Iii v. Bank Of Am.

• Decision Date: 21 January 2011
• Docket Number: CIVIL NO. 10-00551 JMS-KSC
• Parties: JOHN J. PHILLIPS III, an individual, MARGARET M. PHILLIPS, an individual, Plaintiffs, v. BANK OF AMERICA, a Business Entity, form unknown; et al., Defendants.
• Court: U.S. District Court — District of Hawaii

JOHN J. PHILLIPS III, an individual, MARGARET M. PHILLIPS, an individual, Plaintiffs,

v.BANK OF AMERICA, a Business Entity, form unknown; et al., Defendants.

CIVIL NO. 10-00551 JMS-KSC

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAII

Filed: January 21, 2011

ORDER GRANTING DEFENDANTS BANK OF AMERICA, COUNTRYWIDE HOME LOANS, INC., AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.'S MOTION TO DISMISS AND GRANTING LEAVE TO AMEND

I. INTRODUCTION

On September 28, 2010, Plaintiffs John J. Phillips III and Margaret M. Phillips ("Plaintiffs"), proceeding pro se, filed this action against Defendants Bank of America, Countrywide Home Loans, Inc. ("Countrywide"), Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Moving Defendants") and two other Defendants, ¹ alleging federal and state law claims stemming from an August 2004 mortgage transaction concerning real property located at 160 Keonekai Road, No. 6-101, Kihei, Hawaii 96753 (the "subject property"), and an apparent recent foreclosure on the subject property.

Plaintiffs seek declaratory and injunctive relief, as well as damages and rescission of the mortgage transaction. Bank of America, Countrywide, and MERS have filed a Motion to Dismiss, seeking dismissal of all counts in the Complaint. For the reasons set forth, the court GRANTS the Motion with leave to amend as to certain counts.

II. BACKGROUND

A. Factual Background

The court assumes the Complaint's factual allegations are true for purposes of this Motion. See, e.g., Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.1 (9th Cir. 2003).

According to the Complaint, on August 2, 2004, ² Plaintiffs entered into a loan repayment and security agreement with Countrywide. See Compl. ¶ 3. Plaintiffs' claims stem from the consummation of this transaction. Plaintiffs assert, among other things, that (1) Countrywide qualified Plaintiffs for a loan which it knew Plaintiffs were not qualified for and could not repay, and that Plaintiffs "should have been declined for this loan, " id. ¶¶ 25, 27-28, 34; (2) the terms of the transaction were not clear and Defendants never explained the transaction to them, id. \¶¶ 21, 29; (3) the loan was more expensive than alternative financing arrangements for which Plaintiffs were qualified, id.; and (4) Defendants charged excessive or illegal fees. Id.¶¶ 22, 31.

(The Complaint often improperly fails to distinguish between Defendants as to alleged causes of action. At minimum, to provide proper notice the Complaint should allege necessary facts against specific Defendants, i.e., tie each claim to a Defendant and explain how each Defendant is liable--or make clear whether a claim is as to all Defendants).

Plaintiffs assert that Defendants failed to provide forms and disclosures required under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.; the Equal Opportunity Credit Act; "Fair Lending/Fair Debt Collection Act"; and the Real Estate Settlement Practices Act ("RESPA"), 12 U.S.C. § 2601 et seq. Compl. ¶¶ 11, 13. Defendants allegedly "intentionally concealed the negative implications of the loan they were offering, " id. ¶ 18, and "failed to perform due diligence, " id. ¶¶ 20, 30, such that Plaintiffs were sold "a deceptive loan product"and the acts of deception created an illegal loan and constituted predatory lending. Id. ¶¶ 26-27, 39. Defendants' acts allegedly were in violation of federal and state law, including bad faith, breach of fiduciary duty, and unfair and deceptive trade practices.

In their Opposition to the Motion, Plaintiffs assert other potentially relevant details (although none is alleged in the Complaint). They indicate that BAC Home Loans Servicing, LP ("BAC") has already foreclosed on the subject property under a state non-judicial foreclosure procedure. Pls.' Opp'n at 3. The Complaint, however, neither mentions BAC, nor names it as a Defendant. The Opposition contends that BAC is affiliated with Defendant Bank of America. Id. The Opposition also indicates the subject property was sold at auction on March 8, 2010. Id. It later implies that injunctive relief might still apply to prevent a state-court eviction action. Id. at 9.

