Cordero v. Bank of America, N.A. et al

Filing 22

ORDER granting 9 Motion to Take Judicial Notice; granting 10 Motion to Dismiss for Failure to State a Claim; granting 11 Motion to Dismiss. Signed by Judge Candy W Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (klw)on 10/15/2012.)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

KRISTIN CORDERO,
Case No. 1:12-cv-00099-CWD
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
AMERICA’S WHOLESALE LENDER
AKA COUNTRYWIDE HOME
LOANS INC. AKA BAC HOME
LOAN SERVICING INC. LP AKA
BANK OF AMERICA HOME LOANS,
N.A.; FIDELITY NATIONAL TITLE
INSURANCE CO.; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS INC. (MERS);
RECONTRUST COMPANY, N.A.;
FANNIE MAE/FREDDIE MAC; John
and Jane Does, 1-thru-20, individuals
working for above Defendants;
Unknown Business 1-thru Entities 20,
Defendants.

INTRODUCTION
The Court has before it two motions to dismiss, the first filed on March 14, 2012,
by Defendant Fidelity National Title Insurance Company (“Fidelity”) and the second
filed on March 15, 2012, by Defendants Bank of America, N.A., MERS, ReconTrust,
MEMORANDUM DECISION AND ORDER - 1

Fannie Mae and Freddie Mac (collectively, the “Bank Defendants”).1 Accompanying
Fidelity’s motion was a motion for judicial notice. (Dkt. 9.) Plaintiff Kristin Cordero,
who is appearing pro se in this matter, did not file a response to the motions.2 On July 17,
2012, well after the April 9, 2012, response deadline, Cordero filed a Notice of Intent to
File Response, (Dkt. 18), indicating she intended to respond and would do so in the
future. The Court, however, denied Cordero’s request. (Dkt. 21.)
The motions are ripe for the Court’s consideration. Having reviewed the record,
the Court finds that the facts and legal arguments are adequately presented in the briefs
and the record. For the reasons discussed below, the Court will grant Defendants’
motions to dismiss and the motion to take judicial notice.3
FACTS4
On March 8, 2006, Plaintiff Kristin Cordero (“Cordero”) and Joaquin Cordero
borrowed $256,000 from America’s Wholesale Lender to purchase a residence located at
4515 N. Chelmsford Avenue, in Boise, Idaho (the “Property”). The Loan was evidenced
by a promissory note (the “Note”) in the principal amount of $256,000. To secure
1

The Bank Defendants are described as Bank of America, N.A., successor in interest by merger to BAC Home Loan
Servicing, LP, f/k/a, Countrywide Home Loans Servicing, LP, incorrectly named as America’s Wholesale Lender
aka Countrywide Home Loans, Inc., aka BAC Home Loan Servicing Inc. LP aka Bank of America Home Loans
N.A. (“BANA”), ReconTrust Company, N.A. (“ReconTrust”), Mortgage Electronic Registration Systems, Inc.
(“MERS”) and Federal National Mortgage Association, incorrectly named as Fannie Mae/Freddie Mac (“Fannie
Mae”). The Bank Defendants clarified that the naming of Freddie Mac appears to be in error. However, the error is
of no consequence to this decision.
2
Although Cordero did not file a response to Defendants’ motions to dismiss, which the court may consider as
consent to granting the motions, the Court has reviewed the complaint and considered the motions on their merits.
3
All parties have consented to the jurisdiction of a United States Magistrate Judge to enter final orders in this matter
pursuant to 28 U.S.C. § 636. (Dkt. 14.)
4
The following facts are taken from the Complaint (Dkt. 1) and attached exhibits, and documents of public record
attached to Defendants' Motions to Dismiss and Motion for Judicial Notice, of which the Court takes judicial notice.
The Court may consider materials attached to the Complaint, or incorporated by reference, or matters of judicial
notice without converting the motion to dismiss into a motion for summary judgment. U.S. v. Ritchie, 342 F.3d 903,
908 (9th Cir. 2003). The records of state agencies and other undisputed matters of public record are proper records
for judicial notice. Burton v. Countrywide Bank, FSB, 2012 WL 976151 (D. Idaho Mar. 1, 2012).

MEMORANDUM DECISION AND ORDER - 2

repayment of the Note, Mr. and Mrs. Cordero executed a Deed of Trust on March 9,
2006, encumbering the Property for the benefit of America’s Wholesale Lender. The
Deed of Trust was recorded in the records of Ada County on March 14, 2006, as
Instrument Number 106039042. The Deed of Trust designates MERS as the beneficiary,
as nominee on behalf of the original Lender and its successors and assigns. Further, the
Deed of Trust expressly provides MERS with the authority to exercise all of the
Lender’s, and its successors and assigns, rights under the Deed of Trust. Fidelity was
named as the trustee of the Deed of Trust. The Complaint admits that America’s
Wholesale Lender is now known as Bank of America.
Cordero admits that in January 2009, she began “missing mortgage payments” and
defaulted on the Note. On March 2, 2009, Cordero obtained a Decree of Divorce in the
Ada County District Court for the Fourth Judicial District of Idaho, Case No. CV DR
0819730 (the “Divorce Decree”). The Divorce Decree states that the Property is to be
awarded to Cordero, “subject to the 1st lien on the property.” Additionally, the Divorce
Decree states that Cordero is to pay the “1st Mortgage $245,000 to Countrywide Home
Loans.” On May 1, 2009, ReconTrust, the successor trustee, sent Plaintiff a Notice of
Default, which was recorded on May 6, 2009, in the Ada County, Idaho records as
Instrument Number 109051491. On May 19, 2009, ReconTrust sent Cordero a Notice of
Trustee’s Sale notifying her that a foreclosure sale would take place on September 28,
2009. Cordero alleges that on April 30, 2009, she was notified by Bank of America and
ReconTrust of the September 28, 2009 foreclosure sale.

