Morris v. American Reliable Insurance Company et al

Filing 37

ORDER Granting 10 Defendant ARIC's Motion to Dismiss. IT IS FURTHER ORDERED that Defendant Green Tree's 16 Joinder to Motion to Dismiss is GRANTED in part and DENIED in part. IT IS FURTHER ORDERED that Plaintiff shall file his amended Complaint by 7/22/2015. Failure to file a second amended complaint by this date shall result in the court DISMISSING claims with prejudice. (See Order for specific claims.) Signed by Chief Judge Gloria M. Navarro on 7/8/15. (Copies have been distributed pursuant to the NEF - PS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ROBERT MORRIS,
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Plaintiff,

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vs.
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7
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GREEN TREE SERVICING, LLC, a
Delaware Limited Liability Company;
AMERICAN RELIABLE INSURANCE
COMPANY d/b/a ASSURANT,

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Defendants.
10

)
)
)
)
)
)
)
)
)
)
)
)

Case No.: 2:14-cv-01998-GMN-CWH
ORDER

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Pending before the Court is the Motion to Dismiss (ECF No. 10) filed by Defendant

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Response (ECF No. 15), and ARIC filed a Reply (ECF No. 21). Moreover, Defendant Green

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to which Plaintiff filed a Response (ECF No. 20) and Green Tree filed a Reply (ECF No. 22). 1

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I.

This case arises out of the purchase of force-

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19

BACKGROUND

Green Tree from Defendant ARIC. Plaintiff purchased real property located at 2495 April

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21

Countrywide Mortgage, Inc. (Am. Compl. ¶¶ 4 5). Subsequently, Bank of America became

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the servicer of the mortgage until November 1, 2011, when Green Tree became the servicer of

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the mortgage. (Id. ¶¶ 5 6).

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25

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its own dismissal arguments. (See
Joinder as a separate motion to dismiss pursuant to FRCP 12(b)(6).
Page 1 of 28

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Pursuant to the Deed of Trust, the servicer of the mortgage was responsible for the

2

payment of insurance premiums through a mortgage escrow account.2 (Deed of Trust at 5 6,

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ECF No. 16-1). On November 17, 2011, Green Tree sent a letter to Plaintiff indicating that

4

iff to provide proof of

5

insurance or it would purchase FPI. (Am. Compl. ¶ 7; Ex. B-

6

No. 10-3). Plaintiff alleges that he made his monthly payments in full, including the monthly

7

escrow deposit used for insurance premiums, every month from April 2005 through March

8
9

provider that Plaintiff selected when he purchased the Property), and learned that the policy had

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been cancelled in February 2011 for non-payment. (Id. ¶ 14). Plaintiff alleges that he was

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never contacted or notified that the premiums were not being paid, and until November 2011,

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Plaintiff had never been contacted or notified that his policy had lapsed. (Id. ¶ 15 16).
Green Tree sent a second letter to Plaintiff on December 17, 2011, requesting proof of

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14

insurance coverage. (Id. ¶ 20; Ex. B-

-4). Plaintiff
pl. ¶

15
16

20). Next, Green Tree sent a third letter to Plaintiff in January 2012, notifying Plaintiff that he

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owed $660 for FPI that was purchased by Green Tree from ARIC and covered the months of

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November and December 2011. (Id. ¶ 21). Plaintiff was informed by ARIC that Green Tree

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purchased FPI on January 5, 2012, and that ARIC had retroactively dated the policy to include

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coverage for the preceding two months. (Id. ¶ 37). Plaintiff alleges that he continued to make

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2

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The Court takes judicial notice of Exhibit A (ECF No. 10-1) to ARIC Motion to Dismiss
and Exhibits A C, E F (ECF Nos. 16-1 16-3, 16-5 16.
See Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Each of these
Moreover, the Court
takes judicial notice of Exhibits B-1 B-3 (ECF Nos. 10-3 10authenticity. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).
Page 2 of 28

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til he received a call from Defendant Green Tree

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-placed insurance had not

3

been paid for) and that his monthly payments would not post to his account until he paid the

4

$660 representing the alleged force-

5

Id. ¶ 24).

In August 2012, Plaintiff was sent a Notice of Default and Election to Sell, which

6
7

comply with the Nevada Foreclosure Mediation Program. (Id. ¶ 29; see

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Mot. Dismiss, ECF No. 16-5). As a result, on September 12, 2012, Plaintiff sent Green Tree a

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check in the amount of $5640.01, along with an accord and satisfaction, which Plaintiff alleges

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clearly stated that if Defendant Green Tree cashed or otherwise deposited the check that it

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would be voluntarily entering into the Accord and Satisfaction and would agree to seven (7)

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enumerated items in connection with the Accord and Satisfaction.

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Id. ¶¶ 38 39).

In October 2012, Plaintiff contacted Green Tree and was informed that the check for

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$5640.01 had been applied to trial payments under a loan modification program. (Id. ¶ 40).

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Shortly thereafter, Plaintiff received documents from Green Tree purporting to modify the loan

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on the Property. (Id.

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sale that indicated that the Property would be sold at public auction on April 2, 2013. (Id. ¶ 43).

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Plaintiff originally filed the instant action in state court on March 27, 2013. (See Pet. for

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Removal, ECF No. 1). Plaintiff subsequently filed his Amended Complaint, adding ARIC as

20

an additional defendant. (See id.). ARIC removed the action to this Court on December 02,

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2014. (See id.

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breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3)

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intentional misrepresentation; (4) breach of fiduciary duty; (5) accord and satisfaction; (6)

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accounting of funds; (7) conversion; (8) civil conspiracy; (9) RICO; (10) racketeering; (11)

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racketeering conspiracy; (12) violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq.;

s Amended Complaint asserts the following causes of action: (1)

Page 3 of 28

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(13) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq.; (14)

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violation of the Nevada Deceptive Trade Practice Act, NRS 598.0903 et seq.; (15) violation of

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the Nevada Unfair Lending Practices Act, NRS 598D.010 et seq.; (16) wrongful foreclosure;

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(17) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.; (18) violation

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of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.; (19) violation of NRS 107; (20)

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violation of NRS 645F; (21) statutory damages. (Am. Compl. ¶¶ 44 246).

