Coordes et al v. Wells Fargo Bank NA, No. 2:2019cv00052 - Document 39 (E.D. Wash. 2019)

Court Description: ORDER DENYING AS MOOT Defendant's 20 Motion to Dismiss for Failure to State a Claim and Strike Class Action Complaint; and GRANTING IN PART AND DENYING IN PART 26 Defendant's Motion to Dismiss for Failure to State a Claim and Strike Amended Class Action Complaint. Signed by Chief Judge Thomas O. Rice. (BF, Paralegal)

Download PDF

1 2 3 4 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 6 7 8 MONTY AND MICHELLE COORDES, individually and on behalf of all others similarly situated, 9 10 11 12 Plaintiffs, v. WELLS FARGO BANK, N.A., NO. 2:19-CV-0052-TOR ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT Defendant. 13 BEFORE THE COURT is Defendant’s Motion to Dismiss and Strike 14 Amended Class Action Complaint (ECF No. 26). This matter was heard with oral 15 argument on October 18, 2019. Gretchen F. Cappio and Matthew J. Preusch 16 appeared on behalf of Plaintiffs. Amanda L. Groves and Rudy A. Englund 17 appeared on behalf of Defendant. The Court has reviewed the record and files 18 herein and considered the parties’ oral arguments, and is fully informed. For the 19 reasons discussed below, the Court GRANTS IN PART Defendant’s Motion to 20 ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 1 1 Dismiss and DENIES Defendant’s Motion to Strike Amended Class Action 2 Complaint (ECF No. 26). 3 4 BACKGROUND This case arises out of Defendant Wells Fargo N.A.’s (“Wells Fargo”) use of 5 flawed software to deny Plaintiffs’ request for a mortgage modification in 6 connection with a federal program created in the aftermath of the 2008 financial 7 crisis. The following facts are drawn from Plaintiffs’ Amended Complaint and 8 construed in the light most favorable to Plaintiffs. Schwarz v. United States, 234 9 F.3d 428, 436 (9th Cir. 2000). 10 In 2005, Plaintiffs Monty and Michelle Coordes built a new home in 11 Spokane Valley, Washington, secured by a mortgage serviced and later acquired 12 by Defendant. ECF No. 25 at 2, ¶ 1. In early 2010, as a result of the economic 13 downturn, Mr. Coordes became temporarily unemployed. Id. at ¶ 2. In March 14 2010, Plaintiffs contacted Defendant to seek assistance making their mortgage 15 payments and to request relief in the form of a mortgage loan modification. Id. In 16 July 2010, Mr. Coordes obtained full-time employment. ECF No. 25 at 2, ¶ 3. In 17 August 2010, Plaintiffs were offered a trial modification, which would have 18 required Plaintiffs to pay back payments and penalties that Plaintiffs could not 19 afford. Id. 20 ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 2 1 In January 2011, Plaintiffs filed for Chapter 13 bankruptcy and their 2 bankruptcy plan was approved in May. ECF No. 25 at 2, ¶ 4. In July 2011, 3 Plaintiffs again sought a mortgage modification from Defendant. Id. In December 4 2011, Defendant rejected Plaintiffs’ mortgage modification application. ECF No. 5 25 at 3, ¶ 6. In January 2012, Plaintiffs lost their home in a foreclosure sale. Id. 6 In August 2018, Defendant disclosed that a calculation error in its internal 7 mortgage loan modification underwriting software resulted in the improper denial 8 of approximately 625 modification applications that should have been granted. 9 ECF No. 25 at 3, ¶ 7. Defendant discovered this software error as early as 2015. 10 ECF No. 25 at 4, ¶ 9. The error was reported to be an “automated miscalculation 11 of attorneys’ fees that were included for purposes of determining whether a 12 customer qualified for a mortgage loan modification pursuant to the requirements 13 of government-sponsored enterprises….” ECF No. 25 at 7, ¶ 26. In November 14 2018, Defendant disclosed that the number of wrongful denials had been updated 15 to 870. ECF No. 25 at 3, ¶ 7. 16 In a notice dated September 11, 2018, Defendant contacted Plaintiffs to 17 inform them that their mortgage loan modification was erroneously denied based 18 on the calculation error. ECF No. 25 at 12, ¶ 46. Attached to the letter was a 19 check for $15,000. ECF No. 25 at 12, ¶ 47. In November 2018, Plaintiffs 20 ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 3 1 undertook mediation with Defendant and were awarded an additional $25,000. 