Interstate Bank of Kalispell, 978 F.2d 555, 557 (9th Cir. 1992); Coastal Plains, 179 19 F.3d at 208 (debtor is barred from bringing claims not disclosed in its bankruptcy schedules); Oneida 20 Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 419 (3d Cir. 1988) (debtor’s failure to list 21 potential claims against a creditor “worked in opposition to preservation of the integrity of the 22 system which the doctrine of judicial estoppel seeks to protect,” and debtor was estopped by reason 23 of such failure to disclose). 24 In this case, there is no dispute that plaintiff failed to disclose his prepetition causes of action 25 in his bankruptcy matter. Plaintiff had knowledge of the facts, Hamiton, 270 F.3d at 783, that 26 underlie his prepetition claims for predatory lending practices. That is, plaintiff had knowledge of 27 the facts that underlie his unfair lending practices cause of action (NRS 598(D)), his deceptive trade 28 James C. Mahan U.S. District Judge -5- 1 practices cause of action, his conspiracy to commit fraud and conversion cause of action, his 2 conspiracy to commit fraud related to MERS system cause of action, his inspection and accounting 3 cause of action, breach of good faith and fair dealing cause of action, his declaratory relief cause of 4 action, his rescission cause of action, his violation of the Fair Housing Act (42 U.S.C. § 3601, et 5 seq.) claim, and his Financial Exploitation of Older Persons (NRS 200.5092(2), 200.5092(5), and 6 657) cause of action. 7 Thus, the court finds that plaintiff is judicially estopped from bringing the above referenced 8 claims. Finding that amendment would be futile, the court dismisses these causes of action with 9 prejudice. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). 10 Further, the remaining causes of action relating to post-bankruptcy foreclosure have already 11 been dismissed with prejudice. (See doc. # 44). Therefore, all fifteen causes of action in plaintiff’s 12 original complaint are dismissed with prejudice. 13 B. 14 Plaintiff filed a motion for an order to show cause allowing for defendants to maintain 15 foreclosure actions against plaintiff in violation of Nev. Rev. Stat. 107.086. This statute proscribes 16 additional requirements for sale of owner-occupied housing under Nevada law. Motion for order to show cause (doc. # 62) 17 Plaintiff is not entitled to an order to show cause because the causes of action relating to 18 wrongful foreclosure have already been analyzed and dismissed with prejudice by this court.3 Thus, 19 the court denies plaintiff’s motion for an order to show cause. 20 C. 21 Motion for leave to amend complaint (doc. # 63) i. Legal standard 22 Plaintiff filed a motion for leave to amend his complaint. Federal Rule of Civil Procedure 23 15(a) provides that leave to amend “shall be freely given when justice so requires.” The Supreme 24 Court has interpreted Rule 15(a) and confirmed the liberal standard district courts must apply when 25 26 27 3 Further, plaintiff’s complaint does not allege violation of Nev. Rev. Stat. 107.086. Further, the court denies plaintiff’s motion to strike plaintiff’s (doc. # 71) to strike defendants’ reply (doc. # 65) to plaintiff’s motion for order to show cause. 28 James C. Mahan U.S. District Judge -6- 1 granting such leave. In Foman v. Davis, 371 U.S. 178 (1962), the Court explained: “In the absence 2 of any apparent or declared reason – such as undue delay, bad faith or dilatory motive on the part of 3 the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice 4 to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc. – the 5 leave sought should, as the rules require, be ‘freely given.’”Id. at 182. Thus, a district court should 6 deny a motion to amend where the amendment is an “exercise in futility.” Leadsinger, Inc. v. BMG 7 Music Pub., 512 F.3d 522, 532 (9th Cir. 2008). 8 A proposed amendment is futile if no set of facts can be proved under the amendment that 9 would constitute a valid clam or defense. Farina v. Compuware Corp., 256 F.Supp.2d 1033, 1061 10 (9th Cir. 2003) (quoting Miller v. Rykoff–Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)). A 11 proposed amendment to a complaint that merely restates and seeks to reinstate claims that already 12 have been dismissed may be properly denied as futile. Ross v. City of Waukegan, 5 F.3d 1084 (7th 13 Cir. 1993). 