Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02940/USCOURTS-casd-3_12-cv-02940-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LEE I. JUREWITZ,

Plaintiff,

CASE NO. 12cv2940-WQH-WVG

ORDER

vs.

BANK OF AMERICA, N.A., a

Corporation; and DOES 1 through 10,

inclusive,

Defendants.

HAYES, Judge:

The matter before the Court is the Motion to Dismiss Plaintiff’s Complaint, filed by

Defendant Bank of America, N.A. (“Bank of America”). (ECF No. 3).

I. Background

On November 8, 2012, Plaintiff filed a Complaint in San Diego County Superior Court. 

(ECF No. 1-1). The Complaint states: “This action arises out of Defendant Bank of America’s

unlawful foreclosure proceedings against Plaintiff’s property in violation of the Consent

Judgment signed by Bank of America with Federal and State governments.” Id. ¶ 1. The

Complaint alleges that Defendant services Plaintiff’s loan, and Plaintiff has applied for a loan

modification. Id. ¶¶ 5, 7. The Complaint alleges that Defendant “is ‘dual tracking,’ meaning 

Bank of America continues foreclosure efforts at the same time [Plaintiff] is in review for a

foreclosure-preventing option or appealing a denial of a modification request.” Id. ¶ 12. The

Complaint alleges that, in April of 2012, Defendant entered into a Consent Judgment with the

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United States and 49 state attorneys general, which prohibits Defendant from dual tracking. 

Id. ¶¶ 14, 16. The Complaint alleges causes of action for “breach of written contract: Consent

Judgment,” negligence by breaching a duty to exercise care in complying with the Consent

Judgment, and unlawful and unfair acts in violation of California Business & Professions Code

§ 17200. Id. at 13.

On December 10, 2012, Defendant removed the action to this Court alleging federal

question and diversity jurisdiction. (ECF No. 1). On December 17, 2012, Defendant filed the

Motion to Dismiss. (ECF No. 3). On January 11, 2013, Plaintiff filed an opposition to the

Motion to Dismiss. (ECF No. 4). On January 18, 2012, Defendant filed a reply. (ECF No.

5).

II. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a claim

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “A pleading that states a claim

for relief must contain ... a short and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where

the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal

theory. See Balistreri v. Pac. Police Depot, 901 F.2d 696, 699 (9th Cir. 1990). 

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R.

Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all

“well-pleaded factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, a

court is not “required to accept as true allegations that are merely conclusory, unwarranted

deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d

979, 988 (9th Cir. 2001). “In sum, for a complaint to survive a motion to dismiss, the

non-conclusory factual content, and reasonable inferences from that content, must be plausibly

suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962,

969 (9th Cir. 2009) (quotations omitted).

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III. Contentions of the Parties

Defendant contends that the first cause of action for breach of the Consent Judgment

should be dismissed on the grounds that Plaintiff lacks standing to enforce the Consent

Judgment, and the Consent Judgment by its own terms may only be enforced in the United

States District Court for the District of Columbia. Defendant contends that the second cause

of action for negligence should be dismissed because it is based on the Consent Judgment that

Plaintiff lacks standing to enforce, and because Plaintiff has not alleged facts demonstrating

each of the elements of a negligence cause of action. Defendant contends that the third cause

of action for unlawful and unfair acts and practices should be dismissed because it is based on

the Consent Judgment that Plaintiff lacks standing to enforce, Plaintiff lacks standing to sue

under California Business & Professions Code § 17200, and Plaintiff has not alleged that

Defendant has engaged in any conduct that is unlawful, unfair, or fraudulent.

Plaintiff contends that the Complaint adequately alleges a claim for breach of contract

because she is an intended third-party beneficiary of the Consent Judgment and has standing

to enforce the terms of the Consent Judgment in this Court. Plaintiff contends that the

Complaint adequately alleges a claim for negligence because Defendant owed Plaintiff a duty

of care in reviewing Plaintiff’s loan modification application, and Defendant failed to comply

with its duty. Plaintiff contends that the Complaint adequately alleges a claim for unlawful

and/or unfair business acts in violation of California Business & Professions Code § 17200. 

Plaintiff requests leave to amend if the Motion to Dismiss is granted.

IV. Discussion

A. Breach of Contract

Plaintiff contends that she is an intended third-party beneficiary of the Consent

Judgment and has standing to enforce the terms of the Consent Judgment in this Court. The

Consent Judgment, which is attached to the Complaint, was ordered by the United States

District Court for the District of Columbia, and was agreed to by Bank of America, the United

States and 49 state attorneys general. (ECF No. 1-1 at 18).

