Kerr v. Bank of America, N.A. et al, No. 3:2015cv00306 - Document 24 (D. Nev. 2016)

Court Description: ORDER granting Defendant Bank of America's 7 Motion to Dismiss; giving Plaintiff 30 days to file amended complaint; denying as moot Plaintiff's 20 Motion for Restraining Order. Signed by Judge Miranda M. Du on 1/5/2016. (Copies have been distributed pursuant to the NEF - KR)
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Kerr v. Bank of America, N.A. et al Doc. 24 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 DENNIS KERR, Case No. 3:15-cv-00306-MMD-WGC 8 Plaintiff, ORDER v. 9 10 BANK OF AMERICA, N.A. and TRUSSTEE CORPS., 11 Defendants. 12 13 I. SUMMARY 14 Plaintiff Dennis Kerr, proceeding pro se, initiates this action to assert claims that 15 appear to relate in part to a mortgage loan. Before the Court is Defendant Bank of 16 America, N.A.’s (“BANA”) Motion to Dismiss Complaint (“Motion”). (Dkt. no. 7.) Plaintiff 17 has opposed (dkt. no. 10) and BANA has replied (dkt. no. 12). For the reasons 18 discussed below, the Motion is granted. 19 II. BACKGROUND 20 The following background facts are taken primarily from the Complaint, which is 21 rather difficult to parse. Because the Complaint makes general and sweeping 22 allegations relating to several events, the Court will recite these events as best it can. 23 The first relates to an alleged wrongful foreclosure. Plaintiff obtained a mortgage loan 24 from Countrywide secured by a Deed of Trust on property located at 580 Aswan Street 25 in Sparks, Nevada (“the Property”) and paid off a prior loan with Avco Mortgage 26 Company (“Avco”). (Dkt. no. 2 at 2-3.) In 2014, BANA had Avco do a trustee’s sale on 27 the Property under the Avco loan even though it had been satisfied. After Plaintiff’s 28 father confronted Avco, it resolved the wrongful foreclosure by providing a “substitution 1 of trustee and full reconveyance” of the Property on July 30, 2014. (Id. at 3, 6.) BANA’s 2 statement of March 17, 2014, shows adjustments to the monthly statement, including 3 fees that should not have been charged. 4 The second event involves BANA’s alleged theft of insurance proceeds on 5 insurance that BANA had forced Plaintiff to place. (Id. at 7.) Plaintiff alleges that a 6 broken pipe caused the basement of the Property to flood, causing about $9,200 in 7 damages. (Id.) A contractor was hired and after he sent in a claim for doing part of the 8 repair, BANA stole the insurance check but paid him a year later. (Id.) Plaintiff had to 9 sue the contractor to recover the money on payment for work he apparently did not 10 perform. (Id.) BANA paid Plaintiff as a result of a class action settlement in Florida on 11 the forced placed insurance scam. (Id. at 8.) 12 The third event relates to a loan modification that Plaintiff’s father, who 13 possessed a power of attorney, agreed to while Plaintiff was deployed on a tour of duty 14 overseas. Plaintiff’s father agreed to the loan modification term for payment to be $956 15 per month, but not the higher payment term of $2,856 per month. (Id. at 8.) BANA 16 proceeded with the loan modification even though Plaintiff did not sign the modified 17 loan. (Id.) Plaintiff has received a notice of breach of default and election to sale set for 18 July 2015. (Id. at 9.) 19 Based on allegations relating to these three main events, Plaintiff advances 20 seven claims against Defendants BANA and Trusstee Corps1: breach of contract, unjust 21 enrichment, breach of the implied covenant of good faith and fair dealing, libel, slander 22 and defamation, breach of fiduciary duty, violation of the Truth in Lending Act (“TILA”) 23 and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). (Id. at 10-14.) 24 In response, BANA has moved for dismissal. (Dkt. no. 7.) 25 III. LEGAL STANDARD 26 A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which 27 relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must 28 1 The Complaint does not assert any specific allegations against Trustee Corps. 2 1 provide “a short and plain statement of the claim showing that the pleader is entitled to 2 relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). 3 While Rule 8 does not require detailed factual allegations, it demands more than “labels 4 and conclusions” or a “formulaic recitation of the elements of a cause of action.” 5 Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual 6 allegations must be enough to raise a right to relief above the speculative level.” 7 Twombly, 550 U.S. at 555. Thus, “[t]o survive a motion to dismiss, a complaint must 8 contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 9 plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). 