7

II.

8

LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon

9

which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

10

555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on

11

which it rests, and although a court must take all factual allegations as true, legal conclusions

12

couched as a factual allegation are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule
d a formulaic recitation of the elements

13
14

Id.

15

Ashcroft v. Iqbal, 556

16
17

U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

18

when the plaintiff pleads factual content that allows the court to draw the reasonable inference
Id.

19

Id.

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21
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Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542,

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24
25

Id
complaint and whose authenticity no party questions, but which are not physically attached to

Page 4 of 28

1
2

converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14

3

F.3d 449, 454 (9th Cir. 1994). On a motion to dismiss, a court may also take judicial notice of

4

Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986).

5

Otherwise, if a court considers materials outside of the pleadings, the motion to dismiss is

6

converted into a motion for summary judgment. Fed. R. Civ. P. 12(d).

7

If the court grants a motion to dismiss for failure to state a claim, leave to amend should

8

be granted unless it is clear that the deficiencies of the complaint cannot be cured by

9

amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant

10

on the part of the

11
12

movant, repeated failure to cure deficiencies by amendments previously allowed, undue

13

prejudice to the opposing party by virtue of allowance of the amendment, futility of the
Foman v. Davis, 371 U.S. 178, 182 (1962).

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15

III.

DISCUSSION
Collectively, Green Tree and ARIC assert that each cause of action pled by Plaintiff

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17

should be dismissed for failure to state a claim. Accordingly, the Court will analyze each cause

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of action in turn.

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A.

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In his first cause of action, Plaintiff alleges that Green Tree breached the Deed of Trust

Breach of Contract

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payments to the principal balance of the Loan, and failing to acquire insurance equivalent to

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Plain

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53, ECF No. 6).
To state a claim for breach of contract in Nevada, the plaintiff must allege: (1) the

existence of a valid agreement between the plaintiff and the defendant; (2) a breach by the

Page 5 of 28

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defendant; and (3) damages as a result of the breach. Calloway v. City of Reno, 993 P.2d 1259

2

(Nev. 2000). Although Green Tree does not dispute the existence of the Deed of Trust as a

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valid agreement between the parties, it maintains that it did not breach because

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Amended Complaint never alleges he made a payment to Green Tree with the escrowed

5

insurance payment included

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not responsible for any breach of contract

7

First

Green Tree was clearly not involved in any lapse and thus is
Reply 3:18 24, ECF No. 22).

Pursuant to Section 2 of the Deed of Trust, Green Tree was required to apply all

8
9
10

Note; (b) principal due under the Note; (c) amount
ECF No. 16-1). Furthermore, Section 3 required Plaintiff

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12

required by [Green Tree] under

(Id.).
Id. at 6).

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14

However, it was incumbent upon Plaintiff, pursuant to Section 5 of the Deed of Trust, to

15

maintain insurance on the Property. (Id. at 7). If Plaintiff failed to maintain insurance on the

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17
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19

(Id.).
First, Plaintiff alleges that Green Tree breached the Deed of Trust by failing to pay

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became the servicer of the mortgage on November 1, 2011. (Id. ¶ 6). Additionally, Plaintiff

22

alleges that his original

23

non-payment in February 2011. (Id. ¶ 14). Moreover, Plaintiff alleges that subsequent

24

covering the Property was cancelled for

by Plaintiff until the first week of January 2012. (Id. ¶
, when

25

Page 6 of 28

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Green Tree became the servicer of the mortgage, there was no insurance premium that Green

2

Tree could have made payments towards pursuant to Section 3 of the Deed of Trust. Therefore,

3

the allegations of the Amended Complaint demonstrate that Green Tree could not have

4
5

Second, Plaintiff alleges that Green Tree breached the Deed of Trust by failing to apply

6

Id. ¶ 52). Plaintiff alleges

7
8

Mo

9

13). Pursuant to Section 2 of the Deed of Trust, Green Tree was required to apply all payments
ue under the Note; (b)

10
11

Amended Complaint sufficiently pleads a claim of

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13
14
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to the principal balance of the Loan.
Third, Plaintiff alleges that Green Tree breached the Deed of Trust by failing to acquire
However,

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17

as discussed above, the Deed of Trust provided that, if Plaintiff failed to maintain insurance on

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19

shall

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21

cover [Green Tree], but might or might not protect [Plaintiff],

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Property, or the contents of the Property, against any risk, hazard or liability and might provide

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greater or lesser coverage than was previously in effect

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25

equity in the

Id.). Further, the Deed of Trust

acknowledges that the cost of the insurance coverage so obtained
might significantly exceed the cost of insurance that [Plaintiff] could have obtained

Page 7 of 28

Id.).

1

Accordingly, the Deed of Trust did not place an obligation on Green Tree to acquire insurance

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Tree could not have

3
4
5
6

In conclusion,
allegations that Green Tree breache

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8
9

a

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B.

Breach of the Implied Covenant of Good Faith and Fair Dealing

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and fair dealing. (Am. Compl. ¶¶ 56 66). Specifically, Plaintiff alleges that Green Tree

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breached

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insurance premiums on the Property and thereafter purchasing (or claiming to purchase) force-

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placed insuranc

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payments to the outstanding principal balance, making fraudulent representations regarding the

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purchase of force-placed insurance, attempting to extort funds from Plaintiff that were not due

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and owing, and refusing to comply with the terms of the valid Accord and Satisfaction that it

failing to pay homeowners

refusing to apply Plaintiff's mortgage

failing to acquire insurance when it realized that insurance

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22

coverage-which was Green Tree's responsibility to provide-

purchasing force-

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placed insurance and, upon information and belief, receiving a kickback from the insurance

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company

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which there was no risk of loss

backdating the force-placed insurance it purchased to cover time periods for
failing to disgorge (through either credit or refund)

Page 8 of 28

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p

2

insurance but not used for homeowners' insurance

s Monthly Escrow Deposit that were earmarked for homeowners'
Id. ¶¶ 58 63).

