Kells v. First Horizon Home Loan Corporation et al
Filing
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ORDER GRANTING Defendant's [4-2] Motion to Dismiss and 10 Motion for Summary Judgment. This action is DISMISSED in its entirety. FURTHER ORD that D Wells Fargo Bank, N.A. shall have until 1/16/13 to prepare an appropriate order expunging lis pendens and submit same for signature. FURTHER ORD that defendant's 4 Motion for attorney's fees is DENIED. Signed by Judge Larry R. Hicks on 1/6/13. (Copies have been distributed pursuant to the NEF - JK)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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Before the court are defendants LSI Title Agency, Inc. (“LSI”) and LPS Title Company’s
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JERRY L. KELLS
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Plaintiff,
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v.
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FIRST HORIZON HOME LOAN
CORPORATION; et al.,
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Defendants.
3:12-cv-0308-LRH-VPC
ORDER
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(“LPS”) motion to dismiss plaintiff Jerry L. Kells’ (“Kells”) third amended complaint (Doc. #4,
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Exhibit 2) and motion for attorney’s fees (Doc. #4).
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Also before the court is defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”), sued here as
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America’s Servicing Company and the Bank of New York Mellon, motion for summary judgment
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on Kells’ third amended complaint. Doc. #10. Kells filed an opposition to the motions (Doc. #14)
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to which defendants replied (Doc. #20).
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I.
Facts and Procedural History
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In July, 2004, Kells purchased real property through a mortgage note and deed of trust
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originated and executed by First Horizon. Eventually, Kells defaulted on the mortgage note and
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defendants initiated non-judicial foreclosure proceedings.
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Subsequently, Kells filed a complaint in state court against defendants for wrongful
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foreclosure. See Doc. #1, Exhibit A. Kells’ complaint was dismissed, but Kells was granted leave
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to file several amended complaints. See Doc. #1, Exhibit A-1, Exhibit A-2. Ultimately, Kells filed
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the underlying third amended complaint against defendants alleging four causes of action:
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(1) fraud; (2) breach of the implied covenants of good faith and fair dealing; (3) injunctive relief;
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and (4) declaratory relief. Doc. #1, Exhibit A-3. Defendants then removed the third amended
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complaint to federal court on the basis of diversity jurisdiction. Doc. #1. Thereafter, defendants
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filed the present motions.
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II.
Legal Standard
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Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure
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to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state
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a claim, a complaint must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading
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standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). That
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is, a complaint must contain “a short and plain statement of the claim showing that the pleader is
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entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require
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detailed factual allegations; however, a pleading that offers “‘labels and conclusions’ or ‘a
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formulaic recitation of the elements of a cause of action’” will not suffice. Ashcroft v. Iqbal, 129 S.
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Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
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Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,
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accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949 (quoting
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Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows
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the court to draw the reasonable inference, based on the court’s judicial experience and common
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sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility
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standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a
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defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a
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defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to
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relief.” Id. at 1949 (internal quotation marks and citation omitted).
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In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as
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true. Id. However, “bare assertions . . . amount[ing] to nothing more than a formulaic recitation of
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the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret
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Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951) (brackets in original)
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(internal quotation marks omitted). The court discounts these allegations because “they do nothing
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more than state a legal conclusion—even if that conclusion is cast in the form of a factual
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allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to survive a motion to
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dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
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plausibly suggestive of a claim entitling the plaintiff to relief.” Id.
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III.
Discussion
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A. Fraud
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“In alleging fraud or mistake, a party must state with particularity the circumstances
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constituting fraud or mistake.” FED. R. CIV. P. 9(b). In order to meet the heightened pleading
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requirements a plaintiff must specify the time, place, and content of the misrepresentation as well
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as the names of the parties involved. See Yourish v. Cal. Amplifier, 191 F.3d 983, 993 n.10 (9th
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Cir. 1999); see also, Parnes v. Gateway 2000, 122 F.3d 539, 549-50 (8th Cir. 1997) (requiring a
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plaintiff to allege the requisite who, what, where, when, and how of the misrepresentation).
