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Barnes v. Chase Home Finance, LLC

United States District Court, D. Oregon

April 12, 2018

TIMOTHY BARNES, Plaintiff,
v.
CHASE HOME FINANCE, LLC, CHASE BANK USA, N.A., IBM LENDER BUSINESS PROCESS SERVICES, INC., JOHN AND JANE DOES 1-10, and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants.

          FINDINGS AND RECOMMENDATION

          Flonorable Paul Papak United States Magistrate Judge.

         Plaintiff pro se Timothy Barnes filed this action against defendants Chase Home Finance, LLC ("CHF" or "JPMCB"[1]), Chase Bank USA, N.A. ("CBUSA" and, collectively with CHF, the "Chase defendants"), IBM Lender Business Process Services, Inc. ("LBPS"), and ten fictitiously named "Doe" defendants on February 4, 2011. By and through his complaint as originally filed, Barnes alleged these defendants' liability under the Truth in Lending Act ("TILA") and its implementing Regulation Z in connection with their responses (or failures to respond) to Barnes' notice of his intention to exercise his asserted right of rescission as to a mortgage loan he took out on his home more than two years but fewer than three years following the date the mortgage transaction closed. On June 10, 2011, 1 construed Barnes' complaint as alleging claims for (i) rescission of the mortgage loan, (ii) declaratory judgment that Barnes1 notice of intent to rescind was valid when issued and that defendants have no valid security interest in the subject property, (iii) statutory and actual damages in connection with defendants' failure to provide adequate notice of his right to rescind at or around the time the loan documents were signed, (iv) statutoiy and actual damages in connection with the Chase defendants' failure to effect rescission of the mortgage loan following their receipt of his notice of intent to exercise the rescission right, and (v) injunctive relief to enjoin the defendants from initiating or prosecuting non-judicial foreclosure proceedings on the property, from recording any deeds or mortgages regarding the property, or from taking any steps to deprive him of his ownership rights in the property.

         Also on June 10, 2011, on motions to dismiss filed by the Chase defendants and LBPS, I recommended that the court dismiss Barnes' rescission claim for lack of subject-matter jurisdiction and dismiss Barnes' remaining claims for failure to state a claim. On October 18, 2011, disagreeing with my analysis of the jurisprudence interpreting the provisions of Regulation Z, Judge Brown adopted my recommendations of June 10, 2011, only insofar as I recommended that the court dismiss Barnes' construed claim for statutory and actual damages arising out of defendants' purported failure to provide adequate notice of Barnes' right to rescind at or around the time the loan documents were signed, and otherwise denied the defendants' motions to dismiss with instructions that I consider certain issues left unresolved in the my findings and recommendation, specifically the Chase defendants' arguments for dismissal of Barnes' rescission claim and LBPS' arguments for dismissal to the extent premised on the theory that LBPS was not an assignee of Barnes' loan and therefore not subject to TILA liability, On November 3, 2011, the Chase defendants voluntarily withdrew their motion to dismiss. Effective November 16, 2011, Barnes amended his complaint, adding the Federal National Mortgage Association ("Fannie Mae") as an additional defendant and removing his prayer for statutory damages in connection with the defendants' purported failure to provide adequate notice of Barnes' right to rescind at or around the time the loan documents were signed. On December 8, 2011, 1 recommended that LBPS' motion to dismiss be denied to the extent premised on the grounds not addressed in my recommendations of June 10, 2011. Effective February 10, 2012, Barnes amended his complaint for the second time, adding documents tending to support some of his allegations as exhibits thereto. On March 6, 2012, Judge Brown adopted my recommendation that LBPS' then-pending motion to dismiss be denied.

         On March 19, 2012, 1 recommended for the second time that Barnes' claim for rescission be dismissed, this time on the basis of intervening Ninth Circuit case law establishing that that claim was time-barred. On June 20, 2012, Judge Brown adopted my recommendation, and sismissed Barnes' claim for rescission with prejudice.