3
4

fair dealing i

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9, 9 (Nev. 1989) (quoting Restatement (Second) of Contracts § 205). To establish a claim for

6

breach of the implied covenant of good faith and fair dealing, a plaintiff must show that: (1) the

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plaintiff and defendant were parties to a contract; (2) the defendant owed a duty of good faith

8

and fair dealing to the plaintiff; (3) the defendant breached his duty by performing in a manner

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unfaithful to the purpose of the contract; and (4) the plaintiff's justified expectations were

A.C. Shaw Constr. v. Washoe County, 784 P.2d

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denied. Crow v. Home Loan Ctr., No. 3:11 cv 00259 LRH VPC, 2011 WL 2214118, at * 2

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(D. Nev. 2011).

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13

Green Tree maintains that
breached the Deed of
Mot. Dismiss 7:15

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15

Amended Complaint sufficiently pleads a claim for breach of the implied covenant of good

16

faith and fair dealing.

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C.

Intentional Misrepresentation
against

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19

Green Tree. (Am. Compl. ¶¶ 67 78). To succeed on a claim for fraud or intentional

20

misrepresentation, a plaintiff must show: (1) a false representation by the defendant that is

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made with either knowledge or belief that it is false or without sufficient foundation; (2) an

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intent to induce another's reliance; and (3) damages that result from this reliance. See Nelson v.

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Heer, 163 P.3d 420, 426 (Nev. 2007).

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A complaint alleging fraud or mistake must

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include allegations of the time, place, and specific content of the alleged false representations

Page 9 of 28

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and the identities of the parties involved. See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir.

2

2007) (per curiam).

3

multiple defendants together but requires plaintiffs to differentiate their allegations when suing

4

Id.) (internal quotations omitted). The circumstances constituting

5

the alleged fraud must be specific enough to give defendants notice of the particular

6

misconduct alleged so that they can defend against the charge. Less v. Ciba–Geigy Corp. USA,

7

317 F.3d 1097, 1106 (9th Cir. 2003).
January 2012, Green Tree told Plaintiff that it had

8
9

purchased force-placed insurance for the Property in November 2011, when, upon information

10

and belief, Green Tree never purchased force-placed insurance at all, and if it did, it was

11

definitely not purchased until on or after January 5, 2012.

12

alleges that such representations were made via a notice received by Plaintiff in January 2012.

13

(Id. ¶ 21).

14

the parties, and the method by which these alleged misrepresentations were communicated.

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These a

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employees to effectively provide notice to Green Tree of the specific misrepresentations

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alleged in the Amended Complaint. Therefore, the Court finds that Plaintiff

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Complaint sufficiently pleads an intentional misrepresentation cause of action against Green

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Tree.

20

D.

Id. ¶ 69). Moreover, Plaintiff

Breach of Fiduciary Duty

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22
23
24
25

Tree. (Am. Compl. ¶¶ 79 84). Specifically, Plaintiff alleges that such fiduciary duties arose
virtue of the promissory note and deed of trust, and Defendant's position, status, and/or
superior knowledge in connection with mortgages [and] homeowners'

Id. ¶ 80).

fiduciary duty seeks damages for injuries that result from the tortious

Page 10 of 28

1

Stalk v.

2

Mushkin, 199 P.3d 838, 843 (Nev. 2009). To prevail on a breach of fiduciary duty claim,

3

plaintiff must first establish the existence of a fiduciary relationship. The relationship between

4

a lending institution and its borrower-client is not fiduciary in nature absent the creation of a

5

special relationship that would create a fiduciary duty. Weingartner v. Chase Homes Fin., LLC,

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702 F. Supp. 2d 1276, 1288 (D. Nev. 2010).

7

Although
the

8
9

Deed of Trust, does not create a special relationship beyond the standard lender/borrower

10

relationship that would establish a fiduciary duty. Thus, without the existence of a fiduciary

11

duty, there can be no breach of that duty, and Plaintiff's claim for breach of fiduciary duty will

12

be dismissed without prejudice. However, Plaintiff may amend his Amended Complaint if he

13

can allege additional facts sufficient to establish a fiduciary duty owed to Plaintiff by Green

14

Tree.

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E.

16

Pla

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Accord and Satisfaction

¶¶ 85 92). Specifically, Plaintiff alleges that a valid dispute existed between Plaintiff and
certain sum and made

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19
20

and Plaintiff and Green Tree entered into an accord and satisfaction on September 17, 2012.

21

(Id. ¶¶ 86 88). Moreover, Plaintiff alleges t

22

Defendant Green Tree agreed to do seven (7) enumerated items, which to date Defendant Green

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24
25

Id. ¶ 89).
Accord and satisfaction is an affirmative defense. See Nev. R of Civ. P. 8(c); Pierce
Lathing Co. v. ISEC, Inc., 956 P.2d 93, 95 (Nev. 1998); Casarotto v. Mortensen, 663 P.2d 352,

Page 11 of 28

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353 (Nev. 1983). Plaintiff has not cited and the Court cannot find an instance where Nevada

2

courts have allowed a plaintiff to plead accord and satisfaction as a cause of action.

3

Accordingly, this claim will be dismissed with prejudice. However, Plaintiff may have a

4

different claim based on these allegations and can amend its Amended Complaint accordingly.

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F.

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7

Accounting of Funds
sixth cause of action alleges a claim for accounting against Green Tree. (Am.

