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

Filing 24

ORDER granting Defendant Bank of America's 7 Motion to Dismiss; giving Plaintiff 30 days to file amended complaint; denying as moot Plaintiff's 20 Motion for Restraining Order. Signed by Judge Miranda M. Du on 1/5/2016. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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DENNIS KERR,

Case No. 3:15-cv-00306-MMD-WGC

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Plaintiff,

ORDER

v.
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BANK OF AMERICA, N.A. and
TRUSSTEE CORPS.,

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Defendants.

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I.

SUMMARY

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Plaintiff Dennis Kerr, proceeding pro se, initiates this action to assert claims that

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appear to relate in part to a mortgage loan. Before the Court is Defendant Bank of

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America, N.A.’s (“BANA”) Motion to Dismiss Complaint (“Motion”). (Dkt. no. 7.) Plaintiff

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has opposed (dkt. no. 10) and BANA has replied (dkt. no. 12). For the reasons

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discussed below, the Motion is granted.

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II.

BACKGROUND

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The following background facts are taken primarily from the Complaint, which is

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rather difficult to parse. Because the Complaint makes general and sweeping

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allegations relating to several events, the Court will recite these events as best it can.

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The first relates to an alleged wrongful foreclosure. Plaintiff obtained a mortgage loan

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from Countrywide secured by a Deed of Trust on property located at 580 Aswan Street

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in Sparks, Nevada (“the Property”) and paid off a prior loan with Avco Mortgage

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Company (“Avco”). (Dkt. no. 2 at 2-3.) In 2014, BANA had Avco do a trustee’s sale on

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the Property under the Avco loan even though it had been satisfied. After Plaintiff’s

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father confronted Avco, it resolved the wrongful foreclosure by providing a “substitution

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of trustee and full reconveyance” of the Property on July 30, 2014. (Id. at 3, 6.) BANA’s

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statement of March 17, 2014, shows adjustments to the monthly statement, including

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fees that should not have been charged.

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The second event involves BANA’s alleged theft of insurance proceeds on

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insurance that BANA had forced Plaintiff to place. (Id. at 7.) Plaintiff alleges that a

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broken pipe caused the basement of the Property to flood, causing about $9,200 in

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damages. (Id.) A contractor was hired and after he sent in a claim for doing part of the

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repair, BANA stole the insurance check but paid him a year later. (Id.) Plaintiff had to

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sue the contractor to recover the money on payment for work he apparently did not

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perform. (Id.) BANA paid Plaintiff as a result of a class action settlement in Florida on

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the forced placed insurance scam. (Id. at 8.)

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The third event relates to a loan modification that Plaintiff’s father, who

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possessed a power of attorney, agreed to while Plaintiff was deployed on a tour of duty

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overseas. Plaintiff’s father agreed to the loan modification term for payment to be $956

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per month, but not the higher payment term of $2,856 per month. (Id. at 8.) BANA

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proceeded with the loan modification even though Plaintiff did not sign the modified

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loan. (Id.) Plaintiff has received a notice of breach of default and election to sale set for

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July 2015. (Id. at 9.)

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Based on allegations relating to these three main events, Plaintiff advances

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seven claims against Defendants BANA and Trusstee Corps1: breach of contract, unjust

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enrichment, breach of the implied covenant of good faith and fair dealing, libel, slander

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and defamation, breach of fiduciary duty, violation of the Truth in Lending Act (“TILA”)

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and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). (Id. at 10-14.)

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In response, BANA has moved for dismissal. (Dkt. no. 7.)

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III.

LEGAL STANDARD

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A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which

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relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must

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The Complaint does not assert any specific allegations against Trustee Corps.
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provide “a short and plain statement of the claim showing that the pleader is entitled to

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relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

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While Rule 8 does not require detailed factual allegations, it demands more than “labels

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and conclusions” or a “formulaic recitation of the elements of a cause of action.”

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Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual

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allegations must be enough to raise a right to relief above the speculative level.”

