LAUREL BEELER, United States Magistrate Judge
In this putative class action, Plaintiffs challenge their lender U.S. Bank's business practices associated with force-placing flood insurance on their real property that was underwritten by Defendant American Security Insurance Company ("ASIC"). They also allege that U.S. Bank received kickbacks or other compensation from ASIC. Second Amended Class Action Complaint ("SAC"), ECF No. 169, ¶ 2.
ASIC and U.S. Bank move to dismiss the SAC, arguing that certain claims are (1) moot, (2) barred by the filed rate doctrine, (3) barred by the express terms of the governing contracts, and (4) fail to state a claim. See ASIC Motion to Dismiss, ECF No. 175; U.S. Bank Motion to Dismiss, ECF No. 174. Ellsworth opposed the motions on February 14, 2014. See Opposition, ECF No. 180. ASIC and U.S. Bank filed replies on February 27, 2014. See ASIC Reply, ECF No. 181; U.S. Bank Reply, ECF No. 182. The court denies the motions to dismiss.
Plaintiffs and the putative class members have mortgages secured by residential property and were charged for lender-placed (also called "force-placed") flood insurance by U.S. Bank. SAC ¶ 1. Lenders generally have the right to force-place flood insurance where the property securing the loan falls in a Special Flood Hazard Area ("SFHA") and is not insured by
Defendant U.S. Bank is a national banking association headquartered in Cincinnati, Ohio that does business in California and throughout the United States. Id. ¶ 11. U.S. Bank Home Mortgage is one of U.S. Bank's divisions. Id. Defendant ASIC is a Delaware corporation with its principal place of business in Atlanta, Georgia, is a subsidiary of Assurant, Inc., and does business in California and throughout the United States. Id. ¶ 12.
On or about July 2, 2007, Plaintiff Stephen Ellsworth obtained a $393,892 mortgage loan from U.S. Bank that was secured by the deed of trust on his Napa County, California home.
SAC Ex. 1, ECF No. 169-1 at 7. The same provision permits U.S. Bank to force-place flood insurance at Ellsworth's expense
Id. Ellsworth alleges that U.S. Bank's discretion to force-place insurance is constrained by the mortgage's paragraph 9, which provides:
Id. Ex. 1 at 8; see SAC ¶ 20. Ellsworth's mortgage also contains a provision titled "Loan Charges," which provides that U.S. Bank "may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting [U.S. Bank's] interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys' fees, property inspection and valuation fees." Id. at 11.
When Ellsworth entered into the mortgage agreement, U.S. Bank did not require him to carry flood insurance.
On August 18, 2010, U.S. Bank sent Ellsworth a "Notice of Flood Insurance Placed by Lender Due to Cancellation, Expiration, or Missing Policy Information" informing him that it had not received evidence that he had purchased flood coverage. Id. ¶ 24, Ex. 3, ECF No. 169-3 at 2. In the August 18 notice, U.S. Bank stated that it had purchased a "full year flood insurance policy" from ASIC, and the charge for the policy was $2,250. Id. ¶ 24, Ex. 4. The force-placed flood insurance policy was backdated so that it was effective from July 3, 2009 to July 3, 2010 (although it was not issued until August 18, 2010). Id. ¶¶ 24-25, Ex. 4., ECF No. 169-4 at 2. There was no damage to the property or claims arising out of the property during that period. Id. ¶ 25. In other words, the coverage was expired on the date it was purchased and was worthless. Id.
U.S. Bank and/or its affiliates received kickbacks from ASIC on lender-placed insurance (in the form of "expense reimbursements" and subsidized insurance tracking services), which is consistent with ASIC's standard business practices. Id. ¶ 26. U.S. Bank did not subtract these kickbacks from the amount it charged Ellsworth. Id. ¶¶ 26-27.
In August 2010, Ellsworth purchased a one-year flood insurance policy through State Farm effective September 1, 2010. See id. ¶ 28, Ex. 5, ECF No. 169-5. This policy (like the ASIC policy) provided $250,000 in flood insurance coverage, but it was not backdated and cost only $276. Id.
On April 9, 2012, Ellsworth sent a letter to U.S. Bank stating that the force-placed flood insurance policies violated the deed of trust and requesting a refund of the premiums he paid. See id. ¶ 29; id. Ex. 6, ECF No. 169-6 at 2. Ellsworth did not receive a response from U.S. Bank. Id. ¶ 29. Ellsworth was reimbursed for these charges only after the initiation of this lawsuit, but he has not been reimbursed for his costs and expenses associated with bringing this lawsuit. Id. ¶ 27.
Plaintiff Marilyn Weaver is a California resident. Id. ¶ 9. On or about August 28, 2011, Weaver obtained a $435,000 mortgage loan from First Nations Home Finance secured by a deed of trust on her San Diego, California home. Id. ¶ 30, Ex. 7, ECF No. 169-7 at 2. Weaver's mortgage also is a standard Fannie Mae/Freddie Mac Uniform Instrument. Id. ¶ 30. Ellsworth's and Weaver's mortgages contain identical provisions regarding flood insurance and U.S. Bank's discretion to force place it. Compare id. Ex. 7, ECF No. 169-7 at 4-11 (Weaver's mortgage), with id. Ex. 1, ECF No. 169-1 at 4-13 (Ellsworth's mortgage).
Weaver initially was not required to carry flood insurance on her property. Id. at 7 n.3. On or about November 2, 2011, Weaver received a letter from Freddie Mac stating that her mortgage had been sold to Freddie Mac and that the servicer of the mortgage would now be U.S. Bank. Id. ¶ 32, Ex. 8, ECF No. 169-8 at 2. On or about June 11, 2012, U.S. Bank sent Weaver a notice informing her that "[w]e have been notified of a Physical Map Revision issued by the Federal Emergency Management Agency which places your structure(s) in Special Flood Hazard Area `Zone A,'" Weaver had "45 days to purchase flood insurance, and if [she did] not provide adequate proof of flood insurance within 45 days of this letter, as a federally
On July 3, 2012, Weaver sold the property, and she finalized the sale papers on July 16, 2012. Id. ¶ 34. On July 18, 2012, Weaver notified U.S. Bank by letter and fax that she would not need flood insurance because the property had been sold and escrow would close on August 31, 2012. Id. ¶ 34, Ex. 10, ECF No. 169-10 at 2-3.