Compl. ¶¶ 93 97).
Simon v. Bank of Am., N.A., 2010 WL 2609436, *11

8
9

(D. Nev. June 23, 2010). However, no such relationship exists between a lender and a

10

borrower absent the creation of a special relationship that would create a fiduciary duty. Giles

11

v. GMAC, 494 F.3d 865, 882 (9th Cir. 2007). Thus, because Plaintiff and Green Tree have a

12

lender/borrower relationship and Plaintiff does not plead a special relationship that would

13

create a fiduciary duty, this claim will be dismissed without prejudice. However, Plaintiff may

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amend his Amended Complaint if he can allege additional facts sufficient to establish a

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fiduciary duty owed to Plaintiff by Green Tree.

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G.

Conversion

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18

(Am. Compl. ¶¶ 98 105).

dominion wrongfully

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exerted over another's personal property in denial of, or inconsistent with, his title or rights
Wantz v. Redfield, 326

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21

P.2d 413, 414 (Nev. 1958). To be a conve

22

conversion imports an unlawful act, or an act which cannot be

23

Ferreira v. P.C.H. Inc., 774 P.2d 1041, 1043 (Nev. 1989) (quoting Wantz, 326 P.2d at 414).

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Here, Plaintiff alleges that he sent a check in the amount of $5640.01 to Green Tree on

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Page 12 of 28

1
2
3

(Id. ¶ 40). The Court finds that these allegations fail to state a claim of conversion. These

4
5

us, import
unlawful acts, or cannot be justified or excused in law.

6
7
8

support a
claim of conversion.

7, ECF No. 20). However,

9
10

2011 when Green Tree became the servicer of the mortgage, there were no premiums for Green

11

Tree to make payments on pursuant to Section 3 of the Deed of Trust. Therefore, these

12

allegations cannot support a claim of conversion. Accordingly, the Court dismisses this claim

13

without prejudice. However, Plaintiff may amend his Amended Complaint if he can allege

14

additional facts sufficient to support a claim of conversion.

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H.

Civil Conspiracy

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17

and ARIC. (Am. Compl. ¶¶ 106 10). Pursuant to Nevada law, a claim for civil conspiracy

18
19

accomplish an unlawful objective for the purpose of harming another, and damage results from

20

Consolidated Generator–Nevada, Inc. v. Cummins Engine Co., 971 P.2d 1251,

21

1256 (Nev. 1998) (quoting Hilton Hotels v. Butch Lewis Productions, 862 P.2d 1207, 1210

22

(Nev. 1993)).

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Eikelberger v. Tolotti, 611 P.2d 1086, 1088 & n.1 (Nev. 1980).

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25

action, intended to accomplish one or more unlawful objectives for the purposes of harming

Page 13 of 28

1
2

tiff clarifies that the actionable torts include
conversion and fraud. (See

15:7).

3
4

Thus, Plaintiff cannot maintain a claim of civil conspiracy based on the actionable tort of

5

conversion.

6

Second, Plaintiff fails to allege a claim of civil conspiracy based on fraud. Under

7

Nevada law, an actionable civil conspiracy-to-defraud claim exists when there is (1) a

8

conspiracy agreement; (2) an overt act of fraud in furtherance of the conspiracy; and (3)

9

resulting damages to the plaintiff. Jordan v. State ex rel. Dept. of Motor Vehicles and Public

10

Safety, 110 P.3d 30, 51 (Nev. 2005).
Id.

11
12

A claim for conspiracy to commit fraud must be pled with the same particularity as the

13

fraud itself. See Wanetick v. Mel's of Modesto, Inc., 811 F. Supp. 1402, 1406 n.3 (N.D. Cal.

14

1992). Thus, under Rule 9(b), a party must state with particularity the circumstances

15

constituting the conspiracy. See Fed. R. Civ. P. 9(b). Allegations of conspiracy must be

16

See Vess

17

v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Accordingly, to state a claim

18
19

reached some explicit or tacit understanding or agreement. It is not enough to show that

20

defendants might have had a common goal unless there is a factually specific allegation that

21

they directed themselves towards this wrongful goal by virtue of a mutual understanding or

22

S. Union Co. v. Sw. Gas Corp., 165 F. Supp. 2d 1010, 1020 21 (D. Ariz. 2001)

23

(internal citations and quotation marks omitted); Goodwin v. Executive Tr. Servs., LLC, 680 F.

24

Supp. 2d 1244, 1254 (D. Nev. 2010).

25

Plaintiff has failed to allege with sufficient factual particularity that Defendants reached

Page 14 of 28

1

a conspiracy agreement to defraud. Accordingly, the Court dismisses this claim without

2

prejudice. However, Plaintiff may amend his Amended Complaint if he can allege additional

3

facts sufficient to support a claim of civil conspiracy.

4

I.

RICO

5

against Green Tree and

6

ARIC predicated on mail fraud, wire fraud, and extortion. (Am. Compl. ¶¶ 111 38).

7

a civil RICO claim, plaintiffs must allege (1) conduct (2) of an enterprise (3) through a pattern

8

(4) of racketeering activity (5) causing injury to plain

9

Gwinn, 264 F.3d 817, 825 (9th Cir. 2001) (citing 18 U.S.C. § 1964(c)).
1.

10

Enterprise
ip, corporation, association, or other

11
12

Ove v.

legal entity, and any union or group of individuals associated in fact although not a legal
An associated-in-

13
14

together for a common purpo

Odom v. Microsoft Corp.,

15

486 F.3d 541, 552 (9th Cir. 2007) (en banc). A plaintiff pleads an enterprise through

16
17

various assoc

Id. at 549.
Id. at 552 (quotation omitted).

