MORRISON C. ENGLAND, Jr., District Judge.
Through the present action, Plaintiffs Larry J. Trigueiro and Linda S. Trigueiro ("Plaintiffs") seek redress from various entities servicing the mortgage on their home located at 2920 Butte Meadows Court, Yuba City, California ("the subject property"). Plaintiffs claim a variety of improprieties in the servicing of their mortgage and the subsequent commencement of foreclosure proceedings on the subject property. Presently before the Court are two motions to dismiss portions of Plaintiffs' First Amended Complaint ("FAC"). The first Motion to Dismiss, made on behalf of Defendant Bank of America, N.A. ("BANA"), asserts that the FAC's Fourth Cause of Action for intentional infliction of emotional distress should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6)
Plaintiffs purchased the subject property on June 28, 2005, after obtaining financing in the amount of $280,000 from BANA. In order to effectuate the purchase, Plaintiffs executed both a Promissory Note and Deed of Trust. In January 2011, after Mr. Trigueiro lost his job, Plaintiffs called BANA to request mortgage assistance on their home loan. Specifically, they inquired as to whether they could make partial payments for a period of one year until Larry Trigueiro was reemployed. Plaintiffs claimed they were told that BANA was unable to make such an arrangement as it was only the loan servicer and not the investor on their mortgage. Nonetheless, Plaintiffs allege that about a month later, on February 18, 2011, they received a letter from BANA inviting them to apply for a loan modification with BANA in order to avoid foreclosure. Plaintiffs claim that they were still current on their loan and had made every payment since the loan originated in 2005.
Later in February 2011, Plaintiffs claimed they spoke with an authorized representative of BANA who identified himself as "Eloy." Eloy told Plaintiffs that the easiest way for Plaintiffs to get mortgage assistance would be to miss monthly payments on their loans. Plaintiffs allegedly responded that they did not want to default and instead simply wanted help in meeting their mortgage obligations. According to Plaintiffs, Eloy said that that by defaulting on the loan Plaintiffs would show the investor that they truly needed mortgage assistance.
Not wanting to default, Plaintiffs used a credit card to make their monthly mortgage statements for a time, until the credit card payments themselves became intolerable. Subsequently, on or about May 31, 2011, Plaintiffs called BANA to request a loan modification. BANA's authorized representative from the Hardship Modification Department, an individual who identified himself as "Matt," informed Plaintiffs that a loan modification was available for Plaintiffs' loan. Again, however, Plaintiffs were told they had to be delinquent on their loan in order to obtain a modification. Plaintiffs claim they were "specifically instructed to default on their monthly mortgage payments in order to qualify for the loan modification" and followed that directive in order to qualify for assistance. FAC, ¶ 14.
Once Plaintiffs withheld their monthly mortgage payments, they state they were contacted by a BANA representative named Brenda Weathers. Ms. Weathers reiterated that modification was an available option for Plaintiffs and told them she would send a loan modification review package. She allegedly provided "detailed instruction as to how this package should be completed and advised Plaintiffs that if they followed BANA's instructions and completed the package as requested, Plaintiffs would receive a loan modification."
Between May 2011 and October 2012, Plaintiffs state they were in an active loan modification review with BANA. During that period, they claim they were continuously asked to submit and re-submit numerous documents and financial information and aver that they complied with BANA's requests in that regard. Then, on October 29, 2012, Plaintiffs received a letter from BANA's Home Loan Team that stated in pertinent part:
After receiving the letter, Plaintiffs called BANA and again spoke to Brenda Weathers. She told them that despite the contents of the October 29, 2012 letter, their loan could in fact be modified and that they should continue to seek modification through BANA. Shortly thereafter, Plaintiffs received another letter from Ms. Weathers requesting additional documents, which Plaintiffs provided. By additional correspondence on or around October 31, 2012, Weathers told Plaintiffs that once BANA's loan modification review was completed, BANA would contact them about the type of assistance they qualified for. On November 5, 2012, Ms. Weathers assured Plaintiffs that no additional documents were required. However, on November 30, 2012, Plaintiffs received a letter from another member of BANA's Home Loan Team, Richard Bryant, stating that Plaintiffs needed to fax more documentation
On January 3, 2013, Plaintiffs received a letter from Mr. Bryant that was nearly identical to BANA's previous correspondence of October 29, 2012. Mr. Bryant's letter advised Plaintiffs that they were not eligible for loan modification because BANA lacked the contractual authority to modify Plaintiffs' loan. By this time, Plaintiffs were substantially behind on their mortgage payments. Less than a week later, on January 8, 2013, BANA recorded an Assignment of Deed of Trust assigning all beneficial interest under the subject Deed of Trust to Defendant U.S. Bank. BANA remained the loan servicer.
