KATHLEEN M. TAFOYA, Magistrate Judge.
This matter is before the Court on "Defendants' Motion to Dismiss Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6)" (Doc. No. 44 [Mot.], filed February 21, 2013). Plaintiff filed his response on March 14, 2013 (Doc. No. 48 [Resp.]), and Defendants filed their reply on April 1, 2013 (Doc. No. 49 [Reply]). This matter is ripe for ruling.
In his Amended Complaint, Plaintiff states on November 7, 2008, he suffered a traumatic brain injury. (Doc. No. 40 [Am. Compl.], ¶ 8.) He alleges the defendants were notified of his brain injury on November 19, 2008. (Id.) Plaintiff states he made mortgage payments for November and December 2008 and January 2009. (Id.) Plaintiff alleges between February 2009 and April 2009 he received several letters from Countrywide Bank Home Loan and BAC Home Loans Servicing, LP to notify him that his mortgage loan was in default and to advise him he may qualify for a mortgage refinance. (Id., ¶¶ 11-13.)
Plaintiff alleges between June 2, 2009, and January 11, 2010, he had several conversations with and received several letters from various employees of Bank of America ("BOA") and the attorneys who were retained by the defendants to proceed with foreclosure proceedings on Plaintiff's property. (See id., ¶¶ 14-61.) Plaintiff alleges over this period of time, the BOA employees and foreclosure attorneys gave him conflicting information regarding the status of his mortgage account, whether his account was in forebearance, whether his account was in foreclosure, and whether his account was eligible for loan modification. (See id.)
Plaintiff asserts two claims for relief against all defendants, including a breach of contract claim and a fraud claim. (Id., ¶¶ 62-77.) Plaintiff seeks economic and non-economic damages. (Id. at 15.)
Defendants move to dismiss Plaintiff's claims under Fed. R. Civ. P. 12(b)(6) on the bases that (1) Plaintiff has alleged no wrongdoing by Defendant BOA; (2) Plaintiff has not identified a breach of contract; and (3) Plaintiff has not alleged a claim for fraud. (See Mot.)
Plaintiff is proceeding pro se. The Court, therefore, "review[s] his pleadings and other papers liberally and hold[s] them to a less stringent standard than those drafted by attorneys." Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citations omitted); see also Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding allegations of a pro se complaint "to less stringent standards than formal pleadings drafted by lawyers"). However, a pro se litigant's "conclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based." Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991) (citations omitted). A court may not assume that a plaintiff can prove facts that have not been alleged, or that a defendant has violated laws in ways that a plaintiff has not alleged. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983); see also Whitney v. New Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997) (a court may not "supply additional factual allegations to round out a plaintiff's complaint"); Drake v. City of Fort Collins, 927 F.2d 1156, 1159 (10th Cir. 1991) (the court may not "construct arguments or theories for the plaintiff in the absence of any discussion of those issues").
Fed. R. Civ. P. 12(b)(6) provides that a defendant may move to dismiss a claim for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6) (2007). "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citations and quotation marks omitted).
"A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff." Hall v. Bellmon, 935 F.2d 1106, 1198 (10th Cir. 1991). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The Iqbal evaluation requires two prongs of analysis. First, the Court identifies "the allegations in the complaint that are not entitled to the assumption of truth," that is, those allegations which are legal conclusion, bare assertions, or merely conclusory. Id. at 1949-51. Second, the Court considers the factual allegations "to determine if they plausibly suggest an entitlement to relief." Id. at 1951. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 1950.
Notwithstanding, the Court need not accept conclusory allegations without supporting factual averments. Southern Disposal, Inc., v. Texas Waste, 161 F.3d 1259, 1262 (10th Cir. 1998). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S. Ct. at 1940. Moreover, "[a] pleading that offers `labels and conclusions' or `a formulaic recitation of the elements of a cause of action will not do.' Nor does the complaint suffice if it tenders `naked assertion[s]' devoid of `further factual enhancement.'" Id. at 1949 (citation omitted). "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.'" Iqbal,129 S. Ct. at 1949 (citation omitted).
