Sarantapoulas et al v. ReconTrust Company et al

Filing 49

ORDER by Judge Hamilton granting 45 Motion to Dismiss (pjhlc2, COURT STAFF) (Filed on 4/2/2013) (Additional attachment(s) added on 4/2/2013: # 1 Certificate/Proof of Service) (nah, COURT STAFF).

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DENNIS SARANTAPOULAS, et al.,

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Plaintiffs,

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No. C 12-0564 PJH

v.

ORDER GRANTING MOTION TO
DISMISS

BANK OF AMERICA, N.A., et al.,

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For the Northern District of California

United States District Court

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Defendants.
_______________________________/

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Defendant’s motion to dismiss plaintiffs’ second amended complaint was filed with

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this court on February 27, 2013. Having read the parties’ papers and carefully considered

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the relevant legal authority, and good cause appearing, the court hereby GRANTS

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defendant’s motion to dismiss as follows.

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BACKGROUND

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Plaintiffs Dennis Sarantapoulas and Daniel Wood (“plaintiffs”) bring this lawsuit

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against defendant Bank of America, N.A. (“Bank of America” or “defendant”) over a dispute

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arising out of a mortgage agreement. Plaintiffs assert one cause of action against Bank of

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America for breach of contract relating to a loan modification. The facts underlying that

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claim are as follows.

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After entering into a mortgage agreement in 2005, plaintiffs were unable to keep

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pace with their increasing monthly payments. In mid-2008, Bank of America acquired

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plaintiffs’ mortgage, and plaintiffs began negotiations to obtain a loan modification in

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October 2008. Plaintiffs stopped making payments on the mortgage in or around January

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2009. Between then and December 2011, plaintiffs and Bank of America worked together

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to try to agree upon a loan modification plan. During this time (in September 2009, to be

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exact), Bank of America sent a Home Affordable Modification Trial Period Plan (the “Plan”)

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to plaintiffs, which set forth certain conditions for plaintiffs to meet in order to qualify for a

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loan modification. Plaintiffs allege that they met those conditions, but on May 21, 2010,

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Bank of America notified plaintiffs that their mortgage was not eligible for modification.

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In fall 2011, it appears that Bank of America initiated foreclosure proceedings for

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plaintiffs’ property. On October 6, 2011, Bank of America filed a notice of default and

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election to sell under deed of trust. On February 3, 2012, plaintiffs filed the original

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complaint in this action, and also filed an application for a temporary restraining order,

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which the court denied both because of defective service and because plaintiffs had failed
to show a sufficient likelihood of success on the merits. See Dkt. 6. On March 6, 2012,

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For the Northern District of California

United States District Court

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Bank of America (along with another defendant, who has since been dropped from the

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case) moved to dismiss plaintiffs’ original complaint. The court granted the motion to

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dismiss with leave to amend. See Dkt. 20 (order dismissing original complaint).

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On May 16, 2012, plaintiffs filed a first amended complaint, and on June 6, 2012,

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Bank of America moved to dismiss. The court dismissed all claims related to loan

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origination either as time-barred or for failure to state a claim. See Dkt. 34 (order

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dismissing first amended complaint). Specifically, the court dismissed plaintiffs’ claims for

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fraud in the loan origination (time-barred), for TILA violations (time-barred), for RESPA

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violations (failure to state a claim, as conceded by plaintiffs), and for violation of Cal. Civil

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Code § 2923.5 (failure to state a claim). Id. The dismissal of plaintiffs’ RESPA claim was

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without prejudice, and allowed plaintiffs to re-file a RESPA claim if discovery yielded

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sufficient facts.

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The court also dismissed plaintiffs’ claim for fraud in the loan modification, but the

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dismissal was without prejudice, so that plaintiffs could re-assert the loan modification claim

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as a claim for breach of contract, rather than for fraud. When plaintiffs filed their second

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amended complaint (“SAC”), they asserted only a single claim for breach of contract,

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alleging that defendant’s failure to offer them a loan modification constituted a breach of the

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terms of the Plan. Defendant moves to dismiss the SAC based on both Rule 12(b)(1) (for
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lack of subject matter jurisdiction) and Rule 12(b)(6) (for failure to state a claim).

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LEGAL STANDARD

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Federal courts are courts of limited jurisdiction, possessing only that power

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authorized by Article III of the United States Constitution and statutes enacted by Congress

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pursuant thereto. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986).

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Thus, federal courts have no power to consider claims for which they lack subject-matter

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jurisdiction. See Chen-Cheng Wang ex rel. United States v. FMC Corp., 975 F.2d 1412,

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1415 (9th Cir. 1992).

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Subject matter jurisdiction is fundamental and cannot be waived. Billingsly v. C.I.R.,
868 F.2d 1081, 1085 (9th Cir. 1989). The court is under a continuing duty to dismiss an

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For the Northern District of California

United States District Court

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action whenever it appears that the court lacks jurisdiction. Id.; see also Spencer Enters.,

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Inc. v. United States, 345 F.3d 683, 687 (9th Cir. 2003); Attorneys Trust v. Videotape

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Computers Prods., Inc., 93 F.3d 593, 594-95 (9th Cir. 1996). Federal courts are courts of

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limited jurisdiction. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.