On or about August 13, 2012, Weaver received a response from U.S. Bank, stating that ASIC had issued lender-placed flood insurance for her property with an effective date of July 27, 2012. Id. ¶ 34, Ex. 11, ECF No. 169-11 at 2. Then on or about August 21, 2012, Weaver received a "Notice of Flood Insurance Placed by Lender" that attached the declarations page for the flood insurance coverage on her property. Id. ¶ 36, Ex. 12, ECF No. 169-12 at 2-3. This force-placed flood insurance had an effective date of July 27, 2012, provided coverage of $250,000, and had an annual premium of $2,250. Id. ¶ 36, Ex. 12 at 2-3.
Weaver signed the final papers for the sale of her house on August 29, 2012. Id. ¶ 37. She was forced to pay $2,250 in "Escrow Overdraft" for the U.S. Bank-placed flood insurance. Id.; see id. Ex. 13, ECF No. 169-13 at 2-3. Thereafter, Weaver made several attempts to contact U.S. Bank to ask about canceling the force-placed flood insurance. Id. ¶ 38, Ex. 14, ECF No. 169-14 at 2.
On or about September 11, 2012, U.S. Bank sent Weaver a letter stating that the insurance coverage on her property had been partially cancelled effective August 30, 2012. Id. ¶ 38, Ex. 15, ECF No. 169-15 at 2. On or about September 22, 2012, Weaver received a check in the amount of $2,041 for a partial refund of the $2,250 that she initially paid for the force-placed flood insurance coverage. Id. ¶ 39, Ex. 16, ECF No. 169-16 at 2. Weaver has yet to be fully reimbursed. Id.
On or about February 21, 2002, Plaintiffs Lawrence and Donene Skelley obtained a $100,000 mortgage loan from Firstbank that was secured by a deed of trust on their Causey, New Mexico home. Id. ¶ 40, Ex. 17, ECF No. 169-17 at 2. Their mortgage also is a standard Fannie Mae/Freddie Mac Uniform Instrument and contains the same provisions as the Weaver and Ellsworth mortgages. Id.; compare id. Ex. 17, ECF No. 169-17 at 4-12, and id. Ex. 7, ECF No. 169-7 at 4-11, with id. Ex. 1, ECF No. 169-1 at 4-13.
When they closed on their mortgage loan, the Skelleys' home was not located in an SFHA, and they were not required to carry flood insurance on their property at that time. Id. ¶ 41. On or about September 7, 2011, the Skelleys received an "Assignment of Mortgage" document that stated that their mortgage had been assigned to U.S. Bank effective February 3, 2011. Id. ¶ 42, Ex. 18, ECF No. 169-18 at 2-3. At the time of assignment, the Skelleys were not informed of a flood insurance requirement on their property. Id. ¶ 42.
On December 12, 2011, U.S. Bank sent the Skelleys a form letter claiming that their property was located in an SFHA and that they were required to purchase flood insurance on the property. Id. ¶ 43, Ex. 19, ECF No. 169-19 at 2. The letter further stated that U.S. Bank had placed temporary flood insurance on their property with a backdated effective date of June 1, 2011. Id. ¶ 43. An "Insurance Binder" document was attached to the Skelley Notice that showed that this force-placed
On or about February 20, 2012, the Skelleys received a "Notice of Flood Insurance Placed by Lender" that had the declarations page for the force-placed flood insurance coverage attached. Id. ¶ 44. This force-placed coverage had a backdated effective date of June 1, 2011, provided effective coverage of $86,461, and had an annual premium of $778. See id. ¶ 44, Ex. 20, ECF No. 169-20 at 3.
On or about February 21, 2012, the Skelleys' insurance agent, Lori Bohm, sent a letter to U.S. Bank stating that the Skelleys' home was located in Flood Zone D and thus "flood insurance is NOT available nor should it be required." Id. ¶ 45, Ex. 21, ECF No. 169-21 at 2. Attached to Ms. Bohm's letter was a flood zone determination that was completed on February 21, 2012 and stated that the Skelleys' home was not located in a SFHA. Id. ¶ 45, Ex. 21 at 3. The National Flood Insurance Program Map Panel effective date reflected on the form was October 6, 2010. Id. ¶ 45.
On or about March 5, 2012, U.S. Bank sent the Skelleys a letter that stated "A recent review of your account revealed that the property structure secured by the above referenced loan is no longer located in a Special Flood Hazard Area (SFHA)." Id. ¶ 46, Ex. 22, ECF No. 169-22 at 2. The letter also stated that "[a]s a result [of the recent account review], U.S. Bank Home Mortgage no longer requires that you maintain flood insurance. Id. ¶ 46, Ex. 22 at 2. The Skelleys received another letter from U.S. Bank the same day that stated that its records showed "a lapse of insurance coverage from 06/01/11 to 03/0512." Id., Ex. 23, ECF No. 169-23 at 2.
The Skelleys received another letter from U.S. Bank on or about March 12, 2012 that stated the force-placed flood insurance coverage on their property would be cancelled and that they would receive a partial refund of $187. Id. ¶ 47, Ex. 24, ECF No. 169-24 at 2. Nonetheless, because "coverage was provided between the effective date of the coverage [U.S. Bank] obtained and the termination date," $591 would be charged to their escrow account. Id. ¶ 47., Ex. 24 at 2.
Ms. Skelley faxed a letter to U.S. Bank on or about July 5, 2012, reiterating that her home never was located in a flood zone. Id. ¶ 48, Ex. 25, ECF No. 169-25 at 2. Along with this letter, Ms. Skelley faxed a July 5, 2012 flood zone determination that showed that the Skelleys' home was not located in a SFHA. Id. ¶ 48, Ex. 25, ECF No. 169-25 at 3. Like the February 21, 2012 determination, the July 5, 2012 flood zone determination showed a National Flood Insurance Program Map Panel effective date of October 6, 2010. Id. ¶ 48, Ex. 25.
