Kambic v. Wells Fargo Bank, N.A.
| Decision Date | 26 August 2020 |
| Docket Number | Case No. 3:20-cv-00120-SLG |
| Parties | WILLIAM J. KAMBIC, JR. Plaintiff, v. WELLS FARGO BANK, N.A. and THE SAYER LAW GROUP, P.C., Defendants. WELLS FARGO BANK, N.A., Counterclaimant, v. WILLIAM J. KAMBIC, JR., Counterclaim Defendant. |
| Court | U.S. District Court — District of Alaska |
Before the Court at Docket 13 is Defendant and Counterclaimant Wells Fargo Bank, N.A.'s ("Wells Fargo") Motion for Judgment on the Pleadings on First Amended Complaint Pursuant to Fed. R. Civ. P. 12(c). Plaintiff and Counterclaim Defendant William J. Kambic, Jr.'s opposition is at Docket 19. Wells Fargo's reply is at Docket 24. Oral argument was not requested and was not necessary to the Court's decision.
On May 2, 2019, Mr. Kambic filed a Complaint for Declaratory and Injunctive Relief and Damages in the Superior Court for the State of Alaska in the Third Judicial District at Anchorage.2 The Complaint alleged six state-law claims against Defendants Wells Fargo and The Sayer Law Group, P.C. ("Sayer") based on the foreclosure of property owned by Mr. Kambic in Chugiak, Alaska: (1) Breach of Fiduciary Duty by Sayer, (2) Breach of Fiduciary Duty by Wells Fargo, (3) Violation of Alaska Foreclosure Statutes, (4) Quiet Title, (5) Negligent Misrepresentation, and (6) Intentional Misrepresentation.3 On February 20, 2020, Wells Fargo moved to dismiss Claims 2, 4, 5, and 6 for failure to state a claim pursuant to Alaska Rule of Civil Procedure 12(b)(6).4 On April 22, 2020, the Superior Court granted the motion in part, dismissing Mr. Kambic's quiet title claim but allowing the remainder of the claims to proceed.5
On May 4, 2020, Mr. Kambic filed two motions: one to amend the Complaint6 and the other for the Superior Court to reconsider its order dismissing the quiet title claim.7 With the Superior Court's approval,8 Mr. Kambic filed his First Amended Complaint ("FAC") on May 21, 2020, which added a claim against Wells Fargo for violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.9 The Superior Court also granted Mr. Kambic's Motion for Reconsideration, allowing the quiet title claim to proceed because the FAC alleged that Mr. Kambic was in possession of the property at issue.10
Wells Fargo removed the action to this Court on May 28, 2020.11 The Court subsequently denied Mr. Kambic's request for remand to the Superior Court, finding that Wells Fargo had properly removed the case, that the Court had federal question jurisdiction over Mr. Kambic's TILA claim, and that the exercise of supplemental jurisdiction over the remaining state-law claims was appropriate.12
The facts, as alleged in the FAC, are as follows: On October 29, 2007, Mr. Kambic "entered into a Line of Credit Promissory Note" with Wells Fargo "that was secured by [property in Chugiak, Alaska] through a Deed of Trust."13 "Due to a divorce in California and business problems, [Mr. Kambic] began to talk with Wells Fargo's Castro Valley, California branch about refinancing the Note in the summer of 2018," and was informed that he would have to submit a "Mortgage Assistance Application."14 On October 18, 2018, "the employee(s) at the Wells Fargo's Castro Valley, California branch filed [sic] out the Mortgage Assistance Application for [Mr. Kambic] and had him execute [the] same as they were aware that [Mr. Kambic] was having a hard time with the process."15 The Castro Valley Wells Fargo branch eventually informed Mr. Kambic "that a deal had been worked out to refinance the [Chugiak property] and the loan reduction/modification had been put in place in the form of a 30-year fixed mortgage."16
Separately, Sayer recorded a Notice of Default for Mr. Kambic's 2007 Promissory Note on September 4, 2018.17 The Notice of Default "advised that Sayer might be a debt collector and might need to comply with the FDCPA."18 Although Wells Fargo and Sayer "knew or should have known [Mr. Kambic] was living in Castro Valley, California" at the time, a copy of the Notice of Default was not served on Mr. Kambic's California residence.19 Instead, the notice was only served on the Chugiak property.20 As a result, Mr. Kambic did not receive actual notice that the Chugiak property would be foreclosed upon and was not able to take steps to preserve his interest in the property.21 Although a foreclosure sale has occurred, Mr. Kambic alleges that he has retained "possession and control of the real property" at issue.22
