Davis et al v. Bank of America Corporation et al

Filing 22

ORDER that the 19 Motion to Dismiss First Amended Verified Complaint by Defendants Bank of America Corporation and Bank of America, N.A., individually and as successor by merger to BAC Home Loans Servicing LP, is granted. That the First Amended Verified Complaint (Doc. 16) is dismissed with prejudice as to Defendant Bank of America Corporation. That Counts One, Two, Three, Five, Six, and Seven of the First Amended Verified Complaint (Doc. 16) are dismissed with prejudice as to Defendant B ank of America, N.A., individually and as successor by merger to BAC Home Loans Servicing LP. That Count Four of the First Amended Complaint (Doc. 16) is dismissed as to Defendant Bank of America, N.A., individually and as successor by merger to BAC Home Loans Servicing LP, to the extent that it seeks punitive damages or damages for non-economic injuries. Signed by Judge Neil V Wake on 11/28/12.(DMT)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

No. CV-12-01059-PHX-NVW

Ronald Davis, et al.,

10

Plaintiffs,

11
12

ORDER

vs.
Bank of America Corporation, et al.,

13

Defendants.

14

Before the Court is the Motion to Dismiss First Amended Verified Complaint

15

(Doc. 19) by Defendants Bank of America Corporation and Bank of America, N.A.,

16

individually and as successor by merger to BAC Home Loans Servicing LP.

17

I.

LEGAL STANDARD

18

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all

19

allegations of material fact are assumed to be true and construed in the light most

20

favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.

21

2009). To avoid dismissal, a complaint need contain only “enough facts to state a claim

22

for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

23

570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The principle that a court accepts as true

24

all of the allegations in a complaint does not apply to legal conclusions or conclusory

25

factual allegations. Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009).

26

In alleging fraud, the circumstances must be alleged with particularity. Fed. R.

27

Civ. P. 9(b). Plaintiffs alleging fraud “must state the time, place, and specific content of

28

1
2
3
4

the false representations as well as the identities of the parties to the misrepresentations.”
Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986);
accord Odom v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007).
II.

BACKGROUND

5

The facts assumed to be true are essentially the same as those assumed to be true

6

in the August 23, 2012 Order (Doc. 13), which dismissed all counts against Defendant

7

Bank of America Corporation and dismissed all but one count (promissory estoppel)

8

against Defendant Bank of America, N.A., individually and as successor by merger to

9

BAC Home Loans Servicing LP (“BACHL”). In addition to promissory estoppel, the

10

Verified Complaint alleged false advertising/consumer fraud in violation of A.R.S. § 44-

11

1522, constructive fraud, breach of fiduciary duty, negligent infliction of emotional

12

distress, intentional infliction of emotional distress, and negligent misrepresentation.

13

The August 23, 2012 Order (Doc. 13) found Plaintiffs had sufficiently alleged that

14

BACHL stated in two letters that no foreclosure sale would be conducted during the

15

Home Affordable Modification Program (“HAMP”) evaluation, and the statements were

16

false because a foreclosure sale was conducted before the HAMP evaluation was

17

completed. As alleged, Plaintiffs’ injuries were caused by not having adequate time to

18

prepare to move from their home because they relied on BACHL’s false statements.

19

The First Amended Verified Complaint names as Defendants Bank of America

20

Corporation, Bank of America, N.A., and BAC Home Loans Servicing, LP. Like the

21

Verified Complaint, it alleges false advertising/consumer fraud in violation of A.R.S.

22

§ 44-1522, constructive fraud, promissory estoppel, negligent infliction of emotional

23

distress, and negligent misrepresentation.

24

Complaint alleges breach of the implied covenant of good faith and fair dealing and

25

negligence.

In addition, the First Amended Verified

26
27
28
-2 

1

III.

ANALYSIS

2

A.

3

All of the amended claims against Bank of America Corporation will be dismissed

4

for the reasons stated in the August 23, 2012 Order (Doc. 13). In addition, although

5

Plaintiffs allege that Bank of America Corporation controlled Bank of America, N.A.,

6

and BAC Home Loans Servicing LP to the extent that Bank of America Corporation is

7

liable under the instrumentality theory exception to the rule that a parent corporation is

8

not liable for the acts of its subsidiaries, Plaintiffs fail to allege facts supporting “that

9

observance of the corporate form would sanction a fraud or promote injustice.” Taeger v.

10

Claims Against Bank of America Corporation

Catholic Family & Cmty. Servs., 196 Ariz. 285, 297 (Ct. App. 1999).

12

False Advertising/Consumer Fraud in Violation of A.R.S. § 44-1522,
Constructive Fraud, Negligent Infliction of Emotional Distress, and
Negligent Misrepresentation

13

Plaintiffs’ amended claims for false advertising/consumer fraud in violation of

14

A.R.S. § 44-1522, constructive fraud, negligent infliction of emotional distress, and

15

negligent misrepresentation will be dismissed for the reasons stated in the August 23,

16

2012 Order (Doc. 13).

11

B.

17

C.

