Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-01059/USCOURTS-azd-2_12-cv-01059-1/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Breach of Fiduciary Duty

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Ronald Davis, et al., 

Plaintiffs, 

vs. 

Bank of America Corporation, et al., 

Defendants.

No. CV-12-01059-PHX-NVW

ORDER 

Before the Court is the Motion to Dismiss First Amended Verified Complaint 

(Doc. 19) by Defendants Bank of America Corporation and Bank of America, N.A., 

individually and as successor by merger to BAC Home Loans Servicing LP. 

I. LEGAL STANDARD 

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all 

allegations of material fact are assumed to be true and construed in the light most 

favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 

2009). To avoid dismissal, a complaint need contain only “enough facts to state a claim 

for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 

570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The principle that a court accepts as true 

all of the allegations in a complaint does not apply to legal conclusions or conclusory 

factual allegations. Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009). 

In alleging fraud, the circumstances must be alleged with particularity. Fed. R. 

Civ. P. 9(b). Plaintiffs alleging fraud “must state the time, place, and specific content of 

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the false representations as well as the identities of the parties to the misrepresentations.” 

Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); 

accord Odom v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007). 

II. BACKGROUND 

The facts assumed to be true are essentially the same as those assumed to be true 

in the August 23, 2012 Order (Doc. 13), which dismissed all counts against Defendant 

Bank of America Corporation and dismissed all but one count (promissory estoppel) 

against Defendant Bank of America, N.A., individually and as successor by merger to 

BAC Home Loans Servicing LP (“BACHL”). In addition to promissory estoppel, the 

Verified Complaint alleged false advertising/consumer fraud in violation of A.R.S. § 44-

1522, constructive fraud, breach of fiduciary duty, negligent infliction of emotional 

distress, intentional infliction of emotional distress, and negligent misrepresentation. 

The August 23, 2012 Order (Doc. 13) found Plaintiffs had sufficiently alleged that 

BACHL stated in two letters that no foreclosure sale would be conducted during the 

Home Affordable Modification Program (“HAMP”) evaluation, and the statements were 

false because a foreclosure sale was conducted before the HAMP evaluation was 

completed. As alleged, Plaintiffs’ injuries were caused by not having adequate time to 

prepare to move from their home because they relied on BACHL’s false statements. 

The First Amended Verified Complaint names as Defendants Bank of America 

Corporation, Bank of America, N.A., and BAC Home Loans Servicing, LP. Like the 

Verified Complaint, it alleges false advertising/consumer fraud in violation of A.R.S. 

§ 44-1522, constructive fraud, promissory estoppel, negligent infliction of emotional 

distress, and negligent misrepresentation. In addition, the First Amended Verified 

Complaint alleges breach of the implied covenant of good faith and fair dealing and 

negligence. 

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III. ANALYSIS 

A. Claims Against Bank of America Corporation 

All of the amended claims against Bank of America Corporation will be dismissed 

for the reasons stated in the August 23, 2012 Order (Doc. 13). In addition, although 

Plaintiffs allege that Bank of America Corporation controlled Bank of America, N.A., 

and BAC Home Loans Servicing LP to the extent that Bank of America Corporation is 

liable under the instrumentality theory exception to the rule that a parent corporation is 

not liable for the acts of its subsidiaries, Plaintiffs fail to allege facts supporting “that 

observance of the corporate form would sanction a fraud or promote injustice.” Taeger v. 

Catholic Family & Cmty. Servs., 196 Ariz. 285, 297 (Ct. App. 1999). 

B. False Advertising/Consumer Fraud in Violation of A.R.S. § 44-1522, 

Constructive Fraud, Negligent Infliction of Emotional Distress, and 

Negligent Misrepresentation 

Plaintiffs’ amended claims for false advertising/consumer fraud in violation of 

A.R.S. § 44-1522, constructive fraud, negligent infliction of emotional distress, and 

negligent misrepresentation will be dismissed for the reasons stated in the August 23, 

2012 Order (Doc. 13). 

C. Breach of the Implied Covenant of Good Faith and Fair Dealing 

The parties agree that a covenant of good faith and fair dealing is implied into 

every contract and that a claim for breach of the covenant arises from a contract between 

the parties. Plaintiffs allege that Defendants breached the covenant by selling Plaintiffs’ 

house during the HAMP evaluation. However, Plaintiffs have not alleged facts that 

would establish the existence of a contract with Defendants regarding the HAMP 

evaluation. Therefore, Count Two of the First Amended Verified Complaint fails to state 

a claim upon which relief can be granted. 