MEMORANDUM DECISION AND ORDER - 3

The Complaint alleges Bank of America, on June 17, 2009, provided Cordero with
a forbearance program, whereby she would pay only 50% of her Loan payments for a sixmonth period. Cordero made monthly payments under the forbearance program between
July and December of 2009. In or about November of 2009 and August of 2010, the
Complaint asserts Bank of America offered Cordero two different loan modifications,
both of which she rejected. On or about January 25, 2011, Bank of America transferred
its interest in the Property to Fannie Mae. The Assignment was recorded on or about
January 31, 2011, in the records of Ada County under Instrument Number 584735. On or
about April 12, 2011, ReconTrust sent Cordero another notice of sale stating that the
Property would be sold on August 12, 2011.
On May 6, 2011, Plaintiff filed a petition under Chapter 7 of the Bankruptcy Code
in the United States Bankruptcy Court for the District of Idaho, In re Cordero, Case No.
11-01376-TLM. In Plaintiff’s bankruptcy schedules, Cordero admits that Bank of
America is an undisputed, first position creditor of the Property with a fully secured
claim of $245,323.60. (Schedules A, D). Further, Cordero’s Statement of Intention
indicates she intends to “surrender” the Property to Creditor Bank of America. On August
15, 2011, the Bankruptcy Court granted Cordero a discharge under 11 U.S.C. § 727. On
or about October 28, 2011, Plaintiff filed her Complaint in the District Court of the
Fourth Judicial District of Idaho, and Defendants removed the matter to this Court on
February 29, 2012.

MEMORANDUM DECISION AND ORDER - 4

ANALYSIS
1.

Standard of Review
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement

of the claim showing that the pleader is entitled to relief,” in order to “give the defendant
fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule
12(b)(6) motion to dismiss “does not need detailed factual allegations,” it must set forth
“more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Id. at 555. To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to “state a claim to relief that is
plausible on its face.” Id. at 570. A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged. Id. at 556. The plausibility standard is not akin to a
“probability requirement,” but it asks for more than a sheer possibility that a defendant
has acted unlawfully. Id. Where a complaint pleads facts that are “merely consistent
with” a defendant’s liability, it “stops short of the line between possibility and plausibility
of ‘entitlement to relief.’” Id. at 557.
In a more recent case, the United States Supreme Court identified two “working
principles” that underlie Twombly. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).
First, the tenet that a court must accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions. Id. “Rule 8 marks a notable and generous
departure from the hyper-technical, code-pleading regime of a prior era, but it does not
MEMORANDUM DECISION AND ORDER - 5

unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”
Id. at 1950. Second, only a complaint that states a plausible claim for relief survives a
motion to dismiss. Id. “Determining whether a complaint states a plausible claim for
relief will… be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense.” Id.
Providing too much in the complaint may also be fatal to a plaintiff. Dismissal
may be appropriate when the plaintiff has included sufficient allegations disclosing some
absolute defense or bar to recovery. See Weisbuch v. County of L.A., 119 F.3d 778, 783,
n.1 (9th Cir. 1997) (stating that “[i]f the pleadings establish facts compelling a decision
one way, that is as good as if depositions and other . . . evidence on summary judgment
establishes the identical facts”).
A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Livid Holdings Ltd. v. Salomon
SmithBarney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The United States Court of
Appeals for the Ninth Circuit has held that, “in dismissals for failure to state a claim, a
district court should grant leave to amend even if no request to amend the pleading was
made, unless it determines that the pleading could not possibly be cured by the allegation
of other facts.” Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv.,
Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether plaintiff will prevail but
whether she “is entitled to offer evidence to support the claims.” See Hydrick v. Hunter,
466 F.3d 676, 685 (9th Cir. 2006).

MEMORANDUM DECISION AND ORDER - 6

Under Rule 12(b)(6), the Court may consider matters that are subject to judicial
notice. Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court may
take judicial notice “of the records of state agencies and other undisputed matters of
public record” without transforming the motions to dismiss into motions for summary
judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866
(9th Cir. 2004). The Court may also examine documents referred to in the complaint,
although not attached thereto, without transforming the motion to dismiss into a motion
for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
2.

