Egbukichi v. Wells Fargo Bank, NA

• Decision Date: 22 April 2016
• Docket Number: Case No. 3:15-cv-02033-SI
• Citation: 184 F.Supp.3d 971
• Parties: Nnamdi Egbukichi and Elizabeth Egbukichi, Plaintiffs, v. Wells Fargo Bank, NA, Defendant.
• Court: U.S. District Court — District of Oregon

184 F.Supp.3d 971

Nnamdi Egbukichi and Elizabeth Egbukichi, Plaintiffs,

v.Wells Fargo Bank, NA, Defendant.

Case No. 3:15-cv-02033-SI

United States District Court, D. Oregon.

Signed April 22, 2016

Keith D. Karnes, Karnes Law Offices , 1860 Hawthorne Avenue Northeast, Suite 10, Salem, Oregon, 97301. Of Attorneys for Plaintiffs.

Philip S. Van Der Weele and Adam W. Holbrook, K&L Gates LLP , One Southwest Columbia Street, Suite 1900, Portland, Oregon, 97258. Of Attorneys for Defendant.

OPINION AND ORDER

Michael H. Simon, District Judge

Plaintiffs Nnamdi Egbukichi and Elizabeth Egbukichi ("Plaintiffs") bring suit against Wells Fargo Bank, NA ("Defendant") for alleged violations of the Oregon Unlawful Trade Practices Act ("UTPA"), Or. Rev. Stat. ("O.R.S.") § 646.607 et seq. , the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. , ("ECOA"), and the Fair Housing Act, 42 U.S.C. § 3601 et seq. , ("FHA"). Plaintiffs argue that they qualified for a modification of their loan with Defendant under the Home Affordable Modification Program ("HAMP").¹ Plaintiffs allege that Defendant unlawfully discriminated against Plaintiffs when Defendant, on several occasions, refused to modify Plaintiffs' loan under HAMP. Plaintiffs seek compensatory damages, punitive damages, and attorney's fees. Defendant moves to dismiss the complaint for failure to state a claim. For the reasons stated below, the Court grants Defendant's motion to dismiss with leave to replead.

STANDARDS

A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc. , 622 F.3d 1035, 1041 (9th Cir.2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett – Packard Co. , 668 F.3d 1136, 1140 (9th Cir.2012) ; Daniels – Hall v. Nat'l Educ. Ass'n , 629 F.3d 992, 998 (9th Cir.2010). To be entitled to a presumption of truth, allegations in a complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca , 652 F.3d 1202, 1216 (9th Cir.2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution , 513 F.3d 1038, 1043 n. 2 (9th Cir.2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal , 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr , 652 F.3d at 1216. "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." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

BACKGROUND

Plaintiffs, husband and wife, are of African descent and owners of real property ("the Property") that served as collateral for the loan that is the subject of this lawsuit. On June 25, 2008, Plaintiffs purchased the Property. To finance their purchase, Plaintiffs borrowed $393,820 from Northwest Mortgage Group, Inc., signed a promissory note ("the Note"), and executed a trust deed to guarantee repayment. By January 2010, Plaintiffs were in default on the Note and Defendant had been assigned rights to service the Note. On or about February 26, 2010, Plaintiffs requested that Defendant modify Plaintiffs' obligations on the Note. On April 7, 2010, Defendant offered to modify Plaintiffs' obligations on certain specified terms. In September 2010, Defendant was assigned Plaintiffs' Deed of Trust and employed Northwest Trustee Services, Inc. to conduct a non-judicial foreclosure on Plaintiffs' interest in the Property.

On or about October 25, 2010, Plaintiffs requested a HAMP modification from Defendant. Defendant denied the request on November 29, 2010, but offered Plaintiffs a forbearance agreement on certain specified terms. On or about March 30, 2011, and June 20, 2011, Plaintiffs made additional requests for a HAMP modification of their loan. Defendant denied both requests. In denying Plaintiffs' HAMP modification request, Defendant explained that based upon the documentation provided by Plaintiffs, Defendant could not create an affordable mortgage payment that met the requirements of the HAMP program.

In November 2011, Defendant filed a judicial foreclosure action against Plaintiffs' interest in the Property. In April 2014, Defendant voluntary dismissed that action. In 2015, Defendant threatened to bring a non-judicial foreclosure against Plaintiffs and began the mediation process that is required under Oregon's foreclosure laws. During mediation, Plaintiffs again requested and were again denied a HAMP modification.

