Hanif v. Bank of America NA et al

Filing 35

Opinion and Order - Defendant Bank of America's Motion to Dismiss Plaintiff's Complaint (ECF 22 ) and Request for Judicial Notice (ECF 23 ) are GRANTED IN PART and DENIED IN PART. If Plaintiff believes an amended pleading can cure the deficiencies identified, Plaintiff may file an Amended Complaint within two weeks. Signed on 12/20/2016 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

ACHOLAM HANIF,
Plaintiff,

Case No. 3:16-cv-1820-SI
OPINION AND ORDER

v.
BANK OF NEW YORK MELLON FKA
BANK OF NEW YORK, as trustee for the
certificate-holders of the CWABS, Inc.,
asset-backed certificates, series 2005-16;
BANK OF AMERICA NA; DITECH
FINANCIAL LLC; MALCOLM &
CISNEROS, a law corporation; TRUSTEE
CORPS; and NATHAN SMITH,
Defendants.
William J. Macke, WILLIAM J. MACKE & ASSOCIATES, 4411 N.E. Tillamook Street, Portland, OR
97213. Of Attorneys for Plaintiff Acholam Hanif.
James P. Laurick, KILMER, VORHEES & LAURICK, P.C., 732 N.W. 19th Avenue, Portland, OR,
97209. Of Attorneys for Defendant Bank of America NA.
Michael H. Simon, District Judge.
Plaintiff Acholam Hanif (“Hanif”) filed this action against Bank of New York Mellon
(“BONY”), Bank of America NA (“BOA”), Ditech Financial LLC (“Ditech”), Malcolm &
Cisneros, Trustee Corps, and Nathan Smith (collectively, “Defendants”), alleging various causes
PAGE 1 – OPINION AND ORDER

of action in connection with non-judicial foreclosure proceedings initiated against real property
located at 8025 N. Fowler Avenue in Portland, OR (the “Property”). Before the Court is BOA’s
motion to dismiss all claims asserted against it, pursuant to Federal Rule of Civil
Procedure 12(b)(6), and BOA’s request for judicial notice, asking the Court to consider four
documents outside the pleadings. For the reasons below, BOA’s request for judicial notice and
motion to dismiss are granted in part and denied in part.
STANDARDS
A. Motion to Dismiss
A motion to dismiss for failure to state a claim may be granted only when there is no
cognizable legal theory to support the claim or when the complaint lacks sufficient factual
allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual
allegations, the court must accept as true all well-pleaded material facts alleged in the complaint
and construe them in the light most favorable to the non-moving party. Wilson v. HewlettPackard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629
F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint
“may not simply recite the elements of a cause of action, but must contain sufficient allegations
of underlying facts to give fair notice and to enable the opposing party to defend itself
effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from
the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office
Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the
plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556
U.S. 662, 678-79 (2009).

PAGE 2 – OPINION AND ORDER

A complaint must contain sufficient factual allegations to “plausibly suggest an
entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the
expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
B. Incorporation by Reference and Judicial Notice
Federal Rule of Civil Procedure 12(d) provides that “[i]f, on a motion under
Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the
court, the motion must be treated as one for summary judgment under Rule 56.” Consideration of
extrinsic evidence does not convert a motion to dismiss into a motion for summary judgment,
however, when the Court considers “documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of judicial notice.”1 United States v.
Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). The incorporation by reference doctrine applies when
the plaintiff’s claim depends on the contents of a document, the
defendant attaches the document to its motion to dismiss, and the
parties do not dispute the authenticity of the document, even
though the plaintiff does not explicitly allege the contents of that
document in the complaint.
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Under the Federal Rules of Evidence, a
“court may judicially notice a fact that is not subject to reasonable dispute because it: (1) is
generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and

