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Amy Rymal v. Bank of America Fka Countrywide Home Loans

December 6, 2011


The opinion of the court was delivered by: David Alan Ezra United States District Judge


On December 2, 2011, the Court held a hearing on Defendant Bank of America and Bank of America, N.A., successor by merger to BAC Home Loans Servicing LP ("BAC")'s Motion to Dismiss Second Amended Complaint Filed August 8, 2011. Alana Peacott-Ricardos, Esq., appeared at the hearing on behalf of Defendant BAC; Robin Horner, Esq., did not attend the hearing on behalf of Plaintiff. After reviewing the supporting and opposing memoranda, the Court GRANTS IN PART Defendant BAC's Motion to Dismiss. (Doc. # 43.) Plaintiff is GRANTED leave to amend the Second Amended Complaint as to all Defendants.


On May 12, 2010, Plaintiff Amy Rymal ("Plaintiff") filed a Complaint against Defendants Bank of America fka Countrywide Home Loans and BAC. (Doc. # 1.) On June 22, 2010, Plaintiff filed a First Amended Complaint ("FAC") against the Defendants. ("FAC," Doc. # 5.) The claims in Plaintiff's FAC related to the mortgage and note entered into for the purchase of real property located at 349 North Market Street, #9, Wailuku, HI 96793 ("Subject Property"). (FAC ¶ 9.) The mortgage, which was recorded in the Hawaii Bureau of Conveyances on February 16, 2006, lists Countrywide Home Loans, Inc. as the lender on the loan.*fn1

On November 24, 2010, BAC filed a Motion to Dismiss Complaint Filed June 22, 2010. (Doc. # 16.) On February 14, 2011, Plaintiff filed a Memorandum in Opposition to BAC's Motion. (Doc. # 24.) On February 22, 2011, BAC filed a Reply in support of their Motion. (Doc. # 25.)

On April 8, 2011, the Court heard BAC's Motion. On April 11, 2011, the Court granted BAC's Motion and ordered the First Amended Complaint be dismissed without prejudice as against all Defendants with the exception of Plaintiff's Truth in Lending Act rescission claim, which was dismissed with prejudice as a matter of law. (Doc. # 32.) The Court granted Plaintiff leave to amend the First Amended Complaint as to all Defendants.

On August 8, 2011, Plaintiff filed a Second Amended Complaint ("SAC") against Bank of America fka Countrywide Home Loans and BAC Home Loans Servicing, LP. ("SAC," Doc. # 41.) Plaintiff's SAC alleges ten Counts: (I) Violation of Real Estate Settlement Procedures Act (SAC ¶¶ 46-50); (II) Fraud (id. ¶¶ 51-56); (III) Mistake (id. ¶¶ 57-58); (IV) Unconscionability (id. ¶¶ 59-63); (V) Unfair and Deceptive Acts or Practices (id. ¶¶ 64-74); (VI) Breach of Fiduciary Duties (id. ¶¶ 75-86); (VII) Failure to Act in Good Faith Failure to Act Consistent with the Implied Duty of Good Faith and Fair Dealing (id. ¶¶ 87-91); (VIII) Declaratory and Injunctive Relief (id. ¶¶ 92-95); (IX) Unjust Enrichment (id. ¶¶ 96-101); and (X) Negligent and/or Intentional Infliction of Emotional Distress (id. ¶¶ 102-107).

Plaintiff seeks a judgment voiding the underlying loan transaction and documents, statutory damages, actual damages, treble damages, punitive damages, a temporary restraining order or order for injunctive relief "preventing lender or servicer from taking any adverse action to foreclose or obtain possession of the subject property pending a full adjudication of the merits of the subject lawsuit," and a judgment of restitution, reimbursement and/or indemnification. (Id. at 33--34.)

On August 24, 2011, Bank of America ("BOA") and Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP"*fn2 (collectively, "Defendants") filed a Motion to Dismiss Second Amended Complaint Filed August 8, 2011 ("Motion"). ("Mot.," Doc. # 43.) On November 7, 2011, Plaintiff filed a Position Statement to Bank of America and Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP's Motion to Dismiss Second Amended Complaint Filed August 8, 2011 ("Position Statement"). ("Pos. Stmt.," Doc. # 50.) In her Position Statement, Plaintiff states that she has attempted to correct deficiencies regarding her federal claims against Defendants in her Second Amended Complaint but that she has "concluded that under the circumstances where only discovery as to issues relating to the motion to dismiss are allowed and we cannot conduct discovery that would further uncover the fraudulent loan origination and the scheme to defraud, we seek to dismiss those claims." (Id. at 2.) "In other words, without prejudice, Plaintiff seeks to have the Court allow her to dismiss the federal claims against [Defendants] and with respect to her state claims against [Defendants], that the Court take no jurisdiction over these and it be dismissed without prejudice." (Id.) However, in light of the Court's findings as follows, the Court denies Plaintiff's request as moot.


I. Federal Rule of Civil Procedure 12(b)(6)

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Rule"), a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. "Review is limited to the contents of the complaint." Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). A complaint may be dismissed as a matter of law for one of two reasons: "(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal claim." Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984) (citation omitted). Allegations of fact in the complaint must be taken as true and construed in the light most favorable to the plaintiff. See Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).

