Robert J Neely v. JP Morgan Chase Bank, N.A.

NOTICE OF MOTION AND MOTION to Dismiss Case or Stay

C.D. Cal.December 5, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) STROOCK & STROOCK & LAVAN LLP JULIA B. STRICKLAND (State Bar No. 83013) STEPHEN J. NEWMAN (State Bar No. 181570) BENJAMIN G. DIEHL (State Bar No. 192984) 2029 Century Park East Los Angeles, CA 90067-3086 Telephone: 310.556.5800 Facsimile: 310.556.5959 Email: lacalendar@stroock.com Attorneys for Defendant JPMorgan Chase Bank, N.A. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ROBERT J. NEELY, individually, and on behalf of the class of all others similarly situated, Plaintiff, vs. JP MORGAN CHASE BANK, N.A., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 8:16-cv-01924-AG (KESx) [Assigned to Hon. Andrew J. Guilford] DEFENDANT JPMORGAN CHASE BANK, N.A.’S NOTICE OF MOTION AND MOTION TO DISMISS THE COMPLAINT, OR IN THE ALTERNATIVE, TO STAY THIS ACTION Date: February 6, 2017 Time: 10:00 a.m. Room: Courtroom 10D, 411 West 4th Street, Santa Ana, CA 92701 Action Filed: October 21, 2016 [Request for Judicial Notice filed and [Proposed] Order lodged concurrently herein] TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on February 6, 2017, at 10:00 a.m. or as soon thereafter as the matter may be heard before the Honorable Andrew J. Guilford, in Courtroom 10D, located at 411 West 4th Street, Santa Ana, California, 92701, defendant JPMorgan Chase Bank, N.A., (“JPMC”) will and hereby does move this Court pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) for an order Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 1 of 38 Page ID #:78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 1 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 dismissing the Complaint filed in this action on October 21, 2016 (“Complaint”), or in the alternative, staying all proceedings in this action in favor of the primary jurisdiction of the Internal Revenue Service (the “IRS”). Specifically, Plaintiff Robert J. Neely (“Plaintiff”) lacks standing under Article III of the U.S. Constitution and his claims are not ripe for review; his claim for declaratory relief is not authorized by the Declaratory Judgment Act; his claim for injunctive relief is barred by the Tax Anti-Injunction Act; and the IRS has exclusive enforcement jurisdiction over the matters described in the Complaint. If the Court reaches the merits, none of Plaintiff’s claims state a claim upon which relief can be granted. This Motion is based upon this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities, the concurrently-filed Request for Judicial Notice, the pleadings and papers on file herein, all other matters of which the Court may take judicial notice and upon such other or further material as may be presented at or in connection with the hearing on this Motion. This Motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on November 28, 2016. Dated: December 5, 2016 STROOCK & STROOCK & LAVAN LLP JULIA B. STRICKLAND STEPHEN J. NEWMAN BENJAMIN G. DIEHL By: /s/ Stephen J. Newman Stephen J. Newman Attorneys for Defendant JPMorgan Chase Bank, N.A. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 2 of 38 Page ID #:79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - i - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 TABLE OF CONTENTS Page MEMORANDUM OF POINTS AND AUTHORITIES .............................................. 1 I. INTRODUCTION .............................................................................................. 1 II. FACTUAL BACKGROUND ............................................................................ 3 A. Key Principles of Federal Income Taxation of Mortgage Borrowers ................................................................................................. 3 B. Plaintiff’s Allegations .............................................................................. 6 III. ARGUMENT ...................................................................................................... 7 A. Legal Standards on Motion to Dismiss .................................................... 7 B. Plaintiff Lacks Article III Standing .......................................................... 8 1. Plaintiff Suffered No Injury In Fact That Is Fairly Traceable to Any Act or Omission of JPMC and That Is Redressable Through Judicial Action ............................................ 8 2. Plaintiff’s Claim Is Not Ripe ....................................................... 11 C. The IRS Has Exclusive Enforcement Jurisdiction Over Plaintiff’s Claims ..................................................................................................... 12 D. Plaintiff’s Claims For Injunctive and Declaratory Relief Are Barred ..................................................................................................... 15 E. In the Alternative, the Action Should Be Stayed in Favor of the IRS’s Primary Jurisdiction ..................................................................... 16 F. Plaintiff’s Individual State-Law Claims All Fail ................................... 19 1. Plaintiff Fails to State a Claim For Breach of Contract ............... 19 2. Plaintiff Fails to State a Claim For Breach of the Implied Covenant of Good Faith and Fair Dealing ................................... 21 3. Plaintiff Fails to State a Claim For Negligence ........................... 22 4. Plaintiff Fails to State a Claim Under the UCL ........................... 23 IV. CONCLUSION ................................................................................................ 25 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 3 of 38 Page ID #:80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - ii - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 TABLE OF AUTHORITIES Page(s) Cases Aas v. Super. Court, 24 Cal. 4th 627 (2000) ........................................................................................... 23 Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774 (9th Cir. 2012) ................................................................................. 12 Alexander v. “Americans United” Inc., 416 U.S. 752 (1974) ............................................................................................... 16 Arsberry v. Illinois, 244 F.3d 558 (7th Cir. 2001) ................................................................................. 13 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................................. 8 Ayres v. Gen. Motors Corp., 234 F. 3d 514 (11th Cir. 2000) .............................................................................. 13 Batwin v. Occam Networks, Inc., No. 07-cv-2750, 2008 WL 2676364 (C.D. Cal. July 1, 2008) ................................ 8 In re Beisel, 195 B.R. 378 (Bankr. S.D. Ohio 1996) ................................................................. 18 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................. 8 Berger v. Home Depot U.S.A., Inc., 476 F. Supp. 2d 1174 (C.D. Cal. 2007) ................................................................. 21 Braitberg v. Charter Commc’ns, Inc., 836 F.3d 925 (8th Cir. 2016) ................................................................................... 9 Bright v. Bechtel Petroleum, Inc., 780 F.2d 766 (9th Cir. 1986) ................................................................................. 16 Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166 (9th Cir. 2002) ............................................................................... 17 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 4 of 38 Page ID #:81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - iii - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 C & E Servs., Inc. v. D.C. Water and Sewer Auth., 310 F.3d 197 (D.C. Cir. 2002) ............................................................................... 16 Cal. Fed. Bank v. Matreyek, 8 Cal. App. 4th 125 (1992) .................................................................................... 24 California v. Regan, 641 F.2d 721 (9th Cir. 1981) ................................................................................. 16 Californians for Disability Rights v. Mervyn’s, LLC, 39 Cal. 4th 223 (2006) ........................................................................................... 23 Cetacean Cmty. v. Bush, 386 F.3d 1169 (9th Cir. 2004) ................................................................................. 9 Chandler v. Wells Fargo Bank, No. 11-3831 SC, 2014 WL 31315 (N.D. Cal. Jan. 3, 2014), aff’d, 637 F. App’x 413 (9th Cir. 2016) .......................................................................... 20 Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335 (2001) .................................................................................. 22 Clark v. Time Warner Cable, 523 F.3d 1110 (9th Cir. 2008) ............................................................................... 17 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) ..................................................................................... 7 Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011) ............................................................................... 15 Colwell v. Dep’t of Health & Human Servs., 558 F.3d 1112 (9th Cir. 2009) ............................................................................... 12 Conservation Force v. Salazar, 646 F. 3d 1240 (9th Cir. 2011) ................................................................................ 7 Corneli Seed Co. v. Union Pac. R. Co., 263 F.2d 127 (9th Cir. 1958) ................................................................................. 17 Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000) ........................................................................................... 24 Daines v. Alcatel, S.A., 105 F. Supp. 2d 1153 (E.D. Wash. 2000) .............................................................. 16 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 5 of 38 Page ID #:82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - iv - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220 (D.C. Cir. 1991) ............................................................................. 13 Davies Mach. Co. v. Pine Mountain Club, Inc., 39 Cal. App. 3d 18 (1974) ..................................................................................... 21 Day v. AT&T Corp., 63 Cal. App. 4th 325 (1998) .................................................................................. 24 Deerink v. Bank of N.Y. Mellon, N.A., No. 2:11-cv-1735-MCE, 2012 WL 3234027 (E.D. Cal. Aug. 6, 2012) ................ 25 Dep’t of Water & Power v. ABB Power T & D Co., 902 F. Supp. 1178 (C.D. Cal. 1995) ...................................................................... 23 Depalma v. Westland Software House, 225 Cal. App. 3d 1534 (1990) ............................................................................... 18 Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124 (2015) ........................................................................................... 