Thomas v. JPMorgan Chase & Co.
811 F. Supp. 2d 781
S.D.N.Y.2011Background
- Johny Thomas and Johnny Fields (class action plaintiffs) sue JPMorgan Chase & Co. and Chase Home Finance for multiple contract, consumer protection, and FDCPA-based claims arising from HAMP participation and loan modification processing.
- HAMP implemented under TARP via the Making-Home-Affordable program; JP Morgan entered the SPA with Fannie Mae (agency of Treasury) to perform modification/foreclosure-prevention services for loans it services.
- TPP agreements governed three-month trial modifications; they state those payments do not cure defaults and require a fully executed Modification Agreement for a permanent modification.
- Thomas and Fields obtained TPPs in 2009-2010, made multiple trial payments, but Chase allegedly did not credit those payments and eventually denied permanent modification based on investor requirements.
- Complaint alleges various misrepresentations and mishandling in modification processing, notices of default/foreclosure, and in-house modification options, with subsequent foreclosure actions contemplated or pursued.
- Court grants in part and denies in part JPMorgan Chase & Co. and Chase Home Finance, LLC’s Rule 12(b)(1)/(6) motion; dismisses several claims and allows limited repleading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to pursue the claims | Thomas/Fields have injury via notices of foreclosure and contract privity. | No standing until foreclosure completes; injury is contingent. | Plaintiffs have standing; foreclosure contingency does not defeat standing. |
| Breach of the Trial Period Plan and Modification Contracts | TPP/SPA created modification rights; defendants breached by denying permanent modification. | TPP is not a permanent modification; modification requires execution and conditions not met. | TPP breach dismissed; no enforceable permanent modification; TPP not a contract for modification. |
| Breach of the SPA and third-party rights | SPA/Program Documentation intended beneficiaries. | ||
| Plaintiffs rely on SPA terms for modification conduct. | SPA binds only JP Morgan and Fannie Mae; borrowers lack third-party beneficiary status. | Breach of SPA claim dismissed; no third-party beneficiary rights. | |
| Fraud and misrepresentation claims | Defendants misrepresented modification/foreclosure processes; reliance caused damages. | Some misrepresentations assertedly vague; intent not shown; negligent misrepresentation may remain. | Fraud claim dismissed; negligent misrepresentation survives. |
| DPA, CFA, and FDCPA claims | Defendants engaged in deceptive practices under state and federal acts. | Plaintiffs lack proper situs, reliance, or standing to sustain certain acts; some acts foreclosed by law. | DPA and FDCPA claims dismissed; CFA claim survives; DPA claims barred by New York/ out-of-state alignment. |
Key Cases Cited
- Bosque v. Wells Fargo, 762 F.Supp.2d 342 (D. Mass. 2011) (court held TPP may not itself be a modification contract but may involve new consideration facts depending on circumstances)
- Edwards v. Aurora Loan Servs., LLC, 791 F.Supp.2d 144 (D.D.C. 2011) (discusses loan modification processing and standing to challenge practices under similar programs)
- Daloisio v. Liberty Mut. Fire Ins. Co., 754 F.Supp.2d 707 (D.N.J. 2010) (recognizes duty limitations of lenders/loan servicers to borrowers; relevance to negligence claims)