Estate of Mildred J Hoskins v. Wells Fargo Bank NA

[5] UNITED STATES DISTRICT COURT [6] WESTERN DISTRICT OF WASHINGTON AT SEATTLE [7] 8 ESTATE OF MILDRED J. HOSKINS; CASE NO. C20-75RSM ANDREW HOSKINS and ERICK HOSKINS, 9 as co-personal representatives and ORDER GRANTING IN PART individually; CHRISTOPHER HOSKINS; MOTIONS TO DISMISS 10 ESTELITA HOSKINS, 11 Plaintiffs, 12 v. 13 JAMES WELLS FARGO BANK, N.A.; and NATIONSTAR MORTGAGE, LLC d/b/a 14 CHAMPION MORTGAGE, 15 Defendants. 16 I. INTRODUCTION [17] This matter comes before the Court on Defendants’ Motions to Dismiss under Rule [18] 12(b)(6). Dkts. #18 and #19. Plaintiffs oppose. For the reasons stated below, the Court [19] GRANTS IN PART Defendants’ Motions, dismissing certain claims with prejudice and certain [20] claims without prejudice and with leave to amend. 21 II. BACKGROUND [22] For purposes of this Motion to Dismiss, the Court will accept all facts in the Complaint [23] as true. The Court will briefly summarize these facts as necessary for ruling on this Motion. [24] 1 The Estate of Mildred J. Hoskins, Plaintiff, is the owner of the real property located at 4709 46th Ave S in Seattle, Washington. Plaintiffs Erick and Andre Hoskins are the co-personal [2] representatives of the Estate and sue on its behalf and in their individual capacities. These two [3] as well as Plaintiffs Christopher and Estelita Hoskins are the heirs of Mildred J. Hoskins. [4] On or about January 10, 2003, Rufus and Mildred Hoskins entered into a reverse [5] mortgage on their property with Defendant Wells Fargo Bank, N.A. The Promissory Note [6] included a rider stating that $30,000 would be paid to conduct necessary repairs on the home [7] and to the late Mr. Hoskins’ then-appointed guardian “Partner in Care.” However, Plaintiffs [8] claim that no home repairs have ever been made, Defendants have not accounted for these [9] funds, Plaintiffs have not received these funds, and that Plaintiffs are not aware of any party [10] receiving the funds. [11] The appointed guardian for Mr. Hoskins advised the court handling the guardianship [12] proceedings that the repairs were completed, terminated the guardianship, and collected the [13] applicable fees. Plaintiffs allege that Wells Fargo failed to conduct any due diligence to [14] confirm that the work was in fact done. The repair work at issue included repairing and/or [15] replacing the foundation, wiring, structural support members, exterior door, windows, flooring, [16] and ceiling, as well as mold remediation. [17] In 2012, Wells Fargo sent correspondence to Plaintiffs purporting to have advanced [18] funds to pay for property taxes and insurance and stating that the home loan was in default prior [19] to taxes being due. [20] In 2016 through 2017, Wells Fargo contacted Plaintiffs’ insurance company to put them [21] on notice that the above property was vacant, which was apparently incorrect. This caused the [22] insurance company to give notice of termination of the Homeowners policy. [24] 1 In April of 2017, Defendants began the foreclosure process, issuing a notice of default. The Plaintiffs entered into the Washington State Foreclosure Fairness Act mediation program [2] and made a $2,400.11 payment to Wells Fargo qualifying them for the opportunity to correct [3] the default. [4] Wells Fargo transferred the loan to Defendant Champion Mortgage and the loan was [5] never taken out of default status. In October of 2018, Champion initiated foreclosure. Plaintiffs [6] requested mediation, which occurred on January 24, 2019. This mediation was unsuccessful [7] and the mediator issued a certificate of bad faith against Champion. [8] On December 17, 2019, Plaintiffs filed the instant suit against Defendants Wells Fargo [9] and Nationstar Mortgage d/b/a Champion Mortgage. Dkt. #1-1. Plaintiffs essentially claim that [10] Defendants failed to provide the repair funds, failed to follow industry guidelines, attempted to [11] foreclose on the property improperly, and treated Mildred Hoskins differently because she was a [12] black woman. Plaintiffs bring claims under the Washington State Consumer Protection Act [13] (“CPA”), state Consumer Loan Act, the Truth in Lending Act (“TILA”), the Equal Credit [14] Opportunity Act (“ECOA”), Home Ownership and Equity Protection Act (“HOEPA”), Deed of [15] Trust Act (“DTA”), Fair Debt Collections Practices Act (“FDCPA”), Washington Law Against [16] Discrimination (“WLAD”), RCW 62A-3-305 recoupment, and common law breach of contract. [17] Id. [18] III. DISCUSSION [19] A. Legal Standard under Rule 12(b)(6) [20] In making a 12(b)(6) assessment, the court