FILED August 09, 2010 ON 0 0 A 1 || JOHN M. SORICH (CA Bat No.125223) jsorich@adorno.com 2 |] S. CHRISTOPHER YOO (CA Bar No. 169442) cyoo@adomo.com 3 |] ADORNO YOSS ALVARADO & SMITH A Professional Corporation 4 |] 1 MacArthur Place, Suite 200 Santa Ana, California 92707 5 || Tel: (714) 852-6800 Fax: (714) 852-6899 6 Attorneys for Defendants 7 || JPMORGAN CHASE BANK, N.A.. AS AN ACQUIRER || OF CERTAIN ASSETS AND LIABILITIES OF 8 || WASHINGTON MUTUAL BANK FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION 9 |] ACTING AS RECEIVER and CHASE HOME FINANCE LLC 10 u UNITED STATES BANKRUPTCY COURT 12 E CENTRAL DISTRICT OF CALIFORNIA, LOS ANGELES DIVISION 2 13 4 Inte Case No.: 10-26953-C7 15 Se T. PETERSON and Adversary Case No.: 10-ap-02442 2 16 || KATHLEEN T. PETERSON, (DC No. SCY 001) <4 Debtors. (Chapter 7) 18 ‘The Honorable Thomas C. Holman 19 STEVEN T. PETERSON and | MOTION TO DISMISS THE 20 || KATHLEEN T. PETERSON, both individuals ADVERSARY COMPLAINT; MEMORANDUM OF POINTS & a1 AUTHORITIES Plaintifts, 22 (ERCP 12(b)(6) and (e) ) v. 23 JPMORGAN CHASE BANK, NATIONAL. DATE: September 28, 2010 24 || ASSOCIATION; CHASE HOME FINANCE, TIME: 9:32 am, LLC; LENDER PROCESSING SERVICES, CTRM: 32 25 || INC.; and LPS FIELD SERVICE: FLOOR: 6" Floor 26 Defendants. Action Filed: July 9, 2010 27 —— 28 4 ~ NOTICE OF MOTION AND MOTION TO DISMISS ADVERSARY COMPLAINTAND. MEMORANDUM OF POL HOR! Defendants JPMorgan Chase Bank, N.A. (“JPMorgan”), as an acquirer of certain assets and liabilities of Washington Mutual Bank from the Federal Deposit Insurance Corporation acting as receiver and Chase Home Finance LLC (“Chase Home Finance” and collectively “Defendants”) submit the following Memorandum of Points and Authorities in support of its Motion to Dismiss the ‘Complaint of plaintifis Steven T. Peterson and Kathleen T. Peterson (collectively “Plaintiffs"). I. SUMMARY OF ARGUM! Plaintifiés borrowed $510,000.00 secured by a deed of trust encumbering the property located at 4703 Cattalo Way, Roseville, California 95747 (“Subject Property”). When Plaintiffs failed to make payments on the residential loan, a Notice of Default was recorded against the Subject Property, | because Plaintiffs were $20,991.90 in arrears as of May 12, 2010. See Request for Judicial Notice (“RIN”), Exhibit 2. Pl fs do not dispute these facts; they openly admit that since 2008. they struggled to meet their loan obligations, and eventually realized that they might lose the Subject Property to foreclosure. See Complaint, §¥ 33-39. Thus, apparently Plaintiffs attempt to negotiate either a short sale or a deed in lieu of foreclosure with JPMorgan, the holder of the Subject Property note. See Complaint, 4 42, 44, 46-50. At some point during these negotiations, about November 2009, Plaintiffs moved out of the Subject Property into a rental home. See Complaint, $9 53, 56. Plaintifis fale their attempts to short sell the property, and on March 20, 2010 Plaintifl’ filed for Chapter 7 bankruptey. See Complaint, § 62; RIN, Exhibit 3 Over 120 paragraphs of introductory allegations, Plaintiffs accomplish three things: 1) they make erroneous conclusions of law; 2) they assert allegations that are not wrongful; and, 3) any’ purported wrongful conduct cannot be attributed to Defendants. See Complaint, {¥ 14-142. Accordingly, Plaintifi’s cannot state a claim against Defendants as fully discussed below. This Court granted Plaintiffs’ motion to compel abandonment of the Subject Property in April 12, 2010. See RIN, Exhibit 4. Given this fact, Plaintiffs erroneously contend that “[wJhen property is abandoned, itis removed from the Estate, thereby divesting the Bankruptey Court of jurisdiction over matters concerning the subject property. (emphasis added). See Complaint { 74. All of Plaintiffs six claims of 1) trespass; 2) violation of automatic stay; 3) defamation; 4) false light; 5) intentional 1 "MOTION TO DISMISS ADVERSARY COMPLATNT a tuane22infliction of emotional distress; and 6) violation of California's Rosenthal Act are premised on Plaintiff's perplexing contention of the effect of the abandonment order on the Subject Property. See Complaint. Apparently, Plaintiffs’ motion for abandonment of the Subject Property was meant to accomplish one thing, and one thing alone — to enable Plaintiffs to negotiate and sign a deed in lieu of foreclosure, “which effectively would divest plaintiff’ from all interest in the property.” See Complaint, §|69. Thus, in Plaintiffs’ minds, any actions by others that they perceived as an intrusion on their plans to negotiate a deed in lieu of foreclosure are deemed actionable, See Complaint. Before fully discussing Plaintiffs’ failure (o state any claim against Defendants, here is just one example of the perplexing claims asserted by Plaintiffs. Plaintifi’s allege that they sent notice of Plaintiffs’ Chapter 7 bankruptey filing to JPMorgan, and JPMorgan in turned acknowledge receipt of such notice on March 25, 2010. See Complaint, § 69. On the same date, March 25, 2010 Plaintiffs allegedly found posted on the window of the Subject Property “a document titled ‘NOTICE,’ which states. ‘LPS Field Services, Inc. inspected this property and found it to be vacant or abandoned, ‘The mortgage holder has the right and duty to protect this property. Accordingly, it is likely that the mortgage holder will have the property secured and/or winterized within the next few days. Therefore, if this property is NOT VACANT, please call the number below immediately, See Complaint, 4 75. Allegedly, “[w]hen plaintiffs received this notice they were astounded, upset and shocked,” and apparently determined the posting of such a Notice constituted an actionable claim against Defendants because the Notice caused Plaintiffs “embarrassment” and “humiliation.” See Complaint, $f] 134-135. Ostensibly, Plaintiffs wished to keep their financial difficulties and looming foreclosure sale of the Subject Property a private matter, however, Plaintiffs failed themselves in this endeavor when they filed for Chapter 7 bankruptcy protection, which is a matter of public record. See Complaint, § 62; RIN, Exhibit 3. For the reasons stated below all of Plaintiffs’ claims fail and the Motion to Dismiss the Complaint should be granted without leave to amend. MOTION TO DISMISS ADVERSARY COMPLATNT— tnaz32228 ML. MMARY OF RELEVANT FACTS ‘The following are the relevant allegations in the Complaint and judicially noticeable facts set forth in the documents included in the Request for Judicial Notice: ‘© Plaintiff’ obtained a mortgage loan in the sum of $510,000.00 (“Loan”) secured by a deed of trust (“DOT”) encumbering the property located at 4703 Cattalo Way, Roseville, California 95747 (previously defined as “Subject Property”). The DOT ‘was recorded on or about May 31, 2007, with the Placer County Recorder's Office as, instrament number 2007-0054512. ‘The DOT identifies Washington Mutual Bank, FA as the lender and beneficiary and Plaintiffs as the borrowers. See RIN, attached hereto as Exhibit 1 * Plaintifis defaulted on the Loan. A Notice of Default to Sell Under Deed of Trust (NOD") was recorded on or about May 13, 2010, with the Placer County Recorder’s Office as instrument number 2010-0035961. The NOD indicates that as of May 12, 2010, the amount in arrears was $20,991.90. See RIN, Exhibit 2 ‘© Plaintiffs filed for Chapter 7 bankruptcy protection on March 20, 2010 as evidenced in the U.S. Distriet Court, Eastern District Docket Report. See RIN, Exhibit 3 © The Bankruptey Court issued an order of Abandonment regarding the Subject Property. The Abandonment order was issued on April 12, 2010, See RIN, Exhibit 4. ‘©The Bankruptcy Court issued an order lifting the automatic stay as to the Subject, Property. ‘The Order for Relief fiom Stay was issued on April 22, 2010. See RIN, Exhibit 5, mi, NDARD FOR A MOTION TO DISMISS A motion to dismiss pursuant to Rule 7012(b)(6) of the Federal Rules of Bankruptey Procedure (“FRBP”) tests the legal sufficiency of the claim alleged in the complaint. Thus, a motion to dismiss may be brought where a plaintiff fails (o state a claim upon which relief can be granted Federal Rules of Civil Procedure (“FRCP”) Rule 12(b)(6). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a PlaintifY’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1959 (2007). The “[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true.” a. 3 MOTION TO DISMISS ADVERSARY COMPLAINT nn4n3222Sow ra)da it 12 13 14 15 16 7 18 19 20 21 22 24 25 26 27 28 IV. PLAINTIFFS’ CLAIM FOR TRESPASS UPON REAL PROPERTY FAIL! Plaintiffs fal to state a claim for trespass. The elements to trespass are: (1) that plaintif? ‘owned the property; (2) that defendant intentionally, recklessly, or negligently entered plaintiff's property; (3) that plaintiff did not give permission for the entry; (4) that plaintiff was actually harmed: and (5) that defendant's entry was a substantial factor in causing plaintiff's harm. CACI 2000 (2008). ‘The action for trespass may be brought only by a person in possession of the real property. Unendorffer v. Saegers, 50 Cal. 496, 498 (1875) Plaintiffs allege that “defendants willfully took it upon themselves to enter the property not once, not twice, not three, but four times, doing so unreasonably and without notice, in direct contravention