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

Filing 22

ORDER on dft's 17 Motion to Dismiss by Judge Ricardo S Martinez.(RS)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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PHUONG N. TRAN AND CHUONG
VAN NGUYEN, husband and wife,
Plaintiffs,

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Case No. 2:12-cv-01281RSM
ORDER ON MOTION TO DISMISS

vs.
BANK OF AMERICA, N.A.,

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Defendant.

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INTRODUCTION

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Plaintiffs Phuong N. Tran and Chuong Van Nguyen, appearing through counsel, have

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filed the present action against defendant Bank of America, N.A. Previously, this Court

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dismissed plaintiffs’ complaint, which included twelve various claims against defendant. Three

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claims were dismissed with leave to amend and plaintiffs have reasserted those claims here:

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violation of the Washington Consumer Protection Act (“CPA”), RCW 19.86.020, fraud, and

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negligent misrepresentation. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.

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The matter is now before the Court for consideration of defendant’s Rule 12(b)(6)

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motion to dismiss the first amended complaint for failure to state a claim. Dkt. #17. Defendant

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has properly filed this motion before filing an answer to the complaint. FED.R.CIV.P. 12(b)(6).

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Plaintiffs have opposed the motion. After careful consideration of the complaint and

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attachments thereto, the parties’ memoranda, and the remainder of the record, the motion shall

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be granted in part and denied in part.

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FACTUAL BACKGROUND

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The complaint alleges that plaintiffs, husband and wife, purchased real property located

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at 2512 97th Place SE, Everett, Washington, 98208-9828 (the “Property”) which they financed

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with a loan (the “Note”) from Countrywide Home Loans, Inc. (“Countrywide”) in early spring

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of 2007. Dkt. #14, ¶7. The Deed of Trust (“DOT”) securing the Note identified Countrywide

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Home Loans, Inc. (“Countrywide”) as the lender and Chicago Title Insurance Company

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(“CTIC”) as the trustee for the benefit of Mortgage Electronic Registration Systems (“MERS”).

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Id.

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In 2008, defendant Bank of America, N.A. (“BOA”) became the assignee of the DOT

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after acquiring Countrywide. Id., ¶¶ 9-10. In November 2010, MERS, through a Corporation

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Assignment of Deed of Trust, transferred all beneficial interest under the DOT to BAC Home

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Loans Servicing, LP (“BAC”) (formerly known as Countrywide Home Loans Servicing, LP).

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Id., ¶13; Id., Exhibit B. Countrywide executed an Appointment of Successor Trustee making

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ReconTrust Company (“ReconTrust”) the trustee under the DOT. Id., ¶21. ReconTrust is a

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wholly owned subsidiary of BOA. Id., ¶16.

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In October 2010, plaintiffs defaulted on their mortgage and BOA initiated foreclosure

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proceedings. Id., ¶¶ 11, 23. On October 20, 2010, ReconTrust issued a Notice of Default

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(“NOD”) to plaintiffs indicating plaintiffs were $21,587.37 in arrears. Id., Exhibit C.

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Three documents, including two Notices of Trustee’s Sale and a Notice of Foreclosure

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attached to the latter Notice of Trustee’s Sale, indicated that the Property was the subject of an

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impending Trustee’s Sale. Id., Exhibits D, E, K. The first Notice of Trustee’s Sale is dated

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November 25, 2010. Id., Exhibit D. Attached thereto is a Notice to the Resident of the

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Property Subject to Foreclosure dated January 19, 2011. Id. The Notice of Trustee’s Sale

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indicates that a Trustee’s Sale of the Property was scheduled for April 22, 2011. Id.

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The second Notice of Trustee’s Sale (dated January 18, 2011) confirms that a Trustee’s

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Sale of the Property was scheduled for April 22, 2011. Id., Exhibit K. The Notice of

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Foreclosure, however, attached to the second Notice of Trustee’s Sale (with an attached

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Declaration of Mailing dated January 19, 2011), lists the scheduled date of Trustee’s Sale as

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May 20, 2011. Id., Exhibit E.

