United States District Court, W.D. Washington, Seattle
ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS
SUBMITTED BY DEFENDANT NEW PENN FINANCIAL
S. Lasnik, United States District Judge.
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.
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”) 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.
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.
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).
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)).
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).
Plaintiffs' Claim of Negligent Misrepresentation
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)).
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.
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 ¶ 48. ...