Padilla v. JP Morgan Chase Bank, N.A.

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UNITED STATES BANKRUPTCY COURT

Entered on Docket

December 09, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA.
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NORTHERN DISTRICT OF CALIFORNIA
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In re ] Case No. 10-52862-ASW
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4 RAUL PADILLA MUNOZ, ]
a 12 || GUADALUPE M. PADILLA, ]
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2 GUADALUPE M. PADILLA, ] Adv. No. 10-05119
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20 MEMORANDUM DECISION GRANTING
DEFENDANT’S MOTION TO DISMISS
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22 Before this Court is the motion of defendant J.P. Morgan Chase
23 | Bank, N.A. (“Defendant”) to dismiss the adversary complaint of
24" plaintiff Guadalupe Padilla (“Debtor”). On September 22, 2010,
25 || Debtor filed an interim objection requesting a sixty day
26 | continuance to allow the court to sign an order indicating the
27 || automatic stay existed as to the bankruptcy estate. That order was
28 || signed on October 4, 2010. Defendant re-noticed the motion for

as ie 36 Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 1 of 7

GPO MOTION TO DISMISS

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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December 7, 2010. Plaintiff has filed no other objections. For
the following reasons, Defendant’s motion is granted without leave
to amend because the statutes of limitations for all of Debtor's
causes of action have expired.

STANDARD OF REVIEW

The Ninth Circuit has stated that the standard of review for
motions to dismiss is as follows:

The nature of dismissal requires us to accept all
allegations of fact in the complaint as true and construe
them in the light most favorable to the
plaintiffs. However we are not required to accept as
true conclusory allegations which are contradicted by
documents referred to in the complaint, and we do not
necessarily assume the truth of legal conclusions
merely because they are cast in the form of factual
allegations.

Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.

2003) (citations and internal quotations omitted).

Further, the Ninth Circuit has held that “dismissal without
leave to amend is improper unless it is clear, upon de novo review,
that the complaint could not be saved by any amendment.” Steckman

vy. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th Cir. 1998)

(citations and internal quotations omitted).

BACKGROUND

Debtor purchased a home located at 1174 Turtlerock Drive in
San Jose, California (“the property”) on April 6, 2005. Debtor
obtained a mortgage loan from Washington Mutual Bank, F.A. (“WAMU”)
in the amount of $560,000.00 in connection with the property. On
September 25, 2008, the Office of Thrift Supervision closed WAMU
and appointed the FDIC as receiver. On the same date, Defendant
entered into a purchase and assumption agreement with the FDIC

acting in the FDIC’s corporate capacity as well as receiver for

GizkOeMGbkIncDAGH BG Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 2 of 7

MOTION TO DISMISS

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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WAMU. A Notice of Default and Election to Sell Under Deed of Trust
was recorded with the Santa Clara County Recorder's Office on July
20, 2009. A Notice of Trustee’s Sale was recorded on October 23,
2009.

Debtor filed a chapter 13 bankruptcy case on March 23, 2010.
The bankruptcy petition was filed, among other reasons, to stay the
trustee’s sale scheduled for the property. On May 12, 2010, The
Fuller Law Firm substituted in as counsel for Debtor. This Court
issued a temporary restraining order on May 19, 2010 enjoining the
foreclosure sale.

On July 9, 2010, this Court held that Debtor’s request for a
preliminary injunction enjoining the foreclosure sale is
unnecessary and moot. As this is Debtor's second bankruptcy filing
within the past year, the automatic stay, pursuant to bankruptcy
code section 362(c)({3), expired within 30 days of the commencement
date of this case. Debtor failed to file a motion to re-impose the

automatic stay, so there is no automatic stay as to the debtor in

this case. However, the automatic stay is still in effect as to

the bankruptcy estate.

ANALYSTS

Debtor’s first cause of action asserts a breach of section
2601 of the Real Estate Settlement Procedures Act (“RESPA").
Specifically, Debtor argues that Defendant failed to provide Debtor
with a good faith estimate within three days of submitting any loan
application. However, courts have found that RESPA provides for a
private right of action for violation of RESPA’s provisions
relating to kickbacks and referral fees, and for violation of

RESPA’s provisions relating to disclosures of possible assignment

Grebo att pacPAck 26 Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 3 of 7

MOTION TO DISMISS

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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or transfer of the loan, because such sections provide for treble

damages and attorneys’ fees. Bloom v. Martin, 865 F. Supp. 1377,
1383-1386 (N.D. Cal 1994). The Bloom court found that the
remaining sections of RESPA did not contain any such provisions,
and accordingly found no private right of action.

Debtor's first cause of action is based upon the allegation
that RESPA was violated as Debtor was not provided with -- or
timely provided with -- a good faith estimate. However, section
2604 of RESPA does not provide for such a private right of action,
and thus Debtor's claim against Defendant for such a violation
fails as a matter of law.