1

BOA does not argue that any of the documents it requests the Court to consider are
attached to the Complaint. Accordingly, the Court only addresses judicial notice and the doctrine
of incorporation by reference.
PAGE 3 – OPINION AND ORDER

readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R.
Evid. 201(b).
BACKGROUND
Hanif alleges that he received a loan (the “Loan”) from Countrywide Home Loans, Inc.
in 2005 in order to purchase the Property.2 ECF 1 ¶ 5. In connection with the Loan, Hanif signed
a promissory note (the “Note”) and a deed of trust (the “Deed of Trust”). ECF 1 ¶ 6. At some
point after Hanif obtained the Loan, BOA became the Loan’s servicer. ECF 1 ¶ 8. On or about
October 1, 2010, BOA stopped accepting Hanif’s payments, claiming that Hanif was in default
on the Loan. ECF 1 ¶ 10. Hanif alleges that in 2013, Defendants Nathan Smith and Malcolm &
Cisneros filed a lawsuit on behalf of BONY and BOA, seeking foreclosure of the deed of trust
(the “Foreclosure Suit”). ECF 1 ¶ 11. According to Hanif, on or about April 1, 2014, Hanif,
BONY, and BOA settled the Foreclosure Suit. ECF 1 ¶ 12, 24. Also according to Hanif, BONY,
and BOA agreed to explore a loan modification with Hanif and pay Hanif $5,000 in attorney’s
fees (the “Settlement Agreement”). ECF 1 ¶¶ 12, 24.
In furtherance of the Settlement Agreement, Hanif applied for a loan modification
between April 1, 2014, and March 11, 2015. ECF 1 ¶ 13. From March 11, 2015, through
June 21, 2016, Hanif was not provided with any status updates regarding his loan modification
application or any mortgage servicing statements by BONY, BOA, or Malcolm & Cisneros.
ECF 1 ¶¶ 14, 16. Hanif further alleges that a notice of transfer of servicing rights was never
provided to Hanif when Ditech became the Loan’s new servicer at some point between April 1,
2014, and May 23, 2016. ECF 1 ¶ 15. As of the filing of this case, Defendants have still not
processed Hanif’s loan modification application. ECF 1 ¶ 26.
2

The following are allegations taken exclusively from the Complaint. The Court does not
adopt these allegations as findings of fact.
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Hanif asserts claims against all Defendants for breach of contract, breach of duty of good
faith and fair dealing, violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692-92p, violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C.
§ 2601-17, violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601-67f, unfair trade
practices, declaratory relief, and what Hanif calls “mortgage accounting.” BOA moves to dismiss
all claims against it.
DISCUSSION
A. Incorporation by Reference and Judicial Notice
BOA asks the Court to consider the Note and a letter from BOA to Hanif dated March 25,
2015 under the doctrine of incorporation by reference. The Court observes that Hanif’s claims
alleging breach of contract and breach of the implied duty of good faith and fair dealing depend
on the Note because Hanif alleges that Defendants breached the Note. Knievel, 393 F.3d at 1076;
ECF 1 ¶ 26. Hanif, however, does not concede the authenticity of either the Note or the letter at
this stage of the proceedings.3 Thus, the Court will not consider the Note or the letter.
BOA also requests that the Court take judicial notice of the Deed of Trust and a
stipulation filed in the Foreclosure Lawsuit that announced the Settlement Agreement. The Court
finds that the Deed of Trust is a proper subject of judicial notice because it has been recorded in
the official records of Multnomah County. It is relevant to the pending motion because Hanif
alleges that Defendants breached the Deed of Trust. ECF 1 ¶ 25-26. The Court thus takes judicial
notice of the Deed of Trust.

