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

Filing 23

ORDER signed by Judge Benjamin H. Settle granting 14 Motion to Dismiss for Failure to State a Claim; denying 16 Motion for Order. Plaintiffs to file amended complaint by 6/23/2017. (TG)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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JANICE SERGEANT and THOMAS
SERGEANT,
Plaintiffs,
v.
BANK OF AMERICA, N.A., et al.,

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Defendants.

CASE NO. C17-5232 BHS
ORDER GRANTING
DEFENDANT’S MOTION TO
DISMISS, DENYING PLAINTIFFS’
CROSS-MOTION, AND
GRANTING PLAINTIFFS’ LEAVE
TO AMEND

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This matter comes before the Court on Defendant Bank of America N.A.’s

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(“BANA”) motion to dismiss (Dkt. 14) and Plaintiffs Janice and Thomas Sergeant’s

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(“Sergeants”) cross-motion for an order setting aside foreclosure mediator’s certification

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and declaring defendants’ bad faith in foreclosure mediation (Dkt. 16). 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 rules as follows:
I.

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PROCEDURAL AND FACTUAL HISTORY

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On March 29, 2017, Plaintiffs Janice and Thomas Sergeant (“Sergeants”) filed a

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complaint against BANA, Carrington Mortgage Services, LLC (“CMS”), and all others

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claiming an interest in the property described in the complaint. Dkt. 1. The Sergeants

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assert twelve claims for relief for violations of federal and state statutes. Id.

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The claims are based on the subsequent servicing and attempted modification of
the Sergeants’ refinance. In March 2009, they obtained a refinance loan in the amount of

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$214,833.00 secured by the property located at 13310 88th Avenue Ct E, Puyallup, WA

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98373. Id. ¶ 15. Servicing of the loan and the beneficial interest in the deed of trust was

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assigned to BANA. Id. ¶ 16.

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In May 2010, the Sergeants voluntarily ceased to make payments to BANA. Id. ¶

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24. In May 2011, they submitted a loan modification application to BANA. Id. ¶ 26. In

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July 2011, BANA informed the Sergeants that it had closed their loan modification

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review due to the Sergeants’ failure to respond to BANA’s inquiries. Id. ¶ 27. The

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Sergeants submitted two other loan modification applications, but BANA rejected them.

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Id. ¶¶ 33, 35–36.

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In April 2014, the Sergeants entered into the Washington foreclosure mediation

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program and submitted another loan modification application on May 1, 2014. Id. ¶¶ 37–

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38. On June 18, 2014, BANA again denied the Sergeants’ application for a modification

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because their expenses exceeded their gross monthly income. Id. ¶ 39.

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In July 2014, BANA informed the Sergeants that the servicing of their loan would

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be transferred to CMS. In December 2015, CMS offered the Sergeants a temporary

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payment plan, which they rejected. Id. ¶ 51. In October 2016, the Sergeants entered into

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a permanent loan modification with CMS. Id. ¶¶ 57–58.

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On May 8, 2017, BANA moved to dismiss the Sergeants’ claims for violations of

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the Washington State Consumer Protection Act (“CPA”), violation of the Equal Credit

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Opportunity Act (“ECOA”) and the tort of outrage. Dkt. 14. That same day, the

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Sergeants filed a cross-motion for an order setting aside foreclosure mediator’s

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certification and declaring defendants’ bad faith in foreclosure mediation. Dkt. 16. On

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May 22, 2017, BANA responded to the Sergeants’ motion. Dkt. 19. On May 25, 2017,

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the Sergeants responded to BANA’s motion. Dkt. 21. On June 2, 2017, BANA replied.

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Dkt. 22. The Sergeants did not reply to BANA’s response.

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II.
A.

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DISCUSSION

The Sergeants’ Motion
The Sergeants move the Court “for an order setting aside the foreclosure

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mediation certification, and declaring [BANA’s] and [CMS’s] participation in foreclosure

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mediation to be in bad faith.” Dkt. 16 at 1. BANA contends that the Sergeants’ motion

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is “procedurally improper” and “without merit” and that the Sergeants’ “lack of citation

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to legal authority allowing the Court to grant their requests for relief should be fatal to the

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Cross-Motion.” Dkt. 19. The Court agrees. Even if legal authority exists to set aside the

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certificate, the requested relief is not set forth in the complaint. Therefore, the Court

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denies the Sergeants’ motion.

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B.

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BANA’s Motion
BANA moves to dismiss the Sergeants’ claims for a violation of the CPA,

violations of the ECOA, and the tort of outrage.

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1.

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

Standard

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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,

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901 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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2.

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The five elements required to establish a violation of the CPA are: “(1) unfair or

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deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact;

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(4) injury to plaintiff in his or her business or property; (5) causation.” Hangman Ridge

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Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780 (1986). A four-year

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statute of limitations applies to CPA claims. RCW 19.86.120; Pickett v. Holland Am.

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Line–Westours, Inc., 145 Wn.2d 178, 196 (2001).

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CPA

In this case, BANA moves to dismiss the Sergeants’ CPA claim as time-barred

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and on the merits. First, BANA argues that any alleged adverse action that occurred

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more than four years before the Sergeants filed the complaint is time-barred. Dkt. 14 at

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7. The Sergeants respond that the facts support equitable tolling without citing a single

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authority on the issue of applying equitable tolling to a CPA claim. Without adequately

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supporting their opposition, the Sergeants have failed to meet their burden in opposition.