Breach of Fiduciary Duty Claims (Counts One and Two)
Cordero’s first cause of action alleges that Fidelity and the Bank Defendants

breached their fiduciary duties owed to Cordero by “refusing to cooperate with Plaintiff’s
efforts” at a loan modification. Cordero alleges that she received advice from the Bank
Defendants regarding the loan modification and relied on it, and Defendants’ actions
created a fiduciary or “quasi-fiduciary” relationship between these parties. Her second
cause of action avers that Fidelity or ReconTrust, or both, owed a duty toward Cordero to
insure that the “Deed of Trust does not get split from the Note and . . . securitized,” and
that the “alleged trustee(s) breached this duty by continuing the sale when Plaintiff was
still in the modification process.” Cordero further alleges that all Defendants breached
their fiduciary duties by failing to enjoin the trustee’s sale. Defendants move to dismiss
Cordero’s claim for breach of fiduciary duty on the basis that no fiduciary relationship
exists between Plaintiff and any Defendant. The Court agrees.

MEMORANDUM DECISION AND ORDER - 7

“[T]o establish a claim for breach of fiduciary duty, a plaintiff must establish that
defendants owed plaintiff a fiduciary duty and that the fiduciary duty was breached.”
Bushi v. Sage Health Care, PLLC, 203 P.3d 694, 699 (2009) (citation and marks
omitted); see also Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880–881 (9th
Cir.2007) (applying Nevada law).
First, with respect to ReconTrust, there is no duty under the Idaho Trust Deeds Act
or the Deed of Trust for the trustee to stop a foreclosure upon request of a borrower who
is attempting to obtain a loan modification. Sykes v. Mrtg. Electronic Reg. Sys., Inc., No.
1:11–cv–377–BLW, 2012 WL 914922 *5 (D. Idaho Mar. 15, 2012);5 see also Gaitan v.
Mrtg. Electronic Reg. Sys., 2009 WL 3244729, at * 12 (C.D.Cal. Oct.5, 2009) (finding
that “[a] foreclosure trustee has no fiduciary duty to the borrower, since a trustee in a
non-judicial foreclosure is ‘not a true trustee with fiduciary duties, but rather a common
agent for the trustor and beneficiary.’”). Cordero’s claim for breach of fiduciary duty
against ReconTrust fails, therefore, to state a claim upon which relief may be granted.
As to Cordero’s remaining fiduciary duty claims against Fidelity and the Bank
Defendants, Cordero has not established the existence of a fiduciary relationship. It is
generally true that “[a] fiduciary relationship does not depend upon some technical
relation created by or defined in law, [and] exists in cases where there has been a special
confidence imposed in another who, in equity and good conscience, is bound to act in
good faith and with due regard to the interest in one reposing the confidence.” Jones v.
Runft, Leroy, Coffin & Mathews, Chtd., 873 P.2d 861, 868 (Idaho 1994) (quoting Stearns
5

An identical claim as that asserted by Cordero here was asserted, and rejected, in Sykes.

MEMORANDUM DECISION AND ORDER - 8

v. Williams, 240 P.2d 833, 840–41(Idaho 1952)). However, “[t]he facts and
circumstances must indicate that the one reposing the trust has foundation for his belief
that the one giving advice or presenting arguments is acting not in his own behalf, but in
the interests of the other party.” High Valley Concrete, LLC v. Sargent, 234 P.3d 747,
752 (Idaho 2010) (citing Idaho First Nat. Bank v. Bliss Valley Foods, Inc., 824 P.2d 841,
853 (1991)).
A review of Cordero’s Complaint reveals that she makes no allegations supporting
a foundation to believe that the Bank Defendants were acting in Cordero’s interests and
not on their own behalf, or that of the lender or the loan servicer. Moreover, the
Complaint contains no factual allegations demonstrating anything beyond a conventional
borrower-lender relationship. As such, Cordero fails to allege any facts supporting more
than an arms-length, commercial relationship between a borrower and the servicing entity
or lender for the loan in which no fiduciary obligations arise. See Wade Baker & Sons
Farms v. Corp. of Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints,
42 P.3d 715, 721 (Idaho Ct. App. 2002) (“no fiduciary duty ordinarily arises between
parties to an arm’s length business transaction”). See also Headwaters Const. Co. v.
National City Mortg. Co., 720 F.Supp.2d 1182, 1192 (D. Idaho, 2010) (“[I]t cannot be
said that a lender owes a duty of care to a borrower/third party when its involvement in
the loan transaction does not exceed the scope of its conventional role as a mere lender of
money.”).
As to Fidelity, it was not the trustee at the time of foreclosure, and therefore did
not owe Cordero any duty related to the foreclosure proceedings. Moreover, Cordero
MEMORANDUM DECISION AND ORDER - 9

alleges no facts that Fidelity owed or breached any duty prior to ReconTrust’s
appointment as successor trustee.
The Court finds that Cordero’s allegations specific to her breach of fiduciary duty
claims are not supported by a recognized duty that may be extended to and breached by
either Fidelity or the Bank Defendants. Absent such a duty, the Defendants’ motions to
dismiss as to Count One and Count Two will be granted.
3.

