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Tanner v. Bank of America, N.A.

United States District Court, W.D. Washington, Tacoma

November 7, 2014

BANK OF AMERICA, N.A., Defendant.


RONALD B. LEIGHTON, District Judge.

THIS MATTER is before the Court on Bank of America's Motion to Dismiss Jennifer Tanner's claims [Dkt. #7]. Tanner alleges, generally, that Bank of America induced her to default on her home loan and then required her to pay substantial fees to avoid foreclosure. She claims that Bank of America, without her asking, promised to permanently lower her monthly payments if she was able to pay the reduced amount during a trial period without defaulting. She claims that she did that, but the bank nevertheless revoked the trial plan and determined that she was in default.

Tanner is now suing Bank of America for how it managed her loan. She seeks damages for breach of contract, negligent misrepresentation, and fraud, and treble damages for breach of the Washington Consumer Protection Act. Bank of America seeks to dismiss all of Tanner's claims. It contends that Tanner has not identified any enforceable contract provision that it has breached, has not alleged any unfair or deceptive practice that can support her CPA claim, has not pleaded fraud with the required specificity, and, alternatively, that all of her claims are implausible.


Tanner borrowed money to buy a home in 2003. Bank of America owns the deed of trust securing her loan. Tanner fell behind on her payments in late 2009 or early 2010. After she caught up, Bank of America invited her to participate in the Home Affordable Mortgage Program (HAMP). HAMP is a federal program designed to give banks incentives to refinance distressed homeowners' loans. Participating banks receive money from the federal government if they agree to follow Treasury Department guidelines and procedures and modify qualified applicants' loans.

Tanner alleges that Bank of America told her that all she had to do to qualify for a permanent loan modification was successfully complete a HAMP trial period plan. According to Tanner, the trial plan only required her to pay about $400 less a month than her normal loan payments. She admits that she never submitted an application or any other paperwork to be considered for a loan modification, but she claims that Bank of America never asked her to.

Tanner alleges that she made the lower payments for nearly a year before Bank of America terminated the trial plan without notice. When the bank revoked Tanner's trial plan, it also determined that she was in default and demanded that she pay nearly $5, 700 in addition to her normal monthly payments to catch up on her loan. Tanner got a second job to avoid foreclosure and struggled for two years to pay off the balance. She claims that during that time, Bank of America routinely under-credited her payments and charged excessive, unexplained, and unsubstantiated fees. Even so, she paid off her balance in early 2012. Tanner initiated this action two years later.


A. Motion to Dismiss Standard

Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). A claim has "facial plausibility" when the party seeking relief "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Although the Court must accept as true a complaint's well-pled facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper Rule 12(b)(6) motion. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and footnote omitted).

B. HAMP Trial Plan Breach of Contract Claim

Tanner claims that Bank of America was contractually required to offer her a permanent loan modification because she complied with all of her trial plan requirements. An enforceable contract requires an offer, acceptance, and mutual consideration. Storti v. Univ. of Wash., 181 Wash.2d 28, 36, 330 P.3d 159, 163 (2014). A breach of contract claim is actionable if "the contract imposes a duty, the duty is breached, and the breach proximately causes damage to the claimant." Northwest Indep. Forest Mfrs. V. Dep't of Labor & Indus., 78 Wash.App. 707, 712, 899 P.3d 6 (1995).

A HAMP trial plan can be an enforceable contract. See Corvello v. Wells Fargo Bank, NA, 728 F.3d 878 (9th Cir. 2013). If a borrower fulfills all of its trial plan obligations, the bank must offer a permanent modification or notify the borrower that he or she did not qualify to participate in HAMP and consider alternatives. Id. To create an enforceable contract, however, the borrower must agree to do something more than pay a discounted amount to satisfy his or her prior debt. See Harris v. Morgensen, 31 Wash.2d 225, 240, 196 P.2d 317 (1948) (promise to perform an existing legal obligation is not valid consideration unless the existence of the duty is the subject of honest and reasonable dispute); see also Restatement (Second) of Contracts ยง 73 (1981). The new consideration does not have to be much. Any new bargained for legal detriment can serve as valid consideration. Storti at 37, 330 P.3d at 164. For example, other courts have found sufficient consideration when the borrower agreed to open new escrow accounts, undergo credit counseling, or even just make accurate financial disclosures. See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 564 (7th Cir. 2012); Ansanelli v. JP Morgan Chase Bank, N.A., 2011 WL 1134451 (N.D. Cal 2013) (borrower's financial disclosures sufficient consideration). But absent new consideration, a trial plan does not create a contract.

Here, Tanner contends that her consideration was making the lower trial plan payments instead of her regular mortgage payments, and, thus, defaulting on her loan. She claims that part of her consideration was giving up her status as "current" on her loan. While defaulting on her loan might demonstrate damages, merely paying a reduced amount on a prior debt cannot, by itself, be valid consideration. She affirmatively states in her complaint that she did not fill out an application, provide the bank with any financial information, or do anything other than make reduced payments on her prior loan. Her complaint, thus, fails to state an actionable breach of contract claim. Because she alleges that she did nothing more than ...

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