Gahan v. Wells Fargo Bank NA et al, No. 2:2019cv00415 - Document 14 (W.D. Wash. 2019)
Court Description: ORDER granting in part and denying in part Defendant's 9 Motion to Dismiss for Failure to State a Claim. If Plaintiff wishes to file an amended complaint, she must file the amended complaint within 21 days of the date this order is issued. Signed by U.S. District Judge John C Coughenour. (TH) (cc: Plaintiff via USPS)
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Gahan v. Wells Fargo Bank NA et al Doc. 14 THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 SARA GAHAN, 10 Plaintiff, ORDER v. 11 12 CASE NO. C19-0415-JCC WELLS FARGO BANK, N.A., 13 Defendant. 14 15 This matter comes before the Court on Defendant’s motion to dismiss (Dkt. No. 9). 16 Having thoroughly considered the parties’ briefing and the relevant record, the Court hereby 17 GRANTS in part and DENIES in part the motion for the reasons explained herein. 18 I. 19 BACKGROUND In 2008, Plaintiff Sara Gahan purchased real property in Mt. Vernon, Washington (the 20 “Property”) with a loan in the amount of $248,391 obtained through Linear Financial. (Dkt. Nos. 21 5, 10-1 at 2–25.) That loan was subsequently assigned to Defendant Wells Fargo Bank, N.A. 22 (Dkt. No. 10-1 at 26.) In 2010, a Notice of Trustee’s Sale of the Property was recorded, and two 23 years later, a Notice of Discontinuance of Trustee’s Sale was recorded. (Id. at 28–33.) In March 24 2012, Plaintiff entered a loan modification agreement with Defendant, which stated that the new 25 principal balance of Plaintiff’s loan was $266,153.88. (Id. at 35–40; Dkt. No. 5 at 3.) 26 In February 2017, Plaintiff received a letter from Defendant stating that her loan was in ORDER C19-0415-JCC PAGE - 1 Dockets.Justia.com 1 default. (Id. at 4.) In mid-2017 and early 2018, Plaintiff alleges that she received a series of 2 letters from “Home Preservation Specialist Omolarah Hasan” insinuating that Plaintiff was under 3 review for a loan modification (Id.) These letters confused Plaintiff because she believed she was 4 already in a loan modification program. (Id. at 4–5.) By early 2018, Plaintiff would have been in 5 the loan modification program for nearly six years. Plaintiff alleges that she had been making a 6 $1,300.15 monthly payment for over two years. (Id. at 5.) 7 In February 2018, Plaintiff received a letter stating that Defendant would commence 8 foreclosure proceedings on the Property unless she paid $232,388.45. (Id. at 5.) In March 2018, a 9 second Notice of Trustee’s Sale of the Property was recorded, and on June 12, 2018, a Notice of 10 Discontinuance of Trustee’s Sale was recorded. (Dkt. No. 10-1 at 42–47.) In June 2018, Plaintiff 11 sold her home and Defendant received $240,550.25 of the sale proceeds. (Id. at 49–57; Dkt. No. 12 5 at 5.) Plaintiff alleges that she was not credited for the loan modification payments that she 13 made for over two years. (Id. at 5.) Conversely, Defendant alleges that Plaintiff stopped making 14 payments on her loan in August 2017, which is why Defendant planned to commence 15 foreclosure proceedings. (See Dkt. No. 9 at 7.) Plaintiff filed this lawsuit, bringing a breach of 16 contract claim and a claim for violation of the Washington Consumer Protection Act (“CPA”). 17 (Id. at 3, 5–6.) Defendant moves to dismiss Plaintiff’s claims for failure to state a claim. (Dkt. 18 No. 9.) 19 II. DISCUSSION 20 A. Federal Rule of Civil Procedure 12(b)(6) Legal Standard 21 The Court may dismiss a complaint that “fail[s] to state a claim upon which relief can be 22 granted.” Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint must contain 23 sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. 24 Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). A claim has facial plausibility when the plaintiff 25 pleads factual content that allows the Court to draw the reasonable inference that the defendant is 26 liable for the misconduct alleged. Id. at 678. ORDER C19-0415-JCC PAGE - 2 1 A plaintiff is obligated to provide grounds for his or her entitlement to relief that amount 2 to more than labels and conclusions or a formulaic recitation of the elements of a cause of action. 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007). “[T]he pleading standard Rule 8 4 announces does not require ‘detailed factual allegations,’ but it demands more than an 5 unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting 6 Twombly, 550 U.S. at 555). 