Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02129/USCOURTS-azd-2_09-cv-02129-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Injunctive &amp; Declaratory Relief

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Kevin Jones, 

Plaintiff, 

vs.

Bank of America, 

Defendant. 

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No. CV 09-2129-PHX-JAT

ORDER

The Court has reviewed the parties’ filings and it appears the following facts are

undisputed:

1. Plaintiff purchased a residence via two loans from Defendant.

2. Plaintiff bought insurance on both loans for disability or death.

3. Plaintiff also bought insurance on the first loan for unemployment.

4. Plaintiff applied for and received 12 months of payment forgiveness on the first

loan due to his unemployment.

5. Two weeks after Plaintiff became unemployed, Plaintiff became disabled as

defined by both insurance contracts.

Defendant argues that Plaintiff is not entitled to benefits from the disability insurance

for either loan because both loans required Plaintiff to be continuously employed for three

months prior to his disability, and Plaintiff’s unemployment two weeks prior to his disability

renders him ineligible to receive any disability benefits. Additionally, with respect to loan

Case 2:09-cv-02129-JAT Document 30 Filed 12/03/09 Page 1 of 6
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1

 For example, Plaintiff states, “In an orderly society, allowing contractual provisions

to be enforced that destroy reasonable consumer insurance expectations causes fear,

forfeiture and dislocations of persons and their families.” Reply at 8. Plaintiff offers no law

and no facts to explain this statement. Plaintiff’s next sentence is, “De Minimus Non Curat

Lex (Not the Limerick).” Again, this statement comes with no citation to either law or facts

in this case.

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2 only, Defendant argues that even if Plaintiff were entitled to some benefits, he is

nonetheless in default on the loan because Plaintiff would have to have made the first 90 days

of payments before the disability insurance would become active and Plaintiff failed to do

so.

Plaintiff replies with various moral platitudes and grandiose statements, but very little

substance.1

 For the Court to consider Plaintiff’s arguments they must be recharaterized as

legal theories supported by factual arguments. Accordingly, the Court will require

supplemental briefing on the following issues:

1. Plaintiff argues that his work history is “substantial compliance” with the three

months prior work requirement. Reply at 4. Plaintiff also suggests his work

history is a “de minimus shortage of contractual requirements.” Reply at 9.

Plaintiff shall address any legal theory under which the Court could rewrite the

prior-work- requirement of the contract and find “substantial compliance” or “de

minimus shortage” to be a basis for not holding Plaintiff to the express terms of

the contract. The Court will not find in Plaintiff’s favor on a “substantial

compliance” or “de minimus shortage” theory unless in his supplemental brief

Plaintiff states a legal basis for this argument, with citation to applicable case

law. For example, if Plaintiff argues that as a matter of contract interpretation the

Court should average Plaintiff’s prior work history over three months to

determine whether it would rise to 30 hours per week, Plaintiff must argue both

law and facts which would allow such an interpretation.

2. Plaintiff argues that he was not shown or advised of the eligibility requirements

for benefits. Reply at 3. Plaintiff also argues that the requirements were not

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2

 The Court notes the contract Plaintiff signed says, “There are eligibility

requirements, conditions and exclusions that could prevent you from receiving benefits under

Borrowers Protection Plan. You may find a complete explanation of eligibility requirements,

conditions and exclusions in the following portions of the Borrowers Protection Plan

Addendum: For Disability Protection refer to Section II; paragraph a, paragraph b, paragraph

c and paragraph d.” Doc. #26-5 at 9.

3

 And, even if it was a contract of adhesion, such conclusion alone would not make

the contract unenforceable. Broemmer, 840 P.2d at 1016.

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within the “four corners” of the insurance contract. Id.2 The Court does not

know what legal basis Plaintiff is attempting to fit within for being excepted from

the three-month-prior-work requirement by this argument. Plaintiff shall file a

supplemental brief on this issue. The Court will not find in Plaintiff’s favor on

a “lack of knowledge” theory unless in his supplement brief Plaintiff states a

legal basis for this argument, with citation to applicable case law.

3. Plaintiff argues that the three-month-prior-work requirement is contrary to

“reasonable consumer insurance expectations.” Reply at 8. Normally, the test

of “reasonable expectations” is applied when a party is arguing that a contract is

one of adhesion. See Maxwell v. Fidelity Financial Services, Inc., 907 P.2d 51,

56 (Ariz. 1995); Broemmer v. Abortion Services of Phoenix, Ltd., 840 P.2d 1013,

1015-17 (Ariz. 1992). Plaintiff never actually makes a legal or factual argument

that this is a contract of adhesion.3

 Therefore, Plaintiff shall file a supplement

identifying whether he is advancing an adhesion theory. If yes, Plaintiff is

cautioned that the Court will not issue a preliminary injunction on this basis

unless he cites and applies the correct Arizona law to the facts of this case.