of the terms of its mortgage agreement promulgated to plaintiffs by its predecessor-in- interest.” See Complaint, 157. Preliminarily, though Plaintifi’s name four Defendants in their Complaint, throughout their trespass claim, Plaintiffs fails to specify which party purportedly came onto the Subject Property. See Complaint, §f] 144-163. ‘Thus, Plaintiffs’ factual allegations do not meet the pleading standards to state a claim for relief. Bell Atlantic Corp, 127 S.Ct. at 1959. Plaintiffs complain of the March 25, 2010 notice, discussed above, as the first instanee when “defendants” entered onto the Subject Property. See Complaint, 147. First, Plaintiffs do not allege that either JPMorgan or Chase came onto the Subject Property, thus for this reason alone, their trespass claim fails as they cannot state the second element of the claim. See Complaint, $f 144-163. Second, “defendants” did not require Plaintiffs" permission to come onto the Subject Property as they had a right to come onto the property, given no one was living on the property, thus, any entry by “defendants” onto the property was solely for property preservati purposes, as set forth in the mortgage agreement Plaintiffs signed, See Complaint, 20; RIN, Exhibit 1 47. Finally, and most importantly, Plaintiffs do not and cannot assert that they were actually, harmed, thus, they cannot state the fourth and fifth elements of a claim for trespass. See Complaint, 49 144-63. Plaintiffs claim that “defendants™ actions were “heavy handed” and that “[d]Jefendants did not act in good faith, thus, Plaintiffs should be compensated for “the losses they have sustained by way of defendants’ shockingly wrongful conduct.” See Complaint, §§] 159, 161-162. Such statements are mere conclusory allegations, which do not state facts sufficient to constitute a claim 4. MOTION TO DISMISS ADVERSARY COMPLAINT nan3222woe for trespas Plaintifis similarly fail to state a claim for trespass for the purported entries onto the Subject Property on April 23, June 2 and June 16. See Complaint, 149. Because Plaintiffs do not state factual allegations under their claim for trespass, Defendants will refer to the allegations stated in Plaintiffs’ introductory allegations. See Complaint, {144-163 Regarding the purported wrongful entry of April 23, 2010, Plaintiffs state that this Court, “without jurisdiction to do so, ... on April 20, granted defendants’ lift stay motion[.]" See Complaint, | 105. Apparently, Plaintiffs believe that this Court's order regarding the Chapter 7 Trustee’s abandonment of the Subject Property divested this Court of any jurisdiction of the Subject Property. See Complaint, § 98, 105, Further, any “distract{ion]” that might intrude on Plaintiffs" efforts to consummate a short sale or deed in lieu of foreclosure of the Subject Property, is apparently actionable, according to Plaintiffs. See Complaint, §§ 132-133. Ultimately what Plaintiffs are concerned about is “what a foreclosure on their credit history will do to them in the future, including preventing them from obtaining financing to buy another home{,]” along with the “embarrassment” and “humiliation” that PlaintifiS" financial hardship has caused them. See Complaint, {ff 132, 140. In this regard, after this Court granted JPMorgan’s request for a lift of the automatic stay, which was granted on April 22, 2010, Defendant Chase Home Finance LLC purportedly came on to the property and posted a notice. See Complaint, 111. For the same reasons stated above, Plaintiffs fail to state a claim for trespass. First, Plaintiffs do not allege that Defendant JPMorgan came onto the Subject Property, thus, Plaintiffs’ claim fails against JPMorgan. Second, as stated above, because Plaintiffs had moved out of the Subject Property as of November 2009, and, particularly as the automatic stay had already been lifted, defendant Chase Home Finance had a right to come onto the Property for property preservation purposes. See RIN, Exhibit 1 {|7. Finally, and most importantly, again, Plaintiffs camnot show that they were actually harmed, thus, their claim fails as they cannot meet the fourth or fifth element of a trespass claim. See Complaint, | 144-163. hansa224 Finally, as the lift of the automatic stay was in effect on June 2, 2010! and June 16, 2010", dates of the purported third and fourth trespass claims, Plaintiffs cannot state a claim for trespass as to these dates. See Complaint, §] 149; RIN, Exhibit 5. Furthermore, Plaintiffs’ allegations concerning these dates amount to two paragraphs that describe posting of a notice by “[d]efendants.” Id. See Complaint, $9128, 130. Nothing within the notices could have