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Twombly, 550 U.S. at 555. Thus, “[t]o survive a motion to dismiss, a complaint must

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contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

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plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

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In Iqbal, the Supreme Court clarified the two-step approach district courts are to

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apply when considering motions to dismiss. First, a district court must accept as true all

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well-pleaded factual allegations in the complaint; however, legal conclusions are not

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entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a

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cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

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Second, a district court must consider whether the factual allegations in the complaint

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allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the

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plaintiff’s complaint alleges facts that allow a court to draw a reasonable inference that

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the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint fails

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to “permit the court to infer more than the mere possibility of misconduct, the complaint

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has alleged — but it has not ‘shown’ — ‘that the pleader is entitled to relief.’” Id. at 679

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(quoting Fed. R. Civ. P. 8(a)(2)) (alteration omitted). When the claims in a complaint

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have not crossed the line from conceivable to plausible, the complaint must be

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dismissed. Twombly, 550 U.S. at 570. A complaint must contain either direct or

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inferential allegations concerning “all the material elements necessary to sustain

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recovery under some viable legal theory.” Id. at 562 (quoting Car Carriers, Inc. v. Ford

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Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).

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Mindful of the fact that “[t]he Supreme Court has instructed the federal courts to

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liberally construe the ‘inartful pleading’ of pro se litigants,” the Court will view Plaintiff’s
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pleadings with the appropriate degree of leniency. Eldridge v. Block, 832 F.2d 1132,

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1137 (9th Cir. 1987) (quoting Boag v. MacDougall, 454 U.S. 364, 365 (1982)).

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IV.

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DISCUSSION
BANA argues that the Complaint is generally deficient and fails to state a claim

upon which relief may be granted.2 The Court agrees.

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A.

Breach of Contract

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A breach of contract claim requires a plaintiff to show: (1) the existence of a valid

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contract; (2) a breach by the defendant; and (3) damage because of the breach. Saini v.

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Int’l Game Tech., 434 F. Supp 2d 913, 919–20 (D. Nev. 2006) (citing Richardson v.

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Jones, 1 Nev. 405, 405 (Nev. 1865). To create an enforceable contract there must be

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an “offer, acceptance, meeting of the minds, and consideration.” May v. Anderson, 119

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P.3d 1254, 1257 (Nev. 2005).

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The Complaint does not allege the contract that Defendants purportedly

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breached. In fact, the Complaint does not identify the contract in question, what action

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Defendants allegedly did that amount to a breach of that contract and what damage

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resulted from said breach.

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B.

Unjust Enrichment

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“The phrase ‘unjust enrichment’ is used in law to characterize the result or effect

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of a failure to make restitution of, or for, property or benefits received under such

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circumstances as to give rise to a legal or equitable obligation to account therefor.”

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

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(Nev. 1997). “Unjust enrichment occurs when ever [sic] a person has and retains a

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benefit which in equity and good conscience belongs to another.” Id. (quotations and

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citation omitted). “The doctrine of unjust enrichment or recovery in quasi contract

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applies to situations where there is no legal contract but where the person sought to be

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Plaintiff’s opposition brief does not address BANA’s arguments. Instead, Plaintiff
offers exhibits to supplement his Complaint, which is improper. Plaintiff also makes
allegations that he claims support a claim for Fair Debt Collections Practices Act, but he
did not plead this claim in his Complaint.
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charged is in possession of money or property which in good conscience and justice he

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should not retain but should deliver to another [or should pay for].” Id. (citing Lipshie v.

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Tracy Inv. Co., 93 Nev. 370, 379, 566 P.2d 819, 824 (1977) (“To permit recovery by

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quasi-contract where a written agreement exists would constitute a subversion of

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contractual principles.”)).

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The Complaint contains conclusory allegations that Defendants are unjustly

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enriched by “the forced placed insurance scam, and stealing the plaintiffs insurance

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check” among other alleged wrongful conduct. (Dkt. no. 2 at 11.) These conclusory

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allegations are insufficient to show that Plaintiff is entitled to relief. For example, Plaintiff

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alleges theft of insurance proceeds by BANA, but he also alleges that BANA paid the

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contractor although it was not clear whether the contractor performed the repair caused

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by the flood damage. Moreover, Plaintiff alleges he sued the contractor to recover the

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payment. Accepting these allegations as true, it is not clear how BANA was unjustly

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enriched with respect to the insurance proceeds.

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C.

Breach of the Implied Covenant of Good Faith and Fair Dealing

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Nevada law holds that “[e]very contract imposes upon each party a duty of good

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faith and fair dealing in its performance and its enforcement.” A.C. Shaw Constr., Inc. v.