2 ECF No. 25 at 12, ¶ 48. 3 On July 19, 2019, Plaintiffs filed an Amended Complaint against Defendant 4 claiming violation of the Washington Consumer Protection Act (“CPA”) and 5 unjust enrichment. ECF No. 25 at 17-20, ¶¶ 69-87. On August 9, 2019, Defendant 6 filed the instant Motion to Dismiss and Strike Class Action Complaint. 1 ECF No. 7 26. 8 DISCUSSION 9 A. Motion to Dismiss Standard A motion to dismiss for failure to state a claim “tests the legal sufficiency” 10 11 of the plaintiff’s claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To 12 withstand dismissal, a complaint must contain “enough facts to state a claim to 13 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 14 (2007). “A claim has facial plausibility when the plaintiff pleads factual content 15 that allows the court to draw the reasonable inference that the defendant is liable 16 for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 17 18 Defendant’s first Motion to Dismiss and Strike Class Action Complaint 1 19 (ECF No. 20) is based on Plaintiff’s original complaint and is therefore denied as 20 moot. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 4 1 omitted). This requires the plaintiff to provide “more than labels and conclusions, 2 and a formulaic recitation of the elements.” Twombly, 550 U.S. at 555. While a 3 plaintiff need not establish a probability of success on the merits, he or she must 4 demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” 5 Iqbal, 556 U.S. at 678. 6 When analyzing whether a claim has been stated, the Court may consider the 7 “complaint, materials incorporated into the complaint by reference, and matters of 8 which the court may take judicial notice.” Metzler Inv. GMBH v. Corinthian 9 Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor 10 Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). A complaint must contain “a 11 short and plain statement of the claim showing that the pleader is entitled to relief.” 12 Fed. R. Civ. P. 8(a)(2). A plaintiff’s “allegations of material fact are taken as true 13 and construed in the light most favorable to the plaintiff[,]” however “conclusory 14 allegations of law and unwarranted inferences are insufficient to defeat a motion to 15 dismiss for failure to state a claim.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 16 1403 (9th Cir. 1996) (citation and brackets omitted). 17 In assessing whether Rule 8(a)(2) has been satisfied, a court must first 18 identify the elements of the plaintiff’s claim(s) and then determine whether those 19 elements could be proven on the facts pled. The court may disregard allegations 20 that are contradicted by matters properly subject to judicial notice or by exhibit. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 5 1 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). The court 2 may also disregard conclusory allegations and arguments which are not supported 3 by reasonable deductions and inferences. Id. 4 The Court “does not require detailed factual allegations, but it demands 5 more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 6 556 U.S. at 662. “To survive a motion to dismiss, a complaint must contain 7 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible 8 on its face.’” Id. at 678 (citation omitted). A claim may be dismissed only if “it 9 appears beyond doubt that the plaintiff can prove no set of facts in support of his 10 11 claim which would entitle him to relief.” Navarro, 250 F.3d at 732. B. Consideration of Supporting Exhibits 12 In support of their briefing on the pending motion to dismiss, both sides 13 submitted substantial supporting exhibits and requested the Court take judicial 14 notice of these documents. ECF Nos. 26-2, 33, 35-1. 15 “Review [of a motion to dismiss] is limited to the complaint.” Cervantes v. 16 City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993). “Generally, district courts 17 may not consider material outside the pleadings when assessing” a Rule 12(b)(6) 18 motion. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). 