Melville et al v. The Bank of New York Mellon Corporation et al

MOTION to Dismiss for Failure to State a Claim

E.D. Wash.March 6, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Fred B. Burnside, WSBA #32491 The Honorable Rosanna Maulouf Peterson Hugh McCullough, WSBA #41453 Frederick A. Haist, WSBA #48937 Davis Wright Tremaine LLP 1201 Third Avenue, Suite 2200 Seattle, Washington 98101-3045 Telephone: 206.622.3150 Fax: 206.757.7700 fredburnside@dwt.com hughmccullough@dwt.com frederickhaist@dwt.com IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF WASHINGTON AT SPOKANE DANIEL P. MELVILLE, et al., Plaintiffs, v. THE BANK OF NEW YORK MELLON CORPORATION, et al., Defendants. No. 2:17-cv-00030-RMP MOTION TO DISMISS Note on Motion Calendar: April 28, 2017 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - i Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax TABLE OF CONTENTS Page I. INTRODUCTION ......................................................................................... 1 II. STANDARD AND SCOPE OF REVIEW ................................................... 2 III. BACKGROUND ........................................................................................... 4 A. The Melvilles’ Previous Litigation Involving Their Loan ................. 4 1. The Melvilles’ Previous Eastern District Case (Melville I) ..... 4 2. Mary’s Bankruptcy Case (Melville II) ..................................... 4 3. The Melvilles’ New York Case (Melville III) ......................... 5 B. Statement of Allegations in Complaint (Melville IV) ........................ 6 IV. ARGUMENT and Authority ......................................................................... 7 A. Mary’s Bankruptcy Filing Judicially Estops Her from Asserting Her Claims .......................................................................................... 7 1. Mary Failed to Disclose her Claims in Her Bankruptcy Schedules .................................................................................. 7 2. Mary Surrendered Her Interest in the Property so She Cannot Maintain Claims Relating to the Property ................... 9 B. The Melvilles’ Two Claims Fail ....................................................... 10 1. The FDCPA Claim Fails as a Matter of Law ......................... 10 a. The Claim is Time-Barred ............................................. 10 b. The FDCPA does Not Apply to Entities Acquiring a Debt that is Not in Default .......................................... 10 c. The FDCPA does Not Apply because Foreclosure is Not Debt Collection .............................................................. 11 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - ii Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax 2. The Melvilles’ Right of Publicity/Conversion Claim Cannot be Stated ..................................................................... 11 a. The Right of Publicity is Inapplicable to a Loan Debt .. 12 b. Real Property Cannot be the Basis for a Conversion Claim ........................................................................................ 12 C. The Court should Dismiss the Complaint Without Leave to Amend ............................................................................................... 13 V. CONCLUSION ........................................................................................... 13 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - iii Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax TABLE OF AUTHORITIES Page(s) Cases Alhadeff v. Meridian on Bainbridge Island, LLC, 167 Wn.2d 601 (2009) ......................................................................................... 12 Allen v. C & H Distributors, L.L.C., 813 F.3d 566 (5th Cir. 2015) .................................................................................. 8 Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009) .................................................................... 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) ................................................................ 2, 3 Cagle v. C & S Wholesale Grocers Inc., 505 B.R. 534 (E.D. Cal. 2014) ............................................................................... 7 Cannon-Stokes v. Potter, 453 F.3d 446 (7th Cir. 2006) .................................................................................. 