Meyer v. One W. Bank, F.S.B.

• Citation: 91 F.Supp.3d 1177
• Decision Date: 18 March 2015
• Docket Number: Case No. CV 14–05996 DDP AGRx.
• Parties: Melodie MEYER, Plaintiff, v. ONE WEST BANK, F.S.B., American Security Insurance Company, Peter Maloney, Intervenor, Defendants.
• Court: U.S. District Court — Central District of California

91 F.Supp.3d 1177

Melodie MEYER, Plaintiff

v.ONE WEST BANK, F.S.B., American Security Insurance Company, Peter Maloney, Intervenor, Defendants.

Case No. CV 14–05996 DDP AGRx.

United States District Court, C.D. California.

Signed March 18, 2015.

Sheri L. Kelly, Law Office of Sheri L. Kelly, San Jose, CA, Alexander P. Owings, Attorney at Law, Angela Mann, Jack Wagoner, III, Wagoner Law Firm PA, Steven A. Owings, Owings Law Firm, Little Rock, AR, Barry R. Himmelstein, Himmelstein Law Network, Emeryville, CA, for Plaintiff.

Adam William Hansen, Nichols Kaster PLLP, Minneapolis, MN, Matthew C. Helland, Nichols Kaster LLP, San Francisco, CA, for Intervenor.

Elizabeth Lemond McKeen, Danielle Nicole Oakley, Omelveny and Myers LLP, Newport Beach, CA, Rik S. Tozzi, Burr and Forman LLP, Birmingham, AL, Brian P. Perryman, Dawn B. Williams, Frank G. Burt, W. Glenn Merten, Carlton Fields Jorden Burt PA, Washington, DC, Mark A. Neubauer, Meredith M. Moss, Carlton Fields Jorden Burt, LLP, Los Angeles, CA, for Defendants.

ORDER GRANTING MOTIONS TO DISMISS

DEAN D. PREGERSON, District Judge.

Presently before the court are two separate motions to dismiss filed by Defendants One West Bank, F.S.B. (“OneWest”) and American Security Insurance Company (“ASIC”). Having considered the submissions of the parties, the court grants the motions and adopts the following order.

I. Background

In January 2007, Plaintiff obtained a mortgage loan that was eventually acquired by OneWest. (Complaint ¶ 25.) The Deed of Trust securing that loan requires Plaintiff to maintain hazard insurance, including earthquake and flood insurance. (Id. ¶ 26.) The deed also includes a force-placed insurance provision, which reads:

If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage, at Lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount of coverage.... Borrower acknowledges that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance that Borrower could have obtained. Any amounts disbursed by Lender under this Section [ ] shall become additional debt of Borrower secured by this Security Instrument.

(Compl. ¶ 26.)

On March 16, 2012, OneWest force-placed Plaintiff into insurance provided by Defendant ASIC, retroactive to December 16, 2011. (Compl. ¶ 30.) OneWest withdrew premiums for the ASIC policy from Plaintiff's escrow account, then required her to make additional payments to replenish the escrow account. (Id. ¶ 32.) Plaintiff acquired her own insurance on April 13, 2012, apparently to OneWest's satisfaction. (Id. ¶¶ 31–32.) OneWest returned some amount to Plaintiff's escrow account, but retained a portion of the premiums paid between December 16 and April 13 that OneWest deemed itself to have “earned.” (Id. ¶ 32.)

Plaintiff alleges, on a behalf of a putative nationwide class, that OneWest colluded with ASIC in a scheme whereby OneWest allowed ASIC to automatically force-place high-cost and backdated insurance for certain OneWest mortgagors and ASIC then “kicked back” a portion of the premiums to OneWest as unearned compensation. (Compl. ¶¶ 5–11.) Plaintiff's Complaint alleges eight causes of action for violations of the Racketeer Influenced Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c), 1962(d), 1346 ; breach of fiduciary duty; aiding and abetting breach of fiduciary duty, breach of contract and the implied covenant of good faith and fair dealing, unjust enrichment; conversion; and violations of California Business & Professions Code § 17200. Defendants now move to dismiss.¹

II. Legal Standard

A complaint will survive a motion to dismiss when it contains “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). When considering a Rule 12(b)(6) motion, a court must “accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff.” Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir.2000). Although a complaint need not include “detailed factual allegations,” it must offer “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Conclusory allegations or allegations that are no more than a statement of a legal conclusion “are not entitled to the assumption of truth.” Id. at 679, 129 S.Ct. 1937. In other words, a pleading that merely offers “labels and conclusions,” a “formulaic recitation of the elements,” or “naked assertions” will not be sufficient to state a claim upon which relief can be granted. Id. at 678, 129 S.Ct. 1937 (citations and internal quotation marks omitted).

