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Kramer v. JPMorgan Chase Bank, N.A.

United States District Court, D. Nevada

May 17, 2018

LEO KRAMER, AUDREY KRAMER, Plaintiffs,
v.
JP MPRGAN CHASE BANK, N.A. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., NATIONAL DEFAULT SERVICING CORPORATION, WASHINGTON MUTUAL BANK, N.A., and DOES 1 THROUGH 50 INCLUSIVE, Defendants.

          ORDER (ECF NOS. 17, 22, 43)

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE.

         I. SUMMARY

         This action is in part an attempt by Leo Kramer (“Kramer”) and Audrey Kramer (collectively “Plaintiffs”) to prevent a non-judicial foreclosure of their property. (See generally ECF No. 1.) Before the Court, and among other motions, are two motions to dismiss Plaintiffs' complaint (“the Complaint”), pursuant to Fed. Civ. P. (“Rule”) 12(b)(6), by Defendants JPMorgan Chase Bank, N.A. (“Chase”) and Mortgage Electronic Registration Systems, Inc. (MERS). (ECF Nos. 17, 22.) Plaintiffs filed responses to Chase's motion to dismiss (“Chase's Motion”) (ECF Nos. 28, 31), and Chase replied (ECF No. 38).

         Additionally before the Court is Plaintiffs' motion to strike MERS's motion to dismiss (“MERS's Motion”). (ECF No. 43.) The Court has reviewed MERS's response (ECF No. 45) and Plaintiffs' reply (ECF No. 50).

         For the reasons discussed below, Plaintiffs' motion to strike (ECF No. 43) is denied, and both motions to dismiss (ECF Nos. 17, 22) are granted.

         II. BACKGROUND

         The following facts are derived from the Complaint and exhibits attached thereto, or are established by documents found in the public records (ECF Nos. 1, 17-6, 17-7, 17-8, 17-9, 17-11, 17-12, 17-13, 17-14)[1]:

         In June 2005, Plaintiffs obtained a loan from Paul Financial, LLC (“Paul Financial”) to purchase property located at 1740 Autumn Glen Street in Fernley Nevada (the “Property” or “Collateral Property”). (ECF No. 1 at 7, 52.) The loan was secured by a deed of trust (“First DOT”) naming Paul Financial as the lender and MERS as beneficiary. (See ECF No. 1 at 51-53.) In May 2008, MERS substituted Executive Trustee Services, LLC (“ETS”) as the trustee under the First DOT. (ECF No. 1 at 88-90.) Acting as the substituted trustee, ETS reconveyed the Property.[2] (Id. at 89.) Accordingly, the First DOT ceased to encumber the Property.

         On May 1, 2008, Plaintiffs used the Property as collateral to obtain a $176, 000 revolving line of credit (the “Loan”) from Defendant Washington Mutual Bank, F.A. (“WaMu”). (ECF No. 1 at 6-8.) The deed of trust on the Property securing the WaMu Loan (“Second DOT”) was publicly recorded. (Id. at 77.) In September 2008, the Federal Deposit Insurance Corporation (“FDIC”) assumed receivership of WaMu and sold WaMu's assets and liabilities to Chase pursuant to a Purchase and Assumption Agreement (“the PAA”).[3] The PAA details that as part of Chase's acquisition, Chase obtained the rights and liabilities of WaMu, as lender and beneficiary, arising under all of the loan assets of WaMu, which would include the Second DOT. In November 2013, Chase substituted Defendant National Default Servicing Corporation (“NDSC”) as trustee under the Second DOT. (ECF No. 1 at 9, 92.)

         Kramer filed three bankruptcy petitions: Case No. 10-43951, filed as a Chapter 11 petition in April 2010, but converted to a Chapter 7 filing; Case No. 11-49493 filed as a Chapter 13 petition in September 2011; and Case No. 14-42866, filed as a Chapter 13 petition in July 2014.[4], [5] (ECF Nos. 17-6, 17-7, 17-8, 17-11, 17-12; see also ECF No. 1 at 10, 96-100, 102.) In schedules filed in Nos. 10-43951 and 14-42866, Kramer acknowledged the Loan was secured and that Chase held a security interest in the Collateral Property.[6] (ECF No. 17-7 at 4; ECF No. 17-12 at 4, 9; ECF No. 1 at 97.)

         Chase filed a proof of claim regarding the Loan in both No. 14-42866 and No. 11-49493, before the latter's dismissal. (ECF No. 17-9; ECF No. 17-13; see also ECF No. 17-8.) To the proof of claims Chase attached a copy of the WaMu Mortgage Plus Agreement and Disclosure relating to the Loan (the “Note”), and the Second DOT. (See ECF No. 17-9 at 4-23; ECF No. 17-13 at 9-31.) In No. 14-42866, Kramer proposed a Chapter 13 plan wherein Chase was recognized as a Class 3 creditor, and Kramer was to surrender his interest in the Collateral Property upon plan confirmation. (ECF No. 17-14 at 3.) Kramer received discharges in both No. 10-43951 and No. 14-42866, on June 16, 2011, and January 9, 2017, respectively. (ECF No. 17-6 at 2, 13; ECF No. 1 at 11, 102.) At no point in the bankruptcy proceedings did Kramer assert claims against any of the Defendants herein. Nor did Kramer seek to have the lien evidenced in the Second DOT stripped from the Property to render the Loan “unsecured.”

         In October 2017, NDSC recorded a Notice of Default and Election to Sell Under the Deed of Trust. (ECF No. 1 at 11, 105.) In January 2018, Plaintiff initiated this action. The Complaint alleges fifteen (15) causes of action against “all Defendants, ” challenging the impending foreclosure (see generally ECF No. 1) and requesting damages (id. at 12). The Complaint does not allege that the Loan has been paid or that Plaintiffs are not in payment default under the terms of the Loan.

         Chase moves for dismissal, contending, inter alia, Plaintiffs are judicially estopped from asserting claims in this Court against Chase and the various Defendants. (See ECF No. 17.) MERS argues it is entitled to dismissal because MERS had “no interest in transactions that allegedly give rise to Plaintiffs' claims.” (ECF No. 22 at 3.) The Court finds that dismissal with prejudice is warranted as to all Defendants, on all of Plaintiffs' claims, as amendment would be futile.[7]

         III. PLAINTIFFS' MOTION TO STRIKE MERS'S MOTION TO DISMISS

         Plaintiffs' motion to strike is premised on their contention that MERS failed to serve its Motion in time for Plaintiffs to respond (see ECF No. 43 at 2), and that therefore Plaintiffs' right to due process was undermined (id. at 5; ECF No. 50 at 2). The Court disagrees.

         On January 23, 2018, this Court ordered MERS to respond to the Complaint within twenty days after Plaintiffs posted their required security. (ECF No. 13.) Plaintiffs made their cash deposit on February 21, 2018. (ECF No. 15.) MERS filed its Motion on March 12, 2018, within the twenty-day deadline. (Compare ECF No. 22 with ECF No. 13 and ECF No. 15.) MERS's Motion includes a certification that MERS's Motion was served on Plaintiffs by mail at the address Plaintiffs provided in the Complaint. ...


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