CONTRA COSTA SUPERIOR COURT

MARTINEZ, CALIFORNIA DEPARTMENT: 31 HEARING DATE: 05/23/13

4. TIME: 9:00 CASE#: MSC10-02914 CASE NAME: PERRY VS. JP MORGAN CHASE BANK HEARING ON MOTION FOR SUMMARY JUDGMENT FILED BY JP MORGAN CHASE BANK N.A, FEDERAL NATIONAL MORTGAGE ASSOC. * TENTATIVE RULING: *

The Court rules as follows on the motion for summary judgment brought by defendant Quality Loan Service Corp. (QLS), and on the motion for summary judgment brought by defendants JP Morgan Chase Bank, N.A. (JP Morgan), Chase Home Finance, LLC, and Federal National Mortgage Association (the JP Morgan defendants). Both motions are granted. The trial and issue conference dates are vacated. The JP Morgan defendants shall prepare a proposed judgment of dismissal in their favor, separate from any formal order on defendants motion, and shall submit that proposed judgment to plaintiff for approval as to form. Defendant QLS shall prepare a proposed judgment of dismissal in its favor, separate from any formal order on defendants motion, and shall submit that proposed judgment to plaintiff for approval as to form. The basis for these rulings is as follows. Procedural Defects There are procedural defects in the papers on both sides. For example: the separate statement filed by defendant QLS is not numbered; the exhibits to both motions are not tabbed; plaintiffs opposition separate statements are not in proper form (see discussion in the reply memorandum filed by defendant QLS); and plaintiffs memorandum of points and authorities in opposition to the motion by defendant QLS is not signed. The Court has exercised its discretion to overlook all of these procedural defects on both sides, in order to reach the merits of the motions within a reasonable time in advance of the July trial date. Requests for Judicial Notice The JP Morgan defendants filed a request for judicial notice with their opening papers on January 24, 2013. Defendant QLS filed a request for judicial notice with its opening papers on January 29, 2013. These requests are granted. (See, Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-267.) Plaintiff filed a request for judicial notice with his opposition to the JP Morgan defendants motion on May 2, 2013. The Court rules on this request as follows. Request No. 1 is denied. Matters set forth within a press release are not a proper subject of permissive judicial notice. (Evid. Code, section 452.) Also, plaintiff has failed to furnish the Court with sufficient information to enable it to take judicial notice of this document, or document fragment. (Evid. Code, section 453.) Finally, plaintiff has failed to establish the relevance of this document. Request No. 2 is denied. Plaintiff has failed to furnish the Court with sufficient information to enable it to take judicial notice of this document, or document fragment. (Evid. Code, section 453.) Also, plaintiff has failed to establish the relevance of this document; the FAC does not state a cause of action for breach of the federal Truth In Lending Act. -1-

CONTRA COSTA SUPERIOR COURT

MARTINEZ, CALIFORNIA DEPARTMENT: 31 HEARING DATE: 05/23/13
The JP Morgan defendants filed a request for judicial notice with their reply papers on May 17, 2013. The request is granted. Evidentiary Objections The Court rules as follows on plaintiffs objections to the evidence submitted by the JP Morgan defendants, filed with plaintiffs opposition papers on May 2, 2013. No. 1: overruled. See Fontenot, supra. Nos. 2-6: overruled. Plaintiffs arguments go to the weight or legal significance of the evidence, and not to its admissibility. Nos. 7-9: moot. The Court has taken judicial notice of the recorded assignment. No. 10: overruled. The declarant is competent to interpret defendants business records, and he declared only that plaintiff was approved for a trial loan modification, not that plaintiff agreed to the trial loan modification. No. 11: overruled. The declarant is competent to interpret defendants business records, and plaintiff has conceded that he stopped making payments on his loan (FAC, paragraph 23); plaintiffs arguments go to the weight or legal significance of the evidence, and not to its admissibility. Nos. 12-14: moot. The Court has taken judicial notice of the recorded documents. Nos. 15-18: overruled. An attorney is competent to authenticate deposition testimony, and the declarants statement that plaintiff was presented with original loan documents at the deposition is a permissible lay opinion. (Evid. Code, section 800.) Nos. 19-23: overruled. Evidentiary objections are not properly directed to a memorandum of points and authorities. Part E. The Court has noted plaintiffs statements that the Court is guilty of interference by taking certain discovery motions under submission, and plaintiffs insinuation that the Court deliberately timed its ruling on those motions so that plaintiff would not receive the ruling until the day his opposition papers were due. (See Part D of plaintiffs objections to the evidence submitted by defendant QLS.) The Court has previously admonished plaintiff concerning the penalties for contempt of court, and so admonishes plaintiff again. The Court rules as follows on plaintiffs objections to the evidence submitted by defendant QLS, filed with plaintiffs opposition papers on May 2, 2013. No. 1: overruled. See Fontenot, supra. No. 2: overruled. There is no genuine dispute as to the terms of the subject deed of trust, a copy of which was attached to plaintiffs original complaint as Exhibit A. Nos. 3-6: overruled. Plaintiffs arguments go to the weight or legal significance of the evidence, and not to its admissibility. Nos. 7-9: overruled. An attorney is competent to authenticate deposition testimony, and the declarants statement that plaintiff was presented with original loan documents at the deposition is a permissible lay opinion. (Evid. Code, section 800.) Nos. 10-14: overruled. Evidentiary objections are not properly directed to a memorandum of points and authorities. Part D: See ruling on Part E of plaintiffs objections to the evidence submitted by the JP Morgan defendants. The First, Second and Third Causes of Action The operative pleading is plaintiffs First Amended Complaint (FAC), filed on July 29, 2011. All four of the moving party defendants are named in the First Cause of Action for declaratory relief, the Second Cause of Action for slander of title, and the Third Cause of Action for quiet title. While plaintiffs complaint is not a model of clarity, the Court finds that all three causes of action are based on two theories: (1) the JP Morgan defendants and QLS cannot foreclose because JP Morgan does not have physical possession of plaintiffs original promissory note, and; (2) the JP Morgan defendants and QLS cannot foreclose because the notice of default was -2-

