Jing Lin et al vs BAC Home Loans Servicing LP, et al
Filing
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ORDER Granting 13 MOTION to Dismiss. Amended Complaint deadline: 1/3/2013. Signed by Judge Gloria M. Navarro on 12/19/2012. (Copies have been distributed pursuant to the NEF - SLR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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Jing Lin, Liu; and Guo Jia, Mai,
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vs.
Plaintiffs,
BAC Home Loans Servicing, LP;
MERSCORP, Inc.; and Mortgage Electronic
Registration Systems, Inc.,
Defendants.
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Case No.: 2:11-cv-02009-GMN-GWF
ORDER
Before the Court is the Motion to Dismiss (ECF No. 13) filed by Defendants BAC
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Home Loans Servicing, LP (“BAC Home Loans”), MERSCORP, Inc. (“MERSCORP”), and
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Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively, “Defendants”).
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I. BACKGROUND
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Plaintiffs Jing Lin Liu and Guo Jia Mai originally filed this action in state court relating
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to the property located at 8832 Settlers Pointe Ct., Las Vegas, NV, 89148, APN#: 029-00-000-
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549 (“the property”), and the action was removed to this Court. (ECF No. 1.) The complaint
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alleges eleven causes of action: (1) unfair lending practices – NRS 598D.100, 598D110; (2)
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deceptive trade practices; (3) conspiracy to commit fraud and conversion; (4) conspiracy to
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conversion related to MERS system; (5) inspection and accounting; (6) unjust enrichment; (7)
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breach of good faith and fair dealing; (8) injunctive relief; (9) declaratory relief; (10) rescission
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– cancel deed of trust; and (11) violations of the Fair Housing Act 42 U.S.C. § 3601 et seq.
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(ECF No. 1-1.)1
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Plaintiffs’ complaint appears to be a form complaint that has appeared before this Court in other cases. See,
e.g., Wong v. BAC Home Loans Servicing, LP, No. 2:11-cv-01608-GMN-CWH, 2012 WL 4868085, 2012 U.S.
Dist. LEXIS 147111 (D. Nev. Oct. 11, 2012); Lee v. BAC Home Loans Servicing, LP, No. 2:11-cv-1583-JCMPAL, 2011 WL 5827202, 2011 U.S. Dist. LEXIS 133697 (D. Nev. Nov. 18, 2011); Miller v. MERSCORP Inc.,
No. 2:11-cv-00987-GMN-CWH, 2011 WL 6097751, 2011 U.S. Dist. LEXIS 140474 (D. Nev. Dec. 5, 2011);
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II. LEGAL STANDARD
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Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action
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that fails to state a claim upon which relief can be granted. See North Star Int’l. v. Arizona
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Corp. Comm’n., 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss
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under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the
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complaint does not give the defendant fair notice of a legally cognizable claim and the grounds
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on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering
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whether the complaint is sufficient to state a claim, the Court will take all material allegations
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as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v.
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Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
The Court, however, is not required to accept as true allegations that are merely
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conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden
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State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action
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with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a
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violation is plausible, not just possible. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing
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Twombly, 550 U.S. at 555) (emphasis added).
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A court may also dismiss a complaint pursuant to Federal Rule of Civil Procedure 41(b)
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for failure to comply with Federal Rule of Civil Procedure 8(a). Hearns v. San Bernardino
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Police Dept., 530 F.3d 1124, 1129 (9th Cir.2008). Rule 8(a)(2) requires that a plaintiff's
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complaint contain “a short and plain statement of the claim showing that the pleader is entitled
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to relief.” Fed. R. Civ. P. 8(a)(2). “Prolix, confusing complaints” should be dismissed because
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Frederick v. Fed. Nat’l Mortg. Ass’n, No. 2:11-cv-00522-GMN-CWH, 2012 WL 1340801, 2012 U.S. Dist.
LEXIS 54217 (D. Nev. April 18, 2012); Zhen v. BAC Home Loans Servicing, LP, No. 2:11-cv-01585-GMNCWH, 2012 WL 3619147, 2012 U.S. Dist. LEXIS 117618 (D. Nev. Aug. 21, 2012); see also Mai v. Am. Home
Loans Servicing, LP, No. 2:11-cv-01217-PMP-PAL, (D. Nev. Jan. 23, 2012) (Plaintiffs filed a defective
complaint relating to the foreclosure sale of the property located at 808 Cowboy Cross Avenue, North Las
Vegas, NV, 89086, APN#:124-26-213-022).
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“they impose unfair burdens on litigants and judges.” McHenry v. Renne, 84 F.3d 1172, 1179
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(9th Cir.1996). Mindful of the fact that the Supreme Court has “instructed the federal courts to
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liberally construe the ‘inartful pleading’ of pro se litigants,” Eldridge v. Block, 832 F.2d 1132,
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1137 (9th Cir. 1987), the Court will view Plaintiffs’ pleadings with the appropriate degree of
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leniency.
