Nguyen et al v. Bank of America

Filing 45

MEMORANDUM AND ORDER denying 22 MOTION to Dismiss THE COMPLAINT IN PART OR, ALTERNATIVELY, STRIKE THE CLASS ALLEGATIONS.(Signed by Judge Kenneth M. Hoyt) Parties notified.(ccarnew, )

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
LONG BA NGUYEN, et al,

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Plaintiffs,
VS.
BANK OF AMERICA, NA,
Defendant.

CIVIL ACTION NO. G-11-290

MEMORANDUM AND ORDER
I.
Before the Court is the defendant’s, Bank of America, N.A., motion to dismiss portions
of the plaintiffs’ complaint. [Doc. No.22]. The plaintiffs, Long Ba Nguyen and Lan N. Huynh,
have filed a response in opposition to the defendant’s motion [Doc. No. 40], and the defendant
has filed a reply. [Doc. No. 43]. The Court, being fully advised, is of the opinion that the
defendant’s motion should be denied.
II.
The plaintiffs brought this suit as a class action alleging that the defendant has acted
deceptively, unfairly and unreasonably in the manner that it has processed their automatic
mortgage payments. In this regard, the plaintiffs offer that they were customers of the defendant
and among customers who have paid their home mortgage according to a plan called the “Pay
Plan.” Under this Plan, a customer’s mortgage payment is automatically collected from the
customer’s account on a weekly or bi-monthly basis. The total of the automatic deductions over
the course of a month are to equal the monthly payment. The plaintiffs contend that although
there was an agreed date that each payment would be withdrawn from the plaintiffs’ account, the
defendant “systematically and persistently withdrew [the plaintiffs’] payment one to five days (or

even more days) later than agreed.” As a result, the plaintiffs argue, more interest accrued on the
unpaid balance of the plaintiffs’ loana. Because this delay resulted in more interest charges, the
loan balance was not reduced as agreed. Hence, the plaintiffs assert claims for breach of
contract, violations of the Truth in Lending Act (TILA), conversion, negligent misrepresentation,
unjust enrichment and seek to establish a nationwide class action.
III.
In its memorandum in support of its motion to dismiss, the defendant asserts eight bases
for the dismissal of the plaintiffs’ suit in whole or in part. The defendant’s motion to dismiss is
based on Federal Rules of Civil Procedure, Rules 12(b)(6), 12(f) and 23(a) and (b).

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defendant contends that the Court should dismiss the plaintiffs’ suit in full. In the alternative,
however, the defendant argues for partial dismissal because: (a) the plaintiffs’ tort claims, found
in claims 4, 5 and 7 of their pleadings, are barred by the Economic Loss Rule; (b) the plaintiffs’
claim 6 is governed by a written contract; (c) the plaintiffs are not consumers, therefore their
claim 7 (DTPA claim) is not an actionable claim; (d) the plaintiffs’ TILA claim, claim 3 is barred
by limitations and lacks merit; (e) the plaintiffs’ breach-of-contract claim, associated with the
Auto-Draft Pay Plan, cannot form the basis for a valid claim; and (f) the plaintiffs’ claims are too
individualized to meet the Rule 23 prerequisites for a class action.
The plaintiffs contend that the defendant used the Auto Draft Pay Plan to withdraw funds
from the plaintiffs’ account that were not due under the terms of the contract. By withdrawing
funds later than agreed, argue the plaintiffs, the defendant charged additional interest for its delay
and, therefore, unilaterally changed the payment terms resulting in an overpayment of interest.
The plaintiffs dispute the defendant’s assertion that it erroneously miscalculated the plaintiffs’
interest rate. Moreover, the plaintiffs contend the “simple interest miscalculation” excuse is a

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scheme that was/is pervasive and systematic.

