Ingo et al v. Deustche Bank National Trust

Filing 14

MEMORANDUM DECISION granting 10 Motion to Dismiss for Failure to State a Claim. Signed by Magistrate Judge Brooke C. Wells on 11/23/2011. (asp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
TIMOTHY D. INGO and ANGELA INGO,
Plaintiffs,

MEMORANDUM DECISION AND ORDER
GRANTING DEFENDANT'S MOTION TO
DISMISS

v.
Case No. 2:11-cv-812 BCW
DEUTSCHE BANK NATIONAL TRUST
CO.,
Magistrate Judge Brooke Wells
Defendant.

This matter is before the court on a motion by Defendant Deutsche Bank National Trust
Company to dismiss Plaintiffs Timothy and Angela Ingo’s Complaint pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. 1 The court has carefully reviewed the written
memoranda submitted by the parties and has concluded that a hearing would not significantly aid
it in determining the motion. 2 Having fully considered the motion, memoranda, other materials
submitted by the parties and relevant case law, the court enters the following decision
GRANTING Defendant’s Motion to Dismiss.
BACKGROUND
The court takes the following asserted facts from Plaintiff’s Complaint and the
documents that are either attached to, or referenced in the Complaint. 3 For purposes of this
motion the court assumes that the factual allegations are true. 4

1

Docket no. 10.

2

See DUCivR 7-1(f) (2010).

3

See GFF Corp. V. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir. 1997) (permitting a court to
consider outside materials as part of a Rule 12(b)(6) motion to dismiss without turning it into a motion for summary
if certain conditions are met).
4

See Jordan-Arapahoe, LLP v. Bd. of County Comm’rs, 633 F3d 1022, 1026 (10th Cir. 2011).

On approximately April 2, 2007, Mary Ann Pollei signed a Trust Deed encumbering the
property that is the subject of this case. The Trust Deed sets forth certain restrictions on how Ms.
Pollei can transfer a legal or beneficial interest in the property. And, it also sets forth certain
consequences, such as the Lender requiring immediate full payment, if the property is
transferred. 5 On December 23, 2010, the trustee filed a Notice of Default and began non-judicial
foreclosure proceedings on the property. 6
On March 1, 2011, Plaintiffs entered into a Lease Agreement and a Lease to Purchase
Option Agreement with Ms. Pollei for the property. 7 Plaintiffs paid Ms. Pollei $2,000 in
accordance with the Lease to Purchase Option Agreement which provides Plaintiffs the
opportunity until March 1, 2016 to purchase the property. 8 On April 21, 2011, Plaintiffs filed a
“Notice of Lease with Option to Purchase” with the Utah County Recorder. 9 In May Plaintiffs
were mailed copies of Defendant’s Notice of Foreclosure and Tenant’s Rights under Federal
Law.
In August of this year Plaintiffs filed this action in state court and in September it was
removed to this court on the basis of federal question jurisdiction. 10 Plaintiffs seek an order from
the court: (1) directing Defendants to abide by the terms of the Lease Agreement and the Option
to Purchase Agreement, (2) stoping any eviction proceedings, (3) directing Defendants to “give
fair weight in consideration to the offer from the buyer Plaintiffs found to purchase the

5

See Trust Deed § 18, attached to Defendant’s motion to dismiss.

6

See Notice of Default attached to Defendant’s motion to dismiss.

7

Complaint ¶ 7. The parties dispute whether the Lease Agreement and the Lease to Purchase Option Agreement
were separate agreements. Whether they were one agreement or separate agreements is immaterial to the court’s
decision.

8

Id. ¶¶ 11-12.

9

Id. ¶ 13.

10

Docket no. 2.

2

property” 11 and (4) seek an award of punitive damages and attorney fees and costs for bringing
this lawsuit. Plaintiffs’ claims rely on the Protecting Tenants at Foreclosure Act of 2009
(PTFA), 123 Stat. 1632, 1660 (2009).
DISCUSSION
Defendant moves to dismiss the Ingo’s Complaint. Plaintiffs Complaint contains two
causes of action both based on PTFA: (1) Violation of the PTFA and (2) Bad Faith and Punitive
Damages.
In considering a motion to dismiss under Rule 12(b)(6), “the court presumes the truth of
all well-pleaded facts in the complaint, but need not consider conclusory allegations [which] are
allegations that do not allege the factual basis for the claim.” 12 “To 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.’” 13 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.” 14 The standard is not a “probability requirement,” but it requires more than
a “sheer possibility that a defendant has acted unlawfully.” 15
In addition to using well-pleaded facts from the Complaint, the court is also able to
consider documents that are “referred to in the complaint,” that are “central to plaintiff’s claims,”
and that are submitted to the court by the defendant, if the submissions qualify as “indisputably

11

Complaint p. 8.

