JPMorgan Chase Bank N.A. v. Sierra Pacific Mortgage Company, Inc., No. 2:2013cv01397 - Document 20 (E.D. Cal. 2013)
Court Description: ORDER denying 15 Motion to Dismiss signed by Judge John A. Mendez on 12/10/13. (Kaminski, H)
Download PDF
<![CDATA[
JPMorgan Chase Bank N.A. v. Sierra Pacific Mortgage Company, Inc. Doc. 20 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA 11 12 JPMORGAN CHASE BANK, N.A., a National Banking Association, No. 2:13-cv-01397-JAM-KJN 13 Plaintiff, 14 ORDER DENYING DEFENDANT’S MOTION TO DISMISS v. 15 16 17 SIERRA PACIFIC MORTGAGE COMPANY, INC., a/k/a SIERRA PACIFIC MORTGAGE CO., INC., a/k/a SIERRA PACIFIC MTG. CO., INC., 18 Defendant. 19 This matter is before the Court on Defendant Sierra Pacific 20 21 Mortgage Company, Inc.’s (“Defendant”) Motion to Dismiss and in 22 the alternative Motion for a More Definite Statement (Doc. #15) 23 in relation to Plaintiff JPMorgan Chase Bank, N.A.’s 24 (“Plaintiff”) Complaint (Doc. #1). 1 25 Opposition (Doc. #16) and Defendant filed an amended Reply (Doc. Plaintiff filed an 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for October 23, 2013. 1 Dockets.Justia.com 1 2 3 #19). I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND The Complaint states three causes of action against 4 Defendant: (1) breach of contract (breaches of representations 5 and/or warranties), (2) breach of contract (obligation to 6 repurchase loans), and (3) indemnity or in the alternative 7 specific performance. 8 from Plaintiff’s complaint. 9 The following factual summary is derived Plaintiff is a national banking association organized under 10 the laws of the United States. 11 California corporation doing business as a residential finance 12 lender and mortgage banker. 13 entered into a written Correspondent Origination and Sales 14 Agreement – Closed Loan Purchases (“Correspondent Agreement”) 15 governing the duties and obligations of each party with respect 16 to the origination, sale and transfer of residential mortgage 17 loans by Defendant to Plaintiff. 18 Comp. ¶ 1. ¶ 2. Defendant is a In May 1996, the parties ¶ 5. The Correspondent Agreement required all loans submitted by 19 Defendant to comply with the Chase Correspondent Manual. 20 Pursuant to the agreement, Defendant represented and warranted 21 that all loans sold to Plaintiff: (1) complied with certain 22 regulations, requirements and standards; (2) were fully 23 insurable; (3) did not include facts or circumstances that could 24 reasonably result in investors regarding the loans as 25 unacceptable investments, cause the loan to become delinquent or 26 adversely affect the marketability of the loan; (4) contained no 27 representations or warranties containing any untrue statements of 28 material fact; and (5) the appraisal provided an accurate 2 ¶ 6. 1 estimate of the bona fide market value of the property. 2 Exh. A (Correspondent Agreement) § 4.2. 3 ¶ 7; The Correspondent Agreement provides that Defendant is 4 obligated to repurchase a loan (or property) in the event of 5 certain circumstances, including the following: (1) existence of 6 an incurable breach or representation or warranty or Defendant’s 7 failure to cure any curable defect; (2) failure to provide 8 required documentation or timely satisfy other requirements of 9 the agreement; (3) Plaintiff’s repurchase of any loan from a 10 third party buyer due to defects existing prior to or 11 contemporaneous with Plaintiff’s purchase; or (4) the loan or 12 credit file contained fraudulent documents. 13 §§ 5.1, 5.2. 14 against “any and all losses, damages, fines, costs or expenses of 15 any nature, including loss of marketability and attorney’s fees 16 and costs, resulting from breach of any representation or 17 warranty, covenant or agreement, made by” Defendant. 18 § 5.4. 19 Comp. ¶ 8 & Exh. A. Defendant also agreed to indemnify Plaintiff Id. Exh. A The parties also executed a number of addenda that became 20 part of the Correspondent Agreement. 21 Correspondent Agreement further provides that the agreement and 22 its interpretation will be governed by New Jersey law. 23 Exh. A § 7.8. 24 Comp. ¶ 5. The ¶ 10; The Complaint points to eighteen specific loans out of the 25 thousands transferred from Defendant to Plaintiff. Comp. Exh. B; 26 Opp. at p. 4. 