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Fossum v. Bank of America, N.A.

United States District Court, D. Nevada

March 24, 2014

MICHELLE FOSSUM et al., Plaintiffs,
v.
BANK OF AMERICA, N.A. et al., Defendants.

ORDER

ROBERT C. JONES, District Judge.

This is a residential foreclosure avoidance action. Pending before the Court is a Motion to Dismiss (ECF No. 31). For the reasons given herein, the Court denies the motion.

I. FACTS AND PROCEDURAL HISTORY

Plaintiffs Michelle and Peter Fossum gave lender New Century Mortgage Corp. ("New Century") a $275, 000 promissory note to purchase or refinance property at 1380 Laser Ct., Sparks, NV 89436 (the "Property"), secured by a deed of trust (the "DOT") against the Property given to trustee Marquis Title and Escrow. ( See DOT 1-3, Apr. 28, 2006, ECF No. 21-1). Mortgage Electronic Registration Systems, Inc. does not appear to be a party to or third-party beneficiary of the DOT. In 2008, Fidelity National Default Solutions ("Fidelity"), as purported agent for Recontrust Co., filed the first Notice of Default ("FNOD"). ( See FNOD, Apr. 10, 2008, ECF No. 21-2). No further action appears to have been taken as to the FNOD. Both Fidelity and Recontrust appear to have been strangers to the note and DOT at the time. In 2009, BAC Home Loans Servicing, LP ("BAC"), as purported attorney-in-fact for New Century, assigned the note and DOT to HBSC Bank USA, N.A. ("HBSC"), and also, as purported attorney-in-fact for HBSC, substituted Recontrust as trustee under the DOT. ( See Assignment, Sept. 21, 2009, ECF No. 21-3; Substitution, Sept. 21, 2009, ECF No. 21-4). The same day, First American Title ("First American"), as purported attorney-in-fact for Recontrust, filed the second Notice of Default ("SNOD"). ( See SNOD, Sept. 21, 2009, ECF No. 21-2). Plaintiffs either waived or made no request for mediation under Nevada's Foreclosure Mediation Program. ( See FMP Certificate, Apr. 14, 2010, ECF No. 21-5). Recontrust noticed a trustee's sale for January 12, 2011. ( See First Notice of Trustee's Sale, Dec. 23, 2010, ECF No. 21-6, at 2). Recontrust noticed another trustee's sale for May 16, 2011. ( See Second Notice of Trustee's Sale, Apr. 21, 2011, ECF No. 21-6, at 4).

Plaintiffs sued Bank of America Corp., Bank of America, N.A., BAC, and Recontrust in state court without delineating any causes of action. The Court interprets the Complaint to allege statutorily defective foreclosure, see, e.g., Nev. Rev. Stat. § 107.080, as well as promissory estoppel and violation of Nevada's Deceptive Trade Practices Act ("DPTA"), see id. § 598.010. Defendants removed and have now moved to dismiss for failure to state a claim. The Court granted the motion to dismiss but gave Plaintiffs leave to amend the promissory estoppel claim. Plaintiffs filed the First Amended Complaint ("FAC"). Defendants have moved to dismiss the FAC for failure to state a claim.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) ("A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."). In other words, under the modern interpretation of Rule 8(a), a plaintiff must not only specify a cognizable legal theory ( Conley review), but also must plead the facts of his own case so that the court can determine whether the plaintiff has any plausible basis for relief under the legal theory he has specified, assuming the facts are as he alleges ( Twombly-Iqbal review).

"Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss" without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of "matters of public record." Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).

II. ANALYSIS

The Court previously noted that Plaintiffs had made no allegation of fact indicating that BAC had entered into any modification agreement but only allegations of negotiations. A claim for promissory estoppel will lie where: (1) the defendant is apprised of the true facts; (2) the defendant intends that his conduct shall be acted upon, or so acts that the plaintiff has the right to believe it was so intended; (3) the plaintiff is ignorant of the true state of facts; and (4) the plaintiff has relied to his detriment on the conduct of the defendant. E.g., Pink v. Busch, 691 P.2d 456, 459-60 (Nev. 1984). Plaintiffs have now alleged an agreement to modify:

[O]n March 4, 2010, the Plaintiffs received four (4) identical loan modification packets. Plaintiffs contacted Defendant BAC about these packets and received the instruction that they needed to complete only one, not the four that had been sent.
The Plaintiffs promptly completed the loan modification plan form, which included a detailed description of the payment schedule, and the monthly amount to be paid; Plaintiffs signed the loan modification, had it notarized and submitted it to Defendant BAC the same day (March 31, 2010) using the label provided by Defendant BAC.
Pursuant to the terms of the loan modification plan sent to the Plaintiffs by Defendant BAC, the Plaintiffs' interest was reduced, thereby reducing the Plaintiffs' monthly payment. The plan also provided that any arrearages would be subsumed into the principle and that the Plaintiffs' interest rate would be increased in small increments over the period of the loan. This plan from Defendant BAC allowed the Plaintiffs to make their monthly payment, save their home and pay the loan off in full.
After a number of additional delays, the Plaintiffs were finally able to receive verbal confirmation from Defendant BAC that their loan modification was ...

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