12

Margae, Inc. v. Clear Link Tech., 620 F.Supp.2d 1284, 1285 (D.Utah 2009) (citing Tal v. Hogan, 453 F.3d 1244,
1252 (10th Cir. 2006), cert. denied, 549 U.S. 1209 (2007); and Mithcell v. King, 537 F.2d 385, 386 (10th Cir.
1976)).

13

Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570, 127 S.Ct. 1955 (2007).

14

Id.

15

Id.

3

authentic cop[ies].” 16 Therefore, in the instant case, both the Note and the Trust Deed, the
Notice of Default and the Lease Agreement(s) may be considered in order to determine if the
Plaintiffs have sufficiently stated a claim for relief.
Defendant contends that Plaintiffs Complaint fails for the following reasons: (1) the
PTFA does not apply, (2) the PFTA does not have a private right of action, and (3) the bad faith
claim fails to allege a cognizable cause of action. In direct contrast to these arguments, Plaintiffs
assert that the PTFA applies, there is a private right of action under the PTFA and that the
Defendant acted in bad faith by refusing to work with Plaintiffs. The court finds that the PFTA
does not have a private right of action and therefore it need not consider the other arguments.
Plaintiffs argue that by its plain language the PTFA granted Plaintiffs protection and
“created a private right” of action. 17 Plaintiffs fail to support this conclusory allegation with any
case law or any analysis of the history behind the statute. As acknowledged by Plaintiffs “not
many cases outside California exist” 18 and each of these California cases have held that the
PTFA does not have a private right of action. 19 Plaintiffs argue this case is different than those
cases because Plaintiffs proactively filed suit in state court after which Defendant removed this
action to Federal Court. Therefore, “Defendant should be estopped from now claiming that
brining this suit in Federal Court is not proper when it was Defendant that removed the case.” 20
This difference, however, cannot create a private right of action in the PTFA.
The PTFA states that:

16

GFF Corp. v. Assoc. Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (internal citations omitted).

17

Op. p. 7.

18

Id.

19

See, e.g., Cohn v. Bank of America, 2011 WL 98840 (E.D.Cal. Jan 12, 2011); Martin v. LaSalle Bank Nat. Ass'n
2011 WL 9583 (S.D.Cal. 2011); Nativi v. Deutsche Bank Nat. Trust Co., 2010 WL 2179885 (N.D.Cal. 2010).
20

Id.

4

... In the case of any foreclosure on a federally-related mortgage loan or on any dwelling
or residential real property after the date of enactment of this title, any immediate
successor in interest in such property pursuant to the foreclosure shall assume such
interest subject to(1) the provision, by such successor in interest of a notice to vacate to any bona fide
tenant at least 90 days before the effective date of such notice; and
(2) the rights of any bona fide tenant, as of the date of each notice of foreclosure(A) under any bona fide lease entered into before the notice of foreclosure to
occupy the premises until the end of the remaining term of the lease ... 21

On its face, the PTFA does not explicitly create a private right of action. But, whether the PTFA
implicitly allows for a private right of action is a question of first impression in this circuit.
Therefore, the court finds it helpful to first consider the standard for evaluating whether a federal
statute creates a right of action that may be enforced by private parties in federal court.
The Supreme Court set forth a four-factor test for evaluating whether a statute creates a
private right of action in Cort v. Ash. 22 These factors are (a) is the plaintiff “’one of the class for
whose especial benefit the statute was enacted;’” 23 (2) whether there is “any indication of
legislative intent, explicit or implicit, either to create such a remedy or to deny one;” 24 (3) is a
private right of action consistent with the “underlying purposes of the legislative scheme to
imply such a remedy for the plaintiff?”25 and (4) “is the cause of action one traditionally
relegated to state law, in an area basically the concern of the States, so that it would be
inappropriate to infer a cause of action based solely on federal law?” 26 In general, the “first three

21

123 Stat. 1632, 1660 (2009).

22

422 U.S. 66, 78 (1975).

23

Id. at 78 (quoting Texas & Pacific R. Co. v. Rigsby, 241 U.S. 33, 39 (1916)).