On or about July 16, 2012, the Skelleys received another letter from U.S. Bank repeating its earlier claim that their home was no longer in a flood zone as of March 5, 2012 and stating that "U.S. Bank still required you to have flood insurance for this period of time from 06/01-2011-03/05/2012." Id. ¶ 49, Ex. 26, ECF No. 169-26 at 2. The $591 charge that U.S. Bank imposed for force-placed flood insurance coverage from June 1, 2011 to March 5, 2012 was added to the Skelleys' escrow account and built into their monthly mortgage payment. Id. ¶ 50. To remain current on their mortgage, the Skelleys have been making increased payments against their will. Id.
Force-placing insurance is a lucrative business for U.S. Bank and other mortgage lenders and servicers (referred to generically as lenders). Id. ¶ 51. Commonly, the lender selects the insurance provider in accordance with an agreement whereby the insurance provider pays a percentage of the premium back to the lender as an inducement to do business with the insurance provider. Under such arrangements, the force-placed insurance provider pays a commission (also referred to as a "qualified expense reimbursement") to the lender or a subsidiary that poses as an agent. Often, the insurance provider also gives discounted or subsidized insurance tracking services to the lender. Id.
U.S. Bank has tried to keep its own compensation arrangement with ASIC secret, but discovery in this action has shown that ASIC paid so-called qualified expense reimbursements (which were not legitimate reimbursements for actual costs and were tantamount to commissions) to a U.S. Bank affiliate in connection with force-placed insurance. Id. ¶ 52. ASIC also provided discounted insurance tracking services to U.S. Bank. Id.
These compensation arrangements (including arrangements involving ASIC and its parent company) are the subject of court opinions, id. ¶ 53 (citing cases), publicly-filed deposition testimony, id. ¶ 54 (quoting a Chase representative who refers to these arrangements as "standard industry-wide practice"), an article in American Banker magazine, id. ¶ 55 & Ex. 28, and public regulatory filings, id. ¶ 56. For example, ASIC reported to the California Department of Insurance that it paid more than $1.8 million dollars in commissions and brokerage expenses in connection with its flood insurance program in 2010. Id. ¶ 56. According to an article in American Banker, the force-placed insurance business (for flood, hazard, and wind policies) "brings servicers hundreds of millions of dollars each year." Id. ¶ 57, Ex. 30. In return for this compensation, ASIC and its parent company, Assurant, make billions of dollars in premiums. Id. ¶ 58. In 2010 alone, Assurant collected approximately $2.7 billion in premiums through its specialty insurance division, which is primarily is devoted to force-placed insurance. Id. ¶ 58, Ex. 30.
Plaintiffs argue that the "kickback arrangements" between ASIC and its clients (including U.S. Bank) are unjust. Id. ¶ 59. Numerous courts have condemned self-dealing in connection with force-placed insurance. Id. ¶ 60 (collecting cases). Plaintiffs claim that the NFIA allows lenders and servicers only to "charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan in purchasing the insurance." Id. ¶ 61 (quoting 42 U.S.C. § 4012(e)(2)).
On March 6, 2012, Fannie Mae issued a Request for Proposal ("RFP") relating to lender-placed insurance. In the RFP, Fannie Mae stated that it had conducted an extensive internal review of the lender-placed insurance process and found that it could be improved through unit price reductions and fee transparency to the benefit of both the taxpayers and homeowners. Id. ¶ 63, Ex. 33. Fannie Mae made the following observations:
Id. ¶ 63 (quoting Ex. 33). Accordingly, Fannie Mae stated that it sought to "[r]estructure the business model" in part to "[e]liminate the ability of Servicers to pass on the cost of commissions/fees to Fannie Mae" and to "[s]eparate the commissions and fees for Insurance Tracking Services from the fees for Lender Placed Insurance to ensure transparency and accountability." Id.
On March 14, 2012, Fannie Mae issued a Servicing Guide Announcement pertaining to lender-paced insurance. Id. ¶ 62, Ex. 31. In it, Fannie Mae clarified its requirements relating to reasonable reimbursable expenses for lender-placed insurance, and stated that "reimbursement of lender-placed insurance premiums must
Also on March 14, 2012, the California Department of Insurance announced that it had contacted the ten largest lender-placed insurers in California (including ASIC), and asked them to reduce their rates. Id. ¶ 64; see Exs. 34-35. The California Insurance Commissioner expressed concern about "questionable financial integration between mortgage lenders and insurers providing `forced-placed' mortgage insurance." Id. ¶ 64; see Ex. 34. The Commissioner also noted a "lack of arm's length transactions between lenders and insurers and, in some cases, a financial relationship between the lender and the insurer" that results in higher premiums and prejudices homeowners. Id.
In May 2012, the New York Department of Financial Services ("NYDFS") held a three-day hearing regarding the force-placed insurance practices of mortgage lenders, servicers, and insurance companies. Id. ¶ 65 (citing http://www.dfs.ny.gov/insurance/hearing/fp_052012_schedule.htm). On the opening day of the hearings, NYDFS Superintendent Benjamin Lawsky issued a statement, announcing that "our initial inquiry into the operation of the force placed insurance market has raised a number of serious concerns and red flags," including:
Id. ¶ 65 (quoting Ex. 36 at 2). According to Superintendent Lawsky, "[t]his perverse incentive, if it exists, would appear to harm both homeowners and investors while enriching the banks and the insurance companies." Id. ¶ 65 (quoting Ex. 36 at 3). After these hearings, the NYDFS entered into a Consent Order with ASIC. Id. ¶ 65; see Ex. 37. The Consent Order (1) forbids ASIC from paying "commissions
The National Association of Insurance Commissioners ("NAIC") recently expressed its "regulatory concern," as follows:
Id. ¶ 66 (quoting Ex. 38).
