Kowsari v. Aurora Loan Services et al
Filing
16
MEMORANDUM DECISION and ORDER granting 5 Motion to Dismiss. Signed by Judge Ted Stewart on 5/28/2014. (blh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
MEDHI KOWSARI,
MEMORANDUM DECISION AND
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS
Plaintiff,
v.
AURORA LOAN SERVICES, and CAL
WESTERN RECONVEYANCE, John Does
I through V,
Case No. 1:13-CV-160 TS
District Judge Ted Stewart
Defendants.
This matter is before the Court on Defendants’ Motion to Dismiss.1 For the reasons
discussed below, the Court will grant Defendants’ Motion.
I. BACKGROUND
Plaintiff Medhi Kowsari owns real property in Logan, Utah. In 2006, Plaintiff executed a
Deed of Trust against the property to secure a loan. In or around 2009, Plaintiff failed to make
monthly payments on the loan. In 2010, Defendant Aurora Loan Services, LLC (“Aurora”)
began discussing a loan modification agreement with Plaintiff. The parties did not reach a final
agreement. In 2011, the trustee under the Deed of Trust issued a Notice of Trustee’s Sale and the
property was foreclosed and sold to Aurora.
Plaintiff filed suit in state court, challenging the validity of the foreclosure proceedings
and asserting various contract-based claims. Aurora removed the case to federal court in
November 2013. Shortly thereafter, Defendants moved to dismiss all of Plaintiff’s claims.
1
Docket No. 5.
1
II. LEGAL STANDARD
On a 12(b)(6) motion to dismiss, the Court must “accept as true all well-pleaded factual
allegations . . . and view these allegations in the light most favorable to the plaintiff.” 2 “[C]ourts
must consider the complaint in its entirety, . . . [including] documents incorporated into the
complaint by reference . . . .” 3 “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its
face.’” 4 “Thus, the mere metaphysical possibility that some plaintiff could prove some set of
facts in support of the pleaded claims is insufficient; the complaint must give the court reason to
believe that this plaintiff has a reasonable likelihood of mustering factual support for these
claims.” 5 In so doing, the Court “will disregard conclusory statements.” 6
III. DISCUSSION
Plaintiff asserts three causes of action in his Complaint. First, Plaintiff challenges the
validity of the foreclosure proceeding. Second, Plaintiff asserts a claim for breach of the
covenant of good faith and fair dealing. Third, Plaintiff seeks punitive damages. Defendants
argue that all of Plaintiff’s claims should be dismissed with prejudice, based in part on
documents referenced in the Complaint. Plaintiff seeks to convert this 12(b)(6) motion to a Rule
2
Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009).
3
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
4
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
5
Gale v. Aurora Loan Servs., No. 1:11-CV-47 TS, 2011 WL 1897671, at *1 (D. Utah
May 18, 2011) (citing Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007)).
6
Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012).
2
56 motion for summary judgment and argues that summary judgment should not be granted to
Defendants because material facts are in dispute.
“If, on a motion under Rule 12(b)(6) . . . , 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.” 7 “‘[T]he district court may consider documents referred to in the complaint if the
documents are central to the plaintiff’s claim and the parties do not dispute the documents’
authenticity,’” 8 without converting a motion to dismiss into one for summary judgment.
Defendants submitted documents to the Court in their opposition memorandum, and
argued that the documents were all incorporated by reference in Plaintiff’s Complaint or
judicially noticable. In ruling on this Motion, the Court considered Plaintiff’s Complaint and the
Notice of Trustee’s Sale. The Notice of Trustee’s Sale was explicitly referenced in Plaintiff’s
Complaint, is central to one of Plaintiff’s claims, and Plaintiff has not challenged the authenticity
of the copy submitted to the Court. Because the Court does not rely on evidence outside the
pleadings to resolve the issues, the Court denies Plaintiff’s request and resolves the Motion under
12(b)(6).
A. VALIDITY OF FORECLOSURE
Plaintiff’s first cause of action challenges the validity of the foreclosure proceedings.
First, Plaintiff appears to assert a breach of contract claim based on Plaintiff’s allegations that
Defendants refused multiple payments by Plaintiff. Second, Plaintiff asserts that the Notice of
Trustee’s Sale was fraudulently issued by Cal Western Reconveyance. Third, in the briefing for
7
Fed. R. Civ. P. 12(d).
8
Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007) (quoting Jacobsen
v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)).
3
this Motion, Plaintiff references the Making Home Affordable program—Plaintiff does not
articulate a specific argument based on a provision of the legislation enacting this program, but it
appears that Plaintiff intends to rely on the protections afforded by the Home Affordable
Modification Program (“HAMP”).