24

Id.

25

Id.

26

Id.

5

factors . . . are ones traditionally relied upon in determining legislative intent.” 27 In weighing the
Cort factors the Supreme Court has emphasized that intent is the most important element in the
analysis. 28
Applying these factors to the instant matter the case finds as follows. First, Plaintiffs are
part of the class of tenants that are affected by the foreclosure crisis and the PTFA is designed to
protect such tenants. Included in the Act is a right for the tenant to occupy the premises until the
end of the lease, as well as a right to receive a notice to vacate 90 days before the effective
date. 29 Plaintiffs are facing eviction as a result of the home being foreclosed, so the first factor
weighs in their favor.
Next, on its face the Act does not explicitly state whether Congress intended the PTFA to
include a private right of action. Review of the Congressional Record indicates Congress
intended tenants to have certain protections to deal with the foreclosure crisis. 30 During the
debates held in Congress it was explicitly noted that the PFTA was intended to allow tenants
who are victims of the foreclosure crisis a protection that can be used in the state courts to
combat unlawful evictions. 31 Thus, the second factor weighs in favor of dismissal.
The third factor also weighs in favor of dismissal because the underlying purposes of the
legislative scheme anchored the rights found within the PTFA in the framework of the state

27

Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76 (1979).

28

See Thompson v. Thompson, 484 U.S. 174, 179 (1988) (“The intent of Congress remains the ultimate issue,
however, and ‘unless this congressional intent can be inferred from the language of the statute, the statutory
structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.’”)
(quoting Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77 (1981)).
29

See 123 Stat. 1632, 1660 (2009); Protecting Tenants at Foreclosure: Notice of Responsibilities Placed on
Immediate Successors in Interest Pursuant to Foreclosure of Residential Property, 74 Fed.Reg. at 30106 (“The
objective of these new tenant protections is to ensure that tenants receive appropriate notice of foreclosure and are
not abruptly displaced.”).

30

See 155 CONG. REC §5510-5111 (daily ed. May 5, 2009) (statement of Sen. Kerry).

31

See id.

6

judicial system. 32 Therefore to infer a private right of action remedy into the Act would be
contrary to Congressional intent.
Finally, the causes of action here-violation of the PTFA and Bad Faith and Punitive
Damages-are based upon an alleged unlawful eviction which is an area traditionally relegated to
state law. 33 So, it would be improper to infer a cause of action based solely on federal law.
As a general rule, the Supreme Court disfavors granting non-explicit private rights of
action. 34 And where, as here, the plain language of the statute weighs against implying a private
remedy, “the fact that there is no suggestion whatsoever in the legislative history that [the PTFA]
may give rise to suits for damages reinforces [the court’s] decision not to find such a right of
action implicit within the [statute].”35 Because the PTFA does not provide a private right of
action, dismissal of Plaintiff’s Complaint is warranted. 36

32

See id.

33

See Nativi, 2010 WL 2179885 *4.

34

See Touche Ross & Co., 442 U.S. at 571 (“implying a private right of action on the basis of congressional silence
is a hazardous enterprise, at best”).

35

Id.

36

See Thompson, 484 U.S. at 179 (“The intent of Congress remains the ultimate issue, however, and ‘unless this
congressional intent can be inferred from the language of the statute, the statutory structure, or some other source,
the essential predicate for implication of a private remedy simply does not exist.’”) (citation omitted); see also Cohn
v. Bank of America, 2011 WL 98840 (E.D.Cal. Jan 12, 2011); Martin v. LaSalle Bank Nat. Ass'n 2011 WL 9583
(S.D.Cal. 2011); Nativi v. Deutsche Bank Nat. Trust Co., 2010 WL 2179885 (N.D.Cal. 2010)..

7

ORDER
For the reasons set forth above, Defendant’s Motion to Dismiss is HEREBY GRANTED.
All of Plaintiff’s Causes of Action are DISMISSED with PREJUDICE and the Clerk of the
Court is directed to close the case.

DATED this 23 November 2011.

Brooke C. Wells
United States Magistrate Judge

8