Steele et al v. Wells Fargo Bank NA et al, No. 2:2018cv00230 - Document 25 (W.D. Wash. 2018)
Court Description: ORDER granting Moving Defendants' 13 Motion to Dismiss and dismissing the complaint in its entirely against all Defendants. The court GRANTS the Steeles leave to amend their complaint within 14 days of the filing date of this order. Signed by Judge James L. Robart. (PM)
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f contract and promissory estoppel claims because the plaintiff 2 “fail[ed] to plead facts demonstrating a clear and unambiguous promise by [the 3 defendant] to offer [the plaintiff] a loan modification that would prevent foreclosure”). 4 The Steeles’ reliance on RCW 61.24.031 is also unavailing. (See Compl. at 3.) 5 Under RCW 61.24.031, the beneficiary of the deed of trust “must first attempt to 6 communicate with the borrower who is in default through a series of statutorily 7 prescribed methods.” Brown v. Wash. State Dep’t of Commerce, 359 P.3d 771, 774 8 (Wash. 2015) (citing RCW 61.24.031). “The beneficiary must send a letter to the 9 borrower containing certain information, including that the borrower should contact a 10 housing counselor to discuss mediation . . . .” Id. (citing RCW 61.24.031(1)(c)). “If the 11 borrower responds . . . , the notice of default cannot issue for at least 90 days.” Id. (citing 12 RCW 61.24.031(1)(a)). The statute provides that during this 90-day period, the parties 13 “shall attempt to reach a resolution,” such as a loan modification. RCW 14 61.24.031(1)(f)(4). Nevertheless, “[a]fter the relevant time period elapses and if the 15 parties have not agreed to modify the loan, the trustee or beneficiary may then issue the 16 notice of default.” Brown, 359 P.3d at 774 (citing RCW 61.24.031(a)(1)). Here, Wells 17 Fargo sent the statutorily required letter on June 3, 2014. (See MTD, Ex. D.) Although 18 the parties “shall attempt” to resolve the issue short of a foreclosure, there is no 19 obligation to do so. See RCW 61.24.031(1)(f)(4). Further, after 90 days, the beneficiary 20 may issue a notice of default. See RCW 61.24.031(1)(a). Based on the allegations in 21 their complaint 22 // ORDER - 7 1 and the documents on which the court relies in deciding this motion, 10 the Steeles have 2 failed to state a claim under this statutory provision. 11 3 Finally, in order to obtain an injunction of a trustee’s sale in Washington, a 4 plaintiff must deposit with the clerk of court “the sums that would be due on the 5 obligation secured by the deed of trust if the deed of trust was not being foreclosed.” See 6 RCW 61.24.130(1); see also Andrews v. Countrywide Bank, NA, 95 F. Supp. 3d 1298, 7 1300 (W.D. Wash. 2015). The Steeles fail to allege that “they have deposited or are 8 capable of depositing with the clerk of the court the sums required under RCW 9 61.23.130(1).” See Andrews, 95 F. Supp. 3d at 1302. 10 For all of the foregoing reasons, the court concludes that the Steeles fail to state a 11 claim to enjoin the non-judicial foreclosure of the Property on “equitable grounds” 12 related either to a possible modification of the Note or a short sale of the property. 13 C. 14 CPA Claim The Steeles allege that “Wells Fargo has engaged in unfair and deceptive acts and 15 practices by failing to respond in good faith to plaintiff’s requests for mortgage 16 modification and/or short sale and by precipitously moving for foreclosure without 17 complying with the requirements of RCW 61.24.031.” (Compl. at 5.) To state a claim 18 10 19 20 21 22 See supra Notes 3, 5-7. 11 In any event, the Steeles can only recover for Moving Defendants’ alleged violations of RCW 61.24.031 “via the CPA.” Knecht v. Fid. Nat. Title Ins. Co., No. C12-1575RAJ, 2015 WL 3618358, at *10 (W.D. Wash. June 9, 2015) (citing Frias v. Asset Foreclosure Servs., Inc., 334 P.3d 529, 539 (Wash. 2014) (holding that the Deed of Trust Act does not provide for a standalone cause of action for violations of the Act in the absence of a completed foreclosure sale)). As discussed below, the court also concludes that the Steeles fail to adequately allege their CPA claim. See infra § III.C. ORDER - 8 1 under the CPA, a plaintiff must allege: “(1) [an] unfair or deceptive act or practice; (2) 2 occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or 3 her business or property; and (5) causation.” Hangman Ridge Training Stables, Inc. v. 4 Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986). Washington’s Foreclosure 5 Fairness Act (“FFA”) states, in relevant part, that “[i]t is an unfair or deceptive act in 6 trade or commerce and an unfair method of competition in violation of the [CPA] . . . for 7 any person or entity to: (a) [v]iolate the duty of good faith under RCW 61.24.163; . . . or 8 (c) fail to initiate contact with a borrower and exercise due diligence as required under 9 RCW 61.24.031.” RCW 61.24.135(2)(a), (c). 10 The Steeles allege two grounds for their CPA claim. First, they assert that Wells 11 Fargo violated the CPA by “precipitously moving for foreclosure without complying with 12 the requirements of RCW 61.24.031.” (Compl. at 5.) As discussed above, the Steeles 13 fail to adequately allege that Wells Fargo violated RCW 61.24.031. See supra § III.B. 14 Because the Steeles fail to allege a violation of RCW 61.24.031, they also fail to state a 15 CPA claim based on violation of that same statute. 