United States District Court, N.D. California
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
DOCKET NO. 46
M. CHEN UNITED STATES DISTRICT JUDGE
Esperanza Corral and Diana Balgas brought the instant action
against Defendants Countrywide Home Loans, Nationstar
Mortgage LLC, and Wells Fargo Bank, N.A., alleging that
Defendants discriminated against Plaintiffs in rejecting
their “attempt[s] to satisfactorily modify their loans,
instead offering them unsustainably high modification rates
and terms.” Docket No. 36 (First Amended Complaint)
(FAC) at ¶ 15. Plaintiffs believe that Defendants
discriminated against them on the basis of sexual
orientation, gender, and race. Id. at ¶ 16.
Based on these actions, Plaintiffs have brought six causes of
action: (1) discrimination in violation of the Fair Housing
Act (FHA); (2) discrimination in violation of the Equal
Opportunity Credit Act (EOCA); (3) discrimination in
violation of California's Fair Employment and Housing Act
(FEHA); (4) violation of California's Unfair Competition
Law (UCL); (5) discrimination in violation of
California's Unruh Civil Rights Act; and (6) violation of
California's Homeowner Bill of Rights (HBOR).
Id. at 5-9. Defendants now move to dismiss the
complaint with prejudice. Docket No. 46 (Mot.).
motion came on for hearing before this Court on July 21,
2016. For the reasons stated below, the Court GRANTS
Defendants' motion to dismiss, but without prejudice.
are “a lesbian couple of Latina descent, ” who
own five properties in Alameda County, California. FAC at
¶ 14. Plaintiffs allege that beginning in 2009 and until
the present, they “made numerous attempts to retain
sustainable loan modifications for their properties.”
Id. at ¶ 15. However, Defendants
“inexplicably rejected the Plaintiffs' every
attempt to satisfactorily modify their loans, instead
offering them unsustainably high modification rates and
terms.” Id. These terms included “higher
payments than Plaintiffs we remaking under their original
loans or slightly lower rates with severe compound interest
charges and impossibly large balloon payments.”
Id. at ¶ 16. Plaintiffs believe that Defendants
did this because Plaintiffs “are 'different, '
specifically, because of their sexual orientation, gender[, ]
and race.” Id. at ¶ 17.
“Countrywide Home Loans in particular discriminated
against them on the basis of their being Latinas.”
Id. at ¶ 21. Plaintiffs provide no examples of
discriminatory behavior or specific reasons why they believe
Defendants were discriminating against them, beyond their
belief that Defendants' loan modification approval rates
and loan home mortgage refinancing rates were not as
favorable as they would be for heterosexual and white
couples. Id. at ¶¶ 22-26.
also allege that Nationstar and Wells Fargo violated their
rights under California's HBOR by failing to assign a
single point of contact for a loan modification on their
primary residence. Id. at ¶ 18. Plaintiffs
allege that around February 2015, Nationstar assigned Gi-Hahn
El-Bourini to oversee their loan modification process but
never contacted Plaintiffs, despite Plaintiffs making almost
75 calls and voicemail messages trying to get in contact with
her. Id. at ¶ 19. Instead, Plaintiffs dealt
with customer service representatives who were unfamiliar
with their case and had no authority to make decisions in
regard to their loan modification. Id. While
Plaintiffs were told by these representatives that their
information would be passed on to Ms. El-Bourini, they allege
that the information was not passed on. Id. at
then filed the instant suit in February 2016. Docket No. 1.