27 of provisions in the Correspondent Agreement with regards to 28 these identified loans. Plaintiff alleges that Defendant breached a number 3 1 In the first cause of action, Plaintiff alleges the loans 2 numbered 1-6, 10, 11 and 14 (as indicated in Exh. B) failed to 3 comply with the terms and conditions of the Correspondent 4 Agreement and Manual in that Defendant failed to cure and/or 5 events subsequent to their origination triggered obligations 6 Defendant did not meet, all in breach of the Correspondent 7 Agreement. 8 Exhibit B to the Complaint. 9 failed and refused to repurchase the loans or otherwise cure the Comp. ¶ 15. Plaintiff identifies these defects in ¶ 16. Despite notice, Defendant has 10 claims regarding them, resulting in damages to Plaintiff. 11 20. 12 ¶¶ 17- In the second cause of action, Plaintiff alleges that it 13 received demands from its investors for Plaintiff to repurchase 14 each of the loans in Exhibit B or to indemnify them from loss. 15 ¶ 23. 16 loans or indemnify Plaintiff pursuant to the terms of the 17 Correspondent Agreement. 18 by refusing or failing to so comply, resulting in damages to 19 Plaintiff. 20 In turn, Plaintiff demanded that Defendant repurchase the ¶ 24. Defendant breached the agreement ¶¶ 26-27. In the third cause of action, Plaintiff alleges that 21 Defendant failed to indemnify Plaintiff pursuant to the agreement 22 for “loss, damages, fines, costs or expenses, including loss of 23 marketability and attorneys’ fees and costs” suffered as a result 24 of the loans failing to conform to the representations and 25 warranties made by Defendant in relation to the eighteen loans 26 identified in Exhibit B. 27 alternative request for specific performance regarding those 28 loans identified in Exhibit B where foreclosures have not yet ¶¶ 29-34. 4 Plaintiff makes an 1 occurred and/or where the real property underlying the loans has 2 not been sold to third parties. 3 the “unique and specific nature of mortgage loans” it has no 4 adequate remedy at law and the Court should order Defendant to 5 perform its repurchase obligations pursuant to the Correspondent 6 Agreement. Plaintiff alleges that due to ¶¶ 37, 43. 7 8 9 10 II. A. OPINION Legal Standard A party may move to dismiss an action for failure to state a 11 claim upon which relief can be granted pursuant to Federal Rule 12 of Civil Procedure 12(b)(6). 13 plaintiff must plead “enough facts to state a claim to relief 14 that is plausible on its face.” 15 556 U.S. 662, 570 (2007). 16 district court must accept all the allegations in the complaint 17 as true and draw all reasonable inferences in favor of the 18 plaintiff. 19 overruled on other grounds by Davis v. Scherer, 468 U.S. 183 20 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). 21 To survive a motion to dismiss a Bell Atlantic Corp. v. Twombly, In considering a motion to dismiss, a Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), “First, to be entitled to the presumption of truth, 22 allegations in a complaint or counterclaim may not simply recite 23 the elements of a cause of action, but must sufficiently allege 24 underlying facts to give fair notice and enable the opposing 25 party to defend itself effectively.” 26 1202, 1216 (9th Cir. 2011), cert. denied, 132 S. Ct. 2101, 182 L. 27 Ed. 2d 882 (U.S. 2012). 28 are taken as true must plausibly suggest an entitlement to Starr v. Baca, 652 F.3d “Second, the factual allegations that 5 1 relief, such that it is not unfair to require the opposing party 2 to be subjected to the expense of discovery and continued 3 litigation.” 4 are therefore not entitled to the presumption of truth. 5 v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 6 555). 7 claim supportable by a cognizable legal theory. 8 Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). 9 Id. Assertions that are mere “legal conclusions” Ashcroft Dismissal is appropriate when a plaintiff fails to state a Balistreri v. Upon granting a motion to dismiss for failure to state a 10 claim, a court has discretion to allow leave to amend the 11 complaint pursuant to Federal Rule of Civil Procedure 15(a). 12 “Dismissal with prejudice and without leave to amend is not 13 appropriate unless it is clear . . . that the complaint could not 14 be saved by amendment.” 