Therefore, the defendant’s motion is

unmeritorious.
IV.
Federal Rule of Civil Procedure 12(b)(6) authorizes a defendant to seek dismissal for
“failure to state a claim upon which relief may be granted.” Fed. R. Civ. P. 12(b)(6). Under the
demanding strictures of a Rule 12(b)(6) motion, “[t]he plaintiff’s complaint is to be construed in
a light most favorable to the plaintiff, and the allegations contained therein are to be taken as
true.” Oppenheimer v. Prudential Sec., Inc., 94 F.3d 189, 194 (5th Cir. 1996) (citing Mitchell v.
McBryde, 944 F.2d 229, 230 (5th Cir. 1991)). Dismissal is appropriate only if, the “[f]actual
allegations [are not] enough to raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1965, 167 L.Ed.2d 929 (2007).
Moreover, in light of Federal Rule of Civil Procedure 8(a)(2), “[s]pecific facts are not necessary;
the [factual allegations] need only ‘give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93, 127 S. Ct. 2197, 2200, 167
L.Ed.2d 1081 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555, 127 S. Ct. at 1964. Even
so, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more
than labels and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1964 - 65 (citing Papasan v. Allain,478 U.S.
265, 286, 106 S. Ct. 2932, 92 L.Ed. 2d 209 (1986).
More recently, in Ashcroft v. Iqbal, the Supreme Court expounded upon the Twombly
standard, reasonsing that “[t]o survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft

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v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550
U.S. at 570, 127 S. Ct. at 1974). “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.” Ashcroft,---U.S.---, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556,
127 S. Ct. at 1955). “But where the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged--but is has not ‘show[n]’--‘that the
pleader is entitled to relief.’” Ashcroft, 556 U.S. 662, 129 S. Ct. at 1950 (quoting Fed. R. Civ. P.
8(a)(2)). Nevertheless, when considering a 12(b)(6) motion to dismiss, the court’s task is limited
to deciding whether the plaintiff is entitled to offer evidence in support of his or her claims, not
whether the plaintiff will eventually prevail. Twombly, 550 U.S. at 563, 1969 n.8 (citing Scheuer
v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L.Ed.2d 90 (1974)); see also Jones v.
Greninger, 188 F.3d 322, 324 (5th cir. 1999).

V.
The defendant’s motion to dismiss should be denied. The defendant’s own pleading
demonstrates that the plaintiffs have asserted cognizable causes of action. The Court points to
the defendant’s admission that the defendant committed error(s) in its calculation of the interest
due on the plaintiffs’ note obligations. Whether this conduct was simple error or a scheme to
increase the defendant’s revenue is yet to be determined. As well, whether the Statute of
Limitations applies to part or all of a particular claim is a question that goes to the extent of the
plaintiffs’ recovery, not whether liability may be established. After all, pleading the Statute of
Limitations is simply pleading an affirmative defense to a claim or suit, while acknowledging
that the facts, otherwise, support the cause of action. See Scheuer v. Rhodes, 416 U.S. 232, 236

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(1974) (overruled on other grounds); see also Jones v. Greming, 188 F.3d 322, 324 (5th Cir.
1999). A plaintiff’s obligation is to provide the grounds for his claim for recovery; plausibility is
the objective, not proof that determines outcome. See Ashcroft, 129 S. Ct. at 1950.
The Court applies that same analysis to the defendant’s affirmative defense, the
Economic Loss Rule, unavailability of the Discovery Rule, and whether the plaintiffs’ claim
meets the prerequisite of commonality, typicality, predominance and superiority. See F.R.C.P.,
Rule 23. In particular, whether a viable class action claim exists will first be the subject of
discovery. The Court is of the opinion that the plaintiffs’ suit is not so fact specific as to exclude
the possibility of a class claim for conspiratorious, negligent or fraudulent conduct perpetuated
on the defendant’s customers by the manner and means that the defendant collected note
obligations. The defendant simply seeks to have Twombly and its progeny accomplish what was
never intended--a pretrial of the facts of a plaintiff’s case via the defendant’s defenses to those
facts.
Based on the foregoing discussions and analysis, the Court determines that the facts
alleged support the causes of action claimed and, therefore, the defendant’s motion to dismiss
and strike are DENIED.
It is so ORDERED.
SIGNED at Houston, Texas this 6th day of January, 2012.

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Kenneth M. Hoyt
United States District Judge

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