Algaier et al v. Bank of America NA et al, No. 2:2013cv00380 - Document 26 (E.D. Wash. 2014)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART 23 Defendants' Motion to Dismiss for Failure to State a Claim. Does 1-100 are DISMISSED from this action. Defendants CMG Mortgage, Inc., Pacific Northwest Title Company, and First American Title Company are DISMISSED from this action without prejudice. Signed by Judge Thomas O. Rice. (BF, Judicial Assistant)

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1 2 3 4 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 6 7 8 TIMOTHY ALGAIER, and DEBRA EDDY, 9 10 11 12 13 14 15 16 17 18 19 20 Plaintiffs, v. NO: 13-CV-0380-TOR ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ SECOND MOTION TO DISMISS CMG MORTGAGE, INC., a California Corporation doing business in Washington State; BANK OF AMERICA NA, a national bank doing business in Washington State; NORTHWEST TRUSTEE SERVICES, INC., a trustee doing business in Washington State; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., a corporation doing business in Washington State; PACIFIC NORTHWEST TITLE COMPANY, a Trustee doing business in Washington state; FIRST AMERICAN TITLE COMPANY, successor in interest to Pacific Northwest Title Company, a Trustee, doing business in Washington state; DOES 1-100, inclusively and all ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 1 1 2 3 persons unknown claiming any legal or equitable right, title, estate, lien or interest in the property described in the complaint adverse to Plaintiffs’ title or any cloud on plaintiffs’ title thereto, 4 Defendants. 5 BEFORE THE COURT is Defendants Bank of America, N.A., and 6 Mortgage Electronic Registration Systems, Inc.’s Motion to Dismiss Plaintiffs’ 7 First Amended Complaint (ECF No. 23). This matter was submitted for 8 consideration without oral argument. The Court has reviewed the briefing and the 9 record and files herein, and is fully informed. 10 BACKGROUND 11 This case concerns a threatened nonjudicial foreclosure. FACTS1 12 13 Plaintiffs purchased property at 4416 N. Simpson Road in Otis Orchards, 14 Washington, on or about July 3, 2006. In 2009, Plaintiffs refinanced the property, a 15 single family dwelling they used as their primary residence, with CMG Mortgage, 16 Inc., a defendant in the instant lawsuit. The property was allegedly the security 17 under a deed of trust, and the loan was evidenced by a promissory note the current 18 1 19 20 These facts are taken from Plaintiffs’ First Amended Complaint, ECF No. 20, and accepted as true for the purposes of the motion to dismiss. ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 2 1 owner of which Plaintiffs claim “is yet a mystery and unknown.” Bank of America, 2 N.A. (“BANA”) is allegedly the loan servicer, though Plaintiff contests the 3 ownership of the note and disputes all sums that may be alleged to be due under it 4 as well as amounts paid that were allegedly improperly credited. 5 Plaintiffs made payments due on the loan through December 2011. They 6 claim that they were being “over charged [sic] on the Note and loan and not 7 receiving proper credits for sums paid.” They also contend that the notice of 8 default was recorded prematurely and illegally, and that the right to mediation 9 “was not noticed at any time prior to recordation of the [notice of default] in 10 violation of the Wash. Stats.” 11 Fraud allegations. On December 5, 2011, Plaintiffs claim Anna Lopez, an 12 agent of Defendant BANA, contacted Plaintiffs offering a novation of the existing 13 promissory note, reducing monthly payments from $1,872 to $1,252. They claim 14 that she told them: 15 16 17 If you stopped making payments under the Note for 3 consecutive months, they would be “guaranteed” to qualify for a new Note or modified term or novation beneficially altering the current payment to a lower amount under the existing Note. The new conditions would be implemented and terms made known immediately so no default would be declared or foreclosure brought into play. 18 19 They claim Lopez further told them on December 12, 2011, to “just stop paying 20 from January, 2012 through March 2012, and you will qualify, guaranteed.” ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 3 1 Plaintiffs state that Lopez told them BANA would treat the December 2011 2 payment as “confirmation in lieu of any written contract in confirmation of this 3 new modification plan.” 4 In October 2013, Plaintiffs filed a lawsuit in Spokane County Superior 5 Court, alleging 1) negligence; 2) fraud and deceit; 3) violation of the Washington 6 Foreclosure Fairness Act (“FFA”); 4) equitable accounting; 5) breach of contract; 7 6) unjust enrichment and promissory estoppel; 7) quiet title; 8) declaratory relief; 8 and 9) injunctive relief in the form of a temporary restraining order (“TRO”) and 9 preliminary injunction. The superior court entered a TRO on October 9, 2013, 10 postponing the sale.2 11 In November 2013, Defendants removed the action to federal court, and later 12 moved to dismiss. The Court granted in part and denied in part Defendants’ 13 motion, dismissing with leave to amend Plaintiffs’ claims for negligence, 14 Foreclosure Fairness Act violations, equitable accounting, breach of contract, 15 unjust enrichment and quiet title. ECF No. 15 at 30. Only Plaintiff Algaier, timely 16 17 18 2 19 14 days. Washington Superior Court Civil Rule 65(b). The record does not contain 20 a copy of the order from the Superior Court. A temporary restraining order, by court rule, is only effective for not more than ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 4 1 filed an amended complaint, again alleging all nine of his original claims.3 In the 2 motion now before the Court, Defendants only move to dismiss Plaintiffs’ claims 3 for negligence, violation of the Foreclosure Fairness Act, for an equitable 4 accounting, for breach of contract, and to quiet title. 5 DISCUSSION Defendants BANA and MERS move to dismiss Plaintiffs’ claims without 6 7 leave to amend. They argue that (1) Plaintiffs’ negligence claim remains defective 8 because they have not alleged facts showing a legal duty; (2) Plaintiffs’ FFA claim 9 fails because they fail to allege facts indicating that Defendants have failed to 10 participate in a mediation in good faith and naming MERS in the DOT does not 11 invalidate Plaintiffs’ loan obligations; (3) Plaintiffs have not demonstrated facts 12 entitling them to an accounting; (4) Plaintiffs have inadequately plead breach of 13 3 14 Because Timothy Algaier and Debra Eddy are proceeding pro se, each may only 15 represent his or her own interests. Cato v. United States, 70 F.3d 1103, 1105 n. 1 16 (9th Cir. 1995) (“[A] non-attorney may appear only in her own behalf.”). 17 Accordingly, the Court will not entertain any pleading as being applicable to both 18 Plaintiffs, unless both Plaintiffs sign the pleading. Federal Rule of Civil Procedure 19 11(a) requires the Court to strike an unsigned pleading, unless the omission is 20 promptly corrected after being called to the party’s attention. ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 5 1 contract; and (5) Plaintiffs’ quiet title claim still fails for lack of tender. ECF No. 2 23. 3 A. Motion to Dismiss Standard 4 A motion to dismiss for failure to state a claim tests the legal sufficiency of 5 the plaintiff’s claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To 6 withstand dismissal, a complaint must contain “enough facts to state a claim to 7 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 8 (2007). “Naked assertion[s],” “labels and conclusions,” or “formulaic recitation[s] 9 of the elements of a cause of action will not do.” Id. at 555, 557. “A claim has 10 facial plausibility when the plaintiff pleads factual content that allows the court to 11 draw the reasonable inference that the defendant is liable for the misconduct 12 alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While a plaintiff need not 13 establish a probability of success on the merits, he or she must demonstrate “more 14 than a sheer possibility that a defendant has acted unlawfully.” Id. 15 A complaint must also contain a “short and plain statement of the claim 16 showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This 17 standard “does not require detailed factual allegations, but it demands more than an 18 unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 19 678 (quoting Twombly, 550 U.S. at 555). In assessing whether Rule 8(a)(2) has 20 been satisfied, a court must first identify the elements of the plaintiff’s claim(s) and ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 6 1 then determine whether those elements could be proven on the facts pled. The 2 court should generally draw all reasonable inferences in the plaintiff's favor, see 3 Sheppard v. David Evans and Assocs., 694 F.3d 1045, 1051 (9th Cir. 2012), but it 4 need not accept “naked assertions devoid of further factual enhancement.” Iqbal, 5 556 U.S. at 678 (internal quotations and citation omitted). 