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James Cablay and Kathryn S. F. Cablay v. Bank of America

April 25, 2013

JAMES CABLAY AND KATHRYN S. F. CABLAY,
PLAINTIFFS,
v.
BANK OF AMERICA, N.A., DEFENDANT.



ORDER GRANTING MOTION TO DISMISS COMPLAINT

I. INTRODUCTION

On December 4, 2012, Plaintiffs James Cablay and Kathryn S.F. Cablay ("Plaintiffs") filed this action against Defendant Bank of America, N.A. ("Defendant") alleging state law claims in connection with two mortgages currently owned and serviced by Defendant and secured by real property located at 99-1184 Aiea Heights Drive, Aiea, Hawaii (the "subject property").

By the instant Motion, Defendant seeks dismissal of all counts with prejudice, contending that Plaintiffs failed to state a claim upon which relief can be granted. The court GRANTS the Motion with prejudice as to Counts I, II, and IV and with leave to amend as to Count III.

II. BACKGROUND

A. Factual Background

The court assumes the Complaint's factual allegations are true for purposes of this Motion. See, e.g., Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.1 (9th Cir. 2003). According to the Complaint and its exhibits, on February 25, 2008, Plaintiffs entered into two loan agreements secured by the subject property. Doc. No. 1, Compl. ¶ 2; Doc. No. 1-1, Pls.' Ex. 1; Doc. No. 1-2, Pls.' Ex. 2. The first loan, for $625,000, was recordedin the Hawaii Bureau of Conveyances on February 29, 2008 as Document Number 2008-031109 ("the First Mortgage"). Doc. No. 1, Compl. ¶ 2; Doc. No. 1-1, Pls.' Ex. 1. The second loan was a $160,750 home equity line of credit, recorded as Document Number 2008-031110 ("the Second Mortgage"). Doc. No. 1, Compl. ¶ 2; Doc. No. 1-2, Pls.' Ex.

2. Both Mortgages identify Plaintiffs as the borrowers and Countrywide Bank, F.S.B.*fn1 as the lender. Doc. No. 1, Compl. ¶ 2; Doc. No. 1-2, Pls.' Ex. 2.

Plaintiffs imply that they have defaulted on the Mortgages and foreclosure on the subject property has occurred. See Doc. No. 1, Compl. ¶ 34(b) (alleging Defendant's conduct included "charging excessive or improper fees for default-related services"); see also id. ¶ 68 ("The harm sustained by [Plaintiffs] includes . . . unaffordable mortgages, threatened loss of home, and loss of home[].").

Plaintiffs filed the instant action contending that Defendant's conduct in connection with the origination and servicing of the Mortgages was unfair and deceptive and violated an implied covenant of good faith and fair dealing. Defendant's allegedly unfair and deceptive conduct includes:

a. failing to timely and accurately apply payments made by borrowers and failing to maintain accurate account statements;

b. charging excessive or improper fees for default-related services;

c. failing to properly oversee third party vendors involved in servicing activities on behalf of the Banks;

d. imposing force-placed insurance without properly notifying the borrowers and when borrowers already had adequate coverage;

e. providing borrowers false or misleading information in response to borrower complaints; [and]

f. failing to maintain appropriate staffing, training, and quality control systems.

Id. ¶ 34. Plaintiffs further allege that Defendant's allegedly "unfair and deceptive practices" "caused [Plaintiffs] to enter into an unaffordable mortgage loan that led to increased threat of foreclosure." Id. ¶ 37.

B. Procedural Background

On December 4, 2012, Plaintiffs filed a Complaint asserting the following Counts: (1) Count I -- Breach of Implied Covenant of Good Faith and Fair Dealing; (2) Count II -- Tort Liability for Breach of Implied Covenant of Good Faith and Fair Dealing; (3) Count III -- Unfair and Deceptive Consumer Practices with Respect to Loan Servicing; and (4) Count IV -- Unfair ...


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