United States District Court, D. Arizona
David G. Campbell United States District Judge
On December 31, 2015, Plaintiffs William and Lori Leist initiated this action by filing a complaint in the Maricopa County Superior Court. The complaint, as amended on February 2, 2016, asserts claims against Academy Mortgage Corporation, Corbin Olsen, and various unknown individuals and entities for negligent misrepresentation, common law fraud, and consumer fraud. Doc. 1-1 at 43-50 (“Complaint”). On February 3, 2016, Defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1441 and 1446, asserting federal jurisdiction under 28 U.S.C. § 1332(a). Doc. 1. Defendants now move to dismiss the action for failure to state a claim upon which relief can be granted. Doc. 4. The motion has been fully briefed (Docs. 5, 8), and the Court concludes that oral argument will not aid in its decision. For the reasons set forth below, Defendants’ motion will be denied.
The allegations in Plaintiff’s complaint are accepted as true for purposes of this motion. On June 2, 2015, Scott Miller - an individual who is not party to this case - offered to purchase Plaintiffs’ home for $850, 000. Complaint ¶ 9. Miller indicated that he would obtain a loan for $680, 000 at the close of escrow to cover the majority of the purchase price. Id. Miller attached a Pre-Qualification Information Form (“Pre-Qual Form” or “Form”) completed by Corbin Olsen, a loan officer employed by Academy Mortgage Company (“Academy”). Id., ¶¶ 11, 14-16. The Form stated that Academy had determined that Miller was pre-qualified for a loan of $680, 000 and a purchase price of up to $850, 000 based on its review of Miller’s paystubs, W-2s, personal tax returns, down payment/reserves documentation, and credit/liability documentation. Doc. 1-1 at 29. The Form stated that Miller was “not relying on the sale or lease of a property to qualify for this loan.” Id. The Form included the following disclaimer: “This information does not constitute loan approval. All information provided must be approved by an underwriter, and any material change in the Buyer’s credit or financial profile will render the pre-qualification null and void.” Id.
Relying in large part on the Pre-Qual Form - and particularly on its representation that Miller would be able to pay the specified purchase price without selling his existing home - Plaintiffs accepted Miller’s offer. Complaint ¶¶ 7, 25. On August 28, 2015, Olsen informed Miller’s broker that Academy would be denying Miller’s loan request. Id., ¶¶ 27-28. Olsen wrote:
We had hoped that the house would sell in Tulsa for the down payment which was our plan A. Plan B was that Michael [Miller had] lined up a home equity line of credit in order to access the equity for the down payment. However, now that the house is listed for sale, we cannot find any banks to access the equity in the home for the down payment. There are no other funds for the down payment and at this point we can’t move forward without a down payment.
Id., ¶ 27 (alteration in complaint). As a result of Academy’s denial, Miller was unable to purchase Plaintiffs’ home. Id., ¶ 30. Plaintiffs assert damages of at least $90, 000 stemming from Miller’s inability to close the sale. Id., ¶ 32.
II. Legal Standard.
A successful Rule 12(b)(6) motion must show either that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss as long as it contains “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) (citing 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.” Id., 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). The Court must take the well-pleaded factual allegations as true and construe them in the light most favorable to the plaintiff. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations do not enjoy a presumption of truth and are not sufficient to defeat a Rule 12(b)(6) motion. Iqbal, 556 U.S. at 678.
“In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). This requires the plaintiff to identify “the who, what, when, where, and how of the misconduct charged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citations omitted). “Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b).
Defendants argue that Plaintiffs’ claims rest on a misunderstanding of the legal import of the Pre-Qual Form. Doc. 4 at 5-7. As Defendants note, the Form states that it “does not constitute loan approval” and that “any material change in the Buyer’s credit or financial profile will render the pre-qualification null and void.” Doc. 1-1 at 29. According to Defendants, this disclaimer defeats any argument that Defendants were obligated to provide Miller with a loan in the specified amount.
This argument misses the mark. Plaintiffs do not contend that Academy was obligated to provide Miller with a loan. Doc. 5 at 9 (“The Leists acknowledge that the Pre-Qualification Form was not a promise/guarantee that Mr. Miller would later be approved for a loan.”). Instead, Plaintiffs argue that Defendants were obligated to represent Miller’s financial status as accurately as possible based on the information reviewed. Id. at 10. The disclaimer does not purport to relieve Defendants of this ...