15 Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). Eminence Capital, L.L.C. v. Aspeon, 16 B. Discussion 17 Defendant contends Plaintiff’s claims should be dismissed 18 pursuant to F. R. Civ. P. 12(b)(6) because the complaint 19 contains only legal conclusions unsupported by factual 20 allegations. 21 to the Correspondent Agreement undermines Plaintiff’s entire 22 complaint because the subsequently executed rider changes the 23 terms upon which the loans were transferred. 24 MTD at p. 10. It further argues that an addendum Id. at pp. 14-15. In the alternative, or if the Court grants leave to amend, 25 Defendant moves the Court to order Plaintiff to submit a more 26 definite statement that complies with the Federal Rules of Civil 27 Procedure. MTD at pp. 15-17. 28 6 1 2 1. Breach of Contract Claims To establish a breach of contract under New Jersey law, a 3 plaintiff must show that “the parties entered into a valid 4 contract, that the defendant failed to perform his obligations 5 under the contract and that the plaintiff sustained damages as a 6 result.” 7 Super. Ct. App. Div. 2007). 8 9 Murphy v. Implicito, 392 N.J. Super. 245, 265 (N.J. In the Complaint, Plaintiff alleges that the parties entered into a contract, namely the Correspondent Agreement, 10 which was attached to the Complaint. 11 claims in the first and second causes of action, Plaintiff 12 alleges that Defendant failed to meet its obligations under the 13 identified contract with respect to certain loans transferred 14 under the contract, constituting a breach. 15 specifically identifies the loans from which the claims arise, 16 the alleged defects, breaches and/or the ground for repurchase 17 or make whole demand. 18 Plaintiff repurchased the loans from investors or was forced to 19 “makewhole” the investor. 20 which it made its final demand to Defendant to comply with its 21 obligations under the Correspondent Agreement. 22 further alleges damages resulting from Defendant’s failure to 23 perform its obligations under the agreement. 24 In its breach of contract Exhibit B It also includes the date upon which Exhibit B provides the date upon Plaintiff The Court finds that the Complaint sufficiently alleges the 25 underlying facts supporting its breach of contract claims. See 26 Starr v. Baca, 652 F.3d at 1216. 27 the precise loans and the grounds from which the claims arise. 28 These factual allegations plausibly suggest that Plaintiff is Defendant has fair notice of 7 1 2 entitled to some relief. Id. Defendant’s reliance on Roberts v. UBS AG, No. CV F 12–0724 3 LJO SKO, 2013 WL 1499341, at *19-20 (E.D. Cal. 2013) is 4 misplaced. 5 on the ground that they were “vague and conclusory.” 6 However, here, Plaintiff identifies “verbatim” the provisions of 7 the Correspondent Agreement at issue and attached the agreement 8 to the complaint. 9 leading the court to dismiss the claims. 10 11 There the court dismissed breach of contract claims Id. The plaintiff in Roberts did no such thing, Id. The Roberts case is entirely distinguishable. Although Defendant argues in its Reply that it “needs more 12 information” regarding the loans at issue, it does not 13 specifically state that it cannot identify which loans are being 14 referenced in Exhibit B. 15 assumes the detail provided therein is sufficient to put 16 Defendant on notice of the loans from which Plaintiff’s claims 17 arise. 18 Reply at p. 10. Therefore, the Court Defendant also argues the rider attached and incorporated 19 into the Correspondent Agreement altered its obligations with 20 respect to certain loans. 21 potential defenses identified by Defendant may ultimately 22 absolve Defendant of liability. 23 litigation, the Court takes the allegations as true and draws 24 all reasonable inferences in favor of Plaintiff. 25 and claims as pleaded state a plausible entitlement to relief 26 sufficient for Plaintiff to have met its burden. 27 28 MTD at pp. 14-15. This and other However, at this stage in the The agreement Accordingly, the Court hereby denies Defendant’s Motion to Dismiss the breach of contract claims. 8 1 2. Third Cause of Action 2 Under New Jersey law, indemnity contracts are interpreted in 3 accordance with the rules governing the construction of contracts 4 generally. 5 103 N.J. 177, 191 (1986). 6 Ramos v. Browning Ferris Indus. of S. Jersey, Inc., The Complaint alleges the Correspondent Agreement provided 7 for Defendant to indemnify Plaintiff in certain circumstances 8 against specific losses. 