18
19

Allegations that the organization existed over a two-year time span suffice to allege a

20

continuing unit. Id. at 553. Where the plaintiff alleges an associated-in-fact enterprise, the
Id. at

21
22

551.
ists of merely conclusory allegations related

23
24

to an enterprise. (See

25

Page 15 of 28

1

contends that his Amend

2

allegations contained in the Amended Complaint. (Response

3

17, ECF No. 15). Rather, Plaintiff cites a case from the Northern District of California where

4

the court found that an enterprise had been sufficiently pled. (Id. 13:24 14:5 (citing Cannon v.

5

Wells Fargo Bank NA, C-12-1376 EMC, 2014 WL 324556, at *3 (N.D. Cal Jan. 29, 2014)).

6

However, Plaintiff fails to show how the allegations in his Amended Complaint are comparable

7

to those in Cannon. Accordingly, because Plaintiff has failed to sufficiently allege an
RICO claim on this

8
9
10

13:16

basis alone. However, the Court will continue to analy
claim.
Pattern of Racketeering Activity

2.

11
12
13

one of which occurred after the effective date of this chapter and the last of which occurred
after the commission of a prior act of racketeering activity

14
15

1961(5).
H.J. Inc. v. Nw. Bell Tel.

16
17

Co., 492 U.S. 229, 237 38 (1989) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479,

18

496 n.14 (1985)). T

19

[pointing to] the number of predicate acts involved. Id. at 238.

20
21

components, relatedness and continuity, where continuity need not be alleged with certainty to

22

overcome a motion to dismiss. H. J., Inc., 492 U.S. at 239, 250. In particular, the continuity

23

-ended and open-ended, and if either type is
Id. at 241. Generally, the

24
25

closed-ended continuity refers to a specifically defined period of repeated conduct, and the

Page 16 of 28

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open-ended continuity refers to the threat of continued racketeering activity. Id. at 241-242.

2

rely

3

recite conclusory allegations. (See

4

racketeering activity by engaging in mail fraud, wire fraud, monetary transactions with property

5

derived from specified unlawful activity, transportation of stolen goods, and/or other activities

6

in violation of the [RICO] Act

Defendants engaged in a pattern of

7
8

allegations fail to sufficiently establish the requisite relatedness and continuity to establish a

9

pattern of racketeering activity.
a.

10

Mail and Wire Fraud

Plaintiff bases his RICO claim on the predicate acts of mail and wire fraud. (Am.

11
12

Compl. ¶¶ 114 23). To state the elements of wire or mail fraud, the plaintiff must allege (1)

13

the defendants formed a scheme or artifice to defraud; (2) the defendants used the mails or

14

wires in furtherance of the scheme; and (3) the defendants acted with the specific intent to

15

deceive or defraud. Miller v. Yokohama Tire Corp., 358 F.3d 616, 620 (9th Cir. 2004); United

16

States v. Manion, 339 F.3d 1153, 1156 (9th Cir. 2003). The mails or wires are used in

17
18

frau

19

971 (9th Cir. 2004) (quotation omitted).

20
21

United States v. Shipsey, 363 F.3d 962,

Plaintiff contends
purchase of unwanted and unneeded insurance at an inflated rate, which is backdated, and

22
23
24
25

17:11 15).
First, the Court finds that
fraud by purchasing the FPI fail because the Deed of Trust explicitly granted Green Tree the

Page 17 of 28

1

right to purchase FPI in the event that Plaintiff failed to maintain insurance. (See Deed of Trust

2

at 7). Plaintiff admits that the property was not insured when Green Tree became servicer of

3

the mortgage. (Am. Compl. ¶¶ 6 7, 14 16). Moreover, Plaintiff admits that he did not obtain

4
5

almost two months after Green Tree
mailed a notice to Plaintiff informing him that the Property was uninsured and that failure to

6
7
8

purchase any particular type or amount of

9

coverage so obtained might significantly exceed the cost of insurance that [Plaintiff] could have

10
11
12

Thus, Green Tree purchase of FPI at a rate higher than what
Plaintiff could have obtained, although unwanted by Plaintiff, was pursuant to its rights under
unneeded because Plaintiff had failed to maintain insurance.
itted

13
14

fraud by backdating the FPI policy fail because the language of the Deed of Trust does not

15

forbid Green Tree to obtain such policies, and the purchase of backdated insurance protected

16

. As noted above, it was Pla

17

insurance on the Property. (Deed of Trust at 7). If Plaintiff failed to do so, Green Tree had the

18

right to obtain insurance to protect its interest in the Property. (Id.). The Court finds that Green

19
20
21

backdated FPI was not fraudulent because
in the property after Plaintiff failed to maintain coverage.
Other courts have reached similar conclusions regarding backdating claims. See, e.g.,

22

Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 613 (7th Cir. 2013) (finding that the purchase of

23

backdated insurance was necessary to maintain continuous hazard insurance on the property);

24

Rapp v. Green Tree Serv’ g, LLC, No. 12-CV-2493 (PJS/FLN), 2013 WL 3992442, at * 6 (D.

25

Minn. Aug. 5, 2013) (finding that the purchase of backdated i

Page 18 of 28

1

interest in the property at issue); Lane v. Wells Fargo Bank, N.A., No. C12-04026 WHA, 2013

2

Plaintiffs have not, however, sufficiently

3

alleged that Wells Fargo engaged in improper backdating of insurance procured for plaintiffs'

4

property. The complaint contains only a single paragraph of conclusory allegations that Wells

5

Fargo retroactively purchased insurance policies for periods of time where coverage had lapsed

6

but no claims had been made

7

Third, Plaintiff alleges that Green Tree and ARIC committed fraud through a kickback

8

scheme, whereby ARIC paid commissions to Green Tree based on its purchase of FPI. (Am.

