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Humphrey Lau v. Kathi Pylman

March 18, 2011

HUMPHREY LAU, PLAINTIFF,
v.
KATHI PYLMAN, ET AL, DEFENDANTS.



ORDER

This matter came before the court on October 8, 2010, for hearing of defendants' Federal Home Loan Mortgage Corporation and Homesteps motion to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff Humphrey Lau, who is proceeding pro se in this action, appeared telephonically on his own behalf. Attorney Brent Kramer appeared telephonically for defendants Federal Home Loan Mortgage Corporation and Homesteps. Oral argument was heard, and defendants' motion was taken under submission.

Upon consideration of the briefing on file, the parties' arguments at the hearing, and the entire file, the court will grant defendants' motion to dismiss. However, in light of the plaintiff's pro se status and for the reasons set forth below, the court will also grant plaintiff leave to amend his complaint to attempt to allege a cognizable claim. /////

BACKGROUND

Plaintiff originally commenced this action by filing his complaint in the Sacramento County Superior Court on June 30, 2010. On August 9, 2010, defendant Federal Home Loan Mortgage Corporation, removed this action to this court pursuant to 28 U.S.C. §§ 1331 and 1442, and 12 U.S.C. § 1452(f). (Doc. No. 2)

On August 16, 2010, counsel for defendants Federal Home Loan Mortgage Corporation and Homesteps filed the motion to dismiss now pending before the court. ("MTD" (Doc. No. 5.)) Plaintiff filed an opposition on September 2, 2010, ("Opp'n." (Doc. No. 10)), and defendants filed a reply on October 1, 2010. ("Reply" (Doc. No. 16.))

PLAINTIFF'S CLAIMS

In his complaint, plaintiff alleges as follows. On or about January 5, 2010, plaintiff employed defendant Pylman and defendant Lyon to act as his agents in purchasing the property located at 6304 Gus Way, Elk Grove, California ("Property"), which was owned by defendant Federal Home Loan Mortgage Corporation and defendant Homesteps (collectively "Defendant Sellers").*fn1

Plaintiff sent defendant Sellers a proposed purchase agreement ("Offer") on January 5, 2010. On January 13, 2010, defendant Sellers sent plaintiff a counteroffer that provided, in relevant part, that Sellers would agree to pay up to 3.5% of plaintiff's closing costs and to pay $1,100 for a two-year home warranty. Plaintiff signed the counteroffer on January 15, 2010, and emailed it back to defendant Pylman. On January 21, 2010, defendant Currie, acting as an agent for defendant Sellers, informed defendant Pylman that plaintiff's offer was "confirmed."*fn2 However, despite plaintiff's requests, defendant Sellers would not send plaintiff an executed sales agreement.

On January 27, 2010, defendant Currie sent plaintiff several documents for plaintiff's signature. Among the documents was a seven-page addendum ("Addendum #1") to the purchase agreement and counteroffer. Addendum #1 added several new terms and condition which had not previously been part of either the offer or counteroffer. One such condition was that in the event of a conflict between a provision of the contract of sale and the addendum, the provisions of the addendum would control.

Upon examining addendum #1 plaintiff discovered that the document indicated that plaintiff intended to occupy the property even though plaintiff did not intend to do so. Plaintiff then examined the January 5, 2010 offer and discovered that document also erroneously indicated that plaintiff intended to occupy the property. At all times plaintiff had informed defendant Pylman that he did not intend to occupy the property.

Plaintiff corrected addendum #1 to indicate that he did not intend to occupy the property, signed the document and returned it to defendant Pylman on February 1, 2010. As of February 1, 2010, plaintiff still had not received a signed purchase agreement from defendant Sellers reflecting the terms of the offer and counteroffer. While awaiting the signed documents, plaintiff began working with defendant Pylman and others to obtain financing for the purchase of the property. During that process plaintiff was informed that because he did not intend to occupy the property, the defendant Sellers would only pay 2% of plaintiff's closing costs, not the previously offered 3.5%.

Plaintiff asked defendant Pylman to obtain defendant Sellers' agreement to the original 3.5% term. Defendant Pylman responded that although the Sellers were now only going to pay 2% of the closing costs, they also had agreed to pay all escrow fees, title fees and the transfer tax. Relying on Pylman's representation that the defendant Sellers would pay the escrow fees, title fees and the transfer tax, plaintiff reluctantly agreed to the new condition that the defendant Sellers would pay only 2% of plaintiff's closing costs and proceeded to order an appraisal of the property.

On March 29, 2010, plaintiff signed the closing documents for the purchase of the Property. Among those documents was an estimation of the closing cost. That document indicated that the defendant Sellers were to credit plaintiff $6,946.69 towards his closing costs. On March 31, 2010, defendant Pylman emailed plaintiff another addendum, (Addendum #2), that indicated that the defendant Sellers would only pay 2% of those closing costs. Plaintiff initially refused to sign addendum #2. However, defendant Pylman told plaintiff that the signing of addendum #2 would not change the amount of money plaintiff had to pay under the agreement because the parties had already identified in the agreement the specific dollar amounts each was going to pay. Again, relying on defendant Pylman's representations, plaintiff signed addendum #2.*fn3 On April 3, 2010, plaintiff received another document estimating his closing costs. This new estimate indicated that the defendant Sellers were now only going to credit $4,898 toward those closing costs.

Plaintiff again protested to defendant Pylman. This time defendant Pylman told plaintiff that nothing could be done and that if plaintiff did not pay the additional closing costs he would lose the deal and his $2,500 earnest money deposit. Feeling pressured and exhausted, plaintiff reluctantly wired the additional money to the title company on the morning of April 5, 2010. However, later that afternoon the defendant Sellers indicated that they were refusing to pay the escrow fees and transfer tax. Plaintiff was told that he would now have to also pay these fees or the deal would fall through. This time, plaintiff refused to pay the additional costs.

As a result of the defendant Sellers' actions plaintiff lost $66,126.60 he paid to the escrow company, his $2,500 earnest money deposit, $375 for a home inspection fee, $625 for an appraisal, additional incidental expenses, hours of wasted time and other economic damages.

Plaintiff also suffered extreme emotional distress and mental anguish. (Notice of Removal, Ex. A. ("Compl." Doc. No. 2-2), at 3-8.)*fn4

Based on these factual allegations, plaintiff claims that the defendant Sellers are liable for breach of contract, intentional and negligent misrepresentation, the intentional and negligent infliction of emotional distress, and unlawful and unfair business practices. (Id. at 1-16.)

ARGUMENTS OF THE PARTIES

Defendant Sellers seek dismissal of plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that plaintiff has failed to state any cognizable claim. Specifically, defendants argue that plaintiff's complaint fails to state a claim because: (1) the defendant Sellers did not breach any contract; (2) plaintiff has failed to allege any representation was made to him by the defendant Sellers; (3) plaintiff has failed to allege that the defendant Sellers owed plaintiff any duty of care; (4) plaintiff's negligent infliction of emotional distress claim fails because the defendant Sellers did not owe plaintiff a duty of care; and (5) plaintiff's unlawful and unfair business practices claim fails because plaintiff has failed to state any claim for relief. (MTD (Doc. No. 5) at 8-18.)

In opposing defendants' motion, plaintiff addresses each of defendants' arguments and reasserts his claims for relief. (Opp'n. (Doc. No. 10) at 4-12.)

In reply, defendants merely repeat their contention that plaintiff's complaint fails to state a claim for all the reasons set forth in defendants' motion ...


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