Saturday, August 28, 2010

Federal Judge dismisses housing discrimination case against JPMorgan

On Thursday, Judge Charles Breyer dismissed a mortgage loan discrimination case against JPMorgan while allowing the same claims to proceed against co-defendant American Mortgage Network (AMN is a subsidiary of Wachovia).

Antonio Hernandez speaks Spanish fluently, but cannot read English and has a limited capacity to speak English. On June 25, 2004 he purchased some property with a loan from Saxon Mortgage funded by First Franklin Financial.  Later, on the advice of friends, he approached Sutter West Financial to refinance his loan with better terms.  He alleges that he dealt with bilingual representatives at Sutter who gave him a worse deal and arranged such that he had to make prepayment penalty payments on the Saxon loan.  As it relates to the current action, Mr. Hernandez refinance his loan with JPMorgan on June 22, 2006, and again with AMN on May 30, 2007.  He claims that JPMorgan and AMN, in their capacities as mortgage brokers engaged in lending activity that had a disparate impact on Latinos.  He offers a study from the Center for Responsible lending to substantiate that.

Rather than take the allegations head on, JPMorgan argues that the statute of limitations for Mr. Hernandez's claims have expired. Mr. Hernandez filed this action on June 9, 2009, so all of the federal claims would have to have occurred by June 9, 2007, since the JP Morgan loan occurred in 2006 the time for filing had passed.

The California Unruh Civil Rights Act claims are a little different since the statute carries no statute of limitations.  Courts try to determine if the cause of action sound like one created by statute or common law, the former carries a three year statute of limitations and the latter is two years.  Judge Breyer found that discrimination claims are of the common law variety and have a two year statute of limitations, similarly those claims are dismissed.

AMN is not as lucky, the mortgage provider argued under Ashcroft v. Iqbal that the allegations stated were not definite enough to form a complaint.  While not passing on their merits of the case, Judge Breyer stated a claim was present and the case was turned over to Magistrate Judge Bernard Zimmerman for settlement.

The case is Hernandez v. Sutter W. Capital, No. C 09-03658 and the opinion is below the jump.

Here is the opinion.

Hernandez v. Sutter West Capital MTD

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