15 Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073 (9th Cir. 2013), cert. denied, 134 S. Ct. 2877 (2014) .................... 11 Facebook, Inc. v. Grunin, 77 F. Supp. 3d 965, 970 (N.D. Cal. 2015) ............................................................. 19 Fanucchi & Limi Farms v. United Agri Prods., 414 F.3d 1075 (9th Cir. 2005) ............................................................................... 21 Fernandez v. Brock, 840 F.2d 622 (9th Cir. 1988) ................................................................................. 10 In re First Alliance Mortg. Co., 471 F.3d 977 (9th Cir. 2006) ................................................................................. 25 Flora v. United States, 362 U.S. 145 (1960) ............................................................................................... 15 Foley v. Interactive Data Corp., 47 Cal. 3d 654 (1988) ............................................................................................ 21 Fraley v. Allstate Ins. Co., 81 Cal. App. 4th 1282 (2000) ................................................................................ 22 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 6 of 38 Page ID #:83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - v - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85 (1995) ............................................................................................. 23 Gierbolini Rosa v. Banco Popular de P.R., 930 F. Supp. 712 (D.P.R. 1996) ............................................................................ 11 Gifford v. Meda, No. 09-cv-13486, 2010 WL 1875096 (E.D. Mich. May 10, 2010) ....................... 13 Grebow v. Mercury Ins. Co., 241 Cal. App. 4th 564 (2015) ................................................................................ 19 Grier v. Hilton Worldwide Inc., No. CV-14-00189-PHX-DLR, 2014 WL 11515700 (D. Ariz. July 21, 2014) ......................................................................................... 10 Grochowski v. Phoenix Constr., 318 F.3d 80 (2d Cir. 2003) .............................................................................. 14, 15 Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317 (2000) ........................................................................................... 21 Hancock v. Urban Outfitters, Inc., 830 F.3d 511 (D.C. Cir. 2016) ................................................................................. 9 Hawthorne v. Umpqua Bank, No. 11-cv-6700-JST, 2013 WL 5781608 (N.D. Cal. Oct. 25, 2013) .................... 19 Holcomb v. Wells Fargo Bank, N.A., 155 Cal. App. 4th 490 (2007) ................................................................................ 19 Holden v. Hagopian, 978 F.2d 1115 (9th Cir. 1992) ................................................................................. 8 In re Infonet Servs. Corp. Secs. Litig., 310 F. Supp. 2d 1106 (C.D. Cal. 2003) ............................................................... 7, 8 Inline, Inc. v. A.V.L. Holding Co., 125 Cal. App. 4th 895 (2005) ................................................................................ 25 Jones v. Hobbs, 745 F. Supp. 2d 886 (E.D. Ark. 2010) ................................................................... 16 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003) ......................................................................................... 24 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 7 of 38 Page ID #:84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - vi - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal. 4th 116 (2000) ........................................................................................... 24 Lee v. Oregon, 107 F.3d 1382 (9th Cir. 1997) ............................................................................... 12 Loeffler v. Target Corp., 58 Cal. 4th 1081 (2014) ......................................................................................... 14 Lujan v. Defs. Wildlife, 504 U.S. 555 (1992) ................................................................................................. 9 Madrid v. Perot Sys. Corp., 130 Cal. App. 4th 440 (2005) ................................................................................ 24 In re Marriage of Corona, 172 Cal. App. 4th 1205 (2009) .............................................................................. 19 Maya v. Centex Corp., 658 F.3d 1060 (9th Cir. 2011) ................................................................................. 7 MCA, Inc. v. Am. Broad. Cos., Inc., 715 F.2d 475 (9th Cir. 1983) ................................................................................. 16 McElwee v. Wharton, 19 F. Supp. 2d 766 (W.D. Mich. 1998) ................................................................. 14 McCoy v. Chase Manhattan Bank, USA, Nat’l Ass’n, 654 F.3d 971 (9th Cir. 2011) ................................................................................. 21 Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861 (N.D. Cal. 2012) ..................................................................... 7 Miscellaneous Serv. Workers, Drivers & Helpers, Teamsters Local No. 427 v. Philco-Ford Corp., WDL Div., 661 F.2d 776 (9th Cir. 1981) ................................................................................. 13 N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578 (9th Cir. 1983) ................................................................................... 8 In re Napster, Inc. Copyright Litig., 354 F. Supp. 2d 1113 (N.D. Cal. 2005) ................................................................. 24 Nat’l Rural Telecomm. Coop. v. DirecTV, Inc., 319 F. Supp. 2d 1059 (C.D. Cal. 2003) ................................................................. 24 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 8 of 38 Page ID #:85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - vii - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Nymark v. Heart Fed. Sav. & Loan Ass’n., 231 Cal. App. 3d 1089 (1991) ............................................................................... 22 Okpalobi v. Foster, 244 F.3d 405 (5th Cir. 2001) ................................................................................. 25 Pasadena Live, LLC v. City of Pasadena, 114 Cal. App. 4th 1089 (2004) .............................................................................. 21 Paz v. State, 22 Cal. 4th 550 (2000) ........................................................................................... 22 Pemberton, et al. v. Nationstar Mortgage LLC, No. 14-cv-1024-BAS (WVG) (S.D. Cal. filed Feb. 5, 2015) .......................... 17, 18 Rovai v. Select Portfolio Servicing, Inc., No. 14-cv-1738-BAS (WVG), 2015 WL 3613748 (S.D. Cal. May 11, 2015) ................................................................................. 17, 18 Safe Air for Everyone v. Meyer, 373 F.3d 1035 (9th Cir. 2004) ................................................................................. 7 Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp. 2d 873 (N.D. Cal. 2011) ................................................................... 25 Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26 (1976) ................................................................................................... 7 Smith, et al. v. Bank of Am., No. 2:14-cv-6668-DSF-PLA (C.D. Cal. filed Feb. 3, 2015) ................................. 10 Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) ....................................................................................... 9, 10 St. Christopher Assoc., L.P. v. United States, 511 F.3d 1376 (Fed. Cir. 2008) ............................................................................. 20 In re Stac Elecs. Secs. Litig., 89 F.3d 1399 (9th Cir. 1996) ................................................................................... 8 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) ................................................................................................... 9 Strugala v. Flagstar Bank, FSB, No. 5:13-cv-05927-EJD, 2015 WL 5186493 (N.D. Cal. Sept. 4, 2015) ................................................................................. 17, 18 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 9 of 38 Page ID #:86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - viii - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334 (2014) ........................................................................................... 12 Switchmen’s Union of N. Am. v. National Mediation Bd., 320 U.S. 297 (1943) ............................................................................................... 13 Syntek Semiconductor Co. v. Microchip Tech. Inc., 307 F.3d 775 (9th Cir. 2002) ........................................................................... 17, 18 Theme Promotions v. News Am. Marketing FSI, 546 F.3d 991 (9th Cir. 2008) ................................................................................. 25 Thomas v. Anchorage Equal Rights Comm’n, 220 F.3d 1134 (9th Cir. 2000) ............................................................................... 12 Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) ............................................................................................... 13 Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59 (3d Cir. 2008) .............................................................................. 18, 20 United States v. Carroll, 345 U.S. 457 (1953) ............................................................................................... 11 United States v. Dumaine, 493 F.2d 1257 (1st Cir. 1974) ................................................................................ 10 United States v. Haimowitz, 404 F.2d 38 (2d Cir. 1968) .................................................................................... 11 United States v. W. Pac. R. Co., 352 U.S. 59 (1956) ........................................................................................... 17, 18 United States v. Sequel Contractors, Inc., 402 F. Supp. 2d. 1142 (C.D. Cal. 2005) ................................................................ 24 In re VeriFone Secs. Litig., 11 F.3d 865 (9th Cir. 1993) ..................................................................................... 8 Ward v. Am. Family Life Assurance Co., 444 F. Supp. 2d 540 (D.S.C. 2006) ....................................................................... 11 Yau v. Deutsche Bank Nat’l Trust Co. Ams., No. SACV 11-00006-JVS, 2011 WL 8327957 (C.D. Cal. May 9, 2011) ...................................................................................................................... 25 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 10 of 38 Page ID #:87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - ix - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Yoshioka v. Charles Schwab Corp., No. C-11-1625 EMC, 2012 WL 5932817 (N.D. Cal. Nov. 27, 2012) .............. 