19 “When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers 20 evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 6 1 Rule 56 motion for summary judgment, and it must give the nonmoving party an 2 opportunity to respond.” United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 3 2003). 4 However, in considering a motion to dismiss, the Court may consider the 5 “complaint, materials incorporated into the complaint by reference, and matters of 6 which the court may take judicial notice.” Metzler Inv., 540 F.3d at 1061 (citing 7 Tellabs, 551 U.S. at 322). The Court may take judicial notice of “matters of public 8 record.” Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (quoting 9 Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)). This 10 includes “records and reports of administrative bodies.” Ritchie, 342 F.3d at 909 11 (quoting Interstate Nat. Gas Co. v. S. Cal. Gas Co., 209 F.2d 380, 385 (9th Cir. 12 1953)). While the Court has discretion to take notice of certain materials, “the 13 unscrupulous use of extrinsic documents to resolve competing theories against the 14 complaint risks premature dismissals of plausible claims that may turn out to be 15 valid after discovery.” Khoja, 899 F.3d at 998. “Submitting documents not 16 mentioned in the complaint to create a defense is nothing more than another way of 17 disputing the factual allegations in the complaint.” Id. at 1003. 18 1. Plaintiffs’ Supporting Exhibits 19 Plaintiffs request the Court take judicial notice of four consent orders from 20 the United States Department of the Treasury, Comptroller of the Currency; a court ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 7 1 order and two filings from Hernandez v. Wells Fargo Bank, N.A., No. 3:18-cv- 2 07354-WHA, in the Northern District of California (“the Hernandez documents”); 3 and a copy of the September 11, 2018 letter Plaintiffs received from Defendant 4 notifying Plaintiffs of the calculation error. ECF No. 33. 5 First, Plaintiffs argue that the consent orders are subject to notice as agency 6 records. ECF No. 33 at 4. Plaintiffs’ brief refers to these orders as evidence of 7 “relevant information, context, and background regarding Wells Fargo’s 8 concealment of its wrongful foreclosure of Plaintiffs’ home and those of other 9 class members.” ECF No. 32 at 18. Plaintiffs do not identify “discrete facts” of 10 which they seek the Court’s notice from these orders, so the Court construes these 11 exhibits as a request for notice of “a number of whole documents.” See Crawford 12 v. Countrywide Home Loans, Inc., 647 F.3d 642, 649-50 (7th Cir. 2011). Even if 13 these orders are public agency documents, Plaintiffs appear to offer these orders to 14 generally bolster their claims made in the complaint. Because the Court’s inquiry 15 at this stage in the proceedings is to consider the merits of the complaint on its 16 face, the Court declines to take judicial notice of the consent orders at this time to 17 18 19 20 ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 8 1 establish general background about the alleged misconduct.2 See Twombly, 550 2 U.S. at 570. 3 Second, Plaintiffs argue the Hernandez documents are subject to judicial 4 notice as court filings from a proceeding with a direct relation to matters at issue in 5 the present case. ECF No. 33 at 4. A court “may take notice of proceedings in 6 other courts, both within and without the federal judicial system, if those 7 proceedings have a direct relation to matters at issue.” United States ex rel. 8 Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 9 1992) (quoting St. Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172 (10th 10 Cir. 1979)). The attached Hernandez Second Amended Complaint similarly 11 alleges Wells Fargo wrongfully foreclosed on customers’ homes based on a 12 software error and seeks relief as a class. ECF No. 33-1. Because Hernandez 13 deals with similar conduct by the same Defendant as in this case, the Court takes 14 judicial notice of the Hernandez filings. 15 16 17 2 This holding does not extend to the April 13, 2011 Consent Order, Docket 18 No. 11-025-B-HC, which is attached as an exhibit to Plaintiffs’ Amended 19 Complaint at ECF No. 25-1 and is therefore subject to consideration at this stage. 20 See Metzler Inv., 540 F.3d at 1061. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 9 1 Third, Plaintiffs urge the Court to take judicial notice of the September 11, 2 2018 letter from Defendant notifying Plaintiffs of the error in Defendant’s denial 3 of Plaintiffs’ loan modification application. ECF No. 33 at 4. A court may take 4 judicial notice of a document that has been incorporated by reference into the 5 complaint, meaning the plaintiff refers extensively to the document in the 6 complaint or the document forms the basis of the plaintiff’s claim. Ritchie, 342 7 F.3d at 908. Here, the notification letter is referenced throughout Plaintiffs’ 8 Amended Complaint, including an excerpt of the letter’s body. ECF No. 25 at 11- 9 12, ¶¶ 45-46. Because the notification letter is incorporated into the Amended 10 Complaint by reference, it is properly subject to judicial notice. 11 2. Defendant’s Supporting Exhibits 12 Defendant requests the Court take judicial notice of the deed of trust 13 governing Plaintiffs’ mortgage and a motion to dismiss and declaration filed in 14 Hernandez. ECF Nos. 26-2, 35-1. 15 First, Defendant argues the deed of trust is subject to notice because it is 16 both a matter of public record and incorporated by reference into the Amended 17 Complaint. ECF no. 26-2 at 2. Although the Amended Complaint does not 18 discuss the deed of trust by name, it does allege Plaintiffs built a new home that 19 was secured by a mortgage serviced by Defendant. ECF No. 25 at 8, ¶ 32. 20 ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 10 1 Moreover, the deed of trust is a matter of public record. Lee, 250 F.3d at 688-89. 2 Accordingly, the Court takes judicial notice of the deed of trust. 3 Second, Defendant argues that Defendant’s Motion to Dismiss First 4 Amended Class Action Complaint and supporting declaration filed in Hernandez 5 are subject to judicial notice for the same reasons as Plaintiffs’ Hernandez 6 documents. ECF No. 35-1 at 1-3. The Motion to Dismiss is a proceeding in 7 another federal district with a direct relation to the matters at issue in this case. 8 Robinson Rancheria, 971 F.2d at 248. Therefore, the motion and its supporting 9 legal arguments are subject to judicial notice. 10 The declaration of Robert Ferguson in support of the motion, however, 11 differs from both parties’ other Hernandez exhibits in that the Ferguson declaration 12 seeks to establish disputed facts rather than to apprise this Court the similar legal 13 arguments made in the Northern District of California. ECF No. 35-3 at 2-33. The 14 Ferguson declaration purports to identify the loans that were potentially impacted 15 by the calculation error at issue in this case. ECF No. 35-3 at 3. This information 16 is not “generally known,” nor can it be “accurately and readily determined from 17 sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). 18 Moreover, a court “may not, on the basis of evidence outside of the Complaint, 19 take judicial notice of facts favorable to Defendants that could reasonably be 20 disputed.” United States v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 11 1 2011). Accordingly, the Ferguson declaration is not subject to judicial notice. 2 C. Washington Consumer Protection Act 3 Defendant moves to dismiss Plaintiffs’ CPA claim for failure to state a 4 claim. ECF No. 26 at 15-19. Specifically, Defendant argues Plaintiffs’ CPA claim 5 is an impermissible attempt to enforce the federal Home Affordable Modification 6 Program (“HAMP”), which creates no private right of action. ECF No. 26 at 15- 7 16. 8 9 To withstand dismissal, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim 10 has facial plausibility when the plaintiff pleads factual content that allows the court 11 to draw the reasonable inference that the defendant is liable for the misconduct 12 alleged.” Iqbal, 556 U.S. at 678 (citation omitted). The elements of a CPA claim 13 are: “(1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) 14 public interest impact; (4) injury to plaintiff in his or her business or property; (5) 15 causation.” Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 16 P.2d 531, 533 (Wash. 1986). “[A]n act or practice can be unfair without being 17 deceptive ….” Klem v. Wash. Mut. Bank, 295 P.3d 1179, 1187 (Wash. Ct. App. 18 2013). Here, Plaintiffs have alleged that Defendant unfairly denied Plaintiffs’ 19 request for a mortgage modification, based on an error in Defendant’s software that 20 impacted hundreds of consumers in a similar way, resulting in the ultimate ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 12 1 foreclosure of Plaintiffs’ home and associated financial consequences. ECF No. 25 2 at 5-12, ¶¶ 19-48. Construing the factual allegations in the light most favorable to 3 Plaintiffs, these allegations are sufficient to state a plausible claim for relief. 4 Twombly, 550 U.S. at 570. 5 Defendant argues that Plaintiffs’ CPA claim is precluded because it is 6 merely an attempt to enforce HAMP. ECF No. 26 at 16-18. In 2009, the Treasury 7 Department “started the HAMP program to incentivize banks to refinance 8 mortgages of distressed homeowners so they could stay in their homes. Home loan 9 servicers … signed Servicer Participation Agreements with Treasury that entitled 10 them to $1,000 for each permanent modification they made, but required them to 11 follow Treasury guidelines and procedures.” Corvello v. Wells Fargo Bank, NA, 12 728 F.3d 878, 880 (9th Cir. 2013), as amended on reh’g in part (Sept. 23, 2013). 13 Plaintiffs agree with Defendant’s argument that HAMP does not itself create a 14 federal cause of action. ECF No. 32 at 15-16. 15 However, “[t]he absence of a private right of action from a federal statute 16 provides no reason to dismiss a claim under a state law just because it refers to or 17 incorporates some element of the federal law.” Wigod v. Wells Fargo Bank, N.A., 18 673 F.3d 547, 581 (7th Cir. 2012); Corvello, 728 F.3d at 883-84 (approving of 19 Wigod’s reasoning to allow California state law contract claim over HAMP 20 violation to proceed). As the Western District of Washington explained in another ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 13 1 case involving a CPA claim over HAMP-related conduct, “the alleged FHA- 2 HAMP violations are a ‘component’ of the CPA claim … but the CPA is 3 ultimately its own statutory cause of action.” Syed v. Bank of America, N.A., No. 4 C16-1183-JCC, 2016 WL 9175632, at *4 (W.D. Wash. Nov. 22, 2016); see also 5 Hernandez v. Wells Fargo & Co., No. C18-07354 WHA, 2019 WL 2359198, at *6 6 (N.D. Cal. June 3, 2019) (finding HAMP did not preclude state law claims alleging 7 unfair and misleading business practices surrounding Wells Fargo’s mortgage 8 modification software). Plaintiffs’ claim for relief similarly involves conduct 9 related to Defendant’s participation in HAMP but seeks to enforce a separate state 10 cause of action rather than the actual terms of Defendant’s HAMP agreement. 11 In support of its argument, Defendant cites a series of district cases in this 12 circuit and one unpublished circuit opinion to demonstrate that HAMP does not 13 create a private right of action. ECF No. 26 at 16. However, these cases are 14 distinguishable as attempts to enforce HAMP itself despite HAMP not providing a 15 private right of action. See, e.g., Velasquez v. Chase Home Fin. LLC, 588 F. 16 App’x 676, 677 (9th Cir. 2014) (affirming dismissal of wrongful foreclosure claim 17 brought under HAMP); McMillan v. Wells Fargo Bank, No. CV-12-01921-PHX- 18 NVW, 2013 WL 11522057, at *6 (D. Ariz. Apr. 11, 2013) (“Plaintiffs therefore 19 cannot state a claim based on Wells Fargo’s alleged failure to comply with HAMP 20 or modify Plaintiffs’ loan based on their participation in a [HAMP trial period ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 14 1 plan].”), overruled by Corvello, 728 F.3d at 883-84 (allowing contract claims to 2 proceed over Wells Fargo’s noncompliance with HAMP trial period plan 3 requirements). In this case, Plaintiffs allege Defendant wrongfully denied their 4 mortgage modification application and failed to disclose for three years the 5 software error that caused the wrongful application denial. ECF No. 25 at ¶¶ 77- 6 78.3 Although this conduct is related to Defendant’s HAMP participation, 7 Plaintiffs do not seek to enforce HAMP. Instead, Plaintiffs allege this conduct 8 constitutes unfair or deceptive conduct in violation of the CPA. Id. HAMP is 9 involved in this case as a “component” of the CPA claim. Syed, 2016 WL 10 9175632, at *4. Accordingly, Plaintiffs’ claim is not an improper attempt to 11 enforce Defendant’s HAMP agreement. Construing the allegations in Plaintiffs’ 12 favor, Plaintiffs have alleged “enough facts to state a claim to relief that is 13 plausible on its face.” Twombly, 550 U.S. at 570. Defendant’s motion to dismiss 14 on this ground is DENIED. 