1. Breach of Contract
Plaintiff’s Complaint alleges that Defendants repeatedly refused to accept payments
tendered by Plaintiff. But as Plaintiff explains in more detail in his opposition memorandum,
these payments were allegedly tendered under a temporary adjustment agreement that modified
the parties’ original agreement. Moreover, Plaintiff alleges that while he was attempting to
tender payments according to the temporary agreement, Defendants continued with foreclosure
proceedings in an attempt to coerce Plaintiff into an additional modification agreement.
Utah law states that parties seeking to modify a contract must reach a meeting of the
minds on the modification. 9 “A binding contract exists where it can be shown that the parties
had a meeting of the minds as to the integral features of [the] agreement and that the terms are
sufficiently definite as to be capable of being enforced.” 10 Aside from Plaintiff’s conclusory
allegation that the parties entered into an agreement, Plaintiff’s Complaint does not allege terms
of the alleged modification or other facts indicating that there was in fact a meeting of the
parties’ minds to properly modify the original agreement. Instead, Plaintiff’s allegations indicate
that Defendants refused payments because the payments did not meet Defendants’ understanding
of the temporary adjustment agreement. Because the Court is unable to find—based on the facts
9
Provo City Corp. v. Nielson Scott Co., Inc., 603 P.2d 803, 806 (Utah 1979).
10
LD III, LLC v. BBRD, LC, 221 P.3d 867, 872 (Utah Ct. App. 2009) (citations and
internal quotation marks omitted).
4
alleged—that a binding modification agreement existed, Plaintiff’s claim based on the refused
payments fails.
2. Notice of Trustee’s Sale
Plaintiff alleges that Cal Western Reconveyance issued the Notice of Trustee’s Sale as
part of the foreclosure proceedings. Plaintiff asserts that this notice renders the foreclosure
invalid because Cal Western Reconveyance is not an entity authorized to issue the notice under
Utah law.
A copy of the Notice of Trustee’s Sale was included in the briefing for this Motion.
Contrary to Plainitiff’s allegations, Cal Western Reconveyance did not issue the notice. Rather,
the notice was issued by James Woodall. Plaintiff has not asserted that Mr. Woodall was not
authorized to issue the notice. Therefore, this claim fails.
3. HAMP-Based Claim
This Court has repeatedly recognized that HAMP does not provide a private cause of
action. 11 Therefore, to the extent that Plaintiff asserts a claim based on protections afforded by
HAMP, Plaintiff’s claim also fails.
B. GOOD FAITH & FAIR DEALING CLAIM
Plaintiff asserts a claim for breach of the covenant of good faith and fair dealing based on
Defendants’ conduct during modification negotiations, wherein Defendants allegedly engaged in
coercion, undue influence, threatening influence, bad faith, and fraudulent reporting of loan
payments, and also refused to accept loan payments.
11
See, e.g., Domingo v. Direct Mortg. Corp., No. 2:11-CV-464 TS, 2011 WL 4403968,
at *3 (D. Utah Sept. 21, 2011).
5
The duty of good faith and fair dealing “is an implied duty that inheres in every
contractual relationship.” 12 “The duties of good faith and fair dealing arise out of the
relationship between the parties created by the contract and have no independent existence
outside of the contract.” 13 “[T]he implied covenant of good faith and fair dealing does not
require either party to entertain a request to renegotiate the terms of the contract.” 14
As discussed above, Plaintiff failed to plead the existence of a binding modification
agreement. Additionally, Plaintiff has not alleged the existence of a contractual right to
modification contained in the original loan agreement. Plaintiff has not otherwise alleged facts
plausibly demonstrating that Defendants were obligated to enter into a binding modification
agreement with Plaintiff. Based on the foregoing, Plaintiff has failed to state a claim for breach
of the implied covenant of good faith and fair dealing.
C. PUNITIVE DAMAGES CLAIM
Plaintiff asserts a claim for punitive damages based on the substantive claims discussed
above. Because those claims will be dismissed, Plaintiff’s request for punitive damages will also
be dismissed.
IV. CONCLUSION
Based on the foregoing, it is hereby
ORDERED that Defendants’ Motion to Dismiss (Docket No. 5) is GRANTED.
The Clerk of Court is directed to close this case forthwith.
12
Strupat v. Aurora Loan Servs. LLC, No. 2:11-CV-279 DS, 2011 WL 2359842, at *3
(D. Utah June 9, 2011).
13
Peterson & Simpson v. IHC Servs., Inc., 217 P.3d 716, 722 (Utah 2009).
14
Osmond v. Litton Loan Servicing, LLC, No. 1:10-CV-11 DAK, 2011 WL 1988403, at
*2 (D. Utah May 20, 2011).
6
DATED this 28th day of May, 2014.
BY THE COURT:
Ted Stewart
United States District Judge
7
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