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Here, Kells fails to allege anything more than defendants defrauded him during the loan
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process. There are no allegations of who failed to provide information or what information was not
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provided. Further, Kells fails to specifically allege the requisite “time, place, and specific content of
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the false representation as well as the identities of the parties to the misrepresentations.” Edwards
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v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004). Therefore, the court finds that Kells’
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allegations are insufficient to support his claim for fraud.
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B. Breach of Good Faith and Fair Dealing
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Under Nevada law, “[e]very contract imposes upon each party a duty of good faith
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and fair dealing in its performance and execution.” A.C. Shaw Constr. v. Washoe County, 784
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P.2d 9, 9 (Nev. 1989) (quoting Restatement (Second) of Contracts § 205). To establish a claim for
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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 and
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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 denied.
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See Perry v. Jordan, 134 P.3d 698, 702 (Nev. 2006) (citing Hilton Hotels Corp. v. Butch Lewis
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Prod. Inc., 808 P.2d 919, 922-23 (Nev. 1991).
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Kells alleges that defendants breached the implied covenants by misrepresenting the cost of
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credit involved in the loan agreement. However, these alleged misrepresentations occurred before a
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contract was formed. See Doc. #1, Exhibit A. Kells fails to allege any facts to establish a breach of
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the implied covenants after the contract between the parties was formed. Thus, Kells fails to allege
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a claim for breach of the covenants of good faith and fair dealing.
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C. Injunctive and Declaratory Relief
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Claims for injunctive or declaratory relief are remedies that may be afforded to a party after
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he has sufficiently established and proven his claims; they are not a separate cause of action. Here,
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Kells’ claims fail to establish any claim for relief. Therefore, Kells is not entitled to injunctive or
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declaratory relief. Accordingly, the court shall grant defendants’ motions and dismiss Kells’ third
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amended complaint.1
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In dismissing the complaint, the court notes that Kells concedes that he fails to state a claim for w hich
relief can be granted. See Doc. #14, p . 3 ( “I n light of the court’s rulings in similar cases [p]lainitff
acknow ledges that all the [c]auses of action fail to establish claims for w hich relief can be granted.”).
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D. Attorney’s Fees
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In their motion for attorney’s fees, defendants LSI and LPS argue that they are entitled to
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attorney’s fees because Kells brought and maintained this action without reasonable grounds. See
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Doc. #4. Specifically, LSI and LPS argue that attorney’s fees are warranted under NRS 18.010(2)
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because Kells maintained the underlying action in bad faith. Id.
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Under Nevada law, a defendant that prevails in a dispositive motion may be awarded its
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attorney’s fees if there is “evidence in the record supporting the proposition that the complaint was
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brought without reasonable grounds or to harass the other party.” NRS 18.010. Although a court
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has discretion to award attorney’s fees as a sanction pursuant to NRS 18.010, there must be
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evidence supporting the court’s finding that the claim was unreasonable or brought to harass.
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Rivero v. Rivero, 216 P.3d 213, 234 (Nev. 2009).
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Here, the claims were based upon defendants’ actions in pursuing the non-judicial
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foreclosure. The allegations in the complaint, although ultimately unsuccessful, were not entirely
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groundless as plaintiff received some relief in the state court proceeding from other defendants.
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Further, there is insufficient evidence of unreasonableness or intent to harass. Therefore, the court
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declines to award attorney’s fees under NRS 18.010. Accordingly, the court shall deny the motion
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for attorney’s fees.
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IT IS THEREFORE ORDERED that defendants’ motion to dismiss (Doc. #4, Exhibit 2)
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and motion for summary judgment (Doc. #10) are GRANTED. This action, 3:12-cv-0308, is
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DISMISSED in its entirety.
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IT IS FURTHER ORDERED that defendant Wells Fargo Bank, N.A. shall have ten (10)
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days from entry of this order to prepare an appropriate order expunging the lis pendens and submit
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the same for signature.
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IT IS FURTHER ORDERED that defendants’ motion for attorney’s fees (Doc. #4) is
DENIED.
IT IS SO ORDERED.
DATED this 6th day of January, 2013.
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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE
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