United States District Court, D. Nevada
PHILIP M. PRO, District Judge.
Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint for Failure to State a Claim Pursuant to F.R.C.P. 12(b)(6) (Doc. #48), filed on May 6, 2013. Plaintiffs Presidio Adventures Development I, Presidio Adventures Development II, Stephen Slatton, Brian Chavez, Julie V. Gutierrez, and Rudy Guzman filed a Response (Doc. #65) on August 20, 2013. Defendants filed a Reply (Doc. #66) on September 3, 2013.
On June 20, 2008, Plaintiffs Stephen Slatton, Brian Chavez, Julie V. Gutierrez, Zenon Cruz, Beverly Cruz, and Rudy Guzman (the "Individual Plaintiffs") obtained two loans, each in the principal amount of $485, 485.00, from Defendant Countrywide Bank, N.A. a/k/a Countrywide Bank, F.S.B. ("Countrywide"). (Pls.' First Am. Compl. (Doc. #41) ["Am. Compl."] at ¶¶ 12, 51.) Repayment of the loans was secured by two deeds of trust, one on condominium Unit 25301 and the second on Unit 26301, located at Palms Place, 4381 West Flamingo Road, Las Vegas, Nevada, 89103. (Id. at ¶¶ 13, 25-27, 52-53, Ex. A, Ex. B; Defs.' Mot. to Dismiss Pls.' First Am. Compl. for Failure to State a Claim Pursuant to F.R.C.P. 12(b)(6) (Doc. #48) ["Mot. to Dismiss"], Ex. A at 1, Ex. B, Ex. D at 1, Ex. E.) The Individual Plaintiffs subsequently transferred title of Unit 25301 to Presidio Adventures Development I, LLC ("Presidio I") and title of Unit 26301 to Plaintiff Presidio Adventures Development II, LLC ("Presidio II"). (Am. Compl. at ¶¶ 13-14, 28, 55-56; Mot. to Dismiss, Ex. C, Ex. F.) The Warranty Deeds transferring title of the Units to Presidio I and Presidio II were signed on July 31, 2008 and recorded on July 16 and 17, 2009. (Mot. to Dismiss, Ex. C at 1-2, Ex. F at 1-2.)
According to the First Amended Complaint, on January 25, 2011,  the Individual Plaintiffs entered into a Loan Modification Agreement with Defendant Bank of America, N.A. ("Bank of America"), successor by merger to Countrywide. (Am. Compl. at ¶¶ 29, 57, Ex. C.) The Loan Modification Agreement states the Individual Plaintiffs, Bank of America, and Mortgage Electronic Registration Systems, Inc. ("MERS") "agree to modify" the Deed of Trust recorded as Instrument Number XXXXXXXX-XXXXXXX "to correct the property address on the deed of trust to read 4381 W. Flamingo Rd. #26301, Las Vegas, NV 89103." (Am. Compl., Ex. C at 2.) The Deed of Trust recorded as Instrument Number XXXXXXXX-XXXXXXX secures Unit 25301. (Am. Compl., Ex. A at 4; Mot. to Dismiss, Ex. E at 4.) Plaintiffs allege the Loan Modification Agreement caused the Deed of Trust recorded against Unit 25301 to be recorded against Unit 26301 as well. (Am. Compl., ¶¶ 29, 54.)
According to Plaintiffs, they contacted Bank of America and its related entities numerous times to correct the error, to no avail. (Id. at ¶¶ 32-34, 59-60, 62.) Plaintiffs allege the Countrywide and Bank of America entities "have continually represented and promised the Plaintiffs that the duplicate mortgage and duplicate deed issues will be repaired; yet such repairs have not yet been implemented." (Id. at ¶ 63.)
Plaintiffs allege they began experiencing financial difficulties and missing mortgage payments in 2011. (Id. at ¶¶ 30, 62.) Plaintiffs further allege they have attempted to short sale the condominium Units on multiple occasions, however, they have been unable to do so because there are two deeds of trust recorded against Unit 26301 and there is uncertainty regarding the deed of trust on Unit 25301. (Id. at ¶¶ 31, 63-65, 67.) Finally, Plaintiffs allege they have suffered damage to their credit scores due to Defendants' delays in reviewing Plaintiffs' requests for hardship assistance, in reviewing offers to short sale or surrender the Units, and in reviewing Plaintiffs' eligibility for the Home Affordable Mortgage Program. (Id. at ¶ 68.)
Plaintiffs brought suit against Defendants, asserting claims for breach of contract and rescission (count one), breach of the implied covenant of good faith and fair dealing (count two), violation of Nevada Revised Statutes § 106.210/declaratory relief (count three), violation of the Fair Credit Reporting Act (count four), negligence (count five), negligence per se (count six), negligent hiring, retention, and employment (count seven), respondeat superior (count eight), and unjust enrichment (count nine). (Compl. (Doc. #1) at 15-24.) On March 25, 2013, Plaintiffs filed their First Amended Complaint in which they added Plaintiffs Anthony Villegas, Beverly Cruz, and Zenon Cruz and dropped their respondeat superior claim. (Pls.' First Am. Compl. (Doc. #41) ["Am. Compl."] at 2-3, 26.)
Defendants now move to dismiss, arguing that the eight remaining claims alleged against them fail as a matter of law. In their Response, Plaintiffs concede they fail to state a claim for violation of the Fair Credit Reporting Act,  but they request leave to amend this claim. (Pls.' Resp. in Opp'n to Defs.' Mot. to Dismiss (Doc. #65) ["Pls.' Resp."] at 13-14.) Plaintiffs argue their other claims state a claim and therefore dismissal is improper.
II. MOTION TO DISMISS
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move for dismissal of a complaint based upon its "failure to state a claim upon which relief can be granted." To succeed on such a motion, the defendant must show the plaintiff does not make sufficient factual allegations to establish a plausible entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). In considering whether the complaint is sufficient to state a claim, "all wellpleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party." Wyler Summit P'ship v. Turner Broad. Sys. Inc., 135 F.3d 658, 661 (9th Cir. 1998) (citation omitted).
When ruling on a motion to dismiss, if the Court considers evidence outside the pleadings, it normally must convert the motion into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). The Court "may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment." Id . at 908. Here, Plaintiffs submitted as exhibits to their First Amended Complaint copies of various title documents recorded in the Clark County Recorder's Office, as well as two Preliminary Title Reports. Defendants submitted as exhibits to their Motion to Dismiss copies of various title documents recorded in the Clark County Recorder's Office, which include two of the same exhibits submitted by Plaintiffs. The recorded title documents are public records appropriate for judicial notice under Federal Rule of Evidence 201(b)(2), and the Preliminary Title Reports are attached to the First Amended Complaint. As such, in reviewing the Motion to Dismiss, the Court properly may consider these documents without converting the Motion into one for summary judgment.
A. Contract Claims (Counts One and Two)
Plaintiffs allege Defendants breached the parties' agreements related to Units 25301 and 26301 by causing duplicate deeds of trust to be recorded against Unit 26301 despite Defendants' knowledge there was only one mortgage indebtedness with respect to that Unit. Plaintiffs further allege Defendants breached the parties' agreements by failing to provide Plaintiffs with clear and marketable title to the Units and by failing to notify Plaintiffs that the duplicate deeds of trust would limit Plaintiffs' ability to sell the Units. Finally, Plaintiffs allege that by allowing duplicate deeds of trust to be recorded and by failing to correct the error, Defendants breached their ...