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Jpmorgan Chase Bank, N.A v. Republic Mortgage Insurance Company

May 4, 2011

JPMORGAN CHASE BANK, N.A., PLAINTIFF,
v.
REPUBLIC MORTGAGE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Chesler, District Judge

NOT FOR PUBLICATION

OPINION

This matter comes before the Court upon Defendant Republic Mortgage Insurance Company's ("RMIC") motion to dismiss Plaintiff JP Morgan Chase Bank, N.A.'s ("Chase") Amended Complaint [docket entry 12] pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff has opposed the motion, and in turn has filed a cross-motion for partial summary judgment on Count One of its Amended Complaint [docket entry 20]. Defendant has opposed the cross-motion. The Court has considered the papers filed by the parties and rules on the written submissions and without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons that follow, Defendant's motion to dismiss will be granted and Plaintiff's cross-motion for partial summary judgment will be denied.

I. BACKGROUND

RMIC provides mortgage insurance on residential loans in which a borrower makes a down payment that is less than twenty percent of the property's purchase price. In September 1984, RMIC issued Policy No. 34095 to JP Morgan, and in May 2007, issued Policy No. 53606-35 to Washington Mutual Bank, F.A. (JP Morgan and Washington Mutual Bank, F.A. collectively shall be referred to as "Chase") (Policy No. 34095 and Policy No. 53606-35 collectively shall be referred to as the "Policies"). Pursuant to the terms of the Policies, RMIC agreed to pay Chase, in consideration of both the premium paid and "in reliance upon [Chase's] representations and statements made in any Application for coverage" under the Policies, certain losses incurred as a result from the default by a borrower on a mortgage loan. (Hassan Decl., Exs. A, B, p.1, Jan. 31, 2011.)

To obtain coverage for a mortgage loan under the Policies, Chase was required to prepare and submit either an application - which included the borrower's loan application, property appraisal, verification of income and deposit, and other related information regarding the mortgage loan - or provide more limited information regarding the loan along with certifications by Chase regarding the characteristics of the loan. (Id. at ¶¶ 2.1, 1.1.) In either case, Chase represented to RMIC that this information was "not false or misleading in any material respect as of the date(s) on which they are made or provided and do not omit any fact necessary in order to make such statements and information not false or misleading in any material respects as of such date(s)." (Id. at ¶ 2.2(b).) According to the Policies, if any of the representations made in the insurance application were materially false or misleading, RMIC has "the right, at its option and to the extent permitted by applicable law, to cancel or rescind coverage under any Certificate retroactive to commencement of coverage . . . and to return at that time all paid premiums retroactively . . . " (Id. at ¶ 2.3.)

On February 22, 2011, Plaintiff filed an Amended Complaint, asserting that RMIC breached the terms of the two insurance Policies by unilaterally rescinding coverage under the Policies since, according to Chase, RMIC was required by law to seek rescission from a court or arbitrator. Count I of Plaintiff's Amended Complaint and Plaintiff's cross-motion for summary judgment seek a declaratory judgment that RMIC cannot rescind coverage for a loan without first commencing litigation, Count II of the Amended Complaint alleges a breach of contract claim, and Count III of the Amended Complaint asserts a breach of fiduciary duty and bad faith claim.

II. LEGAL ANALYSIS

A. Standard of Review

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds that plaintiff's claims have facial plausibility. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). This means that the Complaint must contain sufficient factual allegations to raise a right to relief above the speculative level, assuming the factual allegations are true. Id. at 1965; Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). The Supreme Court has made clear that "a formulaic recitation of the elements of a cause of action will not do." Twombly, 127 S.Ct. at 1964-65; see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.").

In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon those documents. See Pension Benefit Guar. Corp., 998 F.2d at 1196. The issue before the Court "is not whether plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support of the claims." Burlington Coat Factory Sec. Litig., 114 F.3d at 1420 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

B. Discussion

1. Count I: Declaratory Judgment Count

One of the Amended Complaint pleads for this Court to issue a declaratory judgment regarding RMIC's unilateral rescission practice. The Declaratory Judgment Act provides that a Court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The express language of the declaratory judgment statute and fundamental principles of standing under Article III of the Constitution limit this power to actions which present a case or controversy. Cutaiar v. Marshall, 590 F.2d 523, 527 (3d Cir. 1979). "The statute creates a remedy only; it does not create a basis of jurisdiction, and does not authorize the rendering of advisory opinions." Id. For adjudication of constitutional issues 'concrete legal issues, presented in actual cases, not abstractions' are requisite. United Public Workers of America (C.I.O.) v. Mitchell, 330 U.S. 75, 89 (1947). The difference between an abstract question and a 'controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree and the question in each case is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy any reality to warrant the issuance of a ...


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