After applying for another mortgage assistance program administered by Keep Your Home California, Plaintiffs claim they were told they were conditionally eligible for assistance of up to $25,000 but needed consent from the subject property's loan servicer, BANA, to proceed. Despite the two previous rejections they received, Plaintiffs claim they were told to resubmit yet another loan modification application to BANA since it would not consent to any potential assistance from Keep Your Home California. Plaintiffs submitted that application to BANA in June of 2013.
On or about October 17, 2013, Plaintiffs received a letter from BANA advising them that their loan was in foreclosure and that they had until October 31, 2013, to reinstate the loan by paying $27,706.20 to BANA. Then, on or about November 1, 2013, Defendant transferred its servicing of Plaintiffs' loan to Defendant Nationstar, with Nationstar thereby acquiring all servicing rights and beneficial interest in the subject property. Nationstar subsequently caused a Notice of Trustee's Sale to be recorded on the subject property on November 4, 2013.
Plaintiff's loan modification was ultimately denied by Nationstar on February 26, 2014. The letter Plaintiffs received from Nationstar informed them that the owner of the loan declined to approve a modification based on its review of the loan modification request. Plaintiffs' property was consequently placed back into active foreclosure, with responsibility for the foreclosure process being assigned to Defendant Sage Point. On or about April 19, 2014, Plaintiffs were told by letter from Nationstar that their indebtedness on the subject property had increased to $42,815.26. Nonetheless, according to Nationstar, no subsequent Notice of Trustee's Sale has since been recorded and no Trustee's Sale of the subject property has occurred.
On September 8, 2014, Plaintiffs commenced this action in state court. Following its removal on diversity of citizenship grounds, both BANA and Nationstar/U.S. Bank filed Motions to Dismiss. BANA's Motion was denied with the exception of its challenges to the Fourth and Fifth Causes of Action, for Intentional Infliction of Emotional Distress ("IIED") and Wrongful Foreclosure. The Motion as to those claims was granted for failure to state a viable claim, with leave to amend. The second Motion to Dismiss was brought by Defendants Nationstar and U.S. Bank as to all claims asserted against those entities, again on grounds that the allegations were factually insufficient under Rule 12(b)(6). That Motion was also granted, with leave to amend.
On September 4, 2015, Plaintiffs filed their FAC and that pleading also spawned two Motions to Dismiss brought by BANA and by Nationstar/U.S. Bank and now before the Court. Plaintiffs do not reallege their Wrongful Foreclosure claim against BANA.
On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party.
Furthermore, "Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief."
A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be "freely given" where there is no "undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment. . . ."
In order to state a legally cognizable claim for intentional infliction of emotional distress ("IIED"), a plaintiff must identify facts demonstrating that "(1) the defendant engaged in extreme and outrageous conduct with the intention of causing, or reckless disregard of the probability of causing, severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or extreme emotional distress; and (3) the outrageous conduct was the actual and proximate cause of the emotional distress."
BANA's current challenge to Plaintiffs' IIED claim, like its original Motion, is premised on an argument that a mortgage-related dispute is founded on "purely economic activity" that cannot as a matter of law give rise to severe emotional distress.
In arguing that BANA's conduct can nonetheless support a claim for IIED, Plaintiffs continue to rely primarily on an argument that allegedly instructing Plaintiffs to miss their monthly loan payments in order to seek a loan modification was "extreme and outrageous" when BANA "knew or should have known that it lacked the contractual authority to modify [Plaintiffs'] loan in the first place." FAC, ¶ 73. As BANA points out, however, these allegations are essentially the same as those pled in Plaintiffs' predecessor Complaint and already been rejected by this Court as insufficient. This Court has already held that, however misguided or incorrect BANA's advice may have been in this regard, particularly if its representatives indeed encouraged Plaintiffs to continue to apply for loan modification relief that was in fact unavailable, the facts identified by Plaintiffs still do not rise to the level of outrageous conduct entitling them to seek damages under an IIED claim. At the end of the day, the loan modification process here constitutes a purely economic activity not amenable to IIED as a matter of law. The fact that Plaintiffs claim they would have sought other avenues of relief had they been correctly informed of BANA's limitation does not change this analysis. Nor does the fact that the FAC now alleges that Mr. Triguiero died of a heart attack on January 19, 2015, during the pendency of this litigation, alter the result. Plaintiff's allegation that ongoing efforts to foreclose on the family home "contributed to [Mr. Triguiero's] early death (
Because Plaintiffs have still failed to state a viable IIED claim despite being afforded another opportunity to do so, the Court now dismisses Plaintiff's Fourth Cause of Action without further leave to amend.