Truth in Lending Act (“TILA”) and Real Estate Settlement Procedures Act
(“RESPA”) (Count Three and Five)
Cordero’s third cause of action alleges violation of TILA and RESPA against

Fidelity and the Bank Defendants. She claims she “did not receive documents and
disclosures from [The Defendants] as required under the Truth in Lending Act (TILA),
[and] the RESPA Standards,” and is therefore entitled to damages or to rescind the
transaction. The Complaint states that, because the alleged “TILA violations are
defensive in nature to enjoin foreclosure, no statute of limitations exist.” Defendants
contend that the statute of limitations has run, barring Cordero’s claims.
The Court finds that the applicable statute of limitations bars Cordero’s TILA and
RESPA claims. First, under TILA, there are two TILA statute of limitations periods. The
statute of limitations for a damages claim under TILA is “one year from the date of the
occurrence of the violation.” 15 U.S.C. § 1640(e); Shaw v. Lehman Bros. Bank, FSB,
2009 WL 790166, at *4 (D. Idaho 2009). A claim for rescission is limited to a three-year
statute of repose. 15 U.S.C. § 1635. McOmie-Gray v. Bank of America Home Loans, 667
F.3d 1325, 1328 (9th Cir. 2012).Time begins to run when the plaintiff enters into the loan
MEMORANDUM DECISION AND ORDER - 10

agreement. See King v. Cal., 784 F.2d 910, 915 (9th Cir.1986); Shaw, 2009 WL 790166,
at *4. To the extent that Cordero’s claim refers to origination documents under § 2607 of
RESPA, a claim must be brought “within one year of the date the loan is signed, and thus
closes.” 12 U.S.C. § 2614; Chace v. M & T Mortg. Corp., 2010 WL 1816161, at *2 (D.
Idaho, May 5, 2010).
Cordero’s loan was executed on January 25, 2007. Her Complaint was not filed,
however, until October 28, 2011, more three years beyond the one-year limitations
period, and one and a half years beyond the three year rescission period. Therefore, any
RESPA claim or claim for damages under TILA is time barred.
Further, Cordero’s claim asserted in her Complaint is affirmative in nature, not
defensive. Although TILA provides that a claim for recoupment may be raised as a
“defense” in “an action to collect a debt” without respect to the statute of limitations, 15
U .S.C. § 1640(e), a nonjudicial foreclosure is not “an action to collect a debt” within the
meaning of Section 1640(e). Thomas v. Wells Fargo Bank, N.A., 2010 WL 3401060 *2
(D. Ariz. Aug. 26, 2010). The Complaint fails to allege that the Defendants took any
judicial action to collect a debt, instead alleging only that the Bank Defendants sought
nonjudicial foreclosure of the deed of trust. Therefore, the statute of limitations in TILA
applies, and Cordero’s claims are time barred.
The Complaint’s fifth claim alleges that the Bank Defendants violated RESPA.
Specifically, Cordero alleges that, “under RESPA, a written inquiry triggers obligations
upon a servicer of a loan, [and] Fannie Mae and Bank of America failed to acknowledge
that Plaintiff had relayed all required documents to Bank of America for proper
MEMORANDUM DECISION AND ORDER - 11

modification process.” RESPA requires that mortgage lenders provide borrowers with a
standard disclosure form at or prior to the “settlement.” 12 U.S.C. § 2603(b). This form
must “itemize all charges imposed upon the borrower and all charges imposed upon the
seller in connection with the settlement....” 12 U.S.C. § 2603(a). RESPA also requires
that “[i]f any servicer of a federally related mortgage loan receives a qualified written
request from the borrower (or an agent of the borrower) for information relating to the
servicing of such loan, the servicer shall provide a written response acknowledging
receipt of the correspondence within 20 days ... unless the action requested is taken
within such period.” 12 U.S.C. § 2605(e)(1)(A). When a loan servicer receives a qualified
written request, it must either correct the borrower’s account or, after conducting an
investigation, provide the borrower with a written explanation of: (1) why the servicer
believes the account is correct; or (2) why the requested information is unavailable. See
12 U.S.C. § 2605(e)(2). Thus, RESPA does grant a private right of action relating to
“Qualified Written Requests” made to servicers of loans.
Cordero has not, however, alleged that she made a Qualified Written Requests
under RESPA. Rather, she alleges that Defendants “failed to acknowledge receipt” of
documents. This allegation does not constitute a claim under RESPA. Nor does Cordero
describe in her complaint that she provided any statement describing a problem with her
account. Further, Cordero fails to allege or otherwise indicate in what way any response
by the Bank Defendants failed to comply with RESPA. The Complaint’s allegations
related to Cordero’s RESPA claim are insufficient to satisfy the pleading standards of
Rule 8, and will therefore be dismissed.
MEMORANDUM DECISION AND ORDER - 12

4.

Deed of Trust Act (Count Four)
Cordero alleges in her fourth cause of action, as well as embedded in other causes

of action, that the Bank Defendants violated the Idaho Deed of Trust Act by naming
MERS as the beneficiary of the deed of trust, resulting in the “unlawful splitting” of the
deed of trust from the note, and leaving no party with “standing to foreclose.”
A.