         On April 10, 2013, 1 recommended that the court grant summary judgment in defendants' favor as to Barnes' remaining claims (that is, as to all of Barnes' pled and constructive claims other than his claim for statutoiy and actual damages arising out of defendants' failure to provide adequate notice of his right to rescind, which was dismissed effective October 18, 2011, and his claim for rescission, which was dismissed with prejudice effective June 20, 2012). Judge Brown adopted that recommendation on July 8, 2013. On August 6, 2013, Barnes appealed this court's judgment, including within the scope of his appeal this court's orders effecting dismissal of certain of his claims prior to entry of summary judgment. The Ninth Circuit's mandate issued in connection with Barnes' appeal on September 5, 2017. The circuit court vacated this court's "grant of summary judgment on Barnes's claims for rescission and failure to effect rescission" and remanded Barnes' action for further proceedings.

         Now before the court are Barnes' motion (#175) for summary judgment, the Chase defendants' motion (#193) for summary judgment and Fannie Mae's and LBPS' motion (#199) for summary judgment (by and through which Fannie Mae and LBPS join in the Chase defendants' motion). I have considered the motions and all of the pleadings and papers on file. For the reasons set forth below, Barnes' motion (#175) for summary judgment should be denied, and the Chase defendants' motion (#193) and Fannie Mae's and LBPS' motion (#199) for summary judgment should both be granted.

         LEGAL STANDARD

         Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is not proper if material factual issues exist for trial. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 318, 322 (1986); Anderson v. Liberty Lobby, Inc., Ml U.S. 242, 248 (1986); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert, denied, 116 S.Ct. 1261 (1996). The substantive law governing a claim or defense determines whether a fact is material. See Moreland v. Las Vegas Metro. Police Dep't, 159 F.3d 365, 369 (9th Cir. 1998).

         In evaluating a motion for summary judgment, the district courts of the United States must draw all reasonable inferences in favor of the nonmoving party, and may neither make credibility determinations nor perform any weighing of the evidence. See?, e.g., Lytle v. Household Mfg., Inc., 494 U.S. 545, 554-55 (1990); Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000). On cross-motions for summary judgment, the court must consider each motion separately to determine whether either party has met its burden with the facts construed in the light most favorable to the other. See Fed. R. Civ. P. 56; see also, e.g., Fair Pious. Council v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). A court may not grant summary judgment where the court finds unresolved issues of material fact, even where the parties allege the absence of any material disputed facts. See id.

         FACTUAL BACKGROUND

         I. The Parties

         Plaintiff Timothy Barnes is the owner and resident of a residential property located at 590 South Greenwood Road in Independence, Oregon (the "property").

         Defendant CHF is a Delaware corporation with its principal place of business in New Jersey. Defendant CBUSA was at material times a Delaware corporation with its principal place of business in Delaware, and its successor in interest is JP Morgan Chase Bank, N.A.. CBUSA was the "lender" on the note at issue in this action. CHF appears to have been the original "servicer" of that note on CBUSA's behalf. The parties all agree that CBUSA was the entity to whom Barnes was required to send his notice of intent to rescind in order to effect his right of rescission during the period when that right was in force and exercisable.

         Defendant LBPS is a Delaware corporation with its principal place of business in North Carolina. It appears that LBPS became the servicer of the note at issue in this action on or around October 1, 2010.

         Defendant Fannie Mae became the "creditor" of the note at issue in this action effective November 16, 2010, by way of assignment from CBUSA.

         II. History of the Parties' Dispute

         In 1990, Barnes and his wife Kara Barnes ("Kara"), from whom he is now divorced, entered a contract to purchase the property in Independence, Oregon, that is at the center of the parties' dispute, See Declaration (#194) of Kaley L. Fendall ("Fendall Decl."), Exh. A ("1990 Real Property Sale Contract"). In 1993, the sellers conveyed the property to Barnes and Kara via statutory special warranty deed. See Fendall Decl., Exh. B ("1993 Statutory Special Warranty Deed"). In 1997, Kara conveyed her interest in the property to Barnes via quitclaim deed. See Fendall Decl, Exh. C ("1997 Quitclaim Deed"). In 2003, Barnes conveyed his entire interest in the property back to Kara via another quitclaim deed. See Fendall Decl., Exh. D ("2003 Quitclaim Deed").