9

Compl. ¶¶ 61, 76, 194). Plaintiff refers to three different letters he received from Green Tree

10

that informed Plai

insurance on the Property and asked

11

Plaintiff to provide proof of insurance or Green Tree would purchase FPI. (Am. Compl. ¶¶ 7,

12

20 21). Howeve

13

do so through an affiliated insurance agency, which is an agent for the insurer and may earn a
-1 B-

14

F Nos. 10-3

15

10-5). Thus, Plaintiff was fully notified on multiple occasions that Green Tree could receive a

16

commission from ARIC if Plaintiff failed to provide proof of insurance. Accordingly, the

17

Court finds that such allegations do not support a claim of fraud.
Other courts have rejected similar kickback theories. Feaz v. Wells Fargo Bank, N.A.,

18
19

745 F.3d 1098, 1110 11 (11th Cir. 2014); Cohen, 735 F.3d at 611. For example, in Cohen, the

20

plaintiff failed to maintain hazard insurance as required under her loan agreement, and after

21

multiple warnings from her lender, Wachovia purchased FPI that was backdated to the date the

22
23

higher cost of the FPI and that it could collect a commission from the insurer. Id. The plaintiff

24

a

a deceptive practice. Id. at 608. The Seventh Circuit held

25

Page 19 of 28

1

clear disclosures into a prohibited deceptive act. Id. at 609. Further, the court held that there

2

were no allegations of threats to take illegal, immoral, or otherwise wrongful action against the

3

and legal remedies if she

4

remained in breach of her obligations

5

610.

6
7

Id. at

Regarding what the plaintiff labeled
calling the [Wachovia] commission a kickb

Id. at 611. Rather:

The defining characteristic of a kickback is divided loyalties. But
Wachovia was not acting on behalf of [the plaintiff] or representing
her interests. The loan agreement makes it clear that the insurance
requirement is for the lender's protection
Wachovia was not
subject to divided loyalties; rather, it was subject to an undivided
loyalty to itself, and it made this clear from the start. The
commission for the lender-placed insurance was not a kickback in
any meaningful sense.

8
9
10
11
12
13
14

Id. The Court agrees with the reasoning of the Seventh Circuit.3 The Deed of Trust makes it
Therefore, such coverage

15
16

shall cover Lender, but might or might not protect Borrower

17
18

to plead racketeering activity based on the predicate act of fraud, either mail or wire.
b.

19

Extortion

Plaintiff also bases his RICO claim on the predicate act of extortion under the Hobbs

20
21

Act, 18 U.S.C. § 1951. (Am. Compl. ¶ 124 25).

22

obtaining of property from another, with his consent, induced by wrongful use of actual or

23

threatene

24
25

3

Th
Wells Fargo Bank, N.A., 745 F.3d 1098, 1110
Page 20 of 28

See Feaz v.

1

threatened that Plaintiff's credit would be destroyed,

2

that his home would be foreclosed on, and that it was Plaintiff's fault that his loan was in

3

default.

4

2012, Plaintiff wa

5

advisement as to Plaintiff's rights to mediation and did not comply with the Nevada Foreclosure

6

Mediation Program (Id. ¶ 29).

7

obtained property from the Plaintiff, with Plaintiff's consent, which was acquired through

8

inducement by wrongful use of actual or threatened force, violence, or fear, or under color of

9

official right.

10
11

the month of August
did not include any

Defendants

extortion under the Hobbs Act.
Accordingly, the Court finds that Plaintiff fails to sufficiently plead a civil RICO claim.

12

However, the Court will give Plaintiff an opportunity to amend if he can plead facts sufficient

13

to overcome the defects described herein. Additionally, Plaintiff may not continue to rely on

14

backdating or kickback theories to support the predicate acts of mail or wire fraud.

15

J.

Racketeering
under state law against

16
17

Green Tree and ARIC. (Am. Compl. ¶¶ 139 70). Under Nevada law, RICO claims must be

18

pleaded with specificity. Hale v. Burkhardt, 764 P.2d 866, 869 (Nev. 1988). Moreover, the

19

Nevada Supreme Court requires a plaintiff bringing a civil RICO claim under state law to

20

articulate the factual allegations constituting the RICO claim directly under the portion of the

21

Amended Complaint dedicated to the RICO claim:

22
23
24

A civil RICO pleading must, in that portion of the pleading which
describes the criminal acts that the defendant is charged to have
committed, contain a sufficient
statement of the essential facts such that it would provide a person of
ordinary understanding with notice of the charges.

25

Page 21 of 28

1

Id. at 879 70.

2

incorporation by reference is not enough. Id. Plaintiff has failed to fulfill this pleading

3

requirement; therefore, the Court will dismiss the racketeering claim without prejudice.

4

However, Plaintiff may amend his Amended Complaint to overcome the defects described

5

herein.

6

K.

-

Racketeering Conspiracy

7
8

Green Tree and ARIC. (Am. Compl. ¶¶ 171 76).

cannot claim that a conspiracy to

9

violate RICO existed if [he] do[es] not adequately plead a substantiv

10

Sanford v. MemberWorks, Inc., 625 F.3d 550, 559 (9th Cir. 2010) (quoting Howard v. Am.

11

Online Inc., 208 F.3d 741, 751 (9th Cir. 2000)). Accordingly, because the Court found that

12

Plaintiff failed to plead a substantive violation, Plai

13

dismissed without prejudice.

14

L.

Violation of the Truth in Lending Act

15

Plaintiff concedes that his twelfth cause of action, alleging a violation of the Truth in

16

Lending Act against Green Tree, is time-barred. (Respons

17

19:13 15, ECF No. 20). Accordingly, this claim will be dismissed with prejudice.

18

M.

Violation of the Real Estate Settlement Procedures Act (RESPA)
Real Estate

19
20

Settlement Procedures Act ( RESPA ) against Green Tree and ARIC. (Am. Compl. ¶¶ 186

21

96). Plaintiff fails to cite any specific provision of RESPA that Green Tree or ARIC violated.