The FAC alleges that Wells Fargo used knowledge it acquired during the process of refinancing Mr. Kambic's debt "to prevent [Mr. Kambic] from knowing that Wells Fargo was foreclosing on his real property in Chugiak" and "to acquire title to the real property at issue . . . and to prevent [Mr. Kambic] from keeping his title to the property."23 The FAC pleads seven claims based on these facts: (1) breach of fiduciary duty by Sayer, (2) breach of fiduciary duty by Wells Fargo, (3) violation of Alaska foreclosure statutes, (4) quiet title or ejectment, (5) negligent misrepresentation, (6) intentional misrepresentation, and (7) violation of TILA.24 On June 4, 2020, Wells Fargo filed the instant Motion for Judgment on the Pleadings, seeking dismissal of Claims 2, 4, 5, and 6, as pled in the FAC.25
In this removed action, the Court applies substantive state law to Mr. Kambic's state-law claims and federal law to procedural issues.26 Therefore, the Federal Rules of Civil Procedure apply to the FAC and govern Wells Fargo's motion.27 Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." "Rule 12(c) is 'functionally identical' to Rule 12(b)(6) and . . . 'the same standard of review' applies to motions brought under either rule."28
Under this standard, the Court considers only the pleadings and documents incorporated into them by reference, as well as matters on which the Court may take judicial notice.29 "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.'"30 A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."31 At this stage of review, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party."32
If a court dismisses a claim after this inquiry, it must generally grant the plaintiff leave to amend, unless amendment would be futile.33 In determining whether an amendment would be futile, the court examines whether the complaint could be amended to cure the defect in question "without contradicting any of the allegations of [the] original complaint."34
Whether a fiduciary duty exists is a legal question,37 but the duty can be demonstrated by facts that establish its predicate elements.38
Mr. Kambic's claim rests on his relationship with Wells Fargo as borrower and lender pursuant to a deed of trust.39 The FAC alleges that "Wells Fargo owes a limited fiduciary duty to plaintiff when it started the foreclosure at issue herein, a mortgagee is a trustee for the mortgagor and is required to act in good faith and with absolute fairness to the mortgagor."40 Wells Fargo contends that this statement is not sufficient to plead the existence of a fiduciary duty because no such duty "arises from a debtor-creditor relationship, and therefore, lenders do not owe borrowers a fiduciary duty except in extraordinary cases."41
Although the Alaska Supreme Court has not addressed this question in a precedential opinion, Wells Fargo maintains that it is the law "in many jurisdictions" that lenders and borrowers operate at arm's length.42 In California, for example, "[a]s a general rule, a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money."43 And "[t]he general rule in Washington is that a lender is not a fiduciary of its borrower; a special relationship must develop between a lender and a borrower before a fiduciary duty exists."44 The approach taken in these states is consistent with Alaska's general rule that "[f]iduciary relationships are generally defined by a level of trust beyond that in ordinary business relationships."45
Wells Fargo further argues that an unpublished opinion, Christianson v. First National Bank Alaska, demonstrates the Alaska Supreme Court's intent to hold that the debtor-creditor relationship does not create a fiduciary duty.46 In Christianson, the Alaska Supreme Court affirmed the Superior Court's final resolution, after a bench trial, of several claims brought against a bank by a small business owner.47 The Alaska Supreme Court resolved the majority of the issues on appeal, including whether the Superior Court erroneously concluded that no fiduciary relationship existed between the parties, with...
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