Wright v. JPMorgan Chase Bank, N.A. et al, No. 4:2016cv05155 - Document 30 (E.D. Wash. 2017)
Court Description: ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND FOR EMERGENCY TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION - denying 14 Motion to Remand; denying as moot 21 Motion to Withdraw; and denying as moot 27 Motion to Strike. Signed by Senior Judge Edward F. Shea. (CC, Case Administrator)
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Wright v. JPMorgan Chase Bank, N.A. et al Doc. 30 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 2 3 4 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 5 6 7 No. BERYL ANN WRIGHT, 8 4:16-CV-5155-EFS Plaintiff, 9 ORDER DENYING PLAINTIFF’S MOTION TO REMAND AND FOR EMEGENCY TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION v. 10 JPMORGAN CHASE BANK, N.A. et al., 11 Defendants. 12 13 Before the Court, without oral argument, is Plaintiff Beryl Ann 14 Wright’s Motion to Remand Action to State Court and for Emergency 15 Temporary 16 No. 14. On December 2, 2016, Defendant JPMorgan Chase Bank removed 17 this 18 Plaintiff objects to this removal and also requests injunctive relief 19 to 20 pleadings and the file in this matter, the Court is fully informed and civil prevent Restraining lawsuit a to Order and federal foreclosure sale OSC court. of her Preliminary ECF No. home.1 1. Injunction, In Having her ECF motion, reviewed the 21 22 1 23 24 25 26 It is unclear to the Court whether the property at issue in this case is owned by Ms. Wright or by her son, Anthony Malveto. As explained below, the mortgage documents are in Mr. Malveto’s name. Ms. Wright declares, however, that she owns the property in fee simple absolute with her son. See ECF No. 1-1 at 1; ECF No. 14-1 at 32. When the Court uses the term “her home” or variants of that term, the Court refers only to Ms. Wright’s purported interest in the property, while recognizing that there is no documentation in the record to support that purported interest. ORDER - 1 Dockets.Justia.com Case 4:16-cv-05155-EFS 1 denies both Plaintiff’s 2 injunctive relief. motion I. 3 On October 19, 2016, 4 Washington, to remand Filed 02/02/17 and her request for BACKGROUND Beryl Ann Wright, a resident of College 5 Place, 6 Superior Court, Case No. 16-2-00708-3, alleging that Defendants are 7 unlawfully attempting to foreclose on Ms. Wright’s house and have 8 engaged in unfair and deceptive practices. ECF No. 1-1. Ms. Wright’s 9 allegations regarding the unlawful nature of the foreclosure rely in 10 part on her claim that the mortgage agreement was rescinded under the 11 Truth in Lending Act (TILA), but Defendant JPMorgan Chase disregarded 12 the rescission, and the Defendants continued in “wrongful and unlawful 13 collection” on the mortgage. ECF No. 1-1 at 10. Ms. Wright also claims 14 that 15 practices” and that no valid mortgage contract exists regarding her 16 property. ECF No. 1-1 at 145. Although Ms. Wright does not expressly 17 make a claim under the Washington Consumer Protection Act (WCPA), RCW 18 19.86, her claim of unfair and deceptive acts and practices mirrors 19 some of the language in that Act. Ms. Wright also uses the term 20 “Consumer Protection Act” in one instance. ECF No. 14 at 3. Construing 21 Ms. Wright’s claim liberally, as a pro se plaintiff, the Court finds 22 that Ms. Wright has alleged violations of the WCPA. Based on her 23 claims, Ms. Wright seeks a preliminary injunction and a permanent 24 injunction 25 reversal of negative credit reports, return of all payments made on 26 the mortgage, payment for damages, and legal fees. the ORDER - 2 filed Document 30 Defendants preventing a civil engaged in foreclosure complaint “unfair on her in and house Walla Walla deceptive and County acts requiring and the ECF No. 1-1 at 16. Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 Defendant JPMorgan Chase’s removal of this action followed. ECF 2 No. 1. On December 15, 2016, Ms. Wright filed the instant Motion to 3 Remand to State Court and for Emergency Temporary Restraining Order 4 and OSC Preliminary Injunction. ECF No. 14. Ms. Wright argues that 5 this Court does not have jurisdiction over her land and lacks personal 6 jurisdiction over her and subject matter jurisdiction over this case. 7 ECF No. 14 at 3. She also argues that Defendants removed this action 8 in bad faith. ECF No. 14 at 6. II. 9 STANDING 10 As an initial matter, the Court must address whether Ms. Wright 11 has standing to bring this claim in federal court. Article III of the 12 Constitution limits a federal court’s judicial power to “cases” and 13 “controversies.” U.S. Const. art. III. To ensure that a federal court 14 exercises its power over only a case or controversy, a plaintiff must 15 have standing. Warth v. Seldin, 422 U.S. 490, 498 (1975). To establish 16 this standing, a plaintiff must show (1) an actual or imminent injury 17 that is concrete and particularized (“injury-in-fact”), (2) a causal 18 connection between the injury-in-fact and challenged conduct, and (3) 19 a substantial likelihood that the relief requested will prevent or 20 redress the injury-in-fact. Lujan v. Defenders of Wildlife, 504 U.S. 21 555, 560-61 (1992); Covington v. Jefferson Cty., 358 F.3d 626, 637-38 22 (9th Cir. 2004). 23 In this case, it is not immediately clear that Ms. Wright has a 24 legally protected interest in the property at issue. She is not named 25 in, and her signature does not appear on, the mortgage note or the 26 deed. Instead, Ms. Wright’s son, Anthony John Malveto, is the party ORDER - 3 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 named in those documents. See ECF Nos. 9-1 & 9-2. The Court therefore 2 finds that Ms. Wright likely could not bring a claim under TILA based 3 on the mortgage agreement, to which she was not a party. See In re 4 Crevier, 820 F.2d 1553, 1555 (9th Cir. 1987)(noting that a lower court 5 employed the “judicially imposed prudential rule of standing that bars 6 a litigant from asserting the rights of others” to dismiss a TILA 7 claim for lack of standing); see also Frempong v. Nat’l City Bank of 8 Ind., 452 F. App’x 167 (3d Cir. 2011) (holding that a plaintiff had 9 “no direct interest in the property or the foreclosure action as a 10 result of the fact that he was not contractually obligated to the 11 mortgage,” despite the fact that plaintiff lived on the property and 12 his wife was the party named in the deed); Mashburn v. Wells Fargo 13 Bank, NA, 2011 WL 2940363, *3 (W.D. Wash. July 19, 2011) (“Since 14 Plaintiff Hayakawa was not an obligor on the loan and had no right of 15 rescission, Plaintiff Hayakawa does not have standing to bring the 16 present TILA claim.”). 17 In this case, however, Ms. Wright is not asserting a claim under 18 TILA, but is instead asserting a claim based on allegedly unlawful, 19 unfair, 20 house. The issue of prudential standing again arises, as there is no 21 documentation indicating that Ms. Wright is the record owner of the 22 property, and all evidence instead indicates that her son is the legal 23 owner 24 contest 25 claimant’s 26 property, along with physical possession of the property at the time and of ORDER - 4 deceptive the practices property. forfeiture the ‘unequivocal’ regarding Nevertheless, Ninth Circuit assertion of when has the foreclosure analyzing indicated, ownership in on her standing that the to “[a] seized Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 of seizure, can overcome the summary judgment hurdle.” United States 2 v. JP Morgan Chase Bank Account No. Ending 8215 in Name of Ladislao V. 3 Samaneigo, 835 F.3d 1159, 1164–65 (9th Cir. 2016). The Court finds 4 this reasoning instructive. 5 As to the property at issue here, Ms. Wright claims to be a 6 “joint owner in fee simple with her Son.” ECF No. 1-1 at 1; see also 7 ECF No. 14-1 at 32 (“THIS CERTIFIES that Anthony John Malveto and 8 Beryl Ann Wright are joint owners in fee simple absolute, as assignees 9 for valuable consideration of the following-described personal and 10 natural family homestead . . . .”). Ms. Wright also seems to have 11 physical possession of the property at issue. If Ms. Wright has an 12 ownership interest, a possessory interest, or both, in the property, 13 based on an agreement with her son or otherwise, that interest is 14 likely sufficient for standing purposes. See Gibson v. PNC Bank Nat’l 15 Assoc., 2016 WL 7131518, at *1 (9th Cir. Dec. 7, 2016) (unpublished) 16 (holding that a Plaintiff “has standing to challenge the foreclosure 17 and sale based on the property interest he acquired via his quitclaim 18 deed” despite not being a party to the note or deed foreclosed upon); 19 see also Hurst v. Fed. Nat’l Mortg. Ass’n, 642 F. App’x 533, 537 (6th 20 Cir. 21 foreclosure where the plaintiff