United States District Court, D. Montana, Billings Division
JAMES L. BARKER, JEANNE A. BARKER Plaintiffs,
BANK OF AMERICA, N.A., ONEWEST BANK, CIT BANK, N.A., FIRST AMERICAN TITLE COMPANY OF MONTANA, INC., Trustee, and CHARLES PETERSON, Trustee, Defendants.
FINDINGS AND RECOMMENDATION REGARDING DEFENDANTS
ONEWEST BANK AND CIT BANK N.A.'S MOTION TO
TIMOTHY J. CAVAN, United States Magistrate Judge
James L. Barker and Jeanne A. Barker
(“Plaintiffs”) bring this action against Bank of
America,  OneWest Bank and CIT Bank, N.A.,
(collectively “CIT”), First American Title Company of
Montana, Inc., Trustee, and Charles Peterson, Trustee,
arising from an attempted foreclosure and loan modification.
Plaintiffs allege claims for wrongful exercise of the power
of sale, fraud, violation of the Fair Debt Collection
Practices Act, negligence, violation of the Montana Unfair
Trade Practices Act, constructive fraud, negligent
misrepresentation, and deceit. Plaintiffs also request
declaratory and injunctive relief. (Doc. 8.)
before the Court is CIT's Motion to Dismiss, which has
been referred to the undersigned under 28 U.S.C. §
636(b)(1)(B). (Doc. 11.) The motion is fully briefed and ripe
for the Court's review. (Docs. 12, 16, 19).
considered the parties' submissions, the Court
RECOMMENDS CIT's Motion to Dismiss be
are the owners of real property located in Park County,
Montana. (Doc. 8 at ¶ 1.) On October 11, 2000,
Plaintiffs executed a Trust Indenture, securing a $360, 000
loan, in which they named First American Title Insurance
Company of Montana (“First American”) as Trustee
for the benefit of Bank of America, NA. (Doc. 8 at ¶ 2.)
Bank of America assigned its interest in the Trust Indenture
to OneWest Federal Bank, FSB (“OneWest”) in March
2010, and it transferred its servicing rights to Nationstar
Mortgage in November 2013. (Id. at ¶¶
3-4.) In August 2014, Nationstar Mortgage assigned its
servicing rights to IndyMac Mortgage, a division of One West.
(Id. at ¶ 5.)
2009, Plaintiffs fell behind on their loan payments. (Doc. 8
at ¶ 6.) On October 12, 2010, IndyMac Bank, FSB
appointed Defendant Charles Peterson (“Peterson”)
as Successor Trustee, even though, as plaintiffs allege,
there is no record IndyMac Bank, FSB held a beneficial
interest in the Trust Indenture. (Id. at ¶ 8.)
On October 12, 2010 and November 10, 2010, Peterson filed two
independent Notices of Trustee's Sales, which were later
cancelled. (Id. at ¶ 9.)
October 18, 2012, OneWest appointed First American Title
Company of Montana (“First American”) as
Successor Trustee. (Id. at ¶ 10.) On October
22, 2012 and January 3, 2013, First American filed a two
independent Notices of Trustee's Sale, which were later
20, 2016, First American initiated foreclosure proceedings.
(Doc. 8 at ¶ 11.) The foreclosure sale was scheduled for
November 30, 2016 in Park County. (Id. at ¶
11.) On April 4, 2017, the Park County District Court
enjoined the foreclosure. (Doc. 12-2 at 24.)
allege that beginning in 2009, they initiated communications
with Bank of American concerning a possible loan
modification. (Doc. 8 at ¶ 13.) Plaintiffs were
frustrated with the process and their communications with
Bank of America. (Id. at ¶¶ 13-19.) After
Bank of America transferred its beneficiary interest,
Plaintiffs communicated with OneWest about a possible loan
modification. (Id. at ¶ 20.) One West granted
Plaintiffs a loan modification, and the signed loan
modification agreement was recorded on October 22, 2015 with
the Park County Clerk and Recorder. (Doc. 12-1.) / / / / / /
under Rule 12(b)(6) is proper when the complaint either (1)
lacks a cognizable legal theory or (2) fails to allege
sufficient facts to support a cognizable legal theory.”
Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir.
2013) (quoting Mendiondo v. Centinela Hosp. Med.
Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The
Court's standard of review under Rule 12(b)(6) is
informed by Rule 8(a)(2), which requires that a pleading
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009)
(quoting Fed. R. Civ. P 8(a)).
survive a motion to dismiss under Rule 12(b)(6), “a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Iqbal, 556 U.S. at 678.
“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.” Id. A plausibility
determination is context specific, and courts must draw on
judicial experience and common sense in evaluating a
complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135
(9th Cir. 2014).
argues Plaintiffs' claim for wrongful exercise of power
of sale is not a cognizable legal theory in Montana. CIT also
contends that Plaintiffs have failed to allege sufficient
facts to support any of their other claims. Therefore, CIT
argues all claims against it should be dismissed with
counter that CIT has wrongfully attempted to foreclose their
property, engaged in fraud and deceit, made
misrepresentations, and engaged in unfair trade practices.