9, 10 Constitutional Provisions U.S. Const. amend. XVI ............................................................................................... 3 U.S. Const. art. III, § 2, cl. 1 ......................................................................................... 7 Statutes I.R.C. § 61(a)................................................................................................................. 3 I.R.C. § 61(a)(12) .......................................................................................................... 3 I.R.C. § 108(a)(1)I ........................................................................................................ 4 I.R.C. § 108(h) .............................................................................................................. 4 I.R.C. § 163(h)(3)(B) .................................................................................................... 4 I.R.C. § 6050H ........................................................................................................ 4, 13 I.R.C. § 6050H(a) .......................................................................................................... 4 I.R.C. § 6050H(b)(2)(A) ............................................................................................... 4 I.R.C. § 6721(a)(1) ...................................................................................................... 14 I.R.C. § 6724(d)(1)(A) ................................................................................................ 13 I.R.C. § 7421(a) .......................................................................................................... 15 I.R.C. § 7434 ............................................................................................................... 13 I.R.C. § 7434(f) ........................................................................................................... 13 28 U.S.C. § 2201(a) .................................................................................................... 15 Cal. Bus. & Prof. Code § 17200 ................................................................................... 3 Cal. Bus. & Prof. Code § 17204 ................................................................................. 23 Cal. Civ. Code § 1531 ................................................................................................. 20 Rules F.R.C.P. 12(b)(1) .......................................................................................................... 7 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 11 of 38 Page ID #:88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - x - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 F.R.C.P. 12(b)(6) ...................................................................................................... 7, 8 26 C.F.R. § 1.6050H-2 .................................................................................................. 4 26 C.F.R. § 1.6050H-2(e)(2)(i) ................................................................................... 14 26 C.F.R. § 1.6050P-1 .................................................................................................. 4 26 C.F.R. § 1.6050P-1(d)(2) ..................................................................................... 4, 6 Other Authorities IRS Publication 5, “Your Appeal Rights and How To Prepare a Protest If You Don’t Agree” .............................................................................................. 12 Joint Comm. On Taxation, H.R. 4170, 98th Cong.; Public Law 98-369, Gen. Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984, at 488 (Dec. 31 1984) ......................................................................... 4 Richard J. Pierce, Jr., Administrative Law Treatise § 14.1, at 917 (4th ed. 2002) ................................................................................................................ 17 Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 12 of 38 Page ID #:89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 1 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION By his Complaint, Plaintiff seeks to enlist the support of his former mortgage lender, JPMC, in a tax position he plans to assert with the IRS. This Court lacks jurisdiction over Plaintiff’s claims, and has no basis to interfere with the IRS’s authority over the issues here, which require detailed assessment of the tax code and Treasury regulations governing the information return process. Regardless, JPMC is subject to no contractual or legal requirement to endorse Plaintiff’s tax position. The Court should dismiss the Complaint without leave to amend, or in the alternative, stay this case in favor of the IRS’s primary jurisdiction. Plaintiff seeks to double-dip in a generous tax benefit Congress conferred. Normally, when debt is forgiven, the debtor must declare as income the value of the forgiven debt and pay tax on that value. In 2007, however, Congress amended the Internal Revenue Code (26 U.S.C., “I.R.C.”) to allow individual taxpayers to exclude from income the cancellation of certain mortgage indebtedness on the taxpayer’s primary residence. This amendment was primarily intended to help taxpayers whose homes were foreclosed, but it also benefits taxpayers who dispose of their property via a “short sale” – an agreement with the lender to allow sale of the property for less than the amount owed on the property. Under this amendment, Plaintiff has already excluded from gross income more than $1.3 million in otherwise taxable debt cancellation income, based on the short sale of his luxury residence in Laguna Beach, after he defaulted on his mortgage. Now Plaintiff seeks a further tax benefit. Plaintiff wishes to argue to the IRS that a portion of the short sale proceeds paid to JPMC by the short sale buyer may be treated by Plaintiff as his own payment of mortgage interest, entitling Plaintiff to a deduction from his taxable income and a reduction of his income tax obligation. Plaintiff wants this tax benefit, even though he actually paid nothing to JPMC on his defaulted mortgage in connection with the short sale process, but rather received Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 13 of 38 Page ID #:90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 2 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 $10,000 in cash from the transaction. In furtherance of this tax position, Plaintiff asks this Court to force JPMC to file with the IRS a Form 1098 “information return,” stating that Plaintiff paid interest in connection with the short sale. Plaintiff also seeks damages from JPMC for not filing the Form 1098. Plaintiff’s claims lack merit because Plaintiff is perfectly free to assert his tax position without any assistance from JPMC. Indeed, the IRS provides taxpayers with specific instructions for claiming a mortgage interest deduction when no Form 1098 is filed by the lender. The Complaint identifies no contractual agreement between JPMC and Plaintiff wherein JPMC agrees to file a Form 1098. Indeed, the Complaint fails to identify any such duty on JPMC’s part: no such duty exists in favor of Plaintiff as a matter of law, nor is one described in the parties’ short sale agreement or in any other document. There are many reasons why this Complaint may not be pursued here. First, this Court lacks jurisdiction under Article III of the Constitution because Plaintiff sustained no injury in fact and his claim is not ripe. Plaintiff has not yet claimed the mortgage interest deduction and the IRS has not denied it. Nothing stopped Plaintiff from claiming the deduction when he originally filed his tax return; nothing prevents Plaintiff from filing an amended return to claim the deduction now; and if the IRS allows the deduction, there will be nothing for this Court to adjudicate. Plaintiff’s claim is not ripe until the IRS has actually imposed an adverse tax consequence on Plaintiff due to the IRS’s non-receipt of a Form 1098 from JPMC. Second, this Court lacks jurisdiction to grant Plaintiff declaratory or injunctive relief in regard to Form 1098 filing requirements. Federal district courts are barred by statute from granting declaratory or injunctive relief in tax matters like this one. Third, this Court lacks jurisdiction to determine whether JPMC violated a legal duty to file a Form 1098. Rather, the IRS has exclusive enforcement jurisdiction in regard to information return requirements, subject to very few exceptions that are expressly described in the tax code, which do not apply here. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 14 of 38 Page ID #:91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 3 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Fourth, even if jurisdiction technically exists here, this Court should nonetheless use its discretion to enter a primary jurisdiction stay. This case presents complex tax issues better referred to the IRS for analysis in the first instance. Fifth, if considered on the merits, the claims all fail. Plaintiff asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, negligence and violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. (“UCL”). These claims fail because the relevant contract is the short sale agreement, which supersedes the parties’ mortgage agreement. Indeed, the entire purpose of the transaction was to relieve Plaintiff of his duties under the mortgage. Nothing in the short sale agreement required JPMC to file a Form 1098; nor does the agreement imply such a duty. Plaintiff cannot assert an implied covenant claim, because an implied covenant claim cannot be pursued when one party’s interpretation of the contract is plausible, even if potentially incorrect. He also cannot pursue a negligence theory, as that claim is barred by the economic loss rule: where a contract governs the parties’ relationship, negligence theories may not be asserted to recover for purely economic harms. Finally, the UCL claim is barred because there was no UCL violation, and because there is no allegation that not filing the Form 1098 unjustly enriched JPMC or caused JPMC to unjustly receive money or property from Plaintiff. Moreover, California’s UCL permits only restitution, but Plaintiff asserts a damages claim, a claim which is not authorized by this statute. Thus, as explained below, the Court should dismiss all claims without leave to amend, or should stay the case in favor of the IRS’s primary jurisdiction. II. FACTUAL BACKGROUND A. Key Principles of Federal Income Taxation of Mortgage Borrowers The federal government imposes a tax on “all income from whatever source derived.” I.R.C. § 61(a); see also U.S. Const. amend. XVI. I.R.C. § 61(a)(12) expressly defines “Income from discharge of indebtedness” as a form of income that is usually taxable. When debt is forgiven, the party forgiving the debt is obliged to Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 15 of 38 Page ID #:92 