22

Such a failure itself is sufficient grounds for the dismissal of a RESPA claim. See Stovall v.

23

Nat’ l Default Servicing Corp., 2011 WL 1103582, *3 (D. Nev. Mar. 23, 2011). The Court,

24

Green Tree, and ARIC should not have to speculate as to under which provisions Plaintiff is

25

suing. Accordingly, the Court dismisses this claim without prejudice. However, Plaintiff may

Page 22 of 28

1
2
3

amend his Amended Complaint to overcome the defects described herein.
N.

Violation of the Nevada Deceptive Trade Practices Act
fourteenth cause of action alleges a violation of the Nevada Deceptive Trade

4

207). Specifically, Plaintiff

5

alleges that Green Tree violated the DTPA by (1) representing that goods or services for sale

6

(homeowners' insurance) were of a particular standard, quality or grade, while knowing that

7

they were of another standard, quality, grade, style or model, (2) making false or misleading

8

statements of fact concerning the price of goods or services for sale, (3) knowingly making

9

false representations in a transaction, (4)

10

advertising, (5)

knowingly stating that services or were needed when no such services were actually needed,

11

(6) refusing to provide a refund when refunds were due and allowed, (7) knowingly

12

misrepresenting the legal rights, obligations or remedies of the Plaintiff, a party to a transaction

13

with Green Tree, (8) failing to disclose a material fact in connection with the sale or lease of

14

goods or services, and (9) violating a state or federal statute or regulation relating to the sale

15

or lease of goods or services. (Id. ¶¶ 198 206).

16

Courts in this jurisdiction have routinely held that the Nevada Deceptive Trade Practices

17

Act does not apply to mortgage transactions and real estate, but only to transactions of goods

18

and services. See, e.g., Rodriquez v. Bank of America Corp., No. 2:11 cv 01877 ECR CWH,

19

2012 WL 3277108, at *2 (D. Nev. Aug. 8, 2012); Baudoin v. Lender Processing Servs., No.

20

2:12 cv 00114 JCM CWH, 2012 WL 2367820, at *3 (D. Nev. Jun. 21, 2012); Reyes v. BAC

21

Home Loans Servicing, LP, No. 2:11 cv 01367 KJD, 2012 WL 2367803, at *2 (D. Nev. Jun.

22

21, 2012); Rivera v. Nat'l Default Servicing Corp., No. 2:12 cv 00629 JCM RJJ, 2012 WL

23

2789015, at *2 3 (D. Nev. Jul. 6, 2012); Archer v. Bank of Am. Corp., No. 2:11 cv 01264

24

JCM RJJ, 2011 WL 6752562, at *2 (D. Nev. Dec. 23, 2011); Reyna v. Wells Fargo Bank, N.A.,

25

No. 2:10 cv 01730 KJD RJJ, 2011 WL 2690087, at *9 (D. Nev. Jul. 11, 2011); Alexander v.

Page 23 of 28

1

Aurora Loan Serv., No. 2:09 cv 01790 KJD LRL, 2010 WL 2773796, at *2 (D. Nev. Jul. 8,

2

2010).

3
4

subject to the Nevada Deceptive Trade Practices Act. The transaction occurred pursuant to the

5

Deed of Trust. Moreover, Green Tree did not sell a good or service to Plaintiff. Rather, Green

6

Tree was the consumer because it purchased FPI from ARIC to protect its interest in the

7

Property. Accordingly, the Court dismisses this claim with prejudice.

8

O.

9

Plaintiff concedes that his fifteenth cause of action, alleging a violation of the Nevada

Violation of the Nevada Unfair Lending Practices Act

10

20 25). Accordingly, this claim will

11
12

be dismissed with prejudice.
P.

13

Wrongful Foreclosure

14
15

(Am. Compl. ¶¶ 211 14). In Nevada, the common law tort of wrongful foreclosure requires

16

Plaintiff to establish that at the time the power of sale was exercised no breach of condition or

17

failure of performance existed on the mortgagor's or trustor's part which would have authorized

18

the foreclosure or exercise of the power of sale. Collins v. Union Fed. Sav. & Loan Ass'n., 662

19

P.2d 610, 623 (Nev. 1983). Furthermore, a claim for wrongful foreclosure prior to sale is not

20

actionable. Huggins v. Quality Loan Servicing, LP, 2011 WL 310490, at *5 (D. Nev. January

21

27, 2011). Therefore, Plaintiff has no claim for the common law tort of wrongful foreclosure

22

because he does not allege that a foreclosure sale has taken place. Accordingly, this claim will

23

be dismissed without prejudice. However, Plaintiff may amend his Amended Complaint to

24

allege additional facts sufficient to support a claim of wrongful foreclosure.

25

///

Page 24 of 28

1

Q.

Violation of the Fair Debt Collection Practices Act

2

eenth cause of action alleges a violation of the Fair Debt Collection

3

Practices Act, 15 U.S.C. § 1692 et seq. ( FDCPA ) against Green Tree. (Am. Compl. ¶¶ 215

4

18).

5

the definition of a debt collector.

6

regularly collects or attempts to collect ... debts owed or due or asserted to be owed or due

under the FDCPA must be dismissed because Green Tree does not meet

7

[A]ny person collecting or attempting to collect any debt owed or
due or asserted to be owed or due another to the extent such activity
... (ii) concerns a debt which was originated by such person [or] (iii)
concerns a debt which was not in default at the time it was obtained
by such person.

8
9
10
11
12

15 U.S.C. § 1692a(6)(G). The legislative history of section 1692a(6) indicates conclusively

13

that a debt collector does not include the consumer's creditors, a mortgage servicing company,

14

or an assignee of a debt, as long as the debt was not in default at the time it was assigned. See

15

S.Rep. No. 95 382, 95th Cong., 1st Sess. 3, reprinted in 1977 U.S.Code Cong. & Ad.News

16

1695, 1698. See also Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985). In this

17

case, the FDCPA is inapplicable because Green Tree is not a debt collector. Therefore, the

18

Court dismisses P

19

R.

arising under the FDCPA with prejudice.