claimed that she had the right to 22 purchase the property at the redemption price based on property or 23 inheritance rights).2 2016) (holding that a plaintiff had standing to contest a 24 2 25 26 In Hurst, the Sixth Circuit noted that “the facts alleged in the complaint render the legitimacy of Plaintiff’s interest — as well as the allegedly defective foreclosure’s effect on that interest — suspect. But those issues go more to the merits of Plaintiff’s claims rather than her standing to bring them.” 642 F. App’x at 537. ORDER - 5 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 Based on that reasoning, Ms. Wright satisfies the elements of 2 standing here: (1) she would suffer an imminent, legally protected 3 injury 4 Defendants’ 5 injury; and (3) the Court could redress the injury by granting Ms. 6 Wright’s claim for injunctive relief to prevent foreclosure. The Court 7 therefore finds that Ms. Wright has standing to bring this claim in 8 federal court. if her property foreclosure rights were attempts are impaired the by cause foreclosure; of that (2) imminent III. MOTION FOR WITHDRAWAL AND MOTION TO STRIKE 9 10 Ms. Wright has filed two additional motions relevant to her 11 motion to remand and for preliminary injunction that can be disposed 12 of prior to addressing the substantive issues of that motion. On 13 January 14 Withdrawal of Motion for TRO and OSC Re: Preliminary Injunction and 15 Proposed Order, by Affidavit. ECF No. 21. The Clerk’s Office construed 16 this filing as a Motion for Withdrawal. In this filing, Ms. Wright 17 requests withdrawal of the proposed orders she attached to her motion 18 to remand and also appears to request withdrawal of the portion of her 19 remand motion requesting injunctive relief. Ms. Wright indicates that 20 she requests withdrawal because she does not believe that the Court 21 has jurisdiction to grant such relief. In the motion for withdrawal, 22 however, Ms. Wright also seems to ask the Court to exercise whatever 23 ability it has to grant injunctive relief: 24 25 26 5, 2017, Ms. Wright filed a Notice of Withdrawal If this court has further restraining and enjoining powers without jurisdiction and venue, in that instance only, without waiving any rights in law and equity, I invoke this court to exercise such power to order defendants to cease ORDER - 6 and Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 ALL collection activities described in my proposed order pending remand . . . . 1 2 ECF No. 21 at 3. This conditional language makes Ms. Wright’s motion 3 to withdraw somewhat unclear. Still, based on the above-quoted 4 statement, it appears clear to the Court that Ms. Wright continues to 5 request that the Court grant injunctive relief to the extent possible. 6 Because the Court finds that it has jurisdiction over this case, 7 as outlined below, the Court understands Ms. Wright to continue to 8 request injunctive relief. Accordingly, the Court denies Ms. Wright’s 9 motion to withdraw her request for injunctive relief as moot, finding 10 that the request to withdraw was conditional on a finding that the 11 Court did not have jurisdiction. Because the Court denies injunctive 12 relief, as outlined below, Ms. Wright’s request to withdraw her 13 proposed orders granting such relief is also denied as moot. 14 In addition, on January 20, 2017, Ms. Wright filed a Motion to 15 Strike the request for oral argument included in her Reply regarding 16 the Motion for Remand. ECF No. 27. In Ms. Wright’s Motion for Remand, 17 ECF No. 14, she did not elect oral argument. Nor did Chase elect oral 18 argument in its Response. See ECF No. 19. Under Local Rule 7.1(h)(3), 19 oral argument was therefore waived, and a party would be required to 20 file a motion in order to elect oral argument. Accordingly, Ms. 21 Wright’s inclusion of the phrase “oral argument requested” in the 22 caption to her Reply was insufficient to elect oral argument and need 23 not be stricken. The Motion to Strike is therefore denied as moot. 24 // 25 / 26 ORDER - 7 Case 4:16-cv-05155-EFS IV. 1 Document 30 Filed 02/02/17 REMAND MOTION 2 Turning to Ms. Wright’s Motion to Remand, 28 U.S.C. § 1447(c) 3 provides, “[a] motion to remand the case on the basis of any defect 4 other than lack of subject matter jurisdiction must be made within 30 5 days after the filing of the notice of removal under section 1446(a).” 