As indicated above, Plaintiffs' FAC abandons the claims previously pled against Nationstar, with the exception of the California UCL claim discussed below. Because the UCL claim depends on the viability of Plaintiffs' negligence cause of action against Nationstar under the circumstances of this case, the negligence claim will be addressed first.
A viable negligence claim entails the following elements: "(1) a legal duty to use reasonable care; (2) breach of that duty, and (3) proximate [or legal] cause between the breach and (4) the plaintiff's injury."
However, although it is correct that a lender owes no duty of care to offer, consider, or approve a loan modification request (
Plaintiffs' FAC alleges that on or about November 1, 2013, BANA transferred the servicing of Plaintiffs' loan to Nationstar, and Nationstar "therefore acquired the servicing rights and beneficial interest in Plaintiffs' mortgage thereby assuming all the liabilities of its predecessor, Defendant BANA, with regard to Plaintiffs' loan." FAC, ¶ 30. Otherwise, with regard to Nationstar, Plaintiffs state only that it subsequently sent Plaintiffs a letter assigning a servicing representative, Jen Hansen, as Plaintiffs' single point of contact in assisting Plaintiffs with any available modification options. While Plaintiffs indicate that Ms. Hansen asked Plaintiffs to submit a new loan modification application to Nationstar, and Plaintiffs complied, Plaintiffs do not allege that Nationstar ever made any commitment to modify.
These facts do not indicate anything to suggest that Nationstar acted tortiously in its handling of Plaintiffs' loan modification request. Plaintiffs were already delinquent on their loan payments, and unlike BANA, there are no facts suggesting that Nationstar told Plaintiffs to quit paying their loan in order to qualify for modification, no alleged assurances that a loan modification was forthcoming, nothing approaching the year and a half that Plaintiffs allege they were in active loan modification review with BANA, and no repeated requests to resubmit loan modification requests after Plaintiffs' initial request had already been denied. Consequently, in the absence of any facts suggesting that Nationstar breached any duty owed to Plaintiffs, there is nothing giving rise to any liability on Nationstar's part sounding in negligence. Therefore, Nationstar's Motion to Dismiss the Third Cause of Action will be GRANTED. Because Plaintiffs have identified no facts to suggest that they can state a viable negligence claim against Nationstar, and since Plaintiffs have already been permitted to amend their complaint once in order to do so, no further leave to amend will be permitted.
Under the UCL, any person or entity that has engaged "in unfair competition may be enjoined in any court of competent jurisdiction." Cal. Bus. & Prof. Code §§ 17201, 17203. "Unfair competition" includes "any unlawful, unfair or fraudulent business act or practice."
Plaintiffs' FAC makes it clear that its claim for UCL violations "borrows violations from other statutes and laws" such that Plaintiffs' preceding causes of actions (which in Nationstar's case is limited to a single claim for negligence) "constitute [the], unfair and/or fraudulent business practices" necessary to state a cognizable UCL claim. FAC, ¶¶ 80-81. Therefore, by Plaintiffs' own definition, their UCL claim is derivative of its previously asserted claims. With respect to Nationstar, the only such predicate claim is Plaintiffs' negligence cause of action, with the viability of the UCL cause of action, therefore depending on whether Plaintiffs have stated a cognizable negligence claim.
Because, as demonstrated above, Plaintiffs' underlying negligence cause of action against Nationstar fails, Plaintiffs' derivative UCL claim against Nationstar is also not viable. Therefore, Nationstar's Motion to Dismiss the Fifth Cause of Action will also be GRANTED.
For all the foregoing reasons, Defendants' Motions to Dismiss are adjudicated as follows:
