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Kolbet v. Selene Finance LP

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

June 21, 2019

MICHAEL KOLBET, Plaintiff,
v.
SELENE FINANCE LP, et al., Defendants.

          ORDER GRANTING MOTION FOR EXTENSION OF TIME AND GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

          JAMES L. ROBART UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the court are: (1) Defendant Selene Finance LP's (“Selene”) motion to dismiss pro se Plaintiff Michael Kolbet's complaint (MTD (Dkt. # 5); see also Compl. (Dkt. # 1)); and (2) Mr. Kolbet's motion for an extension of time to respond to Selene's motion to dismiss (MFE (Dkt. # 7)). Mr. Kolbet opposes Selene's motion to dismiss (Resp. (Dkt. # 8)), and Selene filed a reply (Reply (Dkt. # 10)). In Selene's reply, Selene opposes Mr. Kolbet's motion for an extension of time. (See Reply at 1-2.) The court has considered the motions, the parties' submissions concerning the motions, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court GRANTS Mr. Kolbet's motion for an extension of time, GRANTS Selene's motion to dismiss, and GRANTS Mr. Kolbet leave to file an amended complaint within 15 days of the date of this order.

         II. BACKGROUND

         This dispute centers on Mr. Kolbet's unsuccessful attempts to modify his loan for the real property located at 15325 Cascadian Way, Lynnwood, WA 98087 (“the Property”) and the related trustee's sale of the Property. (See generally Compl.)

         On or about March 20, 2003, Mr. Kolbet and Teresa Kolbet (“the Kolbets”) executed a promissory note to Washington Mutual Bank, obligating the Kolbets to repay $218, 500.00, plus interest, in $1, 292.51 monthly installments. (Id. ¶ 12, Ex. A (“Note”) at 18.[2]) Selene is the servicer of this promissory note, also known as a mortgage. (Id.) That same day, the Kolbets granted a deed of trust encumbering the Property, and recorded the deed with the Snohomish County Auditor on March 31, 2003. (See McCormick Decl. (Dkt. # 10)[3] ¶ 1, Ex. 1 (“DOT”).) The deed of trust is currently assigned to Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, not Individually but as Trustee for Pretium Mortgage Acquisition Trust. (McCormick Decl. ¶ 2, Ex. 2 (“Assignment”).) On or about March 16, 2007, the Kolbets granted a subordinate or junior deed of trust to Washington Mutual Bank, also encumbering the Property, and recorded the junior deed on April 2, 2007. (McCormick Decl. ¶ 3, Ex. 3 (“JDOT”).) The junior deed is currently assigned to JPMorgan Chase Bank, NA (“Chase”). (McCormick Decl. ¶ 4, Ex. 4 (“Junior Assignment”).)

         Mr. Kolbet asserts that he has twice applied for loan modification since 2016, but Selene has denied his applications. (Compl. ¶¶ 13, 15.) Selene first denied Mr. Kolbet's loan modification application on September 24, 2018, citing “excessive obligations in relation to your income.” (Id. ¶ 15, Ex. B (“1st Denial”) at 23.) Mr. Kolbet called Selene on September 27, 2018. (Id. ¶ 19.) According to Mr. Kolbet, Selene advised him on that call that Mr. Kolbet “had only one option; that being liquidation of his home and to vacate the property by October 25, 2018.” (Id.) Selene further advised that Mr. Kolbet could sign a deed in lieu of foreclosure in exchange for a waiver of any future deficiency mortgage balance. (Id.) Mr. Kolbet claims that Selene's advice was “misleading, deceptive and illogical” because Mr. Kolbet only owes approximately $300, 000.00 on his first and second mortgages, but the Property is valued at around $600, 000.00. (Id. ¶ 20.) In other words, because Mr. Kolbet has significant equity in the Property, Mr. Kolbet would be better off selling than Property than signing a deed in lieu of foreclosure. (Id.)

         On October 9, 2018, Mr. Kolbet appealed Selene's denial. (Id. ¶ 16, Ex. C (“1st Appeal”) at 27.) In his appeal, Mr. Kolbet stated that he did “not have any credit obligations outside of [his] first mortgage and second mortgages, ” that Chase recently modified his second mortgage, and that his mother-in-law was willing to gift the Kolbets “$10, 000.00 to $15, 000.00, cash in order to be applied toward our outstanding balance of $42, 460.32.” (Id.) Selene denied Mr. Kolbet's appeal, though Mr. Kolbet does not specify on what date. (Id. ¶ 25.)

         Mr. Kolbet claims that he reapplied for mortgage assistance with Selene, though he does not specify on what date. (Id. ¶ 26.) Mr. Kolbet's second application reflected that he was receiving an additional $1, 200.00 in monthly income from a tenant. (Id.) On or about January 16, 2019, Selene advised Mr. Kolbet that no more documents were needed by Selene's underwriting team and that Mr. Kolbet had provided what Selene “considered a full package.” (Id. ¶ 28.) According to Mr. Kolbet, at the same time Selene represented that it was considering his second application, Selene started the home foreclosure process with a sale date set for May 10, 2019. (Id. ¶ 29, Ex. E (“Notice”) at 51-56.) Mr. Kolbet alleges that this process is known as “dual tracking” whereby “banks would simultaneously pursue a foreclosure while telling the borrower that his loan modification application was still under consideration.” (See id. ¶¶ 11, 29.) Selene eventually denied Mr. Kolbet's second modification application, though Mr. Kolbet does not specify on what date. (Id. ¶ 27.)