9 those specific losses have been suffered and that Defendant has Comp. ¶ 29. It further alleges that 10 failed to indemnify Plaintiff after notice. 11 Complaint alleges that, as a result, it has incurred damages. 12 ¶ 34. ¶ 32. The 13 The Court finds that Plaintiff has met its burden at this 14 stage of the litigation and has sufficiently pleaded the third 15 cause of action. 16 Motion to Dismiss the third cause of action. 17 18 3. Accordingly, the Court denies Defendant’s Motion for a More Definite Statement Defendant contends the Court should order Plaintiff to 19 submit a more definite statement pursuant to Fed. R. Civ. P. 20 12(e) so that the Complaint complies with Rules 9(g) and 10(b). 21 MTD at pp. 15-17. 22 more definite statement of a pleading to which a responsive 23 pleading is allowed but which is so vague or ambiguous that the 24 party cannot reasonably prepare a response.” 25 a. Rule 12(e) provides: “A party may move for a Special Damages 26 Defendant argues that Plaintiff’s request for “losses, 27 damages, fines, costs or expenses of any nature, including loss 28 of marketability” are special damages requiring Plaintiff to 9 1 specifically state them. 2 MTD at p. 16; F. R. Civ. P. 9(g). Regarding a breach of contract claim, although both special 3 and general damages must be the natural and proximate 4 consequence of the alleged breach, “general damages are such as 5 inevitably follow, while special damages are such as may, or may 6 not, follow.” 7 Corp., No. C 02-5286 CW, 2005 WL 645389, at *17-18 (N.D. Cal. 8 2005). 9 alleged contractual breach. City and County of San Francisco v. Tutor-Saliba General damages are those that the law implies from the Id. 10 The Correspondent Agreement specifically provides that 11 Defendant will indemnify Plaintiff in the event of a breach 12 against the very damages sought. 13 direct and foreseeable result upon the occurrence of a breach. 14 Accordingly, the Court denies Defendant’s motion for a more 15 definite statement with respect to the damages sought. 16 if at a later stage of this litigation, it is determined that 17 Plaintiff does in fact seek special damages, the Court may deny 18 them. However, Tutor-Saliba Corp., 2005 WL 645389, at *18. 19 20 Therefore, these damages are a b. Rule 10(b) Defendant contends that Plaintiff has combined claims 21 arising from eighteen distinct loans into three causes of 22 action. 23 pleading results in confusion as Plaintiff is “all over the map 24 in terms of which of its three ‘claims’ apply to which loans.” 25 Defendant requests the Court to order Plaintiff to state each 26 claim founded on a separate transaction or occurrence in a 27 separate count. 28 MTD at pp. 16-17. It argues that the “shotgun” Rule 10(b) provides that “each claim founded on a separate 10 1 transaction or occurrence . . . must be stated in a separate 2 count or defense,” but only if doing so “would promote clarity.” 3 “Shotgun pleadings are pleadings that overwhelm defendants with 4 an unclear mass of allegations and make it difficult or 5 impossible for defendants to make informed responses to the 6 plaintiff’s allegations. 7 v. Wachovia Securities, LLC, No. SACV 09-0766 AG (ANx), 2010 WL 8 2674456, at *4 (C.D. Cal. 2010). 9 They are unacceptable.” Sollberger Each of the claims is based on a single contract, the 10 Correspondent Agreement, which involves only the parties to this 11 action. 12 over the map” in identifying which claims apply to which loans, 13 each cause of action specifically identifies which of the loans 14 listed in Exhibit B that particular claim arises from. 15 ¶¶ 12, 23, 30. 16 separately list identical claims to multiple loans under the 17 same agreement would not promote clarity; rather, it would 18 simply be redundant. 19 motion for a more definite statement. Despite Defendant’s contention that Plaintiff is “all Comp. The Court finds that requiring Plaintiff to Accordingly, the Court denies Defendant’s 20 21 22 23 24 25 26 III. ORDER For the reasons set forth above, the Court DENIES Defendant’s Motion to Dismiss in its entirety. IT IS SO ORDERED. Dated: December 10, 2013 ____________________________ JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE 27 28 11
]]>
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.