Defendants argue Plaintiff has not identified a breach of contract. To state a claim for breach of contract under Colorado law
In his Amended Complaint, Plaintiff states that he and Defendant BAC Home Loans Servicing, LP, entered into a Loan Modification Agreement ("Agreement") on October 6, 2009. (Am. Compl., ¶ 63.) Plaintiff states he signed and delivered the Agreement on September 28, 2009. (Id., ¶ 64.) The Court finds Plaintiff has alleged the existence of a contract.
Defendants argue, however, that Plaintiff has failed to state facts sufficient to establish his own performance or a breach of the Loan Modification Agreement. (Mot. at 7.) Plaintiff has attached the Agreement to his Amended Complaint.
Plaintiff's claim for fraud is based on six statements allegedly made in September 2009 by Defendants' employees and attorneys. (See Am. Compl., ¶ 73.) Defendants argue Plaintiff has not alleged a claim for fraud. To establish fraud, the plaintiff must prove that "(1) a fraudulent misrepresentation of material fact was made by the defendant; (2) at the time the representation was made, the defendant knew the representation was false or was aware that he did not know whether the representation was true or false; (3) the plaintiff relied on the misrepresentation; (4) the plaintiff had the right to rely on, or was justified in relying on, the misrepresentation; and (5) the reliance resulted in damages." Barfied v. Hall Realty, Inc., 232 P.3d 286, 290 (Colo. App. 2010) (citations omitted).
In his fraud claim, Plaintiff alleges in September 2009, the defendants' employees made false statements that the foreclosure on his property had been stopped in order to mislead him into modifying his home loan. (Am. Compl., ¶ 73.a.) In support of this allegation, Plaintiff alleges he discussed the foreclosure of the property with Defendants on seven occasions in September 2009. During one of these discussions, he was told the Property was in foreclosure. (Id., ¶ 35.) During four of these discussions, Plaintiff was told the foreclosure had been "stopped" and was no longer in foreclosure. (Id., ¶¶ 36, 38, 41-43.) During the last discussion, Plaintiff was informed by Defendants' attorneys they would proceed with the foreclosure, but that statement was corrected three days later. (Id., ¶¶ 39, 43.)
Defendants rely on documents attached to their Motion to argue that it was clear throughout August and September 2009, the foreclosure did not proceed while Plaintiff applied for a loan modification.
Defendants next argue that, even if it made misrepresentations, Plaintiff has failed to show he relied on the alleged misrepresentations to his detriment. (Mot. at 11-12.) The court agrees. First, Plaintiff did not make any payments under the Agreement. (Am. Compl., ¶ 9; Doc. No. 44-4 at 17:15-25.) Second, Plaintiff did not undertake any new debt he did not already owe to the defendants, and the Agreement provided a more favorable interest rate and permitted Plaintiff to cure the $18,000 arrearage on his original loan by adding it to the modified loan. (See Am. Compl. at 21-23; Doc. No. 44-2 at 17; Doc. No. 44-5 at 4-7.) Thus, the Court finds the records attached to his Amended Complaint and Defendants' Motion belie any allegation that Plaintiff signed the Agreement to his detriment.
Plaintiff alleges that the defendants made a false statement that "[t]he account is a special forbearance." (Am. Compl., ¶ 73.b.) Defendants argue that Plaintiff has failed to make any allegations regarding a special forebearance and that, to the extent any such misrepresentation was made, Plaintiff did not rely on it to his detriment.
The Court agrees with Defendant. Upon a review of the Amended Complaint, Plaintiff states that on July 1, 2009 and July 27, 2009, he was advised his account was in special forbearance. (Id., ¶ 24.) However, on September 17, 2009, Defendants sent Plaintiff a letter canceling the special forbearance because the required payments had not been received. (Id., ¶ 37.) Plaintiff alleges he had another conversation with one of Defendants' employees on September 23, 2009, in which Plaintiff again was advised "there was a special forbearance." (Id., ¶ 41; .) This bare assertion, however, is belied by the documents that show that the special forbearance was cancelled on September 17, 2009, and that Plaintiff was so notified. Moreover, it is nonsensical for Plaintiff to assert that a statement by one of Defendants' employees supposedly advising his account was under a special forbearance, despite his receipt of a letter to the contrary and the alleged conflicting information Plaintiff had received over a period of many months, would induce the plaintiff to sign a loan modification agreement. Plaintiff has failed to plead facts to allow the court to draw the inference that the defendants are liable for a claim for fraud in this regard. See Iqbal, 129 S. Ct. at 1949-51; Hall, 935 F.2d at 1110 ("[C]onclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based.") Finally, to the extent one of Defendants' employees did make the representation that Plaintiff's account was still under a special forbearance on September 23, 2009, Plaintiff fails to allege the employee knew the representation was false or was aware that he did not know whether the representation was true or false. See Barfied, 232 P.3d at 290.