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On or about February 14, 2011, after receiving a NOD, plaintiffs entered into short sale

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negotiations with BOA. Id., Exhibit C. Pursuant to such negotiations, plaintiffs secured a pre-

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approved buyer for the Property. Id., Exhibits G, H. On April 25, 2011, the pre-approved

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buyer and plaintiffs entered into a Residential Purchase and Sale Agreement, which listed the

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sale price of the Property as $229,000. Id., Exhibit G. Plaintiffs contacted BOA to notify it of

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the sale, but received no response. Id., ¶29.

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The Trustee’s Sale did not occur on April 22, 2011 as indicated in the Notices of

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Trustee’s Sale. Id., ¶27. ReconTrust proceeded with the sale, however, on May 20, 2011, as

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listed in the Notice of Foreclosure. Id., ¶30.

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The Property was sold at Trustee’s Sale to Federal National Mortgage Association

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(“FNMA”) for $337,759.99. Id. No consideration was paid. Id., ¶31. FNMA subsequently

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filed an unlawful detainer against plaintiffs, and obtained a Writ of Restitution. Id., ¶¶ 32, 35.

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Plaintiffs were evicted from the Property thereafter. Id., ¶36. They filed this action on January

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24, 2013 and seek relief for violation of the CPA, fraud, and negligent misrepresentation.

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Defendant has again moved to dismiss plaintiffs’ claims.

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DISCUSSION

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I. Legal Standard

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Federal Rule of Civil Procedure 8(a)(2) requires a plaintiff to provide a short and plain

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statement showing entitlement to relief such that the defendant has “fair notice of what the . . .

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claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545

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(2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Claims failing to meet this

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standard must be dismissed. FED.R.CIV.P. 12(b)(6).

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In considering a Rule 12(b)(6) motion to dismiss, the Court may “generally consider

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only allegations contained in the pleadings, exhibits attached to the Complaint, and matters

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properly subject to judicial notice.” Swartz v. KPMG, LLP, 476 F.3d 756, 763 (9th Cir. 2007)

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(internal citations omitted). Moreover, the Court accepts all facts alleged in the Complaint as

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true, even if doubtful in fact, and makes all inferences in the light most favorable to the non-

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moving party. Barker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009)

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(citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

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The question posed by a Rule 12(b)(6) motion to dismiss is whether the plaintiff has

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alleged sufficient facts to state a claim for relief that is “plausible on its face.” Ashcroft v.

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Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim is facially

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plausible if the plaintiff has pled “factual content that allows the court to draw the reasonable

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inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550

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U.S. at 556). The plaintiff must plead facts sufficient to “raise a reasonable expectation that

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discovery will reveal evidence” of the elements of the claim. Twombly, 550 U.S. at 556.

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A plaintiff must provide the grounds for his or her entitlement to relief and merely

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showing the “sheer possibility” that a defendant has acted unlawfully or providing a

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“formulaic recitation of the elements of a cause of action” will not defeat a motion for

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dismissal. Id., at 555-56. Indeed, where there is an “obvious alternative explanation” for the

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conduct alleged, the complaint should be dismissed. Iqbal, 556 U.S. at 682 (internal citations

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omitted).

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II. Analysis

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Defendant contends dismissal of plaintiffs’ fraud and negligent misrepresentation

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claims is appropriate as plaintiffs have failed to allege a false statement or harm flowing from

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such a statement, as required to assert a cause of action for these claims. Defendant also moves

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to dismiss plaintiffs’ CPA claim due to plaintiffs’ failure to allege impact on the public. This

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Court shall grant defendant’s motion to dismiss in part and deny it in part.

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A. Violation of the Consumer Protection Act (Claim 1)

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To be successful on a claim for violation of the CPA, a plaintiff must demonstrate (1)

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an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) that impacts the

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public interest; (4) causing an injury to the plaintiffs’ business or property with; (5) a causal

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link between the unfair or deceptive act and the injury suffered. DeWitt Constr. Inc. v. Charter

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Oak Fire Ins. Co., 307 F.3d 1127, 1138 (9th Cir. 2002). Defendant asserts plaintiffs have not

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stated a claim for violation of the CPA because they failed to satisfy the third element of a

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prima facie case, namely that the unfair act or practice alleged impacts the public interest. This

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Court previously dismissed plaintiffs’ CPA claim without prejudice for failure to allege

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sufficient facts in support of the public interest element of the claim. Again, as defendant

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asserts, plaintiffs have failed to raise facts in support of this element of their CPA claim,

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making only a general assertion that defendant’s actions “impact the public interest.” As

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discussed in this Court’s prior order, this, without more, is insufficient. Plaintiffs were given a

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second opportunity to state facts sufficient to meet this element and have failed to do so.