6 28 U.S.C. § 1447(c). 7 her removal objections were filed on December 15, 2016, less than 8 thirty days after the removal. Although JPMorgan Chase’s removal of 9 this action appears unfair from Ms. Wright’s perspective, the Court that removal Ms. Wright timely filed her motion to remand; 10 finds is permitted by federal law. For the reasons 11 outlined below, the Court denies Ms. Wright’s Motion to Remand. 12 A. Federal Subject Matter Jurisdiction A state court defendant may remove to federal court any state 13 14 court action that 15 jurisdiction of the federal court — that is, claims based on a federal 16 question or involving diversity of citizenship. 28 U.S.C. § 1441. 17 Federal 18 action arises “under the Constitution, laws, or treaties of the United 19 States.” Id.; see also 28 U.S.C. § 1331. “[A] case may arise under 20 federal 21 necessarily turn[s] on some construction of federal law.’” 22 Union of Operating Eng’rs v. Cty. of Plumas, 559 F.3d 104, 1044 (9th 23 Cir. 2009) (quoting Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 24 804, 808 (1986)) (internal quotation marks omitted). Diversity of 25 citizenship 26 controversy is greater than $75,000 and the parties are diverse. Id.; question law ORDER - 8 could subject ‘where subject the have matter been jurisdiction vindication matter brought of jurisdiction a under exists right exists the if under if the original the civil state law Int’l amount in Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 28 U.S.C. § 1332. State law claims over which a federal court would 2 not have original jurisdiction may also be addressed by a federal 3 court if the state law claims “are so related to claims in the action 4 within such original jurisdiction that they form part of the same case 5 or controversy under Article III of the United States Constitution.” 6 28 7 establishing federal jurisdiction. 8 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & 9 Steel Co., 257 U.S. 92, 97 (1921)). 10 U.S.C. Here, § 1367. The federal removing question defendant has the burden of Emrich v. Touche Ross & Co., 846 subject matter jurisdiction exists 11 because Ms. Wright’s claims, as alleged in her complaint, require 12 interpretation 13 Defendants are attempting to unlawfully foreclose on her house. ECF 14 No. 1-1. This claim is based on the facts recited in her complaint, 15 including statements such as, “On 5/13/2015, the hearsay note & DT 16 [deed of trust] were rescinded under the Truth In Lending Act, Title 17 15 United States Code (USC) Chapter 41, specifically § 1635,” “Chase 18 ignored, 19 general claims cancellation,” and “Chase and QLSCW continued ongoing 20 wrongful and unlawful collection on the rescinded, cancelled hearsay 21 note & DT.” ECF No. 1-1 at 10. Ms. Wright also noted in her complaint 22 that: “the hearsay note & DT alleged to represent the alleged debt and 23 basis of the intended foreclosure are in contravention of Washington 24 and federal law.” ECF No. 1-1 at 7 (emphasis added). In her motion for 25 remand, Ms. Wright again indicated her claim’s partial basis in TILA, 26 stating: “Plaintiff moves this Court to take mandatory judicial notice ORDER - 9 of TILA, neglected, and a federal disregarded statute. the She TILA argues rescission that and the the Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 of its duty to enforce the TILA rescission, now that it is in front of 2 it by the defendants’ hands.” ECF No. 14 at 6. Plaintiff’s claims 3 require that the Court determine whether a valid mortgage exists — 4 including whether a valid rescission took place under the federal TILA 5 — 6 Accordingly, this civil action turns on the interpretation of a law of 7 the United States, and federal question subject matter jurisdiction 8 exists. See 28 U.S.C. § 1331. in order There 9 to is under determine also supplemental jurisdiction state finding 13 determining whether the foreclosure at issue is lawful. In addition, 14 both the TILA rescission and the WCPA questions involve assessment of 15 the mortgage transaction and any errors or violations in the execution 16 of that transaction. The Court therefore finds that the federal issues 17 and state law issues “form part of the same case or controversy.” 28 18 U.S.C. § 1367. 