         Seven days after Barnes' interest in the property was extinguished by quitclaim deed, leaving Kara as the sole owner of the property, Kara encumbered the property with a deed of trust in favor of Merit Financial, Inc., identifying her as the sole mortgagor and securing a note in the amount of $250, 781. Fendall Decl., Exh. E ("Merit Deed of Trust"). Subsequently, in 2005, Kara encumbered the property with a second deed of trust, this one in favor of M&T Mortgage Corporation and securing a note in the amount of $251, 000, again identifying Kara as the sole mortgagor. Fendall DecL, Exh. F ("M&T Deed of Trust I"). In 2006, Kara encumbered the property with a third deed of trust, again in favor of M&T Mortgage Corporation, again identifying Kara as the sole mortgagor, and securing a note in the amount of $255, 000. Fendall DecL, Exh. G ("M&T Deed of Trust II").

         Barnes later testified under oath that the property described in the 2003 Quitclaim Deed -the same property as that described in the 1990 Real Property Sale Contract, the 1993 Statutory Special Warranty Deed, and the 1997 Quitclaim Deed, see 1990 Real Property Sale Contract, 1993 Statutory Special Warranty Deed, 1997 Quitclaim Deed, 2003 Quitclaim Deed - is the property at issue in this action, and that (impliedly by operation of the 2003 Quitclaim Deed) he lacked any title in that property at the time he entered into the loan transaction with CBUSA that underlies his claims herein. See Fendall DecL, Exh. J (Deposition of Timothy Barnes ("Barnes Depo.")), 35:20-36:10.

         Barnes and Kara divorced in September 2007. See Fendall DecL, Exh. I ("2007 Dissolution of Marriage"). In connection with the divorce, Barnes was awarded title to the property "free of all right, title and interest of [Kara] thereto." Id., ¶ 5.8. Pursuant to the divorce decree, Barnes was required to pay all encumbrances of record on the property and to indemnify Kara and hold her harmless in connection with such encumbrances. See Id. In addition, Barnes was required to "immediately refinance the mortgage owing on said property in order to remove [Kara]'s name from said financial obligation." Id. The decree provided that title in the property would be transferred from Kara to Barnes after Barnes paid Kara the amount of $100, 000, which amount was characterized as a "property division judgment." See id.; see also id., ¶ 5.11.

         On or around November 15, 2007, Barnes closed a loan transaction with CBUSA secured by the property. See Declaration (#195) of Nina Zakharevych ("Zakharevych Decl."), Exh. A (collectively with Second Amended Complaint (#95), Exh. E, "2007 Balloon Note"). The loan transaction was memorialized by and through the 2007 Balloon Note in the amount of $378, 250, which bears the date November 14, 2007, but was signed by Barnes as the sole borrower on November 15, 2007. See Id. Also on November 15, 2007, Barnes executed a deed of trust identifying the property as security for the 2007 Balloon Note loan for CBUSA's benefit, See Zakharevych Decl., Exh. B (collectively with Second Amended Complaint (#95), Exh. D, "2007 Deed of Trust"). At closing, according to Barnes' allegations, CBUSA's closing agent First American Title Company of Oregon provided Barnes with two unsigned copies of a Notice of Right to Cancel. See Second Amended Complaint (#95), Exh. G ("Unsigned Notice of Right to Cancel"). Each of the copies of the Unsigned Notice of Right to Cancel stated that the loan closed on November 14, 2007. See Id. Specifically, each copy Barnes allegedly received at closing stated as follows:

         You have a legal right under federal law to cancel this transaction, without cost, within three (3) business days from whichever of the following events occurs last:

(1) The date of the transaction, which is November 14, 2007; or
(2) The date you received your Truth-In-Lending disclosures; or
(3) The date you received this notice of your right to cancel.
* * *
You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. .. .
If you cancel by mail or telegram, you must send the notice no later than midnight of November 17. 2007 (or midnight of the third business day following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered ... no later than that time.

Id. (underlining original). Other than the specifically recited dates appearing in the two underlined sections, the language of this notice is in all material respects identical to that of the model form notice of the right to rescission provided by the ...


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