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Therefore, the Court grants BANA’s motion on this issue.

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Second, BANA argues that the Sergeants fail to allege claims to satisfy each

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element of a CPA claim. Dkt. 14 at 9. In response, the Sergeants assert in a conclusory

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fashion that the “complaint is stocked with facts sufficient to state plausible claims” for

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relief. Dkt. 21 at 6. And then, without reciting those supposed facts in the opposition,

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cites to numerous pages in the complaint for facts to support each element assuming that

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the Court will engage in a treasure hunt in order to identify allegations to overcome

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BANA’s motion to dismiss. See, e.g., id. (“The cause of the injury, the fifth and final

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element to plaintiffs’ CPA claim, is also fully pleaded in the complaint, Dkt. No. 1, pg.

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18-19, and in plaintiffs’ expert report Dkt. No. 4, pg.s 26-28”). The Court declines the

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Sergeants’ invitation to search the record to support their argument. Therefore, the Court

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grants BANA’s motion on this issue.

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3.

ECOA

The ECOA forbids discrimination in credit decisions and requires creditors to

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notify applicants within thirty days of taking an “adverse action” on an application for

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credit. 15 U.S.C. § § 1691(a)-(c), 1691(d)(1)-(5). Under the statute, it is not an adverse

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action to refuse “to extend additional credit under an existing credit arrangement where

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the applicant is delinquent or otherwise in default[.]” 15 U.S.C. § 1691(d)(6).

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In this case, BANA asserts that the Sergeants’ ECOA claims fail as a matter of

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law. The Sergeants respond that BANA fails to distinguish between the procedural

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violations and the substantive violations. Dkt. 14 at 10–11. The Court agrees with the

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Sergeants to a certain extent. Regarding the procedural requirement, BANA has failed to

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show or cite authority for the proposition that its duty to notify an applicant under §

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1691(d)(1) is waived if the applicant is delinquent. See, e.g., Vasquez v. Bank of Am.,

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N.A., 13-CV-02902-JST, 2014 WL 1614764, at *3 (N.D. Cal. Apr. 22, 2014). Therefore,

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the Court denies BANA’s motion on this issue because BANA has failed to show that the

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claim is legally deficient.

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Regarding the substantive requirements, the Court agrees with BANA that the

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Sergeants admit that they were in default, which precludes any denial being considered

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an “adverse action.” 15 U.S.C. § 1691(d)(6); Eichholz v. Wells Fargo Bank, NA, 10-CV-

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13622, 2011 WL 5375375, at *9 (E.D. Mich. Nov. 7, 2011). The Sergeants fail to

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respond to this authority or show that the claim may be plead in the alternative.

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Therefore, the Court grants BANA’s motion on this issue and dismisses the Sergeants’

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§ 1691(d)(2) claim with prejudice.

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4.

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A three-year statute of limitations governs the Sergeants’ negligence claims. Cox

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Outrage

v. Oasis Physical Therapy, PLLC, 153 Wn. App. 176, 190 (2009).
In this case, BANA moves to dismiss the Sergeants’ outrage claim because, as

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alleged, it is barred by the statute of limitations. Dkt. 14 at 11. The Court agrees. The

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only date alleged in the complaint is 2009. Dkt. 1, ¶ 150. Based on BANA’s act on that

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date, the Sergeants allege that BANA failed to “mitigate” the damage over the next five

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years. Id. The Sergeants fail to address the problems with the statute of limitations or

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explain how the failure to correct a time-barred act establishes a claim. Therefore, the

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Court grants BANA’s motion on this issue.

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5.

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The Sergeants request that, if the Court grants BANA’s motion to dismiss, the

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Leave to Amend

Court grant them leave to amend to correct the deficiencies in the complaint. The most

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glaring deficiency in the complaint is that it doesn’t contain a short and plain statement of

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each claim. See Fed. R. Civ. P. 8. Instead, the complaint is 48 pages of compound

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factual allegations, legal conclusions, and citations to authorities. The Sergeants have

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also attached three declarations and over 150 pages of exhibits to the complaint. Such an

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unnecessary document dump does nothing but needlessly waste both the defendants and

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the Court’s time and resources to determine whether the Sergeants have asserted the

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minimal factual allegations to overcome a motion to dismiss. Even so, the Sergeants are

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entitled to leave to amend because it is not absolutely clear that the deficiencies identified

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above cannot be cured by additional factual allegations. Therefore, the Court grants the

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Sergeants leave to amend their CPA and outrage claim against BANA.

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III.

ORDER

Therefore, it is hereby ORDERED that BANA’s motion to dismiss (Dkt. 14) is

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GRANTED, the Sergeants’ cross-motion for an order setting aside foreclosure

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mediator’s certification and declaring defendants’ bad faith in foreclosure mediation

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(Dkt. 16) is DENIED, and the Sergeants are GRANTED leave to amend. The Sergeants

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shall file an amended complaint no later than June 23, 2017. Failure to file an amended

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complaint or otherwise response will result in DISMISSAL of these claims against

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BANA.

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Dated this 14th day of June, 2017.

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A

BENJAMIN H. SETTLE
United States District Judge

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