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“Generally, a district court may not consider any material beyond the pleadings in ruling
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on a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the
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complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard
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Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly,
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“documents whose contents are alleged in a complaint and whose authenticity no party
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questions, but which are not physically attached to the pleading, may be considered in ruling on
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a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for
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summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule
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of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay
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Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers
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materials outside of the pleadings, the motion to dismiss is converted into a motion for
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summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th
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Cir. 2001).
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If the court grants a motion to dismiss, it must then decide whether to grant leave to
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amend. The court should “freely give” leave to amend when there is no “undue delay, bad
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faith[,] dilatory motive on the part of the movant . . . undue prejudice to the opposing party by
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virtue of . . . the amendment, [or] futility of the amendment . . . .” Fed. R. Civ. P. 15(a); Foman
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v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is only denied when it is clear
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that the deficiencies of the complaint cannot be cured by amendment. See DeSoto v. Yellow
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Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).
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III. DISCUSSION
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As discussed below, the Court will grant the motion to dismiss, and will dismiss
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Plaintiffs’ Complaint. Because Plaintiffs are representing themselves pro se, the Court will
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give Plaintiffs leave to amend their complaint.
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(1) Unfair Lending Practices
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Plaintiffs’ first cause of action alleges violations of Nevada Revised Statutes §§
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598D.100 and 598D.110. Plaintiff obtained the instant loan in November 2006 and filed their
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original complaint in state court in August 2010. A lender who willfully engages in an unfair
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lending practice described in Chapter 598D is guilty of a misdemeanor, and is liable to the
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borrower. Nev. Rev. Stat. § 598D.110. The Nevada Attorney General has primary jurisdiction
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to investigate and prosecute violations of Chapter 598D. Nev. Rev. Stat. § 598D.150(1). Here,
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the statute of limitations for this action expired in 2009. See Nev. Rev. Stat. § 11.190(3)(a)
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(Three-year statute of limitations for “[a]n action upon a liability created by statute, other than a
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penalty or forfeiture.”) Accordingly, this cause of action is dismissed.
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(2) Deceptive Trade Practices
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Plaintiffs’ second cause of action alleges deceptive trade practices pursuant to Nevada
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Revised Statutes §§ 598.0915 and 598.0923. Subsection 598.0915 makes knowingly making
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any false representation in a transaction a deceptive trade practice. Here, Plaintiff alleges that
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“Defendants did not furnish Plaintiff the correct Notice of Servicing that the loan may be
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assigned, sold, or transferred to any other person in violation of 12 U.S.C. 2605(a).” (Compl.
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8:¶41). Plaintiffs’ claim arises from the origination of the loan in November 2006, and the
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instant action was filed in August 2010. Here, this claim is not barred by the applicable statute
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of limitations for a claim under the Deceptive Trade Practices Act, which is four years. See
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Nev. Rev. Stat. § 11.190(2)(d). However, as discussed below, this claim must also be
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dismissed.
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First, subsection 598.0923 does not apply to this case: (1) Plaintiffs have not alleged,
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pursuant to subsection one, that any Defendant has been conducting its business without a
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required license; (2) subsections two and three apply to the sale or lease of goods or services;
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(3) Plaintiffs have not alleged that any Defendant, pursuant to subsection four, has used
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coercion, duress or intimidation in a transaction; and (4) no Defendant was the seller in a land
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sale installment contract pursuant to subsection five.
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Moreover, courts have recognized that the Deceptive Trade Practices act does not apply
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to real property transactions, but to the sale of goods and services. See Reyna v. Wells Fargo
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Bank, N.A., No. 2:10-cv-01730-KJD-RJJ, 2011 WL 2690087, *9 (D. Nev. July 11, 2011)
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(“N.R.S. § 598 ... applies only to goods and services and not to real estate loan transactions.”;
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see also Alexander v. Aurora Loan Services, No. 2:09-cv-1790-KJD-LRL, 2010 WL 2773796,
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*2 (D. Nev. July 8, 2010) (“Plaintiff’s claim deals with the sale or lease of real property, not
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goods or services; therefore [N.R.S. § 598] does not provide an avenue of relief to [p]laintiff.”);
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Parker v. Greenpoint Mortgage Funding, No. 3:11-cv-00039-ECR-RAM (D. Nev. July 15,
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2011) (N.R.S. § 598 “does not cover a mortgage foreclosure”). Accordingly, this cause of
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action is dismissed.
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(3) Conspiracy to Commit Fraud and Conversion; and
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(4) Conspiracy to Commit Fraud Related to MERS System
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To allege a conspiracy to defraud, a complaint must meet the particularity requirements
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of Federal Rule of Civil Procedure 9(b) and inform each defendant of its actions that
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constituted joining the conspiracy. Graziose v. Am. Home Products Corp., 202 F.R.D. 638, 642
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(D. Nev. 2001). Allegations of conspiracy should be accompanied by the “who, what, when,
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where, and how” of the misconduct. Ness v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th
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Cir. 2003).
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Here, Plaintiffs make conclusory allegations of fraud and fails to individualize the
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Defendants’ conduct. For example, Plaintiffs allege that Defendants “did willfully and
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knowing conspire and agree among themselves to engage in a conspiracy to promote,
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encourage, facilitate and actively engage in fraudulent and predatory lending practices.”