Debtor may argue that Defendant’s failure to inform Debtor of
the $11,200 yield spread paid to broker was a kickback under RESPA
and thus a separate cause of action under section 2607. However,
the statute of limitations for a claim based on section 2607 of
RESPA is one year from the date of the occurrence of the violation.
The violation occurred on March 25, 2005 when Defendant provided
Debtor with the Truth in Lending disclosure. Debtor’s claim was
not brought until May 2010. As such, the statute of limitations
for this claim expired four years ago.

Debtor’s second cause of action asserting a breach of the
Truth in Lending Act(“TILA”) -- is also time-barred. Debtor seeks
a rescission of the loan or, in the alternative, civil penalties.
15 U.S.C. section 1635(f) provides that any claim for rescission
must be brought within three years of consummation of the
transaction or prior to the sale of the property, whichever occurs

first. See also Murray v. Fifth Third Bank, 2007 WL 956916 (E.D.

Mich. 2007). As such, Debtor’s right to rescind the loan has

rhs ests or POck 3@ Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 4 of 7

MOTION TO DISMISS 4

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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expired because more than three years have lapsed since

consummation of the loan transaction. The loan transaction

loccurred in April of 2005, but Plaintiff brought this action in May

of 2010, two years after the three-year statute of limitations had
expired.

Debtor’s claim under TILA for civil penalties is also barred
by the statute of limitations. 15 U.S.C. section 1640(e) provides
in relevant part:

Any action under this section may be brought in any

United States district court, or in any other court of

competent jurisdictions, within one year from the date of

the occurrence of the violation.

In Tucker v. Beneficial Mortq. Co., 437 F. Supp.2d 584, 589 (E.D.

Va. 2006), the court held that the one-year statute of limitations
period applying to claims for civil damages arising from TILA
violations begins to run from the date of the complained violation.
In this case, the date of the loan transaction is apparent from the
recorded deed of trust. The loan transaction occurred in April
2005. Debtor did not bring this action until May 2010, four years
after the one-year statute of limitations expired.

Debtor’s third cause of action for a violation of the equal
opportunity act under 15 U.S.C. section 1691(a) also fails as the
statute of limitations has expired. By the act’s express terms,
the equal opportunity act is governed by a two-year statute of
limitations. 15 U.S.C. § 1691le(f). Debtor claims any purported
violation of the equal opportunity act occurred in the origination
of the loan in April 2005. Debtor did not bring this action until
May 2010, three years after the two-year statute of limitations

expired.

CAO becDAGH 36 Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 5 of 7

MOTION TO DISMISS 5

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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Debtor’s fourth cause of action for a violation of the Fair
Housing Act under 42 U.S.C. section 3601 also fails as the statute
of limitations has expired. Section 3613(a) of the Fair Housing
Act provides:

An aggrieved person may commence a civil action in an

appropriate United States district court or state court

not later than 2 years after the occurrence or the

termination of an alleged discriminatory housing

practice.

42 U.S.C. § 3613(a). In this case, the alleged “occurrence” in
violation of the Fair Housing Act was the issuance of the loan.

The loan closed in April of 2005. Debtor did not bring this action
until May 2010, three years after the two-year statute of
limitations expired.

Because each of Debtor’s claims is time-barred, and there is
no claim on which relief can be granted, it is clear that the
complaint could not be saved by an amendment.

For the reasons set forth above, Debtor’s complaint is
dismissed without leave to amend. Counsel for Defendant shall
prepare a proposed form of order consistent with this ruling and

shall submit the proposed order to the Court after serving counsel

for Debtor.

Dated: ral W \ 9)

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ARTHUR S. WEISSBRODT
UNITED STATES BANKRUPTCY JUDGE

Cap Sieh eh pate 36 Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 6 of 7

MOTION TO DISMISS

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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Court Service List

Guadalupe Padilla
1174 Turtlerock Drive

San Jose, CA 95122
Debtors' Attorney
Lars T. Fuller

THE FULLER LAW FIRM
60 North Keeble Avenue
San Jose, CA 95126

JP Morgan Chase Bank, N.A.
c/o Mark I. Kleinman

Senior Vice President

7255 Bay Meadows Way
Jacksonville, FL 32256-6851

S. Christopher Yoo
Alvardo Smith APC

1 MacArthur Pl. # 200
Santa Ana, CA 92707

Office of the U.S.
U.S. Federal Bldg.
280 S Ist St. #268
San Jose, CA 95113-3004

Trustee / SJ

MOTION TO DISMISS

Gree OeptaOpecPact 26 Filed: 12/07/10 Entered: 12/09/10 13:47:57 Page 7 of 7