Standing

Standing arguments are no longer viable in this District. The Idaho Supreme Court
in Trotter v. Bank of New York Mellon rejected a similar standing argument, holding that
“a trustee may initiate nonjudicial foreclosure proceedings on a deed of trust without first
proving ownership of the underlying note....” 275 P.3d 857, 861 (Idaho 2012). Trotter
explained that the foreclosure process under the Deed of Trust Act is not a judicial
proceeding, and therefore there is no “standing” requirement under the Act. Trotter, 272
P.3d at 862. This Court, in conformance with the Idaho Supreme Court’s interpretation of
Idaho law, likewise has rejected similar standing arguments that bank defendants lack the
ability to foreclose because they lack standing or must “prove” ownership of the original
note. See Cherian v. Countrywide Home Loans, Inc. et. al., No. 1:12-cv-00110-BLW,
2012 WL 2865979 *3 (D. Idaho July 11, 2012).
B.

Split the Note

Cordero generally avers that the interests of the Note and the Deed of Trust were
severed because the note was securitized and sold, and “removed from the State of
Idaho.” She appears to take issue specifically with MERS’s role in the securitization
process.
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In Cervantes v. Countrywide Home Loans, Inc., the Court of Appeals for the Ninth
Circuit, explaining that MERS is an electronic database that tracks the transfers of the
beneficial interest in home loans, held that use of the MERS system does not eliminate a
party’s right to foreclose—even accepting the premise that use of MERS splits the note
from the deed. 656 F.3d 1034, 1044 (9th Cir. 2011). Applying Ninth Circuit law, this
Court finds that any alleged splitting of the note from the deed does not preclude the
proper Defendant in this case, or any other proper party, from foreclosing on Cordero’s
Deed of Trust. Cherian, 2012 WL 2865979 at *4.
Further, the Deed of Trust indicates MERS is acting as the nominee, or agent, of
the Lender, which as explained above is what Cordero expressly agreed to. This Court is
unaware of any binding authority that MERS’s authority to act as an agent on the
Lender’s behalf is invalid. See Hofhines v. BAC Home Loans Servicing, L.P., 2012 WL
3440458 *7 (D. Idaho June 1, 2012) (finding no split when the Deed of Trust explicitly
states that MERS is acting as nominee for the lender, and citing Cervantes, 656 F.3d at
1042).
C.

MERS as Beneficiary

Cordero complains also that MERS is not a proper beneficiary under Idaho Code §
45-1502, and therefore could not assign any interest it had in the Deed of Trust. This
position has been routinely rejected by the courts, including this Court. See, e.g., Hobson
v. Wells Fargo Bank, N.A., 2012 WL 505917, *5 (D. Idaho Feb. 15, 2012). In Hobson,
relying in part on the Idaho Supreme Court decision in Trotter, this Court concluded that
MERS had the authority to assign its nominal beneficial interest in the deed of trust to the
MEMORANDUM DECISION AND ORDER - 14

foreclosing bank. Id. In accordance with these decisions, the Court likewise concludes
here that MERS had the authority to assign its nominal beneficial interest in the Deed of
Trust.
D.

Securitization

Although not pled as a separate cause of action, replete throughout Cordero’s
Complaint are allegations that the securitization of the Note somehow rendered the Bank
Defendants without standing or authority to foreclose. She claims that the securitization
of the Note caused “the note to be null and void, and leaving the Defendants without
standing to foreclose and sell the Plaintiff’s residence.”
“Several courts have rejected various theories that securitization of a loan
somehow diminishes the underlying power of sale that can be exercised upon a trustor’s
breach.” Washburn v. Bank of America, N.A., Case No. 1:11–cv–00193–EJL–CWD, 2011
WL 7053617, *4–5 (D. Idaho Oct. 21, 2011) (internal quotation marks omitted) (citing
cases). Nothing in Cordero’s Complaint persuades this Court to deviate from these
decisions. Securitization of the loan does not discharge Cordero’s clear contractual
obligation to repay the loan. Cherian, 2012 WL 2865979 at *3.
5.

Idaho Consumer Protection Act (Count Six)
Cordero alleges that several acts committed by Defendants constitute violations of

the Idaho Consumer Protection Act, specifically 1) splitting the note; 2) appointing
MERS as the beneficiary; 3) Defendants’ lack of standing to foreclose; and 4)
Defendants’ violation of Cordero’s “right to maintain a high credit score” because

MEMORANDUM DECISION AND ORDER - 15

Defendants informed her she had to be in default before commencing a loan
modification.
Idaho Code § 48-601 through § 48-619 comprises the Idaho Deceptive Trade
Practices Act. Under these sections, recovery is permitted only for specific actions that
are deemed to be unfair or deceptive. Taylor v. McNichols, 243 P.3d 642, 662 (Idaho
2010); See also Idaho Code § 48-603(E). The Act enumerates nineteen prohibited
practices. Idaho Code § 48-603(1)-(19).6 To be actionable, a defendant’s conduct must