Plaintiffs also cite authorities critical of backdating insurance. See id. ¶¶ 67-69. For example, according to the NAIC, insurance is "prospective in nature" and policies "should not be backdated to collect premiums for a time period that has already passed." Id. ¶ 67 (quoting Ex. 28). Similarly, the Ohio Department of Insurance has specifically warned that "there's no such thing as retroactive flood insurance." Id. ¶ 67 (quoting Ex. 39).
In the context of the National Flood Insurance Act of 1968, the Office of the Office of the Comptroller of the Currency ("OCC") has stated:
Id. ¶ 68 (quoting Flood Insurance Questions & Answers, 74 Fed.Reg. at 35,934). The OCC later proposed alternative language that would allow lenders to charge borrowers for flood insurance coverage during the 45-day notice period, if the borrower has given the lender "express authority" to do so. Id. ¶ 68 n.9 (quoting Loans in Areas Having Special Flood Hazards; Interagency Questions & Answers Regarding Flood Insurance, 76 Fed.Reg. 64,175, 64,180-81 (Oct. 17, 2011)). Finally courts have upheld claims that backdating force-placed insurance policies is unfair and/or unlawful." Id. ¶ 69 (collecting cases).
The SAC defines several classes and sub-classes. See SAC ¶¶ 70-79.
Plaintiffs assert their breach of contract claims against U.S. Bank (claim 1) on behalf of the proposed "Multi-State Lender-Placed Class," which is divided into two sub-classes:
Id. ¶ 71.
To the extent that Plaintiffs' breach of contract claims are based on allegations of improper qualified expense reimbursements, Plaintiffs assert these claims on behalf of a proposed "Multi-State QER Class," which is divided into two sub-classes:
Id. ¶ 72.
To the extent that Plaintiffs' breach of contract claims are based on allegations of improper backdating, Plaintiffs assert these claims on behalf of a proposed "Multi-State Backdated Class," which is divided into two sub-classes: Proposed Multi-State Backdated Class: All persons with a closed-end residential mortgage loan secured by a Fannie Mae/Freddie Mac Uniform Instrument, who were charged by U.S. Bank, N.A. for force-placed flood insurance on property in the United States before January 1, 2013 and within the applicable statute of limitations, where such insurance was backdated by more than 60 days, excluding persons whose force-placed flood insurance charges were completely refunded or extinguished through a bankruptcy, foreclosure judgment, loan modification, forbearance, short sale, or deed-in-lieu of foreclosure.
Id. ¶ 73.
Ellsworth and Weaver assert their claims for breach of covenant of good faith and fair dealing (claim 2), unjust enrichment (claims 3-4), and violations of California's Unfair Competition Law (claims 5-6) on behalf of three California classes. See id. ¶¶ 74-76.
First, they seek to represent a proposed "California Lender-Placed Class:"
Id. ¶ 74.
Second, to the extent their claims 2-6 are based on improper qualified expense reimbursements, Ellsworth and Weaver seek to represent a proposed "California QER Class:"
Id. ¶ 75.
Third, to the extent Ellsworth's claims 2-6 are based on allegations of improper backdating, Ellsworth asserts these claims on behalf of a proposed "California Backdated Class:"
Id. ¶ 76.
Plaintiffs Lawrence and Donene Skelley assert their claims for breach of covenant of good faith and fair dealing (claim 2) and unjust enrichment (claims 3-4) on behalf of three New Mexico classes. First, the Skelleys assert claims 2-4 on behalf of a proposed "New Mexico Lender-Placed Class:"
Id. ¶ 77.
Second, to the extent the Skelleys' claims 2-4 are based on allegations of improper qualified expense reimbursements, they seek to represent a proposed "New Mexico QER Class:"
Id. ¶ 78.
Third, to the extent the Skelleys' claims 2-4 are based on allegations of improper backdating, they seek to represent a proposed "New Mexico Backdated Class:"
Id. ¶ 79.
Ellsworth filed his original complaint on May 16, 2012 against U.S. Bank and filed a First Amended Complaint ("FAC") against U.S. Bank and ASIC on July 23, 2012. Complaint, ECF No. 1; FAC, ECF No. 26. On August 6, 2012, U.S. Bank moved to compel arbitration based on the arbitration provisions in Ellsworth's U.S. Bank checking account. See ECF No. 32. While that motion was pending, ASIC moved to dismiss the FAC. See ECF No. 52. On September 19, 2012, the court denied U.S. Bank's motion to compel arbitration. ECF No. 64. U.S. Bank then moved to dismiss the FAC. ECF No. 68. The court denied ASIC's and U.S. Bank's motions to dismiss on December 11, 2012. See ECF No. 80. Defendants then answered the FAC, and the parties began discovery. See ECF Nos. 83 (U.S. Bank Answer), 84 (ASIC Answer), 91 (Pre-Trial Order).
On September 24, 2013, Ellsworth moved for class certification. See ECF No. 135. In its opposition, U.S. Bank stated that at Ellsworth's October 4, 2013 deposition, it "discovered" that Ellsworth's property was never in a flood zone, it never should have force-placed flood insurance on his property, and it was refunding Ellsworth's money. See U.S. Bank Class Certification Opp'n, ECF No. 132-5. In his class certification reply brief, Ellsworth characterized U.S. Bank's late discovery as a "last-minute machination" and proposed new class definitions and adding additional class representatives. See Reply Supp. Motion for Class Certification, ECF No. 149-5. Four days later, on November 18, 2013, Ellsworth filed a motion to amend the complaint and an administrative motion to shorten the hearing schedule so that the motion to amend could be heard at the December 5, 2013 hearing on the class certification motion. See ECF Nos. 151-52.
"Following Plaintiff's identification of Ms. Skelley as a proposed putative class representative and plaintiff to this action, U.S. Bank commenced an internal review and investigation of her records." Wolfe Decl. Supp. U.S. Bank Opp'n to Motion to Amend, ECF No. 165-1, ¶ 7. U.S. Bank explained that it discovered that Ms. Skelley's property was never in a flood zone either. Id. ¶ 9. "Accordingly, consistent with U.S. Bank's policies, on November 29, 2013, U.S. Bank issued to Ms. Skelley a complete refund" of the remaining premiums she had been charged. Id.
