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Ward v. Bank of America

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

May 14, 2019

JAMES H. WARD, Plaintiff,
BANK OF AMERICA, a National Association, Defendant.




         THIS MATTER is before the Court on Defendant Bank of America, a National Association's (BANA) Motion to Dismiss the Complaint under Rule 12(b)(6). Dkt. #9. This action arises out of the potentially invalid nonjudicial foreclosure sale of Plaintiff James Ward's property and BANA's attempt to re-initiate judicial foreclosure proceedings over a year after the sale. Ward has sued BANA for negligence, negligent misrepresentation, per se and traditional violations of the Washington Consumer Protection Act (CPA), violations of the Fair Debt Collection Practices Act (FDCPA), and abuse of process.

         BANA argues that Ward fails to state a claim for negligence because it owed Ward no duty of care. BANA also asserts that Ward's misrepresentation and CPA claims must be dismissed because the allegations do not establish that BANA's actions proximately caused Ward to suffer damages. BANA also argues that Ward does not allege a sufficient injury for a CPA claim, which must consist of diminution of money or property. Ward's FDCPA claim is inadequate, according to BANA, because Ward does not allege that BANA is a “debt collector” within the meaning of the FDCPA or that it sold Ward's property without authority. Finally, BANA contends that Ward fails to explain how BANA utilized judicial processes to obtain an unlawful end.

         For the following reasons, the Court GRANTS in part and DENIES in part BANA's Motion.


         According to the Complaint, Ward became the owner of the property at issue on July 25, 2005. Ward borrowed money from third party Countrywide Bank, FSB, executing a promissory note and deed of trust. Ward began missing payments on May 1, 2010, and on September 14, 2011, Countrywide assigned all benefits under the deed of trust to BANA. Acting as the default servicer, BANA filed a foreclosure action in Jefferson County Superior Court on August 8, 2014. The complaint sought to recover a principal sum of $312, 096.50, $91, 576.66 in interest, $1, 023.51 for title search, $12, 257.77 for escrow advances, $455.00 for property inspections, and $2, 000.00 in attorneys' fees. Dkt. #1-1, Ex. C, at 24. Among the attorneys' fees was $660.29 for “commencing a nonjudicial foreclosure action that could not be completed.” Id. at 23.

         Despite initiating this judicial action, BANA proceeded to sell the property via trustee's sale. An auction took place on February 17, 2017, and the property was sold to Fannie Mae. The trustee's deed evidencing the sale was recorded on February 24, 2017. The property sold for $225, 000.00, which constituted “satisfaction in full of the obligation then secured by said Deed of Trust, together with all fees, costs, and expenses as provided by statute.” Dkt. #1, Ex. D. The trustee's deed also incorrectly stated that “[d]uring foreclosure, no action was pending on an obligation secured by said Deed of Trust.” Id.

         On October 22, 2018, roughly 20 months after the trustee's deed was issued, BANA filed an unopposed motion for leave to amend its foreclosure complaint in Jefferson County Superior Court. The motion argued that leave should be granted because the trustee's sale was “possibly void” due to failure to meet a statutory prerequisite for nonjudicial sales. Dkt. #1, Ex. E. Specifically, RCW 61.24.030(4) states that a requisite for holding a trustee's sale is “[t]hat no action commenced by the beneficiary of the deed of trust is now pending to seek satisfaction of an obligation secured by the deed of trust in any court by reason of the grantor's default on the obligation secured.” The motion also asserted that Ward would not be prejudiced because he was “still in arears as to his payments under the Loan and has been since April 1, 2010.” Dkt. #1, Ex. E. The Court granted BANA's motion. Ward had no legal representation at the time.

         BANA's first amended complaint sought a larger judgment, including a interest of $181, 282.35, late fees of $381.32, escrow advances of $24, 273.48, other advances totaling $4, 716.56, and attorneys' fees of $3, 000.00. Dkt. #1, Ex. F. However, BANA also requested that the property be foreclosed upon with proceeds applied toward Ward's judgment. Id. As with the original complaint, BANA waived its right to a deficiency judgment. Id.


