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Rustad v. Bank of America Corp.

United States District Court, D. Montana, Missoula Division

April 20, 2017

LENNY J. RUSTAD, Plaintiff,


          Dana L. Christensen, Chief Judge.

         Before the Court is Defendants Bank of America Corporation and Bank of America, N.A.'s ("BANA") motion to dismiss.[1] For the reasons given below, the Court grants the Defendants' motion in part and denies it in part.


         "On a motion to dismiss, material allegations of the complaint are taken as admitted, and the complaint is to be liberally construed in favor of the plaintiff." Kennedy v. H&MLanding, Inc., 529 F.2d 987, 989 (9th Cir. 1976).

         Plaintiff Lenny Rustad ("Rustad") owned a residence at 820 Birch Street in Anaconda, Montana. On May 30, 2007, Rustad secured a mortgage for his residence from Ascent Home Loans, Inc. After securing the mortgage, the servicing of the loan was transferred to BANA.

         On September 14, 2009, Rustad received his first letter from BANA introducing the Home Affordable Modification Program ("HAMP"). The letter invited Rustad to enter into a loan modification during HAMP's trial period. In order to qualify for the program, Rustad submitted the documentation requested by BANA and made three trial period payments with the final payment being paid on December 1, 2009. Rustad subsequently received a statement from BANA indicating he was in the HAMP trial period plan.

         Rustad then received a letter from BANA on January 23, 2010, warning him that he must make a fourth trial period payment in order to qualify for the HAMP modification. Rustad paid the fourth trial period payment. In February and March 2010, Rustad received letters from BANA indicating he remained in the HAMP trial period plan. On July 15, 2010, Rustad received a notice from BANA stating that the parties had mutually agreed upon a "Special Forbearance" and that Rustad's failure to make his past due payments under the "Special Forbearance" resulted in termination. Following this notice, Rustad continued to pay the modified loan amount, but BANA rejected the payment and demanded payment of his total past due amount of approximately $16, 000.

         On April 7, 2011, Rustad received a letter from BANA introducing the National Homeownership Retention Program ("NHRP") and requested that he send in certain documents. BANA sent two subsequent letters in May 2011 acknowledging receipt of the documents sent by Rustad for his application for a NHRP modification. On July 13, 2011, BANA sent a letter to Rustad indicating Rustad was not eligible for any modifications and threatened foreclosure.

         On July 16, 2011, BANA sent another letter to Rustad indicating that the previous determination that he was not eligible for the HAMP program was erroneous and invited him to reapply. Rustad reapplied for the HAMP program. On October 31, 2011, BANA stated that since Rustad has not paid his past due amount, his home loan was being referred to a Foreclosure Review Committee.

         On April 12, 2012, Rustad received a letter from his designated "single point of contact" at BANA informing him that he may be eligible for several of BANA's mortgage assistance programs. On May 28, 2012, BANA informed Rustad by phone that he was eligible for the Mortgage Settlement Program. Further, BANA advised Rustad that to be eligible for the Mortgage Settlement Program, Rustad would have to forgo a HAMP review. Rustad agreed to forgo a HAMP review so he could apply for the Mortgage Settlement Program.

         BANA contacted Rustad again on August 17, 2012, stating that he would be eligible for a new modification program introduced by a settlement agreement entered into by state and federal governments and BANA. BANA acknowledged that Rustad had begun the modification process by sending in documents and information, but then requested an additional twenty-one documents. Rustad complied and sent BANA all relevant documents in September 2012.

         In October 2012, BANA sent several letters to Rustad stating they had not received all the proper documentation as requested. Again, Rustad sent BANA the requested documentation. On November 5, 2012, Rustad was notified by BANA that his loan modification was denied due to insufficient documentation.

         On January 12, 2013, Rustad received another loan modification package from BANA indicating that he was eligible for a new loan modification program introduced due to the national settlement between state and federal government and BANA. Based on the facts this is presumably the same loan modification that was offered to Rustad in August 2012. Rustad filled out all the forms included in the package and returned them to BANA. On June 8, 2013, BANA sent a final letter denying Rustad a loan modification due to failure to produce all required documentation. Rustad appealed the final denial of a loan modification to BANA. The appeal was denied on July 10, 2013.

         On November 12, 2013, BANA notified Rustad that BANA will no longer be servicing his loan. BANA transferred the loan servicing to Specialized Loan Servicing. Subsequently, on December 29, 2015, Rustad's residence was sold at a foreclosure sale.


         Rule 12(b)(6) motions test the legal sufficiency of a pleading. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8 "does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal,556 U.S. 662, 678 (2009) (internal citations and quotations omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Ail. Corp. v. Twombly,550 U.S. 544, 570 (2007)). A claim has facial plausibility when the court can draw a "reasonable inference" from the facts alleged that the defendant is liable for the misconduct alleged. Id. On a Rule 12(b)(6) motion to dismiss, ...

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