The Plaintiffs further maintain that the allegations of their
complaint are sufficient to state a claim for each cause of
action set forth in their First Amended Complaint, and
CIT's motion to dismiss should be denied.
Counts I & IV-Wrongful Exercise of Power of Sale and
Attempted Wrongful Exercise Power of Sale & Additional
Acts of Wrong Exercise of Power of Sale
argues that “wrongful exercise of power of sale,
” and the attempt of the same, are not cognizable
claims in Montana. CIT further argues that even if the claims
are recognized, Plaintiffs failed to plead sufficient facts
that would entitle them to relief.
not appear that a cause of action for “wrongful
exercise of power of sale” exists under Montana law.
The Court has found very limited recognition for such a cause
of action, and none under Montana law. See e.g. Strutt v.
Ontario Sav. & Loan Assn., 28 Cal.App.3d 866, 869
(Cal.Ct.App. 1972) (wrongful exercise of a private power of
sale is actionable under Cal. Civ. Code § 2924.);
Brown v. Freedman, 222 Ga.App. 213, 214 (Ga.Ct.App.
1996) (“A claim for wrongful exercise of a power of
sale under OCGA § 23-2-114 can arise when the creditor
has no legal right to foreclose.”).
Plaintiffs have failed to cite any authority that
“wrongful exercise of power of sale” is
recognized under Montana law - and it appears that Montana
has not recognized such a cause of action - Counts I and IV
should be dismissed.
even assuming a claim for “wrongful exercise of power
of sale” is cognizable under Montana law, Plaintiffs
have failed to plead anything more than conclusory statements
in support of such a claim. Plaintiffs allege Defendants
caused multiple Notices of Trustee's Sales to be filed
and foreclosure proceedings scheduled, which were later
cancelled. (Doc. 8 at ¶¶ 9-11.) Plaintiffs conclude
Defendants' acts “constitute one or more acts of
Wrongful Exercise of Power of Sale or Attempted Exercise of
Power of Sale.” (Id. at ¶ 21.) But
Plaintiffs failed to allege any facts that would show how the
Notice of Trustee's Sales were wrongful, or how
Plaintiffs were damaged. Plaintiffs' bare conclusions
that Defendants' actions were wrongful are insufficient.
Iqbal, 556 U.S. at 678 (stating a complaint that
“tenders ‘naked assertion[s]' devoid of
‘further factual enhancement'” is
insufficient under Rule 8).
addition, in Count IV, Plaintiffs provide no factual basis
for the claim entitled “Additional Acts of Wrongful
Exercise of Power of Sale.” Plaintiffs merely state
“[Plaintiffs] reallege and reincorporate the foregoing
paragraphs of their complaint as if restated in full.”
(Doc. 8 at ¶ 24.) Even if such a claim existed, it is
insufficient to assert a cause of action for
“additional acts” without providing any
additional facts or allegations upon which the claim is
the Court recommends that Counts I and IV be dismissed for
failure to state a claim.
Counts II & VII-Fraud & Constructive Fraud
contends Plaintiffs failed to meet the heightened pleading
standards required for alleging fraud.
must be plead with particularity. Federal Rule of Civil
Procedure 9(b) provides, “[i]n alleging fraud or
mistake, a party must state with particularity the
circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person's mind may be
alleged generally.” Fed.R.Civ.P. 9(b). “[T]he
circumstances constituting the alleged fraud must ‘be
specific enough to give defendants notice of the particular
misconduct . . . so that they can defend against the charge
and not just deny that they have done anything
wrong.'” Kearns v. Ford Motor Co., 567
F.3d 1120, 1124 (9th Cir. 2009) (quoting Bly-Magee v.
California, 236 F.3d 1014, 1019 (9th Cir. 2001)). To
satisfy the requirements of Rule 9(b), a plaintiff who claims
fraud must state the “who, what, when, where, and
how” of the fraud. Vess v. Ciba-Geigy Corp.
USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting
Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.
must set forth more than the neutral facts necessary
to identify the transaction. The plaintiff must set forth
what is false or misleading about a statement, and why it is
false.” Id. (quoting In re GlenFed, Inc.
Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994))
(emphasis in original). When multiple defendants are named,
the plaintiff must “inform each defendant separately of
the allegations surrounding his alleged participation in the
fraud.” Swartz v. KPMG LLP, 476 F.3d 756,
764-65 (9th Cir. 2007) (“Rule 9(b) does not allow a
complaint to merely lump multiple defendants together . . .
courts looks to state law to see whether the elements of
fraud have been pled sufficiently. Kearns, 567 F.3d
at 1126. A party must plead the following nine
elements with particularity in order to properly state a
fraud claim in Montana:
(1) a representation; (2) falsity of representation; (3)
materiality of that representation; (4) speaker's
knowledge of falsity of representation or ignorance of its
truth; (5) the speaker's intent that it should be relied
on; (6) the hearer is ignorant of the falsity of the
representation; (7) the hearer relies on the representation;
(8) the hearer has a right to rely on the ...