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Clark v. Homecomings Financial

February 11, 2009


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court


Defendant moves to dismiss count one of plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed an opposition and defendant replied. The Court finds this motion amenable to disposition without oral argument. Local Civil Rule 7.1(d).


The Court draws the following factual background from the allegations contained in plaintiff's complaint. Plaintiff owns residential property commonly known as 5748 Desert View Drive, La Jolla, California 92037 ("Property"). Defendant is a limited liability company that holds a promissory note secured by a deed of trust against the Property.

On October 3, 2007, a landslide occurred on the street and hillside above the Property, causing extensive damage to plaintiff's house. The City of San Diego immediately "yellow-tagged" the property as uninhabitable and plaintiff has not been able to reoccupy the house. Plaintiff has obtained alternative residence while the area is stabilized.

Plaintiff contacted defendant to request a forbearance or accommodation. Defendant agreed to a "credit suppression" agreement,evidenced by a confirmation letter defendant sent on May 27, 2008. Plaintiff understood this credit suppression to be, in effect, a forbearance.Specifically, defendant promised: (1) no collection efforts would be undertaken against plaintiff during the credit suppression; (2) plaintiff's credit would not be adversely affected; and (3) at the end of the suppression term, plaintiff could seek an extension.

As a result of this agreement, plaintiff ceased mortgage payments to defendant. In response, defendant instituted and has continued collection efforts against plaintiff. These include threatened lock changes and threatened foreclosure proceedings.

In his first amended complaint ("FAC"), plaintiff makes five claims: (1) breach of the implied covenant of good faith and fair dealing; (2) breach of contract; (3) promissory estoppel; (4) violation of California Code § 1788, et seq.; and (5) violation of 15 U.S.C. § 1692, et seq.Defendant filed the instant motion to dismiss the first claim, the breach of the implied covenant. Plaintiff opposed and defendant filed a reply.


A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.544 (2007). The court's review is limited to the contents of the complaint and must accept all factual allegations pled in the complaint as true, drawing all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996). In spite of this deference, it is not proper for the court to assume that "the [plaintiff] can prove facts which [he or she] has not alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). Furthermore, a court is not required to credit conclusory legal allegations cast in the form of factual allegations, unwarranted deductions of fact, or unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).


In Count One, plaintiff alleges defendant breached an implied covenant of good faith and fair dealing contained in the credit suppression agreement. Defendant allegedly breached this implied covenant by engaging in collection efforts.

i. Parties' Argument

Defendant argues the claim must be dismissed because plaintiff cannot show a violation of an independent duty, a prerequisite to maintain a claim for tortious breach of the implied covenant. Freeman & Mills v. Belcher Oil Co., 11 Cal. 4th 85 (1995). Defendant contends this independent duty arises from "special relationships" between the parties and argues no independent duty exists between a lender and borrower in a typical mortgage transaction. See, e.g., Marks v. Ocwen Loan Servicing, 2008 WL 344210 at *6 (N.D. Cal. Fed 6, 2008); Nymark v. Heart Fed. Savings & Loan Ass'n, 231 Cal. App. 3d 1089, 1096 (1991). Further, defendant cites analogous cases in which courts found no ...

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