CONTRA COSTA SUPERIOR COURT

MARTINEZ, CALIFORNIA DEPARTMENT: 31 HEARING DATE: 05/23/13
recorded before defendants acquired standing to take that action. The Court finds that there is no triable issue of fact as to either of these two theories, for the following reasons. 1. The Promissory Note.

While the two sides are in disagreement as to the mechanism by which defendant JP Morgan acquired its beneficial interest in the subject note and deed of trust, it is important to observe at the outset that plaintiff acknowledges the existence of that beneficial interest. Defendants assert that the chain went from plaintiffs original lender to defendant Federal National Mortgage Association (FNMA) by assignment, and then from FNMA to JP Morgan by assignment; copies of the recorded assignments are attached to both sets of opening papers. Plaintiff alleges a different chain: from the original lender to Washington Mutual Bank (WAMU), from WAMU to the Federal Deposit Insurance Corporation (the FDIC), and from the FDIC to JP Morgan. (FAC, paragraphs 3, 4, and 17.) Plaintiff alleges that, through this chain, JP Morgan became the successor in interest of the original lender. (FAC, paragraph 17.) In fact, plaintiff submits as part of his own opposition evidence a trustees sale guaranty showing defendant JP Morgan as being the deed of trust beneficiary of record. (Perry Decs., Exhibit C.) Plaintiffs theory is that, despite defendant JP Morgans status as the successor in interest of the original lender, JP Morgan cannot foreclose because it does not have physical possession of plaintiffs promissory note. There are two fatal problems with this theory, one legal and one factual. The legal problem is that, under California law, the foreclosing party is not required to have physical possession of the promissory note. (See, Shuster v. BAC Home Loans Servicing, LP (2012) 211 Cal.App.4th 505, 511-512; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440-442.) The Court acknowledges that plaintiff disagrees with the reasoning of these appellate decisions. (See, e.g., FAC, page 24, lines 19-21.) However, the trial courts are bound by these decisions. (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 454-457.) The factual problem with plaintiffs theory is that defendants have offered substantial evidence that JP Morgan does in fact have physical possession of the original promissory note. Plaintiff acknowledges that a copy of the note was provided to him in August 2010, and that his initial suspicions concerning the authenticity of that copy were based on plaintiffs own mistake in confusing the format of the note with the format of the deed of trust. (FAC, page 2, lines 1-4; FAC, paragraph 27.) If a party can provide a copy of a loan document upon request, it is a reasonable inference that the party has possession of the original. Indeed, plaintiff alleges that, if defendants had only provided him more promptly with the copy of the promissory note he eventually received, plaintiff would have acknowledged the validity of JP Morgans interest and would have paid off his loan through a reverse mortgage. (FAC, paragraph 75.) Further, plaintiff was presented with an original promissory note and deed of trust at his deposition, and he acknowledged that the signature on those documents appeared to be his. (Chavez Dec. [JP Morgan motion], filed on 1-24-13, paragraphs 2-3 and Exhibit 1; Bell Dec. [QLS motion], filed on 1-29-13, paragraphs 2-3 and Exhibits 1-3.) Plaintiffs speculation that the promissory note he saw at his deposition could be a mere copy, cunningly contrived to look like an original, or that it could be a forged original, does not create a triable issue of fact. -3-

CONTRA COSTA SUPERIOR COURT

MARTINEZ, CALIFORNIA DEPARTMENT: 31 HEARING DATE: 05/23/13
2. The Notice of Default.