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Defendant’s motion to dismiss shall be granted as to plaintiffs’ CPA claim.

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B. Fraud (Claim 2)

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Plaintiffs allege that defendant, through its subsidiary ReconTrust, made false

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statements to them throughout the foreclosure process. In order to establish a prima facie case

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of fraud, a plaintiff must show: (1) a representation of an existing fact; (2) its materiality; (3) its

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falsity; (4) the speaker’s knowledge of its falsity; (5) the speaker’s intent that it should be acted

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on by the person to whom it is made; (6) ignorance of its falsity on the part of the person to

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whom the representation is addressed; (7) the latter’s reliance on the truth of the representation;

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(8) the latter’s right to rely upon it; and, (9) consequent damage caused to the person who

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rightfully relied on the misrepresentation. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wash. 2d

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157, 166 (2012). Defendant contends that plaintiffs have failed to allege facts which establish

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elements (3) and (9).

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With respect to the third element, plaintiffs have pointed directly to a number of

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inconsistent documents that were made available by ReconTrust, a wholly-owned subsidiary of

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defendant. First, plaintiffs allege the Notices of Default, Trustee’s Sale, and Foreclosure list

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differing amounts required to cure their default. Second, plaintiffs point to documents filed by

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ReconTrust in the Snohomish County Superior Court in connection with the unlawful detainer

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action against plaintiffs. Plaintiffs allege the false statements in those documents include the

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following: (1) foreclosure documents that list contradictory arrears amounts and a differing date

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on the signature line than the copies provided to plaintiffs during the foreclosure of their home;

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(2) an affidavit allegedly written by Leticia Quintana, the purported Vice President of

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ReconTrust, but sworn and signed by an individual by the name of Eva Tapia; and, (3) a

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Declaration of Posting filed by Ms. Quintana that corresponds to a property address that is not

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that of the Property at issue in plaintiffs’ dispute. Some of these contradictory statements must

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be false.

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Plaintiffs also contend that the Notices of Default, Trustee’s Sale, and Foreclosure

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inconsistently identify the trustee’s client payee, first as BOA, then as BAC, then, again, as

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BOA. Finally, plaintiffs allege that the Notice of Trustee’s Sale (dated November 25, 2010)

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listed April 22, 2011 as the date scheduled for the sale, while the Notice of Foreclosure with

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another Notice of Trustee’s Sale attached (from January 2011) listed May 20, 2011 as the date

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scheduled for the sale.

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i. The Contradictory Dates

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The record reveals plaintiffs received notice of an impending Trustee’s Sale prior to

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entering into short sale negotiations with BOA. Thereafter, plaintiffs contend they “actively

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work[ed]” with BOA on the short sale process through April 25, 2011, when they found a pre-

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qualified and willing buyer for the Property. Plaintiffs, however, never allege that BOA

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explicitly stated it would not proceed with the Trustee’s Sale. On May 20, 2011, the date listed

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in the latter documentation provided to plaintiffs, ReconTrust commenced the Trustee’s Sale.

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As this Court held previously, “[a]n assumption by [p]laintiffs regarding [defendant’s] actions

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do not rise to the level of supplying false information.” Plaintiffs have not, therefore,

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sufficiently alleged that the varying dates of Trustee’s Sale provided by defendant constitute a

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false representation.

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ii. The Identity of ReconTrust’s Client Payee

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As plaintiffs allege, the Notices of Default, Trustee’s Sale, and Foreclosure

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inconsistently identify the trustee’s client. However, plaintiffs had notice of the merger

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between BOA and BAC making the entities, in fact, one and the same. Plaintiffs have not

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sufficiently alleged that defendant falsely represented the identity of ReconTrust’s client payee.