14 In addition, leave to amend may be denied if a court determines that “allegation of other facts 15 consistent with the challenged pleading could not possibly cure the deficiency.” Abagninin v. 16 AMVAC Chemical Corp., 545 F.3d 733, 742 (9th Cir. 2008) (quoting Schreiber Distrib. Co. v. 17 Serv–Well Furniture Co., 806 F.2d 1393, 1401(9th Cir. 1986)). The futility analysis determines 18 whether the proposed amendment would survive a challenge of legal sufficiency under Fed R. Civ. 19 P. 12(b)(6). Miller, 845 F.2d at 214. 20 In addition to the Rule 15(a) requirements, the local rules of federal practice in the District 21 of Nevada require that a plaintiff submit a proposed, amended complaint along with a motion to 22 amend. LR 15-1(a). 23 ii. Discussion 24 Here, plaintiff has complied with Local Rule 15-1 and submitted an amended complaint 25 along with his motion to amend. (Doc. # 63). While the court acknowledges the extreme liberality 26 Rule 15 proscribes as to granting leave to amend, the court finds that amendment would be futile 27 here. See Leadsinger, Inc., 512 F.3d at 532. The court has already dismissed with prejudice several 28 James C. Mahan U.S. District Judge -7- 1 of the causes of action plaintiff seeks to re-allege (first cause of action for quiet title, second cause 2 of action for aiding/abetting wrongful foreclosure,4 third cause of action for wrongful foreclosure, 3 ninth cause of action for unjust enrichment, tenth cause of action for injunctive relief, fourteenth 4 cause of action for negligent infliction of emotional distress). (See doc. # 44). Thus, plaintiff has 5 been foreclosed from alleging these causes of action against these defendants. 6 Further, the court has dismissed with prejudice plaintiff’s prepetition causes of action. 7 Although plaintiff’s causes of action in his amended complaint are different from those in the 8 original complaint, the same principal applies: “a party is judicially estopped from asserting a cause 9 of action not raised in a reorganization plan or otherwise mentioned in the debtor’s schedules or 10 disclosure statements.” Hamilton, 270 F.3d at 783. Those causes of action in plaintiff’s amended 11 complaint that arose prepetition are plaintiff’s fifth cause of action for unlawful reliance on falsified 12 documents against property rights (NRS 107.080), thirteenth claim for violation of the Fair Housing 13 Act (42 U.S.C. § 3601), and plaintiff’s fifteenth cause of action for Financial Exploitation of Older 14 Persons (NRS 41.1395 , 200.5092(2), 200.5092(5), 657.220-270). Since some of these causes of 15 action have already been determined to be judicially estopped (thirteenth and fifteenth causes of 16 action) and some are similar in nature to those being judicially estopped (fifth cause of action) the 17 court finds that amendment as to these causes of action inappropriate. 18 Lastly, the court finds that amendment would be futile as to the remaining causes of action: 19 plaintiff’s fourth cause of action for unlawful (statutorily defective) foreclosure proceedings (NRS 20 107.080), plaintiff’s sixth cause of action for false recordation concerning title and transfers to real 21 property, plaintiff’s seventh cause of action for broken chain of custody (promissory note & 22 assignment rights), plaintiff’s eighth cause of action for cancellation of instruments, plaintiff’s 23 eleventh cause of action for declaratory relief, and plaintiff’s twelfth cause of action for slander of 24 title. Having reviewed the proposed amended complaint, the court finds that these causes of action 25 26 27 28 James C. Mahan U.S. District Judge 4 The court recognizes that wrongful foreclosure was dismissed with prejudice, (doc. # 44); however, a cause of action for aiding/abetting wrongful foreclosure is derivative of wrongful foreclosure. -8- 1 would not likely survive a challenge of legal sufficiency under Fed. R. Civ. P. 12(b)(6). See Miller, 2 845 F.2d at 214. Thus, the court denies plaintiff’s motion for leave to amend his complaint as to all causes of 3 4 action in plaintiff’s proposed amended complaint. 5 III. Conclusion 6 Accordingly, 7 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants second motion 8 to dismiss (doc. # 41) be, and the same hereby is, GRANTED. These prepetition causes of action are 9 dismissed with prejudice. 10 11 12 IT IS FURTHER ORDERED that plaintiff’s motion for an order to show cause (doc. # 62) be, and the same hereby is, DENIED. IT IS FURTHER ORDERED that plaintiff’s motion for leave to amend complaint (doc. # 13 63) be, and the same hereby is, DENIED. 14 DATED October 18, 2012. 15 16 17 UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -9-
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