Plaintiff alleges the defendants made false statements that the Modification Agreement was "payment assistance." (Am. Compl., ¶¶ 41, 73.d.) Defendants argue that Plaintiff has alleged no facts to explain how this statement was fraudulent or how he relied on this alleged false statement to his detriment. (Mot. at 13.)
Recasting of a mortgage, including mortgage modification, is one of the appropriate actions a lender may offer a distressed borrower. See 24 C.F.R. §§ 230.501, 230.616. The Court agrees with Defendants that the Agreement, which provided a more favorable interest rate and permitted Plaintiff to cure the $18,000 arrearage on his original loan by adding it to the modified loan (see Am. Compl. at 21-23; Doc. No. 44-2 at 17; Doc. No. 44-5 at 4-7) constituted "payment assistance." The court also agrees with the defendants that, even if the statement was a misrepresentation, Plaintiff fails to allege how he relied on it to his detriment, given the fact that he failed to make any payments under the Agreement and that the Agreement benefitted him.
Plaintiff alleges on September 23, 2009, Defendants' employees advised Plaintiff that if he signed the Agreement, foreclosure would be "stopped." (Am. Compl., ¶¶ 41, 42.) Defendants argue that this was not a false statement because it withdrew the "Notice of Election and Demand for Sale by Public Trustee" (Doc. No. 44-3 at 1) immediately after it received the signed Agreement from Plaintiff. (Mot. at 14.) Indeed, on October 13, 2009, only one week after the Agreement was approved by the defendants (see Am. Compl. at 27), Defendants filed a "Withdrawal of Notice of Election and Demand for Sale by Public Trustee." (Doc. No. 44-2 at 2.) Therefore, Plaintiff's claim that the defendants misrepresented to him that the foreclosure would "stop" upon his signing the Agreement is belied by the records submitted by Defendants and is dismissed.
Plaintiff alleges on September 23, 2009, the defendants made false statements that upon his signing the Agreement, "mortgage payments are suspended through October 2009 " and "[a] payment is not required until November 01, 2009." (Am. Compl., ¶¶¶ 41, 73.c. and f.) Defendants argue that at no time after sending Plaintiff the Agreement did they request payments due prior to November 1, 2009.
In support of his allegations, Plaintiff refers to his Exhibit 2 (see Am. Compl, ¶ 73.f.), which is the letter from Defendants dated September 17, 2009, in which they advise Plaintiff that the Special Forbearance has been canceled. (Am. Compl. at 19.) This letter pre-dates the Agreement that Plaintiff executed on September 28, 2009. (See id. at 19, 21-22.) However, the Agreement, which is relevant to this claim, provides that Plaintiff's first payment of $1,586.00 was due on November 1, 2009. (Id. at 21, ¶ 2(a)(ii)). In his Amended Complaint, Plaintiff states on October 5, 2009, he received "a home loan statement for $2,139.18, effective
Thus, the alleged statement by Defendants' employees that loan modification would stop foreclosure is reinforced by the allegations in Plaintiff's Amended Complaint and by the documents attached to Defendants' Motion, which show that the defendants did not require a payment from the time Plaintiff signed the Agreement until the date his first payment was due on November 1, 2009. Therefore, Plaintiff's claim that the defendants' employees made false statements by advising him his payments were suspended through October 2009 is dismissed.
For the foregoing reasons, Defendants' Motion to dismiss for Plaintiff's failure to state a fraud claim should be granted.