“When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.” Id. at 679, 129 S.Ct. 1937. Plaintiffs must allege “plausible grounds to infer” that their claims rise “above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “Determining whether a complaint states a plausible claim for relief” is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

III. Discussion

A. HOLA Preemption of State Law Claims

Defendants contend that Plaintiff's claims are preempted by the Home Owners' Loan Act (“HOLA”), 12 U.S.C. § 1461 et seq.² As explained by this court in the related Maloney case, HOLA granted the Office of Thrift Supervision (“OTS”) broad authority to regulate federal savings associations. Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1005 (9th Cir.2008). One OTS regulation, 12 C.F.R. § 560.2(a), entitled “Occupation of field,” stated that “[p]ursuant to ... HOLA, OTS is authorized to promulgate regulations that preempt state laws affecting the operations of federal savings associations.... OTS hereby occupies the entire field of lending regulation for federal savings associations.”12 C.F.R. § 560.2(a). Preempted state laws include those that impose requirements regarding the “[p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages[.]” 12 C.F.R. § 560.2(b)(10).

Plaintiff appears to argue first that HOLA does not preempt her claims because HOLA was repealed on July 21, 2011 by the Dodd–Frank Act, 12. U.S.C. § 1465, and all of the force-placing of insurance at issue here occurred after that date. The Dodd–Frank Act transferred supervisory authority over federal savings associations from the OTS to the Office of the Comptroller of the Currency and provided that HOLA does not occupy the field of lending regulations. See Settle v. World Savings Bank F.S.B., No. ED CV 11–800 MMM, 2012 WL 1026103 at *13 (C.D.Cal. Jan. 11, 2012) ; 12 U.S.C. §§ 5412, 1465.

The Dodd–Frank Act is not, however, retroactive. Contracts formed before the Act's effective date are, therefore, subject to the preemption rules applicable at the time of formation. See Aldana v. Bank of America, N.A., No. CV 14–7489–GHK, 2014 WL 6750276 at *5 (C.D.Cal. Nov. 26, 2014) ; Settle, 2012 WL 1026103 at *14 ; Deschaine v. IndyMac Mortgage Servs., No. CIV. 2:13–1991 WBS, 2014 WL 281112 at *8 (E.D.Cal. Jan. 23, 2014). Here, Plaintiff obtained her mortgage in 2007, well before Dodd–Frank took effect, and subject to the HOLA preemption regime of the time.

Plaintiff next argues that her claims are not preempted even under HOLA's preemption rules. OTS regulations provided that, notwithstanding field preemption of regulations affecting federal savings associations, state laws, including contract and tort laws, are not preempted to the extent they “only incidentally affect the lending operations of Federal savings associations.” 12 C.F.R. § 560.2(c). OTS also set out a framework for determining whether a state law claim is preempted under 12 C.F.R. § 560.2. Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1006 (9th Cir.2008). Under that framework, “the first step will be to determine whether the type of law in question is listed in [12 C.F.R. § 560.2 ] paragraph (b). If so, the analysis will end there; the law is preempted.” Id. (quoting OTS, Final Rule, 61 Fed.Reg. 50951, 50966–67 (Sept. 30, 1996) ). If paragraph (b) is not applicable, the question then becomes whether the law affects mortgage lending. Id. If the law does affect lending, a presumption of preemption can be rebutted only if the law falls under the “incidental effect” exception of paragraph (c). Id. The exception is narrow, however, and doubts are resolved in favor of preemption. Id.

Plaintiff appears to suggest that her claims fall under 12 C.F.R. § 560.2(c) because similar claims are not preempted under the National Bank Act (“NBA”). Comparisons to the NBA are inapt, however, as “HOLA preemption is much broader.” Cannon v. Wells Fargo Bank N.A., 917 F.Supp.2d 1025, 1050 (N.D.Cal.2013) ; See also Tamburri v. Suntrust Mortgage, Inc., 875 F.Supp.2d 1009, 1019–20 (N.D.Cal.2012) (explaining distinction between HOLA and “the more lenient NBA conflict preemption standard.”). Plaintiff's reliance on Gibson v. World Savings & Loan Ass'n, 103 Cal.App.4th 1291, 128 Cal.Rptr.2d 19 (2002) is also unavailing. Although Plaintiff is correct that Gibson found force-placed insurance claims were not preempted by HOLA, courts in this district and circuit have recognized Gibson as inconsistent with the Ninth Circuit's decision in Silvas and the preemption framework described therein. See, e.g. Munoz v. Financial Freedom Senior Funding Corp., 567 F.Supp.2d 1156, 1162–63 (C.D.Cal.2008) ; Hayes v. Wells Fargo Bank, N.A., No. 13cv1707 L(BLM), 2014 WL 3014906 at *6 (S.D.Cal. July 3, 2014).

One federal case cited by Plaintiff did conclude that HOLA does not preempt force-placed...