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 4 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 report that fact to the IRS by filing a Form 1099-C information return – to make the IRS aware of possible unreported taxable income – and is required to send the debtor a copy. See 26 C.F.R. § 1.6050P-1; see also Request for Judicial Notice (“RJN”), Ex. 1. However, only forgiven principal must be reported on Form 1099-C. Accrued but unpaid interest need not be reported on Form 1099-C. 26 C.F.R. § 1.6050P-1(d)(2). Even when reported on Form 1099-C, certain debt cancellation income is exempt from taxation. In 2007, the Mortgage Forgiveness Debt Relief Act amended I.R.C. § 108(a)(1) to exclude from taxable income such debt cancellation relating to a “qualified principal residence.”1 In general, this applies to purchase money mortgages and refinances of such mortgages, but not most home equity loans. See I.R.C. §§ 108(h), 163(h)(3)(B). Congress provides different tax benefits to homeowners who pay their mortgages. Section 163(h)(3) permits taxpayers to deduct, from taxable income, home mortgage interest the taxpayer pays. As detailed in the I.R.C. and Treasury regulations, this deduction is subject to important exceptions, limitations and qualifications. A lender that receives qualifying home mortgage interest payments must report such payments to the IRS by filing a Form 1098 information return.2 I.R.C. § 6050H; see also 26 C.F.R. § 1.6050H-2. Significantly, the lender’s obligation is to file a Form 1098 only with respect to the person “from whom such interest was received.” I.R.C. § 6050H(a); see also I.R.C. § 6050H(b)(2)(A). A homeowner’s entitlement to a mortgage interest deduction does not depend on receipt of a Form 1098, and receipt of a Form 1098 does not necessarily entitle a 1 This exclusion sunsets at the end of 2016, unless Congress renews it. Additionally, there is a $2 million cap on the excludable amount. See I.R.C. § 108(h). 2 Congress created Form 1098 information reporting to “assist the [IRS] in verifying the accuracy of claimed mortgage interest deductions” in light of IRS studies finding that a “significant percentage of all overstated deductions involves overstatement of interest deductions.” See Joint Comm. on Taxation, H.R. 4170, 98th Cong.; Public Law 98-369, Gen. Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984, at 488 (Dec. 31, 1984). Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 16 of 38 Page ID #:93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 5 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 taxpayer to claim the deduction. The form itself cautions taxpayers that the amount stated “may not be fully deductible by you.” (RJN, Ex. 2.) Conversely, lack of a Form 1098 does not prevent a taxpayer from claiming an entitled deduction. Specifically, as the IRS explains, the deduction may be claimed on Line 11 of Schedule A (Itemized Deductions) to Form 1040. (RJN, Ex. 3.) The IRS’s instructions to this Schedule expressly state, “[i]f you paid home mortgage interest and it wasn’t reported to you on Form 1098, report your deductible mortgage interest on line 11.” (RJN, Ex. 4 at A-7.) The same instructions also explain how to claim a mortgage interest deduction when a Form 1098 was issued to a different taxpayer in regard to the interest payment. (Id. at A-8.) Thus, although Plaintiff contends that he cannot claim the mortgage interest deduction without a Form 1098 (Compl., ¶¶ 30- 32), the IRS’s official instructions to Schedule A, where the deduction is claimed, state the contrary. (RJN, Ex. 4 at A-7; see also RJN, Ex. 5 at 9 (“[i]f you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on [Schedule A] line 10” and “[a]ttach a statement explaining the difference and print ‘See attached’ next to line 10.”)). The IRS recently confirmed this policy responding to an inquiry from Plaintiff’s counsel in a different case, stating that [a] taxpayer can take a mortgage interest deduction for an amount greater than the amount reported on a Form 1098 if the taxpayer paid more deductible interest to the financial institution than the amount shown on that form. If a taxpayer failed to take a deduction to which he or she was entitled and is within the period of limitations, the taxpayer can file an amended tax return to request a refund. (RJN, Ex. 6, at 1) (citations omitted). Plaintiff neither describes nor attaches to the Complaint any communication from the IRS to him saying that he wrongfully claimed a deduction, or that he is forbidden from seeking a deduction due to JPMC’s non-filing of a Form 1098.3 3 The heavily redacted IRS letter and notice of deficiency attached as Exhibits D and E to the Complaint do not relate to Plaintiff or to any JPMC loan. Nor do they represent any general policy of the IRS. They appear to relate to unique issues on an Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 17 of 38 Page ID #:94 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 6 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 B. Plaintiff’s Allegations As alleged in the Complaint, Plaintiff defaulted on a nearly $3.5 million JPMC mortgage that secured his home in Laguna Beach. (Compl., ¶ 18.) JPMC agreed to resolve the default via a short sale for about $2.1 million. (Compl., ¶¶ 18, 20.) The short sale agreement – attached to the Complaint as Exhibit A – states that in return for the buyer’s payment, JPMC will release its lien and otherwise waive the balance due on the mortgage. (Compl., Ex. A at 1.) Under the agreement, Plaintiff was permitted to receive up to $10,000 in cash from the buyer for moving expenses. (Id. at 2.) The agreement expressly states that all funds received from escrow will be applied “to offset the investor’s loss” on the loan, i.e., unpaid principal. (Id.) It further states, “[r]eduction of the amount owed, as well as any payments made to you as a result of this sale, may be reported to the IRS and may have tax implications. Please consult your tax advisor to discuss those implications.” (Id. at 2.) Plaintiff concedes that the short sale agreement is “a second contract.” (Compl., ¶¶ 18, 59.) After the short sale, JPMC reported the forgiveness of principal to the IRS on a Form 1099-C. (Compl., Ex. B.) In response to a request by Plaintiff, JPMC advised Plaintiff that because he made no interest payments in connection with the short sale, no Form 1098 was filed. (Compl., Ex. C.) Plaintiff speculates that JPMC must have applied some of the buyer’s payment to interest that had accrued on the account, because no amount is stated on Form 1099-C for forgiveness of interest. (Compl., ¶ 24.) This contention, however, is based on a misreading of the Treasury regulations governing Form 1099-C. As discussed above, only forgiven principal, not forgiven interest, must be reported. See 26 C.F.R. § 1.6050P-1(d)(2). Plaintiff contends that JPMC’s non-filing of a Form 1098 impairs his ability to claim a mortgage interest deduction. (Compl., ¶ 27.) He contends that JPMC should have applied a payment allocation rule, supposedly set forth in the superseded unrelated taxpayer’s tax filings in different circumstances. Plaintiff does not contend that he received any similar communications from the IRS. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 18 of 38 Page ID #:95 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 7 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 mortgage documents, requiring JPMC to deem at least $100,000 of the short sale proceeds a payment of interest. (Compl., ¶¶ 24, 27.) Moreover, he claims that JPMC should have issued a Form 1098 for the exact amount he could claim as a mortgage interest deduction. (Compl., ¶ 27.) He argues that without a Form 1098, he is unable to calculate the deduction amount, and therefore has incurred further tax filing expenses. (Compl., ¶¶ 27-28.) The Complaint describes no specific language in any contract document, however, imposing a duty on JPMC to apply the proceeds of the short sale in the manner Plaintiff contends, or imposing a duty on JPMC to file and deliver a Form 1098 in the manner Plaintiff demands. (Compl., ¶¶ 57, 59.) III. ARGUMENT A. Legal Standards on Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(1), “[d]ismissal of a claim is appropriate . . . when the court lacks subject-matter jurisdiction over the claim.” Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861, 867 (N.D. Cal. 2012). A court has subject matter jurisdiction only if there is an actual case or controversy. See U.S. Const. art. III, § 2, cl. 1; Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976). When determining subject matter jurisdiction, the court’s inquiry is not limited to the complaint. Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011). A court may look to evidence outside the complaint without converting a motion to dismiss for lack of subject matter jurisdiction to one for summary judgment. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Under Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint may be based either on the “lack of a cognizable legal theory” or on “the absence of sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F. 3d 1240, 1242 (9th Cir. 2011). The Court is not required to “accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness Network, 18 F.3d 752, 754-755 (9th Cir. 1994); see also In re Infonet Servs. Corp. Secs. Litig., Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 19 of 38 Page ID #:96 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 8 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 310 F. Supp. 2d 1106, 1113 (C.D. Cal. 2003). Dismissal is proper if a complaint is vague, conclusory, or fails to set forth material facts in support of the allegations. See Id.; see also N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 583 (9th Cir. 1983). “[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.” In re Stac Elecs. Secs. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (quoting In re VeriFone Secs. Litig., 11 F.3d 865, 868 (9th Cir. 1993)); see also Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir. 1992) (a court need not accept every conclusory allegation in the complaint as true). Additionally, “a court may take judicial notice of matters of public record outside the complaint without converting a motion to dismiss into a motion for summary judgment.” In re Infonet Servs., 310 F. Supp. 2d at 1116 n.10. Also, an implausible claim should be dismissed under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 571-72 (2007). A plaintiff must provide the basis for relief, which “requires more than labels and conclusions and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. Facts that are “merely consistent with” a defendant’s liability do not meet this burden. Iqbal, 556 U.S. at 678. Instead, a complaint must allege facts supporting “the reasonable inference that the defendant is liable for the misconduct alleged.” Id.; see also Batwin v. Occam Networks, Inc., No. 07-cv-2750, 2008 WL 2676364, at *7 (C.D. Cal. July 1, 2008). B. Plaintiff Lacks Article III Standing As a threshold matter, the Court should dismiss the Complaint for lack of Article III standing. Plaintiff suffered no injury in fact, and his claims are not ripe. 1. Plaintiff Suffered No Injury In Fact That Is Fairly Traceable to Any Act or Omission of JPMC and That Is Redressable Through Judicial Action The “case or controversy” clause of Article III of the Constitution requires a plaintiff to demonstrate that he has suffered sufficient injury to have standing to sue. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 20 of 38 Page ID #:97 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 9 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998)). This “‘irreducible constitutional minimum’ of standing consists of three elements[: t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (quoting Lujan v. Defs. Of Wildlife, 504 U.S. 555, 560 (1992)), as revised (May 24, 2016). “The plaintiff as the party invoking federal jurisdiction bears the burden of establishing these elements.” Id. Plaintiff cannot meet any of these requirements. Plaintiff cannot demonstrate that he “suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Id. At 1548. Moreover, a “bare procedural violation” alone does not confer standing. Id. At 1549. A plaintiff must establish “a concrete injury even in the context of a statutory violation.” Id.; see also Braitberg v. Charter Commc’ns, Inc., 836 F.3d 925, 931 (8th Cir. 2016) (a claim based on wrongful data retention was barred by Spokeo because the data was not harmfully used); Hancock v. Urban Outfitters, Inc., 830 F.3d 511, 515 (D.C. Cir. 2016) (a claim for statutory violation may not proceed without pleading Article III injury in fact). Plaintiff fails to show Article III injury in fact because he fails to plead a plausible connection between the allegedly wrongful non-filing of a Form 1098 and an actual tax consequence. The IRS expressly contemplates situations where a Form 1098 might not be issued at all, or where it might be issued to a different taxpayer, and tells to taxpayers how to nonetheless claim the deduction. Plaintiff does not allege that he followed the IRS instructions or that, upon following them, that he failed to obtain the tax benefit he thinks he deserves.4 See Yoshioka v. Charles 4 Moreover, even if Plaintiff does not ultimately obtain the tax benefit, that alone will not establish standing. Plaintiff must show a causal link between the failure to receive a Form 1098 and the loss of the benefit. However, because the mortgage interest deduction is available only to those who pay interest, and because Plaintiff was not the payor in the short sale transaction, the IRS may ultimately disallow the deduction for reasons completely unrelated to whether or not a Form 1098 was filed. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 21 of 38 Page ID #:98 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Schwab Corp., No. C-11-1625 EMC, 2012 WL 5932817, at *10 (N.D. Cal. Nov. 27, 2012) (“Plaintiff has failed to allege the kind of imminent injury that would give her standing in this case [because] she has not alleged that the IRS has indicated to her that she has incurred any tax liability because of [defendant’s conduct.]”); see also Grier v. Hilton Worldwide Inc., No. CV-14-00189-PHX-DLR, 2014 WL 11515700, at *3 (D. Ariz. July 21, 2014) (plaintiffs failed to allege injury because “[i]f Plaintiffs disagree with Defendant’s tax reporting, they may file a claim for a refund with the IRS . . . or they may [self-report their income] as they see fit.”) (citation omitted). Nor was a Form 1098 necessary for Plaintiff to calculate the amount of his potential deduction. Presumably he knows, or should know, from his original loan documents and billing statements how much he owed and how much unpaid interest had accrued. At best, even if Plaintiff should have received a Form 1098 but did not, this is merely a “bare procedural violation” without any plausible resulting harm. This is barred by Spokeo, and even by pre-Spokeo authority in this context. See Order Granting Def.’s Mot. To Dismiss (“Smith Order”) at 3, Smith, et al. v. Bank of Am., No. 2:14-cv-6668-DSF-PLA (C.D. Cal. filed Feb. 3, 2015), ECF No. 28 (RJN, Ex. 7) (plaintiff failed to plead injury for an alleged Form 1098 violation in part because she “did not file income tax returns seeking mortgage interest deductions different from that reported on the Forms 1098, which the IRS then denied”), appeal filed (May 4, 2015); see also Fernandez v. Brock, 840 F.2d 622, 630 (9th Cir. 1988) (“[A] plaintiff who merely claims that a defendant violated a statutory duty does not necessarily satisfy the requirement of injury in fact in article III.”). Plaintiff’s claim also fails to establish redressability. As discussed above, receipt or non-receipt of a Form 1098 does not establish Plaintiff’s right or lack of a right to a deduction. A Form 1098 does not certify to taxpayers what taxes they might or might not owe; rather, its purpose is to assist the IRS in administering the tax system by helping the IRS identify behavior that might suggest avoidance. See United States v. Dumaine, 493 F.2d 1257, 1258 (1st Cir. 1974) (reporting Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 22 of 38 Page ID #:99 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 11 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 requirements are “intended to help the government locate and check upon recipients of income, and the amounts they receive”) (citing United States v. Carroll, 345 U.S. 457 (1953); United States v. Haimowitz, 404 F.2d 38 (2d Cir. 1968)). If Plaintiff is not otherwise entitled to a deduction, his receipt of a Form 1098 does not so entitle him. Conversely, if he is entitled to the deduction, his lack of a Form 1098 does not disentitle him and, as explained above, the IRS explains to taxpayers lacking a Form 1098 how they may nonetheless claim the deduction. Thus, compelling JPMC to file a Form 1098 will not affect Plaintiff’s tax obligation, which is determined objectively by the facts and circumstances of the underlying short sale transaction. See Gierbolini Rosa v. Banco Popular de P.R., 930 F. Supp. 712, 716 (D.P.R. 1996) (“The information return creates no tax obligations on the part of the taxpayer beyond what the taxpayer’s particular tax status in a given year requires him to pay. [T]he government and the taxpayer [must] sort out their differences as to the taxable status of any income . . . .”); Ward v. Am. Family Life Assurance Co., 444 F. Supp. 2d 540, 544 & n.6 (D.S.C. 2006) (questioning whether relief in the form of an amended information return could redress plaintiff’s injury because “the ultimate decision of taxability rests with the IRS and not the Defendant,” and therefore the amended information return “may have absolutely no effect on the IRS’s determination of Plaintiff’s tax liability”); see also Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073, 1092 (9th Cir. 2013) (plaintiff lacked standing to challenge an agency’s report of a land-use status change because the injury, the status change, was not traceable to the report, but rather to the agency policy underlying the status change), cert. denied, 134 S. Ct. 2877 (2014). Thus, JPMC’s Form 1098 non-filing did not cause sufficient injury to Plaintiff to allow him to file suit in federal court, even if this non-filing was wrongful, which JPMC denies. The Court should dismiss the Complaint for lack of standing. 2. Plaintiff’s Claim Is Not Ripe Relatedly, Plaintiff’s claim is barred by the doctrine of ripeness. Until he Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 23 of 38 Page ID #:100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 12 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 actually is denied a tax benefit to which he is entitled, and until he exhausts the process to challenge such a denial,5 Plaintiff’s claim is not sufficiently ripe to present to this Court. See Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 793 (9th Cir. 2012) (“Whether framed in terms of ripeness or standing, petitioners’ alleged injury is too speculative to give rise to a case or controversy as required by Article III.”). “[W]hereas ‘standing is primarily concerned with who is a proper party to litigate a particular matter, ripeness addresses when that litigation may occur.’” Colwell v. Dep’t of Health & Human Servs., 558 F.3d 1112, 1123 (9th Cir. 2009) (quoting Lee v. Oregon, 107 F.3d 1382, 1387 (9th Cir. 1997)). “The doctrines of standing and ripeness originate from the same Article III limitation.” Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (internal quotation marks omitted); Thomas v. Anchorage Equal Rights Comm’n, 220 F.3d 1134, 1138 (9th Cir. 2000) (en banc) (“[I]n many cases, ripeness coincides squarely with standing’s injury in fact prong.”). C. The IRS Has Exclusive Enforcement Jurisdiction Over Plaintiff’s Claims Even if Plaintiff has Article III standing (which he does not), he cannot file suit in a district court due to the IRS’s exclusive enforcement jurisdiction over Form 1098 filing requirements. Plaintiff cannot create an independent enforcement regime in the guise of private class action litigation. Rather, the I.R.C. permits civil litigation over information return requirements in only rare, inapposite circumstances. In Smith, for example, a case brought by the same counsel representing Plaintiff here, Judge Fischer of this Court dismissed a complaint asserting that a lender miscalculated the amount reported on a Form 1098. (Smith Order at 1, RJN, Ex. 7.) Judge Fischer reasoned that because Congress expressly exempted I.R.C. § 6050H, governing Form 1098 information returns, from private enforcement, 5 See IRS Publication 5, “Your Appeal Rights and How To Prepare a Protest If You Don’t Agree.” (RJN, Ex. 8.) Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 24 of 38 Page ID #:101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 13 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 district courts lack jurisdiction to hear claims based on alleged violations of Form 1098 requirements. (Id. at 5-6.) Congress specifically authorized claims for improper filing of other information returns in I.R.C. § 7434, but omitted § 6050H from this authorization, thus claims based on Form 1098 cannot be pursued.6 (Id.) (citing Touche Ross & Co. v. Redington, 442 U.S. 560, 572 (1979) (“Obviously, then, when Congress wished to provide a private damage remedy, it knew how to do so and did so expressly.”)). When a “legislative scheme . . . envisions a comprehensive administrative rubric” such as the IRS’s administration of federal tax law, “the specification thereof normally excludes duplicative judicial jurisdiction.” Miscellaneous Serv. Workers, Drivers & Helpers, Teamsters Local No. 427 v. Philco-Ford Corp., WDL Div., 661 F.2d 776, 780-81 (9th Cir. 1981) (citing Switchmen’s Union of N. Am. V. National Mediation Bd., 320 U.S. 297, 301 (1943) (“Congress for reasons of its own decided upon the method for the protection of the ‘right’ which it created. [I]t is for Congress to determine how the rights which it creates shall be enforced.”)). The doctrine of exclusive jurisdiction applies “when, in a suit involving a regulated firm but not brought under the regulatory statute itself, an issue arises that is within the exclusive original jurisdiction of the regulatory agency to resolve, although the agency’s resolution of it will usually be subject to judicial review.” Arsberry v. Illinois, 244 F.3d 558, 563 (7th Cir. 2001). Courts routinely dismiss claims to enforce statutes that fall squarely within an agency’s comprehensive enforcement and regulatory scheme. See Smith Order at 5 (RJN, Ex. 7) (citing Ayres v. Gen. Motors Corp., 234 F.3d 514, 520-25 (11th Cir. 2000); Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1227 (D.C. Cir. 1991); Gifford v. Meda, No. 09-cv-13486, 2010 WL 1875096, at *10-16 (E.D. Mich. May 10, 2010) (dismissing claims because the comprehensive 6 I.R.C. § 7434(f) defines “information return” for the civil liability provision by reference to I.R.C. § 6724(d)(1)(A), which lists nine specific information returns but omits reference to I.R.C. § 6050H and Form 1098 mortgage interest reporting. