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Armstrong v. JPMorgan Chase Bank National Association

United States District Court, D. Colorado

April 7, 2014



R. BROOKE JACKSON, District Judge.

This case comes before the Court on defendant JPMorgan Chase Bank National Association's ("JPMorgan Chase") Motion to Dismiss Plaintiff's Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) [Doc. #15]. For the reasons set forth below, the motion is granted.


In December of 2007, the plaintiff obtained a $417, 000 mortgage loan (the "note") from Stewart Mortgage Services, Inc. to buy a home located at 350 Garfield Avenue, Carbondale, Garfield County, Colorado 81623. The loan was secured by a deed of trust recorded against the property, and the beneficiary of the trust was Mortgage Electronic Registration Systems, Inc. ("MERS"). On February 1, 2009, Stewart Mortgage assigned the note to AmTrust Bank, which, according to the defendant, then made a blank endorsement of the note and successfully negotiated it to JPMorgan Chase. The plaintiff, Mr. Armstrong, disputes this assertion. On February 28, 2012, MERS executed a Corporate Assignment of Deed of Trust in JPMorgan Chase's name. [Doc. #15-3].

Mr. Armstrong has been in default of the note since January 2010. Chase Home Finance, LLC-presumably a subsidiary of JPMorgan Chase-sent notice of foreclosure and sale by public auction to Mr. Armstrong on March 29, 2010. [Doc. #15-4 at 10]. Chase Home Finance withdrew the foreclosure action on September 14, 2011. [Doc. #15-5 at ΒΆ 2].

On or around December 3, 2010, Mr. Armstrong filed suit in the District Court of Garfield County in response to the then-pending foreclosure action. In stark parallel to the present case, he sought declaratory judgment that the defendants did not have a right to service the loan, as well as temporary and permanent injunctive relief to remain in the property. [Doc. # 15-4 at 1-9; Case Number 2010CV374].

On December 14, 2010, while his state case was pending, Mr. Armstrong filed a voluntary petition for Chapter 7 bankruptcy in the United States Bankruptcy Court in the District of Colorado. [Doc. #15-6]. In filing this petition, Mr. Armstrong declared under penalty of perjury that the information he provided was true and correct. Mr. Armstrong was represented by counsel in the bankruptcy action.

Mr. Armstrong made three representations in his bankruptcy filings that are material to this motion. First, he alleged that the only proceeding to which he was a party within the year preceding his filing was the foreclosure action instituted by Chase Home Finance. [Doc. #15-6 at 9]. Yet, less than two weeks earlier Mr. Armstrong had filed his action for declaratory judgment against Chase Home Finance. It is unclear why Mr. Armstrong failed to disclose this pending lawsuit on his petition. Second, Mr. Armstrong listed the amount due on his mortgage as a secured claim held by Chase Manhattan Mortgage[1] in the amount of $410, 986. [ See Doc. #15-6 at 12, 14, 19]. The form entitled "Schedule D - Creditors Holding Secured Claims" includes an area where a petitioner can mark a secured claim as disputed. [Doc. #15-6 at 19]. However, Mr. Armstrong failed to make any indication that he disputed the claim. See id. Finally, in his Statement of Intention, Mr. Armstrong indicated that he intended to retain the encumbered property and reaffirm the debt he owed to Chase Manhattan. [Doc. #15-7]. Once again, it is unclear why he made the latter statement if he actively disputed the claim.

On March 4, 2011, the United States Trustee filed a motion to dismiss the bankruptcy action on the grounds that Mr. Armstrong's disposable income was higher than Mr. Armstrong had estimated such that granting relief would be an abuse of the provisions of Chapter 7. [Doc. #15-14 at 1-3]. Mr. Armstrong did not file any objections. [ See Doc. #15-15 at 1]. On April 15, 2011, United States Bankruptcy Judge Sidney B. Brooks granted the motion to dismiss. [Doc. #15-15]. The Clerk of the United States Bankruptcy Court closed the case on August 21, 2011. [Doc. #15-16].

In June of 2012, JPMorgan Chase filed a Rule 120 motion in the District Court of Garfield County seeking authorization to sell the encumbered property. The court denied the motion on November 5, 2012, finding that JPMorgan Chase had not carried its burden of proving that it held an enforceable note. [Doc. #15-20]. That decision seems to have prompted this lawsuit.

In his Complaint, Mr. Armstrong argues that JPMorgan Chase does not have valid claim to the note and cannot, in turn, foreclose upon the encumbered property. Mr. Armstrong heavily relies upon the denial of the Rule 120 motion in seeking (1) declaratory judgment that JPMorgan Chase has no interest in the note, and (2) quiet title to the property.

JPMorgan Chase seeks to dismiss the action on a number of grounds. First, it argues that Mr. Armstrong lacks standing to bring this action because he failed to list this claim in a prior Chapter 7 bankruptcy filing. Second, it contends that Mr. Armstrong's request for declaratory judgment should be dismissed because JPMorgan Chase is the valid note holder. Finally, it argues that the quiet title claim should be dismissed because Mr. Armstrong fails to sufficiently plead a claim for quiet title.

The first and third arguments are ripe for review at this time. The second argument goes to the merits of the action and cannot be considered at the motion to dismiss stage. Further, the defendant asks that the Court dismiss the claim with ...

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