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

United States District Court, D. Idaho

December 22, 2017





         Before the Court are Defendants' motion to dismiss and their accompanying motion to take judicial notice. This matter concerns Plaintiffs' allegations of constructive fraud, breach of the implied covenant of good faith and fair dealing, slander of title, and violation of Idaho Code § 45-1506, the statute that governs foreclosure proceedings in Idaho. Defendants ask the Court to take judicial notice of several documents that reflect Plaintiffs' mortgage loan origination, default, and foreclosure proceedings, and based upon those documents, asks the Court to dismiss Plaintiffs' complaint with prejudice for failure to state a claim.

         The motion to dismiss is now ripe. Having fully reviewed the record, the Court finds the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding delay, and because the Court conclusively finds the decisional process would not be significantly aided by oral argument, this matter will be decided on the record without oral argument. The Court issues the following order granting Defendants' motion for judicial notice, and a report recommending Defendants' motion to dismiss be granted.


         Plaintiffs obtained a loan in 2011 to purchase their home, located at 423 Snake River Circle, Rigby, Idaho, in Jefferson County (the Property). On or about March 14, 2011, Plaintiffs executed a promissory note and deed of trust secured by the Property. (Dkt. 12-1 at 2.) The Deed of Trust, Instrument No. 390550, was recorded on March 16, 2011, in Jefferson County. It identified the lender as Guild Mortgage Company, and the trustee as First American Title Insurance Company of Idaho. Mortgage Electronic Registration Systems, Inc. (MERS) was identified as a separate corporation acting “solely as a nominee for Lender and Lender's successors and assigns. MERS is the beneficiary under this Security Instrument.”

         In the section titled “Transfer of Rights in the Property, ” the Deed of Trust states as follows:

The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably grants and conveys to Trustee, in trust, with the power of sale, the following described property….

         The property identified in this section is Plaintiff's property located in Rigby, Idaho.

         The Deed of Trust set forth Borrowers' duty to pay Lender, and the consequences of nonpayment. These consequences include demand for immediate payment of all sums due under the Security Instrument, as well as invocation of the power of sale.

         The Deed of Trust informed Plaintiffs that the “Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the “Loan Servicer”) that collects Periodic Payments due under the Note and this Security Instrument.”

         If the Lender invoked the power of sale, the Lender was obligated to execute or cause Trustee to execute written notice of the event of default, and cause notice of the sale to be given. The Lender possessed also the authority to remove Trustee and appoint a successor trustee, and such successor trustee “shall succeed to all the title, power and duties conferred upon Trustee” under the terms of the Deed of Trust.

         On March 24, 2011, Plaintiffs received a Notice of Assignment, Sale, or Transfer of Servicing Rights from Guild Mortgage Company. (Dkt. 3 at 5.) The notice indicated Chase Home Finance would be the servicer of the mortgage loan and begin collecting payments on May 1, 2011.

         On December 20, 2012, Vernita Lansey, acting in her capacity as Assistant Secretary of Mortgage Electronic Registration Systems, Inc. (MERS) as Nominee for Guild Mortgage Company, executed a corporate assignment of the deed of trust. (Dkt. 12-1 at 17.) The assignment assigned and transferred the deed of trust to JP Morgan Chase Bank, NA. It was recorded as Instrument No. 402054 in Jefferson County, Idaho.

         An appointment of successor trustee was recorded on November 24, 2015, as Instrument No. 420367. (Dkt. 3 at 60.) JP Morgan appointed Sydney K. Leavitt, Esq., as successor trustee under the Deed of Trust.

         On December 2, 2015, Sydney Leavitt, of the law firm Aldridge Pite, LLP, executed a Notice of Default. (Dkt. 12-1 at 19.) The notice identified Leavitt as the successor trustee under the Deed of Trust executed by the Schaeffers; indicated they had failed to pay the monthly payment due on April 1, 2015; and noted the amount due as of December 2, 2015, was $11, 857.21. Plaintiffs admit in the Complaint they stopped making payments in 2015. Compl. ¶ 20-21.

         Although the assignment of the deed of trust to JP Morgan had occurred in 2012, the Notice of Default identified First American Title Insurance Company of Idaho as Trustee, and MERS as Nominee for Guild Mortgage Company. But, the Notice included reference as well to MERS's “successors and assigns as beneficiary” of the deed of trust. The notice was recorded as Instrument No. 420472 in Jefferson County, Idaho.

         On December 11, 2015, Leavitt executed a Notice of Trustee's sale, setting forth that the sale would occur on April 20, 2016, at the Jefferson County courthouse, and that Leavitt, as successor Trustee, would sell the Property at public auction. (Dkt. 3 at 75.) The notice indicated the sum owing on the debt secured by the deed of trust as of December 11, 2015, was $202, 556.72.


         1. Motion to Dismiss Standard

         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss “does not need detailed factual allegations, ” it must set forth “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Id. at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id. at 557.

         The United States Supreme Court identified two “working principles” that underlie Twombly in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the Court need not accept as true legal conclusions that are couched as factual allegations. Id. Rule 8 does not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79. Second, to survive a motion to dismiss, a complaint must state a plausible claim for relief. Id. at 679. “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

         Under Rule 12(b)(6), the Court may consider matters that are subject to judicial notice. Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court may take judicial notice “of the records of state agencies and other undisputed matters of public record” without transforming the motions to dismiss into motions for summary judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866, n.1 (9th Cir. 2004). The Court may also examine documents referred to in the complaint, although not attached ...

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