3

Because Hanif does not concede the authenticity of the documents, BOA’s citation to
Branch v. Tunnell is unavailing. 14 F.3d 449, 453-54 (9th Cir. 1994) (applying the doctrine of
incorporation by reference because “[n]either side questions the authenticity of the” proffered
documents).
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In addition, the stipulation also is a proper subject of judicial notice because it is a court
filing. The Court therefore takes judicial notice of the filing of that document. BOA relies on the
stipulation as circumstantial evidence that it did not sign the Settlement Agreement because its
name is not included in the stipulation announcing the Settlement Agreement. Further, before
oral argument, Hanif filed the “Settlement Agreement” itself at the Court’s request. ECF 33;
ECF 33-1. That Agreement consists of the stipulation and related email correspondence between
Hanif’s attorney and Defendant Smith on behalf of BONY. The Court will consider the filed
Settlement Agreement, which is referenced in the Complaint.
B. Breach of Contract and Breach of the Implied Duty of Good Faith and Fair Dealing
Hanif claims that BOA breached the Note, Deed of Trust, and Settlement Agreement by
failing to process Hanif’s loan modification application. ECF 1 ¶ 25-26. BOA does not respond
to Hanif’s claim that it breached the Note and Deed of Trust. Hanif, however, has not sufficiently
alleged this claim because he does not plead which provisions, if any, of the Note or Deed of
Trust BOA allegedly breached.
In response to Hanif’s claim that BOA breached the Settlement Agreement, BOA argues
that it was not a party to that agreement. See Barinaga v. JPMorgan Chase & Co., 749 F.
Supp. 2d 1164, 1178 (D. Or. 2010) (citing Herron v. Wells Fargo Fin., Inc., 299 F. App’x 713,
714-15 (9th Cir. 2008)) (noting that there is “[n]o duty of good faith and fair dealing . . . in the
absence of an enforceable contract”); N.W. Nat. Gas Co. v. Chase Gardens Inc., 333 Or. 304,
312-13 (2002) (stating that existence of a contract is a required element for a breach of contract
claim). BOA’s argument that it was not a party to the Settlement Agreement contradicts the
allegations in the Complaint. ECF 1 ¶ 24. Before oral argument, however, Hanif filed a copy of
the Settlement Agreement at the Court’s request. As previously discussed, the Settlement
Agreement consists of a stipulation approved by BONY and Hanif through their respective
PAGE 6 – OPINION AND ORDER

counsel and email correspondence between Hanif’s attorney and Defendant Smith on behalf of
BONY. ECF 33 at 4; ECF 33-1. The Court finds that BOA did not sign the Settlement
Agreement or participate in the email correspondence and thus was not a party to the Settlement
Agreement.
Hanif responds, however, that it is “plausible” that BOA was nevertheless a party to the
Settlement Agreement through a pooling and servicing agreement (“PSA”) between BONY and
BOA. ECF 27 at 2. If BOA agreed to be bound by the Settlement Agreement, through the PSA,
then, Hanif argues, BOA could be liable for breach of contract and breach of the implied duty of
good faith and fair dealing. Hanif, however, has not sufficiently alleged such a relationship
between BONY and BOA that would obligate BOA under the Settlement Agreement.
Accordingly, the Court dismisses the breach of contract and breach of the implied duty of good
faith and fair dealing claims.
C. FDCPA
Hanif claims that all Defendants violated the FDCPA in five ways. ECF 1 ¶ 32. Based on
the factual allegations in the Complaint, only one of these ways even potentially applies to BOA:
Hanif’s claim that Defendants “fail[ed] to provide Mr. Hanif with monthly mortgage
statements.” ECF 1 ¶ 32(a). BOA argues that it is not liable under the FDCPA because (1) it is a
loan servicer, not a debt collector; and (2) Hanif has not sufficiently alleged that BOA is a debt
collector.4 Hanif responds only that his FDCPA claim is viable “[i]f [BOA] was responsible for

4

Additionally, BOA argues that actions taken in furtherance of foreclosure are not debt
collection activities under the FDCPA. The Court notes that BOA’s argument comports with a
recent Ninth Circuit opinion holding that “actions taken to facilitate a non-judicial foreclosure,
such as sending the notice of default and notice of sale, are not attempts to collect ‘debt’ as that
term is defined by the FDCPA.” Ho v. ReconTrust Co., NA, 840 F.3d 618, 621 (9th Cir. 2016).
Furthermore, Hanif does not claim that BOA is involved in the pending foreclosure. According
to Hanif’s allegations, BOA transferred servicing rights to Ditech before the foreclosure. ECF 1
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servicing plaintiff’s mortgage at the time plaintiff alleges he submitted applications for a loan
modification.”5 ECF 27 at 2.
“To state a claim under the FDCPA, a plaintiff must allege (1) she has been the object of
collection activity arising from a consumer debt, (2) the defendant is a debt collector, (3) and the
defendant’s conduct is prohibited by the FDCPA.” Nguyen v. Madison Mgmt. Servs., LLC, 2016
WL 4708535, at *7 (D. Or. Sept. 7, 2016). Under the FDCPA, a “debt collector” is
any person who uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of which is the
collection of any debts, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted to be
owed or due another.
15 U.S.C. § 1692a(6). The definition also expressly excludes
any person collecting or attempting to collect any debt owed or due
or asserted to be owed or due another to the extent such activity . . .
concerns a debt which was not in default at the time it was
obtained by such person.
Id. § 1692a(6)(F)(iii).
Under the exclusion in Section 1692a(6)(F)(iii), other circuits have held that a loan
servicer that acquired servicing rights before the debt went into default is not a debt collector
under the FDCPA. See,e.g., Glazer v .Chase Home Fin. LLC, 704 F.3d 453, 457 (6th Cir. 2013);
Bailey v. Sec. Nat’l Servicing Corp., 154 F.3d 384, 388 (7th Cir. 1998); Perry v. Stewart Title
Co., 756 F.2d 1197, 1208 (5th Cir. 1985). This view finds support in the FDCPA’s legislative
history. S. Rep. No. 95-382, at 3-4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698 (stating
that the term debt collector does not include those “mortgage service companies and others who