15 16 3 The Court notes that Plaintiffs’ response brief further alleges Defendant’s 17 failure to properly test, monitor, and modify its software; failure to utilize accurate 18 tools to process mortgage modification applications; and misrepresentations 19 regarding the same also constitute unfair practices in violation of the CPA. ECF 20 No. 32 at 14-15. These allegations are absent from the complaint. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 15 1 2 D. Unjust Enrichment Defendant moves to dismiss Plaintiffs’ unjust enrichment claim on the 3 grounds that the existence of an express contract between the parties precludes a 4 quasi-contract claim. ECF No. 26 at 12-15. 5 “Unjust enrichment is the method of recovery for the value of the benefit 6 retained absent any contractual relationship because notions of fairness and justice 7 require it.” Young v. Young, 191 P.3d 1258, 1262 (Wash. 2008). The elements of 8 an implied contract unjust enrichment claim are “(1) the defendant receives a 9 benefit, (2) the received benefit is at the plaintiff’s expense, and (3) the 10 circumstances make it unjust of the defendant to retain the benefit without 11 payment.” Id. However, “[a] party to a valid express contract is bound by the 12 provisions of that contract, and may not disregard the same and bring an action on 13 an implied contract relating to the same matter, in contravention of the express 14 contract.” Chandler v. Wash. Toll Bridge Auth., 137 P.2d 97, 103 (Wash. 1943). 15 Here, Plaintiffs allege Defendant was unjustly enriched when Plaintiffs 16 conferred the benefits of penalties, fees, foreclosed property, and back payments 17 upon Defendant. ECF No. 25 at 19-20, ¶ 84. However, Defendant accurately 18 notes that the relationship between Plaintiffs and Defendant were governed by 19 contract through the deed of trust, and that the contract’s terms govern loan 20 payments, fees, past due amounts, and foreclosure proceedings. ECF No. 26 at 14; ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 16 1 see ECF No. 26-4 at 4-13, ¶¶ 1-2, 14, 22. Unlike the cases Plaintiffs cite, Plaintiffs 2 have not alleged facts in the complaint to indicate that the benefits conferred to 3 Defendant were sufficiently separate from the terms of the written contract so as to 4 support a quasi-contract claim. See, e.g., Gerber v. First Horizon Home Loans 5 Corp., No. C05-1554P, 2006 WL 581082, at *3 (W.D. Wash. Mar. 8, 2006) 6 (allowing unjust enrichment claim to proceed where plaintiff alleged defendant 7 “conditioned its performance on payments to which it is not entitled under the 8 contract”) (emphasis in original); Beyer v. Countrywide Home Loans Servicing LP, 9 No. C07-1512MJP, 2008 WL 1791506, at *11 (W.D. Wash. Apr. 18, 2008), aff’d, 10 359 F. App’x 701 (9th Cir. 2009) (same). Because the benefits alleged to be the 11 subject of the unjust enrichment are governed by the parties’ express contract, 12 Plaintiffs are not able to maintain their unjust enrichment claim. Chandler, 137 13 P.2d at 103. Defendant’s motion to dismiss the unjust enrichment claim is 14 GRANTED. 15 Plaintiffs request leave to amend their complaint to alternatively plead 16 claims for breach of contract and breach of the covenant of good faith and fair 17 dealing. ECF No. 32 at 19. Plaintiffs imply that they brought quasi-contract 18 claims in reliance on arguments Defendant made in a similar case in the Northern 19 District of California. Id.; see Hernandez, 2019 WL 2359198, at *8-9. Although 20 Plaintiffs imply bad faith in Defendant’s allegedly inconsistent positions about ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 17 1 whether contract terms govern the relationships in Hernandez and this case, the 2 Court does not find Defendant’s arguments to be inconsistent. Regardless, leave to 3 amend should be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). 