Owens et al v. Bank of America et al

Filing 147

ORDER by Judge Yvonne Gonzalez Rogers denying 136 Plaintiffs' Motion for Reconsideration (fs, COURT STAFF) (Filed on 11/6/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JOANN R. OWENS AND LARRY M. OWENS,

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Plaintiffs,

Case No.: 11-cv-4580-YGR
ORDER DENYING PLAINTIFFS’ MOTION FOR
RECONSIDERATION

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United States District Court
Northern District of California

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vs.
BANK OF AMERICA, N.A., ET AL.,
Defendants.

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Plaintiff Joanne R. Owens and Larry M. Owens (“Plaintiffs”) have filed their Motion for

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Reconsideration and For Leave To File Proposed Amended Complaint Or Set Hearing (Dkt. No.

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136). Defendant Bank of America, N.A. (“BANA”) filed its opposition to the Motion on August

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13, 2013. (Dkt. No. 138).

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Plaintiffs ask the Court to reconsider of this Court’s April 30, 2013 Order (1) Denying In

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Part And Granting In Part Motion To Dismiss of Defendant Bank of America; and (2) Denying In

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Part And Granting In Part Motion To Dismiss As To Defendants J.P. Morgan Mortgage

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Acquisition Corporation, Marix Servicing, LLC, and Residential Credit Solutions. (Dkt. No. 126),

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which dismissed their fraud, negligence, and Equal Credit Opportunity Act (“ECOA”) claims

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against BANA. They also seek to amend the complaint to add two additional claims: one for

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intentional infliction of emotional distress against BANA and one for violation of the federal Fair

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Debt Collection Practice Act (“FDCPA”) against Marix.

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Having carefully considered the papers submitted and the pleadings in this action, and for

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the reasons set forth below, the Court hereby DENIES the Motion for Reconsideration and to amend

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the Second Amended Complaint.

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I.

RECONSIDERATION BASED UPON NEW FACTS

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In support of their request for reconsideration of dismissal of their claims, Plaintiffs offer

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declarations filed in the multi-district litigation entitled In re: Bank of America Home Affordable

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Modification Program (HAMP) Contract Litigation, MDL No. 2193 (D. Mass.). Those

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declarations of former BANA employees indicate that BANA offices in North Carolina, Texas, and

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New Jersey engaged in a pattern of delay and unfounded rejection with respect to HAMP

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modification applications, in part to convince applicants to accept higher rate, internal refinancing

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with BANA. (See Dkt. No. 137, Declaration of Robert Kane, Exh. 1 at ¶ 8.) They also aver that

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BANA did not process payments received and told customers they had not received payments or

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paperwork when they actually had. (See Kane Dec., Exh. 1-5.)
Plaintiffs argue that such policies and practices support their claims for fraud and

United States District Court
Northern District of California

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negligence against BANA. The Court is not persuaded by this argument. Leaving aside questions

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of whether these declarations are “new facts” that could not have been presented previously, or are

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admissible in these proceedings, Plaintiffs have not demonstrated that they have any bearing on

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their proposed claims here. First, the declarations concern HAMP loan modifications that were

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denied by a number of BANA offices in other parts of the country. The practices discussed therein,

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while certainly concerning, do not affect the allegations by Plaintiffs here:

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

a (non-HAMP) loan modification offer extended to Plaintiffs in October 2009 with a sevenday acceptance window;

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

Plaintiffs’ late return of their acceptance after the seven days had lapsed;

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

BANA’s acceptance of an alleged “mortgage contribution fee” and three loan payments in
the modified amount thereafter;

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

BANA’s notification that the original modification offer was “lost,” and extension of a
HAMP modification offer to Plaintiffs, which they rejected.