6 In ruling upon a motion to dismiss, a court must accept all factual allegations 7 in the complaint as true and construe the pleadings in the light most favorable to 8 the party opposing the motion. Sprewell v. Golden State Warriors, 266 F.3d 979, 9 988 (9th Cir. 2001). The court may disregard allegations that are contradicted by 10 matters properly subject to judicial notice or by exhibit. Id. The court may also 11 disregard conclusory allegations and arguments which are not supported by 12 reasonable deductions and inferences. Id. 13 14 1. Whether Plaintiffs’ Negligence Claim Should Be Dismissed Defendants argue that Plaintiffs’ First Amended Complaint fails—as their 15 original complaint did—to demonstrate any duty owed by Defendants; as such, the 16 Plaintiffs’ negligence claim should be dismissed. ECF No. 23 at 8. 17 As the Court stated in its previous Order on Defendants’ motion to dismiss 18 (ECF No. 15), “[t]he economic loss rule applies to hold parties to their contract 19 remedies when a loss potentially implicates both tort and contract relief” Alejandre 20 v. Bull, 159 Wash.2d 674, 681 (2007). “Tort law has traditionally redressed injuries ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 7 1 properly classified as physical harm.” Stuart v. Coldwell Banker Commercial 2 Group, Inc., 109 Wash.2d 406, 420 (1987). It “is concerned with the obligations 3 imposed by law rather than by bargain,” and carries out a “safety-insurance policy” 4 that requires that products and property that are sold do not “unreasonably 5 endanger the safety and health of the public.” Id. at 421, 420. Contract law, on the 6 other hand, carries out an “expectation-bargain protection policy” which “provides 7 an appropriate set of rules when an individual bargains for a product of particular 8 quality or for a particular use.” Id. at 420-421. “Where economic losses occur, 9 recovery is confined to contract ‘to ensure that the allocation of risk and the 10 determination of future liability is based on what the parties bargained for in the 11 contract….’” Alejandre, 159 Wash.2d at 682-83. 12 13 14 15 If the economic loss rule applies, the party will be held to contract remedies regardless of how the plaintiff characterizes the claims. Washington law consistently follows these principles. The key inquiry is the nature of the loss and the manner in which it occurs, i.e., are the losses economic losses with economic losses distinguished from personal injury or injury to other property. If the claimed loss is an economic loss, and no exception applies to the economic loss rule, then the parties will be limited to contractual remedies. 16 17 18 Alejandre, 159 Wash.2d at 683-684. Unlike in their first complaint, Plaintiffs allege more than economic loss; 19 they allege negligent infliction of emotional distress as well. See ECF No. 20 at 8 20 (“knowing the foreseeable effect of such breach of duty, emotional distress and ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 8 1 damage to credit standing and reputation to plaintiff was likely and in fact was 2 incurred throughout this lender/borrower dispute. Plaintiffs alleged this breached 3 duty has ‘caused’ financial injury to them AND inflicted physical harm by the 4 foreseeable infliction of emotional distress upon both plaintiffs…. [P]laintiffs were 5 emotionally and physically made ill, sick, upset, and affected medically in their 6 bodies, minds, and emotions.”). 7 The elements of a negligent infliction of emotional distress claim are (1) the 8 defendant engaged in negligent conduct; (2) the plaintiff suffered serious 9 emotional distress; (3) the defendant's negligent conduct was the cause of the 10 plaintiff's serious emotional distress. See Hegel v. McMahon, 136 Wash.2d 122, 11 135 (1988) (plaintiff came upon scene of accident injuring family member as the 12 result of defendants' negligence); Hunsley v. Girard, 87 Wash.2d 424, 553 P.2d 13 1096 (1976). To demonstrate that a plaintiff suffered emotional distress, he or she 14 must show an “objective symptomology” that is susceptible to a medical diagnosis. 15 Hegel, 136 Wash.2d at 133. 16 Here, however, Plaintiffs’ allegations of negligent infliction of emotional 17 distress arise out of the alleged breach of contract. They have not shown that the 18 defendants acted negligently outside their allegation of breach of contract. See 19 Henderson v. GMAC Mortgage Corp., 2008 WL 1733265 (W.D. Wash. 2008) 20 aff'd, 347 F. App'x 299 (9th Cir. 2009) (unpublished). Furthermore, emotional ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 9 1 distress damages are generally not recoverable in breach of contract cases. See 2 Gaglidari v. Denny’s Restaurants, Inc., 117 Wash. 2d 426, 432 (1991) (holding 3 that emotional distress damages were not recoverable in breach of employment 4 contract case). Thus, the economic loss rule still applies. As the Washington 5 Supreme Court stated: 6 7 8 In general, whereas tort law protects society's interests in freedom from harm, with the goal of restoring the plaintiff to the position he or she was in prior to the defendant's harmful conduct, contract law is concerned with society's interest in performance of promises, with the goal of placing the plaintiff where he or she would be if the defendant had performed as promised. 