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Fayant v. U.S. Bank National Association

United States District Court, E.D. Washington

January 26, 2017



          SALVADOR MENDOZA, JR United States District Judge

         Before the Court, without oral argument, are Defendants Washington Trust Bank and U.S. Bank National Association's Motions to Dismiss, ECF Nos. 13 and 16, respectively. Through these motions, Defendants seek to have the Plaintiffs' complaint dismissed for failure to state a claim upon which relief can be granted. See generally ECF Nos. 13 and 16. Before Plaintiffs replied to Defendants' motions, the Court notified all parties that, pursuant to Federal Rule of Civil Procedure 12(d), it would treat the motions to dismiss as summary judgment motions. ECF No. 25. However, for reasons detailed below, the Court reviews the motions under the motion to dismiss standard. Plaintiffs oppose Defendants' motions. See ECF Nos. 28 and 29.

         Having reviewed the pleadings and the file in this matter, the Court is fully informed and GRANTS Defendants' motions. The Plaintiffs fail to present a cognizable legal theory or to allege sufficient facts to support a cognizable legal theory, necessitating their complaint's dismissal. Further, because, as detailed below, this and other courts have repeatedly rejected nearly identical claims filed by Plaintiffs' counsel, Jill Smith, the Court ORDERS Ms. Smith to show cause why the Court should not impose sanctions or recommend disciplinary proceedings against her and ORDERS Defendants' counsel to file a statement concerning attorneys' fees.

         I. BACKGROUND

         In 2005 and 2006, Plaintiffs and Spokane County, Washington residents William Robert Fayant and Julie Lorraine Fayant obtained loans from Cherry Creek Mortgage (“Cherry Creek”) and Washington Trust Bank (“WTB”). ECF Nos. 14, 14-1, 14-2, 17, and 17-1. The Cherry Creek loan and relevant documents concerning the loan were subsequently endorsed and assigned to U.S. Bank National Association (“U.S. Bank”). ECF Nos. 17 and 17-1. They used their home in Liberty Lake, Washington as collateral for the loans. ECF Nos. 14-2 and 17-1 (deeds of trust encumbering the subject property).

         About a decade later, in a letter dated September 24, 2015, Plaintiffs purported to rescind the subject loans. ECF No. 1-1. Four days later, Plaintiffs sent another letter to the same parties purporting to void any security interest U.S. Bank, Cherry Creek or WTB had in the Plaintiffs' home. Id. Aside from noting the loan numbers, the letters do not provide the date on which the loans were secured.

         Several months later, on April 29, 2016, Plaintiffs filed their complaint against U.S. Bank, Cherry Creek, and WTB. ECF No. 1. In it, Plaintiffs allege violations of the Truth in Lending Act (“TILA” or “the Act”) and seek injunctive relief. See generally ECF No. 1. Specifically, Plaintiffs state that they mailed U.S. Bank, Cherry Creek, and WTB the rescission notices in September 2015. Plaintiffs claim none of the three institutions complied with their purported duties as allegedly set forth in TILA. This, Plaintiffs allege, led to the cancellation and voiding of the loan contracts and notes encumbering their home by operation of law. Id. at 2-3. They also claim that the loan in dispute was never consummated. Id. at 3. Moreover, Plaintiffs allege that on January 21, 2016, they “filed and had recorded with the Spokane County [sic] an Affidavit of Rescission, instrument # 6466789 of a loan transaction.” Id. at 4. Plaintiffs state they attached it as Exhibit C of the complaint, but no such exhibit is attached to the complaint or present elsewhere in the record. As relief to the asserted harm, Plaintiffs seek temporary, permanent, and mandatory injunctions against U.S. Bank, Cherry Creek, and WTB. Id. at 4-6.

         About two months after Plaintiffs filed their complaint, on June 21, 2016, the Court approved the parties' stipulated motion to dismiss then Defendant Cherry Creek from this lawsuit. ECF No. 10. Three days later, Defendant WTB filed its Rule 12(b)(6) motion to dismiss the complaint. ECF No. 13. About a month later, Defendant U.S. Bank also filed a Rule 12(b)(6) motion to dismiss the complaint. ECF No. 16.

         Thereafter, the Court set a briefing schedule for the parties' response and reply briefs-and also granted Plaintiffs' request to file a surreply brief- addressing Defendants' motions to dismiss. ECF Nos. 24, 25, and 39. Also, in an abundance of caution, the Court alerted the parties that it would consider the Defendants' motions to dismiss as motions for summary judgment pursuant to Rule 12(d). ECF No. 25; see Rule 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.”)


         A claim may be dismissed pursuant to Rule 12(b)(6) either for lack of a cognizable legal theory or failure to allege sufficient facts to support a cognizable legal theory. Taylor v. Yee, 780 F.3d 928, 935 (9th Cir. 2015). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).


         U.S. Bank and WTB moved to dismiss the complaint pursuant to Rule 12(b)(6) claiming: (1) Plaintiffs' rescission argument is factually unsupported; (2) the claims are time-barred, (3) Plaintiffs have not offered to tender the borrowed funds as TILA requires; and (4) res judicata and judicial estoppel bars the claims. ECF No. 13 at 7-20; ECF No. 16 at 5-11.

         As noted above, the Court notified the parties that it would treat the motions as summary judgment motions to provide the parties adequate time to brief the issues, thus permitting the Court to consider material beyond the complaint in reaching a decision. ECF No. 25. However, in certain circumstances, courts can consider documents outside the pleadings without converting a 12(b)(6) motion into a Rule 56 motion for summary judgment. Particularly, where a complaint incorporates documents by reference or attaches documents to the complaint, or in matters of judicial notice, courts may consider these materials without implicating Rule 12(d). United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). This is also true where a “plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim.” Id. Upon review of the parties' filings and the case file, this doctrine applies to the ...

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