Plaintiffs also moved for a temporary restraining order (TRO)
to enjoin Defendants from foreclosing on their residential
home. Docket No. 2. The Court denied the TRO application, on
the grounds that: (1) Plaintiffs failed to notify opposing
counsel of the TRO application; (2) Plaintiffs had failed to
show a likelihood of success because they made only limited
allegations of discrimination based on race and sexual
discrimination, without providing specific facts or instances
or explaining which of the Defendants engaged in the alleged
discriminatory behavior; and (3) Plaintiffs failed to allege
facts demonstrating disparate treatment, such as their
qualifications for a loan. Docket No. 7 at 2. In March 2016,
Plaintiffs filed another complaint in Alameda County Superior
Court, also alleging that Defendants discriminated in
providing them loan modifications. Case No. 16-cv-2215,
Docket No. 1-1. Plaintiffs' state complaint was
separately removed by both Defendants and JP Morgan Chase.
See Case No. 16-cv-2235, Docket No. 1. After the
cases were assigned to this Court, the three cases were
consolidated. Docket No. 29. Plaintiffs subsequently filed an
amended complaint and dismissed Bank of America and Chase as
defendants on May 26, 2016, and dismissed Countrywide as a
defendant on June 6, 2016. Docket Nos. 37, 40.
Standard of Review
move for a dismissal pursuant to Federal Rule of Civil
Procedure 12(b)(6). Rule 12(b)(6) allows for dismissal based
on a failure to state a claim for relief. A motion to dismiss
based on this rule essentially challenges the legal
sufficiency of the claims alleged. See Parks Sch. of Bus.
v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In
considering a Rule 12(b)(6) motion, a court must take all
allegations of material fact as true and construe them in the
light most favorable to the nonmoving party, although
“conclusory allegations of law and unwarranted
inferences are insufficient to avoid a Rule 12(b)(6)
dismissal.” Cousins v. Lockyer, 568 F.3d 1063,
1067 (9th Cir. 2009). While “a complaint need not
contain detailed factual allegations . . . it must plead
'enough facts to state a claim of relief that is
plausible on its face.'” Weber v. Dep’t
of Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “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); see also
Twombly, 550 U.S. at 556. However, “[t]he
plausibility standard is not akin to a 'probability
requirement, ' but it asks for more than sheer
possibility that a defendant acted unlawfully.”
Iqbal, 556 U.S. at 678.
Disparate Impact Claims
their first through third causes of action, Plaintiffs assert
a “disparate impact” theory of discrimination
based on race, sexual orientation, and gender during the loan
modification process, in violation of the FHA, EOCA, and
FEHA. FAC at ¶¶ 30-50, Docket No. 50 (Opp.) at 7.
In order to bring a disparate impact claim, the plaintiff
must allege: “(1) the occurrence of a certain outwardly
neutral practices, and (2) a significantly adverse or
disproportionate impact on persons of a particular type
produced by the defendant's facially neutral acts or
practices.” Gamble v. City of Escondido, 104
F.3d 300, 306 (9th Cir. 1996).
Court dismisses these claims. Plaintiffs have failed to
identify any “outwardly neutral policy” which has
a disparate impact. Compare with Merritt v. Countrywide
Financial Corp., Case No. 09-cv-1179-BLF, 2015 U.S.
Dist. LEXIS 125284, at *61 (N.D. Cal. Sept. 17, 2015)
(dismissing claim for failure to identify a specific policy
that was causally linked to the alleged disparate);
Canatella v. Castro, Case No. 13-cv-5937-HSG, 2015
U.S. Dist. LEXIS 136515, at *13-14 (N.D. Cal. Oct. 6, 2015)
(dismissing disparate impact claim where the plaintiff
“makes no effort to allege facts sufficient to show
that RMS had a policy or practice that has a significant
disparate impact based on marriage status or gender);
Vega v. Am. Home Mortg. Servicing, Inc., No.
CV-10-02087-PHX-NVW, 2011 U.S. Dist. LEXIS 65841, at *6-7 (D.
Ariz. June 20, 2011) (same). Instead, they only make general
statements such as: (1) “On information and belief, the
loan modification approval rates for heterosexual and white,
non-Hispanic couples are higher than those of same-sex
couples and couples of Hispanic and Latin American descent,
” and (2) “On ...