9 10 11 12 13 14 15 16 17 The economic loss rule maintains the “fundamental boundaries of tort and contract law.” Where economic losses occur, recovery is confined to contract “to ensure that the allocation of risk and the determination of potential future liability is based on what the parties bargained for in the contract.... If tort and contract remedies were allowed to overlap, certainty and predictability in allocating risk would decrease and impede future business activity.” A manufacturer or seller sets prices in contemplation of, among other things, potential contractual liability. tort liability is expanded to include economic damages, parties would be exposed to “ ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class.’ ” “A bright line distinction between the remedies offered in contract and tort with respect to economic damages also encourages parties to negotiate toward the risk distribution that is desired or customary.” In addition, the economic loss rule prevents a party to a contract from obtaining through a tort claim benefits that were not part of the bargain. 18 Alejandre, 159 Wash. 2d at 681-83 (2007) (internal citations omitted). To allow a 19 claim for emotional distress arising out of the breach of contract would undermine 20 contract law and expose contracting parties to indeterminate liability, decreasing ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 10 1 certainty and predictability, as the Supreme Court noted in Alejandre. Though 2 Plaintiff claims that Defendants have a legal duty under “business custom and 3 usage and common business practices,” ECF No. 20 at 7, such a duty could only be 4 owed to Plaintiffs under the contractual relationship between Plaintiffs and 5 Defendants. 6 Plaintiffs also claim negligence per se based on Defendants’ alleged 7 violations of the Washington Consumer Protection Act and Foreclosure Fairness 8 Act. ECF No. 20 at 8. For the most part, the doctrine of negligence per se was 9 abolished by the legislature in 1986 with the passing of RCW 5.40.050. Now, a 10 violation of a statute is only evidence of negligence. See Williams v. Leone & 11 Keeble, Inc., 170 Wash. App. 696, 719 (2012). But that advances Plaintiffs’ claim 12 no further, as Plaintiffs must first establish a tort duty, which they have not. 13 14 15 16 Accordingly, Plaintiffs’ negligence claim is dismissed. 2. Whether the First Amended Complaint’s Foreclosure Fairness Act Claim Should Be Dismissed Defendants again argue that Plaintiffs’ amended Foreclosure Fairness Act 17 claim fails because the statute relates to borrowers’ entitlement to request 18 mediation prior to foreclosure. ECF No. 23 at 10. The Court agrees. 19 As the Court noted in its previous order, RCW 61.24.163 relates to the 20 foreclosure mediation process. Plaintiffs’ complaint now contends that “the right to ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 11 1 mediation was not noticed at any time prior to the recordation of the NOD in 2 violation of the Wash. Stats.” ECF No. 20 at 5. Thus, Plaintiffs have now pleaded 3 Defendants’ failure to “provide documentation required before mediation or 4 pursuant to the mediator’s instructions.” RCW 61.24.163(10). Accordingly, 5 Plaintiffs’ amendment cured the deficiency identified in the Court’s prior Order (at 6 ECF No. 15). 7 However, Defendants argue there is no dispute that they provided the 8 required mediation notice. See ECF No. 9, Exhibit E. As a general rule, a district 9 court may not consider any material beyond the pleadings in ruling on a Rule 10 12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). 11 Rule 12(b)(6) expressly provides that when: 12 14 matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56. 