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 25 of 38 Page ID #:102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 14 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 administrative scheme embodied in the I.R.C. and the Social Security Act gave the IRS exclusive jurisdiction over RICO claims premised on employee misclassification); McElwee v. Wharton, 19 F. Supp. 2d 766, 771 (W.D. Mich. 1998)); see also Loeffler v. Target Corp., 58 Cal. 4th 1081, 1132 (2014). For example, in Loeffler v. Target Corp., the California Supreme Court affirmed dismissal of a claim under the UCL alleging that defendant retailer was charging sales tax on “to go” coffee purchases in violation of the state tax code. Id. at 1125-35. The Court held that because “the tax code provides the exclusive means by which plaintiffs’ dispute over the taxability of a retail sale may be resolved[, their] current lawsuit is inconsistent with the tax code procedures.” Id. at 1092. Therefore, “the [UCL] cannot be employed to avoid the limitations and procedures set out by the Revenue and Taxation Code.” Id. Here, this analysis is buttressed further by the Treasury regulation governing Form 1098, 26 C.F.R. § 1.6050H-2(e)(2)(i), which subjects lenders who violate Form 1098 requirements to potential administrative penalties of $250 per violation (subject to a maximum of $3 million per calendar year). See also I.R.C. § 6721(a)(1). A robust administrative enforcement regime exists, thus there is no justification for a parallel system of private enforcement. See Smith Order at 6 (RJN, Ex. 7). Indeed, such private enforcement risks interfering with IRS policy, as the IRS likely would oppose JPMC filing a Form 1098 for Plaintiff because he appears to seek the filing as part of a strategy to reduce his tax obligation. See Grochowski v. Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003) (“At bottom, the plaintiffs’ state-law claims are indirect attempts at privately enforcing the [statute, which] would be inconsistent with the underlying purpose of the legislative scheme and would interfere with the implementation of that scheme[. They] are clearly an impermissible end run around the [statute].”) (citations and internal quotation marks omitted). Similarly, private litigation against JPMC is unnecessary if Plaintiff’s interpretation of the tax code is correct; Plaintiff can claim the deduction and then pursue it through normal channels Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 26 of 38 Page ID #:103 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 15 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 relating to tax disputes. (Smith Order at 6-7, RJN, Ex. 7.) If the IRS resolves the issue unfavorably for him, Plaintiff could then seek review of the IRS’s determination. (Id. at 7.) This Court should dismiss the Complaint here for the same reason the Smith court dismissed similar claims: the IRS has exclusive enforcement jurisdiction. D. Plaintiff’s Claims For Injunctive and Declaratory Relief Are Barred At a minimum, Plaintiff’s claims for injunctive and declaratory relief are jurisdictionally barred and should be dismissed for these independent reasons. The Tax Anti-Injunction Act, I.R.C. § 7421(a) (“TAIA”), prohibits district courts from issuing an injunction restraining “the assessment or collection of any tax” (subject to certain inapposite statutory exceptions). Similarly, the Declaratory Judgment Act, 28 U.S.C. § 2201(a) (“DJA”), excepts from federal district court jurisdiction all matters “with respect to Federal taxes” (subject to certain inapposite statutory exceptions). Flora v. United States, 362 U.S. 145, 164 (1960) (“The application of the Declaratory Judgments Act to taxes would constitute a radical departure from the long-continued policy of Congress . . . .”). These provisions are understood to be co-extensive. Cohen v. United States, 650 F.3d 717, 731 (D.C. Cir. 2011) (“What the [T]AIA accomplishes by denying its application to ‘any suit for the purpose of restraining the assessment or collection of any tax’ the DJA accomplishes by an exception ‘with respect to Federal taxes.’”). Plaintiff asks this Court to force JPMC to file a Form 1098 in his favor to help him avoid assessment and collection of his full tax liability. This Court lacks jurisdiction to grant such relief. The Ninth Circuit applies these jurisdictional limitations broadly. An injunction or declaratory judgment relating to information return requirements can interfere with IRS determinations of what tax is owed, thus claims like Plaintiff’s threaten to restrain the assessment or collection of tax. Thus, the jurisdictional bar applies to claims relating to information returns. See Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124, 1129-30 (2015) (“[T]he Federal Tax Code has long treated Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 27 of 38 Page ID #:104 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 16 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 information gathering as a phase of tax administration procedure that occurs before assessment, levy, or collection. This step includes private reporting of information used to determine tax liability, including reports by third parties who do not owe the tax . . . .”) (citations omitted); see also California v. Regan, 641 F.2d 721, 722 (9th Cir. 1981). TAIA and DJA defenses may be asserted by private parties. See, e.g., Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 770 (9th Cir. 1986) (TAIA); MCA, Inc. v. Am. Broad. Cos., Inc., 715 F.2d 475, 476 (9th Cir. 1983) (DJA); Daines v. Alcatel, S.A., 105 F. Supp. 2d 1153, 1158 (E.D. Wash. 2000) (TAIA). Also, because Plaintiff seeks class-wide relief on behalf of an allegedly large group of taxpayers, the potential tax collection impact could be substantial. Congress has denied the district court’s jurisdiction to issue injunctive or declaratory relief in matters that might interfere with the IRS’s ability to assess or collect tax, and this Court should respect Congress’s judgment in this regard. See Alexander v. “Americans United” Inc., 416 U.S. 752, 760-61 (1974) (claims with even only an indirect impact on tax assessment or collection are barred); see also C & E Servs., Inc. v. D.C. Water and Sewer Auth., 310 F.3d 197, 201 (D.C. Cir. 2002) (“[The Act] creates no private remedy in the federal courts. . . . A judicial declaration telling [defendant] how to interpret the [Act] would constitute an end-run around Congress’s clear intent . . . .”); Jones v. Hobbs, 745 F. Supp. 2d 886, 893 (E.D. Ark. 2010). E. In the Alternative, the Action Should Be Stayed in Favor of the IRS’s Primary Jurisdiction Even if jurisdiction is proper, this Court nonetheless should stay this action. Plaintiff raises a complex, technical tax issue of first impression that the IRS should properly consider in the first instance.7 Here, a stay pursuant to the doctrine of primary jurisdiction is appropriate. Indeed, other California district courts reviewing Form 1098 reporting claims, also brought by Plaintiff’s counsel, entered primary 7 On October 28, 2016, the IRS announced that it will begin a new “formal guidance process” in regard to Form 1098 reporting requirements. See RJN, Ex. 9. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 28 of 38 Page ID #:105 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 17 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 jurisdiction stays. See Strugala v. Flagstar Bank, FSB, No. 5:13-cv-05927-EJD, 2015 WL 5186493, at *5 (N.D. Cal. Sept. 4, 2015); Rovai v. Select Portfolio Servicing, Inc., No. 14-cv-1738-BAS (WVG), 2015 WL 3613748, at *1 (S.D. Cal. May 11, 2015); Order Granting In Part Def.’s Mot. To Dismiss and Stay (“Pemberton Order”) at 2, Pemberton, et al. v. Nationstar Mortgage LLC, No. 14-cv- 1024-BAS (WVG) (S.D. Cal. filed Feb. 5, 2015), ECF No. 17 (RJN, Ex. 10). This Court would benefit from the impending IRS guidance. (RJN, Ex. 9.) “Under primary jurisdiction doctrine, courts may ‘allocate initial decision making responsibility’ to an agency when a cognizable claim first requires ‘resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency.’” (Id. at 4) (quoting Syntek Semiconductor Co. v. Microchip Tech. Inc., 307 F.3d 775, 780 (9th Cir. 2002)); see also Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166, 1172 (9th Cir. 2002); Richard J. Pierce, Jr., Administrative Law Treatise § 14.1, at 917 (4th ed. 2002). As the Ninth Circuit has explained: A court’s invocation of the [primary jurisdiction] doctrine does not indicate that it lacks jurisdiction. Rather, the doctrine is a prudential one, under which a court determines that an otherwise cognizable claim implicates technical and policy questions that should be addressed in the first instance by the agency . . . rather than by the judicial branch. Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008) (citation and internal quotation marks omitted). Both legal and factual questions “requiring the assertion of the expert and specialized knowledge of the agency members or questions involving the interpretation of terms used in a peculiar or technical sense” may be referred to an agency’s primary jurisdiction. Corneli Seed Co. v. Union Pac. R. Co., 263 F.2d 127, 130 (9th Cir. 1958) (citing United States v. W. Pac. R. Co., Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 29 of 38 Page ID #:106 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 18 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 352 U.S. 59, 77 (1956)). In similar circumstances, courts have declined to decide issues of taxation better addressed by the IRS.8 Recently, California district courts have stayed challenges to Form 1098 reporting practices, in favor of the IRS’s primary jurisdiction. See Strugala, 2015 WL 5186493, at *5; Rovai, 2015 WL 3613748, at *3; Pemberton Order at 5-6 (RJN, Ex. 10). The Rovai and Pemberton courts both concluded: Here, the state law causes of action each turn on whether Defendant accurately reported the interest paid in Plaintiff’s 1098 Forms. These forms are completed, submitted, and relied upon by the IRS to enforce the nationwide taxation scheme Congress has entrusted to it. The IRS promulgates rules regarding the scope of interest payments and the proper administration of Form 1098s. [Citation.] The IRS’ position is therefore necessary in this case to determine whether Defendant’s actions breached any duties to Plaintiff. (Id. at 5); see also Rovai, 2015 WL 3613748 at *5 (citing Pemberton Order); see also Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59, 65 (3d Cir. 2008) (“[P]ermitting [plaintiff’s] suit to proceed . . . would interfere with the IRS’s administrative scheme for handling such disputes . . . .”). Plaintiff’s claims relate to the nub of Form 1098 reporting requirements, and cannot be fairly resolved without the IRS’s position on the subject. Indeed, because Plaintiff seeks to assert claims on behalf of a nationwide class, failure to consider the IRS’s views may impair the efficiency of the tax administration system nationally. See Syntek, 307 F.3d at 780-81. Since the IRS announced forthcoming formal guidance in this area (RJN, Ex. 9), if the instant litigation is not dismissed on jurisdictional grounds, at a minimum the Court should stay it pending receipt of that guidance. 8 See, e.g., In re Beisel, 195 B.R. 378, 380 (Bankr. S.D. Ohio 1996) (“Because of the complexity of the issue involved and since there is no need for a determination of this tax issue for estate administration purposes, this Court is not the proper forum for this litigation.”); Depalma v. Westland Software House, 225 Cal. App. 3d 1534, 1541-42 (1990) (“It is not within this court’s jurisdiction to decide whether the tax benefit rule would apply to respondent in this circumstance: that is a matter for the Internal Revenue Service and the federal court system.”). Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 30 of 38 Page ID #:107 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 19 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 F. Plaintiff’s Individual State-Law Claims All Fail Although this Court should not proceed to the merits, if it does, all claims should be dismissed for failure to state a claim. 1. Plaintiff Fails to State a Claim For Breach of Contract No contract claim is properly pleaded, and Count One therefore fails. The governing contract is the short sale agreement. (Compl., Ex. A.) Nothing in that agreement requires a Form 1098 filing, and the agreement nowhere states that short sale proceeds are to be applied to interest before principal. “To plead a claim for breach of contract, the complaint must allege sufficient facts to show: (1) the existence of a contract; (2) plaintiff’s performance or excuse for non-performance; (3) defendant’s breach; and (4) resulting damages.” Facebook, Inc. v. Grunin, 77 F. Supp. 3d 965, 970 (N.D. Cal. 2015). A plaintiff must allege the specific term of the contract that has been breached. See, e.g., Hawthorne v. Umpqua Bank, No. 11-cv-6700-JST, 2013 WL 5781608, at *12 (N.D. Cal. Oct. 25, 2013) (dismissing breach of contract claim for failure to identify breached term); Holcomb v. Wells Fargo Bank, N.A., 155 Cal. App. 4th 490, 501 (2007) (same). Plaintiff concedes that neither the short sale agreement nor his earlier mortgage agreement specifies any JPMC duty to file a Form 1098. (Compl., ¶¶ 57, 59.) This alone should defeat the claim, as JPMC never promised to report in the manner Plaintiff now demands. Plaintiff nonetheless alleges an implied obligation under his original mortgage agreement, which he has not placed before the Court. This attempt suffers from three fatal flaws. First, implied contractual obligations are disfavored, and Plaintiff fails to plead that JPMC’s supposed duty to file a Form 1098 “[was] indispensable to effectuating the parties’ intentions” and “was so clearly within the parties’ contemplation when they drafted the contract that they did not feel the need to express it.” Grebow v. Mercury Ins. Co., 241 Cal. App. 4th 564, 578-79 (2015), as modified on denial of reh’g, (Oct. 26, 2015) (citing In re Marriage of Corona, 172 Cal. App. 4th 1205, 1222 (2009)), review denied (Jan. 13, 2016). Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 31 of 38 Page ID #:108 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 20 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Second, courts do not imply tax reporting duties into contracts, as that would undermine the substantive tax law relating to filing duties and Congress’s choice not to create private rights of action for tax issues. See Umland, 542 F.3d at 66 (rejecting plaintiff’s attempt to imply federal tax law into a contract’s terms because “doing so here would trump the standard inquiry whether a federal statute creates a private right of action”); see also St. Christopher Assoc., L.P. v. United States, 511 F.3d 1376, 1384 (Fed. Cir. 2008) (“[W]holesale incorporation of regulations into a contract would allow the contracting party to choose among a multitude of regulations as to which he could claim a contract breach – and thus [a] wholly new ground of obligation would be summarily created by mere implication.”) (citations and internal quotation marks omitted); Chandler v. Wells Fargo Bank, No. 11-3831 SC, 2014 WL 31315, at *5-6 (N.D. Cal. Jan. 3, 2014) (rejecting plaintiffs’ attempt to incorporate HUD regulations into a reverse mortgage agreement for same), aff’d, 637 F. App’x 413 (9th Cir. 2016). Third, Plaintiff cannot even rely upon his prior mortgage agreement because it was superseded by the short sale agreement when that agreement was consummated and JPMC released its security on the property. In other words, even if a duty existed under the mortgage agreement to apply payments in a particular fashion, and to report accordingly to the IRS, the short sale payment was not made under the prior mortgage agreement. Rather, the short sale payment was made under the short sale agreement, which replaced the prior mortgage agreement and relieved both JPMC and Plaintiff of their duties under that prior agreement. See Cal. Civ. Code § 1531 (novation extinguishes duties under prior agreement, substituting new duties under the new agreement). The short sale agreement stated that the payment would be applied to principal, not interest, and advised Plaintiff to seek independent tax advice as to the consequences of the transaction. (Compl., Ex. A.) Accordingly, the short sale agreement extinguished all duties relating to payment application or information reporting, express or implied, that might have existed under the prior mortgage Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 32 of 38 Page ID #:109 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 21 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 agreement. See Fanucchi & Limi Farms v. United Agri Prods., 414 F.3d 1075, 1081 (9th Cir. 2005) (“Whereas a modification of a term or a provision of a contract alters only certain portions of the contract, novation wholly extinguishes the earlier contract.”) (citing Davies Mach. Co. v. Pine Mountain Club, Inc., 39 Cal. App. 3d 18, 25 (1974)). Plaintiff’s contract theory depends wholly on implied terms of the superseded original mortgage agreement; thus, it fails as a matter of law. 2. Plaintiff Fails to State a Claim For Breach of the Implied Covenant of Good Faith and Fair Dealing Plaintiff’s implied covenant claim, set forth in Count Two, fails for similar reasons. Theories of implied contractual liability cannot be employed to impose tax filing obligations. Additionally, because the short sale agreement both addresses application of the short sale payment and warns Plaintiff to obtain independent tax advice, Plaintiff cannot pursue an implied covenant theory. See Pasadena Live, LLC v. City of Pasadena, 114 Cal. App. 4th 1089, 1093-94 (2004) (The “implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract . . . .”); see also McCoy v. Chase Manhattan Bank, USA, Nat’l Ass’n, 654 F.3d 971, 975 (9th Cir. 2011) (where issue is or could have been addressed in the written contract “the implied duty to perform in good faith does not come into play.”) (citation omitted); Berger v. Home Depot U.S.A., Inc., 476 F. Supp. 2d 1174, 1177 (C.D. Cal. 2007) (Guilford, J.) (“[T]he implied covenant will not apply where no express term exists on which to hinge an implied duty, and where there has been compliance with the contract’s express terms.”) (citation omitted). “The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract’s purposes.” Foley v. Interactive Data Corp., 47 Cal. 3d 654, 690 (1988). The implied covenant “cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 349-50 (2000). Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 33 of 38 Page ID #:110 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 22 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Count Two also fails because the “implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself,” and Plaintiff must demonstrate more than mere contract breach to recover. Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 345-47 (2001). A mere dispute over contract interpretation does not give rise to a bad faith claim. Id. Since there were reasonable grounds for JPMC’s non-filing of a Form 1098 – the short sale agreement states how the payment would be applied – and Plaintiff was not the actual payor of the short sale proceeds – there is no bad faith liability as a matter of law, even if at some point in the future Plaintiff’s tax position is vindicated. Id. at 349-51 (a “mistaken or erroneous” contract interpretation, “if reasonable or if based on a legitimate dispute,” does not give rise to a bad faith claim); see also Fraley v. Allstate Ins. Co., 81 Cal. App. 4th 1282, 1292 (2000) (no breach of implied covenant when there was a genuine dispute as to the scope of the underlying contractual obligation). Accordingly, the Court should dismiss this claim. 