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1989).

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The burden of establishing that a cause lies within this limited jurisdiction rests upon

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the party asserting jurisdiction. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S.

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375, 377 (1994). Thus, petitioners bear the burden of demonstrating that subject matter

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jurisdiction exists over this complaint. See, e.g., Tosco Corp. v. Communities for a Better

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Env't, 236 F.3d 495, 499 (9th Cir. 2001).

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On a motion to dismiss pursuant to Rule 12(b)(1), the applicable standard turns on

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the nature of the jurisdictional challenge. A defendant may either challenge jurisdiction on

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the face of the complaint or provide extrinsic evidence demonstrating lack of jurisdiction on

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the facts of the case. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where there is a

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facial attack on the court’s subject matter jurisdiction, the standard is akin to the standard

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applied in determining a Rule 12(b)(6) motion. That is, the factual allegations are

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presumed true, and the motion is granted only if the plaintiff does not set forth the elements

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necessary for subject matter jurisdiction. See Doe v. Schachter, 804 F.Supp. 53, 57 (N.D.
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Cal. 1992).
After construing the allegations in the light most favorable to the plaintiff, the court

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may dismiss the complaint only if the claim does not “arise under” federal law or the

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Constitution, there is no case or controversy, or the cause of action is not described in any

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jurisdictional statute. See Baker v. Carr, 369 U.S. 186, 198 (1962). The court may grant

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leave to amend a complaint to remedy jurisdictional allegations that are defective as to

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form. See Telluride Management Solutions, Inc. v. Telluride Investment Group, 55 F.3d

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463, 466 (9th Cir. 1995).

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A motion to dismiss for lack of subject matter jurisdiction may also be a “speaking
motion” in which the defendant actually challenges the existence of subject matter

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For the Northern District of California

United States District Court

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jurisdiction. In such a case, “[n]o presumptive truthfulness attaches to plaintiff’s allegations,

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and the existence of disputed material facts will not preclude the trial court from evaluating

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for itself the merits of jurisdictional claims.” Thornhill Publ’g v. Gen. Tel. & Elec. Corp., 594

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F.2d 730, 733 (9th Cir. 1979). Moreover, the plaintiff bears the burden of proof that

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jurisdiction does in fact exist, and must establish jurisdiction with evidence from other

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sources, such as affidavits or depositions. See Schwarzer, Tashima & Wagstaffe, Federal

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Civil Procedure Before Trial (1999) §§ 9:77 - 9:78.

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DISCUSSION

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Defendant argues that, because the only claim left in the case is a common law

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cause of action for breach of contract, there is no federal subject matter jurisdiction.

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Specifically, defendant argues that there is not complete diversity between the parties, and

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that no federal question is involved. In their opposition, plaintiffs argue that a federal

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question is raised by their complaint, because the Making Home Affordable Program “is an

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official federal government program,” and because the contract at issue is this case is part

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of the federal government’s Troubled Asset Relief Program. However, the fact remains

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that plaintiffs do not bring any cause of action under a federal statute, and instead assert

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only a single claim for breach of contract. Thus, the court agrees with defendant that no

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federal question is raised by this action.
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As to the presence of diversity jurisdiction, plaintiffs argue that all national banking

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associations are considered citizens of the states in which they are located, and that the

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corporate location of a bank is determined by the place where the bank’s main office is

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currently located. Bank of America’s main office is located in Charlotte, North Carolina, so

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plaintiffs argue that defendant should be considered a North Carolina citizen for

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jurisdictional purposes. And because plaintiffs are citizens of California, plaintiffs argue that

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there is indeed complete diversity between the parties. Defendant does not challenge this

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argument in its reply, and the court agrees that plaintiffs have adequately alleged complete

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diversity between the parties. However, in its reply, defendant also points out that plaintiffs
have not alleged damages in an amount greater than $75,000. Plaintiffs allege two

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For the Northern District of California

United States District Court

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measures of damages: (1) the three payments of $2,118.78 that they made as part of the

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Plan (for a total of $6,356.34); and (2) the denial of a loan modification. However, because

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plaintiffs were never actually offered a loan modification, there is no way of measuring the

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value of any such modification. Thus, plaintiffs have not (and cannot) meet the amount in

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controversy requirement without engaging in improper speculation, and as a result, cannot

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establish diversity jurisdiction. For that reason, defendant’s motion to dismiss for lack of

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subject matter jurisdiction is GRANTED.

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However, the dismissal is without prejudice, so that plaintiffs may re-file their breach

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of contract claim in state court. Though the court does not reach the merits of plaintiffs’

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claim in this order, it notes that defendant’s arguments regarding the lack of a valid contract

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were considered and rejected in this court’s previous order. See Dkt. 34 at 6-7.

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IT IS SO ORDERED.

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Dated: April 2, 2013
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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