15 Fed.R.Civ.P. 12(b)(6) (emphasis added). However, there are two exceptions to the 16 rule that consideration of extrinsic evidence converts a 12(b)(6) motion to a 17 summary judgment motion: 13 18 19 20 First, a court may consider “material which is properly submitted as part of the complaint” on a motion to dismiss without converting the motion to dismiss into a motion for summary judgment. If the documents are not physically attached to the complaint, they may be considered if the documents' “authenticity ... is not contested” and “the plaintiff's complaint necessarily relies” on them. Second, under ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 12 2 Fed.R.Evid. 201, a court may take judicial notice of “matters of public record.” We review a district court's decision to take judicial notice for abuse of discretion. 3 Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (internal citations 4 omitted). Here, the document in question was attached to Plaintiffs’ amended 5 complaint. See ECF No. 20-2. The document, noted as “the final step before the 6 foreclosure sale of your home,” states that “[y]ou have only 20 DAYS from the 7 recording date of this notice to pursue mediation.” See also ECF No. 20-4. These 8 documents clearly states that the time period in which Plaintiffs may pursue 9 mediation. Since the documents were appended to the amended complaint filed by 1 10 Plaintiffs, their authenticity does not appear to be contested, and there appears to 11 be no dispute that Plaintiffs were afforded notice of their statutory right to 12 mediation. Accordingly, Plaintiffs’ claim under the Foreclosure Fairness Act is 13 dismissed. 14 Defendants also argue that naming MERS in the deed of trust does not 15 invalidate Plaintiffs’ loan obligations and that Plaintiffs’ citation to Bain v. 16 Metropolitan Mortgage Group, Inc., 175 Wash.2d 83 (2012), does not relate to 17 Plaintiffs’ claim under the FFA. ECF No. 23 at 11. Having dispensed with 18 Plaintiff’s FFA claim above, the Court need not consider this second argument. 19 /// 20 /// ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 13 1 2 3. Whether Plaintiffs Are Entitled to an Equitable Accounting Defendants maintain that Plaintiffs have failed to allege in their amended 3 complaint entitlement to an accounting, as they did in the original complaint. ECF 4 No. 23 at 15. The Court agrees. 5 As the Court noted in its order on Defendants’ previous motion to dismiss, 6 actions for partnership accounting are now covered under statute in Washington; 7 actions for common-law accounting arise under case law. The requisites for an 8 accounting action are set forth in Corbin v. Madison, 12 Wash. App. 318, 327 9 (1974), quoting with approval language from Seattle Nat'l Bank v. School Dist. 40, 10 11 12 13 20 Wash. 368 (1898): In general, a complaint for an accounting must show by specific averments that there is a fiduciary relation existing between the parties, or that the account is so complicated that it cannot conveniently be taken in an action at law. And it must allege that the plaintiff has demanded an accounting from the defendant, and the latter's refusal to render it, in order to state a cause of action. 14 15 16 Corbin, 12 Wash. App. at 327 (quoting Seattle Nat’l Bank, 20 Wash. 368). A fiduciary relationship arises as a matter of law between an attorney and 17 client, or a doctor and patient, for example. Liebergesell v. Evans, 93 Wash.2d 881, 18 890 (1980). However, a fiduciary relationship can also arise in fact regardless of 19 the legal relationship between the parties. Id. In some circumstances a fiduciary 20 relationship which allows an individual to relax his guard and repose his trust in ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 14 1 another may develop. Id. at 889. Such a fiduciary relationship is one in which one 2 party “occupies such a relation to the other party as to justify the latter in expecting 3 that his interests will be cared for. . . .” Id. at 889-90 (quoting Restatement 4 Contracts § 472(1)(c)) (sufficient evidence of fiduciary relationship to overcome 5 summary judgment where businessman induced a widowed school teacher to lend 6 him money at 20 percent interest rate, even though he knew that rate was illegal). 7 “’The facts and circumstances must indicate that the one reposing the trust has 8 foundation for his belief that the one giving advice or presenting arguments is 9 acting not in his own behalf, but in the interests of the other party.’” Goodyear Tire 10 & Rubber Co. v. Whiteman Tire, Inc., 86 Wash. App. 732, 742 (1997) (quoting 11 Burwell v. South Carolina Nat'l Bank, 340 S.E.2d 786, 790 (1986)). In other 12 words, the plaintiff must show some dependency on his or her part and some 13 undertaking by the defendant to advise, counsel, and protect the weaker party. Id. 14 In Goodyear, the court found that counterclaim plaintiff had not created an issue of 15 fact sufficient to avoid summary judgment where, though tire dealer was 16 vulnerable, tire manufacturer was clearly interested in promoting itself as 17 demonstrated by its reservation of right to compete. Id. at 743 (“the existence of 18 conflicting profit incentives between a manufacturer and dealer is at odds with a 19 fiduciary relationship”). 