¶¶ 15, 19. Hanif also has dismissed his unfair trade practices and declaratory relief claims against
BOA. ECF 27 at 2.
5

Hanif has the same response to BOA’s arguments on the RESPA and TILA claims.

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service outstanding debts for others, so long as the debts were not in default when taken for
servicing”). Other district courts in the Ninth Circuit have followed this approach. See, e.g.,
Klohs v. Wells Fargo Bank, N.A., 901 F. Supp. 2d 1253, 1258 (D. Haw. 2012); Jara v. Aurora
Loan Servs., 852 F. Supp. 2d 1204, 1210-12 (N.D. Cal. 2012); Lettenmaier v. Fed. Home Loan
Mortg. Corp., 2011 WL 3476648, at *13-14 (D. Or. Aug. 8, 2011).
Moreover, in De Dios v. International Realty & Investments, the Ninth Circuit considered
and adopted the reasoning of the Seventh Circuit’s decision in Bailey referenced above. 641
F.3d 1071, 1075 (9th Cir. 2011). In De Dios, the Ninth Circuit held that a property management
company that sent a tenant a demand for unpaid rent was not a debt collector under the FDCPA
because it “obtained the right to collect the rent long before” the rent was due. Id. at 1074. The
Ninth Circuit quoted, with approval, the FDCPA’s legislative history discussed above. Id.
at 1075 n.3.
According to Hanif’s allegations, BOA became the Loan’s servicer before the Loan went
into default. Hanif alleges that he obtained the Loan in 2005, ECF 1 ¶ 5, and that BOA “became
the servicer of Plaintiff’s loan at some point after the loan was originated.” ECF 1 ¶ 8. Hanif
further alleges that “[o]n or about October 1, 2010,” BOA asserted “that Mr. Hanif was in
default.” ECF 1 ¶ 10. Because Hanif has alleged that BOA became the Loan’s servicer before the
Loan was in default, BOA is not a debt collector under the FDCPA. The Court dismisses the
FDCPA claim.6

6

Even if BOA were a debt collector, Hanif has not alleged facts sufficient to show that
the FDCPA prohibits BOA’s alleged conduct. Hanif does not allege that BOA affirmatively
made any false statements to him. Rather, Hanif alleges that BOA failed to communicate with
him by not providing him monthly mortgage statements. The FDCPA obligates debt collectors to
communicate with debtors by requiring them to make certain disclosures. For example, debt
collectors must disclose that they are “attempting to collect a debt and that any information
obtained will be used for that purpose,” 15 U.S.C. § 1692e(11), and that the consumer has a
PAGE 9 – OPINION AND ORDER

D. RESPA
Hanif alleges that BOA violated RESPA by (1) failing to notify him of the status of the
loan modification, (2) failing to notify him that his loan modification had been denied, (3)
making a foreclosure referral while his loan modification was pending, and (4) failing to notify
him that his Loan had been service transferred. ECF 1 ¶ 34. BOA argues that it is not liable to
Hanif under any of these theories.
Regarding Hanif’s first and second RESPA theories, BOA does not argue that it notified
Hanif about the status of his loan modification or that his loan modification had been denied.
Instead, BOA argues that it was not responsible for notifying Hanif because it service transferred
Hanif’s loan on April 16, 2015. BOA adds that April 16, 2015, is only one month after Hanif
allegedly submitted his application, but BOA’s argument misconstrues the Complaint. Hanif
alleges that he applied for a loan modification between April 1, 2014, and March 11, 2015; that
he sent “numerous” documents to BOA; and that the servicing rights to the Loan “were
transferred” to Ditech between April 1, 2014, and May 23, 2016. ECF 1 ¶ 13, 15. Accepting as
true Hanif’s allegations and construing them in the light most favorable to him, Hanif could have
submitted his application as early as April 1, 2014, and BOA could have ceased being the Loan’s
servicer as late as May 23, 2016. These dates are almost 26 months apart. Even BOA’s proffered
date of April 16, 2015, for the service transfer would have given BOA more than a year to
process Hanif’s loan modification application.
Regarding Hanif’s third theory, BOA correctly argues that Hanif has alleged that Ditech,
not BOA, made the foreclosure referral. ECF 1 ¶ 21. Hanif has not alleged how BOA could be

