Niborg et al v. CitiMortgage, Inc. et al

Filing 31

ORDER signed by Judge Benjamin H. Settle granting 24 Motion to Dismiss for Failure to State a Claim; granting 25 Motion to Dismiss for Failure to State a Claim. (TG; cc mailed to the Niborgs)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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ERIC NIBORG and TAMMI NIBORG,
Plaintiffs,

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v.

CASE NO. C17-5155 BHS
ORDER GRANTING
DEFENDANTS’ MOTIONS TO
DISMISS

CITIMORTGAGE, INC., et al.,

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Defendants.

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This matter comes before the Court on Defendants Fannie Mae and CitiMortgage,

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Inc.’s (collectively “Defendants”) motions to dismiss. Dkts. 24, 25. The Court has

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considered the pleadings filed in support of and in opposition to the motions and the

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remainder of the file and hereby grants Defendants’ motions for the reasons stated herein.

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I.

PROCEDURAL HISTORY

On February 10, 2017, Plaintiffs Eric and Tammi Niborg’s (the “Niborgs”) filed a

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complaint against Defendants in Clark County Superior Court for the State of

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Washington. Dkt. 1-2. The Niborgs asserted claims for quiet title, wrongful foreclosure,

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conversion, fraud, misrepresentation, and civil conspiracy. Id.

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ORDER - 1

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On March 1, 2017, Defendants removed the matter to this Court. Dkt. 1. On

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March 9, 2017, Defendants moved to dismiss. Dkts. 8, 9. On May 1, 2017, the Court

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granted dismissal. Dkt. 22. While the Court dismissed Plaintiff’s claims, it also granted

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the Niborgs leave to file an amended complaint. Id.

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On June 5, 2017, Plaintiffs filed an amended complaint. Dkt. 23. The amended

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complaint abandoned Plaintiffs’ previous claims, instead asserting claims for slander of

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title, violations of the Fair Debt Collection Practices Act (“FDCPA”), and civil

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conspiracy. Id.

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On June 8, 2017, Fannie Mae again moved to dismiss the amended complaint.

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Dkt. 24. On June 19, 2017, CitiMortgage also moved to dismiss. Dkt. 25. On June 21 and

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23, 2017, Plaintiffs responded to the motions to dismiss. Dkt. 27, 28. On June 30, 2017,

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Fannie Mae replied. Dkt. 29. On July 14, 2017, CitiMortgage replied. Dkt. 30.

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II.

FACTUAL BACKGROUND

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The Niborgs allege that they own the real property located at 1518 NE 91st

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Avenue, Vancouver, WA 98664 (“Property”). In April 2006, the Niborgs obtained a loan

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secured by the Property. In 2012, two assignments of the Deed of Trust were recorded,

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giving notice that CitiMortgage was the new beneficiary. On May 13, 2013,

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CitiMortgage appointed Clear Recon Corp. (“CRC”) as successor trustee.

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On October 23, 2013, CRC recorded a notice of trustee’s sale noting a non-judicial

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foreclosure of the Property to occur on February 28, 2014. The notice claimed that the

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Niborgs had missed 21 months of payments resulting in a past due balance of $37,486.70.

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ORDER - 2

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Dkt. 10 at 38–43. CRC formally discontinued the foreclosure sale on August 7, 2014. The

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Niborgs do not allege any foreclosure activity subsequent to this date.

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On October 13, 2014, CitiMortgage recorded notice that Fannie Mae was the new

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beneficiary of the Deed of Trust. The servicing of the loan transferred to non-party

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Seterus, Inc. In Spring 2015, the Niborgs entered into a loan modification with Seterus.

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The modification capitalized the Niborgs’ past due balance as principal, thus reducing the

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past due balance to zero. The modification also reduced the Niborg’s interest rate to 2%

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for five years, which would be increased to a fixed rate of 3% for the sixth year and

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3.75% subsequently.

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III.
A.

DISCUSSION

12(b)(6) Standard
Motions to dismiss brought under Rule 12(b)(6) of the Federal Rules of Civil

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Procedure may be based on either the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under such a theory. Balistreri v. Pacifica Police Department, 901

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F.2d 696, 699 (9th Cir. 1990). Material allegations are taken as admitted and the

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complaint is construed in the plaintiff’s favor. Keniston v. Roberts, 717 F.2d 1295, 1301

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(9th Cir. 1983). To survive a motion to dismiss, the complaint does not require detailed

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factual allegations but must provide the grounds for entitlement to relief and not merely a

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“formulaic recitation” of the elements of a cause of action. Bell Atlantic Corp. v.

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Twombly, 127 S. Ct. 1955, 1965 (2007). Plaintiffs must allege “enough facts to state a

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claim to relief that is plausible on its face.” Id. at 1974.

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ORDER - 3

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The scope of review on a 12(b)(6) motion to dismiss is generally limited to the

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contents of the complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001).

