(Reuters) - The U.S. Supreme Court on Monday declined to revive a lawsuit by singer-songwriter Todd Rundgren and his wife Michele accusing JPMorgan Chase of wrongfully attempting to foreclose on the couple’s Kilauea, Hawaii home.
The court’s rejection of the couple’s appeal lets stand a lower court’s dismissal of their claims for damages and an order to stop a foreclosure sale.
The Rundgrens’ lawyer, Gary Dubin, said the couple are still in their home and have other defenses to fight the foreclosure.
“This is just the beginning,” Dubin said by email.
JPMorgan spokesman Jason Lobo declined comment.
Rundgren, set to begin a U.S. tour in April, is best known for such 1970s hits as “Hello It’s Me” and “I Saw the Light.”
The Rundgrens’ dispute stems from a $3 million refinancing loan the couple arranged with Washington Mutual Bank several months before the bank failed in 2008. Chase bought that bank’s assets, including the Rundgrens’ loan, out of receivership in 2008.
In court filings, Chase said it started foreclosure proceedings in 2009 after the Rundgrens defaulted on their $17,060 monthly mortgage payments.
The Rundgrens’ lawsuit alleged that their mortgage was void because of numerous fraudulent acts by Washington Mutual Bank, also called WaMu, when the bank originated the loan. The lawsuit said WaMu created a false loan application, exaggerated the Rundgrens’ income and used a false appraisal for their home.
The lawsuit said WaMu tricked the Rundgrens into signing the mortgage without giving the couple time to read it and understand its terms. The loan had been switched from a fixed-rate to an adjustable-rate loan, the lawsuit said.
In a motion to dismiss the case filed in 2010, Chase argued that it was not liable for WaMu’s actions. The bank said that when it bought WaMu’s loans from the Federal Deposit Insurance Corp, its purchase agreement provided that Chase would not assume related liabilities.
Hawaii’s U.S. District Court and the San Francisco-based U.S. Court of Appeals for the 9th Circuit agreed, saying claims involving WaMu loans have to be resolved in administrative proceedings at the FDIC.
The courts cited the 1989 Financial Institutions Reform, Recovery and Enforcement Act, which gave the FDIC broad authority to address claims against failed banks.
In seeking a Supreme Court review, Dubin had argued that it defied logic to leave the couple exposed to foreclosure while they pursued administrative claims.
The case is: Todd Rundgren et al, petitioners v Washington Mutual Bank et al, No 14-865
Reporting By Dena Aubin; Editing by Will Dunham