3. Plaintiff Fails to State a Claim For Negligence Plaintiff’s negligence theory, asserted in Count Three, fares no better. “The threshold element of a cause of action for negligence is the existence of a duty to use due care toward an interest of another that enjoys legal protection against unintentional invasion.” Paz v. State, 22 Cal. 4th 550, 559 (2000) (citations omitted). JPMC owed no duty to Plaintiff regarding the Form 1098. See, e.g., Nymark v. Heart Fed. Sav. & Loan Ass’n., 231 Cal. App. 3d 1089, 1096 (1991) (“[A] financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.”). JPMC’s reporting duty, to the extent it has any, is to the IRS, not to Plaintiff, as Plaintiff tacitly concedes. (Compl., ¶¶ 70-73.) The economic loss rule also bars the negligence claim. Under California law, where a claim arises out of a contractual relationship, “a claim for economic losses is Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 34 of 38 Page ID #:111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 23 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 barred in a tort action, absent physical injury to property.” See Dep’t of Water & Power v. ABB Power T & D Co., 902 F. Supp. 1178, 1186 (C.D. Cal. 1995). This flows from the principle that “contract and warranty law should govern the economic relations between contracting parties,” and “[t]o permit recovery for economic losses under tort theory would destroy any contractual allocation of risks between the parties.” Id. The California Supreme Court has consistently applied the economic loss rule to preclude torts from contractual relations “to distinguish recoverable damages for physical injury from unrecoverable damages representing the benefit of a contractual bargain.” See Aas v. Super. Court, 24 Cal. 4th 627, 640 (2000). Plaintiff concedes that his relationship with JPMC was fundamentally contract-based. Plaintiff also alleges no physical injury, but merely the alleged inability to claim a tax benefit. The Complaint describes nothing but a pure economic loss, and accordingly, Plaintiff’s negligence claim is barred. See also Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85, 102 (1995) (California applies “a general rule precluding tort recovery for noninsurance contract breach”). 4. Plaintiff Fails to State a Claim Under the UCL Finally, Plaintiff’s Count Four under the UCL also fails. As discussed above, Plaintiff pleads no unlawful, unfair or deceptive conduct, and the TAIA precludes this Court from issuing injunctive relief under the UCL. Independently, the UCL claim fails for lack of standing. UCL standing is more limited than Article III standing: Plaintiff must plead that he suffered an injury in fact and lost specific money or property as a result of the alleged UCL violation. Cal. Bus. & Prof. Code § 17204; see also Californians for Disability Rights v. Mervyn’s, LLC, 39 Cal. 4th 223, 227-28 (2006) (discussing ramifications of the passage of Proposition 64). As discussed above, because Plaintiff has not yet suffered any adverse tax consequences, he sustained no cognizable loss of money or property, and thus cannot pursue a UCL claim. Plaintiff’s UCL claim for monetary relief also fails because UCL monetary Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 35 of 38 Page ID #:112 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 24 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 remedies are limited strictly to restitution, a theory Plaintiff does not plead. Under the UCL, restitution is limited to recovering specific money or property transferred from the plaintiff to the defendant through the allegedly wrongful conduct. “[T]he notion of restoring something to a victim of unfair competition includes two separate components. The offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep.” Day v. AT&T Corp., 63 Cal. App. 4th 325, 340 (1998).9 JPMC’s non-filing of a Form 1098 regarding the short sale transaction transferred no money or property directly from Plaintiff to JPMC; therefore, no restitution is possible. See Madrid v. Perot Sys. Corp., 130 Cal. App. 4th 440, 456 (2005) (rejecting UCL claim because “plaintiff fails to cite any authority that a UCL plaintiff may recover money from a defendant who never received it on a theory that the defendant conspired with or aided someone else who did receive it. This sounds like damages (which are unavailable under the UCL) rather than restitution.”); Nat’l Rural Telecomm. Coop. v. DirecTV, Inc., 319 F. Supp. 2d 1059, 1082 (C.D. Cal. 2003) (UCL restitution is “the return of money in which [plaintiff has] an identifiable property interest.”); Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1149 (2003) (“The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.”). 9 See also United States v. Sequel Contractors, Inc., 402 F. Supp. 2d. 1142, 1156 (C.D. Cal. 2005) (restitution unavailable under the UCL because plaintiff “does not allege any facts that support a finding that [defendant] has an ownership interest in property or funds” in defendant’s possession); In re Napster, Inc. Copyright Litig., 354 F. Supp. 2d 1113, 1126 (N.D. Cal. 2005) (denying restitution where plaintiff could not demonstrate that defendants possessed funds in which plaintiff had an ownership interest); Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal. 4th 116, 126-27 (2000) (restitution under the UCL available only to compel a “defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property . . . .”); Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163, 178 (2000) (restitution awards “encompass quantifiable sums one person owes to another” like wages and back-pay). Nor can Plaintiff plausibly claim that JPMC was unjustly enriched, given that JPMC forgave over $1.3 million of Plaintiff’s loan obligation. See Cal. Fed. Bank v. Matreyek, 8 Cal. App. 4th 125, 130 (1992) (plaintiff bank was not entitled to restitution since there was no unjust enrichment). Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 36 of 38 Page ID #:113 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 25 - NOTICE OF MOTION AND MOTION TO DISMISS OR STAY LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Plaintiff’s allegations of damages – lack of a tax benefit and expenses in completing his tax filings – are not recoverable under the UCL because the UCL does not authorize damages recovery or compensation for injury. In re First Alliance Mortg. Co., 471 F.3d 977, 996 (9th Cir. 2006); Inline, Inc. v. A.V.L. Holding Co., 125 Cal. App. 4th 895, 903 (2005). Nor does it authorize non-restitutionary disgorgement of profit. See Theme Promotions v. News Am. Marketing FSI, 546 F.3d 991, 1008-09 (9th Cir. 2008). For each of these reasons, Plaintiff’s UCL claims in Count Four should be dismissed.10 IV. CONCLUSION For the foregoing reasons, JPMC respectfully requests the Court grant the Motion in its entirety and dismiss the Complaint with prejudice, or in the alternative, stay the action pending IRS formal guidance for Form 1098 filing requirements. Dated: December 5, 2016 Respectfully submitted, STROOCK & STROOCK & LAVAN LLP JULIA B. STRICKLAND STEPHEN J. NEWMAN BENJAMIN G. DIEHL By: /s/ Stephen J. Newman Stephen J. Newman Attorneys for Defendant JPMorgan Chase Bank, N.A. 10 Plaintiff cannot assert a separate “count” for declaratory relief, because the DJA authorizes only a “form of relief,” not a freestanding claim untethered to some other specific cause of action. Deerink v. Bank of N.Y. Mellon, N.A., No. 2:11-cv-1735- MCE, 2012 WL 3234027, at *5 (E.D. Cal. Aug. 6, 2012); see also Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp. 2d 873, 888 (N.D. Cal. 2011) (dismissing declaratory relief claim when plaintiff failed to allege viable underlying claim); Okpalobi v. Foster, 244 F.3d 405, 423 n.31 (5th Cir. 2001); Yau v. Deutsche Bank Nat’l Trust Co. Ams., No. SACV 11-00006-JVS, 2011 WL 8327957, at *7 (C.D. Cal. May 9, 2011). Plaintiff’s Count Five therefore must be dismissed. Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 37 of 38 Page ID #:114 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 1 - CERTIFICATE OF SERVICE LA 52020236 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 CERTIFICATE OF SERVICE I hereby certify that on December 5, 2016, a copy of the foregoing DEFENDANT JPMORGAN CHASE BANK, N.A.’S NOTICE OF MOTION AND MOTION TO DISMISS THE COMPLAINT, OR IN THE ALTERNATIVE, TO STAY THIS ACTION was filed electronically and served by mail on anyone unable to accept electronic filing. Notice of this filing will be sent by e-mail to all parties by operation of the court’s electronic filing system or by mail to anyone unable to accept electronic filing as indicated on the Notice of Electronic Filing. Parties may access this filing through the court’s CM/ECF System. /s/ Stephen J. Newman Stephen J. Newman Case 8:16-cv-01924-AG-KES Document 18 Filed 12/05/16 Page 38 of 38 Page ID #:115 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] ORDER GRANTING MOTION TO DISMISS [OR STAY] LA 52025857 Case No. 8:16-cv-01924-AG (KESx) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ROBERT J. NEELY, individually, and on behalf of the class of all others similarly situated, Plaintiff, vs. JP MORGAN CHASE BANK, N.A., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 8:16-cv-01924-AG (KESx) [Assigned to Hon. Andrew J. Guilford] [PROPOSED] ORDER GRANTING DEFENDANT JPMORGAN CHASE BANK, N.A.’S MOTION TO DISMISS THE COMPLAINT[, OR IN THE ALTERNATIVE, TO STAY THIS ACTION] Date: February 6, 2017 Time: 10:00 a.m. Room: Courtroom 10D, 411 West 4th Street, Santa Ana, CA 92701 Action Filed: October 21, 2016 Case 8:16-cv-01924-AG-KES Document 18-1 Filed 12/05/16 Page 1 of 3 Page ID #:116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 1 - [PROPOSED] ORDER GRANTING MOTION TO DISMISS [OR STAY] LA 52025857 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 Defendant JPMorgan Chase Bank, N.A. (“JPMC”), filed a motion under Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure asking this Court to dismiss all claims asserted against JPMC, or in the alternative, to stay this action. This Court, after full consideration of the briefs and other documents in support of and in opposition to the motion and all other matters presented in connection therewith, orders as follows: IT IS HEREBY ORDERED that JPMorgan Chase Bank, N.A’s Motion to Dismiss is GRANTED. All claims asserted against JPMC in the Complaint are DISMISSED WITH PREJUDICE. [Alternatively:] [IT IS HEREBY ORDERED that JPMorgan Chase Bank, N.A’s Motion to Stay is GRANTED. All claims asserted against JPMC in the Complaint are STAYED in favor of the Internal Revenue Service’s primary jurisdiction. The parties are ordered to file a joint status report by _____________, 2017, in regard to the status of proceedings before the Internal Revenue Service.] IT IS SO ORDERED. Dated: _______________________ Hon. Andrew J. Guilford United States District Judge Case 8:16-cv-01924-AG-KES Document 18-1 Filed 12/05/16 Page 2 of 3 Page ID #:117 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 1 - CERTIFICATE OF SERVICE LA 52025857 Case No. 8:16-cv-01924-AG (KESx) S T R O O C K & S T R O O C K & L A V A N L L P 20 29 C en tu ry P ar k E as t Lo s A ng el es , C al ifo rn ia 9 00 67 -3 08 6 CERTIFICATE OF SERVICE I hereby certify that on December 5, 2016, a copy of the foregoing [PROPOSED] ORDER GRANTING DEFENDANT JPMORGAN CHASE BANK, N.A.’S MOTION TO DISMISS THE COMPLAINT[, OR IN THE ALTERNATIVE, TO STAY THIS ACTION] was filed electronically and served by mail on anyone unable to accept electronic filing. Notice of this filing will be sent by e-mail to all parties by operation of the court’s electronic filing system or by mail to anyone unable to accept electronic filing as indicated on the Notice of Electronic Filing. Parties may access this filing through the court’s CM/ECF System. /s/ Stephen J. Newman Stephen J. Newman Case 8:16-cv-01924-AG-KES Document 18-1 Filed 12/05/16 Page 3 of 3 Page ID #:118