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Richard A. Doran and Patricia v. Wells Fargo Bank

March 28, 2012


The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge


Before the Court is Defendant Wells Fargo Bank, National Association's*fn1 ("Defendant") Motion to Dismiss Second Amended Complaint ("Motion"), filed on December 2, 2011. Plaintiffs Richard A. Doran and Patricia R. Doran, individually and as trustees of the Richard A. Doran and Patrician R. Doran Family Trust ("the Trust", all collectively "Plaintiffs") filed their memorandum in opposition on January 17, 2012, and Defendant filed its reply on February 17, 2012. The Court finds this matter suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, Defendant's Motion is HEREBY DENIED for the reasons set forth below.


The parties and this Court are familiar with the factual and procedural background of this case, which are set forth in this Court's prior orders: the May 31, 2011 Order Granting Defendant's Motion to Dismiss Complaint filed February 8, 2011 ("5/31/11 Order"), 2011 WL 2160643; and the October 31, 2011 Order Granting in Part and Denying in Part Defendant's Motion to Dismiss First Amended Complaint Filed June 13, 2011 ("10/31/11 Order"), 2011 WL 5239738. This Court therefore will only discuss the events that are relevant to the instant Motion.

The 10/31/11 Order dismissed Plaintiffs' wrongful foreclosure claim, infliction of emotional distress claim, and loss of consortium claim with prejudice and dismissed Plaintiffs' fraud claim without prejudice. As to the fraud claim in Plaintiffs' First Amended Complaint, this Court reiterated the standards set forth in the 5/31/11 Order, 2011 WL 5239738, at *7-8 (quoting 5/31/11 Order, 2011 WL 2160643, at *12, *11), and stated:

Plaintiffs' First Amended Complaint fails to offer any details as to the time, place, or content of the allegedly fraudulent statements. The First Amended Complaint merely makes general allegations, for example, stating that Defendant "made a number of statements that Plaintiffs were 'pre-qualified' for loan modification", but Plaintiffs have not provided the required information about these misrepresentations. The general allegations in the First Amended Complaint are not sufficient to satisfy the pleading standard for fraud claims.

Fraud claims must, "in addition to pleading with particularity, also must plead plausible allegations. That is, the pleadings must state 'enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the misconduct alleged].'" Cafasso [ex rel. United States v. Gen. Dynamics C4 Sys. Inc.], 637 F.3d [1047,] 1055 [(9th Cir. 2011)] (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 566, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)) (alterations in Cafasso) (footnotes omitted). The Court acknowledges that, at this stage of the case, Plaintiffs may not have documentary evidence supporting their allegations and they may not know the names of the persons who made the representations. Plaintiffs, however, must plead enough facts to raise a reasonable expectation that discovery would reveal evidence of such a misrepresentation. Plaintiffs must allege the time, place, and content of the allegedly fraudulent statements in order to satisfy the Rule 9(b) standard of particularity.

Further, Plaintiffs must also plead plausible allegations that they reasonably relied on Defendant's misrepresentations to their detriment. While it is understandable that the Dorans have suffered hardships because of the foreclosure on their home, it does not necessarily follow that the Trust's reliance on the alleged misrepresentations regarding the loan modification process caused harm to the Trust.

Id. at *8 (some alterations in 10/31/11 Order). The Court cautioned Plaintiffs that, if their Second Amended Complaint did not comply with the pleading standards set forth in the 10/31/11 Order, the Court would dismiss Plaintiffs' fraud claim with prejudice. Id. at *12.

Plaintiffs filed their Second Amended Complaint on November 18, 2011. [Dkt. no. 38.] The only claim in the Second Amended Complaint is a fraud claim, [id. at ¶¶ 31-61,] and Defendant is the only named defendant [id. at ¶¶ 3-4]. The Second Amended Complaint admits that Defendant "did not commit fraud because it promised a loan modification to Plaintiffs[.]" Instead, Plaintiffs allege that Defendant "committed fraud because it stated, through various representatives, that [Defendant] was exploring loss mitigation alternatives with [Plaintiffs], when it was in fact, not considering them for anything but foreclosure[.]" [Id. at ¶ 39.]

I. Defendant's Motion

Defendant argues that the Second Amended Complaint still fails to allege Plaintiffs' fraud claim with the requisite particularity and still fails to state a claim that is plausible on its face. Defendant urges the Court to dismiss the Second Amended Complaint with prejudice because the Court has given Plaintiffs ample guidance and Plaintiffs have failed to correct the deficiencies that this Court identified. [Mem. in Supp. of Motion at 2.]

Defendant argues that Plaintiffs have not identified, inter alia, who made the allegedly false statements, who received them, the dates the statements were made, and what the specific content of those statements was. Defendant contends that the allegations of the Second Amended Complaint do not give Defendant sufficient notice, and therefore Defendant has not had the opportunity to prepare a defense to Plaintiffs' claim. [Id. at 8-9.] Defendant also asserts that Plaintiffs have failed to present plausible allegations that Plaintiffs reasonably relied on the alleged misrepresentations to their detriment or that Plaintiffs suffered pecuniary damages as a result of that reliance. [Id. at 10.]

In addition, Defendant argues that some of the factual allegations in the Second Amended Complaint that "are not warranted based on the evidence and are not likely to have evidentiary support after a reasonable opportunity for investigation[,]" and Defendant alleges that Plaintiffs and their counsel "have misrepresented facts to the court and are in clear violation of their obligations under [Fed. R. Civ. P.] 11 and the Hawaii Rules of Professional Conduct." [Id. at 14-15.]

II. Plaintiffs' Memorandum in Opposition

Plaintiffs argue that they have sufficiently pled the requirements of a fraud claim. Plaintiffs argue that the Court should not require Plaintiffs to include the names of the specific representatives of Defendant who made the alleged misrepresentations because Plaintiffs cannot obtain this information without discovery. Further, Plaintiffs contend that, for purposes of a motion to dismiss, their allegation that Defendant's representatives made the alleged false statements to the Dorans and their agent, as ...

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