20 ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 15 1 Plaintiffs’ complaint does not allege any relationship between BANA and/or 2 MERS and Plaintiffs that could give rise to a fiduciary relationship. Plaintiffs 3 contend in their amended complaint that “Plaintiff who are contracted in a business 4 relationship with BOA and CMG concerning a loan that must be accurately 5 maintained in the books and records of the lender and loan servicer under common 6 usage in the banking and secured transactions industry have a right to a fair and 7 honest report of the total sums due, payable, paid and credited under the referenced 8 Note.” ECF No. 20 at 11 (emphasis in original). But business relationships do not 9 inherently give rise to accounting rights. Plaintiffs have again not sufficiently 10 alleged facts giving rise to a finding of a fiduciary relationship between the parties. 11 Nor does the complaint indicate that the mortgage at issue is anything other than 12 the typical mortgage, warranting an accounting because of complexity. Nor have 13 Plaintiffs stated that they demanded an accounting from Defendants, as required. 14 See Corbin, 12 Wash. App. at 327. Accordingly, Plaintiffs’ claim for an equitable 15 accounting in its First Amended Complaint has the same defects as the claim in the 16 original complaint and again must be dismissed. 17 18 4. Whether the First Amended Complaint’s Breach of Contract Claim Should Be Dismissed 19 Defendants argue that Plaintiffs’ amended complaint fails to cure the 20 deficiencies identified in Court’s previous order because Plaintiffs have not ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 16 1 demonstrated the existence of a valid written contract that survives the statute of 2 frauds. ECF No. 23 at 16. As the Court noted in its previous order, the statute of 3 frauds requires that agreements relating to an interest in real property, including 4 mortgages, be in writing and signed by the party to be charged. RCW § 64.04.010. 5 Plaintiffs’ amended complaint alleges that Defendants breached the “novated 6 agreement” modifying the original note, entered into in December 2011 to reduce 7 the monthly payments by $620. ECF No. 20 at 12. But all factual allegations 8 indicate that this agreement was verbal. See, e.g., id. at 5 (“the reduced sum was 9 stated by Lopez to be $1252. The benefit to plaintiffs was … $620”; “Lopez stated 10 that the December 2011 payment would be treated by BOA as a confirmation in 11 lieu of any written contract in confirmation of this new modification plan.” 12 (emphasis added)). Thus, Plaintiffs’ amended complaint, like the original 13 complaint, fails to state a cause of action for breach of contract (the novated 14 agreement) that survives the statute of frauds. 15 Defendants also argued in their previous motion to dismiss that Plaintiffs 16 failed to allege facts demonstrating the elements of a breach claim because they do 17 not state the relevant provisions or describe any breach or damages. ECF No. 8 at 18 14. The Court never directly addressed this argument concerning the original loan 19 agreement in its previous order. See ECF No. 15. Generally, a plaintiff in a 20 contract action must prove (1) a valid contract between the parties, (2) breach, and ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 17 1 (3) resulting damage. Lehrer v. State Dep’t of Soc. & Health Servs., 101 Wash. 2 App. 509, 516 (2000). Plaintiffs’ Second Amended Complaint states that: 3 4 5 6 7 8 9 Plaintiff’[s] original loan agreement set forth dates by which monthly principal and interest payments were due, and when late fees and other charges could be assessed. Other terms and conditions exist all stated in writing in the promissory Note and Deed of Trust which make up the agreement between the contracting parties…. Alternatively plead, if the original note and deed of trust were properly assigned in 2009 to Defendant BOA, Defendant BOA breached the note and deed of trust that Plaintiff signed on or about July 24, 2009. The terms of the note required payments made by Plaintiff to be applied properly to the note. Any variance from the Note’s terms and conditions and those implied conditions as imposed by the law contracts of this state constitute a material breach of the contract with remedies available as prayed for hereinafter. 