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Pifer v. Bank of America, N.A.

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

August 27, 2019

LARRY PIFER, at al., Plaintiffs,
BANK OF AMERICA, N.A., et al., Defendants.


          Robert S. Lasnik, United States District Judge.

         This matter comes before the Court on defendant New Penn Financial, LLC dba Shellpoint Mortgage Servicing's (“Shellpoint”) motion for judgment on the pleadings. Dkt. #56.


         The Court has previously laid out the facts and allegations of this case, see Dkts. #44-46, and will not recite them here in depth. To summarize, in May 2007, plaintiffs Larry and Pamela Pifer obtained a loan of $393, 750 from Countrywide Home Loans Inc. dba America's Wholesale Lender (“AWL”), with interest in the amount of 7.6% (“the Loan”). Ex. C, Dkt. #21-2 at 18-22. This was secured by a Deed of Trust dated May 7, 2007. Ex. A, Dkt. #21-1 at 2-3. On July 5, 2011, Bank of America (“BANA”)[1] sent plaintiffs a letter with a proposed Loan Modification Agreement (“LMA”). Ex. D, Dkt. #21-2 at 24-29. BANA listed an unpaid principal amount of $434, 710.30 and a new interest rate of 2%. Id. at 24. It stated that the interest rate would increase to 3% in the fourth year, 4% in the fifth year and 4.875% in the sixth year. Id. BANA stated that the LMA “[would] not be binding or effective unless and until it [had] been signed by both [plaintiffs] and [BANA].” Id. Plaintiffs signed the LMA and made some payments pursuant to it, but they did not receive a copy of the fully executed LMA from BANA. Dkt. #3 (First Amended Complaint (“FAC”)) at ¶ 12. They eventually stopped making payments after September 2011. Id. at ¶ 54. In 2016, the Loan was transferred to Shellpoint for servicing. Id. at ¶ 23.

         Shellpoint sent a Validation of Debt Notice to plaintiffs on December 8, 2016. Ex. O, Dkt. #21-2 at 23-24. This Notice stated that plaintiffs owed a debt of $143, 810.10 and identified BANA as the creditor to whom the debt was owed. Id. On January 18, 2017, Shellpoint sent a second Validation of Debt Notice to plaintiffs. Ex. P, Dkt. #21-2 at 26-27. It stated that the Loan had been updated to a “Cease & Desist” and that the purpose of the Notice was to respond to plaintiffs' inquiry. It stated that the owner of the Loan was The Bank of New York As Trustee for The Certificate Holders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-8 (“BONY”). It listed a principal balance of $432, 572.88 and an interest rate of 2.000%. Id. Shellpoint also issued statements to plaintiffs between December 21, 2016 and April 18, 2018. Ex. Q, Dkt. #21-2 at 30-47. These all listed an interest rate of 4.8750%. Id. On February 15 and February 21, 2018, Shellpoint responded to inquiries from plaintiffs and informed them that BONY was the owner of their Loan. Ex. R, Dkt. #21-2 at 49-50. At some point, Shellpoint referred the Loan for foreclosure by its agent, North Star Trustee. Dkt. #3 at ¶27. A Notice of Trustee's Sale was issued on January 17, 2018, setting a foreclosure sale for May 18, 2018. Ex. S, Dkt. #21-2 at 52-55.[2]

         Plaintiff brought four causes of action against Shellpoint. Three of these were dismissed. Dkt. #46. All that remains is plaintiffs' claim for negligent misrepresentation. Shellpoint now seeks dismissal of that claim pursuant to Federal Rule of Civil Procedure 12(c).


         A. Legal Standard

         A party may move for judgment on the pleadings after the pleadings are closed. Fed.R.Civ.P. 12(c). “The same legal standard applies to a motion for judgment on the pleadings as to a motion to dismiss for failure to state a claim.” Dacumos v. Toyota Motor Credit Corp., 287 F.Supp.3d 1152, 1154 (W.D. Wash. 2017) (citing Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 n.4 (9th Cir. 2011)). The Court accepts “as true all material facts alleged in the pleadings and draw[s] all reasonable inferences in favor of the nonmoving party.” Id. (citing Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009)). “Judgment on the pleadings is proper when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Id. (quoting Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1990)).

         “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, 555 (2007)). There must be more than a sheer possibility that a defendant has acted unlawfully. Id. (citing Twombly, 550 U.S. at 556).

         B. Plaintiffs' Claim of Negligent Misrepresentation

         A negligent misrepresentation claim has six elements: (1) the defendant supplied false information that guided the plaintiff's business transaction, (2) the defendant knew or should have known that the information was offered to advise the plaintiff's business transaction, (3) the defendant obtained or communicated the false information negligently, (4) the plaintiff relied on the false information, (5) the plaintiff's reliance was reasonable, and (6) the false information proximately caused the plaintiff's damages. Childs v. Microsoft Corp., No. C10-1916RAJ, 2011 WL 6330141, at *5 (W.D. Wash. Dec. 16, 2011), aff'd, 489 Fed.Appx. 224 (9thCir. 2012) (citing Ross v. Kirner, 162 Wn.2d 493, 499 (2007) (en banc)).

         Plaintiffs base their claim of negligent misrepresentation on three grounds. First, Shellpoint issued contradictory Validation of Debt Notices on December 8, 2016 and January 18, 2017. One stated that BANA was the creditor to whom plaintiffs owed the debt, although BONY owned it at the time. Ex. O, Dkt. #21-1 at 23-24; see Dkt. #56 at 5. The other stated that BONY owned the Loan. Ex. P, Dkt. #21-23 at 26-27. Second, Shellpoint sent plaintiffs periodic statements between 2017 and 2018 that contained misrepresentations regarding the amounts due. FAC at ¶ 47; Ex. Q, Dkt. #21-2 at 30-47. Third, Shellpoint was negligent in onboarding the Loan without verifying whether the terms were valid and in making demands based upon interest rates that differed from those in the original promissory note. Id. at ¶ 48.

         Shellpoint contends that plaintiffs have not alleged that they detrimentally relied on the Validation of Debt Notices. Dkt. #56 at 5. It also argues that any confusion regarding who owned the Loan should not have led plaintiffs to stop making payments on their Loan altogether. Id. at 5-6. However, plaintiffs have alleged that Shellpoint “committed negligent misrepresentation” by issuing contradictory Validation of Debt Notices, FAC at ¶ 46, and that Shellpoint's negligent misrepresentations caused them to default on the Loan. Id. at ¶ 51. They have also stated that they received many contradictory communications from all the defendants and were unclear on their payment obligations in the absence of an executed LMA from BANA. Id. at ¶¶ 17, 22; see Exs. D, E, G-I, Dkt. #21-1. This was compounded by the fact that Shellpoint's statements reflected the terms of the LMA instead of the original agreement with BANA. FAC at ΒΆ 48. ...

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