6

Those nineteen prohibited acts are as follows:
(1) Passing off goods or services as those of another;
(2) Causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification
of goods or services;
(3) Causing likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or
certification by, another;
(4) Using deceptive representations or designations of geographic origin in connection with goods or services;
(5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or
quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, connection,
qualifications or license that he does not have;
(6) Representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or
secondhand;
(7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular
style or model, if they are of another;
(8) Disparaging the goods, services, or business of another by false or misleading representation of fact;
(9) Advertising goods or services with intent not to sell them as advertised;
(10) Advertising goods or services with intent not to supply reasonably expectable public demand, unless the
advertisement discloses a limitation of quantity;
(11) Making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price
reductions;
(12) Obtaining the signature of the buyer to a contract when it contains blank spaces to be filled in after it has been
signed;
(13) Failing to deliver to the consumer at the time of the consumer's signature a legible copy of the contract or of
any other document which the seller or lender has required or requested the buyer to sign, and which he has signed,
during or after the contract negotiation;
(14) Making false or misleading statements of fact concerning the age, extent of use, or mileage of any goods;
(15) Promising or offering to pay, credit or allow to any buyer or lessee, any compensation or reward in
consideration of his giving to the seller or lessor the names of prospective purchasers or lessees, or otherwise aiding
the seller or lessor in making a sale or lease to another person, if the earning of the rebate, discount or other value is
contingent upon the occurrence of an event subsequent to the time the buyer or lessee agrees to buy or lease;
(16) Representing that services, replacements or repairs are needed if they are not needed, or providing services,
replacements or repairs that are not needed;
(17) Engaging in any act or practice which is otherwise misleading, false, or deceptive to the consumer;
(18) Engaging in any unconscionable method, act or practice in the conduct of trade or commerce, as provided in
section 48-603C, Idaho Code, provided, however, that the provisions of this subsection shall not apply to a regulated
lender as that term is defined in subsection (37) of section 28-41-301, Idaho Code;

MEMORANDUM DECISION AND ORDER - 16

fall within one of the statute’s nineteen subsections. State v. Daicel Chem. Indus., Ltd.,
106 P.3d 428, 433-34 (Idaho 2005). Further, the Idaho Supreme Court has found that
only debts arising from the sale of goods and services are subject to the Trade Practices
Act. In re Western Acceptance Corp., Inc., 788 P.2d 214, 216 (Idaho 1990) (“Debts that
do not arise out of the sale of goods and services subject to the provisions of the Act are
not covered.”).
Other than her broad, sweeping allegations condemning the mortgage backed
securities market, Cordero has not identified what conduct attributable to any specific
Defendant violated the Deceptive Trade Practices Act, let alone any specific provision of
the Act such conduct violated. Moreover, the Complaint involves a secured transaction,
not a debt that arose out of the sale of goods or services. Therefore, Defendants’ motions
to dismiss the consumer protection claims will be granted, as Cordero has not stated a
claim under the Idaho Deceptive Trade Practices Act.
6.

Intentional Infliction of Emotional Distress (Count Seven)
Cordero’s Seventh Cause of Action alleges intentional infliction of emotional

distress related to the Bank Defendants’ “poor treatment” of her, and their “callous
attitude and clear unwillingness to work with Plaintiff.”
“To prevail on a claim for intentional infliction of emotional distress: (1) the
conduct must be intentional or reckless; (2) the conduct must be extreme and outrageous;
(3) there must be a causal connection between the wrongful conduct and the emotional

(19) Taking advantage of a disaster or emergency declared by the governor under chapter 10, title 46, Idaho Code,
or the president of the United States . . .

MEMORANDUM DECISION AND ORDER - 17

distress; and (4) the emotional distress must be severe.” Mortensen v. Stewart Title Guar.
Co., 235 P.3d 387, 396 (Idaho 2010) (internal citations omitted). “To be actionable, the
conduct must be so extreme as to ‘arouse an average member of the community to
resentment against the defendant,’ and ‘must be more than unreasonable, unkind, or
unfair.’ ” Id. at 397 (citing 86 CJ.S. Torts § 74 (2009) (citations omitted)).
The Court concludes that Cordero’s allegations do not rise to the level of
outrageous conduct required to state a claim upon which relief may be granted on this
cause of action. In view of the fact that Cordero has made no claim that she did not owe
the mortgage debt, or that it was not in default, the Court cannot find the refusal to stop
the foreclosure process as “outrageous.” Nor are Cordero’s claims that she was “treated
poorly” and subject to a “callous attitude” sufficient to constitute conduct or actions that
rise to a level supporting a claim for intentional infliction of emotional distress. See id.
Accordingly, Cordero fails to state a claim upon which relief may be granted for
intentional infliction of emotional distress.
7.