accepts all facts alleged in the complaint as [21] true, and makes all inferences in the light most favorable to the non-moving party. Baker v. [22] Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009) (internal citations omitted). [23] However, the court is not required to accept as true a “legal conclusion couched as a factual [24] 1 allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The complaint “must contain sufficient factual matter, accepted as [2] true, to state a claim to relief that is plausible on its face.” Id. at 678 . This requirement is met [3] when the plaintiff “pleads factual content that allows the court to draw the reasonable inference [4] that the defendant is liable for the misconduct alleged.” Id. The complaint need not include [5] detailed allegations, but it must have “more than labels and conclusions, and a formulaic [6] recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 . Absent [7] facial plausibility, a plaintiff’s claims must be dismissed. Id. at 570 . [8] Where a complaint is dismissed for failure to state a claim, “leave to amend should be [9] granted unless the court determines that the allegation of other facts consistent with the [10] challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv11 Well Furniture Co., 806 F.2d 1393 , 1401 (9th Cir. 1986). [12] B. Defendants’ Motions to Dismiss under Rule 12(b)(6) [13] Out the outset, the Court generally notes that Plaintiffs’ Complaint fails to satisfy the [14] above federal pleading standards, almost exclusively pleading mere labels and conclusions [15] rather than sufficient factual matter to state a claim to relief that is plausible on its face. To the [16] extent that a claim is not addressed below, it is properly dismissed with leave to amend for [17] Plaintiffs to restyle their Complaint under the above standards. [18] 1. Claims brought by Plaintiffs in their individual capacities [19] Defendants argue that Plaintiffs in their individual capacity lack standing. Dkt. #18 at 5; [20] Dkt. #19 at 3. Under Washington law, third parties (such as individual “heirs”) do not have an [21] automatic right to sue on a contract or raise claims of injury to real property they do not own [22] unless they are third party beneficiaries. See Ramos v. Arnold, 141 Wn. App. 11 , 21–22, 169 23 P.3d 482 (2007) (dismissing contract claim “because [plaintiffs] were not a party to the … [24] 1 contract”); see also Grudzinski v. Grudzinski, 176 Wn. App. 1012 , *5–*6 (Aug. 27, 2013) (unpublished) (heirs lack “standing to raise a claim for injury to real property” because they did [2] not own the real property at the time of the alleged injury). The Complaint is clear that the [3] Estate owns the Property in question, and there is no evidence that under any applicable [4] agreement the promising party was to assume a “direct obligation” to these individual Plaintiffs [5] as intended beneficiaries. See Ramos, 141 Wn. App. at 21 (citing Schaaf v. Highfield, 127 6 Wn.2d 17 , 21 n.5, 896 P.2d 665 (1995)). [7] Plaintiffs do not address Defendants’ standing argument except to state that they have [8] standing to assert their CPA claim under an expectancy interest. Dkt. #22 at 6. This lack of a [9] response leaves the Court with no basis to find standing for the other claims. Defendant Wells [10] Fargo correctly points out that the expectancy interest argument is unsupported, and cites to [11] RCW 11.04.250 and Grudzinski to argue that the individual plaintiffs had no interest in the [12] reverse mortgage or the Property prior to Mrs. Hoskins’ death. Dkt. #24 at 3 (citing 176 Wn. 13 App. 1012 at *5–*6 (heirs lack “standing to raise a claim for injury to real property” where they [14] did not own the real property at the time of the alleged injury)). [15] The Court agrees with Defendants and finds that all claims brought by Plaintiffs Erick [16] and Christopher Hoskins in their individual capacity and all claims brought by the remaining [17] Plaintiffs are properly dismissed with prejudice for lack of standing. Only the Estate has [18] standing to sue Defendants on these claims. [19] 2. CPA Claim brought by the Estate [20] “To prevail in a private [Consumer Protection Act] claim, the plaintiff must prove (1) an [21] unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) affecting the public [22] interest, (4) injury to a person's business or property, and (5) causation.” Panag v. Farmers Ins. [24] 1 Co. of Washington, 166 Wn.2d 27 , 204 P.3d 885, 889 (2009) (citing Hangman Ridge Training Stables v. Safeco Title Ins. Co., 105 Wn.2d 778, 786 , 719 P.2d 531 (1986)). [2] Plaintiffs argue that Wells Fargo