MORRISON C. ENGLAND, Jr., District Judge.
In bringing this lawsuit, Plaintiff Genet Habtemariam alleges that she was wrongfully subjected to foreclosure proceedings on a Second Deed of Trust that had been cancelled by the owner of the note, Defendant PNC Bank, N.A., some five years previously. Despite that cancellation, Plaintiff alleges the note was sold and ultimately assigned by PNC to Defendant Vida Capital Group who proceeded with the foreclosure. Plaintiff seeks to clear title to her property and further alleges various improprieties against both Defendants. PNC previously moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiff's second through fifth causes of action for failure to state a claim, ECF No. 5, which the Court denied, ECF No. 24. In her opposition to that motion, Plaintiff moved for leave to amend her complaint to add a claim for breach of contract. ECF No. 8. That motion was granted ECF No. 24, and Plaintiff filed a First Amended Complaint ("FAC"), ECF No. 26, on March 3, 2017. PNC now moves to dismiss the newly added claim for breach of contract for failure to state a claim. ECF No. 36. As set forth below, that motion is GRANTED.
In 2001, Plaintiff obtained a purchase money loan to buy a house located at 7 Shipman Court in Sacramento, California ("the subject property"). Then, in April of 2007, she refinanced her initial loan through Gateway Bank FSB and took out a second mortgage from National City Bank, an entity which later merged into PNC. Plaintiff's second mortgage was secured by a Second Deed of Trust ("SDOT") recorded on April 17, 2007.
Some three years later, PNC notified Plaintiff by mail that its SDOT was discharged, apparently due to settlement agreements PNC had reached with various agencies of the United States government. PNC effectuated that cancellation by sending a 1099-C form approved by the Internal Revenue Service for cancelling a debt. Plaintiff received the Form 1099-C on or about June 29, 2010. According to Plaintiff, because the Form 1099-C cancelled the amount she owed on the second mortgage, she believed it legally released her from any further obligation to pay the debt. Plaintiff accordingly reported the debt cancellation as income to the Internal Revenue Service for the 2010 calendar year.
Unbeknownst to Plaintiff, PNC never recorded a release of lien as to its SDOT and in fact assigned its purported interest in the loan to Defendant US Mortgage Resolution ("UMR") in approximately March of 2012. UMR, who made no attempt to foreclose on the loan, then sold the SDOT to Vida sometime in 2014. When Vida contacted Plaintiff in early 2015 in an attempt to collect on the instrument, Plaintiff responded by providing Vida with a copy of the Form 1099-C and asserting that the debt had been cancelled and was not collectable. Vida nonetheless recorded a Notice of Default on the subject property on September 22, 2015, and directed the trustee to transfer title to Vida itself through non-judicial foreclosure proceedings which culminated in title transfer to Vida by a deed recorded on February 16, 2016.
Plaintiff responded by commencing this action in state court on April 19, 2016. PNC removed Plaintiff's lawsuit to this Court the same day, citing diversity of citizenship. On May 11, 2016, Vida filed an unlawful detainer action against Plaintiff, and Plaintiff was given a three-day notice to quit the premises. Rather than comply with that notice, Plaintiff removed that second case to this Court and moved to consolidate it with the suit she had commenced. The Court granted the motion. PNC subsequently moved to dismiss four of Plaintiff's five claims, and Vida joined in that motion. After the Court denied the motion to dismiss and granted leave for Plaintiff to amend her complaint, she added a breach of contract claim in connection with the settlement agreements PNC reached with various agencies of the United States government, which allegedly led PNC to discharge the SDOT.
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 . . . ."
As an initial matter, PNC contends that "when a plaintiff asserts a cause of action for breach of a written contract, she must attach a copy of the contract to the complaint or set forth the allegedly breached terms verbatim."
Regardless of the method a plaintiff takes in pleading a breach of contract claim, he or she must allege "(1) the existence of a contract; (2) the party's performance under that contract or an excuse for nonperformance; (3) the defendant's breach; and (4) resulting damages."
Plaintiff's breach of contract claim is deficient under Rule 8, failing to give PNC sufficient notice of the claims against it. The FAC alleges that PNC entered into "two distinct settlement agreements" with "the U.S. Justice Department and the Consumer Financial Protection Bureau, and the Federal Reserve and the Office of the Comptroller of the Currency," FAC, ¶¶ 56-57, but then fails to distinguish which allegations apply to each agreement. For example, the FAC fails to specify which agencies were parties to which agreement. Were all four government agencies party to both, or did different agencies enter into the different agreements?
Though PNC has been able to identify a settlement agreement that largely matches the gist of Plaintiff's breach of contract claims,
For the reasons provided above, PNC's Motion to Dismiss, ECF No. 36, is GRANTED. Plaintiff's breach of contract claim is dismissed without prejudice. Plaintiff may, but is not required to, file an amended complaint. If no amended complaint is filed within twenty (20) days of the date this Order is electronically filed, the cause of action dismissed by this Order shall be dismissed with prejudice without further notice to the parties. The Court also cautions that this will be the last opportunity to sufficiently allege the existence of a second settlement agreement.
IT IS SO ORDERED.