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(SAC ¶¶ 18-21.) There are no allegations of improper denial of a HAMP modification or failure to

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credit payments in the Second Amended Complaint or Proposed Third Amended Complaint. Based

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upon the allegations of the SAC and the matters judicially noticeable, the Court previously

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determined that the issue to be resolved was whether Plaintiffs’ late-acceptance of BANA’s

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October 2009 modification offer was waived by BANA because it accepted additional

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consideration for the modification beyond other monies already owed by Plaintiffs.
More importantly, Plaintiffs’ Proposed Third Amended Complaint (“PTAC”), submitted

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with the Motion for Reconsideration, does not reflect any new allegations based upon these newly

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discovered facts in the MDL. Instead, the PTAC submits new allegations about the Plaintiffs

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themselves. For instance, the PTAC now offers allegations that:
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At the end of October 2009, Plaintiffs received a letter from BANA “welcoming” them and
assigning them a new account number for the modified loan;

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

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In a phone conversation with a BANA representative in December 2009, Plaintiffs were
assured that a bill showing the un-modified loan amount and their loan in arrears was an

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United States District Court
Northern District of California

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error, that Plaintiffs’ loan had been modified but the files were not yet updated, and that

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Plaintiffs should “ignore” the bill.


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In a phone call with a BANA representative in February 2010, after receiving another

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statement showing an unmodified amount, Plaintiffs were again instructed to ignore the

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statement and reassured that the modification was effective.

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(PTAC ¶¶ 1-3, compare SAC ¶¶ 18-21.)
These allegations are entirely new and differ significantly from the allegations and

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arguments previously made by Plaintiffs. Plaintiffs offer no reason that these allegations, uniquely

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within their own knowledge, could not have been made previously, had they acted with diligence.

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In short, there is simply no relationship between the “new” facts in the proffered MDL declarations

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and the new allegations in the PTAC. Consequently, the “new” facts do not establish a basis for

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reconsideration, and the motion for reconsideration is DENIED as to dismissal of the fraud and

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negligence claims.

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II.

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RECONSIDERATION BASED UPON NEW LEGAL DEVELOPMENTS
Plaintiffs also argue for reconsideration of the Court’s dismissal of their ECOA claim based

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upon a subsequent decision of the Ninth Circuit in Schlegel v. Wells Fargo Bank, NA, 720 F.3d

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1204 (9th Cir., July 3, 2013). The court in Schlegel reversed a dismissal of an ECOA claim,

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holding that the facts alleged gave rise to a claim that the bank revoked the plaintiffs’ credit for

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purposes of 15 U.S.C. § 1691(d)(6). Id. at 1211. The facts alleged were that the plaintiffs had

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obtained a loan modification as part of their court-ordered bankruptcy proceedings, but the bank

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later informed plaintiffs that payments made under the modification were not sufficient, sent

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several default notices, and accelerated their loan payments. Id. at 1206-07. The court held that the

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default notices and acceleration were, effectively, a “revocation of credit.” Id. at 1210-11.
Plaintiffs’ reliance on Schlegel is unavailing. Schlegel does not change the law on which

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this Court relied in reaching its conclusion that the SAC did not allege a revocation or denial of

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credit under section 1691(d)(6), i.e. that the ECOA does not include “refusal to extend additional

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credit under an existing credit arrangement where the applicant is delinquent or otherwise in
default, or where such additional credit would exceed a previously established credit limit.” 15

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United States District Court
Northern District of California

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U.S.C. §1691(d)(6); see also 12 C.F.R. § 202.2(c)(2)(ii) (stating that adverse action does not

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include “[a]ny action or forbearance relating to an account taken in connection with inactivity,

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default, or delinquency as to that account”). The allegations of the SAC, and the matters judicially

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noticeable, indicate that Plaintiffs were offered a modification, accepted that modification too late,

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BANA accepted some payments that may or may not constitute a waiver of the late acceptance, and

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BANA later repudiated the prior offer. This is not an adverse action under section 1691(d)(6), and

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nothing in Schlegel affects that decision. The motion for reconsideration of the dismissal of the

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ECOA claims is therefore DENIED.

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III.

REQUEST TO AMEND
Finally, Plaintiffs also seek to add claims for intentional infliction of emotional distress

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(IIED) against BANA and a violation of the FDCPA against Marix. The Court considers each in

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turn.

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A.

Intentional Infliction of Emotional Distress Claim (IIED)

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The request to add an IIED claim is both procedurally improper, since it was lumped in with

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the reconsideration request rather than separately noticed and set for hearing, and apparently futile.