16 Second, the Steeles allege that Wells Fargo violated the CPA “by failing to 17 respond in good faith to [their] requests for mortgage modification and/or short sale.” 18 (Compl. at 5.) The Steeles cite no authority for the proposition that Wells Fargo has any 19 duty to respond to such requests—let alone a duty to respond in “good faith”—and the 20 court could find none. (See generally Resp.) The Steeles also cite no authority for the 21 proposition that a failure to respond to a request for a mortgage modification or approval 22 // ORDER - 9 1 of a short sale is an “unfair or deceptive practice,” and again the court could find none. 2 (See id.) 3 Nevertheless, Washington State has established a foreclosure mediation program, 4 and the State requires participants to mediate in good faith. See RCW 61.24.163(1), 5 (10). 12 As noted above, a violation of the foreclosure mediation program’s duty of good 6 faith is an unfair or deceptive act in trade or commerce and an unfair method of 7 competition in violation of the CPA. RCW 61.24.135(a). The Steeles, however, never 8 allege that they are or ever were participants in this program. (See generally Compl.) 9 Indeed, the foreclosure mediation program “applies only to borrowers who have been 10 referred to mediation by a housing counselor or attorney.” See RCW 61.24.163(1). 11 In sum, the Steeles fail to adequately allege a CPA claim based on Wells Fargo’s 12 alleged failure to respond to the Steeles’ requests for a mortgage modification or short 13 sale of the Property. Accordingly, the court dismisses this claim. 14 D. QLSCW 15 QLSCW did not join Moving Defendants’ motion to dismiss. (See MTD at 1.) 16 Nevertheless, the trial court may sua sponte dismiss claims for failure to state a claim 17 without notice or an opportunity to respond where “the plaintiffs cannot possibly win 18 relief.” Sparling v. Hoffman Const. Co., 864 F.2d 635, 638 (9th Cir. 1988). For the same 19 reasons as stated above, the court also dismisses the Steeles’ claims against QLSCW. See 20 21 22 12 The court cites to the version of this statute in effect from June 12, 2014, to June 6, 2018. However, the court’s analysis is not altered when applying the language of the current version of RCW 61.24.163. ORDER - 10 1 Edwards v. Caliber Home Loans, No. C16-1466-JCC, 2017 WL 2713689, at *3 (W.D. 2 Wash. June 7, 2017), aff’d sub nom. Edwards v. Caliber Home Loans, Inc., 708 F. App’x 3 438 (9th Cir. 2018) (dismissing claims against the defendant trustee in a wrongful 4 foreclosure action despite defendant trustee’s failure to join in the other defendants’ 5 motion to dismiss). 6 E. Leave to Amend 7 As a general rule, when a court grants a motion to dismiss, the court should 8 dismiss the complaint with leave to amend. See Eminence Capital, LLC v. Aspeon, Inc., 9 316 F.3d 1048, 1051-52 (9th Cir. 2003) (citing Fed. R. Civ. P. 15(a)). The policy 10 favoring amendment is to be applied with “extreme liberality.” Id. at 1051; United States 11 v. Corinthian Colls., 655 F.3d 984, 995 (9th Cir. 2011) (“Dismissal without leave to 12 amend is improper unless it is clear, upon de novo review, that the complaint could not be 13 saved by any amendment.”). In determining whether dismissal without leave to amend is 14 appropriate, courts consider such factors as undue delay, bad faith or dilatory motive on 15 the part of the movant, repeated failures to cure deficiencies by amendments previously 16 allowed, undue prejudice to the opposing party by virtue of allowing the amendment, and 17 the futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). But “[a]bsent 18 prejudice, or a strong showing of any of the remaining Foman factors, there exists a 19 presumption under Rule 15(a) in favor of granting leave to amend.” Eminence, 316 F.3d 20 at 1052. Here, Moving Defendants have not argued that leave to amend will cause any 21 undue prejudice (see generally Mot.; Reply (Dkt. # 23)), and the court does not discern 22 the presence of any other Foman factor. Because the Steeles might be able to allege facts ORDER - 11 1 that could cure the deficiencies noted above, the court grants the Steeles leave to amend 2 their complaint. 3 The Steeles must file their amended complaint within 14 days of the filing date of 4 this order. If the Steeles fail to timely file their amended complaint or fail to cure the 5 pleading deficiencies described in this order, the court will dismiss their complaint with 6 prejudice and without leave to amend. 7 8 IV. CONCLUSION Based on the foregoing analysis, the court GRANTS Moving Defendants’ motion 9 (Dkt. # 13) and DISMISSES the complaint in its entirety against all Defendants. The 10 court GRANTS the Steeles leave to amend their complaint within 14 days of the filing 11 date of this order. 12 Dated this 26th day of June, 2018. 13 14 A 15 JAMES L. ROBART United States District Judge 16 17 18 19 20 21 22 ORDER - 12
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