10 ECF No. 20 at 12. Defendants argue that Plaintiffs allegations are the same as 11 those raised by Plaintiffs in the original complaint and should again be dismissed. 12 Plaintiffs’ amended breach of contract claim (paragraphs 83-87, ECF No. 20) 13 incorporates all prior paragraphs of the amended complaint. Id. at ¶ 83. Plaintiffs’ 14 new allegations include: 15 16 Plaintiff . . . disputes all sums that may be alleged to be due under said alleged obligation and that amounts paid or that should have been credited properly were not thus creating this good faith dispute over alleged arrears. 17 18 19 20 Plaintiffs made each payment due on the refinance contractual loan to and through the month of December, 2011. . . . Plaintiffs allege that credits against the Note are existent in sums approximating $10,000 or more and have not been accounted for by the beneficiary or loan servicer who are defendants, thus, rendering that the under the Note there is NO default. The allegations of wrong ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 18 1 2 3 4 5 6 7 8 accounting are made against all defendants and most recently Bank of America [BOA, hereafter]. CMG was the original lender who received money payment paid at the commencement of the Note. The Note was originally $274,039. According to the Closing Documents there was to be paid back to plaintiff the sum of $14,987.00 in credits at closing based on calculated over charges that CMG was to repay. This was never done. . . . As such, credits and set offs being alleged in the sum of $14,987 were and are due. Have the sums been properly accounted for and either returned to plaintiffs or properly credited, the default would not have been claimed or declared and no foreclosure would have been lawfully commenced, yet such did occur and foreclosure efforts commenced. Thus, the sums claimed owed by any of the defendants are incorrect; this is sufficient to render the default to be improperly assessed and any notice of default or notice of intent to foreclose under Wash. Stats. to be premature and unenforceable. 9 ECF No. 20 at ¶¶ 5.2-8.1 (emphasis deleted). Here, Plaintiffs have now pleaded 10 factual content—i.e., specific information about the terms of the contract and the 11 resulting action that breached that contract—for the court to draw a reasonable 12 inference that the defendant could be liable for the misconduct alleged. 13 Accordingly, Plaintiffs’ claim of breach of the original loan agreement survives the 14 dismissal motion. 15 16 17 5. Whether the First Amended Complaint’s Claim for Quiet Title Should Be Dismissed Defendants argue that Plaintiffs’ amended complaint again fails to allege 18 that they tendered the amount due on the loan, and, as such, their quiet title action 19 fails. ECF No. 23 at 16-17. The Court agrees. A plaintiff may not maintain an 20 action to quiet title where he at no time offered to pay the balance of the purchase ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 19 1 price to satisfy the mortgage debts on land. See Littlejohn v. Miller, 5 Wash. 399, 2 404 (1892) (“However this may be, their indebtedness for the said portion of the 3 purchase price was concluded by this judgment, and they are in no position to 4 question the validity thereof; and they not having at any time offered to pay the 5 balance of said purchase price, and to satisfy said mortgage debts, the judgment 6 rendered in their favor in the court below must be reversed, and the cause is 7 remanded with instructions to the lower court to dismiss it.”). Here, Plaintiffs’ 8 complaint only alleges that they made payments and then stopped making 9 payments. There is no suggestion that Plaintiffs have paid off their mortgage or 10 11 12 offered to do so. Accordingly, their action for quiet title is dismissed. 6. Leave to Amend The standard for granting leave to amend is generous. See Fed. R. Civ. P. 13 15(a)(2) (“The court should freely give leave when justice so requires.”). 14 “Dismissal of a pro se complaint without leave to amend is proper only if it is 15 absolutely clear that the deficiencies of the complaint could not be cured by 16 amendment.” Schucker v. Rockwood, 846 F.2d 1202, 1203–04 (9th Cir. 1988) 17 (internal quotation marks and citations omitted). The court considers five factors in 18 assessing the propriety of leave to amend: bad faith, undue delay, prejudice to the 19 opposing party, futility of amendment, and whether the plaintiff has previously 20 ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 20 1 amended the complaint. United States v. Corinthian Colleges, 655 F.3d 984, 995 2 (9th Cir. 2011). 