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Kautsman v. Carrington Mortgage Services LLC

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

October 2, 2017

NIKOLAY KAUTSMAN, et al., Plaintiffs,



         This matter comes before the Court on Defendant Carrington Mortgage Services, LLC's (“CMS”) motion to dismiss (Dkt. No. 32) and Plaintiffs motion for class certification (Dkt. No. 34). Having considered the parties' briefing and the relevant record, the Court GRANTS CMS's motion to dismiss and DISMISSES as moot Plaintiffs' motion for class certification for the reasons explained herein.

         I. BACKGROUND

         Plaintiffs are the fee title owners of a single family residence in Redmond, Washington. (Dkt. No. 44 at 6.) Wilmington Trust (“Wilmington”), is the lender of record, beneficiary of the Deed of Trust, and holder of a related Secured Promissory Note. (Id. at 7.) CMS services the Note for Wilmington. (Dkt. No. 44 at 7-8.) The Deed of Trust contains a provision allowing the lender to do whatever is “reasonable and appropriate to protect the lender's interest” in Plaintiffs' residence and secure it if Plaintiffs “fail[] to perform the covenants and agreements contained in this Security Instrument” or “abandon[] the Property.” (Id. at 7.) The covenants referenced above include Plaintiffs' agreement to make the timely payment of principal, interest, and late charges. (Dkt. No. 44-2 at 3.)

         Plaintiffs assert CMS directed a related entity, Defendant Carrington Home Solutions L.P. (“CHS”), to enter onto their property and inspect the exterior of the residence without Plaintiffs' permission. (Dkt. No. 44 at 9.) Plaintiffs further assert that after erroneously determining that the property was vacant, CHS broke in, rekeyed the lock, winterized the property, and generally took possession of it. (Id.) All of this occurred despite clear signs that the property was not vacant. (Id.) Plaintiffs further allege that CMS charged them for the inspection and resulting fees by adding the fees to the balance of Plaintiffs' loan. (Id. at 10.) Plaintiffs allege this is a common practice by CMS and, as such, bring this suit as a class action. (Dkt. Nos. 34 at 1-4, 44 at 2-3.)

         Plaintiffs brought suit in state court for breach of contract, violations of the duty of good faith and fair dealing, violations of Washington's Consumer Protection Act (“WCPA”), Revised Code of Washington § 19.86, and negligent supervision. (Dkt. No. 1-2.) CMS removed to this Court and moved for partial judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The Court granted the motion, dismissing some of Plaintiffs' claims without prejudice. (Dkt. No. 26.)

         Plaintiffs since filed a second amended class action complaint (Dkt. No. 44).[1] The complaint includes additional claims for unjust enrichment and, for the first time, names CHS as Defendant in some of the claims. (Id.) It also alleges additional facts to support previously-asserted claims. (Id.) Lastly, Plaintiffs dropped their negligent supervision claim. The current claims are as follows: breach of contract by CMS (Claim #1); violations of the implied duty of good faith and fair dealing by CMS (Claim #2) (Id. at 8, 16-17); a WCPA violation by CMS and CHS (Claim #3) (Id. at 18-19); another WCPA violation solely by CMS (Claim #4) (Id. at 19); and two instances of unjust enrichment by CMS and CHS (Claims #5 and #6) (Id. at 19-21). Plaintiffs assert the following damages: fees CMS charged against their loan, costs Plaintiffs incurred to replace the lock and reverse CHS's winterization efforts, and legal consultation fees. (Id. at 10.)

         Plaintiffs move to certify the matter as a class action pursuant to Federal Rule of Civil Procedure 23(b)(3). (Dkt. No. 34 at 12.) They seek to certify two classes. Plaintiffs define Class I as borrowers for whom CMS or their agents inspected their homes, deemed them to be vacant, engaged in preservation services, such as rekeying and winterization, and charged resulting fees against borrowers' loans. (Id. at 1.) Plaintiffs define Class II as borrowers for whom CMS or their agents inspected their homes and did not engage in further preservation services, but charged resulting inspection fees against their loans. (Id.) Plaintiffs move to be appointed as class representatives and their counsel as class counsel for each class. (Id. at 1-2.) Defendants oppose certification. (Dkt. No. 49.)


         A. Motion to Dismiss

         Only CMS moves to dismiss Plaintiffs' claims. (Dkt. No. 32.) But “[a] [d]istrict [c]ourt may properly on its own motion dismiss an action as to defendants who have not moved to dismiss where such defendants are in a position similar to that of moving defendants.” Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 743 (9th Cir. 2008) (internal quotations omitted). Therefore, to the extent CMS raises arguments that would also apply to CHS, the Court will consider dismissing claims against CHS.

         1. Legal Standard: Motion to Dismiss

         A defendant may move for dismissal when a plaintiff “fails to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Under Rule 12(b)(6), the Court accepts all factual allegations in the complaint as true and construes them in the light most favorable to the nonmoving party. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007). However, to survive a motion to dismiss, a plaintiff must cite facts supporting a “plausible” cause of action. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). 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.” Ashcroft v. Iqbal, 556 U.S. 662, 672 (2009) (internal quotations omitted). Although the Court must accept as true a complaint's well-pleaded facts, “conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper motion to dismiss.” Vasquez, 487 F.3d at 1249 (quotation omitted). “Dismissal for failure to state a claim is appropriate only if it appears beyond doubt that the non-moving party can prove no set of facts in support of his claim which would entitle him to relief.” Id. (quotation omitted).

         2. Claims #1 and #2: Breach of Contract and Violations of the Implied ...

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