A complaint need not include detailed facts to survive a Rule 12(b)(6) motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555--56 (2007). In providing grounds for relief, however, a plaintiff must do more than recite the formulaic elements of a cause of action. See id. at 556; see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988) ("[C]onclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim.") (citation omitted). "The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions," and courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1948--50 (2009) (internal quotations and citations omitted). Thus, "bare assertions amounting to nothing more than a formulaic recitation of the elements" of a claim "are not entitled to an assumption of truth." Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) ("[T]he non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.") (internal quotations and citations omitted).

A court looks at whether the facts in the complaint sufficiently state a "plausible" ground for relief. See Twombly, 550 U.S. at 570. A plaintiff must include enough facts to raise a reasonable expectation that discovery will reveal evidence and may not just provide a speculation of a right to relief. Id. at 586. When a complaint fails to adequately state a claim, such deficiency should be "exposed at the point of minimum expenditure of time and money by the parties and the court." Id. at 558 (citation omitted). If a court dismisses the complaint or portions thereof, it must consider whether to grant leave to amend. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (finding that leave to amend should be granted "if it appears at all possible that the plaintiff can correct the defect") (internal quotations and citations omitted).

II. Federal Rule of Civil Procedure 9(b)

Federal Rule of Civil Procedure 9(b) requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). Under Ninth Circuit law, "Rule 9(b) requires particularized allegations of the circumstances constituting fraud." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (en banc), superseded on other grounds by 15 U.S.C. § 78u-4.

In their pleadings, plaintiffs must include the time, place, and nature of the alleged fraud; "mere conclusory allegations of fraud are insufficient" to satisfy this requirement. Id. at 1548 (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)). "[T]he circumstances constituting the alleged fraud [must] 'be specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong.'" Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)); see also Moore, 885 F.2d at 540 (finding that Rule 9(b) requires a plaintiff to attribute particular fraudulent statements or acts to individual defendants). However, "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d at 1547 ("We conclude that plaintiffs may aver scienter . . . simply by saying that scienter existed."); Walling v. Beverly Enter., 476 F.2d 393, 397 (9th Cir. 1973) (finding that Rule 9(b) "only requires the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations" (citations omitted)).

A motion to dismiss for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). In considering a motion to dismiss, the court is not deciding the issue of "whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984).


I. Pleading Defects as to Defendant "Bank of America"

As an initial matter, Defendant argues there is a pleading defect as to its identification in the SAC. The SAC names "Bank of America fka Countrywide Home Loans" as a defendant. (SAC at 1.) The SAC "Bank of America" is a trade name, not a legal entity, and therefore cannot be sued. Duarte v. Bank of America, No. 10-00372, 2011 WL 1399127, at *3 (D. Haw. Apr. 12, 2011); Sarmiento v. Bank of New York Mellon, No. 10-00349, 2011 WL 884457, at *3 (D. Haw. Mar. 10, 2011).

Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to all claims against BOA without prejudice.

II. Count I: Real Estate Settlement Procedures Act Violations

Plaintiff alleges that Defendants failed to timely respond to her request for information and request to resolve servicing issues and that Defendants failed to timely notify her of the transfer of the servicing of the loan in violation of the Real Estate Settlement Procedures Act ("RESPA"). (SAC ¶¶ 47--48.)

RESPA provides that "[i]f any servicer of a federally related mortgage loan receives a qualified written request from the borrower . . . for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days." 12 U.S.C. § 2605(e)(1)(A). RESPA further provides that no later than 60 days after the receipt of a qualified written request, the servicer shall either correct the borrower's account, or, after conducting an investigation, provide the borrower a written explanation of why the account is correct, or why the requested information is unavailable, and the contact information of an employee of the servicer who can further assist the borrower. 12 U.S.C. § 2605(e)(2).

The FAC alleges that Plaintiff "submitted a request for information and a request that [Defendants] resolve servicing issues," which was neither timely acknowledged nor resolved. (SAC ¶ 47.) However, the SAC fails to sufficiently describe the "request" to establish that it was indeed a qualified written request*fn3 such that it triggered Defendants' duty to respond. See Lettenmaier v. Federal Home Loan Mortgage Corp., 2011 WL 3476648, at *12 (D. Or. Aug. 8, 2011) (dismissing a RESPA claim because plaintiffs failed to "attach a copy of their correspondence to the Complaint or to allege facts showing the communication concerned servicing of the loan as defined by the statute").

RESPA also provides that "[e]ach servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the loan to any other person . . . not less than 15 days before the effective date of transfer of the servicing of the mortgage loan." 12 U.S.C. §§ 2605(b)(1)--(2). Plaintiff fails to include any facts establishing that Plaintiff received a federally related mortgage loan or when any transfers occurred.

Finally, as Defendants noted, Plaintiff has not adequately alleged any actual damages as a result of the alleged failure to respond and other omissions. Pursuant to 12 U.S.C. § 2605(f)(1), a plaintiff has a burden to plead and demonstrate that she has suffered damages. Specifically, § 2605(f)(1) provides:

Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:

(1) Individuals

In the case of any action by an individual, an amount ...

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