O'Connor-Rose v. JPMorgan Chase Bank, N.A.
2:12-cv-00225
E.D. Cal.Feb 11, 2014Background
- Mortgage 2005 loan secured by 2945 Sporting Court, Deed of Trust allowed a suspense account and payment application in due-order; default notices and foreclosures contemplated if not cured.
- Between 2006–2008 plaintiff incurred sixteen late-payment charges; numerous Notices of Default issued and subsequently rescinded after payments.
- In 2011–2012 plaintiff’s payments and corporate advance fees affected suspense account balances; defendant applied payments to prior balances, creating ongoing delinquencies.
- Plaintiff filed suit December 2011 in state court, later removed to federal court; defendant moved for summary judgment on breach of contract.
- Court addressed evidentiary objections, conformity of accounting, HBOR retroactivity (section 2924.17) and unconscionability challenges to corporate advance fees; ultimately finds plaintiff in default and grants summary judgment for defendant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was plaintiff in default at the time suit was filed? | Plaintiff argues misapplication of payments caused default. | Defendant maintains payments were applied correctly and default existed. | Yes; plaintiff was in default when suit filed. |
| Were corporate advance fees and foreclosure-related charges lawful and recoverable? | Fees were unlawful or unconscionable under HBOR and related statutes. | Fees were contractually authorized and properly charged; HBOR not retroactive. | Fees lawful; HBOR retroactivity not applied retroactively. |
| Did defendant fail to promptly notify plaintiff of corporate advance charges? | Defendant violated notice provisions of the Deed of Trust. | Notice was given via monthly statements; no obligation to notify promptly of corporate charges. | No breach; notices adequate. |
| Does RESPA or HBOR retroactivity defeat or alter the accounting-based breach analysis? | HBOR/RESPA mandating different treatment retroactively; misstatement of amounts. | HBOR not retroactive; accounting was correct; RESPA arguments insufficient. | HBOR not retroactive; RESPA arguments unpersuasive. |
Key Cases Cited
- Oasis W. Realty, Inc. v. Goldman, 51 Cal.4th 811 (Cal. 2011) (elements of breach and contract; standard for determining material facts in CA)
- Wise v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047 (C.D. Cal. 2012) (default defeats breach of contract claim in mortgage context)
- Fox v. Pollack, 181 Cal. App. 3d 954 (Cal. Ct. App. 1986) (attorney malpractice duty not owed to adversary in foreclosure)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (unconscionability limits in contract terms)
- Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952 (N.D. Cal. 2010) (procedural unconscionability and contract formation considerations)
- Borrissoff v. Taylor & Faust, 33 Cal.4th 523 (Cal. 2004) (attorney duties and third-party beneficiaries in contract)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (U.S. 1999) (reliability standards for expert testimony)
- Nationwide Transport Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051 (9th Cir. 2008) (ultimate issue testimony admissibility separate from reliability)