19 The need not WCPA reach was the jurisdiction. law 12 the supplemental the lawful. finding as to whether there was a valid rescission under TILA and a whether on over is 11 Court based foreclosure claims to WCPA the 10 as the whether violated question of are Both essential whether a to diversity 20 jurisdiction also exists in this case, although the Court notes that 21 the 22 remaining balance of the mortgage is greater than $75,000. See ECF 23 No. 14-1 at 21. In addition, diversity of citizenship clearly exists 24 for all Defendants apart from Quality Loan Service Corporation of 25 Washington. The only question, therefore, would be whether Quality 26 Loan Service Corporation of Washington is a nominal Defendant, as amount ORDER - 10 in controversy requirement is satisfied here, as the Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 alleged by Defendant JPMorgan Chase, see ECF No. 19 at 5. The Court 2 need not decide that issue at this time. 3 To the extent Ms. Wright requests to amend her complaint in 4 order to eliminate federal subject matter jurisdiction, ECF No. 26 at 5 8, that request is denied. The Ninth Circuit has made clear that 6 “jurisdiction must be analyzed on the basis of the pleadings filed at 7 the 8 Sparta Surgical Corp. v. Nat’l Ass’n of Sec. Dealers Inc., 159 F.3d 9 1209, 1213 (9th Cir. 1998), abrogated on other grounds by Merrill 10 Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562 (2016). 11 “[A] 12 eliminate the federal question upon which removal was based.” Id. 13 B. time of removal plaintiff may without not compel reference remand to by subsequent amending a amendments.” complaint to Personal Jurisdiction 14 The Court also has personal jurisdiction over Ms. Wright. The 15 record indicates that Ms. Wright is physically present in the Eastern 16 District of Washington and has resided in the district at all times 17 relevant to this case. As a result, in personam jurisdiction exists. 18 See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 925 19 (2011) (“For an individual, the paradigm forum for the exercise of 20 general jurisdiction is the individual’s domicile[.]”); Burnham v. 21 Sup. Ct. of Cal., 495 U.S. 604, 619 (1990) (“[J]urisdiction based on 22 physical presence alone constitutes due process because it is one of 23 the continuing traditions of our legal system that define the due 24 process standard of ‘traditional notions of fair play and substantial 25 justice.’”). The Court also has jurisdiction over the property at 26 ORDER - 11 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 issue in this case, as it is located in the Eastern District of 2 Washington. 3 C. Venue In addition, venue is appropriate in the Eastern District of 4 5 Washington. For cases that have been removed to federal court, venue 6 is governed by 28 U.S.C. § 1441. Polizzi v. Cowles Magazines, Inc., 7 345 U.S. 663, 665 (1953). Section 1441 states: [A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. 8 9 10 11 The Eastern District of Washington is the federal district associated 12 with the state court where Ms. Wright filed her complaint, so venue is 13 appropriate in this Court based on Ms. Wright’s original choice of 14 filing in Walla Walla County. 15 V. MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY 16 INJUNCTION 17 In her motion, Ms. Wright also requested both a temporary injunction, with the 18 restraining order and a preliminary goal of 19 preventing Defendants from foreclosing on her house.3 The analysis for 20 issuance of a preliminary injunction is generally as follows: “A 21 plaintiff seeking a preliminary injunction must establish that he is 22 likely to succeed on the merits, that he is likely to suffer 23 irreparable harm in the absence of preliminary relief, that the 24 balance of equities tips in his favor, and that an injunction is in 25 3 26 The foreclosure was originally scheduled for December 15, 2016, ECF No. 141 at 2, but Plaintiff has since indicated that the sale is now scheduled for February 10, 2017, ECF No. 21 at 3. ORDER - 12 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 2 7, 20 (2008). Under this inquiry, “courts must balance the competing 3 claims of injury and must consider the effect on each party of the 4 granting or withholding of the requested relief.” Id. at 24 (internal 5 quotation marks omitted). If a court finds, however, that there is a 6 complete lack of probability of success on the merits, no further 7 findings are necessary. Daniels v. Cmty. Lending, Inc., 621 F. App’x 8 427, 427 (9th Cir. 