18

The parties agree that a covenant of good faith and fair dealing is implied into

19

every contract and that a claim for breach of the covenant arises from a contract between

20

the parties. Plaintiffs allege that Defendants breached the covenant by selling Plaintiffs’

21

house during the HAMP evaluation. However, Plaintiffs have not alleged facts that

22

would establish the existence of a contract with Defendants regarding the HAMP

23

evaluation. Therefore, Count Two of the First Amended Verified Complaint fails to state

24

a claim upon which relief can be granted.

Breach of the Implied Covenant of Good Faith and Fair Dealing

25

D.

26

The First Amended Verified Complaint alleges that Defendants owed Plaintiffs a

27

general duty of care because they had “a special and confidential relationship,” which

Negligence

28
-3 

1
2
3
4
5

Defendants breached. Plaintiffs have not alleged facts that would establish “a special and
confidential relationship,” a general duty of care, or a breach of any duty beyond that
alleged in their negligent misrepresentation claim. Therefore, Count Five of the First
Amended Verified Complaint fails to state a claim upon which relief can be granted.
E.

Promissory Estoppel Damages

6

Defendants seek dismissal of Count Four of the First Amended Verified

7

Complaint for promissory estoppel to the extent it seeks punitive damages and damages

8

for non-economic injuries, like emotional distress.

9

Arizona courts recognize promissory estoppel, defined in Restatement (Second) of

10

Contracts § 90(1), as a proper alternative to a contract claim, but acknowledge that the

11

remedy under this theory may be more limited than damages for breach of contract.

12

AROK Constr. Co. v. Indian Constr. Servs., 174 Ariz. 291, 299-300, 848 P.2d 870, 878-

13

79 (Ct. App. 1993). Under § 90(1), certain promises are “binding if injustice can be

14

avoided only by enforcement of the promise.” A promise binding under § 90(1) is a

15

contract, and normal contract remedies are often appropriate. Restatement (Second) of

16

Contracts § 90 cmt. d. However, “relief may sometimes be limited to restitution or to

17

damages or specific relief measured by the extent of the promisee’s reliance rather than

18

by the terms of the promise.” Id. Therefore, the most Plaintiffs may recover on a

19

promissory estoppel claim is what they could recover for breach of contract.

20

Under Arizona law, punitive damages and damages for non-economic injuries,

21

like emotional distress, may not be recovered for breach of contract. Fox v. Citicorp

22

Credit Servs., Inc., 15 F.3d 1507, 1517 (9th Cir. 1994) (breach of contract claim dismissed

23

because plaintiffs alleged only emotional distress and mental anguish damages);

24

Continental Nat’l Bank v. Evans, 107 Ariz. 378, 382, 489 P.2d 15, 19 (1971) (citing

25

Restatement of Contracts § 342, which states, “Punitive damages are not recoverable for

26

breach of contract.”). Because a promise made binding under the theory of promissory

27
28
-4 

1
2
3

estoppel is a contract, Plaintiffs may not recover punitive damages or damages for noneconomic injuries for a claim of promissory estoppel.
IV.

FURTHER LEAVE TO AMEND WILL NOT BE GRANTED.

4

Although leave to amend should be freely given “when justice so requires,” Fed.

5

R. Civ. P. 15(a)(2), the Court has “especially broad” discretion to deny leave to amend

6

where the plaintiff already has had one or more opportunities to amend a complaint.

7

Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989). “Leave to

8

amend need not be given if a complaint, as amended, is subject to dismissal.” Moore v.

9

Kayport Package Exp., Inc., 885 F.2d 531, 538 (9th Cir. 1989). “Futility of amendment

10

can, by itself, justify the denial of a motion for leave to amend.” Bonin v. Calderon, 59

11

F.3d 815, 845 (9th Cir. 1995).

12

Plaintiffs already have had an opportunity to amend their complaint. Because

13

further amendment would be futile, all claims against Bank of America Corporation will

14

be dismissed with prejudice and all claims against Bank of America, N.A., except Count

15

Four (Promissory Estoppel), will be dismissed with prejudice.

16

IT IS THEREFORE ORDERED that the Motion to Dismiss First Amended

17

Verified Complaint (Doc. 19) by Defendants Bank of America Corporation and Bank of

18

America, N.A., individually and as successor by merger to BAC Home Loans Servicing

19

LP, is granted.

20
21

IT IS FURTHER ORDERED that the First Amended Verified Complaint (Doc.
16) is dismissed with prejudice as to Defendant Bank of America Corporation.

22

IT IS FURTHER ORDERED that Counts One, Two, Three, Five, Six, and Seven

23

of the First Amended Verified Complaint (Doc. 16) are dismissed with prejudice as to

24

Defendant Bank of America, N.A., individually and as successor by merger to BAC

25

Home Loans Servicing LP.

26
27
28
-5 

1
2
3
4
5

IT IS FURTHER ORDERED that Count Four of the First Amended Complaint
(Doc. 16) is dismissed as to Defendant Bank of America, N.A., individually and as
successor by merger to BAC Home Loans Servicing LP, to the extent that it seeks
punitive damages or damages for non-economic injuries.
Dated this 28th day of November, 2012.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-6