Wieck v. Cit Bank, N.A.
| Decision Date | 02 November 2018 |
| Docket Number | Civ. No. 16-00596 JMS-RLP |
| Parties | JULIA WIECK, on behalf of herself and all others similarly situated, Plaintiff, v. CIT BANK, N.A.; FINANCIAL FREEDOM; SEATTLE SPECIALTY INSURANCE SERVICES, INC.; CERTAIN UNDERWRITERS OF LLOYD'S, LONDON; and GREAT LAKES REINSURANCE (UK), PLC, Defendants. |
| Court | U.S. District Court — District of Hawaii |
On March 30, 2018, this court issued a comprehensive decision ("the March 30th Order") that granted in part and denied in part several motions to dismiss the First Amended Complaint ("FAC") in this putative class action, which arises out of lender-placed (or "forced-placed") hurricane insurance on reverse mortgages. See ECF No. 96; Wieck v. CIT Grp., Inc., 308 F. Supp. 3d 1093 (D. Haw. 2018). The March 30th Order determined that some of Plaintiff Julia Wieck's ("Plaintiff" or "Wieck") claims — certain non-preempted breach of contract, and unfair or deceptive trade practices allegations — survived the motions to dismiss, but the Order dismissed other claims. The court granted Plaintiff leave to file a Second Amended Complaint ("SAC") solely to attempt to rectify pleading deficiencies with the claims that were dismissed without prejudice as explained in the March 30th Order. Accordingly, Plaintiff filed a SAC on May 11, 2018, ECF No. 104, and Defendants now move to dismiss the repleaded claims. ECF Nos. 123, 124 & 125. Based on the following, the Motions are GRANTED in part and DENIED in part.
Because the March 30th Order comprehensively set forth the factual and legal background (at least as to Wieck's claims1), the instant Order does not repeat that background, and the court presumes a detailed familiarity with that prior Order. This Order picks up where the March 30th Order left off, and only discusses new allegations in the SAC as necessary to address the present Motions.The court otherwise relies on the March 30th Order for the background and context for the Motions. See Wieck, 308 F. Supp. 3d at 1098-1104.
Similar to the FAC, the SAC alleges the following Counts:
See ECF No. 104. Unlike the FAC, the SAC no longer alleges a violation of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., against Financial Freedom and CIT (a claim that the March 30th Order dismissed without prejudice).
CIT's Motion to Dismiss challenges aspects of Counts One, Two, Three, Six and Seven. ECF No. 123. Seattle Specialty and National General's Motion to Dismiss challenges the addition of National General as a Defendant, and Counts Five, Six, and Seven. ECF No. 124. Similarly, Lloyd's and Great Lakes challenge aspects of the SAC's additional allegations in Count Four, as well as Counts Five, Six, and Seven. ECF No. 125. Plaintiff filed an omnibus Opposition on August 3, 2018. ECF No. 145. Replies were filed on August 17, 2018. ECFNos. 147, 148 & 150. The court heard the Motions on September 10, 2018. ECF No. 156.
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for "failure to state a claim upon which relief can be granted[.]" A Rule 12(b)(6) dismissal is proper when there is either a "'lack of a cognizable legal theory or the absence of sufficient facts alleged.'" UMG Recordings, Inc. v. Shelter Capital Partners, LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990)).
Although a plaintiff need not identify the legal theories that are the basis of a pleading, see Johnson v. City of Shelby, Mississippi, 135 S. Ct. 346, 346 (2014) (per curiam), a plaintiff must nonetheless allege "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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This tenet — that the court must accept as true all of the allegations contained in the complaint — "is inapplicable to legal conclusions." Id. 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); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) ().
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." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). In other words, "the factual allegations that are taken as true must 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. Factual allegations that only permit the court to infer "the mere possibility of misconduct" do not show that the pleader is entitled to relief as required by Rule 8. Iqbal, 556 U.S. at 679.
Several aspects of CIT's Motion are not seriously contested. First, CIT argues that Financial Freedom should be dismissed as a party because Financial Freedom is (or was) only a corporate division of CIT Bank, N.A.3 See,e.g., In re Sugar Indus. Antitrust Litig., 579 F.2d 13, 18 (3d Cir. 1978) (); Western Beef, Inc. v. Compton Inv. Co., 611 F.2d 587, 590-91 (5th Cir.1980) (); Wilson v. EverBank, N.A., 77 F. Supp. 3d 1202, 1216 (S.D. Fla. 2015) (). Plaintiff does not object to this argument. See ECF No. 158 at 5, Tr. (Sept. 10, 2018) at 5. Accordingly, Financial Freedom is DISMISSED as a separate Defendant; any remaining claims against "Financial Freedom" are construed as being made against CIT Bank, N.A., itself.
Second, CIT points out that Count Two alleges a bad faith tort claim — a claim that the March 30th Order dismissed with prejudice, and without leave to amend.4 See Wieck, 308 F. Supp. 3d at 1120 n.14 ("Count Two (seeking damages for 'breach of implied covenant of good faith and fair dealing' is DISMISSED with prejudice, although its [factual] allegations are relevant for the breach-of-contract claim [against CIT.]"). As the March 30th Order noted, there is no independent cause of action for breach of the duty of good faith and fair dealingin a non-insurance contract (such as the reverse mortgage at issue with CIT). See, e.g., Jou v. Nat'l Interstate Ins. Co. of Haw., 114 Haw. 122, 129, 157 P.3d 561, 568 (Haw. Ct. App. 2007). Count Two is again DISMISSED with prejudice.
Some aspects of the FAC's Count Three, alleging unfair or deceptive trade practices under HRS chapter 480 against CIT, survived CIT's previous challenge — aspects that were not preempted by the Home Owners Loan Act of 1933. See Wieck, 308 F. Supp. 3d at 1113-1124. In the SAC, however, Plaintiff attempts to buttress Count Three with allegations that CIT also violated HRS § 431:13-103(a)(8), which — unless otherwise expressly provided — makes rebates of premiums an unfair or deceptive act or practice in the business of insurance.5 Plaintiff is not asserting a specific cause of action under chapter 431for this violation; rather she is bolstering the basis for a § 480-2 claim. But § 431:13-103 only applies to those in "the business of insurance," and CIT is not an insurer and is not in that business. See, e.g., Noetzel v. Haw. Med. Serv. Ass'n, 2016 WL 4033099, at *9 (D. Haw. July 27, 2016) (). These new allegations in Count Three are immaterial and unnecessary for a § 480-2 claim against CIT (although they might be relevant as to the other Defendants as pled in other Counts). Accordingly, the court STRIKES the § 431:13-103(a)(8) allegations in paragraph 154 of Count Three of the SAC as to CIT. See Fed. R. Civ. P. 12(f) ().6
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Plaintiff did not name National General as a Defendant in the FAC. Plaintiff, however, added National General in the SAC (both as a Defendant and throughout the SAC), along with a paragraph explaining how National General is related to Seattle...
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