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Leave to amend is ordinarily liberally granted unless the amendment is futile, would cause

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undue prejudice to the defendants, or is sought by plaintiffs in bad faith or with a dilatory

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motive. Foman v. Davis, 371 U.S. 178, 182 (1962); Smith v. Pacific Properties and Dev. Corp.,

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358 F.3d 1097, 1101 (9th Cir. 2004). However, when a district court has already granted

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plaintiffs leave to amend, its discretion is deciding subsequent motions to amend is “particularly

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broad.” Chodos v. West Publ'g Co., 292 F.3d 992, 1003 (9th Cir. 2002) (internal citation omitted).

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Here, Plaintiffs were given several opportunities to correct the deficiencies in their

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complaint and to allege cognizable claims. Their attempt to amend the complaint yet again by way

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of tacking on a request to add this claim in an advanced stage of the proceedings is procedurally

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improper, and prejudicial to Defendants. Plaintiffs have used this motion for reconsideration,

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necessarily limited in its scope, as a means to make a moving target of the complaint.

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On the merits of the IIED claim, Plaintiffs argue that BANA’s “policies and procedures
were intentionally designed to cause damage and distress to its borrowers.” (Motion at 9.)

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United States District Court
Northern District of California

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Plaintiffs argue that they were “misled and on the eve of foreclosure required to file suit to mitigate

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the damage and stress caused by [BANA’s] conduct.” (Id.) The IIED claim in the PTAC alleges

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that BANA, “pursuant to its policies, patterns and practices enticed” Plaintiffs to apply for a loan

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modification it did not intend to perform and then claimed to have lost the modification papers,

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which conduct was “intentional and malicious.” (PTAC ¶¶ 70, 71.)

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To plead an IIED claim, a plaintiff must allege “that (1) the defendant engaged in extreme

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and outrageous conduct with the intention of causing, or reckless disregard of the probability of

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causing, severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or

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extreme emotional distress; and (3) the outrageous conduct was the actual and proximate cause of

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the emotional distress.” Ross v. Creel Printing & Publ’g. Co., Inc., 100 Cal. App. 4th 736, 744-45

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(2002) (citation omitted). Plaintiffs’ new allegations in the IIED claim itself are too vague and

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conclusory to state a plausible claim for relief. Further, the new allegations in the preamble of the

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proposed amended complaint (PTAC ¶¶ 1-3) offer significantly different facts about Plaintiffs’

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interactions with BANA than they presented previously, with no explanation about why Plaintiffs’

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delay in offering those allegations should be excused and amendment should be permitted.

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B.

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As to the FDCPA claim, Plaintiffs’ PTAC alleges that Marix, acting as a debt collector,

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Fair Debt Collection Practices Act Claim (“FDCPA”)

falsely represented that Plaintiffs were in default and falsely issued a notice of default and notice of

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trustee’s sale, which were unfair and unconscionable means to collect a debt under 15 U.S.C. §

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1692f. Plaintiffs’ request to amend to add this claim is, essentially, an unsupported motion for

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reconsideration, since the Court previously rejected this same argument from Plaintiffs.

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In opposition to the first motion to dismiss, Plaintiffs argued that they could state an

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FDCPA claim. (Oppo., Dkt. No. 100, at 13.) The Court, in granting the motion to dismiss, rejected

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Plaintiffs’ argument, noting both that Plaintiffs had not pleaded an FDCPA theory and that the

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claim appeared to be meritless. (Order Granting Motions To Dismiss With Leave To Amend, Dkt.

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No. 108, at 10-11.) As the Court stated therein, “assignees and servicers on mortgage loans are not

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‘debt collectors’ for purposes of the FDCPA.” Id. at 10, citing Lal v. Am. Home Servicing, Inc.,

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680 F. Supp. 2d 1218, 1224 (E.D. Cal. 2010).
Plaintiffs elected not to plead an FDCPA claim in the Second Amended Complaint. (Dkt.

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Northern District of California

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No. 111.) And while they again argued an FDCPA theory in opposition to the motion to dismiss

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the Second Amended Complaint, the Court rejected that argument and dismissed all claims against

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Marix other than for declaratory relief. (Order, Dkt. No. 126, at 10-11.)
Plaintiffs offer no basis for reconsideration of this ruling. The motion to amend is therefore

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DENIED.

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IV.

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CONCLUSION
Accordingly, the Motion for Reconsideration, and to amend to add IIED and FDCPA claims

is DENIED.

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This terminates Docket No. 136.

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IT IS SO ORDERED.

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Date: November 6, 2013

_______________________________________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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