Negligent Infliction of Emotional Distress (Count Eight)
Cordero’s eighth cause of action for negligent infliction of emotional distress also

is based on the Bank Defendants alleged “poor treatment” of her, and their failure to take
reasonable care to avoid causing her emotional distress and anxiety. The Bank
Defendants assert that the Complaint fails to allege any wrongful conduct, and no duty
arose in the context of an arms-length transaction between a lender and borrower.
To state a claim for negligent infliction of emotional distress, Cordero must allege
facts supporting “(1) a duty recognized by law requiring the defendant to conform to a
MEMORANDUM DECISION AND ORDER - 18

certain standard of conduct; (2) a breach of that duty; (3) a causal connection between the
conduct and the plaintiff's injury; and (4) actual loss or damage.” Johnson v. McPhee,
210 P.3d 563 (Idaho Ct. App.2009) (citing Nation v. State Dept. of Correction, 158 P.3d
953, 965 (Idaho 2007)). Cordero also must allege “some physical manifestation of the
[her] emotional injury.” Id. (citations omitted).
It is well established in Idaho that “[n]o liability exists under the law of torts
unless the person from whom relief is sought owed a duty to the allegedly injured party.”
Baccus v. Ameripride Serv., Inc. 179 P.3d 309, 312 (Idaho 2008) (citing Vickers v.
Hanover Constr. Co., Inc., 875 P.2d 929, 932 (1994)). Although every person in our
society has the duty to use reasonable care to avoid injury to another person that is
“reasonably anticipated or foreseen,” absent a special relationship, there is generally no
duty to act affirmatively to assist or protect someone. Id. at 312–13. However, if one
voluntarily assumes such a duty, he or she must carry it out in a non-negligent manner.
Id. at 313. In addition, one cannot maintain a tort claim for violation of a duty which is
created by contract. Id. (citing Steiner Corp. v. American Dist. Telegraph, 683 P.2d 435,
438 (Idaho 1984)). To allege a tort claim, the duty must “be imposed by law independent
of that arising out of contract.” Id.
The Bank Defendants owe no duty that would support a claim of negligence based
on the foreclosure actions. Any duty relating to the foreclosure arises from the parties’
contractual agreements—the Note and the Deed of Trust. Cordero’s allegations with
respect to the Bank Defendants’ actions in instituting foreclosure proceedings fail,
therefore, to state a claim for negligence.
MEMORANDUM DECISION AND ORDER - 19

Nor do the Note and the Deed of Trust impose any duty upon the Bank Defendants
to work out a loan modification for Plaintiffs in the event of a default. Cordero’s
complaint alleges, vaguely, that the Bank Defendants’ conduct during the loan
modification process forms the basis for Cordero’s allegations of poor treatment.
However, Cordero’s negligence allegations as pled are not sufficient to state a claim upon
which relief may be granted. Burton v. Countrywide Bank, FSB, 2012 WL 976151 at *14
(D. Idaho Mar. 1, 2012) (dismissing similar claims of negligence on the basis of “poor
treatment” during the loan modification process).
8.

Misrepresentation or Fraud (Count Nine)
Cordero’s final cause of action claims that the Bank Defendants’ actions in failing

to inform her that they had the authority to postpone the foreclosure sale and allow her to
receive a loan modification, as well as depriving her of any opportunity to submit missing
paperwork required, constitutes fraud because it resulted in the “wrongful foreclosure
sale” of her house. The Bank Defendants argue that the Complaint identifies no
representations made by ReconTrust or any other defendant, and fails to satisfy the
particularity requirement of Fed. R. Civ. P. 9(b).
For claims based on fraud or deceit, Fed. R. Civ. P. 9(b) requires particularity in
pleading the circumstances of the alleged fraud. It is well-settled that mere conclusory
allegations of fraud are not sufficient for the purposes of Rule 9. Fraud requires (1) a
representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity
or ignorance of its truth; (5) his intent that it should be acted on by the person and in the
manner reasonably contemplated; (6) the hearer’s ignorance of the falsity; (7) his reliance
MEMORANDUM DECISION AND ORDER - 20

on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.
Faw v. Greenwood, 613 P.2d 1338 (1980) (quoting Mitchell v. Siqueiros, 582 P.2d 1074,
1079 (1978)).
Cordero has not alleged facts supporting any of the nine elements of fraud.
Specifically, Cordero has not identified the representations made that were false;
specified how the Bank Defendants intended their representations should be relied upon
by Cordero; how Cordero relied upon any representation or lack thereof; or any injury
that resulted other than that which she was told would occur if she failed to pay her
mortgage obligation. Cordero has not set forth with particularity the required elements of
her fraud claim. C.f. Cervantes, 656 F.3d at 1041 (affirming denial of claim for
conspiracy to commit fraud through the MERS system because the allegations did not
identify any representation made to the plaintiffs about the MERS system).
9.