2015) (citing Flexible Lifeline Sys., Inc. v. 9 Precision Lift, Inc., 654 F.3d 989, 993–94 (9th Cir. 2011) (per 10 curiam); Global Horizons, Inc. v. U.S. Dep’t of Labor, 510 F.3d 1054, 11 1058 (9th Cir. 2007)). The Ninth Circuit has noted that the analysis for issuance of a 12 13 temporary 14 analysis for issuance of a preliminary injunction. Stuhlbarg Int’l 15 Sales Co., Inc. v. John D. Brush and Co., Inc., 240 F.3d 832, 839 n.7 16 (9th 17 restraining order and a preliminary injunction are the duration of the 18 injunction and the availability of argument prior to issuance of the 19 injunction. Bennett v. Medtronic, Inc., 285 F.3d 801, 804 (9th Cir. 20 2002). A temporary restraining order may last no longer than 14 days 21 and argument is not required prior to issuance of the order. Fed. R. 22 Civ. P. 65. In this case, Ms. Wright is requesting ongoing relief, and 23 the parties have had time to fully brief the issue, so the Court will 24 treat the request as one for a preliminary injunction. 25 26 restraining Cir. The 2001). Court order The finds is primary that, at “substantially differences this juncture, identical” between Ms. a Wright to the temporary has not demonstrated a likelihood of success in this case on any issue that ORDER - 13 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 would affect the validity of the foreclosure. The Court therefore 2 denies Plaintiff’s motion for injunctive relief without reaching the 3 other preliminary injunction factors. See Daniels, 621 F. App’x at 427 4 (“The 5 plaintiffs’ motion for a preliminary injunction after . . . concluding 6 that plaintiffs had failed to establish a likelihood of success on the 7 merits with regard to any claim that could affect the validity of the 8 foreclosure.”). district First, 9 court Ms. under did Wright has not its provided evidence of valid rescission right extends to “each consumer whose ownership interest is 13 or will be subject to the security interest.” 12 C.F.R. § 226.15(a). 14 Under 15 U.S.C. § 1635(f): “An obligor’s right of rescission shall 15 expire three years after the date of consummation of the transaction 16 or 17 notwithstanding the fact that the information and forms required under 18 this section or any other disclosures required under this chapter have 19 not been delivered to the obligor.” Consummation is defined under 20 Regulation Z as the point when the borrower becomes contractually 21 obligated on the loan. 12 C.F.R. § 226(a)(13). The Ninth Circuit has 22 explained that when a borrower is contractually obligated is defined 23 by state law. Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989). In 24 Washington, a contract is created when the essential elements of a 25 contract, 26 promise, ORDER - 14 “the the sale of subject terms and the matter 15 property, of the conditions, U.S.C. the a 12 transactions. with denying rescind the borrowers by 11 consumer provides discretion rescission upon TILA abuse 10 certain TILA. not § 1635(a). whichever contract, and (in the some right occurs to The first, parties, the but all not Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 jurisdictions) the price or consideration,” have been included in the 2 agreement. DePhillips v. Zolt Const. Co., Inc., 959 P.2d 1104 (Wash. 3 1998). 4 Ms. Wright’s son, Mr. Malveto, signed the mortgage documents on 5 August 1, 2003. ECF Nos. 9-1 & 9-2. There is no evidence to support a 6 finding 7 documents. According, the Court finds that the mortgage transaction 8 was likely consummated shortly after its execution, as demonstrated by 9 the fact that Mr. Malveto made payments on the loan between 2003 and 10 2011. ECF No. 9-4 at 3. Ms. Wright claims that the transaction was 11 rescinded on May 13, 2015. ECF No. 14 at 10; see also ECF No. 14-1 at 12 31. The statutory time period for rescission concluded long before May 13 13, 2015, making any rescission at that time ineffective. See Miguel 14 v. 15 (“[S]ection 1635(f) represents an ‘absolute limitation on rescission 16 actions’ which bars any claims filed more than three years after the 17 consummation of the transaction.” (quoting King v. California, 784 18 F.2d 910, 913 (9th Cir. 1986))). that Country any essential Funding 1161, in 22 apparently attempted to rescind the loan transaction based on the 23 following: creation of the mortgage no sent 2002) violation presents been Cir. 21 Plaintiff had (9th the time the rescission 1164 from statutory period, of F.3d missing 20 26 notice 309 were Even 25 the Corp., terms 19 24 if contract evidence agreement. within of Mr. a TILA Malveto [U]nder the three day rule, the three year limitation, and under the usury, extortion, lack of disclosure, misrepresentation, ultra vires, unconscionability, unfair trade practice, and deprivation of fundamental human rights, including, but not limited to, the intangible ORDER - 15 the Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 rights to receive honest services and to be free from being deceived into violation of the state of Washington Constitution Article 12 Section 11 and general claims theories and causes of action for deceptive and unfair business practices have made my alleged obligation to be void and unenforceable from its first alleged inception. By failing to disclose that the “borrower” is not a consumer for personal, family or household purposes, as myself seeking a consumer loan solely for those purposes, and by failing to disclose the true lender and using subterfuge to hide the fact that the “lender at closing was paid to pose as the lender when in fact an undisclosed unregistered third party had rented the charter or lending license of the “lender”, and for these facts constituting the creation of an unconscionable contract the limitation on my right to rescind was extended indefinitely. For refusal, failure, and/or neglect to provide all lawfully required loan disclosures form inception of the original alleged “loan”, I, Anthony John Malveto, do hereby rescind/cancel “loan number 48580583” and all pertaining to and in relation thereto every time, in every place, by every device, to/for/by all persons, and for all purposes, including but not limited to all related prior and/or subsequent alleged loans, information, applications, modifications, business, instrument, document, alleged transactions, and all of every nature relevant thereto. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ECF No. 14-1 at 38–39. Mr. Malveto separately alleged appraisal fraud, 15 fraud in the inducement, fraud in the execution, and usury. ECF 16 No. 14-1 at 40–41. Most of these claims are not of the type for which 17 rescission under TIlA would be allowed. See 15 U.S.C. § 1635; 12 18 C.F.R. §§ 226.18, 226.23(a)(3). In addition, at this time, there is no 19 evidence in the record beyond the bare assertions of Ms. Wright and 20 Mr. Malveto to support the alleged grounds for TILA rescission. The 21 Court therefore finds that Ms. Wright is unlikely to succeed on the 22 merits of her claim regarding TILA rescission. 23 In addition, neither Plaintiff nor her son has returned the loan 24 proceeds from the mortgage transaction, and Plaintiff remains in 25 possession of the property purchased with those loan proceeds. See 26 ORDER - 16 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 Semar v Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 702 (9th 2 Cir. 3 dissolved, 4 borrower returns the loan proceeds, less any finance or other charge.” 5 (citing 6 satisfied the borrower obligations that would have been required had a 7 valid rescission occurred. 1986) (“Under the a TILA lender rescission, returns 15 U.S.C. § 1635(b))). the the security borrower’s interest payments, and is the As a result, Mr. Malveto has not 8 There is also no evidence in the record that either Ms. Wright 9 or Mr. Malveto intends to return the loan proceeds. Instead, Ms. 10 Wright’s statements indicate that she believes no debt is owed to the 11 Defendants by her or her son. See, e.g., ECF No. 1-1 at 3 (“Chase and 12 QLSCW 13 rescinded, cancelled hearsay not & DT.”); ECF No. 1-1 at 7 (“[T]he 14 facts obtained on the record by discovery will reveal . . . that the 15 alleged note & DT were never in default.”). A court need not approve a 16 rescission if it is clear that the borrower will not satisfy its 17 obligations upon rescission. Yamamoto v. Bank of N.Y., 329 F.3d 1167, 18 1173 (9th Cir. 2003) (“[A] court may impose conditions on rescission 19 that assure that the borrower meets her obligations once the creditor 20 has performed its obligations.”). continued ongoing wrongful and unlawful collection on the 21 Second, to the extent Ms. Wright has stated a claim under the 22 WCPA, Ms. Wright has not provided evidence of a violation of that Act. 23 The statutory time