On December 19, 2013, the court granted Ellsworth's motion to file the SAC, vacated the class certification hearing, and ordered the parties to submit a proposed schedule regarding (1) discovery into new issues regarding the new Plaintiffs and proposed classes, (2) dispositive motions, and (3) supplemental class certification briefing. ECF No. 168 at 18-20. The court limited the scope of the issues the parties could address in any motions to dismiss to "new issues (such as the New Mexico law issues identified in ASIC's opposition to the motion to amend) and [said
Claim Defendant(s) Proposed Classes Breach of Contract (Claim 1) U.S. Bank 1. Multi-State Lender Placed Class a. Ellsworth/Weaver Lender-Placed Sub-Class b. Skelley Lender-Placed Sub-Class 2. Multi-State QER Class a. Ellsworth/Weaver QER Sub-Class b. Skelley QER Sub-Class 3. Multi-State Backdated Class a. Ellsworth Backdated Sub-Class b. Skelley Backdated Sub-Class
Implied Covenant (Claim 2) U.S. Bank 1. California Lender-Placed Class
2. California QER Class
Unjust Enrichment/Restitution/Disgorgement 3. California Backdated Class
(Claim 3) U.S. Bank 4. New Mexico Lender-Placed Class
5. New Mexico QER Class
Unjust Enrichment/Restitution/Disgorgement 6. New Mexico Backdated Class
(Claim 4)
ASIC
California Unfair Competition U.S. Bank 1. California Lender-Placed Class
Law (Claim 5) 2. California QER Class
3. California Backdated Class
California Unfair Competition ASIC
Law (Claim 6)
On January 17, 2014, U.S. Bank and ASIC filed separate motions to dismiss the SAC. See ECF Nos. 174-175. The court held a hearing on March 20, 2014. See Minute Order, ECF No. 184.
Dismissal of a claim is appropriate under Federal Rule of Civil Procedure Rule 12(b)(1) when the court lacks subject-matter jurisdiction over the claim. Morongo Band of Mission Indians v. California Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir.1988). A Rule 12(b)(1) motion may either attack the sufficiency of the complaint to establish federal jurisdiction (a facial challenge) or allege a lack of jurisdiction that exists despite the formal sufficiency of the complaint (a factual challenge). See White v. Lee, 227 F.3d 1214, 1242 (9th Cir.2000). A facial attack asserts lack of federal jurisdiction based on the complaint alone, and the court must accept all allegations of fact in the complaint as true and construe them in the light most favorable to the plaintiffs. See Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.2003). By contrast, with a factual challenge, a court need not assume the truth of factual allegations but may hear additional evidence about jurisdiction and resolve factual disputes when necessary. See Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). If a defendant challenges jurisdiction
Rule 8(a) requires that a complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A complaint must therefore provide a defendant with "fair notice" of the claims against it and the grounds for relief. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation and citation omitted).
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "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." Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citations and parentheticals omitted).
In considering a motion to dismiss, a court must accept all of the plaintiff's allegations as true and construe them in the light most favorable to the plaintiff. See id. at 550, 127 S.Ct. 1955. In addition, courts may consider documents attached to the complaint. Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995) (citation omitted).
Under the National Flood Insurance Act of 1968 ("NFIA") and the Flood Disaster Protection Act of 1973, as amended, the Office of the Comptroller of Currency ("OCC") is charged with promulgating regulations that require lending institutions and servicers to ensure that properties subject to their mortgage loans have adequate flood insurance. See 42 U.S.C. §§ 4012a(b)(1), 4003(a)(5). The OCC regulations that control a lender's powers and obligations related to flood insurance provide that a national bank "shall not make, increase, extend, or renew any designated loan unless the building ... securing the loan is covered by flood insurance for the term of the loan."
42 U.S.C. § 4012a(e)(1). "If the borrower fails to purchase such flood insurance within 45 days after notification ... the lender or servicer for the loan shall purchase the insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan in purchasing the insurance." 42 U.S.C. § 4012a(e)(2).
The three issues are as follows: whether the Skelleys' claims are barred for lack of standing or mootness; whether the filed rate doctrine bars the kickback claims; and whether the amended complaint pleads plausible claims.
The first issue is whether the Skelleys' claims are moot or whether they lack standing.
Standing is jurisdictional, cannot be waived, and is properly addressed under Rule 12(b)(1). See United States v. Hays, 515 U.S. 737, 742, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995); Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir.2010). The party asserting the claim has the burden of establishing standing. See Colwell v. Dept. of Health and Human Servs., 558 F.3d 1112, 1121 (9th Cir.2009). When ruling on a motion to dismiss for lack of standing, the court "must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Graham v. FEMA, 149 F.3d 997, 1001 (9th Cir.1998) (quoting Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)).
From a constitutional perspective, Article III's case-or-controversy requirement requires the following for each claim: (1) the party invoking federal jurisdiction
"[A] case is moot when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome." County of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 59 L.Ed.2d 642 (1979) (quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969)). "[T]he question is not whether the precise relief sought at the time the application for an injunction was filed is still available. The question is whether there can be any effective relief." West v. Secretary of Dept. of Transp., 206 F.3d 920, 925 (9th Cir.2000).
