Tennier et al v. Wells Fargo Bank, N.A.

Filing 16

ORDER granting in part and denying in part 3 Motion to Dismiss and denying without prejudice 11 Motion for Preliminary Injunction. Signed by Judge Larry R. Hicks on 5/6/14. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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JAMES TENNIER; LOIS TENNIER,

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Plaintiffs,

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v.

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WELLS FARGO BANK, N.A.; et al.,

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Defendants.

3:14-cv-0035-LRH-VPC
ORDER

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Before the court is defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”) motion to dismiss.

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Doc. #3.1 Plaintiffs James and Lois Tennier (“the Tenniers”) filed an opposition (Doc. #6) to which

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Wells Fargo replied (Doc. #8).

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Also before the court is the Tenniers’ motion for a preliminary injunction. Doc. #11.

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Defendant Wells Fargo filed an opposition (Doc. #13) to which the Tenniers replied (Doc. #15).

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I.

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Facts and Background
In December 2007, the Tenniers refinanced their existing home loan and entered into an

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Option Adjustable Rate Mortgage (“ARM”) agreement with World Savings Bank, FSB (“WSB”)

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as part of WSB’s ‘Pick-a-Payment’ loan program. Eventually, the Tenniers defaulted on the

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refinanced loan and Wells Fargo, WSB’s successor-in-interest, recorded a notice of default on the

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property.

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Refers to the court’s docket number.

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Subsequently, on December 6, 2013, the Tenniers filed a complaint against defendants in

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state court. Doc. #1, Exhibit 1. The Tenniers then filed an amended complaint on December 26,

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2013 (Doc. #1, Exhibit 2), and a second amended complaint on January 9, 2014 (Doc. #1,

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Exhibit 6). The second amended complaint alleges six causes of action against defendants:

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(1) fraudulent omissions; (2) breach of contract; (3) breach of the implied covenants of good faith

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and fair dealing; (4) unjust enrichment; (5) deceptive trade practice against elderly person; and

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(6) deceptive trade practice against a person with a disability. Id.

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On January 15, 2014, Wells Fargo removed the complaint to federal court on the basis of
diversity jurisdiction. Doc. #1. Thereafter, Wells Fargo filed the present motion to dismiss.

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Doc. #3.

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II.

Motion to Dismiss

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A. Legal Standard

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Wells Fargo seeks 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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B. ‘Pick-a-Payment’ Settlement Res Judicata

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The doctrine of res judicata precludes a party from re-litigating issues in one court that have

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already been fully litigated on the merits in another court. See Five Star Capital Corp. v. Ruby, 194

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P.3d 709, 713 (Nev. 2008). Further, “under elementary principles of prior adjudication a judgment

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in a properly entertained class action is binding on class members in any subsequent litigation.”

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Cooper v. Federal Reserve Bank, 467 U.S. 867, 874 (1984).

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In the present motion, Wells Fargo contends that the underlying claims of the instant action

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were the subject of a class action covering the same type of loan agreement entered into by the

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Tenniers. That litigation, In Re Wachovia Corporation ‘Pick-a-Payment’ Mortgage Marketing and

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Sales Practices Litigation, case no. 5:09-md-02015-JF, 2011 WL 1877630 (N.D. Cal. 2011),

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defined class members as anyone who obtained ‘Pick-a-Payment’ mortgage loans between

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August 1, 2003, and December 31, 2008.2 See Doc. #3, Exhibit A. That class action culminated in

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an approved claims settlement.3 Because the Tenniers are members of the settled In Re Wachovia

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class action, Wells Fargo argues that the present action should be dismissed with prejudice under

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the doctrine of res judicata.

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However, the Tenniers allege that they opted out of the settlement by sending an appropriate

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opt-out letter before the final cut off date. See Doc. #6. As such, for the purpose of this motion, the

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court finds that the Tenniers have sufficiently alleged that they are excluded from enforcement of

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the settlement. See Doc. #6, Exhibit 1 (“Any Person who timely and properly submits a Request for

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Exclusion shall not (1) be bound by any orders or Judgment entered in the Lawsuit nor by the

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Release herein contained . . . .”). Therefore, the court shall deny Wells Fargo’s motion as to this

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issue.