10 In Iqbal, the Supreme Court clarified the two-step approach district courts are to 11 apply when considering motions to dismiss. First, a district court must accept as true all 12 well-pleaded factual allegations in the complaint; however, legal conclusions are not 13 entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a 14 cause of action, supported only by conclusory statements, do not suffice. Id. at 678. 15 Second, a district court must consider whether the factual allegations in the complaint 16 allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the 17 plaintiff’s complaint alleges facts that allow a court to draw a reasonable inference that 18 the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint fails 19 to “permit the court to infer more than the mere possibility of misconduct, the complaint 20 has alleged — but it has not ‘shown’ — ‘that the pleader is entitled to relief.’” Id. at 679 21 (quoting Fed. R. Civ. P. 8(a)(2)) (alteration omitted). When the claims in a complaint 22 have not crossed the line from conceivable to plausible, the complaint must be 23 dismissed. Twombly, 550 U.S. at 570. A complaint must contain either direct or 24 inferential allegations concerning “all the material elements necessary to sustain 25 recovery under some viable legal theory.” Id. at 562 (quoting Car Carriers, Inc. v. Ford 26 Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)). 27 Mindful of the fact that “[t]he Supreme Court has instructed the federal courts to 28 liberally construe the ‘inartful pleading’ of pro se litigants,” the Court will view Plaintiff’s 3 1 pleadings with the appropriate degree of leniency. Eldridge v. Block, 832 F.2d 1132, 2 1137 (9th Cir. 1987) (quoting Boag v. MacDougall, 454 U.S. 364, 365 (1982)). 3 IV. 4 5 DISCUSSION BANA argues that the Complaint is generally deficient and fails to state a claim upon which relief may be granted.2 The Court agrees. 6 A. Breach of Contract 7 A breach of contract claim requires a plaintiff to show: (1) the existence of a valid 8 contract; (2) a breach by the defendant; and (3) damage because of the breach. Saini v. 9 Int’l Game Tech., 434 F. Supp 2d 913, 919–20 (D. Nev. 2006) (citing Richardson v. 10 Jones, 1 Nev. 405, 405 (Nev. 1865). To create an enforceable contract there must be 11 an “offer, acceptance, meeting of the minds, and consideration.” May v. Anderson, 119 12 P.3d 1254, 1257 (Nev. 2005). 13 The Complaint does not allege the contract that Defendants purportedly 14 breached. In fact, the Complaint does not identify the contract in question, what action 15 Defendants allegedly did that amount to a breach of that contract and what damage 16 resulted from said breach. 17 B. Unjust Enrichment 18 “The phrase ‘unjust enrichment’ is used in law to characterize the result or effect 19 of a failure to make restitution of, or for, property or benefits received under such 20 circumstances as to give rise to a legal or equitable obligation to account therefor.” 21 Leasepartners Corp. v. Robert L. Brooks Trust Dated Nov. 12, 1975, 942 P.2d 182, 187 22 (Nev. 1997). “Unjust enrichment occurs when ever [sic] a person has and retains a 23 benefit which in equity and good conscience belongs to another.” Id. (quotations and 24 citation omitted). “The doctrine of unjust enrichment or recovery in quasi contract 25 applies to situations where there is no legal contract but where the person sought to be 26 Plaintiff’s opposition brief does not address BANA’s arguments. Instead, Plaintiff offers exhibits to supplement his Complaint, which is improper. Plaintiff also makes allegations that he claims support a claim for Fair Debt Collections Practices Act, but he did not plead this claim in his Complaint. 2 27 28 4 1 charged is in possession of money or property which in good conscience and justice he 2 should not retain but should deliver to another [or should pay for].” Id. (citing Lipshie v. 3 Tracy Inv. Co., 93 Nev. 370, 379, 566 P.2d 819, 824 (1977) (“To permit recovery by 4 quasi-contract where a written agreement exists would constitute a subversion of 5 contractual principles.”)). 6 The Complaint contains conclusory allegations that Defendants are unjustly 7 enriched by “the forced placed insurance scam, and stealing the plaintiffs insurance 8 check” among other alleged wrongful conduct. (Dkt. no. 2 at 11.) These conclusory 9 allegations are insufficient to show that Plaintiff is entitled to relief. For example, Plaintiff 10 alleges theft of insurance proceeds by BANA, but he also alleges that BANA paid the 11 contractor although it was not clear whether the contractor performed the repair caused 12 by the flood damage. Moreover, Plaintiff alleges he sued the contractor to recover the 13 payment. Accepting these allegations as true, it is not clear how BANA was unjustly 14 enriched with respect to the insurance proceeds. 