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Duke v. JPMorgan Chase Bank National Association

United States District Court, N.D. Alabama, Southern Division

November 5, 2014

THOMAS N. DUKE, et al., Plaintiffs,
v.
JPMORGAN CHASE BANK NATIONAL ASSOCIATION, Defendant.

MEMORANDUM OPINION

R. DAVID PROCTOR, District Judge.

This matter is before the court on Defendant's Motion to Dismiss Amended Complaint (Doc. # 17). The Motion has been fully briefed. (Docs. # 19 and 22). In this case, the Dukes, who have undisputedly not made any mortgage payments for over four years, sued the holder of their mortgage because it initiated, but did not conclude, foreclosure proceedings against them.

I. BACKGROUND

On or about October 8, 2007, Tracey H. Duke borrowed $87, 500.00 from Chase Bank USA, N.A. to finance the Dukes' residence located at 1033 Martinwood Lane, Birmingham, Alabama. (Doc. # 16 at ¶ 4; Doc. # 17-1 at ¶ 1). In exchange, Tracey Duke executed a promissory note (the "Note"), and both Dukes executed a residential Mortgage (the "Mortgage"). (Docs. # 17-1 and 17-2).[1] Although Plaintiffs remain in their home, the last full mortgage payment they made was on August 10, 2009. (Doc. # 16 at 2).

Chase Bank USA, N.A. assigned the Mortgage, together with the Note and indebtedness secured by the Mortgage, to JPMorgan Chase Bank, NA, a successor to Chase Home Finance, LLC. (Doc. # 16 at ¶ 4). As a result of the Dukes' default, Chase foreclosed on the Mortgage in June 2010. (Doc. # 16 at ¶ 5; Doc. # 17-1). The 2010 foreclosure was rescinded on May 17, 2012, so that the Dukes could apply for a modification of their loan. (Doc. # 16 at ¶¶ 6, 7).

The Dukes then applied for a loan modification and, after their account was already more than thirty-eight months past due, signed a trial modification plan on December 13, 2012. (Doc. # 16-2; Doc. # 17-3). That trial modification plan required the Dukes to make three trial payments in order to qualify for a permanent loan modification. (Doc. # 17-3). The trial modification plan provided as follows:

After all trial period payments are timely made and you continue to meet all program requirements, your mortgage would then be permanently modified. You will be required to execute a permanent mortgage modification agreement that we will send you before your modification becomes effective. Until then, your existing loan and loan requirements remain in effect and unchanged during the trial period.

(Doc. # 17-3 at 3).

According to Home Affordable Modification Program (HAMP) guidelines, the amount of the trial payments was set at approximately 31% of the Dukes' total gross monthly income as determined from documentation provided by the Dukes. (Doc. # 17-3 at 4). The trial plan further provided that "[i]f each trial payment is not received by us in the month in which it is due, this offer will end, your loan will not be modified under the terms described in this offer, and you may lose eligibility for any modification programs." (Doc. # 17-3 at 3). The Dukes never made the payments. (Doc. # 19 at ¶ 25).

As of September 26, 2013, a payment of $45, 961.23 was required to bring the Dukes' account current. (Doc. # 16-3 at 2).

Plaintiffs also advance other complaints about how they were treated during their period of default. For example, they complain that: (1) Defendant continued to send them communications after they engaged an attorney in this matter ( e.g., Doc. # 19 at ¶¶ 16, 17); (2) Defendant's attorneys initiated foreclosure proceedings after Defendant invited Plaintiffs to seek a resolution and Plaintiffs requested a loan modification (Doc. # 19 at ¶¶ 6-10); and (3) Defendant offered a loan modification which would have required a greater monthly payment than that required by Plaintiffs' original mortgage (Doc. # 19 at ¶¶ 20, 21, 24). Plaintiffs particularly complain that Defendant informed Plaintiffs that they were not eligible for a loan modification. (Doc. # 19 at ¶¶ 27, 28). Plaintiffs allege that Chase had previously "promised [the Dukes] that they would be entitled to a modification, " "indicated a willingness to once again modify [the Dukes'] loan, " and "agreed to modify [the Dukes'] mortgage. (Doc. # 16 at ¶¶ 7, 10, & 16). The documents Plaintiffs allege evince these promises contain the following conditional language:

• Based on your individual financial situation, we may be able to reduce your existing monthly payment amount.... all workout options require the approval of Chase management, and you must meet the workout criteria to qualify for the assistance.... no guarantees can be made ...

(Doc. # 16-1 at 4) (emphasis added).

• Chase Home Finance LLC is writing to confirm receipt of your recently submitted request for a modification under the Making Home Affordable (MHA') program. This program can help homeowners stay in their homes and avoid foreclosure by giving eligible borrowers a modified set of loan terms that promotes long-term affordability. If you meet the eligibility criteria, including submitting all of the required documentation, we will offer you a Trial Period Plan. The monthly trial period payments will be based on the income documentation that you provide. They will be an estimate of what your payment will be if we are able to modify your Loan under the terms of the program.... In order to qualify for the MHA program, you will need to... make timely monthly trial period payments ...

(Doc. # 16-1 at 8) (emphasis added).

• I've discussed your letter with my client and I think you may have identified a framework for potential resolution of the issue, namely a framework which involves some form of loan modification with potential credits due to your clients as well as some form of cash payment. Accordingly, I am hopeful that we will be able to resolve this issue between our clients.... After my client has then reviewed this information, they will be in a position to respond to your offer with specific terms.

(Doc. # 16-1 at 10) (emphasis added).

• Chase may be able to help make your mortgage more affordable if you are having difficulty making your payments. You could be eligible to take advantage of the Home Affordable Mortgage Program, part of a federal initiative to help homeowners.... Once we receive all of your documentation we'll determine if you are eligible for the program. If you are, we'll send you a letter with details about your new, affordable mortgage payment - and you will start paying that new amount during a trial period. If you make those trial payments on time and fulfill all the other program conditions, we will offer you a permanent modification to keep your payments low.

(Doc. # 16-1 at 12) (emphasis added).

• You are approved to enter into a trial period plan under the Home Affordable Modification Program. This is the first step toward qualifying for more affordable mortgage payments.... After all trial period payments are timely made and you continue to meet all program eligibility requirements, your mortgage would then be permanently modified.... Until then, your existing loan and loan requirements remain in effect and unchanged during the trial period. If each trial payment is not received by us in the month in which is due, this offer ...

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