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Roche v. Bank of America, National Association

United States District Court, Ninth Circuit

July 9, 2013

VICENTE A. ROCHE, Plaintiff,
BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association; and DOES 1 through 100, inclusive, Defendants.


THOMAS J. WHELAN, District Judge.

Pending before the Court is Defendant Bank of America, N.A.'s ("BANA") motion to dismiss Plaintiff Vicente A. Roche's ("Roche") complaint under Federal Rule of Civil Procedure 12(b)(6). ( MTD [Doc. 6-1].) Roche opposes. ( Pl.'s Opp'n [Doc. 8].) The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons discussed below, the Court DENIES Defendant BANA's motion.


On July 2, 2004, Roche entered into a written promissory note agreement with Countrywide Home Loans, Inc. ("Countrywide") and secured a deed of trust (collectively referred to as the "Loan") in order to finance the purchase of a condominium located at 830 South Sierra Avenue, Solana Beach, California (the "Residence"). ( Compl. [Doc. 1], ¶ 9.) Roche agreed to pay a principal sum of $460, 000.00, in monthly installments of $2, 795.01, to Countrywide. ( Id. at ¶ 10.) However, prior to March 16, 2012, [1] and without Roche's knowledge, Countrywide sold and/or transferred all of its rights, titles, and interests to BANA. ( Id. at ¶ 11.) Thus, BANA assumed all of Countrywide's rights and obligations of the Loan, and Roche dealt solely with BANA regarding the Loan. ( Id. at ¶¶ 12-13).

In May 2011, Roche failed to pay the property tax assessment on the Residence due to an inadvertent oversight. ( Id. at ¶ 15.) BANA paid the assessment and established an escrow account for both he property tax it paid and for the payment of future property tax assessments. ( Id. at ¶ 16.) BANA charged Roche $7, 600.39 to fund the escrow account: $2, 600.39 for the escrowed taxes and $5, 000.00 for projected unfunded tax payments. ( Id. ) As of July 2011, BANA increased Roche's monthly payments to $4, 183.15. ( Id. ) Roche learned of this increase when he received a letter from BANA dated August 16, 2011, which informed him that the July 2011 payment was insufficient. ( Id. at ¶ 17.) The letter advised Roche that he still owed $4, 460.31 to bring his loan up to date. ( Id. )

On August 16, 2011, Roche's attorneys sent two checks to BANA for Roche's July and August payments, each in the amount of $4, 500.00. ( Id. at ¶ 19.) Upon discovering that BANA did not credit one check toward the August payment, Roche requested a correction of BANA's misallocations and information as to how he could satisfy and eliminate the escrow account. ( Id. at ¶¶ 20-21.) Shortly thereafter, on or about September 6, 2011, a BANA employee, Sharon, stated that if Roche paid $11, 291.00, the escrow would be removed.[2] ( Id. at ¶¶ 22-23.) Sharon also told Roche he needed to send a letter to BANA's payment research department requesting correction of the loan account. ( Id. at ¶ 24.)

Roche sent BANA a letter, stating that BANA was not crediting Roche's payments toward the Loan and requesting a correction of the account and the return of his original payment amount. ( Id. at ¶ 26.) Roche also sent BANA two checks totaling $11, 291.30. ( Id. at ¶ 27.) BANA did not credit Roche's September payment, remove the escrow account, or return Roche's payments to their original amount. ( Id. at ¶ 29.)

In October, Roche attempted to make a payment at a BANA branch in the amount of $2, 795.01, his original payment amount. ( Id. at ¶ 30.) The branch did not accept the payment, and Roche learned that BANA still had not reduced the payment amount, but also had assessed additional penalties. ( Id. ) Roche then contacted BANA's customer service and spoke with John, who stated that Sharon's directions were incorrect and that she had no authority to make the statements. ( Id. at ¶ 31.) Roche asked John for BANA to provide an accounting on the Loan account, but BANA never responded to the request. ( Id. )

In December, Roche again contacted customer service and spoke with Kristen, who advised that the escrow account could not be removed as suggested by Sharon. ( Id. at ¶ 32.) Kristen told Roche that $3, 198.22 was needed to bring the Loan current as of October 2011 and that subsequent monthly payments, inclusive of the escrow payments, would be $3, 433.03. ( Id. at ¶¶ 33-34.) Accordingly, Roche paid $3, 198.22 for October and $3, 433.03 for November. ( Id. at ¶ 35.) BANA, however, still did not correct Roche's account or accept the agreed-upon payment amount of $3, 433.03 and continued to report Roche as delinquent to national credit bureaus. ( Id. at ¶¶ 36-37.)

