Stewart v. JPMorgan Chase Bank, N.A. (In re Stewart)
473 B.R. 612
Bankr. W.D. Pa.2012Background
- Debtors filed for Chapter 13 after defaulting on a WaMu/WaMu-affiliate refinanced loan acquired by JPMorgan from the FDIC on Sep. 25, 2008.
- Complaint targets JPMorgan and related entities with eight counts, including TILA, RESPA, UTPCPL, and a claimed 544(a)(3) “PREFERENCE” by using Trustee powers.
- FIRREA/FDIC administrative claim process governs claims against failed banks and their receivers; FIRREA bar requires exhaustion before federal courts may adjudicate such claims.
- Debtors seek to avoid JPMorgan’s security interest via Count IV, arguing derivative standing to pursue avoidance actions under §§ 544, 547, 548, but the Trustee and JPMorgan oppose derivative standing.
- Rooker-Feldman doctrine bars federal review of state court foreclosure judgments when rescission or related relief would negate that judgment; this affects the rescission theory in Count II/V.
- Court finds Counts I, II, V, VI, VII fall under FIRREA exhaustion; Count II rescission defense barred by Rooker-Feldman; Counts I, II, V, VI, VII dismissed for lack of jurisdiction and/or failure to state a claim; Count III proceeds; Count IV derivative standing denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FIRREA exhaustion bars Counts I, II, V, VI, VII | Debtors argue FIRREA does not bar their claims against JPMorgan as successor to WaMu | JPMorgan argues FIRREA requires administrative exhaustion and bars these claims | Counts I, II, V, VI, VII are barred by FIRREA exhaustion and dismissed without prejudice |
| Rooker-Feldman bars rescission-based relief after foreclosure judgment | Debtors contend rescission is an independent defense not review of state judgment | Court should review only state-court judgment under Rooker-Feldman | Rescission claim barred by Rooker-Feldman; Count II/rescission dismissed |
| Derivative standing for Counts IV (avoidance actions) | Debtors seek derivative standing to pursue Trustee powers | Trustee/JPMorgan oppose derivative standing; need colorable estate-benefiting claim | Derivative standing denied; no colorable claim shown; Count IV dismissed |
| Remaining post-Purchase-Agreement servicing claims survive threshold but fail to state a claim | Debtors allege servicing failures under JPMorgan after assumption of WaMu’s obligations | Jurisdiction not barred; however claims fail on pleading standards | Counts I–III? (3rd category) dismissed under Rule 12(b)(6) for failure to state a claim; Count III to proceed? (Note: court allowed Count III to proceed; see text) |
Key Cases Cited
- National Union Fire Ins. Co. v. City Sav., F.S.B., 28 F.3d 376 (3d Cir. 1994) (FIRREA exhaustion applies to claims against receivers and successors)
- Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir. 2010) (Gives four-factor test for Rooker-Feldman applicability)
- In re Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery, 330 F.3d 548 (3d Cir. 2003) (Affords equitable standing to pursue actions for the estate (Cybergenics))
- In re Knapper, 407 F.3d 573 (3d Cir. 2005) (Chapter 13 debtor standing to bring avoidance actions not plainly recognized)
- Langenkamp v. Culp, 498 U.S. 42 (1990) (Constitutional limits on bankruptcy court final adjudication and waiver concepts)