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

Filing 27

ORDER Granting 23 Motion for Judgment on the Pleadings. IT IS FURTHER ORDERED that plaintiffs fifth cause of action be dismissed, as it is timebarred.IT IS THEREFORE ORDERED that judgment be entered in favor of the defendants. Signed by Judge James C. Mahan on 12/5/11. (Copies have been distributed pursuant to the NEF - ASB)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 8 DANIEL P. SHANNON, 9 10 11 2:11-CV-1174 JCM (RJJ) Plaintiff, v. BANK OF AMERICA N.A., et al., 12 Defendants. 13 14 15 ORDER 16 Presently before the court is defendant Meridias Capital, Inc.’s (“Meridias”) motion for 17 judgment on the pleadings. (Doc. #23). Plaintiff Daniel Shannon, appearing in proper person, has 18 filed an opposition (doc. #24), to which Meridias has replied (doc. #26). 19 This court previously dismissed Shannon’s first, third, fourth, eighth, ninth, ninth, eleventh, 20 and twelfth causes of action1 for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). See 21 Doc. #22. The second cause of action, for breach of the implied duty of good faith and fair dealing, 22 was dismissed as to defendants Bank of America, N.A., and Quality Loan Service Corporation. Id. 23 Meridias was not dismissed from the second cause of action. Also, this court did not address 24 defendants’ arguments relating to the fifth cause of action, for rescission of the underlying loan 25 documents. Id. 26 27 28 James C. Mahan U.S. District Judge 1 Shannon’s complaint contained two ninth causes of action, but did not contain a sixth, seventh, or tenth cause of action. 1 Meridias now moves for judgment on the pleadings as to the second and fifth causes of 2 action. 3 Discussion 4 1. 5 Motions for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) are “functionally 6 identical” to motions for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Dworkin v. Hustler 7 Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). The primary difference between the two is that 8 a “Rule 12(c) motion, unlike a Rule 12(b)(6) motion, implicates the pleadings as a whole, and not 9 merely the complaint.” Amerson v. County of Clark, 2011 WL 4433751, *1-2 (D. Nev. September 10 Legal Standard 21, 2011) (citing Aponte-Teorres v. Univ. of Puerto Rico, 445 F.3d 50, 54-55 (1st Cir. 2006). 11 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted 12 as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 13 1949 (2009) (internal quotation marks omitted). Dismissal is proper when the complaint does not 14 make out a cognizable legal theory or does not allege sufficient facts to support a cognizable legal 15 theory. Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). A complaint 16 that alleges only “labels and conclusions” or a “formulaic recitation of the elements of the cause of 17 action” will not survive dismissal. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 18 2. Analysis 19 (a) Second Cause of Action: Breach of the Implied Covenant of Good Faith and 20 Fair Dealing 21 Meridias’ previous joinder to defendant Quality Loan Servicing’s motion to dismiss did not 22 provide the court with particularized arguments relating to Meridias. Rather, Meridias simply joined 23 in all arguments made by Quality Loan Servicing. As none of those arguments reached the failure 24 of the complaint to state a claim against Meridias for breaching the implied covenant, this court did 25 not dismiss Meridias from the second cause of action. Meridias now moves for judgment on the 26 pleadings arguing that it is entitled to judgment because Shannon has failed to plead a cause of action 27 for breaching the implied covenant of good faith and fair dealing as to it. 28 James C. Mahan U.S. District Judge -2- 1 To state a claim for breach of the covenant of good faith and fair dealing, a plaintiff must 2 allege that (1) plaintiff and defendants were parties to an agreement; (2) the defendants owed a duty 3 of good faith to the plaintiff; (3) the defendant breached that duty by performing in a manner that was 4 unfaithful to the purpose of the contract; and (4) the plaintiff’s justified expectations were denied. 5 Perry v. Jordan, 900 P.2d 335, 338 (Nev. 1995). However, “a party cannot breach the covenant of 6 good faith and fair dealing before a contract is formed.” Kwok v. Recontrust Company, N.A., 2011 7 WL 3022412 *2 (D. Nev. July 22, 2011). 8 Here, Shannon alleges that Meridias violated the implied covenant by promising that he 9 would qualify for a fixed interest rate of 5.99%, but eventually inducing him to enter into a variable 10 interest rate that was higher than 5.99%. See Compl. ¶ 9-14. Such allegations of “bait and switch” 11 necessarily predate the formation of the contract. As such, the actions Shannon complains of 12 occurred before the contract was formed. As made clear by this district previously, pre-contractual 13 interactions do not form the basis of a bad faith claim. See Kwok, 2011 WL 3022412 at *2. 14 Accordingly, the complaint fails to state a claim against Meridias for breach of the implied covenant 15 of good faith and fair dealing, and Meridias is therefore entitled to judgment on the pleadings as to 16 this claim. 17 (b) Fifth Cause of Action: Rescission under the Truth in Lending Act 18 The Truth in Lending Act (“TILA”) provides for a rescission remedy, but contains a three- 19 year statute of limitations. See 15 U.S.C. § 1635(f). Here, the alleged violations of TILA occurred 20 during loan origination, on or about May 8, 2007. The complaint, however, was not filed until June 21 10, 2011, over four years after the cause of action accrued. As such, any cause of action for 22 rescission under TILA is time-barred. Therefore, Meridias is entitled to judgment on the pleadings 23 as to the fifth cause of action. 24 Accordingly, 25 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that defendant Meridias 26 Capital, Inc.’s motion for judgment on the pleadings (doc. #23) be, and the same hereby is, 27 GRANTED. 28 James C. Mahan U.S. District Judge -3- 1 2 IT IS FURTHER ORDERED that plaintiffs’ fifth cause of action be dismissed, as it is timebarred. 3 IT IS THEREFORE ORDERED that judgment be entered in favor of the defendants. 4 DATED December 5, 2011. 5 6 UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -4-

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