United States District Court, D. Hawaii
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
PLAINTIFF'S FIRST AMENDED COMPLAINT
OKI MOLLWAY, UNITED STATES DISTRICT JUDGE
JP Morgan Chase Bank, N.A., initiated, then voluntarily
dismissed, a state judicial foreclosure action against
Plaintiffs Rosita and Leslie Fountain, (collectively, the
“Fountains”). The Fountains ultimately sold their
house and paid the balance of the loan owed to Chase. The
Fountains now assert claims against Chase concerning their
unsuccessful attempt to modify their loan before the
foreclosure action was filed. See First Amended
Complaint, ECF No. 16.
September 21, 2015, this court stayed this action before
ruling on the present motion to allow the Hawaii Supreme
Court to rule on an issue at the heart of this action. On
April 10, 2017, the court reopened the case in light of the
Hawaii Supreme Court's issuance of its ruling in
Hungate v. Law Office of David B. Rosen, 139 Haw.
394, 411, 391 P.3d 1, 18 (2017).
to Local Rule 7.2(d), the court, proceeding without a
hearing, grants Chase's motion to dismiss.
Fountains got a loan from Long Beach Mortgage Company,
secured by a mortgage on their home in Mililani on the west
side of Oahu. Chase allegedly purchased the loan and
accompanying mortgage, and thereafter collected payments from
the Fountains. See ECF No. 16, PageID #s 302, 304.
appears that, in 2010, the Fountains ran into financial
difficulties. They applied for a mortgage modification
through the federally funded Making Home Affordable Program.
See ECF No. 16-1, PageID #s 340-42, 345. They
describe that program as offering incentives for modifying
certain mortgages by reducing a borrower's monthly loan
payments to an affordable level. See Complaint, ECF
No. 16, PageID # 305.
Fountains' mortgage was not modified, and on April 15,
2013, Chase filed a foreclosure action against them in Hawaii
state court. See Docket Sheet, U.S. Bank
Nat'l Ass'n v. Fountain, et al., 1CC13-1-001123,
ECF No. 22-2, PageID # 459. The foreclosure action was
voluntarily dismissed after the Fountains sold their home and
paid off the loan. See ECF No. 22- 2, PageID # 460
(docket sheet indicating dismissal); ECF No. 22-3 (warranty
deed from the Fountains).
Fountains now allege that, in handling their loan
modification application, Chase failed to meet its
obligations as lender and servicer of their mortgage. They
claim that Chase breached industry standards established in
the “National Mortgage Settlement, ” an agreement
that the attorneys general of Hawaii and 48 other states and
the District of Columbia reached with the five largest banks
and mortgage servicers, including Chase (collectively, the
“Banks.”). See First Amended Complaint,
ECF No. 16, PageID # 310-13.
Fountains say that the National Mortgage Settlement was
memorialized in a Consent Judgment filed in the United States
District Court for the District of Columbia in 2012. The
agreement allegedly provided various benefits and relief to
borrowers whose loans were owned or serviced by the Banks.
The Settlement also allegedly required the Banks to adhere to
various servicing standards. See First Amended
Complaint, ECF No. 16, PageID # 307-08; ECF No. 16-2 (copy of
First Amended Complaint contains three counts: breach of the
implied covenant of good faith and fair dealing (Count I);
tortious breach of the covenant of good faith and fair
dealing (Count II), and unfair and deceptive consumer
practices (Count III). See ECF No. 16, PageID #s
310-15. The Fountains claim that the wrongdoing alleged in
all three counts involved violations of the terms of the
National Mortgage Settlement.See id., PageID #s
Fountains seek money damages, punitive damages,
attorneys' fees and costs, and other unspecified relief.
See id., PageID #s 315-16.
Rule 12(b)(6) of the Federal Rules of Civil Procedure, the
court's review is generally limited to the contents of a
complaint. Sprewell v. Golden State Warriors, 266
F.3d 979, 988 (9th Cir. 2001); Campanelli v.
Bockrath, 100 F.3d 1476, 1479 (9th Cir.
1996). If matters outside the pleadings are considered, the
Rule 12(b)(6) motion is treated as one for summary judgment.
See Keams v. Tempe Tech. Inst., Inc., 110 F.3d 44,
46 (9th Cir. 1997); Anderson v. Angelone,
86 F.3d 932, 934 (9th Cir. 1996). However, the
court may take judicial notice of and consider matters of
public record without converting a Rule 12(b)(6) motion to
dismiss into a motion for summary judgment. See Lee v.
City of Los Angeles, 250 F.3d 668, 688 (9th
Cir. 2001); Emrich v. Touche Ross & Co., 846
F.2d 1190, 1198 (9th Cir. 1988).
Rule 12(b)(6) motion to dismiss, all allegations of material
fact are taken as true and construed in the light most
favorable to the nonmoving party. Fed'n of African
Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207
(9th Cir. 1996). However, conclusory allegations
of law, unwarranted deductions of fact, and unreasonable
inferences are insufficient to defeat a ...