7 B. Judicial Notice 8 Defendant asks the Court to take judicial notice of the following documents: (1) a 9 promissory note dated April 14, 2008, executed by Plaintiff (“Exhibit 1”); (2) a deed of trust 10 dated April 14, 2008, executed by Plaintiff and her husband, Jason Gahan, recorded April 16, 11 2008 (“Exhibit 2”); (3) an assignment of the April 14, 2008 deed of trust to Defendant, executed 12 by Plaintiff, recorded on April 23, 2008 (“Exhibit 3”); (4) a Notice of Trustee’s Sale dated 13 September 7, 2010, recorded on September 9, 2010 (“Exhibit 4”); (5) a Notice of Discontinuance 14 of Trustee’s Sale dated March 20, 2012, recorded on March 22, 2012 (“Exhibit 5”); (6) a loan 15 modification agreement entered between Plaintiff and Defendant, dated February 29, 2012 16 (“Exhibit 6”); (7) a Notice of Trustee’s Sale dated March 23, 2018, recorded on March 27, 2018 17 (“Exhibit 7”); (8) a Notice of Discontinuance of Trustee’s Sale dated June 12, 2018, recorded on 18 June 14, 2018 (“Exhibit 8”); (9) a statutory warranty deed dated May 29, 2018, executed by 19 Plaintiff and Jason Gahan, recorded on June 6, 2018 (“Exhibit 9”); (10) a deed of reconveyance 20 dated June 14, 2018, recorded July 23, 2018 (“Exhibit 10”); and (11) a real estate tax affidavit 21 executed by Plaintiff and Jason Gahan on June 5, 2018 (“Exhibit 11”). (See Dkt. No. 10.) 22 Generally, the Court may not consider material outside of the pleadings when assessing 23 the sufficiency of a complaint under Federal Rule of Civil Procedure 12(b)(6). Lee v. City of Los 24 Angeles, 250 F.3d 668, 688 (9th Cir. 2001). There are two exceptions to this rule. First, the 25 incorporation-by-reference doctrine allows the Court to treat certain documents as though they 26 are part of the complaint itself. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1002 (9th ORDER C19-0415-JCC PAGE - 3 1 Cir. 2018). “[A] court may consider evidence on which the complaint necessarily relies if: (1) the 2 complaint refers to the document; (2) the document is central to the plaintiff’s claim; and (3) no 3 party questions the authenticity of the copy attached to the 12(b)(6) motion.” Daniels-Hall v. 4 Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). Second, the Court is permitted to take 5 judicial notice of facts that are “not subject to reasonable dispute.” Fed. R. Evid. 201(b). One 6 way that a fact is not subject to reasonable dispute is if it “can be accurately and readily 7 determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 8 201(b). 9 Every exhibit except for Exhibits 1 and 6 are subject to judicial notice because they are 10 official public records that can be accurately and readily determined from sources whose 11 accuracy cannot reasonably be questioned. See Fed. R. Evid. 201(b)(2); Disabled Rights Action 12 Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004). Exhibits 1 and 6 are 13 subject to judicial notice via the incorporation-by-reference doctrine. Plaintiff’s complaint refers 14 to both her initial purchase of the Property and the loan modification agreement. (Dkt. No. 5.) 15 Both of these documents are central to Plaintiff’s claim because the crux of her complaint is that 16 she made payments, in compliance with the requirements of her note and subsequent loan 17 modification agreement, and was never credited for those payments. (See generally id.) And 18 Plaintiff does not question the authenticity of Exhibits 1 or 6. (See Dkt. No. 11.) Therefore, the 19 Court GRANTS Defendant’s request for judicial notice in full. 20 C. Breach of Contract Claim 21 In order to state a claim for breach of contract, the plaintiff must show that there was a 22 contract that imposed a duty on the defendant, the defendant breached that duty by failing to 23 fully perform it, and the plaintiff was injured as a result. See Nw. Indep. Forest Mfrs. V. Dep’t of 24 Labor & Indus., 899 P.2d 6, 9 (Wash. Ct. App. 1995). In suits for damages only, a party must 25 allege that damages have been suffered. See Jacob’s Meadow Owners Ass’n v. Plateau 44 II, 26 LLC, 162 P.3d 1153, 1160 (Wash. Ct. App. 2007). Defendant argues that Plaintiff’s breach of ORDER C19-0415-JCC PAGE - 4 1 contract claim fails because she has not, and cannot, establish that she has suffered actual 2 damages. (Dkt. No. 9 at 6–7.) The basis of Defendant’s argument is that Plaintiff’s damages 3 were the result of the non-payment of her loans—Defendant alleges that Plaintiff failed to make 4 her monthly payments beginning in August 2017, which is supported by the Notice of the 5 Trustee’s Sale recorded in March 2018. (See Dkt. No. 9 at 7.) But Plaintiff alleges that she was 6 making payments at this time and had been making those payments for two years, and it would 7 be improper to judicially notice the Notice of the Trustee’s Sale for that disputed fact. (Dkt. No. 8 5.) In other words, Plaintiff alleges that the Notice of the Trustee’s Sale was entered and 9 recorded in error because she was making satisfactory payments on the loan. Therefore, 10 Defendant’s motion to dismiss Plaintiff’s breach of contract claim is DENIED. 1 11 D. 12 In order to state a claim for a CPA violation, the plaintiff must allege that the defendant: 13 (1) engaged in an unfair or deceptive act or practice that (2) occurred in trade or commerce, (3) 14 had a public interest impact, and (4) caused (5) injury to the plaintiff in his or her business or 15 property. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 533 16 (Wash. 1986). Defendant argues that Plaintiff’s CPA claim fails because she fails to allege that 17 Defendant committed an unfair or deceptive practice, that Defendant’s conduct impacts the 18 public interest, and that Defendant’s conduct caused Plaintiff’s injury. (Dkt. No. 9 at 8–13.) 19 20 CPA Claim With regard to Defendant’s first argument, Plaintiff has not used the words “unfair or deceptive” to describe Defendant’s conduct. (See id.) However, she has alleged facts that allow 21 22 23 24 25 26 1 Defendant makes one other argument in support of dismissal of Plaintiff’s breach of contract claim. It argues that because Plaintiff elected to privately sell her property for a sizable profit, she has not suffered any actual damages. (Dkt. No. 9 at 7.) This argument also fails. Plaintiff’s complaint is premised on the theory that she was not credited for two years of payments. (See Dkt. No. 5.) Therefore, assuming the facts in her complaint are true as the Court must, if Defendant properly credited her for those two years of payments, Plaintiff would have owed Defendant less money when she elected to privately sell her house. Therefore, she still suffered actual damages even if she made a profit from the sale of her home. ORDER C19-0415-JCC PAGE - 5 1 the Court to draw a reasonable inference that Defendant’s conduct was unfair or deceptive. (See 2 id.); Iqbal, 556 U.S. at 678. Defendant also argues that Plaintiff’s CPA claim fails because she 3 has failed to properly allege injury and causation. (Dkt. No. 9 at 11–13.) Defendant supports this 4 argument with the same theory it uses to support its breach of contract argument—that Plaintiff’s 5 damages were the result of her failure to make timely payments. (Id. at 12–13); see supra Section 6 II.C. As discussed previously, this argument ignores Plaintiff’s allegation that she made timely 7 payments for two years. 8 However, Plaintiff has not alleged that any of Defendant’s conduct impacts the public 9 interest. (Id.) Plaintiff’s claim focuses entirely on Defendant’s actions with regard to her loan, 10 and the harm that she suffered. (Id.) In order to properly plead a CPA claim, Plaintiff must allege 11 that Defendant’s conduct had a public interest impact, which she has failed to do. See Hangman 12 Ridge Training Stables, 719 P.2d at 533; (Dkt. No. 5.) Therefore, Defendant’s motion to dismiss 13 Plaintiff’s CPA claim is GRANTED. Plaintiff’s CPA claim is DISMISSED without prejudice 14 and with leave to amend. 15 E. 16 Defendant argues that Plaintiff’s claims are barred by the doctrines of waiver and 17 estoppel. (Dkt. No. 9 at 5–6.) Defendant’s argument is that Plaintiff was in default beginning in 18 2017, elected to sell the Property to pay her debt to Defendant, did so, and never complained to 19 Defendant. (Id.) Therefore, because Plaintiff decided to sell her property to pay her debt to 20 Defendant, she should be barred from suing Defendant. (Id.) There is no legal basis for this 21 argument. Assuming the truth of Plaintiff’s allegations, she made two years of payments to 22 Defendant during a time that Defendant asserted that she was in default. (Dkt. No. 5 at 4–6.) 23 When she tried to contact Defendant, she received no help or valuable information about what 24 happened to those payments. (Id. at 5.) So when Defendant told Plaintiff that it was going to 25 foreclose on her property, she chose to sell it in an effort to obtain more money. Plaintiff’s 26 conduct does not bar her from bringing litigation against Defendant, if Defendant failed to ORDER C19-0415-JCC PAGE - 6 Waiver and Estoppel 1 properly credit her for two years of payments. Defendant’s motion to dismiss on the grounds of 2 waiver and estoppel is DENIED. 3 III. 4 CONCLUSION For the foregoing reasons, Defendant’s motion to dismiss (Dkt. No. 9) is GRANTED in 5 part and DENIED in part. Plaintiff’s CPA claim is DISMISSED without prejudice and with 6 leave to amend. If Plaintiff wishes to file an amended complaint, she must allege sufficient facts 7 to satisfy all the elements of a CPA violation. See Hangman Ridge Training Stables, 719 P.2d at 8 533. Specifically, Plaintiff must allege facts demonstrating that Defendant’s conduct had a public 9 interest impact. See id. If Plaintiff wishes to file an amended complaint, she must limit her 10 amendments to the deficiencies addressed in this order. Plaintiff may not add other parties or 11 other causes of action. Plaintiff must file the amended complaint within 21 days of the date this 12 order is issued. 13 DATED this 30th day of July 2019. 16 A 17 John C. Coughenour UNITED STATES DISTRICT JUDGE 14 15 18 19 20 21 22 23 24 25 26 ORDER C19-0415-JCC PAGE - 7
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