period for a WCPA claim concluded long before the 24 filing of this action. See RCW 19.86.120 (“Any action to enforce a 25 claim for damages under RCW 19.86.090 shall be forever barred unless 26 commenced within four years after the cause of action accrues[.]”). In ORDER - 17 Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 addition, Ms. Wright has not provided evidence to support her claim 2 for violation of the WCPA. In the complaint, Plaintiff argues that the 3 mortgage transaction was invalid because “a. there is no document 4 signed by both parties; b. they are adhesion contracts; c. there was 5 no bargaining over terms and conditions; d. there was no meeting of 6 the 7 ‘consideration’ which each party was to provide under the contract was 8 never mutually agreed to, and/or was never performed.” ECF No. 1-1 at 9 8. Ms. Wright has not, however, provided evidence to support these 10 allegations. In addition, Defendant Chase has raised the argument that 11 Ms. Wright is barred from asserting the WCPA claims based on res 12 judicata stemming from a prior Washington State Court judgment. See 13 ECF No. 9 at 10. For these reasons, based on the evidence currently 14 before it, the Court finds that Ms. Wright is unlikely to succeed on 15 her WCPA claims. minds into mutually agreed terms and conditions; e. the 16 Third, because at this time there is no evidence of a valid 17 rescission under TILA and there is no support in the record for Ms. 18 Wright’s claim that the mortgage agreement was an invalid contract 19 under the WCPA or otherwise, Ms. Wright has failed to establish that 20 the 21 rescinded and was otherwise valid, then the holder of the mortgage 22 note 23 borrower’s default. Ms. Wright does not seem to contest the allegation 24 that neither she nor Mr. Malveto has been making payments on the 25 mortgage, but instead argues only that they are not required to make 26 such foreclosure would be payments. ORDER - 18 is unlawful. authorized This to failure If the foreclose to make mortgage on the payments, agreement property without was upon a not the valid Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 rescission or invalidation of the mortgage, appears to constitute 2 default sufficient to justify foreclosure. 3 The Court finds that, at this time, Ms. Wright has failed to 4 establish a likelihood of success on the merits that would affect the 5 validity of the foreclosure action. This finding alone is sufficient 6 to justify denial of her request for a preliminary injunction. In addition to her failure to prove a likelihood of success on 7 8 the merits, the 9 equitable relief by the doctrine of unclean hands. Silvas v. G.E. 10 Money Bank, 449 F. App’x 641, 644 (9th Cir. 2011). In Silvas, the 11 Ninth 12 prevent foreclosure based on the doctrine of unclean hands, noting 13 that the Plaintiff “wishes to continue to live in her house, but she 14 has not offered to make any payments on her loan, she did not tender 15 any payments when she sought rescission, nor is she able to repay the 16 loan 17 maintains possession of the property purchased with the loan proceeds 18 from the mortgage transaction with Defendants, and neither she nor Mr. 19 Malveto have repaid the loan proceeds or offered to do so, Ms. Wright 20 cannot now seek judicial interference to prevent sale of the property. Circuit at this Court finds that Ms. affirmed time.” the Id. denial As of a explained 21 Accordingly, IT IS HEREBY ORDERED: 22 1. Wright is also preliminary above, barred from injunction because Ms. to Wright Plaintiff’s Motion to Remand Action to State Court and for 23 Emergency Temporary Restraining Order and OSC Preliminary 24 Injunction, ECF No. 14, is DENIED. 25 2. Plaintiff’s construed Motion for Notice of Withdrawal and Motion 26 ORDER - 19 for Withdrawal of Motion for TRO and OSC RE: Case 4:16-cv-05155-EFS Document 30 Filed 02/02/17 1 Preliminary Injunction and Proposed Order, ECF No. 21, is 2 DENIED AS MOOT. 3 3. 6 7 Motion to Strike, ECF No. 27, is DENIED AS MOOT. 4 5 Plaintiff’s IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and provide copies to all counsel. DATED this 2nd day of February 2017. 8 s/Edward F. Shea EDWARD F. SHEA Senior United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Q:\EFS\Civil\2016\5155.Wright.ord.deny.remand.TRO.PI.lc02.docx ORDER - 20
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