166 F. Supp. 3d 1030
C.D. Cal.2015Background
- Plaintiff Elizabeth Griffin refinanced her home in 2007 with Countrywide and later applied for a loan modification with Bank of America (BofA) in 2009; she alleges BofA orally promised a permanent modification after three trial payments, which she made.
- Griffin claims the trial payments were treated as partial payments, not credited or refunded, and that foreclosure notices issued without required pre-foreclosure notices or adequate foreclosure-prevention contact.
- Servicing of the loan transferred to Green Tree in 2013; Griffin alleges poor communications and that Green Tree foreclosed in 2014 while a modification was allegedly pending.
- She sued BofA, Green Tree, and Northwest Trustee Services asserting causes of action including promissory estoppel, breach of the implied covenant of good faith and fair dealing, negligence, CLRA, specific performance, fraud, negligent misrepresentation, and declaratory relief.
- Defendants moved to dismiss; the court heard whether claims survive Rule 12(b)(6), considered judicially-noticeable public records, and evaluated preemption under HOLA.
- Court dismissed most claims (many with leave to amend); CLRA and specific performance were dismissed with prejudice; HOLA preemption was rejected as applied by defendants here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| HOLA preemption | Griffin: claims are not preempted because wrongful acts are post-merger and/or not subject to HOLA | BofA: loan originated with a federal savings association, so HOLA/OTS preempts state-law claims | Court: rejected broad preemption; because alleged wrongdoing was post-originator conduct by national bank, HOLA did not bar claims here |
| Promissory estoppel | Griffin: BANA promised modification, she relied (made 3 reduced payments) | BofA: payments were amounts plaintiff was already contractually obligated to pay; no detrimental reliance | Held: claim deficient — making payments plaintiff already owed does not show legally cognizable injury; promissory estoppel dismissed |
| Breach of implied covenant | Griffin: defendants lured into default and failed to honor modification or explore alternatives | Defendants: no specific contractual provision identified; conduct falls within ordinary lending | Held: dismissed for failure to identify specific contract term frustrated by defendants’ conduct |
| Negligence (duty) | Griffin: servicer/lender made assurances during modification negotiations creating duty | Defendants: lenders/servicers owe no general duty beyond lending role; Jolley limited to construction loans | Held: dismissed — court follows authority limiting Jolley to construction loans; no general duty alleged; also no proximate damages pleaded |
| CLRA | Griffin: defendants engaged in deceptive practices in modification/servicing | Defendants: mortgage/loan is not a ‘good’ or ‘service’ under CLRA | Held: CLRA claim dismissed with prejudice (plaintiff abandoned opposing it) |
| Fraud and negligent misrepresentation | Griffin: defendants misrepresented willingness/ability to modify loan | Defendants: allegations fail Rule 9(b) particularity (who, where, why false) | Held: dismissed for failing Rule 9(b) — plaintiff did not sufficiently identify makers, specifics, or factual basis for falsity; pleading lumped defendants together |
| Specific performance | Griffin: seeks specific performance of the alleged modification | Defendants: specific performance is a remedy, not independent claim | Held: dismissed with prejudice as not an independent cause of action |
| Declaratory relief | Griffin: requests declaration of rights regarding loan/modification | Defendants: duplicative of other claims; no viable underlying claims | Held: dismissed because underlying substantive claims failed |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for federal pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (factual allegations must permit plausible inference of liability)
- Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49 (2013) (no common-law duty to offer/approve loan modifications; duty exists for negligent misrepresentations about modification or foreclosure status)
- Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (2013) (construction-loan context where lender’s specific promises created a duty of care)
- In re Daou Sys., Inc., 411 F.3d 1006 (9th Cir. 2005) (leave to amend standard on dismissal)
- Balistreri v. Pacifica Police Dept., 901 F.2d 696 (9th Cir. 1988) (Rule 12(b)(6) tests legal sufficiency of claims)
- Alvarez v. BAC Home Loans Servicing, LP, 228 Cal.App.4th 941 (2014) (finding a duty to exercise reasonable care in processing loan-modification applications)