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Washoe Cnty., 784 P.2d 9, 9 (Nev. 1989) (quoting Restatement (Second) of Contracts §

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205). “When one party performs a contract in a manner that is unfaithful to the purpose

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of the contract and the justified expectations of the other party are thus denied,

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damages may be awarded against the party who does not act in good faith.” Hilton

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Hotels v. Butch Lewis Prods., Inc., 808 P.2d 919, 923 (Nev. 1991). To establish a claim

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for contractual breach of the implied covenant of good faith and fair dealing, a plaintiff

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must allege the existence of a valid contract and a breach of the implied duty of good

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faith and fair dealing by performing in a manner that was unfaithful to the purpose of the

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contract. Perry v. Jordan, 900 P.2d 335, 338; see Hilton Hotels, 808 P.2d at 923. A

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plaintiff must establish that the defendant intentionally breaches the intention and spirit

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of the agreement. Morris v. Bank of America, 886 P.2d 454, 457 (Nev. 1994) (citing

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Hilton Hotels, 808 P.2d at 922-23).

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The Complaint is deficient because there is no allegation relating to the existence

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of a valid contract and what Defendants purportedly did to breach the intention and spirit

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of that contract.

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D.

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Under Nevada law, a prima facie case of defamation is established if the plaintiff

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alleges: “(1) a false and defamatory statement by the defendant concerning the plaintiff;

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(2) an unprivileged publication to a third person; (3) fault, amounting to at least

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negligence; and (4) actual or presumed damages.” Pacquiao v. Mayweather, 803 F.

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Supp. 2d 1208, 1211 (D. Nev. 2011) (citing Wynn v. Smith, 16 P.3d 424, 427 (2001)).

Libel/Slander/Defamation

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The Complaint fails to allege facts to support each element of a defamation

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claim. Plaintiff does not even allege what false statement of facts was made about him.

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He asserts that he can prove that BANA did communicate information concerning him to

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others. (Dkt. no. 2 at 12.) However, Plaintiff must allege what false statement was

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communicated, not just promise that he will show the content of that communication to

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survive dismissal.

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E.

Breach of Fiduciary Duty

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A breach of fiduciary duty claim requires Plaintiffs to show the existence of a

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fiduciary duty, the breach of that duty, and damages proximately caused by the breach.

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Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880-81 (9th Cir. 2007) (applying

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Nevada law); see also Clark v. Lubritz, 944 P.2d 861, 866-67 (Nev. 1997). “A fiduciary

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relation exists between two persons when one of them is under a duty to act for the

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benefit of another upon matters within the scope of the relation.” Stalk v. Mushkin, 199

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P.3d 838, 843 (Nev. 2009). Fiduciary relationships arise where the parties do not deal

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on equal terms and there is special trust and confidence placed in the superior party.

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Hoopes v. Hammargren, 725 P.2d 238, 242 (Nev. 1986). Moreover, courts have

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repeatedly held that a lender owes no fiduciary duties to a borrower absent exceptional
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circumstances, such as when a special relationship exists between the two parties. See

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Yerington Ford, Inc. v. Gen. Motors Acceptance Corp., 359 F. Supp. 2d 1075, 1090 (D.

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Nev. 2004) (stating “the Court is satisfied that the Nevada Supreme Court would hold

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that an arms-length lender-borrower relationship is not fiduciary in nature, absent

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exceptional circumstances”), aff’d in relevant part by Giles v. Gen. Motors Acceptance

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Corp., 494 F.3d 865 (9th Cir. 2007).

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Plaintiff makes conclusory allegations that the monthly payment under the

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modification was higher than represented and he did not sign the modification. These

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conclusory allegations fail to establish a claim for breach of fiduciary duty. Moreover,

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because it is well settled that the relationship between a lender and a borrower is not

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one that gives rise to a fiduciary duty absent exceptional circumstances, see Yerington

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Ford, 359 F. Supp. 2d at 1090, Plaintiff must also allege facts to show a special

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relationship with Defendants other than that of a lender and borrower. Here, Plaintiff

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fails to allege what special relationship existed between Plaintiff and Defendants, other

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than the fact that he had obtained a mortgage loan from BANA.

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F.

TILA

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The Complaint alleges violations of TILA and all related regulations. TILA was

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enacted “to protect consumers' choice through full disclosure and to guard against the

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divergent and at times fraudulent practices stemming from uninformed use of credit.”