7 Cholla Readimix, Inc. v. Civish, 382 F.3d 969 (9th Cir. 2004) .................................................................................. 3 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) .................................................................................... 3 Cruse v. Sun Products Corp., 2016 WL 6892795 (W.D. Tenn. Nov. 22, 2016) ................................................... 8 Cunningham v. Reliable Concrete Pumping, Inc., 126 Wn. App. 222, 108 P.3d 147 (2005) ............................................................. 10 De Dios v. Int’l Realty & Investments, 641 F.3d 1071 (9th Cir. 2011) .............................................................................. 11 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - iv Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Gauvin v. Trombatore, 682 F. Supp. 1067 (N.D. Cal. 1988) ...................................................................... 2 Gilchrist v. Bayview Loan Servicing, LLC, 2016 WL 6635111 (W.D. Wash. Nov. 9, 2016) .................................................. 11 Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) .............................................................................. 7, 9 Harris v. Cnty. of Orange, 682 F.3d 1126 (9th Cir. 2012) ................................................................................ 3 Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555 (9th Cir. 1992) .............................................................................. 2, 7 Ho v. ReconTrust Co., NA, 840 F.3d 618 (9th Cir. 2016) ................................................................................ 11 Ileto v. Glock Inc., 349 F.3d 1191 (9th Cir. 2003) ................................................................................ 2 In re Cassidy, 892 F.2d 637 (7th Cir.1990) ................................................................................... 7 In re Failla, 838 F.3d 1170 (11th Cir. 2016) .............................................................................. 9 In re Marriage of Langham & Kolde, 153 Wn.2d 553 (2005) ......................................................................................... 12 In re Sagent Technology, Inc., Derivative Litig., 278 F. Supp. 2d 1079 (N.D. Cal. 2003) ................................................................. 2 Jones v. Bob Evans Farms, Inc., 811 F.3d 1030 (8th Cir. 2016) ................................................................................ 8 Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) ................................................................................ 3 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - v Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Kruger v. Horton, 106 Wn.2d 738 (1986) ......................................................................................... 13 Lee v. Thornburg Mortg. Home Loans Inc., 2014 WL 4953966 (N.D. Cal. 2014)...................................................................... 3 Nat’l Ass’n for Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043 (9th Cir. 2000) ................................................................................ 3 Neff v. Capital Acquisitions & Mgmt. Co., 352 F.3d 1118 (7th Cir. 2003) .............................................................................. 11 Steckman v. Hart Brewing, Inc., 143 F.3d 1293 (9th Cir. 1998) ................................................................................ 3 Thinket Ink Information Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053 (9th Cir. 2004) .............................................................................. 13 Urbick v. Spencer Law Firm, LLC, 192 Wn. App. 483, 367 P.3d 1103 (2016) ............................................................. 7 Van Horn v. Martin, 812 F.3d 1180 (8th Cir. 2016) ............................................................................ 7, 8 Statutes 15 U.S.C. § 1692g(b) ................................................................................................... 6 15 U.S.C. § 1692k(d) ................................................................................................. 10 RCW 63.60.010 ......................................................................................................... 12 RCW 63.60.070(6) .................................................................................................... 12 Rules Federal Rules of Civil Procedure Rule 8 ..................................................................... 