3 While the Court again finds no indication of bad faith, undue delay, or 4 significant prejudice to the opposing party, this is Plaintiffs’ second attempt at 5 drafting a complaint sufficient to meet the pleading standards. Accordingly, 6 granting leave to amend again would be futile; if Plaintiffs, having been informed 7 what claims are deficient, cannot remedy those deficiencies now, it is futile to give 8 them another chance when their claims have failed for the same reasons. 9 B. Dismissal of Does 1-100 10 11 The Court previously allowed Plaintiffs to amend their complaint. ECF No. 15. However, the Court cautioned Plaintiffs that: The use of “Doe” Defendants is not favored in the Ninth Circuit. See Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980). For Plaintiffs to properly name “John Doe” Defendants, they must provide all of the information they would normally provide if they already knew each of the defendants’ names. Plaintiff should identify “John Does” by their function, their actions, the dates these actions occurred and most importantly, a short and plain statement of the law or legal theory and facts supporting each claim against each defendant which would entitle Plaintiffs to relief. 12 13 14 15 16 17 Id. at 28. This, Plaintiffs have wholly failed to do. See ECF No. 20 at ¶ 4. 18 Accordingly, Does 1-100 are hereby dismissed. 19 /// 20 /// ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 21 1 C. Dismissal for Failure to Serve 2 The Court previously ordered the Plaintiffs to show cause why the case 3 against each Defendant who has not been served. ECF No. 19 at 3. Specifically, 4 on April 25, 2014, the Court ordered: 5 6 7 Fed. Rule Civ. P. 4(m) requires Plaintiffs to serve each Defendant within 120 days after the complaint is filed or suffer dismissal. Accordingly, Plaintiffs shall show cause, on or before May 7, 2014, why this case should not be dismissed against each of the Defendants that have not appeared and for which proof of service has not been filed. 8 9 Id. On May 7, 2014, Plaintiff Algaier only responded to the Court’s Order to 10 Show Cause, by certifying (neither under oath or by proper declaration) that three 11 Defendants; CMG Mortgage, Inc., Pacific Northwest Title Company, and First 12 American Title Company, were served in that he caused the Notice of Summons 13 and Notice of Verified Complaint to be mailed by United States Postal Service. 14 ECF No. 21. 15 Only a person at least 18 years old, not a party, may serve a summons and 16 complaint by one of the methods set forth in Federal Rule of Civil Procedure 4. 17 Merely mailing a summons and complaint is wholly inadequate service. 18 Accordingly, Defendants CMG Mortgage, Inc., Pacific Northwest Title 19 Company, and First American Title Company are dismissed from this action 20 without prejudice. ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 22 1 2 3 IT IS HEREBY ORDERED: 1. Defendants’ Motion to Dismiss (ECF No. 23) is GRANTED in part and DENIED in part. 4 a. Plaintiffs’ negligence claims are DISMISSED. 5 b. Plaintiffs’ Foreclosure Fairness Act claim is DISMISSED. 6 c. Plaintiffs’ claim for an accounting is DISMISSED. 7 d. Plaintiffs’ breach of contract claim concerning the “novated 8 agreement” is DISMISSED, yet the breach of contract claim 9 concerning the original loan agreement survives. 10 e. Plaintiffs’ quiet title cause of action is DISMISSED. 11 2. Plaintiff Debra Eddy is granted leave to affirm the First Amended 12 Complaint for which she neglected to personally sign. Unless Debra 13 Eddy files a personally signed affirmation of the First Amended 14 Complaint (ECF No. 20) on or before August 25, 2014, said complaint 15 will be stricken as it pertains to her and she will be terminated from this 16 case. 17 18 3. Does 1-100 are dismissed from this action and the Clerk of Court shall terminate them from the caption and case. 19 4. Defendants CMG Mortgage, Inc., Pacific Northwest Title Company, and 20 First American Title Company are dismissed from this action without ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 23 1 prejudice, and the Clerk of Court shall terminate them from the caption 2 and case. 3 4 5 The District Court Executive is hereby directed to enter this Order and provide copies to the parties. DATED August 13, 2014. 6 7 THOMAS O. RICE United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 ORDER RE DEFENDANTS’ MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO REMAND ~ 24

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