Miller v. Washington Mutual Bank FA
776 F. Supp. 2d 1064
N.D. Cal.2011Background
- Miller signed a March 2005 deed of trust securing a $640,000 loan from WaMu, with CRC as trustee on the property at 5178 East Lakeshore Dr., San Ramon.
- Plaintiff alleges she was not informed of the correct interest rate, adjustments, or costs/fees before signing.
- In 2010, CRC issued a notice of default and a notice of trustee's sale; JPMorgan Chase subsequently acquired WaMu's assets from the FDIC in 2008.
- Plaintiff filed suit in state court (Contra Costa) in 2010 alleging six claims against all defendants; JPMorgan Chase and CRC removed the case to federal court.
- Defendants moved to dismiss under Rule 12(b)(6); the court granted in part and denied in part, with several claims dismissed in full or in part and leave to amend granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud claim timeliness and specificity | Discovery rule extends accrual date; misrepresentation concealed rates and index. | Statute of limitations and lack of 9(b) specificity bar the claim against some defendants. | Fraud claim surviving as to WaMu; dismissed as to Chase and CRC. |
| Rescission/restitution for cognovit note | Discovery rule tolls for fraud/mistake; rescission should be available. | Four-year contract-based statute controls; discovery rule not applicable here. | Second claim dismissed as barred by statute. |
| Wrongful foreclosure claim based on cognovit note | Wrongful foreclosure under federal and state law without requiring immediate tender. | Tender of total debt is required. | Claim survives; no tender requirement applied to bar it at this stage. |
| Quiet title | Plaintiff seeks declaratory title; seeks to quiet against others. | Tender of debt is required to quiet title; claims fail otherwise. | Fourth claim dismissed for lack of tender. |
| Unfair business practices (UCL) and discovery rule | Defendants misrepresented terms; discovery rule tolls limitations. | Limitations bar most of the claim against Chase/CRC; only WaMu implicated. | Fifth claim survives against WaMu; dismissed against Chase and CRC; discovery rule applicable. |
Key Cases Cited
- Lee v. Escrow Consultants, Inc., 210 Cal.App.3d 915 (Cal. Ct. App. 1989) (discovery rule for fraud-based rescission cases)
- Mix v. Sodd, 126 Cal.App.3d 386 (Cal. Ct. App. 1981) (tender required to maintain quiet title action)
- More v. Calkins, 85 Cal. 177 (Cal. 1890) (mortgage sale considerations when debt is uncertain)
- Stockton v. Newman, 148 Cal.App.2d 558 (Cal. Ct. App. 1957) (equitable relief and reformation in foreclosure context)
- Edwards v. Marin Park, Inc., 356 F.3d 1058 (9th Cir. 2004) (Rule 9(b) pleading for civil RICO fraud claims)
- Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (pleading requirements for fraud and specificity)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (Rule 9(b) heightened pleading standard for UCL claims)
- Jolly v. Eli Lilly & Co., 44 Cal.3d 1103 (Cal. 1988) (discovery rule for accrual of injury and discovery of cause)
- Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393 (9th Cir. 1986) (pattern requirement for RICO claims)