         In addition, Mr. Kolbet claims that Selene mishandled a number of his loan obligations, including: (1) stating “that escrow was short $1, 055.58 when transfer from Selene took place in 2014, ” but “fail[ing] to provide accounting records to prove up the shortage”; (2) stating that “escrow was short $2, 839.23” when Mr. Kolbet was current on all payments; (3) increasing Mr. Kolbet's monthly payments from $1, 296.27 to $1, 444.50 “with no explanation of additional escrow charges”; and (4) claiming that “the loan balance was $177, 124.38 at the time of transfer, ” but “refus[ing] to provide proper accounting records to prove up the validity of the debt.” (Id. ¶¶ 30-33.)

         Based on the foregoing, Mr. Kolbet brought suit against Selene on March 26, 2019, asserting fraud, misrepresentation, violation of the Washington Consumer Protection Act (“CPA”), and negligence.[4] (Id. ¶¶ 35-61.) On April 17, 2019, Selene filed the present motion to dismiss Mr. Kolbet's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (See MTD.) Selene's motion noted on May 10, 2019. (See Id. at 1.) Under the local rules, Mr. Kolbet's response was due May 6, 2019, see Local Rules W.D. Wash. LCR 7(d)(3), but Mr. Kolbet failed to respond on that date (see Dkt.). Instead, on May 10, 2019, Mr. Kolbet moved for an extension of time to file his response. (See MFE at 1-2.) Mr. Kolbet then filed his response on May 13, 2019. (See Resp.) On May 16, 2019, Selene opposed Mr. Kolbet's “untimely” response and filed its reply to Mr. Kolbet's response. (See Reply.)

         III. ANALYSIS

         A. Motion to Dismiss Standard

         Rule 12(b)(6) provides for dismissal for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). The court, however, is not required “to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). “A claim has facial plausibility 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 677-78. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. at 678 (quoting Twombly, 550 U.S. at 555, 557). Dismissal under Rule 12(b)(6) can be based on 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).

         Additionally, claims of fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b). Under Rule 9(b), “a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily constitute fraud (even if the word ‘fraud' is not used).” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003). Rule 9(b) requires that an allegation of fraud be “specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong.” Id. at 1106 (quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). In other words, an allegation of fraud “must be accompanied by ‘the who, what, when, where, and how' of the misconduct charged.'” Id. (citing Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). The plaintiff must identify “what is false or misleading about the statement, and why it is false.” Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994)).

         B. Documents Attached to the Complaint and Judicial Notice of Publicly Filed Documents

         When determining if a complaint states a claim for relief, the court may consider facts contained in documents attached to the complaint. Nat'l Ass'n for the Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000). Accordingly, the court considers the documents Mr. Kolbet attached to his complaint, including: (1) the promissory note or mortgage (see Note); (2) Selene's first denial of Mr. Kolbet's loan modification application (see 1st Denial); (3) Mr. Kolbet's appeal of Selene's first denial (see 1st Appeal); (4) the $1, 200.00 per month rental agreement that Mr. Kolbet submitted with his second application for loan modification (see Compl. ¶ 26, Ex. D (“Rent”)); and (5) Selene's notice of trustee's sale (see Notice).

         In addition, “[a]lthough, as a general rule, a district court may not consider materials not originally included in the pleadings in deciding a Rule 12 motion, ” the court “may take judicial notice of matters of public record and may consider them without converting a Rule 12 motion into one for summary judgment.” United States v. 14.02 Acres of Land More or Less in Fresno Cty., 547 F.3d 943, 955 (9th Cir. 2008) (internal quotation marks and citations omitted). Therefore, pursuant to Selene's request (see MTD at 2-3), the court takes judicial notice of the following publicly filed records: (1) the deed of trust, recorded on March 31, 2003, under Snohomish County Auditor instrument number 200303312416 (see DOT at 14); (2) the assignment of the deed of trust to Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, not Individually but as Trustee for Pretium Mortgage Acquisition Trust, recorded on January 10, 2013, under Snohomish County Auditor instrument number 201805210300 (see Assignment at 32); (3) the junior deed of trust, recorded on April 2, 2007, under Snohomish County Auditor instrument number 200704020168 (see JDOT at 34); (4) the assignment of the junior deed of trust to Chase, recorded on February 19, 2014, under Snohomish County Auditor instrument number 201402190031 (see Junior Assignment at 41); and (5) Selene's notice of trustee's sale, recorded on January 9, 2019, under Snohomish County Auditor instrument number 201901090213 (see McCormick Decl. ¶ 5, Ex. 5 (“Recorded Notice”[5])).

         C. Motion for an Extension of Time

         As explained, on May 10, 2019, Mr. Kolbet moved for an extension of time to file his motion to dismiss response. (See MFE at 1-2.) Mr. Kolbet ultimately filed his response on May ...


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