violated the CPA by (1) advising “Mildred Hoskins’ [3] insurer, Allstate… that the Plaintiffs’ home was vacant, causing [her] insurance to be canceled [4] and making the loan fall into default,” and (2) advancing property taxes before they were due. [5] Dkt. #22 at 7–8. Plaintiffs’ claims do not address the public interest prong of the CPA. As [6] Wells Fargo argues, Plaintiffs have failed to plead facts that could establish a “likelihood that [7] additional plaintiffs have been or will be injured in exactly the same fashion.” Dkt #24 at 5 [8] (citing Michael v. Mosquera-Lacy, 165 Wn.2d 595 , 604–05, 200 P.3d 695 (2009)). [9] Additionally, the Court agrees that Plaintiffs’ bare assertion that Wells Fargo caused damages to [10] “the equity in their family home,” Dkt. #22 at 8, is insufficient because it provides no specifics [11] about the nature of the injury to Plaintiffs’ business or property, much less how Wells Fargo [12] caused an injury that would not have otherwise occurred. [13] The Court agrees with Defendant Champion that Plaintiffs’ CPA allegations against that [14] party “fail to identify an unfair or deceptive act or practice, fail to identify a public interest [15] impact, fail to articulate any specific injury caused to Plaintiffs, and fail to establish any causal [16] link between an act of Champion and an injury to Plaintiff.” Dkt. #18 at 7. [17] These flaws warrant dismissal of this claim. However, the Court finds that Plaintiffs [18] could possibly allege facts consistent with the existing Complaint to cure the above deficiencies [19] and will therefore grant leave to amend. [20] 3. Breach of Contract Claim [21] Plaintiffs’ Breach of Contract claim states only: [22] Plaintiffs incorporate by this reference the averments contained in [23] paragraphs 1 through 70 above. The loan obligations constitute a contract between the parties. All of the loan obligations incorporate [24] 1 terms that the parties will comply with all requirements of law. Defendants have not complied with all requirements of law, which are material breaches of the parties’ contract. Defendants have [2] further failed to honor the agreement. Such breaches of contract have deprived Plaintiffs of the benefit of their bargain and caused [3] them damages in amounts to be proven at the time of trial. [4] Dkt. #1-1 at 9–10. Defendants argue, inter alia, that this fails to state a claim under the [5] Twombly/Iqbal standard. The Court agrees. Defendants have no notice from the above what [6] was breached by whom, nor exactly how Plaintiffs were damaged. On the other hand, the Court [7] is not convinced at this stage that a breach of contract claim cannot be brought by Plaintiffs in [8] some form. Rather than have the parties dispute in briefing what is being claimed, the Court [9] will simply dismiss this claim without prejudice and with leave to amend. [10] 4. Recoupment under RCW 62A-3-305 [11] RCW 62A-3-305 states in part that “the right to enforce the obligation of a party to pay [12] an instrument is subject to… [a] claim in recoupment of the obligor against the original payee of [13] the instrument if the claim arose from the transaction that gave rise to the instrument; but the [14] claim of the obligor may be asserted against a transferee of the instrument only to reduce the [15] amount owing on the instrument at the time the action is brought.” [16] Plaintiffs’ claim states: [17] Plaintiffs incorporate by reference the averments contained in paragraphs 12 through 67 above. Plaintiffs are entitled to assert [18] their claim for recoupment pursuant to RCW 62A-3-305. Plaintiff’s amount of recoupment will be determined at the time of [19] trial. [20] Dkt. #1-1 at 9. Defendant Champion argues that Plaintiffs fail to allege they suffered any [21] damages as a result of the act or omission of that party. Plaintiffs’ claim generally fails to [22] satisfy the Twombly/Iqbal standard and will be dismissed without prejudice and with leave to [23] amend. [24] 1 5. TILA, ECOA, and HOEPA Claims The Court generally agrees with Defendants’ briefing on these three claims. See Dkt. [2] #19 at 5–7; Dkt #18 at 6 n.2 and n.3. Not only are these three claims inadequately pled and [3] inapplicable to Defendant Champion, Plaintiffs do not explain why they are not barred by the [4] applicable statutes of limitations. A claim under TILA is subject to a one-year statute of [5] limitations. 15 U.S.C. § 1640 (e). Because TILA concerns disclosures made in connection with a [6] loan closing, a cause of action under TILA arises as of the date of the loan closing. See Zeppeiro [7] v. Ditech Fin., LLC, 781 F. App’x 676 , 676 (9th Cir. 2019). A claim under the Homeowners [8] Equity Protection Act (“HOEPA”) is also subject to the TILA one-year statute of limitations. 