         Dismissal under Fed.R.Civ.P. 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 plaintiff's complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (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 the Complaint's well-pled facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper 12(b)(6) motion to dismiss. Vazquez v. Los Angeles Cty., 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. 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 footnotes omitted). This requires a plaintiff to plead “more than an unadorned, the-defendant-unlawfully-harmed-me-accusation.” Iqbal, 556 U.S. at 678 (citing id.).

         On a 12(b)(6) motion, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However, where the facts are not in dispute, and the sole issue is whether there is liability as a matter of substantive law, the court may deny leave to amend. Albrecht v. Lund, 845 F.2d 193, 195-96 (9th Cir. 1988).

         1. Negligence

         BANA argues that Ward's negligence claim should be dismissed because Washington law recognizes no duty between a borrower and a loan servicer unless the latter's activities exceed the scope of a conventional lender, which they did not here. BANA also claims that the independent duty doctrine precludes a duty of care because the parties have contractual obligations to each other.

         Ward responds by pointing to several cases, mostly from California, that found a duty during the loan modification process. See, e.g., Garcia v. Ocwen Loan Servicing, LLC, No. C 10-0290 PVT, 2010 WL 1881098, at *2 (N.D. Cal. May 10, 2010). According to Ward, the six-factor balancing test applied in those cases to establish a duty also suggests that BANA owed a duty during the foreclosure process. See Biakanja v. Irving, 49 Ca.2d 647, 122 P.2d 293 (1958) (creating the six-factor test). In addition, Ward argues that the independent duty doctrine does not apply here because BANA's duty arose separately from any contractual relationship. Finally, Ward asserts that the Court should look to RCW 61.24.030 as establishing a duty during nonjudicial foreclosure.

         “In order to prove actionable negligence, a plaintiff must establish the existence of a duty, a breach thereof, a resulting injury, and proximate causation between the breach and the resulting injury.” Schooley v. Pinch's Deli Mkt., Inc., 134 Wash.2d 468, 474 (1998). “In the law of negligence, a duty of care is defined as an obligation, to which the law will give recognition and effect, to conform to a particular standard of conduct toward another.” Affiliated FM Ins. Co. v. LTK Consulting Servs., Inc., 243 P.3d 521, 526 (Wash. 2010). The existence of a duty is a question of law. Estate of Bruce Templeton ex rel. Templeton v. Daffern, 98 Wash.App. 677, 687, 990 P.2d 968, 974 (2000). The burden of establishing a duty belongs to the plaintiff. Jackson v. City of Seattle, 158 Wash.App. 647, 652, 244 P.3d 425, 428 (2010).

         “So long as a loan servicer's activities do not exceed the scope of a conventional lender, the servicer will be treated as a lender for purposes of determining its duty to a borrower.” Smokiam, 2017 WL 4224408, at *4 (citing Johnson v. JP Morgan Chase Bank N.A., No. 14-5607 RJB, 2015 WL 4743918, at *8 (W.D. Wash. Aug. 11, 2015)). In Washington, lenders “do not owe a fiduciary duty to borrowers because they conduct their transactions at arm's length.” Id. (citing Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 33 Wash.App. 456, 458, 656 P.2d 1089, 1092 (1982). However, a fiduciary duty may exist where the lender is “thrust . . . into the role of an adviser, thereby creating a relationship of trust and confidence which may result in a fiduciary duty upon the bank to disclose facts when dealing with the customer.” Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 33 Wash.App. 456, 459 (1982).

         A party may also owe a duty based on a statute establishing a standard of care. See Jackson v. City of Seattle, 158 Wash.App. 647, 651 (2010); Mix v. Ocwen Loan Servicing, LLC, No. C17-0699JLR, 2017 WL 5549795, at *6 n.12 (W.D. Wash. Nov. 17, 2017). Washington courts look to the Restatement (Second) of Torts § 286 (1965) when making this determination. Jackson, 158 Wash.App. at 647. Section 286 provides, “The court may adopt as the standard of conduct of a reasonable man the requirements of a legislative enactment or an administrative regulation whose purpose is found to be exclusively or in part: (a) to protect a class of persons which includes the one whose interest is invaded, and (b) to protect the particular interest which is invaded, and (c) to protect that interest against the kind of harm which has resulted, and (d) to protect that interest against the particular hazard from which the harm results.” Restatement (Second) of Torts § 286. Under traditional negligence principles, the existence of a ...

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