“[C]onsent decrees are construed as contracts for purposes of enforcement.” United

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States v. FMC Corp., 531 F.3d 813, 819 (9th Cir. 2008) (quotation omitted); see United States

v. Asarco Inc., 430 F.3d 972, 980 (9th Cir. 2005) (“Without question courts treat consent

decrees as contracts for enforcement purposes. A consent decree, like a contract, must be

discerned within its four corners, extrinsic evidence being relevant only to resolve ambiguity

in the decree.”). “Federal law governs the interpretation of contracts entered into pursuant to

federal law where the government is a party.” O’Neill v. United States, 50 F.3d 677, 682 (9th

Cir. 1995) (citation omitted).

“[A] well-settled line of authority from this Court establishes that a consent decree is

not enforceable directly or in collateral proceedings by those who are not parties to it even

though they were intended to be benefitted by it.” Blue Chip Stamps v. Manor Drug Stores,

421 U.S. 723, 750 (1975). “[U]nder Ninth Circuit precedent, incidental third-party

beneficiaries may not enforce consent decrees, but intended third-party beneficiaries may.” 

FMC Corp., 531 F.3d at 820 (citing Hook v. Ariz., Dep’t of Corr., 972 F.2d 1012, 1014 (9th

Cir. 1992). In FMC Corp., the Court of Appeals for the Ninth Circuit stated: “Hook plausibly

can be read to hold that, when the government is the plaintiff, third-party beneficiaries never

have standing to enforce the consent decree.... But Hook also can be interpreted to hold only

that, when the government is the plaintiff, third-party beneficiaries are presumed to be

incidental in the absence of a clear expression of a different intent in the consent decree.” Id.

at 821. In FMC Corp., the Ninth Circuit assumed without deciding that the latter interpretation

of Hook was correct. See id.; see also Klamath Water Users Protective Ass’n v. Patterson, 204

F.3d 1206, 1211 (9th Cir. 1999) (“Parties that benefit from a government contract are generally

assumed to be incidental beneficiaries, and may not enforce the contract absent a clear intent

to the contrary. Government contracts often benefit the public, but individual members of the

public are treated as incidental beneficiaries unless a different intention is manifested.”)

(quotation omitted). More recently, the Ninth Circuit stated:

[P]arties that benefit from a government contract are generally assumed to be

incidental beneficiaries, rather than intended ones, and so may not enforce the

contract absent a clear intent to the contrary. This clear intent hurdle is not

satisfied by a contract’s recitation of interested constituencies, vague, hortatory

pronouncements, statements of purpose, explicit reference to a third party, or

even a showing that the contract operates to the third parties’ benefit and was

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entered into with them in mind. Rather, we examine the precise language of the

contract for a clear intent to rebut the presumption that the third parties are

merely incidental beneficiaries.

County of Santa Clara v. Astra USA, Inc., 588 F.3d 1237, 1244 (9th Cir. 2009) (quotations

omitted), rev’d on other grounds by Astra USA, Inc. v. Santa Clara County, Cal., 131 S. Ct.

1342 (2011).

The Consent Judgment at issue contains a provision entitled, “Enforcement,” which

states: “[Bank of America]’s obligations under this Consent Judgment shall be enforceable

solely in the U.S. District Court for the District of Columbia. An enforcement action under

this Consent Judgment may be brought by any Party to this Consent Judgment or the

Monitoring Committee.” (ECF No. 1-3 at 18). The Consent Judgment establishes “Servicing

Standards Quarterly Compliance Metrics,” which the Monitoring Committee reviews to

determine to whether Bank of America is complying with the Consent Judgment. Id. at 22;

see also id. at 8. The enforcement provisions of the Consent Judgment describe financial

punishments for violating the agreement as “civil penalties,” and split the penalties between

the United States and the 49 state parties. Id. at 19-20. The Consent Judgment contains no

provisions referencing the possibility of an enforcement proceeding brought by an individual

borrower as a third-party beneficiary. The Consent Judgment contains no provisions

referencing the possibility of an enforcement proceeding brought by any party or person in a

court other than the United States District Court for the District of Columbia.

