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Humphrey Lau v. Kathi Pylman

December 20, 2011

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



FINDINGS AND RECOMMENDATIONS

This matter came before the court on July 8, 2011, for hearing of defendants' Federal Home Loan Mortgage Corporation and Homesteps motion to dismiss plaintiff's amended 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 undersigned will recommend that defendants' motion be granted in part.

BACKGROUND

Plaintiff commenced this action by filing his original complaint in the Sacramento County Superior Court on June 30, 2010. On August 9, 2010, defendant Federal Home Loan Mortgage Corporation, removed the 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 a motion to dismiss plaintiff's original complaint. (Doc. No. 5.) On March 21, 2011, the court granted that motion and dismissed the original complaint while granting plaintiff leave to file an amended complaint. (Doc. No. 18.) Plaintiff filed his amended complaint on April 19, 2011. (Am. Compl. (Doc. No. 19.)) On May 11, 2011, defendants Federal Home Loan Mortgage Corporation and Homesteps filed the motion to dismiss plaintiff's amended complaint now pending before the court. ("MTD" (Doc. No. 20.)) Plaintiff filed an untimely opposition on July 1, 2011, ("Pl.'s Opp'n." (Doc. No. 28)), and defendants filed a reply on July 5, 2011. ("Defs.' Reply" (Doc. No. 29.))

PLAINTIFF'S CLAIMS

In his amended complaint, plaintiff alleges as follows. On or about January 5, 2010, plaintiff employed Kathi Pylman, a real estate agent with William L. Lyon & Associates, to act as his agent 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, offering to purchase the property for $244,900.00. 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 the purchase price towards plaintiff's closing costs and pay $1,100 for a two-year home warranty insurance policy. Plaintiff signed the counteroffer on January 15, 2010, and gave it to Pylman to transmit to defendant Sellers.

On January 27, 2010, plaintiff received from defendant Sellers a seven-page document titled "Homesteps Addendum #1 to Contract of Sale" ("Addendum #1"). 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 his agent Pylman that he did not intend to occupy the property.

Plaintiff corrected addendum #1 to indicate that he did not intend to occupy the subject property, signed the document and returned it to Pylman on February 1, 2010. On February 9, 2010, defendant Sellers accepted plaintiff's January 5, 2010 proposed purchase agreement, as modified by defendant's January 13, 2010 counteroffer and addendum #1. The three signed documents were delivered to plaintiff on February 17, 2010. Shortly thereafter, plaintiff was informed that because he did not intend to occupy the property, the defendant Sellers would only credit 2% of the purchase price towards plaintiff's closing costs, not the previously agreed to 3.5%.

On February 24, 2010, Pylman represented to plaintiff that although the defendant Sellers were now only willing to credit 2% of the purchase price towards his closing costs, they had agreed to pay all escrow fees, title fees and the transfer tax, which in total amounted to $2,390.39. Plaintiff expressed his displeasure to Pylman over the closing costs dispute but was told that if the purchase of the property did not proceed, he would lose his earnest money deposit.

Facing the loss of his earnest money deposit, and relying on the assurance of his agent Pylman that defendant Sellers had agreed to pay the escrow fees, title fees and transfer tax, plaintiff signed all the closing documents sent by the title company for the purchase of the subject property on March 29, 2010. Among those closing documents was a document titled Buyers Estimated Closing Costs, dated March 30, 2010. According to that document the defendant Sellers were to credit plaintiff $6,949.60 towards his closing costs and plaintiff's total amount to close escrow was $60,197.50.

On March 31, 2010, Pylman emailed plaintiff a second addendum, ("Addendum #2"), specifying in writing that the defendant Sellers would only credit 2% of the purchase price towards plaintiff's closing costs. When plaintiff again balked because of his unhappiness with the reduction in the percentage of the purchase price the Sellers were now willing to pay toward closing costs, his agent Pylman told him 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 stated the exact dollar amounts each was going to pay. Again, relying on his agent Pylman's representations, plaintiff signed addendum #2.*fn2

On April 3, 2010, plaintiff received another document titled Buyers Estimated Closing Costs. That document indicated that the defendant Sellers were only to credit $4,898 toward plaintiff's closing costs and that the total amount due from plaintiff to close escrow was now $63,626.69. Plaintiff again protested to Pylman. This time Pylman told plaintiff that nothing could be done about the change in terms and that if plaintiff did not pay the additional closing costs he would not be able to purchase the property and would lose his 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 now refusing to pay the escrow fees, transfer tax and the $1,100 home warranty. Plaintiff was told that he needed to wire an additional $1,167.88 to complete the purchase and that he would have to pay all escrow fees and transfer tax, or the transaction would not take place. This time, plaintiff refused to pay the additional costs and the purchase fell through.

Based on these factual allegations, plaintiff alleges claims against defendant Sellers for breach of contract, "damage," and the intentional and negligent infliction of emotional distress. (Am. Com (Doc. No. 19) at 1-17.)*fn3

DEFENDANTS' MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(6)

The defendant Sellers seek dismissal of plaintiff's amended complaint with prejudice. In moving to dismiss the defendant Sellers argue that: (1) they did not breach any contract; (2) plaintiff's damage claim is not a recognized claim; (3) plaintiff's intentional infliction of emotional distress claim fails because there is no extreme or outrageous conduct alleged; and (4) plaintiff's negligent infliction of ...


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