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(Compl. 10:¶60.) The Complaint also refers to “Defendant, “Freddie Mac,” but does not name
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such a defendant in the case caption or in the description of parties to the complaint. (See
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Compl. 10:¶63.) The Complaint alleges that MERS was created as a fraudulent venture to take
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advantage of unwitting borrowers and that the defendants “acted as creators for the
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conspiracy.” (Compl. 12:¶69.) Such general and vague allegations are not sufficient to meet
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the heightened pleading standard of Rule 9(b). Accordingly, these causes of action are
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dismissed.
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(5) Inspection and Accounting
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An action for inspection and accounting will prevail only where the plaintiff can
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establish that there exists a relationship of special trust between the plaintiff and defendant.
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McCurdy v. Wells Fargo, 2010 WL 4102943 (D. Nev. 2010). Absent special circumstances, no
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such relationship exists between a lender and a borrower. Giles v. Gen. Motors Acceptance
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Corp., 494 F.3d 865, 882 (9th Cir. 2007).
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Plaintiffs allege that “[d]ue to the unfair and deceptive nature of the Plaintiff’s loan
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transaction, the defendants were paid excessive interest and fees . . . . Therefore proper
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discovery and accounting will reveal the ‘true realized’ status of the account as stated.”
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(Compl. 12:¶76.) However, Plaintiffs have failed to allege any special circumstances that
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would create the requisite fiduciary relationship between themselves as the borrowers, and one
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or more Defendants as a lender. See McCurdy, 2010 WL 4102943 (dismissing an action for
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inspection and accounting where plaintiff failed to allege the requisite relationship of trust).
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Accordingly, this cause of action is dismissed.
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(6) Unjust Enrichment
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“An action based on a theory of unjust enrichment is not available when there is an
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express, written contract, because no agreement can be implied when there is an express
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agreement.” Leasepartners Corp. v. Robert L. Brooks Trust, 942 P.2d 182, 187 (Nev. 1997)
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(per curiam). Thus the doctrine of unjust enrichment only “applies to situations where there is
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no legal contract but where the person sought to be charged is in possession of money or
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property which in good conscience and justice he should not retain but should deliver to
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another [or should pay for].” Id. Plaintiffs’ Complaint admits that they entered into an express
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contract when they executed the deed of trust and note. (Compl. 3:¶2.) Accordingly, this cause
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of action is dismissed.
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(7) Breach of Good Faith and Fair Dealing
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To state a claim of breach of the covenant of good faith and fair dealing, Plaintiffs must
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allege: (1) Plaintiffs and Defendants were parties to an agreement; (2) Defendants owed a duty
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of good faith to the Plaintiffs; (3) Defendants breached that duty by performing in a manner
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that was unfaithful to the purpose of the contract; and (4) Plaintiffs’ justified expectations were
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denied. Perry v. Jordan, 900 P.2d 335, 338 (Nev. 1995). In Nevada, an implied covenant of
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good faith and fair dealing exists in every contract, Consol. Generator-Nevada v. Cummins
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Engine Co., Inc., 971 P.2d 1251, 1256 (Nev. 1998), and a plaintiff may assert a claim for its
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breach if the defendant deliberately contravenes the intention and spirit of the agreement,
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Morris v. Bank Am. Nev., 886 P.2d 454 (Nev. 1994).
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Plaintiffs alleges that Defendants breached the duty in two ways. First, Plaintiff
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contends that by failing to pay equal consideration to Plaintiff’s financial interests, Defendants
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acted in bad faith. Second, Plaintiff argues that Defendants refused to negotiate with Plaintiff
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in good faith after plaintiff requested payment assistance under the Home Affordable
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Modification Program (“HAMP”).
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Plaintiffs’ first contention must fail because it is established that lenders owe no
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fiduciary obligations to borrowers absent exceptional circumstances. See Kwok v. CR Title Co.,
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No. 2:09-cv-02298-RLH-LRL (D. Nev. June 23, 2010). No exceptional circumstances or
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special relationship was alleged here.
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Plaintiffs’ second allegation regarding the covenant of good faith and fair dealing alleges
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that Defendants failed to meet their obligations under the federal HAMP program, and that the
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failure constitutes a breach of the covenant of good faith and fair dealing. However, even if
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Plaintiffs have a private right of action under HAMP, Plaintiffs have failed to allege any
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conduct by Defendants which deliberately contravened the intention and spirit of any
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agreement between them. Accordingly, this cause of action is dismissed.
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(8) Injunctive Relief; (9) Declaratory Relief; (10) Rescission
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Plaintiffs’ eighth, ninth and tenth causes of action are not recognized as causes of action
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in Nevada. Injunctive relief, declaratory relief, and rescission are remedies, not claims.
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Accordingly, these “causes of action” are dismissed.
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IV. CONCLUSION
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IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 13) is GRANTED.
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Plaintiffs’ Complaint is dismissed without prejudice. Plaintiffs are given leave to file an
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amended complaint consistent with this Order by January 3, 2013. Failure to do so within this
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time will result in dismissal of this action with prejudice.
DATED this 19th day of December, 2012.
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___________________________________
Gloria M. Navarro
United States District Judge
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