Summary
denying PNC and Freddie Mac's 12(b) motion where borrowers alleged they sent written request to defendant PNC asking who owned their mortgage note and did not receive an appropriate response, the court determining that allegations were sufficient to state a claim “against defendants” for violation of TILA.
Summary of this case from Marais v. Chase Home Finance LLCOpinion
3:10-cv-0678-LRH-VPC.
May 6, 2011
ORDER
Before the court is defendants PNC Mortgage ("PNC") and the Federal Home Loan Mortgage Corporation's ("Freddie Mac") (collectively "defendants") motion to dismiss the amended complaint. Doc. #39. Plaintiffs Gerald and Donna Erickson ("the Ericksons") filed an opposition (Doc. #45) to which defendants replied (Doc. #49).
Refers to the court's docket entry number.
I. Facts and Procedural History
In January, 2005, the Ericksons purchased real property through a mortgage note and deed of trust executed by defendant non-party Accubanc Mortgage. Eventually, the Ericksons defaulted on the mortgage note and defendants initiated non-judicial foreclosure proceedings.
Subsequently, the Ericksons filed a complaint in state court against defendants. Doc. #1, Exhibit A. Defendants removed the action to federal court (Doc. #1) and the Ericksons filed an amended complaint (Doc. #26, Exhibit 1). The amended complaint alleges eight causes of action against defendants: (1) declaratory relief; (2) wrongful foreclosure; (3) contractual breach of the duty of good faith and fair dealing; (4) tortious breach of the duty of good faith and fair dealing; (5) violation of NRS 649 (debt collection violations); (6) violation of the Fair Debt Collection Practices Act ("FDCPA"); (7) unfair and deceptive trade practices; and (8) violation of the Truth in Lending Act ("TILA"). Doc. #26, Exhibit 1. Thereafter, defendants filed the present motion to dismiss claims one (1) through four (4), seven (7), and eight (8) from the amended complaint. Doc. #39.
The Ericksons concede in their opposition that claim seven (7) for unfair and deceptive trade practices is not directed at moving defendants. See Doc. #45 ("Claim 7 asks for nothing from PNC, though it is mistakenly listed in the subheading of that paragraph."). Accordingly, the court shall grant defendants' motion to dismiss as to this claim.
Defendants are not alleged to have violated the Fifth and Sixth causes of action which relate to the Fair Debt Collection Practices Act. See Doc. #26, Exhibit 1.
II. Legal Standard
Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). That is, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however, a pleading that offers "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action'" will not suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Furthermore, Rule 8(a)(2) requires a complaint to "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. at 1949 (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference, based on the court's judicial experience and common sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. at 1949 (internal quotation marks and citation omitted).
In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as true. Id. However, "bare assertions . . . amount[ing] to nothing more than a formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951) (brackets in original) (internal quotation marks omitted). The court discounts these allegations because "they do nothing more than state a legal conclusion — even if that conclusion is cast in the form of a factual allegation." Id. (citing Iqbal, 129 S. Ct. at 1951.) "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Id.
III. Discussion
A. Wrongful Foreclosure
An action for wrongful foreclosure requires that, at the time of the foreclosure sale, the plaintiff was not in breach of the mortgage contract. Collins v. Union Federal Sav. Loan Ass'n, 662 P.2d 610, 623 (Nev. 1983). Here, the Ericksons were in default on their mortgage obligations so there can be no sustainable action for wrongful foreclosure.
B. Breach of Good Faith and Fair Dealing
Under Nevada law, "[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and execution." A.C. Shaw Constr. v. Washoe County, 784 P.2d 9, 9 (Nev. 1989) (quoting Restatement (Second) of Contracts § 205). To establish a claim for breach of the implied covenants of good faith and fair dealing, a plaintiff must show that: (1) the plaintiff and defendant were parties to a contract; (2) the defendant owed a duty of good faith and fair dealing to the plaintiff; (3) the defendant breached his duty by performing in a manner unfaithful to the purpose of the contract; and (4) the plaintiff's justified expectations were denied. See Perry v. Jordan, 134 P.3d 698, 702 (Nev. 2006) (citing Hilton Hotels Corp. v. Butch Lewis Prod. Inc., 808 P.2d 919, 922-23 (Nev. 1991).
Here, the Ericksons allege that they entered into a trial modification agreement with PNC, made the necessary trial payments, and were foreclosed upon despite specific language in the modification agreement to the contrary. The court has reviewed the allegations in the complaint and finds that the Ericksons have sufficiently alleged a claim for breach of the covenants of good faith and fair dealing based on the trial modification agreement. Accordingly, the court shall deny defendants' motion as to this issue.
C. Breach of Fiduciary Duty
The Ericksons allege that PNC breached its fiduciary duties in dealing with them during the trial modification process. Generally, a loan servicer does not owe a borrower a fiduciary duty. See Yerington Ford, Inc. v. General Motors Acceptance Corp., 359 F.Supp.2d 1075, 1092 (D. Nev. 2004). Absent a duty, there can be no breach. See A.C. Shaw Constr. v. Washoe County, 784 P.2d 9, 10 (Nev. 1989). Because the Ericksons have failed to allege sufficient facts to establish that PNC acted outside its capacity as a loan servicer, which does not, in itself, create a fiduciary relationship, the Ericksons' claim for breach of a fiduciary duty fails to state a claim upon which relief can be granted.
D. Truth in Lending Act
Pursuant to the Truth in Lending Act ("TILA"), "upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation." 15 U.S.C. § 1642(f)(2).
In their complaint, the Ericksons allege that they sent an appropriate written request to PNC to determine who owned their mortgage note and deed of trust under TILA and that they did not receive an appropriate response in return. The court has reviewed the allegations in the complaint and finds that these allegations are sufficient to state a claim for violation of TILA. Accordingly, the court shall deny defendants' motion to dismiss as to this issue.
The Ericksons' first claim for declaratory relief is solely against defendant Freddie Mac. PNC is not a defendant to this claim.
A claim for declaratory relief is a remedy that may be afforded to a party after he has sufficiently established and proven his claims; it is not a separate cause of action. See e.g., In re Wal-Mart Hour Employment Practices Litig., 490 F. Supp. 1091, 1130 (D. Nev. 2007). Here, the Ericksons don't allege any specific claim for relief against defendant Freddie Mac. Accordingly, the Ericksons are not entitled to declaratory relief.
IT IS THEREFORE ORDERED that defendant's motion to dismiss (Doc. #39) is GRANTED in-part and DENIED in-part. Defendant PNC Mortgage is DISMISSED as a defendant from plaintiff's second cause of action for wrongful foreclosure; fourth cause of action for tortious breach of the duty of good faith and fair dealing; and seventh cause of action for unfair and deceptive trade practices. Defendant the Federal Home Loan Mortgage Corporation is DISMISSED as a defendant in this action.
IT IS SO ORDERED.