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However, the Court may consider documents that are not attached to the complaint “if the

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documents’ authenticity...is not contested and the plaintiff’s complaint necessarily relies

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on them.” Id. (internal quotation marks omitted). Such is the case with the documents

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Defendants have filed in connection with their requests for judicial notice. Dkts. 10, 26.

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B.

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Claims
In their amended complaint, Plaintiffs bring claims for (1) slander of title, (2)

violations of the FDCPA, and (3) civil conspiracy. Defendants move to dismiss all of
these claims.

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1.

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In Washington, a slander of title claim has five elements: “(1) false words; (2)

Slander of Title

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maliciously published; (3) with reference to some pending sale or purchase of property;

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(4) which go to defeat plaintiff’s title; and (5) result in plaintiff’s pecuniary loss.” Rorvig

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v. Douglas, 123 Wn.2d 854, 859 (1994). “Slander of title is only available where the

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defendant has interfered with the plaintiff’s sale of the property.” Lapinski v. Bank of

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Am., N.A., C13–00925, 2014 WL 347274, at *5 (W.D. Wash. Jan. 30, 2014).

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In this case, Defendants argue that the Niborgs have failed to allege any facts

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showing that they published a false statement or that they interfered with a sale of the

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Property. The Court agrees. To the extent the Niborgs argue that Defendants interfered

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with the loan modification by recording assignments of the Deed of Trust, the Court

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rejects this argument. First, the Niborgs have failed to show that such a loan modification

ORDER - 4

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constitutes a pending sale for the purposes of their claim. Second, the loan modification

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necessarily contemplated (and was actually premised upon) the preexisting debt owed to

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CitiMortgage, meaning that the assignments could not go to defeat the Niborgs’ interest

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in the subject property to the extent that it formed the basis of the loan modification

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transaction. Third, the loan modification was actually granted, and Plaintiffs have failed

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to allege how any alleged interference with that transaction resulted in pecuniary loss.

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The fact that the balance due was capitalized as principal cannot constitute a loss, as

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Plaintiffs have failed to allege facts showing that the amount owed was not actually

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owing.

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Therefore, the Court grants Defendants’ motions on the Niborgs’ slander of title
claim.

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2.

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“Because [the FDCPA] appl[ies] only to ‘debt collector[s]’ as defined by the

FDCPA Claim

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FDCPA, the complaint must plead factual content that allows the court to draw the

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reasonable inference that [the defendant] is a debt collector.” Schlegel v. Wells Fargo

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Bank, NA, 720 F.3d 1204, 1208 (9th Cir. 2013). Under the FDCPA, a “debt collector” is

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one “who uses any instrumentality of interstate commerce or the mails in any business [1]

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the principal purpose of which is the collection of any debts, or [2] who regularly collects

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or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or

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due another.” 15 U.S.C. § 1692a(6). An entity that seeks to collect a debt for its own

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account is not a “debt collector” under the FDCPA, even if it obtained the debt from the

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loan originator after it went into default. Henson v. Santander Consumer USA Inc., 137 S.

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Ct. 1718, 1722–23 (2017). Accordingly, a holder on a note and deed of trust does not

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constitute a “debt collector” under the FDCPA. Bank of New York Mellon Trust Co. N.A.

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v. Henderson, 15-5186, 2017 WL 2883744, at *2 (D.C. Cir. July 7, 2017).

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Because Defendants were the current note holders at the time of their alleged

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wrongful conduct, they are not “debt collectors” under the FDCPA. Therefore, the Court

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must dismiss this claim.

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3.

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The Niborgs base their civil conspiracy claim on the wrongful acts alleged in the

Civil Conspiracy

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other two claims. Because the Niborgs have failed to allege any wrongful act in those

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claims, the Court grants Defendants’ motions to dismiss the Niborgs’ civil conspiracy

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claim.

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C.

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Leave to Amend
The Niborgs have already been granted leave to file an amended complaint in this

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action. Rather than attempt to cure any of the original complaint’s deficiencies, the

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Niborgs have instead abandoned their original claims and raised new claims as set forth

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in the amended complaint. However, as explained above, it is clear that Plaintiff’s new

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claims fail as a matter of law because the Defendants’ alleged conduct did not interfere

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with any sale of the subject property and Defendants are not “debt collectors” under the

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FDCPA. Dismissal without leave to amend is proper if it is absolutely clear that the

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deficiencies of the complaint could not be cured by amendment. Broughton v. Cutter

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Labs., 622 F.2d 458, 460 (9th Cir. 1980). Here, it is clear that the deficiencies in

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Plaintiff’s complaint cannot be cured by amendment. Moreover, the Court has already

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granted the Niborgs an opportunity to cure their deficient complaint. Therefore, dismissal

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shall be without leave to amend.

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IV.

ORDER

Therefore, it is hereby ORDERED that Defendants’ motions to dismiss (Dkts. 24,

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25) are GRANTED and the Niborgs’ claims are DISMISSED. The Clerk shall enter

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judgment for Defendants and close this case.

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Dated this 17th day of July, 2017.

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BENJAMIN H. SETTLE
United States District Judge

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ORDER - 7