15 C. Breach of the Implied Covenant of Good Faith and Fair Dealing 16 Nevada law holds that “[e]very contract imposes upon each party a duty of good 17 faith and fair dealing in its performance and its enforcement.” A.C. Shaw Constr., Inc. v. 18 Washoe Cnty., 784 P.2d 9, 9 (Nev. 1989) (quoting Restatement (Second) of Contracts § 19 205). “When one party performs a contract in a manner that is unfaithful to the purpose 20 of the contract and the justified expectations of the other party are thus denied, 21 damages may be awarded against the party who does not act in good faith.” Hilton 22 Hotels v. Butch Lewis Prods., Inc., 808 P.2d 919, 923 (Nev. 1991). To establish a claim 23 for contractual breach of the implied covenant of good faith and fair dealing, a plaintiff 24 must allege the existence of a valid contract and a breach of the implied duty of good 25 faith and fair dealing by performing in a manner that was unfaithful to the purpose of the 26 contract. Perry v. Jordan, 900 P.2d 335, 338; see Hilton Hotels, 808 P.2d at 923. A 27 plaintiff must establish that the defendant intentionally breaches the intention and spirit 28 /// 5 1 of the agreement. Morris v. Bank of America, 886 P.2d 454, 457 (Nev. 1994) (citing 2 Hilton Hotels, 808 P.2d at 922-23). 3 The Complaint is deficient because there is no allegation relating to the existence 4 of a valid contract and what Defendants purportedly did to breach the intention and spirit 5 of that contract. 6 D. 7 Under Nevada law, a prima facie case of defamation is established if the plaintiff 8 alleges: “(1) a false and defamatory statement by the defendant concerning the plaintiff; 9 (2) an unprivileged publication to a third person; (3) fault, amounting to at least 10 negligence; and (4) actual or presumed damages.” Pacquiao v. Mayweather, 803 F. 11 Supp. 2d 1208, 1211 (D. Nev. 2011) (citing Wynn v. Smith, 16 P.3d 424, 427 (2001)). Libel/Slander/Defamation 12 The Complaint fails to allege facts to support each element of a defamation 13 claim. Plaintiff does not even allege what false statement of facts was made about him. 14 He asserts that he can prove that BANA did communicate information concerning him to 15 others. (Dkt. no. 2 at 12.) However, Plaintiff must allege what false statement was 16 communicated, not just promise that he will show the content of that communication to 17 survive dismissal. 18 E. Breach of Fiduciary Duty 19 A breach of fiduciary duty claim requires Plaintiffs to show the existence of a 20 fiduciary duty, the breach of that duty, and damages proximately caused by the breach. 21 Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880-81 (9th Cir. 2007) (applying 22 Nevada law); see also Clark v. Lubritz, 944 P.2d 861, 866-67 (Nev. 1997). “A fiduciary 23 relation exists between two persons when one of them is under a duty to act for the 24 benefit of another upon matters within the scope of the relation.” Stalk v. Mushkin, 199 25 P.3d 838, 843 (Nev. 2009). Fiduciary relationships arise where the parties do not deal 26 on equal terms and there is special trust and confidence placed in the superior party. 27 Hoopes v. Hammargren, 725 P.2d 238, 242 (Nev. 1986). Moreover, courts have 28 repeatedly held that a lender owes no fiduciary duties to a borrower absent exceptional 6 1 circumstances, such as when a special relationship exists between the two parties. See 2 Yerington Ford, Inc. v. Gen. Motors Acceptance Corp., 359 F. Supp. 2d 1075, 1090 (D. 3 Nev. 2004) (stating “the Court is satisfied that the Nevada Supreme Court would hold 4 that an arms-length lender-borrower relationship is not fiduciary in nature, absent 5 exceptional circumstances”), aff’d in relevant part by Giles v. Gen. Motors Acceptance 6 Corp., 494 F.3d 865 (9th Cir. 2007). 7 Plaintiff makes conclusory allegations that the monthly payment under the 8 modification was higher than represented and he did not sign the modification. These 9 conclusory allegations fail to establish a claim for breach of fiduciary duty. Moreover, 10 because it is well settled that the relationship between a lender and a borrower is not 11 one that gives rise to a fiduciary duty absent exceptional circumstances, see Yerington 12 Ford, 359 F. Supp. 2d at 1090, Plaintiff must also allege facts to show a special 13 relationship with Defendants other than that of a lender and borrower. Here, Plaintiff 14 fails to allege what special relationship existed between Plaintiff and Defendants, other 15 than the fact that he had obtained a mortgage loan from BANA. 16 F. TILA 17 The Complaint alleges violations of TILA and all related regulations. TILA was 18 enacted “to protect consumers' choice through full disclosure and to guard against the 19 divergent and at times fraudulent practices stemming from uninformed use of credit.” 