2 Federal Rules of Civil Procedure Rule 12(b)(6) ......................................................... 2 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 1 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax I. INTRODUCTION Since 2011, Daniel and Mary Melville1 have started four legal actions that all relate to their default on their loan. In 2011, they filed a lawsuit that was voluntarily dismissed against several Chase entities (some defunct, some not) relating to a payment dispute and their default (“Melville I”). In June 2014, Mary filed a chapter 13 bankruptcy petition (“Melville II”); her plan indicated she would surrender the property at issue here, but her schedules did not list her current claims. That case is still pending. The third lawsuit (“Melville III”) was filed in New York against Bank of New York Mellon Corporation on June 17, 2014; they alleged claims relating to the alleged securitization of the loan and foreclosure. Judgment was entered in Bank of New York Mellon Corporation’s favor. Now, representing themselves, the Melvilles filed this action (“Melville IV”) against The Bank of New York Mellon Trust Company, NA, as Trustee, sued herein as “The Bank of New York Mellon Corporation, f/k/a The Bank of New York as Trustee for Citicorp Mortgage Securities Trust Series 2007-6” (“BNY Mellon Trust”) and JPMorgan Chase Bank, N.A. (“Chase”), both individually and as successor-in-interest to Chase Home Finance LLC (collectively, “Defendants”), alleging two claims, one under the federal Fair Debt Collection Practices Act (“FDCPA”) and the other for “conversion.” Both claims fail. Mary’s claims are barred under judicial estoppel due to her bankruptcy case. The FDCPA simply does 1 To avoid confusion, Chase will refer to Mr. Melville individually as Daniel, and Ms. Melville as Mary. No disrespect is intended. Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 2 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax not apply under the facts, and the claim is time-barred. Conversion cannot occur as to real property and a right-of-publicity claim (which is what the Melvilles actually pleaded) does not apply to a loan. The Court should grant Defendants’ motion to dismiss because: First, Mary’s bankruptcy filings judicially estop her from asserting her claims now because she failed to disclose those claims in her bankruptcy disclosures and she surrendered her interest in the property. Second, the Melvilles’ FDCPA claim fails because it is time-barred, it does not apply to entities that acquired the loan when it was current, and foreclosure is not debt collection. Third, the conversion claim fails because the right of publicity does not apply to a loan and real property cannot be the subject of a conversion claim. The Court should deny leave to amend because no amendments are possible. II. STANDARD AND SCOPE OF REVIEW A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint. Ileto v. Glock Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). A complaint that lumps together seemingly unrelated defendants fails to give them fair notice of the claims against them under Rule 8. In re Sagent Technology, Inc., Derivative Litig., 278 F. Supp. 2d 1079, 1094-1095 (N.D. Cal. 2003); Gauvin v. Trombatore, 682 F. Supp. 1067, 1071 (N.D. Cal. 1988). A complaint must allege enough facts to state a claim against a particular defendant that is plausible, not merely conceivable. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S. Ct. 1955, 1974 (2007). Moreover, “the court is not required to accept legal conclusions Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 3 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax cast in the form of factual allegations if those allegations cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness Network, 18 F.3d 752, 754- 55 (9th Cir. 1994); Cholla Readimix, Inc. v. Civish, 382 F.3d 969, 973 (9th Cir. 2004); see also Twombly, 550 U.S. at 555, 570. A plaintiff must allege more than “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937 (2009). “‘[L]abels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). The Court may consider—on a motion to dismiss—evidentiary facts contained in exhibits attached to a complaint. Nat’l Ass’n for Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000). And where allegations are contradicted by documents relied on in the complaint, the documents control. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998). Moreover, the Court may consider documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The Court may also take judicial notice of undisputed matters of public record, such as documents on file in federal or state courts. See Harris v. Cnty. of Orange, 682 F.3d 1126, 1131-32 (9th Cir. 2012) (taking judicial notice of state- court proceedings in res judicata analysis); Lee v. Thornburg Mortg. Home Loans Inc., 2014 WL 4953966 (N.D. Cal. 2014) (taking judicial notice of court filings and public records in evaluating whether res judicata barred pro se plaintiff’s third attempt to litigate home foreclosure). Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 4 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax III. BACKGROUND A. The Melvilles’ Previous Litigation Involving Their Loan The Melvilles have filed several different lawsuits relating to Defendants, the property located at 11019 E Upriver Drive, Spokane, WA 99206-4544 (“Property”), and the foreclosure on the loan.2 1. The Melvilles’ Previous Eastern District Case (Melville I) The Melvilles filed Melville I, case number CV-11-447-LRS, on December 5, 2011. The Melville I complaint named various related Chase entities as defendants and primarily alleged Chase did not respond to their purported request under the Real Estate Settlement Procedures Act relating to a payment dispute on their loan. Request for Judicial Notice (“RJN”) #1, Melville I Compl. (Ex. 1). They also alleged facts relating to a foreclosure: “The Defendants continued claim that the plaintiffs are in default on the loan and have began to institute foreclosure proceedings.” Ex. 1, Melville I Compl. ¶ 20. The Melvilles’ attorney was Timothy Durkop. Ex. 1, Melville I Compl. Chase was servicing the loan prior to November 2011. Ex. 1, Melville I Compl. ¶ 8. Melville I was voluntarily dismissed. 2. Mary’s Bankruptcy Case (Melville II) Mary filed a Chapter 13 bankruptcy petition on June 12, 2014, case number 14-02203-FPC, in the Eastern District of Washington, and later amended her bankruptcy schedules. RJN #2, Melville II Petition (Ex. 2); RJN #3, Amended 2 Defendants request judicial notice of the court pleadings submitted with this motion pursuant to the standards set forth above. Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 5 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Schedules (Ex. 3). Her schedules do not list the two claims alleged in Melville IV. Mary’s attorney in Melville II was the same as her attorney for Melville I. Ex. 2, Melville II Petition. Mary proposed a Chapter 13 plan, modified it, and the court then confirmed the modified plan. RJN #4, Plan (Ex. 4); RJN #5, First Amended Plan (Ex. 5); RJN #6, Order Confirming Plan3; RJN #7, Modification to Plan (Ex. 7); RJN #11, Second Modification to Plan (Ex. 11). The plan, as confirmed by the bankruptcy court, required Mary to surrender the Property. Ex. 5, First Amended Plan p. 6. 3. The Melvilles’ New York Case (Melville III) On June 17, 2014, the Melvilles filed a lawsuit in the Supreme Court for the state of New York, County of New York, index number 155908/2014, and filed an amended complaint on September 4, 2014. RJN #8, Melville III Compl. (Ex. 8); RJN #9, Melville III Amended Compl. (Ex. 9). Bank of New York Mellon Corporation was the sole defendant. They alleged their loan was securitized in 2007, and Bank of New York Mellon Corporation became the trustee of the securitization trust at that time. Ex. 9, Melville III Amended Compl. ¶¶ 6-9, 11-13. Melville III was dismissed upon a motion to dismiss and judgment was entered for Bank of New York Mellon Corporation. RJN #10, Melville III Decision and Order (Ex. 10). 3 The Order confirming the plan was issued as an ECF notification; the text is available as docket #82 on Pacer (also attached as Exhibit 7). Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 6 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax B. Statement of Allegations in Complaint (Melville IV) The Melvilles’ current complaint alleges two claims—one under the FDCPA and one for “conversion.” They repeat the same allegations as a claim against defendant. Chase summarizes their allegations below without admitting their truth. The Melvilles filed this action on January 23, 2017. Melville IV Compl. The Melvilles defaulted on November 2011. Melville IV Compl. Ex. A (Loan Statements). The Melvilles conducted a “securitization audit” in February 2014 that showed the Defendants acquired interests in the loan by 2009. Melville IV Compl. Ex. B. On October 14, 2015, the Melvilles sent Defendants a series of letters that: 1) claimed the Defendants had no interest in their loan (contradicting their own “securitization audit”); 2) claimed Defendants improperly contacted them about the debt; 3) claimed Defendants improperly used their name; 4) requested validation of their mortgage debt under 15 U.S.C. §1692g(b); and 5) purportedly rescinded the loan. Melville IV Compl. Ex. B. The Melvilles dispute that Defendants have an interest in the Note or Deed of Trust. Melville IV Compl. p. 3. The Melvilles claim that Defendants improperly stated they could foreclose on the Property. Melville IV Compl. p. 4. The Defendants allegedly improperly obtained the Melvilles’ name and information, infringing their property rights. Melville IV Compl. p. 29-45. Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 7 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax IV. ARGUMENT AND AUTHORITY A. Mary’s Bankruptcy Filing Judicially Estops Her from Asserting Her Claims “Judicial estoppel is designed to ‘prevent the perversion of the judicial process.’” Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006) (quoting In re Cassidy, 892 F.2d 637, 641 (7th Cir.1990)). Judicial estoppel should be applied when: 1) the plaintiff’s position is inconsistent with his previous position; 2) plaintiff persuaded the previous court of her prior position; and 3) plaintiff would obtain an unfair advantage from the inconsistent positions. See Cagle v. C & S Wholesale Grocers Inc., 505 B.R. 534, 538 (E.D. Cal. 2014); Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782-83 (9th Cir. 2001); Urbick v. Spencer Law Firm, LLC, 192 Wn. App. 483, 488, 367 P.3d 1103, 1105 (2016), as corrected (Feb. 3, 2016). 1. Mary Failed to Disclose her Claims in Her Bankruptcy Schedules “In the bankruptcy context, a party is judicially estopped from asserting a cause of action not raised in a reorganization plan or otherwise mentioned in the debtor’s schedules or disclosure statements.” Hamilton, 270 F.3d at 783; Van Horn v. Martin, 812 F.3d 1180, 1182–83 (8th Cir. 2016) (estoppel in Chapter 13 context); Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555, 557 (9th Cir. 1992) (estoppel in Chapter 11 context). All three elements of judicial estoppel are met. Mary’s bankruptcy petition and her Chapter 13 plan fail to mention the claims she asserts in this case. Ex. 2, Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 8 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Melville II Petition; Ex. 3, Amended Schedules; Ex. 5, First Amended Plan; Ex. 6, Modification to Plan. Her position in the bankruptcy case—that no claims exist—is inconsistent with her current position that claims do exist. Van Horn, 812 F.3d at 1183. The bankruptcy court accepted her position—it confirmed her Chapter 13 plan based upon her schedules, including her representation that she would abandon her interests in the Property. RJN #7, Order Confirming Plan. A discharge or final disposition is not necessary. Allen v. C & H Distributors, L.L.C., 813 F.3d 566, 573 (5th Cir. 2015). Finally, Mary obtained an unfair advantage in not disclosing the claims, since any recovery on the claims could be made available to creditors, while Defendants could have objected if Mary tried to retain her interest in the Property. Jones v. Bob Evans Farms, Inc., 811 F.3d 1030, 1034 (8th Cir. 2016). Mary’s omission was not inadvertent. She knew she potentially had claims against Defendants—she and Daniel sued a Bank of New York Mellon entity and several Chase entities previously. Ex. 1, Melville I Compl.; Ex. 9, Melville III Amended Compl. She knew that Defendants were trying to enforce a foreclosure— she and Daniel previously alleged “The Defendants continued claim that the plaintiffs are in default on the loan and have began to institute foreclosure proceedings.” Ex. 1, Melville I Compl. ¶ 20. Her attorney in Melville I was the same as her attorney for Melville II, so he certainly should have known about her current claims. The failure to disclose the claims was not inadvertent. See Jones, 811 F.3d at 1034; see also Cruse v. Sun Products Corp., 2016 WL 6892795, at *3-4 (W.D. Tenn. Nov. 22, 2016). Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 9 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax 2. Mary Surrendered Her Interest in the Property so She Cannot Maintain Claims Relating to the Property Mary stated that she will surrender the Property in her Chapter 13 plan. Ex. 5, First Amended Plan. She is judicially estopped from asserting her claims due to her surrender. Surrender means that she cannot exercise rights in or to the Property. “[Surrender] does not mean that a debtor who declares he will surrender his property can then undo his surrender after the bankruptcy is over and the creditor initiates a foreclosure action.” In re Failla, 838 F.3d 1170, 1178 (11th Cir. 2016). Mary’s current position—challenging actions relating to the Property—is inconsistent with surrender. As the Failla court explained, “[c]ompelling them [the Faillas] to stop opposing the foreclosure action requires them to honor that declaration [of surrender]. The Faillas may not say one thing in bankruptcy court and another thing in state court . . . .” Failla, 838 F.3d at 1178. Indeed, “[w]hen the debtors act to preserve their rights to the property ‘by way of adversarial litigation,’ they have not ‘relinquish[ed] ... all of their legal rights to the property, including the rights to possess and use it.’ [citation omitted].” Failla, 838 F.3d at 1177. The bankruptcy court adopted Mary’s position when it confirmed her Chapter 13 plan. Mary would obtain an unfair position—escaping payment and responsibility on the mortgage, but maintaining an action challenging the foreclosure on the Property. If Mary had disclosed her intention to keep the Property, the Defendants would have had an opportunity to object. In Hamilton, the court was adamant in holding a bankrupt debtor like Mary to her word and not letting her manipulate courts to take two different positions. Hamilton, 270 F.3d at Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 10 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax 784; see also Cunningham v. Reliable Concrete Pumping, Inc., 126 Wn. App. 222, 231, 108 P.3d 147, 152 (2005). Mary’s claims should be dismissed due to her declaration of surrender. B. The Melvilles’ Two Claims Fail As discussed, Mary’s claims are barred due to her bankruptcy filing. In addition, both the Melvilles’ claims fail as a matter of law. 1. The FDCPA Claim Fails as a Matter of Law The FDCPA regulates debt collection, requiring statutorily defined “debt collectors” to act in certain ways. Defendants are not debt collectors, foreclosure is not debt collection, and the claim is time-barred. a. The Claim is Time-Barred On October 14, 2015, the Melvilles sent Defendants a series of letters claiming the Defendants had no interest in their loan and improperly contacted them about the debt. Melville IV Compl. Ex. B. The FDCPA has a one-year statute of limitations. 15 U.S.C. §1692k(d). The Complaint was filed on January 23, 2017. January 2017 is more than one year from October 2015. Their claim is time-barred. b. The FDCPA does Not Apply to Entities Acquiring a Debt that is Not in Default Defendants are not debt collectors under the FDCPA. In Melville I, the Melvilles indicated that Chase was collecting on the loan prior to November 2011. Ex. 1, Melville I Compl. ¶ 8. In Melville III, they indicated that their loan was securitized in 2007, and Bank of New York Mellon Corporation became the trustee of the security trust in the same time-frame. Ex. 8, Melville III Amended Compl. ¶¶ Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 11 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax 6-9, 11-13. The “securitization audit” indicates that all Defendants gained their interests in the loan by 2009. Melville IV Compl. Ex. B. The Melvilles defaulted in November 2011. Melville IV Compl. Ex. A (Loan Statements). An entity who obtains its interest in a debt when the debt is not in default is not a debt collector for purposes of the FDCPA. De Dios v. Int’l Realty & Investments, 641 F.3d 1071, 1074 (9th Cir. 2011); Neff v. Capital Acquisitions & Mgmt. Co., 352 F.3d 1118, 1121 (7th Cir. 2003). Thus, the FDCPA claim fails as to Defendants. c. The FDCPA does Not Apply because Foreclosure is Not Debt Collection The Melvilles dispute that Defendants have an interest in the Note or Deed of Trust and that they are improperly collecting on the debt through foreclosure. Melville IV Compl. p. 3; Melville IV Compl. p. 4 (“The defendant made false representations that it had rights to foreclose against the plaintiffs’ property (home) under the provisions of a trust deed that is recorded against the title of the plaintiffs’ property in the county where the property is situated”). Foreclosure does not qualify as debt collection under the FDCPA. Gilchrist v. Bayview Loan Servicing, LLC, 2016 WL 6635111, *4 (W.D. Wash. Nov. 9, 2016); Ho v. ReconTrust Co., NA, 840 F.3d 618, 621 (9th Cir. 2016). Thus, no claim can be stated. 