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Coordes v. Wells Fargo Bank, N.A.

United States District Court, E.D. Washington

October 18, 2019

MONTY AND MICHELLE COORDES, individually and on behalf of all others similarly situated, Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.



         BEFORE THE COURT is Defendant's Motion to Dismiss and Strike Amended Class Action Complaint (ECF No. 26). This matter was heard with oral argument on October 18, 2019. Gretchen F. Cappio and Matthew J. Preusch appeared on behalf of Plaintiffs. Amanda L. Groves and Rudy A. Englund appeared on behalf of Defendant. The Court has reviewed the record and files herein and considered the parties' oral arguments, and is fully informed. For the reasons discussed below, the Court GRANTS IN PART Defendant's Motion to Dismiss and DENIES Defendant's Motion to Strike Amended Class Action Complaint (ECF No. 26).


         This case arises out of Defendant Wells Fargo N.A.'s (“Wells Fargo”) use of flawed software to deny Plaintiffs' request for a mortgage modification in connection with a federal program created in the aftermath of the 2008 financial crisis. The following facts are drawn from Plaintiffs' Amended Complaint and construed in the light most favorable to Plaintiffs. Schwarz v. United States, 234 F.3d 428, 436 (9th Cir. 2000).

         In 2005, Plaintiffs Monty and Michelle Coordes built a new home in Spokane Valley, Washington, secured by a mortgage serviced and later acquired by Defendant. ECF No. 25 at 2, ¶ 1. In early 2010, as a result of the economic downturn, Mr. Coordes became temporarily unemployed. Id. at ¶ 2. In March 2010, Plaintiffs contacted Defendant to seek assistance making their mortgage payments and to request relief in the form of a mortgage loan modification. Id. In July 2010, Mr. Coordes obtained full-time employment. ECF No. 25 at 2, ¶ 3. In August 2010, Plaintiffs were offered a trial modification, which would have required Plaintiffs to pay back payments and penalties that Plaintiffs could not afford. Id.

         In January 2011, Plaintiffs filed for Chapter 13 bankruptcy and their bankruptcy plan was approved in May. ECF No. 25 at 2, ¶ 4. In July 2011, Plaintiffs again sought a mortgage modification from Defendant. Id. In December 2011, Defendant rejected Plaintiffs' mortgage modification application. ECF No. 25 at 3, ¶ 6. In January 2012, Plaintiffs lost their home in a foreclosure sale. Id.

         In August 2018, Defendant disclosed that a calculation error in its internal mortgage loan modification underwriting software resulted in the improper denial of approximately 625 modification applications that should have been granted. ECF No. 25 at 3, ¶ 7. Defendant discovered this software error as early as 2015. ECF No. 25 at 4, ¶ 9. The error was reported to be an “automated miscalculation of attorneys' fees that were included for purposes of determining whether a customer qualified for a mortgage loan modification pursuant to the requirements of government-sponsored enterprises….” ECF No. 25 at 7, ¶ 26. In November 2018, Defendant disclosed that the number of wrongful denials had been updated to 870. ECF No. 25 at 3, ¶ 7.

         In a notice dated September 11, 2018, Defendant contacted Plaintiffs to inform them that their mortgage loan modification was erroneously denied based on the calculation error. ECF No. 25 at 12, ¶ 46. Attached to the letter was a check for $15, 000. ECF No. 25 at 12, ¶ 47. In November 2018, Plaintiffs undertook mediation with Defendant and were awarded an additional $25, 000. ECF No. 25 at 12, ¶ 48.

         On July 19, 2019, Plaintiffs filed an Amended Complaint against Defendant claiming violation of the Washington Consumer Protection Act (“CPA”) and unjust enrichment. ECF No. 25 at 17-20, ¶¶ 69-87. On August 9, 2019, Defendant filed the instant Motion to Dismiss and Strike Class Action Complaint.[1] ECF No. 26.


         A. Motion to Dismiss Standard

         A motion to dismiss for failure to state a claim “tests the legal sufficiency” of the plaintiff's claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To withstand dismissal, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). This requires the plaintiff to provide “more than labels and conclusions, and a formulaic recitation of the elements.” Twombly, 550 U.S. at 555. While a plaintiff need not establish a probability of success on the merits, he or she must demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         When analyzing whether a claim has been stated, the Court may consider the “complaint, materials incorporated into the complaint by reference, and matters of which the court may take judicial notice.” Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A plaintiff's “allegations of material fact are taken as true and construed in the light most favorable to the plaintiff[, ]” however “conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (citation and brackets omitted).

         In assessing whether Rule 8(a)(2) has been satisfied, a court must first identify the elements of the plaintiff's claim(s) and then determine whether those elements could be proven on the facts pled. The court may disregard allegations that are contradicted by matters properly subject to judicial notice or by exhibit. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). The court may also disregard conclusory allegations and arguments which are not supported by reasonable deductions and inferences. Id.

         The Court “does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 662. “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.'” Id. at 678 (citation omitted). A claim may be dismissed only if “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Navarro, 250 F.3d at 732.

         B. Consideration of ...

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