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C. Statute of Limitations

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Wells Fargo argues in the alternative, that the Tenniers’ fraud based claims (the first, fifth,

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and sixth causes of action) are barred by the applicable statute of limitations. Generally, claims

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based in fraud are subject to a three year statute of limitations. NRS § 11.190(3). Wells Fargo

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argues that the Tenniers’ fraud claims accrued at the time the refinance documents were signed in

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December 2007, because those claims are based on WSB’s failure to disclose certain information in

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the loan documents. Thus, Wells Fargo argues that the statute of limitations exhausted in

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December 2010; three years before the filing of the initial complaint.

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However, under Nevada law, fraud based claims “accrue upon the discovery by the

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aggrieved party of the facts constituting the fraud.” NRS 11.190(3)(d). In their complaint, the

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Tenniers allege that they did not discover WSB’s fraud, and thus the statute of limitations did not

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It is undisputed that the Tenniers obtained a ‘Pick-a-Payment’ mortgage loan during the relevant class

period.
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A copy of the order granting final approval of the class action settlement is attached as Exhibit 1 to
Wells Fargo’s motion to dismiss. Doc. #3, Exhibit 1.

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begin to run, until they received notice of the In re Wachovia class action lawsuit in 2011.

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Therefore, based on the allegations in the complaint, the court finds that the Tenniers’ first, fifth,

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and sixth causes of action are not barred by the applicable statute of limitations.

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D. Unjust Enrichment

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To set forth a claim for unjust enrichment, a plaintiff must allege that a defendant unjustly

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retained money or property of another against fundamental principles of equity. See Asphalt Prods.

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Corp. v. All Star Ready Mix, 898 P.2d 699, 700 (Nev. 1995). However, an action for unjust

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enrichment cannot stand when there is an express written contract which guides the activities of the

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parties. LeasePartners Corp. v. Robert L. Brooks Trust Dated Nov. 12, 1975, 942 P.2d 182, 187

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(Nev. 1997).

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Here, there was a written contract between the parties, namely, the refinance documents and

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mortgage note. These documents guided the interactions, obligations, and rights of the parties. As

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such, the Tenniers cannot make a claim in equity for actions that are guided by a contract they are a

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party to. See LeasePartners Corp., 942 P.2d at 187-88. Further, the Tenniers concede in their

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opposition that their claim should be dismissed. Accordingly, the court shall grant Wells Fargo’s

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motion and dismiss the claim for unjust enrichment.

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III.

Motion for Preliminary Injunction

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A preliminary injunction is an “extraordinary remedy that may only be awarded upon a clear

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showing that the plaintiff is entitled to such relief.” Id. (citing Mazurek v. Armstrong, 520 U.S. 968,

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972 (1997) (per curiam)). A court may only grant a preliminary injunction upon a showing that:

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(1) the petitioner is likely to succeed on the merits of his complaint; (2) irreparable harm will result

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in the absence of an injunction; (3) the balance of equities favors an injunction; and (4) an

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injunction is in the public’s interest. Winters v. Natural Res. Def. Council, Inc., 129 S. Ct. 365, 376

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(2008) (citations omitted); Alliance for Wild Rockies v. Cottrell, 622 F.3d 1045, 1050 (9th Cir.

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2010).

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In their motion, the Tenniers claim that right after this action was removed to federal court,

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the parties completed their fifth mortgage mediation without resolution. As a result of the fifth

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mediation’s conclusion, the mediator issued a certificate on April 14, 2014, allowing Wells Fargo

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to file another notice of default and seek foreclosure of the underlying property if it chooses. The

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Tenniers contend that absent an injunction, “Wells Fargo may be able to proceed with foreclosure

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proceedings.” Doc. #11, p.8. (emphasis added).

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The court has reviewed the documents and pleadings on file in this matter and finds that the

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Tenniers’ motion for a preliminary injunction is without merit because there is no pending

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imminent or irreparable harm. Wells Fargo has not indicated that it will take any action against the

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property while this action is pending and no new notice of default has been filed in response to the

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completion of the fifth mediation. The court cannot issue an injunction merely on the possibility

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that future harm “may” occur at some unknown time. Accordingly, the court shall deny the motion

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for a preliminary injunction without prejudice.

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IT IS THEREFORE ORDERED that defendant’s motion to dismiss (Doc. #3) is DENIED

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in-part and GRANTED in-part. Plaintiffs’ fourth cause of action for unjust enrichment is

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DISMISSED.

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IT IS FURTHER ORDERED that plaintiffs’ motion for a preliminary injunction (Doc. #11)
is DENIED without prejudice.

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IT IS SO ORDERED.

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DATED this 6th day of May, 2014.

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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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