caused harm to Plait For all of the reasons stated herein, Plaintiffs’ trespass claim fails to state a claim and the Court should dismiss the claim without leave to amend. Vv. PLAINTIFFS’ CLAIM FOR VIOLATION OF AUTOMATIC STAY PURSUANT TO Uw. § 362(A) FAILS: To establish an actionable violation of the automatic stay, the debtor must establish that: (1) the creditor knew of the existence of the stay; (2) the creditor's actions were willful; and (3) the creditor's actions violated the stay. See 11 U.S.C. § 362(a); see also Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348, 355, co Cir. 2008). A willful violation of the automatic stay is a deliberate and intentional act done with knowledge of the automatic stay. See Eskanos & Adler, PC. v, Leetien, 309 F.3d 1210 (9" Cir. 2002). An entity’s failure to comply with its duty to restore the status quo and to undo its previous actions which violated the stay may also constitute a willful violation of the stay. Jd. A monetary penalty may not be imposed on a creditor for a violation of a stay in effect under section 362(a) unless the conduct that is the basis of such violation or of such failure occurs after such creditor receives notice effective under this section of the order for relief, See 11 US.C. § 342(g)(2). Furthermore, activities which violate the automatic stay “all involve attempts to confiscate the debtor's property or require the debtor to act affirmatively to protect its interests.” Morgan Guaranty Trust Company of New York v. American Savings and Loan Association, 804 F.2d 1487, 1491 (9" Cir, 1986). Where a communication is coercive or harassing, it violates the automatic stay. Id. "Defendants (sic) a third time came onto plaintifts' property, on June 2, 2010, and posted another sign that threatened the ‘mortgage holder''will likely’ be taking over the property in a few days. See Complaint, 4 128. * Plaintiffs allege the exact same allegations here as in the June 2, 2010 notice posting, Id. 130. 6 MOTION TO DISMISS ADVERSARY COMPLAINT nama10 12 1B 4 15 16 7 18 19 20 21 22 23 24 25 26 27 28 Here, Plaintiffs allege that “LPS defendants, who are an (sic) agent of defendant Chase, violated the automatic stay, on March 25[.]" See Complaint, 166. Specifically, Plaintiffs allege the posting of the March 25, 2010 notice constituted a violation of the automatic stay.’ However, Defendants fail to establish that defendant “Chase” knew of the existence of the stay at the time LPS came onto the Subject Property. See Complaint, §¥ 164-187. Indeed, Plaintiffs allege that they “sent notice of bankruptcy to Chase, who acknowledged receipt in writing on March 25, 2010.” See ‘Complaint, 66. Thus, given “Chase” acknowledged receipt of the automatic stay on March 25 and LPS came onto the property on the same date, Plaintiffs would have to allege what time on March 25 Chase knew of the automatic stay, and establish that LPS came onto the property after such time on March 25. Plaintiffs do not, thus, they fail to allege that “Chase” knew of the existence of the stay ‘See Complaint, § 164-187. For the same reasons just stated, the actions of LPS cannot be deemed “willful” as without the knowledge that the automatic stay was in effect, LPS, as alleged agent of “Chase” could not have acted in a deliberate and intentional way with knowledge of the automatic stay. Accordingly, Plaintiffs cannot meet the second element of a violation of the automatic stay. Furthermore, and perhaps most significant, the March 25 notice posted on the Subject Property cannot be deemed an action which could violate the automatic stay. There is nothing in the March 25" notice which is coercive or harassing. See Complaint, 475. The notice merely states the jerized within the next few days.” Id. Also, given property will likely be “secured and/or Plaintiff had moved out of the Subject Property months earlier, the house appeared vacant. See Complaint {f 53, $6. Finally, the notice provided a phone number that the occupants of the Subject Property could contact in the event the property was not vacant, See Complaint, § 75 ‘Thus, for all the reasons set forth above, Defendants could not have violated the automatic stay on March 25, 2010, * The notice states: "LPS Field Services, Inc. inspected this property and found it to be vacant or abandoned. The mortgage holder has the right and duty to protect this property. Accordingly, itis likely that the morigage holder will have the property secured and/or winterized within the next few days. ‘Therefore, if this property is NOT VACANT, please call the number below immediately." See Complaint, 75. 7 INTO DISMISS-ADVERSARY COMPLAINT u4n3222