"Mere voluntary cessation of allegedly illegal conduct does not moot a case; it if did, the courts would be compelled to leave [t]he defendant ... free to return to his old ways." United States v. Concentrated Phosphate Export Ass'n, 393 U.S. 199, 89 S.Ct. 361, 21 L.Ed.2d 344 (1968) (quoting United States v. W.T. Grant Co., 345 U.S. 629, 632, 73 S.Ct. 894, 97 L.Ed. 1303 (1953)); see also, Adarand Constructors, Inc. v. Slater, 528 U.S. 216, 222, 120 S.Ct. 722, 145 L.Ed.2d 650, (2000). Voluntary cessation of illegal conduct does not render a challenge to that conduct moot unless "(1) there is no reasonable expectation that the wrong will be repeated, and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation." Barnes v. Healy, 980 F.2d 572, 580 (9th Cir.1992); see also Lindquist v. Idaho State Bd. of Corrections, 776 F.2d 851, 854 (9th Cir.1985) (quoting Davis, 440 U.S. at 631, 99 S.Ct. 1379). "The burden of demonstrating mootness `is a heavy one.'" Davis, 440 U.S. at 631, 99 S.Ct. 1379 (quoting W.T. Grant, 345 U.S. at 632-33, 73 S.Ct. 894).
Here, the relevant facts
U.S. Bank argues that the Skelleys' claims are moot and ASIC argues that the refunds mean that the Skelleys lack standing. The court disagrees.
In this circuit, an unaccepted settlement offer that would fully satisfy a plaintiff's claim does not render that claim moot. Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948, 954-55 (9th Cir.2013). This is because "a case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party." Id. (quoting Knox v. Serv. Employees Int'l Union, Local 1000, ___ U.S. ___, 132 S.Ct. 2277, 183 L.Ed.2d 281 (2012) (internal quotation marks and alteration omitted)). In Diaz, the Ninth Circuit vacated the district court's order granting a motion to dismiss where the plaintiff rejected the defendant's Rule 68 offer of judgment. Id. The plaintiff purchased a home warranty plan from the defendant and filed a class action alleging the defendant refused to make timely repairs, used substandard contractors, and wrongfully denied claims. Id at 949. After the court denied class certification, the defendant made a Rule 68 offer of judgment that would have fully satisfied Diaz's remaining individual claims. Lacking binding Ninth Circuit authority, the district court relied on Fourth and Seventh Circuit precedent and dismissed the plaintiff's claims as moot. Id. at 951. On appeal, the Ninth Circuit quoted the following passage from Justice Kagan's dissent in Genesis Healthcare v. Symczyk:
Id. at 953-54 (quoting Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523, 185 L.Ed.2d 636 (2013) (Kagan, J., dissenting)). In Diaz, the Ninth Circuit said that "Justice Kagan has articulated the correct approach" and held "that an unaccepted Rule 68 offer that would have fully satisfied a plaintiff's claim does not render that claim moot." Id. at 954-55. The court explained that its holding was "consistent with the language, structure and purpose of Rule 68 and with fundamental principles governing mootness. These principles provide that "a case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party" Id. at 955 (quotation omitted).
Here, as in Diaz, U.S. Bank attempted to refund the Skelleys' money. Because the Skelleys did not accept U.S. Bank's settlement offer, the attempted refund did not moot their claims.
The analysis in Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir.2011), supports this conclusion. There, the Ninth Circuit reversed the district court's determination that a Rule 68 offer of a judgment to a named plaintiff mooted the putative class action. Id. The offer of judgment exceeded the amount of the named plaintiff's individual claim. See id. It also was made before the district court certified the class (and before the class certification motion was even filed). Id. This procedural context was potentially relevant because once the district court has certified a class, mooting the class representative's claim does not moot the class action. Id. at 1090. That is because the class acquires a legal status apart from the interest asserted by the class representative. Id.
In holding that the claim was not moot, the Ninth Circuit observed that even where the district court denies a motion for class certification, mooting the class representative's claim will not necessarily moot the class action because the putative class representative retains an interest in obtaining a final decision on class certification. Id. Also, where the offer precedes the filing of a class certification motion, a rejected offer of judgment for the full amount of a putative class representative's individual claim does not necessarily moot a class action complaint. Id. at 1090.
The Pitts court explained that where "a defendant seeks to `buy off' the small individual claims of the named plaintiffs," the class claims become analogous to "inherently transitory claims." Id. at 1091 "An inherently transitory claim will certainly repeat as to the class, either because `the individual could nonetheless suffer repeated harm' or because `it is certain that other persons similarly situated' will have the same complaint." Id. at 1090 (quoting Gerstein v. Pugh, 420 U.S. 103, 95 S.Ct. 854, 43 L.Ed.2d 54 (1975) (alterations omitted). "In such cases the named plaintiff's claim is `capable of repetition, yet evading review,' and `the relation back doctrine is properly invoked to preserve the merits of the case for judicial resolution." Id. (quoting Gerstein, 420 U.S. at 103, 95 S.Ct. 854, and County of Riverside v. McLaughlin, 500 U.S. 44, 52, 111 S.Ct. 1661, 114 L.Ed.2d 49 (1991)). "A rule allowing a class action to become moot `simply because the defendant has sought to `buy off' the individual private claims of the named plaintiffs' before the named plaintiffs have a chance to file a motion for class certification would thus contravene Rule 23's core
Defendants argue that the procedural context is different here in part because the amended complaint had not been filed. That might make a difference in a different case. But here, Plaintiffs filed a class certification motion. Defendants (according to Plaintiffs) tried to moot Mr. Ellsworth's claims. See 12/19/13 Order, ECF No. 168 at 14-16). As a result, Plaintiffs revised the class definitions and proposed an amended complaint with new parties. Id. Defendants then offered not to oppose Ellsworth's motion to amend his complaint if he withdrew his class certification motion (something that Ellsworth obviously was not inclined to do). See id. at 16. The procedural context suggests a calculated strategy that includes picking off named Plaintiffs. U.S. Bank's actions do not moot the claims.
The next issue is whether Plaintiffs' "kickback theory" claims are barred under the filed rate doctrine. See ASIC Motion a 15-24; U.S. Bank Motion at 20-21.