20 King v. California, 784 F.2d 910, 915 (9th Cir.1986). TILA requires creditors to disclose 21 certain information about the terms of a particular loan to the prospective borrower. See 22 e.g., 15 U.S.C. §§ 1631-32, 1638; 12 C.F.R. § 226.17. Plaintiff’s conclusory allegations 23 that Defendants fail to “accurately and fully disclose the terms of the legal obligations 24 between the parties involved” fail to give notice of any plausible claim. (Dkt. no. 2 at 13.) 25 The assertion of general allegations — that Defendants “forced place insurance on the 26 home then stole the insurance check for a year,” “signed the original modification 27 agreement when the plaintiff was in Iraq” and engaged in racketeering — do not show 28 what terms were not disclosed at the time credit was extended. Plaintiff cites to 12 7 1 C.F.R. § 226.17(c), but that regulation does not involve forced place insurance or loan 2 modifications. 3 G. RICO 4 18 U.S.C. § 1964(c) provides for a private right of action by “[a]ny person injured 5 in his business or property by reason of a violation of § 1962.” See Sedima, S.P.R.L. v. 6 Imrex Co., Inc., 473 U.S. 479, 495 (1985). A civil RICO claims requires a showing of: 7 “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known 8 as ‘predicate acts’) (5) causing injury to the plaintiff's ‘business or property.’” Grimmett v. 9 Brown, 75 F.3d 506, 510 (9th Cir. 1996) (quoting 18 U.S.C. §§ 1964(c), 1962(c); 10 Sedima, S.P.R.L. 473 U.S. at 496). Allegations of fraudulent conduct that constitutes a 11 pattern of racketeering activity must satisfy Fed. R. Civ. P. 9(b)’s specificity 12 requirements. Odom v. Microsoft Corp., 486 F.3d 541, 553-54 (9th Cir. 2007) (en banc); 13 Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1400-01 (9th Cir. 14 1986). To satisfy Rule 9(b)’s requirements, the Complaint “must state the time, place, 15 and specific content of the false representations as well as the identities of the parties to 16 the misrepresentation.” Schreiber Distrib., 806 F.2d at 401. 17 The Complaint makes conclusory allegations about Defendants’ “criminal 18 racketeering activity,” including the confusing allegations that “Defendants were 19 employed by and associated with an illegal enterprise” that were “all paid for by the 20 villains at Bank of America” when BANA is one of two named defendants. These 21 conclusory allegations fail to establish a claim. Moreover, Rule 9(b) requires that 22 allegations of racketeering activities must include the time, place, identities and specific 23 content of the alleged fraud. However, the Complaint lumps the two Defendants 24 together and does not identify the alleged racketeering activities with particularity. 25 H. Leave to Amend 26 The Court has discretion to grant leave to amend and should freely do so “when 27 justice so requires.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990) 28 (quoting Fed. R. Civ. P. 15(a)). As Plaintiff is proceeding pro se, the Complaint has not 8 1 been previously amended, and the Court cannot conclude that amendment would be 2 futile, the Court grants leave to amend the Complaint to address the deficiencies 3 discussed in this Order. 4 If Plaintiff chooses to file an amended complaint he is advised that an amended 5 complaint supersedes the original complaint and, thus, the amended complaint must be 6 complete in itself. See Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 7 1542, 1546 (9th Cir. 1989) (holding that “[t]he fact that a party was named in the original 8 complaint is irrelevant; an amended pleading supersedes the original”); see also Lacey 9 v. Maricopa Cnty., 693 F.3d 896, 928 (9th Cir. 2012) (holding that for claims dismissed 10 with prejudice, a plaintiff is not required to reallege such claims in a subsequent 11 amended complaint to preserve them for appeal). Plaintiff’s amended complaint must 12 contain all claims, defendants, and factual allegations that Plaintiff wishes to pursue in 13 this lawsuit. 14 V. CONCLUSION 15 The Court notes that the parties made several arguments and cited to several 16 cases not discussed above. The Court has reviewed these arguments and cases and 17 determines that they do not warrant discussion as they do not affect the outcome of the 18 Motion. 19 It is therefore ordered that Defendant Bank of America, N.A.’s Motion to Dismiss 20 Complaint (dkt no. 7) is granted. Plaintiff’s Complaint is dismissed without prejudice and 21 with leave to amend. Plaintiff will have thirty (30) days from today to file an amended 22 complaint. Failure to do so will result in dismissal of the Complaint with prejudice. 23 24 25 Plaintiff’s Motion for Restraining Order (dkt. no. 20) is denied as moot. DATED THIS 5th day of January 2016. 26 27 MIRANDA M. DU UNITED STATES DISTRICT JUDGE 28 9