Violation of the Fair Credit Reporting Act

20
21

15 U.S.C. § 1681 et seq.

to ensure fair and accurate credit reporting, promote efficiency in

22

Safeco Ins. Co. of Am. v. Burr, 551 U.S.

23
24
25

ompl. ¶¶ 219 22). Congress

47, 53 (2007).
Plaintiff alleges that Green Tree violated the FCR

Page 25 of 28

failing to follow reasonable

1

policies and procedures regarding the accuracy and integrity of the delinquency dates provided

2

on Plaintiff

3

(Am. Compl. ¶¶ 220 21).

4

by continually ignoring the resolution requests from Plaintiff.

First, while Plaintiff does not allege the specific provisions of the FCRA that Green Tree

5

violated, his allegation that Green Tree failed to follow reasonable policies and procedures

6

regarding the accuracy and integrity of the delinquency dates provided on Plaintiff's account

7

likely alleges a violation of Section 1681s 2(a), which imposes certain duties on those who

8
9

reporting.

ed on furnishers under [Section 1681s 2(a)] are

10

enforceable only by federal or state agencies. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d

11

1147, 1154 (9th Cir. 2009).
ts

12
13

from Plaintiff likely alleges a violation of Section 1681s 2(b), which imposes certain duties on
duties

14
15

arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute

16

received directly from the consumer does not trigger furnishers' duties under subsection (b)

17

Gorman, 584 F.3d at 1154. Here, Plaintiff does not allege that Green Tree received notice of

18

dispute from a CRA. Accordingly, the Court

19

FCRA without prejudice. However, Plaintiff may amend his Amended Complaint to allege

20

additional facts sufficient to support an FCRA claim.

21
22
23

S.

Violation of NRS 107
nineteenth cause of action alleges a violation of NRS 107 against Green Tree.

(Am. Compl. ¶¶ 223

24
25

4). Plaintiff cites no law and makes no arguments regarding his NRS 107 claims. He therefore

Page 26 of 28

1

consents to the motion being granted. LR 7 2(d).

2

NRS 107 claim without prejudice.

3

T.

Violation of NRS 645F

4

alleges a violation of NRS 645F against Green Tree.

5

(Am. Compl. ¶¶ 229 33). Specifically, Plaintiff alleges, without citing a specific provision of

6

the statute, that Green Tree violated the statute by charging for fees outside the scope of the

7

Deed of Trust, by receiving consideration from a third party in connection with a covered

8

service provided to Plaintiff that was not fully disclosed to the homeowner, and by

9

misrepresenting aspects of covered service. (Id. ¶¶ 230 32). The provisions of NRS 645F.300

10

et seq., apply to foreclosure consultants, loan modification consultants, and persons performing

11
12

Tree is a foreclosure consultant, loan modification consultant, or person performing covered

13
14

NRS 645F without prejudice. However, Plaintiff may amend his Amended Complaint to allege

15

additional facts to support an NRS 645F claim.
U.

16

Statutory Damages
-first cause of action alleges statutory damages against Green Tree and

17
18

ARIC. (Am. Compl. ¶¶ 234 46). However, a demand for damages is not independently

19

ndependent claim for statutory

20

damages with prejudice.

21

IV.

22

CONCLUSION
IT IS HEREBY ORDERED that

23

is GRANTED. The following claims are DISMISSED without prejudice: (1) civil

24

conspiracy; (2) RICO; (3) racketeering; (4) racketeering conspiracy; and (5) violation of the

25

Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. Moreover,

Page 27 of 28

1
2

statutory damages is DISMISSED with prejudice.
IT IS FURTHER ORDERED

to Dismiss (ECF

3

No. 16) is GRANTED in part and DENIED in part. The following claims are DISMISSED

4

with prejudice: (1) accord and satisfaction; (2) violation of the Truth in Lending Act, 15

5

U.S.C. § 1601 et seq.; (3) violation of the Nevada Deceptive Trade Practice Act, NRS 598.0903

6

et seq.; (4) violation of the Nevada Unfair Lending Practices Act, NRS 598D.010 et seq.; (5)

7

violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.; and (6) statutory

8

damages. Moreover, the following claims are dismissed without prejudice: (1) breach of

9

fiduciary duty; (2) accounting of funds; (3) conversion; (4) civil conspiracy; (5) RICO; (6)

10

racketeering; (7) racketeering conspiracy; (8) violation of the Real Estate Settlement

11

Procedures Act, 12 U.S.C. § 2601 et seq.; (9) wrongful foreclosure; (10) violation of the Fair

12

Credit Reporting Act, 15 U.S.C. § 1681 et seq.; (11) violation of NRS 107; and (12) violation

13

of NRS 645F.

14

to the following claims: (1) breach of contract; (2) breach of the implied covenant of good faith

15

and fair dealing; and (3) intentional misrepresentation.

16

IT IS FURTHER ORDERED that Plaintiff shall file his second amended complaint by

17

Wednesday, July 22, 2015. Failure to file a second amended complaint by this date shall

18

result in the Court DISMISSING the following claims with prejudice: (1) breach of fiduciary

19

duty; (2) accounting of funds; (3) conversion; (4) civil conspiracy; (5) RICO; (6) racketeering;

20

(7) racketeering conspiracy; (8) violation of the Real Estate Settlement Procedures Act, 12

21

U.S.C. § 2601 et seq.; (9) wrongful foreclosure; (10) violation of the Fair Credit Reporting Act,

22

15 U.S.C. § 1681 et seq.; (11) violation of NRS 107; and (12) violation of NRS 645F.

23

DATED this 8th day of July, 2015.

24
25

___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge
Page 28 of 28