D. Negligence 

The First Amended Verified Complaint alleges that Defendants owed Plaintiffs a 

general duty of care because they had “a special and confidential relationship,” which 

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Defendants breached. Plaintiffs have not alleged facts that would establish “a special and 

confidential relationship,” a general duty of care, or a breach of any duty beyond that 

alleged in their negligent misrepresentation claim. Therefore, Count Five of the First 

Amended Verified Complaint fails to state a claim upon which relief can be granted. 

E. Promissory Estoppel Damages 

Defendants seek dismissal of Count Four of the First Amended Verified 

Complaint for promissory estoppel to the extent it seeks punitive damages and damages 

for non-economic injuries, like emotional distress. 

Arizona courts recognize promissory estoppel, defined in Restatement (Second) of 

Contracts § 90(1), as a proper alternative to a contract claim, but acknowledge that the 

remedy under this theory may be more limited than damages for breach of contract. 

AROK Constr. Co. v. Indian Constr. Servs., 174 Ariz. 291, 299-300, 848 P.2d 870, 878-

79 (Ct. App. 1993). Under § 90(1), certain promises are “binding if injustice can be 

avoided only by enforcement of the promise.” A promise binding under § 90(1) is a 

contract, and normal contract remedies are often appropriate. Restatement (Second) of 

Contracts § 90 cmt. d. However, “relief may sometimes be limited to restitution or to 

damages or specific relief measured by the extent of the promisee’s reliance rather than 

by the terms of the promise.” Id. Therefore, the most Plaintiffs may recover on a 

promissory estoppel claim is what they could recover for breach of contract. 

Under Arizona law, punitive damages and damages for non-economic injuries, 

like emotional distress, may not be recovered for breach of contract. Fox v. Citicorp 

Credit Servs., Inc., 15 F.3d 1507, 1517 (9th Cir. 1994) (breach of contract claim dismissed 

because plaintiffs alleged only emotional distress and mental anguish damages); 

Continental Nat’l Bank v. Evans, 107 Ariz. 378, 382, 489 P.2d 15, 19 (1971) (citing 

Restatement of Contracts § 342, which states, “Punitive damages are not recoverable for 

breach of contract.”). Because a promise made binding under the theory of promissory 

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estoppel is a contract, Plaintiffs may not recover punitive damages or damages for noneconomic injuries for a claim of promissory estoppel. 

IV. FURTHER LEAVE TO AMEND WILL NOT BE GRANTED. 

Although leave to amend should be freely given “when justice so requires,” Fed. 

R. Civ. P. 15(a)(2), the Court has “especially broad” discretion to deny leave to amend 

where the plaintiff already has had one or more opportunities to amend a complaint. 

Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989). “Leave to 

amend need not be given if a complaint, as amended, is subject to dismissal.” Moore v. 

Kayport Package Exp., Inc., 885 F.2d 531, 538 (9th Cir. 1989). “Futility of amendment 

can, by itself, justify the denial of a motion for leave to amend.” Bonin v. Calderon, 59 

F.3d 815, 845 (9th Cir. 1995). 

Plaintiffs already have had an opportunity to amend their complaint. Because 

further amendment would be futile, all claims against Bank of America Corporation will 

be dismissed with prejudice and all claims against Bank of America, N.A., except Count 

Four (Promissory Estoppel), will be dismissed with prejudice. 

IT IS THEREFORE ORDERED that the Motion to Dismiss First Amended 

Verified Complaint (Doc. 19) by Defendants Bank of America Corporation and Bank of 

America, N.A., individually and as successor by merger to BAC Home Loans Servicing 

LP, is granted. 

IT IS FURTHER ORDERED that the First Amended Verified Complaint (Doc. 

16) is dismissed with prejudice as to Defendant Bank of America Corporation. 

IT IS FURTHER ORDERED that Counts One, Two, Three, Five, Six, and Seven 

of the First Amended Verified Complaint (Doc. 16) are dismissed with prejudice as to 

Defendant Bank of America, N.A., individually and as successor by merger to BAC 

Home Loans Servicing LP. 

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IT IS FURTHER ORDERED that Count Four of the First Amended Complaint 

(Doc. 16) is dismissed as to Defendant Bank of America, N.A., individually and as 

successor by merger to BAC Home Loans Servicing LP, to the extent that it seeks 

punitive damages or damages for non-economic injuries. 

Dated this 28th day of November, 2012. 

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