“right to dispute the debt or request the name and address of the original creditor,” 15 U.S.C.
§ 1692g(b). Hanif has not alleged how BOA’s failure to provide monthly mortgage statements
violates either of these provisions or any other provision of the FDCPA.
PAGE 10 – OPINION AND ORDER

liable for a referral made by Ditech. Hanif’s third theory of RESPA liability is dismissed against
BOA.
Regarding Hanif’s fourth theory, BOA argues that it notified Hanif on March 25, 2015,
that it was making a service transfer. As discussed earlier, Hanif alleges that BOA did not notify
him of the service transfer. The Court must take Hanif’s allegation as true at this stage of the
proceedings.
In summary, the Court grants BOA’s motion to dismiss Hanif’s RESPA claim against
BOA solely with respect to Hanif’s theory that BOA violated RESPA by making a foreclosure
referral while Hanif’s loan modification was pending. The Court denies BOA’s motion to
dismiss Hanif’s RESPA claim in all other respects.
E. TILA
Hanif alleges that BOA violated TILA by failing to provide periodic mortgage servicing
statements from March 11, 2015, through June 21, 2016. ECF 1 ¶¶ 16, 36. TILA regulations
provide that
A servicer of a transaction subject to this section shall provide the
consumer, for each billing cycle, a periodic statement . . . . A
creditor or assignee that does not currently own the mortgage loan
or the mortgage servicing rights is not subject to the requirement in
this section to provide a periodic statement.
12 C.F.R. § 1026.41(a)(2). Additionally, the statement must be “delivered or placed in the mail
within a reasonably prompt time after the payment due date or the end of any courtesy period
provided for the previous billing cycle.” Id. § 1026.41(b).
BOA argues that it did not violate TILA during the period from March 11, 2015, through
June 21, 2016, because it transferred service rights to Ditech on April 16, 2015. As previously
discussed, Hanif has alleged that the service rights “were transferred” as late as May 23, 2016.
ECF 1 ¶ 15. BOA’s argument to the contrary contradicts the Complaint. The Court holds that
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Hanif has stated a plausible claim for relief under TILA. For the period before May 23, 2016,
Hanif plausibly alleges that BOA was required to provide a periodic mortgage servicing
statement under TILA. Further, for at least the one month between May 23, 2016, and June 21,
2016, BOA could still plausibly have been required to provide a periodic statement for the month
before May 23, 2016. Therefore, the Court denies BOA’s motion to dismiss the TILA claim
against it at this stage of the proceedings.
F. Remaining Claims
BOA also moves to dismiss Hanif’s unlawful trade practices and declaratory relief
claims. Hanif responds that BOA is not a defendant to these claims. ECF 27 at 2. Accordingly,
the Court dismisses Hanif’s unlawful trade practices and declaratory relief claims against BOA.
Finally, BOA moves to dismiss Hanif’s claim entitled “mortgage accounting” on the grounds
that a mortgage accounting is a remedy, not a claim. The Court agrees and notes that Hanif has
requested mortgage accounting as a remedy. ECF 1 at 11. Accordingly, the Court dismisses
Hanif’s Eighth Claim as alleged against BOA.
CONCLUSION
Defendant Bank of America’s Motion to Dismiss Plaintiff’s Complaint (ECF 22) and
Request for Judicial Notice (ECF 23) are GRANTED IN PART and DENIED IN PART. If
Plaintiff believes an amended pleading can cure the deficiencies identified, Plaintiff may file an
Amended Complaint within two weeks.
IT IS SO ORDERED.
DATED this 20th day of December, 2016.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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