2. The Melvilles’ Right of Publicity/Conversion Claim Cannot be Stated The Melvilles’ second claim is titled conversion but really seems to be alleging a right to publicity. Regardless of which is their claim, they cannot state it. Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 12 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax a. The Right of Publicity is Inapplicable to a Loan Debt The Melvilles cite RCW 63.60.010 as forming the basis of their conversion claim. Apparently, they claim Defendants violated their right of publicity in their name in foreclosing on the loan. They cannot allege facts showing Defendants made any unauthorized use of their signature; Defendants are merely enforcing a contract. And even if enforcing a promissory note and foreclosing were somehow within the realm of “personality rights,” the use of the Melvilles’ names was incidental and de minimis. “This chapter does not apply . . . when the use of the individual’s or personality’s name . . . is an insignificant, de minimis, or incidental use.” RCW 63.60.070(6). Defendants are not trying to profit off of the Melvilles’ names; they are trying to enforce a contract the parties executed. b. Real Property Cannot be the Basis for a Conversion Claim Defendants did not convert anything. The Melvilles contend that Defendants converted their real property through foreclosing on it: The defendant has denied the plaintiff the free use of his property by engaging in a foreclosure action which is not authorized by law, in which the defendant has no legal rights or interests and which may involve the laundering of forged and counterfeited negotiable instruments using state laws and the county court system. Compl. p. 32, 35, 38-39, 42, 45. Conversion occurs when a person takes (or retains) a chattel unlawfully. Alhadeff v. Meridian on Bainbridge Island, LLC, 167 Wn.2d 601, 619 (2009). Chattel is moveable personal property, not real property. In re Marriage of Langham & Kolde, 153 Wn.2d 553, 564–65 (2005). Conversion simply cannot be alleged here. Moreover, the Melvilles do not allege Defendants Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 13 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax wrongfully kept anything; they only alleged the Defendants learned information about them that they concede an entity with an interest in the loan would know. Compl Ex B. To the extent the Melvilles assert Defendants converted their payments, the theory fails. “The plaintiff in a conversion action must prove a right to possess the property converted.” Kruger v. Horton, 106 Wn.2d 738, 743 (1986). The Melvilles made the payments to repay their loan; they were not entitled to the payments, Defendants were. Melville IV Compl. p. 2. Thus, no claim is stated. C. The Court should Dismiss the Complaint Without Leave to Amend Dismissal without leave to amend is proper if amendment could not save the complaint. The Melvilles cannot amend their complaint to state any claims as to Defendants. The Court should dismiss their claims against Defendants with prejudice and enter judgment in their favor. See e.g., Thinket Ink Information Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004). V. CONCLUSION Defendants’ motion to dismiss should be granted. Mary’s claims are barred by her bankruptcy petition. In addition, the Melvilles’ conversion and FDCPA claims fail. The Melvilles’ claims should be dismissed without leave to amend. Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 14 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax DATED this 6th day of March, 2017. Davis Wright Tremaine LLP Attorneys for The Bank of New York Mellon Trust Company, NA, as Trustee, sued herein as “The Bank of New York Mellon Corporation, f/k/a The Bank of New York as Trustee for Citicorp Mortgage Securities Trust Series 2007-6”, JPMorgan Chase Bank, N.A., on its own behalf and as successor by merger to Chase Home Finance LLC By/s/Frederick A. Haist Fred B. Burnside, WSBA #32491 Hugh McCullough, WSBA #41453 Frederick A. Haist, WSBA #48937 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 Telephone: 206.622.3150 Fax: 206.757.7700 fredburnside@dwt.com hughmccullough@dwt.com frederickhaist@dwt.com Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MOTION TO DISMISS - 15 Case No. 2:17-cv-00030-RMP 4826-5080-6595v.5 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax CERTIFICATE OF SERVICE I hereby certify that on March 6, 2017, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record registered on the CM/ECF system. Also, on March 6, 2017, I served copies of the foregoing document on the following parties of record via first class mail: Daniel P Melville Mary R Melville 11019 East Upriver Drive Spokane, WA 99206 DATED this 6th day of March, 2017. /s/Frederick A. Haist Frederick A. Haist, WSBA #48937 Case 2:17-cv-00030-RMP Document 21 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 [PROPOSED] ORDER Case No. 2:17-cv-00030-RMP 4815-7877-2036v.1 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Fred B. Burnside, WSBA #32491 The Honorable Rosanna Maulouf Peterson Hugh McCullough, WSBA #41453 Frederick A. Haist, WSBA #48937 Davis Wright Tremaine LLP 1201 Third Avenue, Suite 2200 Seattle, Washington 98101-3045 Telephone: 206.622.3150 Fax: 206.757.7700 fredburnside@dwt.com hughmccullough@dwt.com frederickhaist@dwt.com IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF WASHINGTON AT SPOKANE DANIEL P. MELVILLE, et al., Plaintiffs, v. THE BANK OF NEW YORK MELLON CORPORATION, et al., Defendants. No. 2:17-cv-00030-RMP [PROPOSED] ORDER GRANTING MOTION TO DISMISS Note on Motion Calendar: April 28, 2017 Case 2:17-cv-00030-RMP Document 21-1 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 [PROPOSED] ORDER - 1 Case No. 2:17-cv-00030-RMP 4815-7877-2036v.1 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax This matter comes before the court on The Bank of New York Mellon Trust Company, NA, as Trustee, sued herein as “The Bank of New York Mellon Corporation, f/k/a The Bank of New York as Trustee for Citicorp Mortgage Securities Trust Series 2007-6” (“BNY Mellon Trust”) and JPMorgan Chase Bank, N.A. (“Chase”), both individually and as successor-in-interest to Chase Home Finance LLC (collectively, “Defendants”)’s Motion to Dismiss (FRCP 12(b)(6)). The Court has considered the motion, the pleadings and papers submitted in support of and in opposition to the motion, and the argument of counsel. NOW, THEREFORE, it is hereby ORDERED that: 1. Defendants’ Motion to Dismiss (FRCP 12(b)(6)) is GRANTED in its entirety; 2. Any attempt by Plaintiff s Daniel and Mary Melville to amend the complaint would be futile; and 3. All claims and causes of action asserted against Defendants are hereby dismissed with prejudice. DATED this ______ day of ________________, 2017. United States District Judge Case 2:17-cv-00030-RMP Document 21-1 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 [PROPOSED] ORDER - 2 Case No. 2:17-cv-00030-RMP 4815-7877-2036v.1 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Presented by: Davis Wright Tremaine LLP Attorneys for The Bank of New York Mellon Trust Company, NA, as Trustee, sued herein as “The Bank of New York Mellon Corporation, f/k/a The Bank of New York as Trustee for Citicorp Mortgage Securities Trust Series 2007-6”, JPMorgan Chase Bank, N.A., on its own behalf and as successor by merger to Chase Home Finance LLC By/s/Frederick A. Haist Fred B. Burnside, WSBA #32491 Hugh McCullough, WSBA #41453 Frederick A. Haist, WSBA #48937 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 Telephone: 206.622.3150 Fax: 206.757.7700 fredburnside@dwt.com hughmccullough@dwt.com frederickhaist@dwt.com Case 2:17-cv-00030-RMP Document 21-1 Filed 03/06/17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 [PROPOSED] ORDER - 3 Case No. 2:17-cv-00030-RMP 4815-7877-2036v.1 0036234-000609 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax CERTIFICATE OF SERVICE I hereby certify that on March 6, 2017, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record registered on the CM/ECF system. Also, on March 6, 2017, I served copies of the foregoing document on the following parties of record via first class mail: Daniel P Melville Mary R Melville 11019 East Upriver Drive Spokane, WA 99206 DATED this 6th day of March, 2017. /s/Frederick A. Haist Frederick A. Haist, WSBA #48937 Case 2:17-cv-00030-RMP Document 21-1 Filed 03/06/17