"The filed rate doctrine bars suits against regulated utilities grounded on the allegation that the rates charged by the utility are unreasonable. The doctrine holds that any `filed rate' — that is, one approved by the governing regulatory agency — is per se reasonable and unassailable in judicial proceedings brought by ratepayers." Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir.1994). The policies underlying the filed rate doctrine are the following: (1) courts are not "institutionally well suited" to determine whether rates are reasonable, and (2) permitting individual ratepayers to attack the filed rate "would lead to discrimination in rates in that a victorious plaintiff would end up paying less than similarly situated non-suing customers" and "`would undermine the congressional scheme of uniform rate regulation.'" Id. at 19 (citing Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 162-63, 43 S.Ct. 47, 67 L.Ed. 183 (1922) and quoting Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 572, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981)).
In denying the previous motions to dismiss, the court rejected Defendants' arguments that the filed rate doctrine barred Ellsworth's claims, stating:
Order, ECF No. 80 at 19-20.
The allegations in the SAC are not significantly different from those in the FAC.
The addition of New Mexico class claims does not change this analysis. ASIC points to Valdez v. State, 132 N.M. 667, 54 P.3d 71 (2002), where the New Mexico Supreme Court applied the filed rate doctrine to bar a suit by prisoners who alleged that correctional facilities received commissions in exchange for granting exclusive contracts to companies to provide telephone service and that those companies charged an unfairly high rate. But there, the prisoners were ratepayers who alleged that the approved rates they paid were too high. Here, Plaintiffs allege that U.S. Bank (the ratepayer) charged them more than them more than the actual insurance rate it paid and that ASIC's role in that arrangement led to its unjust enrichment. Defendants also rely on Coll v. First Am. Title Ins. Co., 642 F.3d 876 (10th Cir.2011) (applying New Mexico law), but that case was a direct challenge to the rate setting process.
Finally, Defendants argue that New Mexico law permits an insurer to file rates that include commissions, insurance tracking, and expense reimbursement to creditors. See ASIC Opp'n at 19-20 (citing N.M. Admin. Code §§ 13-18-3-13). ASIC attaches copies of the applicable rate filings to its motion. See Voyles Decl. ¶¶ 5-6, Exs. 1-3 (rate filings), ECF No. 175-1; Wilson Decl. ¶¶ 10-13, Exs. A-C, ECF No. 175-2. But Defendants do not identify any provisions specifically disclosing commissions, insurance tracking fees, or QERs, and the court is not going to wade through the filings. In any event, at the pleadings stage, Plaintiffs' allegations are plausible.
The court denies the motion to dismiss on this basis.
The next issue is whether Plaintiffs' first five claims fail to the extent they are based on Plaintiffs' kickback-related allegations. See supra Statement. In relevant part, Plaintiffs allege that U.S. Bank abused its right to force-place flood insurance by accepting kickbacks, commissions, qualified expense reimbursements ("QERs"), and discounted insurance tracking services from ASIC in exchange for using ASIC's policies and that U.S. Bank did not deduct these payments from the premiums it passed onto Plaintiffs. SAC ¶ 2. These allegations are sufficiently similar to the allegations in the earlier complaint. As the court said in December 2013 at the hearing and in its order, the revised complaint was not meant to be another opportunity to relitigate matters already raised (or that could have been raised) in the previous motions to dismiss.
U.S. Bank's new argument is that these QERs are linked to hazard insurance, not the flood insurance at issue in this case, and the discovery in this case
U.S. Bank also argues that Plaintiffs' kickback-related claims fail under both California and New Mexico law. U.S. Bank Motion at 15-16. U.S. Bank's California law argument relies on a California Department of Insurance opinion regarding the propriety of ASIC's including commissions and tracking expenses as components of the rate it charged a lender. See In re Rates, Rating Plans, or Rating Sys. of Am. Sec. Ins. Co., No. OV-01-01-8309 (Cal. Ins. Comm'r Apr. 18, 2002). But as Plaintiffs point out, in that opinion, the Department of Insurance expressly noted that it lacked "jurisdiction to decide the scope of charges which would be reasonable as between a lender and its borrower." Id. at 6 n.3. Another court in this district recently rejected the identical argument made by Wells Fargo (represented by ASIC's counsel). See Cannon III, 2014 WL 324556, at *5. The court applies Cannon III and reaches the same result.
U.S. Bank's New Mexico law argument is that regulations promulgated by the New Mexico Public Regulations Commission, Insurance Division, expressly permit lenders to pass QERs and insurance tracking fees to consumers. U.S. Bank Motion at 16; see N.M. Admin. Code § 13.18.3.1, et seq. The cited provision provide as follows:
N.M. Admin. Code § 13.18.3.13(E). The only other cited provision includes the following:
N.M. Admin. Code § 13.18.3.16.
U.S. Bank reads these provisions as "prohibit[ing] inducements generally but... allow[ing] commissions or other compensation less than 30% specifically." U.S. Bank Reply at 10. Plaintiffs counter that the provisions are consistent with its theory that the commissions U.S. Bank received were not legitimately earned. Opp'n at 13. At the pleading stage, the claims are plausible.
ASIC argues that this court should follow the Seventh Circuit's opinion in Cohen v. American Security Insurance Company, 735 F.3d 601 (7th Cir.2013).
U.S. Bank generally argues that the Skelleys' breach of contract claim fails because New Mexico law applies and "expressly allows creditors to charge borrowers QERs and insurance tracking fees as part of a lender placed insurance premium." U.S. Bank Motion at 21 (citing N.M. Admin. Code §§ 13.18.3.13, 13.18.3.16). It makes no substantive analysis of New Mexico law. The administrative code provisions are not straight forward, and the generalized argument does not provide a basis at the pleading stage to conclude that the claims are not plausible.
Ellsworth and Weaver argue breach of contract under California law. Any argument about Ellsworth is foreclosed by the court's previous orders. As the court held previously, the claims are plausible. By extension, Weaver's claims are too (to the extent that they are the same as Ellsworth's).
There is a separate issue regarding Weaver, which is whether she can sue U.S. Bank for breach of the mortgage agreement when U.S. Bank is the mortgage servicer, not the lender.
