United States District Court, W.D. Washington, Seattle
ORDER GRANTING MOTION FOR EXTENSION OF TIME AND
GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
L. ROBART UNITED STATES DISTRICT JUDGE
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,  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
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.)
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
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) ¶ 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
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.)
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.)
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.)
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.
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. (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.)
Motion to Dismiss Standard
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).
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.
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)).
Documents Attached to the Complaint and Judicial Notice of
Publicly Filed Documents
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).
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”)).
Motion for an Extension of Time
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