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iii. The Unlawful Detainer Action

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The Snohomish County Superior Court relied on the documents provided by defendant

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when making its decision to grant a Writ of Restitution in favor of FNMA. Notwithstanding

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defendant’s contention that the filings were the product of incidental oversight, the Superior

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Court’s decision was closely followed by that Court’s denial of plaintiffs’ motion for

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reconsideration and recission and, subsequently, plaintiffs’ eviction from the Property.

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Plaintiffs’ alleged harm from the Superior Court’s reliance on alleged false statements meets

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the threshold requirements for asserting the cause of action.

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iv. The Differing Arrears Amounts

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The total amount listed as due on the Notice of Trustee’s Sale dated January 19, 2011 is

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less than the amount listed on the Notice of Trustee’s Sale dated November 25, 2010. One of

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these amounts must be incorrect. As a result of inconsistently listed amounts, plaintiffs contend

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they could not ascertain how much they would need to pay to become current on the Note. By

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“pointing to inconsistent . . . statements or information . . . which were made available by

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[defendant],” plaintiffs have alleged a false statement. Wessa v. Watermark Paddlesports, Inc.,

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2006 WL 1418906, at *3 (W.D. Wash.).

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Although no false statement has been alleged with regard to ReconTrust’s client or the

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conflicting dates of Trustee’s Sale, plaintiffs have alleged false statements regarding the

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documents filed in support of the unlawful detainer action and the contradictory arrears

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amounts. Defendant’s motion to dismiss shall accordingly be denied as to plaintiffs’ fraud

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claim.

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C. Negligent Misrepresentation (Claim 3)

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Plaintiffs claim they relied on defendant’s negligent misrepresentations when choosing

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to pursue a short sale of the Property and forego alternatives that may have allowed them to

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avoid foreclosure. Defendant asserts that plaintiffs have failed to allege a false representation

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or an injury caused by such misrepresentation.

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In order to establish a prima facie case of negligent misrepresentation, a plaintiff must

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show: (1) the defendant supplied false information for the guidance of others in their business

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transactions; (2) the defendant knew or should have known that the information was supplied to

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guide a plaintiff in his business transactions; (3) the defendant was negligent in obtaining or

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communicating the false information; (4) the plaintiff relied on the false information; (5) the

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plaintiff’s reliance was reasonable; and, (6) the false information proximately caused the

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plaintiff’s damages. Ross v. Kirner, 162 Wash. 2d 493, 499 (2007).

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Mirroring the facts alleged in plaintiffs’ fraud claim, plaintiffs contend the following

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false statements support their claim of negligent misrepresentation: (1) the Notices of Default,

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Trustee’s Sale, and Foreclosure list differing amounts required to cure their default; (2)

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ReconTrust filed documents containing false information in the Snohomish County Superior

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Court in connection with the unlawful detainer action against plaintiffs; (3) the Notices of

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Default, Trustee’s Sale, and Foreclosure inconsistently identified the trustee’s client first as

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BOA, then as BAC, then, again, as BOA; and, (4) the Notice of Trustee’s Sale from November

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25, 2011 listed April 22, 2011 as the scheduled date for Trustee’s Sale, while a later Notice of

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Foreclosure with attached Notice of Trustee’s Sale listed the Trustee’s Sale date as May 20,

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2011.

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As previously addressed, although no false statement or representation has been alleged

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with regard to ReconTrust’s client or the conflicting dates listed for Trustee’s Sale, plaintiffs

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have alleged false statements or representations with regard to the documents filed in support of

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the unlawful detainer action and the contradicting amounts required to cure their default.

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Defendant’s motion to dismiss shall be denied as to plaintiffs’ negligent misrepresentation

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claim.

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CONCLUSION
Defendant’s motion to dismiss for failure to state a claim is GRANTED as to plaintiffs’

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claim of violation of the CPA (Claim 1) and this claim is DISMISSED. The motion is

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DENIED as to plaintiffs’ claims of fraud and negligent misrepresentation (Claims 2 and 3).

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DATED this 22nd day of July 2013.

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A

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RICARDO S. MARTINEZ
UNITED STATES DISTRICT JUDGE

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ORDER - 9