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Quintana v. Bank of America

United States District Court, D. Arizona

February 24, 2014

Karoly Quintana, Plaintiff,
Bank of America, Countrywide Home Loans Inc., Countrywide Financial Corp., Mortgage Electronic Registration Systems, Defendants.


JAMES A. TEILBORG, Senior District Judge.

This case arose when someone authorized a Trustee sale on Plaintiff's residence. Prior to this attempted Trustee sale, Plaintiff alleges as follows. In April 2009, Plaintiff inquired with BAC Home Loans Servicing LP about applying to modify her loan.[1] The bank representative advised Plaintiff that she was required to miss three months payments to qualify for a loan modification. Plaintiff missed three months payments. Plaintiff applied for a loan modification.

While Plaintiff's application was pending, the bank accelerated Plaintiff's loan. MERS filed a substitution of Trustee appointing Recontrust, N.A. as the Trustee on Plaintiff's Deed of Trust. On July 31, 2009, Recontrust, N.A. filed a notice of Trustee sale.

It is unclear who actually owned the note on Plaintiff's home at the time she was attempting to obtain the modification. However, in the reply to the motion to dismiss, Defendants state: "Pleadings on file in this Court, including a declaration from a bank employee, unequivocally demonstrate that BANA[2] remains the servicer of Plaintiff's loan with the authority to consider modification applications and to negotiate a settlement of the case." Doc. 38 at 3. The Reply further states that after April 2012 the beneficial interest in the Deed of Trust was transferred by MERS to Deutsche Bank. Id. It is unclear whether Deutsche Bank retains such interest as of today.

Plaintiff filed this lawsuit in October 2011. In March 2012, the parties stipulated to dismiss this lawsuit while Plaintiff was considered for a new loan modification. Plaintiff then submitted a loan modification application, which Plaintiff alleges was intentionally lost by Bank of America, N.A., and never considered by Bank of America, N.A.

In December 2012, Recontrust, N.A. sent a notice of Trustee sale to Plaintiff on behalf of Deutsche Bank. In March 2013, Plaintiff moved to reopen this case and the Court granted the motion. The Court later granted a preliminary injunction to stop the Trustee sale of the residence. On April 2, 2013, Plaintiff filed an amended complaint. Now pending is Defendants' motion to dismiss the amended complaint and Defendants' motion for clarification.

I. Motion to Dismiss

The Court may dismiss a complaint for failure to state a claim under 12(b)(6) for two reasons: 1) lack of a cognizable legal theory and 2) insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a "short and plain statement of the claim showing that the pleader is entitled to relief, " so that the defendant has "fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

Although a complaint attacked for failure to state a claim does not need detailed factual allegations, the pleader's obligation to provide the grounds for relief requires "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations omitted). The factual allegations of the complaint must be sufficient to raise a right to relief above a speculative level. Id. Rule 8(a)(2) "requires a showing, ' rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only fair notice' of the nature of the claim, but also grounds' on which the claim rests." Id. n.3 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure ยง1202, pp. 94, 95(3d ed. 2004)).

In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts alleged in the complaint in the light most favorable to the drafter of the complaint and the Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286 (1986).

Additionally, claims of fraud must be plead with particularity under Federal Rule of Civil Procedure 9(b).

Pursuant to Fed.R.Civ.P. 9(b), "in order for a complaint to allege fraud with the requisite particularity, a plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false. In other words, the plaintiff must set forth an explanation as to why the statement or omission complained of was false or misleading.'" [footnote omitted] Yourish v. Cal. Amplifier, 191 F.3d 983, 993 [9th Cir. 1999] (quoting In re GlenFed, 42 F.3d at 1548 [9th Cir. 1994]).

Williamson v. Allstate Insurance Co., 204 F.R.D. 641, 644-45 (D. Ariz. 2001).

A. Count 1: Fraud

1. 2009 Fraud

Plaintiff claims Defendant Bank of America, N.A as successor through merger to BAC Home Loans Servicing LP (hereinafter BofA) committed fraud against her in 2009 when it (through its agents) advised her to miss three months of payments on her home loan. Plaintiff claims this was fraud because BofA never intended to consider her for a loan modification, and instead induced her to default on her loan, which caused her harm, including the acceleration of her debt to the point that she now cannot come current on the loan.

To plead a claim for fraud, Plaintiff must claim that: defendant made a false, material misrepresentation that he knew was false or was ignorant of its truth, with the intention that plaintiff would act on it in a manner that was reasonably contemplated, that plaintiff was ignorant of the representation's falsity, rightfully relied on the truth of the representation, and sustained consequent and proximate damage. Haisch v. Allstate Inc. Co., 5 P.3d 940, 944 (Ariz.Ct.App. 2000).

Here, Plaintiff claims that Defendant's agent advised her to miss three months payments on her house to be considered for a mortgage modification. She said that this statement was false because Defendant never intended to consider her for a mortgage modification. Further, Plaintiff was induced to miss the three months of payments, which was foreseeable. Plaintiff did not know she would not be considered for the modification and relied on the advice of Defendant's agent.

Finally, Plaintiff claims she suffered the damage of not receiving a modification and also not being able to come current on her house payments. Defendant argues that Plaintiff was not damaged because, due to the size of her loan she was never eligible for a modification. However, the Ninth Circuit Court of Appeals has instructed this Court that this type of defense, "presents a factual dispute that cannot be resolved [at the motion to dismiss stage]." Corvello v. Wells Fargo, 728 F.3d 878, 885 (9th Cir. 2013) (citation omitted). Further, even if Plaintiff was ineligible for the modification, she has alleged that she received notice that, as a consequence of her missing three payments, her note had been accelerated. Therefore, she would have been responsible immediately for the full amount of the note plus any late fees and penalties, and that she could not make such a payment. This is a sufficient allegations of harm to survive a motion to dismiss. Finally, Plaintiff claims that her credit rating was damaged by Defendant's actions. The Court finds this too is a sufficient allegation of injury to survive a motion to dismiss.

Accordingly, Defendant's motion to dismiss the 2009 fraud allegation will be denied.

2. 2012 Fraud

Next Plaintiff claims that Defendant fraudulently induced her into settling this lawsuit in 2012. More specifically, Plaintiff claims that Defendant, though counsel, agreed to considering her for a loan modification if she dismissed her suit; but in reality Defendant never ...

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