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King v. California, 784 F.2d 910, 915 (9th Cir.1986). TILA requires creditors to disclose

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certain information about the terms of a particular loan to the prospective borrower. See

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e.g., 15 U.S.C. §§ 1631-32, 1638; 12 C.F.R. § 226.17. Plaintiff’s conclusory allegations

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that Defendants fail to “accurately and fully disclose the terms of the legal obligations

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between the parties involved” fail to give notice of any plausible claim. (Dkt. no. 2 at 13.)

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The assertion of general allegations — that Defendants “forced place insurance on the

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home then stole the insurance check for a year,” “signed the original modification

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agreement when the plaintiff was in Iraq” and engaged in racketeering — do not show

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what terms were not disclosed at the time credit was extended. Plaintiff cites to 12
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C.F.R. § 226.17(c), but that regulation does not involve forced place insurance or loan

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modifications.
RICO

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G.

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18 U.S.C. § 1964(c) provides for a private right of action by “[a]ny person injured

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in his business or property by reason of a violation of § 1962.” See Sedima, S.P.R.L. v.

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Imrex Co., Inc., 473 U.S. 479, 495 (1985). A civil RICO claims requires a showing of:

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“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known

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as ‘predicate acts’) (5) causing injury to the plaintiff's ‘business or property.’” Grimmett v.

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Brown, 75 F.3d 506, 510 (9th Cir. 1996) (quoting 18 U.S.C. §§ 1964(c), 1962(c);

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Sedima, S.P.R.L. 473 U.S. at 496). Allegations of fraudulent conduct that constitutes a

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pattern of racketeering activity must satisfy Fed. R. Civ. P. 9(b)’s specificity

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requirements. Odom v. Microsoft Corp., 486 F.3d 541, 553-54 (9th Cir. 2007) (en banc);

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Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1400-01 (9th Cir.

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1986). To satisfy Rule 9(b)’s requirements, the Complaint “must state the time, place,

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and specific content of the false representations as well as the identities of the parties to

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the misrepresentation.” Schreiber Distrib., 806 F.2d at 401.

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The Complaint makes conclusory allegations about Defendants’ “criminal

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racketeering activity,” including the confusing allegations that “Defendants were

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employed by and associated with an illegal enterprise” that were “all paid for by the

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villains at Bank of America” when BANA is one of two named defendants. These

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conclusory allegations fail to establish a claim. Moreover, Rule 9(b) requires that

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allegations of racketeering activities must include the time, place, identities and specific

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content of the alleged fraud. However, the Complaint lumps the two Defendants

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together and does not identify the alleged racketeering activities with particularity.

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H.

Leave to Amend

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The Court has discretion to grant leave to amend and should freely do so “when

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justice so requires.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)

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(quoting Fed. R. Civ. P. 15(a)). As Plaintiff is proceeding pro se, the Complaint has not
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been previously amended, and the Court cannot conclude that amendment would be

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futile, the Court grants leave to amend the Complaint to address the deficiencies

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discussed in this Order.

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If Plaintiff chooses to file an amended complaint he is advised that an amended

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complaint supersedes the original complaint and, thus, the amended complaint must be

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complete in itself. See Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d

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1542, 1546 (9th Cir. 1989) (holding that “[t]he fact that a party was named in the original

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complaint is irrelevant; an amended pleading supersedes the original”); see also Lacey

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v. Maricopa Cnty., 693 F.3d 896, 928 (9th Cir. 2012) (holding that for claims dismissed

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with prejudice, a plaintiff is not required to reallege such claims in a subsequent

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amended complaint to preserve them for appeal). Plaintiff’s amended complaint must

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contain all claims, defendants, and factual allegations that Plaintiff wishes to pursue in

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this lawsuit.

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V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several

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cases not discussed above. The Court has reviewed these arguments and cases and

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determines that they do not warrant discussion as they do not affect the outcome of the

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Motion.

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It is therefore ordered that Defendant Bank of America, N.A.’s Motion to Dismiss

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Complaint (dkt no. 7) is granted. Plaintiff’s Complaint is dismissed without prejudice and

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with leave to amend. Plaintiff will have thirty (30) days from today to file an amended

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complaint. Failure to do so will result in dismissal of the Complaint with prejudice.

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Plaintiff’s Motion for Restraining Order (dkt. no. 20) is denied as moot.
DATED THIS 5th day of January 2016.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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