Lester v. J.P. Morgan Chase Bank
926 F. Supp. 2d 1081
N.D. Cal.2013Background
- Lester borrowed $2,292,500 from WaMu in 2007 to buy property in Hillsborough, CA, secured by a Deed of Trust naming CRC as Trustee.
- Lester alleges WaMu loan was securitized into the WaMu 2007-HY7 Trust with LaSalle Bank as Trustee; Chase later acquired WaMu assets after the FDIC’s 2008 seizure.
- Assignment of Deed of Trust (Nov. 18, 2010) purportedly transferred interests to Bank of America, successor by merger to LaSalle Bank as trustee for the WaMu 2007-HY7 Trust; Lester questions authority of signatory Colleen Irby.
- Chase began foreclosure proceedings and several notices of default were recorded; modification attempts spanned 2008–2012, including trial periods and multiple submissions of financial information.
- Lester filed a multi-claim complaint in Oct. 2012 seeking injunction, declaratory relief, and various tort, contract, and tort-like remedies; Chase moved to dismiss under Rule 12(b)(6).
- Court granted in part and denied in part Chase’s motion, dismissing several claims with/without prejudice and allowing one claim to survive (Accounting). Logistic constraints and muddled theories about securitization affected the court’s analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose challenged by securitization theory | Lester contends Chase lacks standing due to WaMu securitization | Chase relies on securitization not defeating standing and argues no void | Causes dismissed; standing theories unclear; some claims dismissed with prejudice |
| Tender requirement applicability | Tender not required where foreclosure authority is in dispute | Tender required for foreclose challenges under standard rules | Tender not required where foreclosure authority is contested; some claims survive without tender |
| Fraud/contract claims pleading standards | Fifth–eighth claims pleaded with claims of misrepresentation | Claims fail for lack of clear promises and Rule 9(b) specificity | Fifth–eighth claims dismissed without prejudice |
| Quiet title viability against a foreclosure action | Chase lacks authority to foreclose; quiet title should lie | Quiet title requires proper pleading and traditional tender considerations | Ninth claim dismissed without prejudice; may proceed under proper theory that foreclose is void |
| Accounting claim viability | Accounting is necessary to determine disputed sums | Accounting not warranted without fiduciary duty or complexity | Tenth claim survives; accounting theory sufficiently pled |
| Unfair Competition Law (17200) pleading | Chase engaged in deceptive practices in modification/foreclosure | Claims are conclusory and inadequately pleaded | Twelfth claim dismissed without prejudice |
Key Cases Cited
- Dimock v. Emerald Properties LLC, 81 Cal.App.4th 868 (Cal. App." 2000) (void/voidable foreclosure concerns and authority issues)
- Mabry v. Superior Court, 185 Cal.App.4th 208 (Cal.Ct.App. 2010) (tender not required for certain foreclosure challenges; standard of remedy)
- Kelley v. Mortgage Electronic Registration Sys., 642 F.Supp.2d 1048 (N.D. Cal. 2009) (unfair title interests and evidence standards in quiet-title/foreclosure context)
- Leeper v. Beltrami, 53 Cal.2d 195 (Cal.) (distinguishes remedies vs. causes of action; limits on certain claims)