Plaintiffs allege that at all relevant times they were qualified for a HAMP modification on their loan, and that Defendant's own employee admitted that Plaintiffs were qualified for a HAMP modification. Plaintiffs further allege that Defendant discriminated against Plaintiffs by denying their HAMP modification and by refusing to consider all of Plaintiffs' income when evaluating the HAMP modification requests. Plaintiffs also allege that Defendant has improperly billed Plaintiffs for fees and costs for the various foreclosure actions that were begun but not completed.

DISCUSSION

A. The Oregon UTPA Claims

Defendant moves to dismiss Plaintiffs' UTPA claims, arguing that: (1) the UTPA does not apply to Plaintiffs' loan because the UTPA does not apply to loans made before 2010; (2) Plaintiffs' claim is barred by the UTPA's one-year statute of limitations; and (3) Plaintiffs have not pled any ascertainable loss, which is required for a private lawsuit for damages brought under the UTPA. Plaintiffs respond that: (1) the UTPA applies because all of Defendant's alleged misconduct occurred after the 2010 UTPA Amendment; (2) the statute of limitations does not apply because Plaintiffs were not aware of the fees and costs; and (3) Plaintiffs have properly pled ascertainable loss.

1. Whether the UTPA Applies to Plaintiffs' Claim

Under Oregon's UTPA, "a person engages in an unlawful practice if in the course of the persons business ... the person ... engages in any other unfair or deceptive conduct in trade or commerce." O.R.S. § 646.608(1)(u). Oregon's administrative rules explain that a "mortgage loan servicer engages in unfair or deceptive conduct in trade or commerce if the mortgage loan servicer ... fails to deal with a borrower in good faith." Or. Admin. R. ("OAR") 137–020–0805(6).

Defendant relies on cases that have found that in Oregon, the UTPA does not apply to extensions of credit made before the 2010 statutory amendment. Mikityuk v. Nw. Tr. Servs., Inc. , 952 F.Supp.2d 958, 962 (D.Or.2013) (holding that the UTPA statutory amendment in 2010 would not permit plaintiff to bring a wrongful foreclosure claim in 2013 for a loan originating in 2003) (citing O.R.S. § 646.605(6), as amended by Or. Laws. Spec. Sess. Ch. 94 § 1 (2010)); Roisland v. Flagstar Bank, FSB , 989 F.Supp.2d 1095, 1108 (D.Or.2013) (citing Lamm v. Amfac Mortg. Corp. , 44 Or.App. 203, 204, 605 P.2d 730 (1980) (holding that when a claim arises from a loan and deed of trust granted before 2010, a claim on the loan or extension of credit cannot be supported under the Oregon UTPA). In Roisland , the plaintiff signed a deed of trust on the property to secure her loan in 2009. By 2011, the plaintiff was in default on the loan payments and the property was nonjudicially foreclosed in 2012. The plaintiff in Roisland alleged that the foreclosure proceedings were improper and sought to unwind the subsequent trustee sale. Her claims involved a variety of allegations, including false information in the deed of trust, improper fees and costs, and confusion related to the parties' relationship. In dismissing the case, U.S. District Judge Mosman explained:

it is unclear exactly what acts of Defendants are at issue in these allegations .... However sparse the factual allegations, at least this much is clear: [plaintiff's] UTPA claim arises from the loan she received and the deed of trust she granted in 2009. [Plaintiff] consequently cannot support a claim challenging the enforcement of the deed of trust under the UTPA.

Id. at 1107–08. Consequently, the court in Roisland dismissed plaintiff's UTPA claim. Id. at 1108.

Plaintiffs here respond by arguing that because the negotiations for their requested loan modification took place after the 2010 UTPA amendment, even for a loan that originated before 2010, the UTPA amendment applies with respect to allegations involving unlawful practices relating to the loan modification process that occurred after the effective date of the amendment. Plaintiffs primarily rely on Rubic v. Wells Fargo, N.A. , 2015 WL 632235 (D.Or. Feb. 13, 2015). In Rubic , the plaintiff alleged violations of Oregon's UTPA despite his loan originating in 2009, because he engaged in loan modification negotiations after the effective date of the 2010 statutory amendment. Id. at *2. In that case, Judge Mosman adopted the Findings and Recommendation of U.S. Magistrate Judge Acosta and found that a claim under Oregon's UTPA that "arises out of loan modification negotiations that occurred after March 23, 2010, [ ] is not foreclosed as a matter of law." Id. at *1. Judge...