4. Plaintiff argues that Defendant’s conduct was “unconscionable.” Reply at 9. The

Court is unclear what legal argument Plaintiff is making. Because Plaintiff is

referencing Defendant’s conduct, Plaintiff may be making an unclean hands

argument. However, the party seeking equitable relief, in this case Plaintiff, is

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 Under the unclean hands doctrine, a court will not grant equitable relief to a party

"tainted with inequitableness or bad faith relative to the matter in which he seeks relief . . .

." Adler v. Fed. Republic of Nigeria, 219 F.3d 869, 877 (9th Cir. 2000). 

5 Procedural or process unconscionability is concerned with

“unfair surprise,” fine print clauses, mistakes or ignorance of

important facts or other things that mean bargaining did not

proceed as it should. Substantive unconscionability is an unjust

or “one-sided” contract. 

Maxwell, 907 P.2d at 57-58.

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the one who must have clean hands.4

 Therefore, the Court will not grant Plaintiff

a preliminary injunction on this theory unless Plaintiff explains in his

supplemental brief how it applies to this case.

5. “Unconscionability” has its own specific meaning in terms of contract

enforceability. However, the Court looks at the contract itself, and not

Defendant’s post-contract-conduct to determine procedural or substantive

unconscionability. Maxwell, 907 P.2d at 57-58.5

 Here, many of Plaintiff’s

factual assertions perhaps could fit within the rubric of unconscionability.

However, having carefully reviewed Plaintiff’s filing, the Court does not see that

Plaintiff has actually made this argument, and certainly Plaintiff has not cited any

law which would support such an argument. Accordingly, the Court will not

analyze whether the three-month-prior-work requirement is unconscionable

unless, in his supplemental brief, Plaintiff expressly makes an unconscionability

argument both citing to and applying the correct law to the facts of this case.

6. Plaintiff also says in a heading, without law or argument, “Equitable Estoppel.”

Reply at 9. The Court will not grant relief on an “equitable estoppel” theory

unless in his supplemental brief Plaintiff cites law, and applies said law to the

facts of this case, explaining how “equitable estoppel” should prevent Defendant

from foreclosing on the home.

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 The Court notes that this schedule does not give Defendant an opportunity — other

than at the hearing — to respond to Plaintiff’s supplemental brief. If Defendant seeks such

an opportunity, and the parties can stipulate to postpone the trustee sale of the residence, the

parties may stipulate to continue the preliminary injunction hearing and stipulate to a longer

briefing schedule. The parties MUST file any such stipulation with the Court. However,

based on the Court’s understanding that the sale is scheduled for December 9, 2009, if the

parties cannot reach such a stipulation, the deadlines in this Order will control.

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7. Defendant argues Plaintiff did not purchase unemployment insurance for loan 2.

In his supplemental brief, Plaintiff shall state explicitly whether he disputes this

factual assertion, and if yes, based on what evidence. If Plaintiff does not dispute

this factual assertion, Plaintiff shall explicitly state whether he disputes

Defendant’s factual assertion that before being entitled to disability benefits,

Plaintiff had to wait 90 days from the date of the disability, and if yes, based on

what evidence. If Plaintiff does not dispute this factual assertion, Plaintiff shall

advise the Court whether he made the payments on loan 2 for the first 90 days

following his disability.

8. Both parties discuss whether Defendant could be liable for the tort of bad faith

based on a breach of the covenant of good faith and fair dealing in the contracts.

Generally, the Court finds that “bad faith” even if applicable, is remediable by

money damages. See Stanley v. Univ. of Calif., 13 F.3d 1313, 1320-21 (9th Cir.

1994) (to obtain a preliminary injunction, moving party must demonstrate that his

remedy at law was inadequate; to the extent he is seeking money damages, his

remedy at law is adequate). Therefore, a claim of bad faith cannot be the basis for

a preliminary injunction and the Court will not consider those arguments at this

time unless Plaintiff explains in his supplemental brief how Defendant’s alleged

failure to respond in a timely manner is not remediable by money/tort damages.

Based on the foregoing,

IT IS ORDERED that Plaintiff shall file a supplemental brief addressing all issues

above by noon, Monday, December 7, 2009.6

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IT IS FURTHER ORDERED confirming the hearing on December 8, 2009 at 9:00

a.m.

IT IS FURTHER ORDERED that the Court notes that in the amended complaint,

Plaintiff still did not properly allege Federal subject matter jurisdiction. Therefore, Plaintiff

shall both file, and bring a copy to the hearing, a separate supplemental brief specifically

addressing subject matter jurisdiction. This brief should include an affirmative avowal that,

as Plaintiff alleges in the amended complaint, Defendant is a corporation and not a bank.

Based on the correct entity status, Plaintiff must then properly allege jurisdiction. See

Industrial Tectonics v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990) (corporation);

Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006) (bank).

DATED this 3rd day of December, 2009.

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