4 Here, where Defendant has allegedly already conceded error in its denial of 5 Plaintiffs’ loan modification application, justice requires such leave. 6 7 E. Motion to Strike Class Action Allegations Defendant moves to strike Plaintiffs’ class action allegations. ECF No. 26 at 8 19-24. “[I]n the context of a motion to strike class allegations, in particular where 9 such a motion is brought in advance of the close of class discovery, it is properly 10 the defendant who must bear the burden of proving that the class is not certifiable.” 11 Bates v. Bankers Life and Cas. Co., 993 F. Supp. 2d 1318, 1340-41 (D. Or. 2014) 12 (emphasis in original). 13 As a threshold matter, the Court must determine the scope of the class 14 allegations at issue. The Amended Complaint alleges a nationwide class of “[a]ll 15 persons who sought a mortgage modification from Wells Fargo between April 13, 16 2010, and October 20, 2015, and were denied due to an error Wells Fargo 17 acknowledged in its mortgage underwriting software.” ECF No. 25 at 12-13, ¶ 49. 18 Plaintiffs’ CPA claim is brought on Plaintiffs’ own behalf and on behalf of each 19 Washington member of the class. ECF No. 25 at 17, ¶ 70. Plaintiffs’ unjust 20 enrichment claim is brought on Plaintiffs’ own behalf and on behalf of the ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 18 1 nationwide class. ECF No. 25 at 19, ¶ 82. Because the Court dismissed Plaintiffs’ 2 unjust enrichment claim supra, Plaintiffs no longer have standing to assert that 3 claim on behalf of a class. Lewis v. Casey, 518 U.S. 343, 357 (1996) (“[E]ven 4 named plaintiffs who represent a class ‘must allege and show they have been 5 personally injured…’”) (citation omitted). Defendant’s arguments regarding the 6 nationwide class are therefore moot.4 Accordingly, the relevant inquiry for 7 Defendant’s Motion to Strike now becomes Plaintiffs’ CPA claim on behalf of 8 Washington members of the class. 9 Defendant argues that Plaintiffs do not and cannot allege that a Washington 10 class is sufficiently numerous to sustain a class action. ECF No. 26 at 24. A class 11 action may proceed only if “the class is so numerous that joinder of all members is 12 impracticable.” Fed. R. Civ. P. 23(a)(1). Fifteen class members is not sufficiently 13 numerous. Harik v. Cal. Teachers Ass’n, 326 F.3d 1042, 1051 (9th Cir. 2003) 14 (citing Gen. Tel. Co. v. EEOC, 445 U.S. 318, 330 (1980)). “Generally, 40 or more 15 members will satisfy the numerosity requirement.” Garrison v. Asotin Cty., 251 16 F.R.D. 566, 569 (E.D. Wash. 2008) (citing Consol. Rail Corp. v. Town of Hyde 17 Park, 47 F.3d 473, 483 (2d Cir. 1995)). Here, Defendant cites to the Ferguson 18 19 20 4 Should Plaintiffs file a second amended complaint asserting different claims on behalf of a nationwide class, Defendant may renew its arguments. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 19 1 declaration, which the Court declined to notice, to argue that the Hernandez case 2 puts Plaintiffs on notice that only 14 Washington borrowers were potentially 3 affected by the calculation error. ECF No. 35 at 14. Plaintiffs argue the size of the 4 class is unknown because Defendant continues to investigate the matter. ECF No. 5 32 at 26. This disputed issue of fact indicates that the motion to dismiss stage is 6 too early to determine whether a Washington class is sufficiently numerous to 7 sustain a class action. Defendant’s motion to strike Plaintiffs’ class action 8 allegations is DENIED. 9 ACCORDINGLY, IT IS HEREBY ORDERED: 10 11 12 13 14 15 16 17 18 1. Defendant’s Motion to Dismiss and Strike Amended Class Action Complaint (ECF No. 26) is GRANTED in part and DENIED in part. 2. Defendant’s original Motion to Dismiss and Strike Class Action Complaint (ECF No. 20) is DENIED as moot. 3. Plaintiff is granted leave to file a Second Amended Class Action Complaint within 14-days of this Order. The District Court Executive is directed to enter this Order and furnish copies to counsel. DATED October 18, 2019. 19 20 THOMAS O. RICE Chief United States District Judge ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE CLASS ACTION COMPLAINT ~ 20

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.