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