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James Carpenter v. Bank of America

December 28, 2012


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


I. Introduction

Carpenter previously owned two properties in the San Diego area-one on West Bernardo Drive in San Diego proper (the "West Bernardo Property") and another on Valencia Avenue in Carlsbad (the "Valencia Property"). This case involves BOA's refusal to modify his loans on the properties, and their subsequent sale in foreclosure. BOA was not the original lender; it just serviced both of the loans.

It is really the West Bernardo loan that's at issue here. When Carpenter initially requested the loan modifications, the request with respect to the Valencia Property was quickly denied. But Carpenter alleges that he spent a considerable amount of time, money, and energy working with a BOA agent to modify the loan on the West Bernardo Property, and that he was led to believe, falsely, the loan modification would go through.

Specifically, Carpenter attended a loan modification event sponsored by BOA in August 2011 and spoke with a BOA representative who stated, in Carpenter's words, "that he could see no problem and that the numbers looked good." After this, in about November 2011, he was put in touch with a person named Joe Brown, who insisted that they start from scratch and resubmit all of Carpenter's paperwork. In the midst of this, however, BOA apparently decided not to modify Carpenter's West Bernardo loan, and it recorded a Notice of Default and initiated foreclosure proceedings. Brown told Carpenter on February 3, 2012 that he had requested a postponement of a February 6 foreclosure sale, but the sale went forward. And later, around February 7, Brown told Carpenter he requested that the foreclosure sale be rescinded, but again, this was denied.

Carpenter brings five claims: (1) negligence; (2) promissory estoppel; (3) negligent misrepresentation; (4) elder abuse; and (5) unfair and deceptive acts and practices. Carpenter's essential grievance is that he was misled by BOA about the possibility of a loan modification-as well as the subsequent possibility of a foreclosure postponement and rescission-and that as a result he wasted time, money, and energy and was not able to pursue other options to save his properties.

II. Legal Standards

A 12(b)(6) motion to dismiss for failure to state a claim challenges the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering such a motion, the Court accepts all allegations of material fact as true and construes them in the light most favorable to the non-moving party. Cedars-Sinai Med. Ctr. v. Nat'l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). To defeat a 12(b)(6) motion, a complaint's factual allegations needn't be detailed; they must simply be sufficient to "raise a right to relief above the speculative level . . . ." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, "some threshold of plausibility must be crossed at the outset" before a case can go forward. Id. at 558 (internal quotations omitted). 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "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.

While the Court must draw all reasonable inferences in Carpenter's favor, it need not "necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (internal quotations omitted). In fact, the Court does not need to accept any legal conclusions as true. Iqbal, 556 U.S. at 678. A complaint does not suffice "if it tenders naked assertions devoid of further factual enhancement." Id. (internal quotations omitted). Nor does it suffice if it contains a merely formulaic recitation of the elements of a cause of action. Bell Atl. Corp., 550 U.S. at 555.

Leave to amend must "be freely given when justice so requires." Fed. R. Civ. P. 15(a). This policy is applied with "extraordinary liberality." See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). "Their exists a presumption under Rule 15(a) in favor of granting leave to amend." See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

III. Discussion

The Court will address each of Carpenter's causes of action in sequence.

A. Negligence

A negligence claim has to start with a duty of care. United States Liability Ins. Co. v. Haidinger-Hayes, Inc., 1 Cal.3d 586, 594 (1970). "[A]s a general rule, a financial institution owes no duty of care to a borrower when the institutions involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money." Nymark v. Heart Fed. Savings & Loan Ass'n, 231 Cal.App.3d 1089, 1096 (Cal. Ct. App. 1991). This rule has been applied to loan servicers. See Shepherd v. American Home Mortg. Servs., Inc., 2009 WL 4505925 at *2 (E.D. Ca. Nov. 20, 2009) ("In fact ...

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