Hofstetter v. Chase Home Finance, LLC
2010 U.S. Dist. LEXIS 143033
| N.D. Cal. | 2010Background
- Hofstetter sues Chase entities over NFIA flood-insurance requirements for HELOCs in SFHA.
- Court previously dismissed most claims; only California §17200 unfair practice claim survived against Hofstetter.
- Plaintiff seeks to amend to add a second plaintiff, Modersbach, with similar flood-insurance allegations.
- Sept. 2010 order held 'zero/zero' borrowers may lack standing; others with positive balances differ factually.
- Defendants sent flood-insurance form letters; NFIA governs required coverage, with NFIP caps and potential force-purchases.
- Motion to amend granted in part, denied in part; TILA and §17200 amendments allowed; initial disclosures not challenged here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amendment to plead TILA claims is proper | Amendment plausibly states 'change of terms' under 226.5b(f)(3). | Regulations 226.5b(f)(3) not apply; notices not 'changes of terms' or applicable to HELOCs. | Yes; TILA 'change of terms' claim plausibly stated; 226.5b(f)(3) applies to flood-insurance changes. |
| Whether notice claims under 226.9(c) are viable | Defendants failed to provide proper post-origination notice of term changes. | Notices complied under NFIA or regulation; or not required for the facts. | Yes; plausible claim that notices failed to satisfy 226.9(c)(1)(i) in required cases. |
| Whether to add Modersbach as a second named plaintiff | Modersbach’s facts mirror Hofstetter’s and are timely and justified by scope of discovery. | Potential Rule 23 issues and prejudice; overlapping claims not automatically warranted. | Granted; no bad faith or undue prejudice; considerations noted for potential Rule 23 issues. |
| Whether to plead unlawful/unfair §17200 claims for Modersbach | Modersbach’s flood-insurance notices and over-insurance amount plausibly unfair. | Agency guidelines allow some over-insurance; need more justification to be unfair. | Unlawful claim granted; unfair claim for Modersbach granted based on alleged notice shift. |
| Whether to allow class-related theories and remedies to proceed | Putative class definitions and proposed remedies should be evaluated in certification. | Premature to resolve class scope and remedies at this stage. | Denial of strike; issues preserved for class certification stage. |
Key Cases Cited
- Ashcroft v. implausibly cited Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for amended pleadings)
- Twombly, 550 U.S. 544 (U.S. 2007) (plausibility requirement for pleading)
- Eminence Capital v. Aspeon, 316 F.3d 1048 (9th Cir. 2003) (liberal amendment standard)
- Griggs v. Pace Am. Group, 170 F.3d 877 (9th Cir. 1999) (prejudice and futility considerations in amendment denial)
- Zucco Partners v. Digimarc, 552 F.3d 981 (9th Cir. 2009) (factors for leave to amend; preference to grant)
- Cel-Tech Commc'ns v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163 (Cal. 1999) (unfair competition requires tethering to policy or market impact)
- Watt v. Alaska, 451 U.S. 259 (U.S. 1981) (read statutes to preserve purpose)
- Household Credit Services v. Pfennig, 541 U.S. 232 (U.S. 2004) (board as primary authority on TILA interpretation)