On or about December 6, 2011, Roche sent BANA another letter, detailing the errors in his account and requesting immediate correction of the account and the credit reports.[3] ( Id. at ¶ 38.) BANA did not correct the account or respond to Roche's request. ( Id. ) On May 23, 2012, counsel for Roche sent a letter to BANA disputing the accounting of the Loan and demanding its correction. ( Id. at ¶ 40.) Counsel also demanded retraction of BANA's negative credit reports and restoration of the original payment amount. ( Id. ) BANA responded to counsel's letter on August 2, 2012, admitting it misapplied Roche's August 2011 payment. ( Id. at ¶ 41.) BANA did not mention or respond to Roche's remaining requests. ( Id. )

On August 13, 2012, Roche filed the instant action alleging (1) breach of written contract, (2) breach of oral contract, (3) negligent misrepresentation, (4) fraud, (5) violation of the Rosenthal Fair Debt Collection Practices Act, (6) violation of the Real Estate Settlement Procedures Act, (7) violation of the California Business and Professions Code, and (8) violation of the California Consumer Credit Reporting Agencies Act. The Complaint also requests an accounting and injunctive relief. On September 20, 2012, BANA moved to dismiss the Complaint in its entirety.


The Court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See Parks Sch. of Bus., Inc. v. Symington , 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Balisteri v. Pacifica Police Dep't. , 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the motion, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. L.A. Cnty. , 487 F.3d 1246, 1249 (9th Cir. 2007).

However, the Court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (internal citations omitted). Instead, the allegations in the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Twombly , 550 U.S. at 570). "The plausibility standard is not akin to a probability requirement, ' but rather asks for more than a sheer possibility that a defendant has acted unlawfully." Id.

Generally, the court may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co. , 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, the court may consider any documents specifically identified in the complaint whose authenticity is not questioned by the parties. Fecht v. Price Co. , 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statute on other grounds). Moreover, the court may consider the full text of those documents, even when the complaint quotes only selected portions. Id . The court may also consider material properly subject to judicial notice without converting the motion into a motion for summary judgment. Barron v. Reich , 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. South Bay Beer Distribs., Inc. , 798 F.2d 1279, 1282 (9th Cir. 1986) abrogated on other grounds by Astoria Federal Savings and Loan Ass'n v. Solimino , 501 U.S. 104 (1991)).


A. Breach of Written Contract

BANA moves to dismiss Roche's first claim for breach of written contract for failure to allege a breach of contract or damages. ( MTD 4.) Roche counters, arguing that his complaint "alleges all necessary elements and facts to support [his] breach of contract claim." ( Opp'n 6.)

In California, "[a] cause of action for breach of contract requires proof of the following elements: (1) existence of a contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach." CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008). "Resolution of contractual claims on a motion to dismiss is proper if the terms of the contract are unambiguous." Monaco v. Bear Stearns Residential Mortgage Corp. , 554 F.Supp.2d 1034, 1040 (C.D. Cal. 2008). "A contract provision will be considered ambiguous when it is capable of two or more reasonable interpretations." Id . (citing Bay Cities Paving & Grading, Inc. V. Lawyers' Mut. Ins. Co., 5 Cal.4th 854, 867 (1993). "[T]he language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist." Cal. Civ. Code § 1654.

1. Roche has properly plead a breach of written contract.

BANA first argues that Roche's failure to timely pay his property taxes triggered a series of BANA actions that were all authorized by the Loan. ( MTD 4.) These actions included (1) creating and funding an escrow account, (2) increasing Roche's monthly payments to payoff this escrow account, and (3) charging late fees in light of Roche's partial payments on his newly increased monthly payments. ( Id. ) According to BANA, because these actions were authorized by the Loan, Roche cannot claim that they constitute a breach of contract. ( Id. ) BANA's argument is flawed, as it oversimplifies Roche's claims.

There is no debate that Loan "explicitly authorizes BANA to create and fund an escrow account subsequent to a borrower's failure to pay insurance or taxes." ( MTD 4.) Indeed, the parties do not dispute that Roche's admitted failure to timely pay property taxes triggered this escrow account clause. ( Compl. ¶ 15; MTD 4.) However, Roche's breach of written contract claims are more numerous than BANA suggests. Apart from the challenged actions listed above, Roche also claims that BANA refused to accept payments, failed to credit payments, and assessed late charges and penalties ...

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