15 9 U.S.C. § 1640 (e); Cebrun v. HSBC Bank USA, N.A., 2011 WL 321992 , *3 (W.D. Wash. Feb. 2, [10] 2011). Under the Equal Credit Opportunity Act (“ECOA”), plaintiffs were required to file any [11] claim within five years of the date on which the claim occurred. 15 U.S.C. § 1691e(f). Plaintiffs [12] base their ECOA claim on Wells Fargo’s alleged failure “to provide proper notices.” Dkt. #1-1 [13] at ¶ 47. It appears to the Court that such a claim would have arisen in 2003 when Wells Fargo [14] originated the Reverse Mortgage. Thus, plaintiffs’ ECOA claim against Wells Fargo is [15] apparently time-barred. Plaintiffs do not address these arguments, and the Court does not find [16] they can be cured with further amendment. Accordingly, all of these claims are dismissed with [17] prejudice. [18] 6. WLAD Claim [19] Plaintiffs’ claim does not state what acts of Defendants were discriminatory or why [20] Plaintiffs have a basis to believe Ms. Hoskins was treated differently because she was a black [21] woman. See Dkt. #1-1 at ¶¶63-67. Plaintiffs do not differentiate between the Defendants or [22] state when the alleged discriminatory acts occurred. Many of the alleged acts, even if they [24] 1 violated the WLAD, would be time-barred. In any event, this claim fails the Twombly/Iqbal standard and will be dismissed with leave to amend. [2] 7. Remaining Claims against Wells Fargo [3] Plaintiffs concede that they do not assert the following claims against Wells Fargo: (1) [4] Count B (Consumer Loan Act); (2) Count G (Fair Debt Collection Practices Act); (3) Count F [5] (Deed of Trust Act); and (4) Count I (recoupment). See Dkt. #22 at 9–10 (noting that all four [6] above-mentioned claims “are aimed at Defendant Nationstar Mortgage, LLC”). These claims [7] are dismissed with prejudice as to Defendant Wells Fargo. [8] 8. FDCPA Claim against Champion [9] Champion argues that Plaintiffs fail to allege that Champion is a debt collector, that [10] Champion engaged in debt collection activities, or that they are consumers, as those terms are [11] defined by the FDCPA, and fail to allege that they suffered any damages as a result of any [12] conduct by Champion. Champion also questions whether this claim is based solely on damages [13] from foreclosure proceedings, arguing that such authorized by paragraph 9(a)(i) of the Deed of [14] Trust, and that “commencement of non-judicial foreclosure, in any event, could not violate the [15] FDCPA.” Dkt. #18 at 8 (citing Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019)). [16] The Court agrees with Champion that this claim is insufficiently pled and will dismiss without [17] prejudice and with leave to amend. [18] 9. Deed of Trust Act Claim against Champion [19] Champion argues that Plaintiffs’ claim for violation of the DTA fails because they do [20] not allege that a trustee’s sale of the Property has occurred and because they fail to allege that [21] they suffered any damages as a result of Champion’s acts or omissions. Dkt. #18 at 9 (citing, [22] inter alia, Myers v. Mortgage Elec. Registration Sys., Inc., No. 11-CV-05582 RBL, 2012 WL 23 678148, at *3 (W.D. Wash. Feb. 24, 2012) aff'd, 540 F. App'x 572 (9th Cir. 2013)). [24] 1 In Response, Plaintiffs admit that “the DTA does not create an independent cause of action for monetary damages based on violations before a foreclosure has occurred” but argue [2] that a violation of the DTA may be used to pursue a CPA claim. Dkt. #20 at 11. [3] The Court finds that the parties agree that the DTA claim cannot be pursued as a [4] separate claim here, and that Plaintiffs are free to argue violation of the DTA in pursuit of a [5] CPA claim if they are able to amend their pleading consistent with the Court’s holding above. [6] This claim is dismissed with prejudice. [7] IV. CONCLUSION [8] Having reviewed the relevant pleadings and the remainder of the record, the Court [9] hereby finds and ORDERS: [10] (1) Defendants’ Motions to Dismiss, Dkts. #18 and #19, are GRANTED IN PART. [11] Plaintiffs’ claims are DISMISSED with and without prejudice as stated above. [12] (2) Plaintiffs are granted leave to file an Amended Complaint curing the above13 mentioned deficiencies no later than thirty (30) days from the date of this Order. [14] Failure to file an Amended Complaint within this time period will result in this case [15] being closed. [17] DATED this 6th day of April, 2020. [20] A [21] 22 RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE