In re JPMorgan Chase Mortgage Modification Litigation
880 F. Supp. 2d 220
D. Mass.2012Background
- MDL consolidates homeowner suits against Chase alleging breach of HAMP trial modification agreements, deceptive promises, mishandling of modification processes, and foreclosure after promises of keeping homes during negotiations.
- Chase filed a motion to dismiss on March 5, 2012 under Fed. R. Civ. P. 12(b)(1), (6), and (7) for lack of subject matter jurisdiction, failure to state a claim, and failure to join necessary parties.
- Plaintiffs’ claims are organized into four groups: Group 1 breach of form contracts under HAMP; Group 2 UDAP and promissory estoppel; Group 3 breach of negotiated Loan Modification Agreements; Group 4 FDCPA.
- HAMP framework and two-stage modification: a Trial Period Plan (TPP) followed by a permanent modification if compliant; foreclosures suspended during evaluation and trial modification.
- OCC consent orders (2011) require remediation, institutional controls, and a framework (Independent Foreclosure Review) for calculating financial injury and remediation, with the framework described in OCC’s FAQ as not exclusive and not waiving other legal remedies.
- Chase argues that FISA precludes jurisdiction over Parts I, II, and IV, but the court holds that FISA does not bar non-party claims and that enforcement of state consumer protection laws and contract claims may proceed to the extent they do not contradict the OCC order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FISA bar jurisdiction over Part I, II, IV claims? | Chase argues bar under §1818(i)(1). | Chase contends all Part I, II, IV claims are barred to the extent inconsistent with OCC order. | No; FISA does not preclude these claims. |
| Are Part II UDAP claims preempted by the National Bank Act (NBA)? | UDAP claims are not preempted if they concern general duties or fraud; framing within HAMP must not create conflict. | NBA preempts state UDAP claims that regulate national banks' lending activities. | UDAP claims not preempted in part; some non-preempted conduct identified, but several examples are preempted. |
| Do Group 2 promissory estoppel claims survive? (Statute of Frauds and definiteness) | Oral promises induced reliance; estoppel can enforce definite promises. | Michigan Statute of Frauds bars certain claims; other promises lack definite terms and reasonable reliance. | Michigan estoppel claims dismissed; other estoppel claims dismissed for indefiniteness or lack of clear, definite promises. |
| Do Rosenthal Act and FDCPA claims against Chase survive? | California Rosenthal Act and FDCPA claims allege deceptive debt collection related to modification process. | FDCPA/Rosenthal Act claims should be limited or precluded where communications are not collection actions. | Rosenthal Act and California FDCPA claims permitted; Part IV FDCPA claim denied. |
| Are Michigan UDAP claims and party joinders required to proceed? | UDAP and co-plaintiff joinder should proceed; parties should be joined as necessary. | Some Michigan claims may be preempted or improperly pleaded; necessary-party analysis pending. | Stay or dismissal granted for Michigan UDAP and certain co-borrower joinder issues; plaintiffs to dismiss Michigan claims and join necessary parties. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for 12(b)(6) sufficiency)
- Katz v. Pershing, LLC, 806 F. Supp. 2d 452 (D. Mass. 2011) (standing and jurisdictional considerations in dismissal)
- Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92 (1st Cir. 2007) (pleading requirements in civil actions)
- Watterson v. Page, 987 F.2d 1 (1st Cir. 1993) (consideration of documents attached to pleadings)
- American Fair Credit Ass’n v. United Credit Nat’l Bank, 132 F.Supp.2d 1304 (D. Colo. 2001) (non-party enforcement of consent orders; limits on duplicative relief)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (state consumer protection claims and HOLA/NBA preemption framework)
- Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549 (9th Cir. 2010) (field preemption and state-law applicability to national banks)
- Conover v. E. Nat’l Bank, 786 F.2d 192 (3d Cir. 1986) (OCC consent orders and judicial review scope)
- Riggs v. Prober & Raphael, 681 F.3d 1097 (9th Cir. 2012) (FDCPA debt collector status for loan servicers under Rosenthal Act)