To establish her contract claims, Weaver must plead facts demonstrating the existence of a contract with U.S. Bank. See, e.g., First Commercial Mortgage Co. v. Reece, 89 Cal.App.4th 731, 745, 108 Cal.Rptr.2d 23 (2001) (establishing elements of breach of contract claim); Guz v. Bechtel Nat'l, Inc., 24 Cal.4th 317, 375, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (2000) (holding that breach of the implied covenant of good faith and fair dealing claim is predicated on the existence of a contract).
This is a fact issue. Plaintiffs point to the Uniform Instrument and argue that more discovery will illuminate the nature of the assignment. Defendants say that looking at the assignments ends the inquiry. No one calls out the specific provisions with sufficient detail to allow a call at the pleadings stage about the argument. As in Cannon, this may well be an issue that is resolvable as a matter of law. On this record, the court cannot easily do so and thus holds that the claims are plausible.
U.S. Bank moves to dismiss this claim as barred by the express terms of the contract. The New Mexico Supreme Court describes the elements of the claim as follows:
Sanders v. FedEx Ground Package Sys., Inc., 144 N.M. 449, 188 P.3d 1200, 1203 (N.M.2008).
U.S. Bank argues that the Skelleys' mortgage agreement discloses that "the lender placement process is for the benefit of U.S. Bank" and that it "grants U.S. Bank discretion with respect to the fees, such as expense reimbursements and insurance tracking, that may be charged." U.S. Bank Motion at 22 (quoting SAC Ex. 17 § 5, 14). Plaintiffs respond that U.S. Bank's conduct violated other express provisions of the mortgage agreement, which permit U.S. Bank only to "do and pay for whatever is reasonable and appropriate to protect [its] Interest in the Property and rights under [the] Security Instrument." See Opp'n at 24; SAC Ex. 17 § 9. The court addressed this issue previously with Ellsworth's claims, and its conclusions apply by extension here. See ECF No. 80 at 24-25.
Defendants argue that Plaintiffs cannot allege unjust enrichment claims and claims for breach of an express contract. ASIC Motion at 25; U.S. Bank Motion at 26. The court previously rejected this argument:
ECF No. 80 at 26-27; ECF No. 168 at 19. The court will not revisit its previous orders merely because Plaintiffs added a party to forestall Defendant's possible attempts to moot Ellsworth's claims.
The court reaches the same conclusions for the claims arising under New Mexico law. To state a claim for unjust enrichment under New Mexico law, a plaintiff must allege that the defendant knowingly benefitted at their expense and that allowing the defendant to retain this benefit would be unjust. See Starko, Inc. v. Presbyterian Health Plan, Inc., 276 P.3d 252, 278 (N.M.Ct.App.2011) In Starko, the New Mexico Court of Appeals reversed the lower court's dismissal of breach of contract and unjust enrichment claims, explaining "[t]hat Plaintiffs had a contractual relationship with the MCOs does not foreclose a claim for unjust enrichment." Id. at 278. The plaintiffs were pharmacists who alleged that managed care organizations ("MCOs") were underpaying them for treating Medicaid patients. See id. at 278. Multiple contracts were involved including contracts between the plaintiffs and the New Mexico Human Services Department ("HSD"), the HSD and the MCOs, and Plaintiffs and the MCOs. Id. The pharmacists alleged that the MCOs breached contracts with the HSD by retaining payments that should have gone to them under those contracts and sued the MCOs for unjust enrichment. After examining precedent concerning the relationship between law and equity in New Mexico, the court held that the plaintiffs' "pleadings are enough to state a claim in equity for unjust enrichment, and the fact that Plaintiffs had contracts with the MCOs does not work to automatically foreclose it. Our system explicitly provides for alternative pleading of civil claims. We therefore leave open their claim for unjust enrichment." Id.
U.S. Bank also argues that Ellsworth and the Skelleys cannot pursue claims for unjust enrichment because U.S. Bank "fully disgorged all payments made by the Skelleys in the November 29, 2013 refund." U.S. Bank Motion at 23. Plaintiffs dispute this, arguing that they did not cash the check from U.S. Bank and the amount of interest was insufficient. Opp'n at 25 n.19, 31. Because the Skelleys rejected U.S. Bank's refund offer, and given the conflicting arguments regarding whether the amount of interest was sufficient, at the pleading stage, the court resolves the inferences in Plaintiffs' favor and denies U.S. Bank's motion.
The claims allege that U.S. Bank engaged in unfair practices by (1) "[m]anipulating the force-placed insurance process," (2) "[a]rranging for kickbacks, commissions, qualified expense reimbursements or other compensation (e.g., subsidized or discounted insurance tracking services) for itself and/or its affiliates in connection with lender-placed flood insurance;" and (3) "[p]urchasing backdated flood insurance coverage at borrowers' expense." SAC ¶ 117. The court already rejected Defendants' QER and kickback arguments and held that the kickback allegations are plausible. See supra; 12/11/2012 Order, ECF No. 80 at 27-30.
ASIC also argues that the court should dismiss the UCL claims against it under the doctrine of equitable abstention because "the suit ... attacks the pricing, sales, and placement practices of a heavily regulated industry." See ASIC Motion at 21.
"A court may abstain from employing the relief permitted by the UCL if (1) "granting the requested relief would require a trial court to assume ... or to interfere with the functions of an administrative agency;" (2) "the lawsuit involves determining complex economic policy, which is best handled by the Legislature or an administrative agency;" or (3) "granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress." Reudy v. Clear Channel Outdoor, Inc., 428 Fed.Appx. 774, 776 (9th Cir.2011) (quoting Blue Cross of California, Inc. v. Superior Court, 180 Cal.App.4th 1237, 102 Cal.Rptr.3d 615 (2009)). "Where a court abstains under the UCL, dismissal with prejudice is appropriate." Id.
ASIC could have raised this argument previously, and it did not. Again, the amended complaint was not an opportunity to try again and instead was a remedy to address potential predatory mooting by Defendants. In any event, this is not a case that involves complex economic policy considerations or requires the court to determine "whether LPI charges are too high." See ASIC Motion at 23.
The court denies the motions to dismiss. This disposes of ECF Nos. 174 & 175.
12 C.F.R. § 22.7.