The Court finds that the “precise language” of the Consent Judgment does not establish

“a clear intent to rebut the presumption that the third parties [to the Consent Judgment] are

merely incidental beneficiaries.” Astra USA, Inc., 588 F.3d at 1244. Accordingly, the Court

concludes that Plaintiff has failed to allege sufficient facts indicating that she has standing to

enforce the Consent Judgment. The Motion to Dismiss the first cause of action for breach of

contract is granted.

B. Negligence

 “A person may not ordinarily recover in tort for the breach of duties that merely restate

contractual obligations. Instead, courts will generally enforce the breach of a contractual

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promise through contract law, except when the actions that constitute the breach violate a

social policy that merits the imposition of tort remedies.” Aas v. Superior Court, 24 Cal. 4th

627, 643 (2000), superseded by statute on another ground as stated in Rosen v. State Farm

General Ins. Co., 30 Cal. 4th 1070, 1079-80 (2003); see also Stop Loss Ins. Brokers, Inc. v.

Brown & Toland Med. Group, 143 Cal. App. 4th 1036, 1041-42 (2006) (same).

The second cause of action for negligence alleges that “Defendant owes Plaintiff a duty

to exercise ordinary care in complying with and following the standards set forth in the

Consent Judgment.” (ECF No. 1-1 ¶ 24). The Complaint does not allege that a general duty

to exercise ordinary care exists apart from the standards set forth in the Consent Judgment.1

The Complaint does not allege that “the breach [of the duty to exercise ordinary care in

complying with and following the Consent Judgment] violate[s] a social policy that merits the

imposition of tort remedies.” Aas, 24 Cal. 4th at 643. The Court finds that, based upon the

allegations of the Complaint, Plaintiff may not “recover in tort for the breach of duties that

merely restate contractual obligations.” Id. The Motion to Dismiss the second cause of action

for negligence is granted.

C. California Business & Professions Code § 17200

In the Motion to Dismiss, Defendant contends that the third cause of action for violation

of California Business & Professions Code § 17200 should be dismissed on the grounds that

“Plaintiff has not alleged standing” because Plaintiff “has not shown that she has lost money

or property because the foreclosure has not yet taken place.” (ECF No. 3-1 at 8). In

opposition to the Motion to Dismiss, Plaintiff fails to address Defendant’s contention regarding

standing.

A private action for violation of California Business & Professions Code § 17200 may

only be brought “by a person who has suffered injury in fact and has lost money or property

1

 In his opposition brief, Plaintiff contends that, without reference to the Consent

Judgment, Defendant “owes Plaintiff a legal duty to exercise ordinary care in reviewing her

loan modification application.” (ECF No. 4). In deciding the Motion to Dismiss, the Court

is limited to reviewing the facts and legal theories that are alleged in the Complaint. Cf. Lee

v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (“[W]hen the legal sufficiency of a

complaint’s allegations is tested by a motion under Rule 12(b)(6), review is limited to the

complaint.”) (quotation omitted).

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as a result of the unfair competition.” Cal. Bus. & Prof. Code § 17204; see also Kwikset Corp.

v. Superior Court, 51 Cal. 4th 310, 320-21 (2011) (“In 2004, the electorate substantially

revised the [Unfair Competition Law]’s standing requirement; ... now private standing is

limited to any person who has suffered injury in fact and has lost money or property as a result

of unfair competition.”) (quotation omitted).

The Complaint alleges that a foreclosure sale was scheduled (ECF No. 1-1 ¶ 8), but

does not allege that Plaintiff has actually lost his property. The Complaint states that “Plaintiff

... seeks lost monies,” id. ¶ 36, but the Complaint fails to allege “non-conclusory factual

content ... plausibly suggestive of a claim” that Plaintiff has suffered injury in fact and has lost

money or property as a result of the alleged unfair competition. Moss, 572 F.3d at 969. The

Court finds that the Complaint fails to adequately allege standing pursuant to California

Business & Professions Code § 17204. The Motion to Dismiss the third cause of action for

violation of California Business & Professions Code § 17200 is granted.

V. Conclusion

IT IS HEREBY ORDERED that the Motion to Dismiss is GRANTED. (ECF No. 3). 

The Complaint is dismissed without prejudice. No later than thirty (30) days from the date this

Order is filed, Plaintiff may file a motion for leave to amend the Complaint accompanied by

a proposed first amended complaint. If no motion for leave to amend is filed within thirty

days, this case will remain closed without further order of the Court.

DATED: April 10, 2013

WILLIAM Q. HAYES

United States District Judge

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