Estoppel
Last, the Bank Defendants argue that Cordero is judicially estopped from bringing

her claims because of her admissions in her bankruptcy schedules. Specifically, the Bank
Defendants argue that Cordero did not alert the Bankruptcy Court of her existing prepetition claim, and she disclosed Bank of America as a secured creditor. Further, her
Statement of Intention indicated that she intended to surrender the Property to Bank of
America.
Statements made by a debtor in her bankruptcy schedules can constitute
admissions under Fed. R. Evid. 801(d)(2). In re Heath, 331 B.R. 424 (9th Cir. BAP
2005). Once a bankruptcy case has been closed, a debtor’s schedules may not be
MEMORANDUM DECISION AND ORDER - 21

amended, unless the case is reopened and amended schedules are filed. Fed. R. Bankr. P.
1009; In re Goswami, 304 B.R. 386, 392—93 (9th Cir. BAP 2003).7 Statements of
Intention must be performed within 30 days after the first date set for the meeting of
creditors. 11 U.S.C. § 521(a)(2). The statement of intention may be amended by the
debtor at any time before the expiration of the periods provided for in 11 U.S.C. § 521(a),
all of which are prior to closure of the case.8
Judicial estoppel, sometimes known also as the doctrine of preclusion of
inconsistent positions, precludes a party from gaining an advantage by taking one
position, and then seeking a second advantage by taking an incompatible position.
Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600, 605 (9th Cir. 1996).
Judicial estoppel applies even when inconsistent positions are taken in different causes of
action. Rissetto, 94 F.3d at 600, 605.9 The rationale for the doctrine is to prevent a litigant
from “playing fast and loose with the courts . . . . Because it is intended to protect the
dignity of the judicial process, it is an equitable doctrine invoked by a court at its
discretion.” Id. at 601.
The inconsistent position taken, according to the Bank Defendants, are Cordero’s
assertions in her bankruptcy schedules that Bank of America has a secured interest in the
Property, and Cordero intended to surrender the property to the Bank. Yet now, Cordero
7

An amendment would be barred, however, if the debtor acted in bad faith or if prejudice would result. In re Arnold,
252 B.R. 778, 784 (9th Cir. BAP 2000), superseded by statute on other grounds, In re Salgado-Nava, 473 B.R. 911
(9th Cir. BAP 2012).
8
Section 521(a) references a 45 day redemption period with respect to personal property. The section requires a
debtor to perform her stated intention within the thirty day period after the first date set for the meeting of creditors.
9
The Idaho Supreme Court cited these same holdings with apparent approval in discussing the equivalent state
doctrine in McKay v. Owens, 937 P.2d 1222, 1226 (1997). McKay also identified the essence of the doctrine: “One
may not assert a particular position in order to serve one purpose, then assert a wholly contrary position to serve
another.” 937 P.2d at 1227, quoting Owen v. Knop, 853 S.W.2d 638, 643 (Tex.App.1993).

MEMORANDUM DECISION AND ORDER - 22

asserts the Bank Defendants are without the authority to foreclose, and she seeks
judgment in her favor. Further, the Bank Defendants contend that Cordero’s claim in this
matter was a prepetition claim because the events giving rise to this lawsuit occurred
prior to Cordero’s May 6, 2011 bankruptcy filing.
Under the facts of this case, the Court agrees that it may properly invoke the
doctrine of judicial estoppel. The facts and circumstances forming the basis of Cordero’s
complaint in this matter all occurred prior to Cordero’s bankruptcy filing. Yet, she did not
list her claims against Defendants as an asset in her bankruptcy schedules. Further,
Cordero identified Bank of America as a secured creditor and stated, under oath, that she
intended to surrender the Property. Although Cordero could have moved to reopen her
bankruptcy case and amended her schedules, see In re Arnold, 252 B.R. at 784, she did
not do so in this case prior to filing her Complaint against Defendants. Under these
circumstances, Cordero cannot invoke the protections of the Bankruptcy Code on the one
hand, yet now claim the Bank Defendants are unsecured and without the authority to
foreclose in this matter.
10.

Leave to Amend
A dismissal without leave to amend is improper unless it is beyond doubt that the

complaint “could not be saved by any amendment.” Livid Holdings Ltd. v. Salomon Smith
Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The United States Court of Appeals for
the Ninth Circuit has held that, “in dismissals for failure to state a claim, a district court
should grant leave to amend even if no request to amend the pleading was made, unless it
determines that the pleading could not possibly be cured by the allegation of other facts.”
MEMORANDUM DECISION AND ORDER - 23

Cook, Perkiss and Liehe, Inc. v. N. California Collection Serv., Inc., 911 F.2d 242, 247
(9th Cir. 1990). The issue is not whether plaintiff will prevail but whether she “is entitled
to offer evidence to support the claims.” See Hydrick v. Hunter, 466 F.3d 676, 685 (9th
Cir. 2006).
In light of the established case law, and upon review of the Complaint and the
claims made, the Court will not grant leave to amend the Compliant. The addition of
other facts would not cure the deficiencies in light of the claims made and the
representations in Cordero’s bankruptcy schedules.

MEMORANDUM DECISION AND ORDER - 24

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1) Defendant Fidelity National Title Insurance Co.’s Motion to Dismiss (Dkt.
10) is GRANTED.
2) Defendant Fidelity National Title Insurance Co.’s Motion To Take Judicial
Notice (Dkt. 9) is GRANTED.
3) Defendants Bank of America, N.A., Federal Home Loan Mortgage
Corporation, Mortgage Electronic Registration Systems, Inc, Recontrust
Company, N.A.’s Motion to Dismiss (Dkt. 11) is GRANTED.

October 15, 2012

MEMORANDUM DECISION AND ORDER - 25