The Court pointed out, in its ruling on defendants demurrers to the First Amended Complaint, that defendants had not yet adequately addressed an alleged defect in the subject notice of default: that it was recorded before the substitution of trustee and the assignment from defendant FNMA to defendant JP Morgan were recorded. (See, Order After Hearing, filed on April 16, 2012, page 3.) The Court did not, as plaintiff suggests, make a binding determination that the notice of default was void. The Court must address the purported defect now in the context of these dispositive motions. As defendants correctly observe in both motions for summary judgment, the fact that QLS had not been formally substituted in as trustee at the time QLS recorded the notice of default is not a procedural irregularity under California law. QLS executed the notice of default, not in its capacity as the trustee of record, but rather in its capacity as an agent of the beneficiary. (See, Request for Judicial Notice, filed on 1-24-13 [JP Morgan motion], Exhibit 3 [signature block on page 2]; Request for Judicial Notice, filed on 1-29-13 [QLS motion], Exhibit E [same].) This is perfectly permissible under California law. (See, Civil Code, section 2924, subdivision (a)(1) [or any of their authorized agents].) The Dimock decision is distinguishable. (See, Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 876-877.) That decision dealt with the authority of someone who was not the trustee to issue a trustees deed, and was based in part on the title theory of deeds of trust. (Ibid.) The notice of default is a notice document, and not a title document. This leaves the Court with the question of question of whether recording the assignment to JP Morgan after the notice of default represents a procedural irregularity in the nonjudicial foreclosure proceedings. The Court finds that it does not. First, California law does not require that the assignment be recorded at all, so a fortiori, the fact that the assignment was recorded after the notice of default is not of consequence. (See, Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 121-125.) Second, it is a reasonable inference from the fact of recordation itself that defendant QLS acted with the authority of the beneficiary at the time, whether or not that beneficiary was then defendant JP Morgan: from whom else would QLS have received the deed of trust information, the dollar amount of the default, etc. Finally, the Court notes that plaintiff has failed to allege, or to suggest in his opposition to the pending motions for summary judgment, any prejudice arising from the fact that the notice of default was recorded by defendant QLS, rather than by some other business entity, or any prejudice arising from the fact that the notice directed plaintiff to contact JP Morgan in care of QLS. Plaintiff has not alleged any defect in the statutorily prescribed contents of the notice of default, or in the manner of service of the notice of default. (See, Civil Code section 2924.) Thus, the basic purposes of the notice of default, to notify plaintiff of the amount of his default and that nonjudicial foreclosure proceedings had been formally initiated, were still satisfied. Prejudice is an essential element of any cause of action based on procedural irregularities in the nonjudicial foreclosure process. (See, Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 232 [notice of defaults designation of incorrect beneficiary not prejudicial]; Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94-99.) -4-

CONTRA COSTA SUPERIOR COURT

MARTINEZ, CALIFORNIA DEPARTMENT: 31 HEARING DATE: 05/23/13
The Fourth Cause of Action The Fourth Cause of Action is for violation of section 2943 of the California Civil Code. This cause of action is stated only against the JP Morgan defendants, and not against defendant QLS. The JP Morgan defendants argue in their opening memorandum that this cause of action is preempted by federal law. (See, Lopez v. World Savings & Loan Assn. (2003) 105 Cal.App.4th 729, 733-745. See also, Jelsing v. MIT Lending (S.D. Cal. July 9, 2010) 2010 U.S. Dist. LEXIS 68515, pp. 6-7.) Plaintiff makes two opposition arguments, and the Court finds that both arguments lack merit. First, plaintiff argues that the JP Morgan defendants waived the federal preemption defense by failing to state that defense in their answer. This argument lacks merit, because federal preemption goes to the Courts subject matter jurisdiction. (Hartenstine v. Superior Court (1987) 196 Cal.App.3d 206, 213-214.) Second, plaintiff makes an opposition argument based on distinctions among the different kinds of statements that can be requested under section 2943: a beneficiary statement, a payoff demand statement, and a short-pay demand statement. (See, Civil Code, section 2943, subds. (a)(2), (a)(5), and (a)(7).) The Court finds plaintiffs argument unpersuasive; any such distinction is not relevant to the question of federal preemption. (See, Lopez, supra, at 737 [federal law occupies the entire field of lending regulation for federal savings associations].) The JP Morgan defendants offer an alternative analysis under the federal Real Estate Settlement Procedures Act (RESPA). However, plaintiffs Fourth Cause of Action does not attempt to state a cause of action under RESPA, and in ruling on a summary judgment motion the Court is limited to the issues framed by the pleadings. (See, Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663.) Further, even if the Court were to treat the Fourth Cause of Action as a RESPA cause of action, the letters on which plaintiff relies do not constitute a valid qualified written request under RESPA. (See, Gates v. Wachovia Mortgage, FSB (E.D. Cal. June 28, 2010) 2010 U.S. Dist. LEXIS 64268, pp. 8-10.)

5. TIME: 9:00 CASE#: MSC10-02914 CASE NAME: PERRY VS. JP MORGAN CHASE BANK HEARING ON MOTION FOR SUMMARY JUDGMENT FILED BY QUALITY LOAN SERVICE CORP. * TENTATIVE RULING: * Please see Line 4.

-5-