The Opposition also asserts (again, based not on factual allegations in the Complaint), that Plaintiffs are disputing the validity and effect of the assignment of mortgage from MERS to BAC. Id. at 3. They contend that, although the mortgage may have been transferred, there is no indication that the underlying promissory note was assigned. Id. They argue that "none of the Defendants is the holder of the promissory note" and that therefore the foreclosurewas improper. Id. at 4.

Because these factual assertions are not pled in the Complaint, the court cannot consider them in determining whether the Complaint states a claim. The court, however, will consider the assertions in assessing whether--if particular Counts are deficient--an amended complaint might plausibly allege facts that could cure identified deficiencies.

B. Procedural Background

Plaintiffs' September 28, 2010 Complaint alleges twelve separate counts, entitled: "(1) Declaratory Relief; (2) Injunctive Relief; (3) Contractual Breach of Implied Covenant of Good Faith and Fair Dealing; (4) Violation of TILA; (5) Violation of RESPA; (6) Rescission; (7) Unfair and Deceptive Acts and Practices (UDAP); (8) Breach of Fiduciary Duty; (9) Unconscionability; (10) Predatory Lending; (11) Quiet Title; and (12) Lack of Standing (MERS)." Plaintiffs also filed an Ex Parte Petition for Injunctive Relief and Temporary Restraining Order on September 28, 2010, which this court denied without prejudice. See Doc. 6.

On October 29, 2010, Moving Defendants filed the present Motion, seeking dismissal of all counts. Subsequently, on or about November 12, 2010, James H. Fosbinder, Esq., entered an appearance on behalf of Plaintiffs. The Complaint, however, was not amended by counsel--the Motion is directed at the prior pro se Complaint. Counsel filed an Opposition on December 21, 2010, and a Reply was filed on January 3, 2011. The court heard the matter on January 18, 2011.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss a claim for "failure to state a claim upon which relief can be granted[.]"

"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, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Weber v. Dep't of Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008). This tenet--that the court must accept as true all of the allegations contained in the complaint--"is inapplicable to legal conclusions." Iqbal, 129 S. Ct. at 1949. Accordingly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). Rather, "[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." Id. (citing Twombly, 550 U.S. at 556). Factual allegations that only permit thecourt to infer "the mere possibility of misconduct" do not show that the pleader is entitled to relief. Id. at 1950.

IV. DISCUSSION

The Motion makes two preliminary arguments as to aspects of the Complaint, and then specifically challenges each of the twelve Counts. The court first addresses the preliminary arguments, and then turns to the arguments as to each specific Count.³

A. Preliminary Arguments

1. Bank of America

Bank of America first argues that it is improperly named solely as "Bank of America, " which is not a legal entity. Whether or not it should more precisely be named as "Bank of America, N.A. (National Association)" or by some other corporate description, the common name "Bank of America" is technically deficient for purposes of describing the corporate entity Plaintiffs seek to hold liable. Regardless, Bank of America also points out that it is named only in thecaption of the Complaint. There are no factual allegations as to Bank of America in the body of the Complaint.

Plaintiffs respond by arguing that Countrywide was acquired by Bank of America in 2007 or 2008. They also contend that BAC is a wholly-owned subsidiary of Bank of America. They seek to hold Bank of America liable both as a "successor in interest [to Countrywide] and as a principal." Pls.' Opp'n at 7. Whether or not those contentions are true, none of these details is in the Complaint. As the Complaint now stands, it states no claim against "Bank of America." Accordingly, the Motion is GRANTED as to Bank of America. The dismissal as to Bank of America is without prejudice. Plaintiffs may file an Amended Complaint attempting to assert precise theories against a properly-named defendant or defendants.

2. "Fraud"

Moving Defendants next argue the court should strip the Complaint's averments of fraud because the averments do not meet Rule 9(b)'s requirement of particularity. See Fed. R. Civ. P. 9(b) ("In alleging fraud... a party must state with particularity the circumstances constituting fraud[.]"). They argue that, because multiple defendants are involved, the Complaint is deficient--it does not identify each Defendant's separate role in a fraudulent scheme and fails to giveeach Defendant notice of particular misconduct. See also Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989) (stating that Rule 9(b) requires a plaintiff to attribute particular fraudulent statements or acts to individual defendants). The Complaint fails to explain "the who, what, when, where, and how of the [fraudulent] misconduct charged." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).

Although these arguments regarding lack of particularity might be valid, Plaintiffs have not asserted a separate...