United States District Court, W.D. Washington, Tacoma
JAMES H. WARD, Plaintiff,
BANK OF AMERICA, a National Association, Defendant.
ORDER ON MOTION TO DISMISS
B. LEIGHTON UNITED STATES DISTRICT JUDGE
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
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.
following reasons, the Court GRANTS in part and DENIES in
part BANA's Motion.
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.
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.
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.
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.
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,
Iqbal, 556 U.S. at 678 (citing id.).
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).
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.
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.
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,
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).
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