Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_15-cv-01775/USCOURTS-caed-2_15-cv-01775-1/pdf.json

Parties Involved:
J.P. Morgan Chase, Inc.
Defendant
Select Portfolio Servicing, Inc.
Defendant
Nelda White
Plaintiff
Patrick White
Plaintiff

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

PATRICK WHITE and NELDA WHITE,

Plaintiffs,

v.

J.P. MORGAN CHASE, INC., et al.,

Defendants.

No. 2:15-CV-01775-MCE-AC

MEMORANDUM AND ORDER

Through this action, Plaintiffs Patrick White and Nelda White (“Plaintiffs”) allege 

causes of action for promissory estoppel, intentional misrepresentation, and negligent 

misrepresentation against Defendants J.P. Morgan Chase, Inc. (“Chase”) and Select 

Portfolio Servicing, Inc. (“SPS”) arising from Defendants’ alleged promises for a loan 

modification. Pending before the Court are Defendants’ Motions to Dismiss the 

operative First Amended Complaint (“FAC”). ECF Nos. 13, 18. For the reasons that 

follow, Defendants’ Motions to Dismiss are GRANTED.1

///

///

///

 1 Because oral argument would not have been of material assistance, the Court ordered this 

matter submitted on the briefs. See E.D. Cal. Local R. 230(g).

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BACKGROUND2

On April 17, 2006, Plaintiffs secured a $1,350,000.00 loan to purchase the 

property located at 8915 Los Posas Court, Granite Bay, CA 95746 (the “Property”). This 

loan was secured by a deed of trust recorded against the Property with RMR Financial, 

DBA Princeton Capital. 

A. The First Loan Modification 

In late September 2012, a Chase representative called Mr. White to ask if 

Plaintiffs would be interested in a loan modification instead of foreclosure. Based on the 

oral information provided by Mr. White, the Chase representative allegedly indicated that 

while Plaintiffs appeared to qualify for a loan modification, Plaintiffs’ oral information 

would have to be verified. The Chase representative sent a Loan Modification package,

and Plaintiffs returned the completed package to Chase. 

During October, November and December 2012, the Chase representative 

demanded that Plaintiffs take certain actions as conditions of the loan modification. The 

conditions of the loan modifications included: (1) taking the Property off the market for 

sale in November 2012; (2) not renting the house in whole or in part; (3) maintaining the 

Property and fire insurance; (4) paying the monthly Home Owners Association 

assessments; (5) paying the gardener; (6) paying the pool service; (7) maintaining the 

Home Owner’s Insurance Warranty to cover any necessary home repairs; and 

(8) replacing the pool motor. In March 2013, the Chase representative requested 

additional documentation, and Plaintiffs provided it. Plaintiffs allege that Chase 

mishandled the documents and denied the loan modification later that month. 

B. The Second Loan Modification

Shortly after Chase’s initial denial described above, a Chase representative again 

called Mr. White regarding Plaintiffs’ interest in a potential loan modification. Plaintiffs

again completed a Loan Modification package. On July 11, 2013, Chase denied the 

 2 This statement of facts is entirely based on the allegations in Plaintiffs’ FAC (ECF No. 10). 

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loan modification in writing because the unpaid principal balance exceeded the 

maximum amount eligible for a loan modification, and because Plaintiffs’ income was 

insufficient. 

C. The Third Loan Modification

In July 2013, Plaintiffs received a written notice from Chase that Chase sold the 

servicing of their loan effective as of August 1, 2013 to SPS. On August 29, 2013, an

SPS representative called regarding Plaintiffs’ interest in a loan modification. The 

representative informed that based on oral information provided by Plaintiffs, they 

appeared to qualify for a loan modification. Plaintiffs were allegedly told that, contingent 

upon verification of that oral information, they would in fact receive a loan modification. 

SPS sent a Loan Modification Package shortly thereafter. Relying on what they believed 

was a forthcoming loan modification, Plaintiffs performed the following actions: 

(1) maintained the property and fire insurance; (2) paid the monthly Home Owners 

Association assessments; (3) paid the gardener; (4) paid the pool service; (5) maintained 

the Home Owner’s Insurance Warranty; (5) repaired the freezer and dishwasher; and 

(6) bought a new washing machine. Upon verification, however, SPS denied Plaintiffs a 

loan modification. Plaintiffs have exhausted the appeals process with respect to that 

decision.

STANDARD

On a motion to dismiss for failure to state a claim under Federal Rule of Civil 

Procedure 12(b)(6)3, all allegations of material fact must be accepted as true and 

construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 

Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and plain 

statement of the claim showing that the pleader is entitled to relief” in order to “give the 

 3 All further references to “Rule” or “Rules” shall be to the Federal Rules of Civil Procedure unless 

otherwise indicated. 

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defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 

47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 

detailed factual allegations. However, “a plaintiff’s obligation to provide the grounds of 

his entitlement to relief requires more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do.” Id. (internal citations and 

quotations omitted). A court is not required to accept as true a “legal conclusion 

couched as a factual allegation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) 

(quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a 

right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles 

Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) 

(stating that the pleading must contain something more than “a statement of facts that 

merely creates a suspicion [of] a legally cognizable right of action.”)). 

Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 

assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (internal citations and 

quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard 

to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of 

the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 Charles 

Alan Wright & Arthur R. Miller, supra, at § 1202). A pleading must contain “only enough 

facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . 

have not nudged their claims across the line from conceivable to plausible, their 

complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed 

even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a 

recovery is very remote and unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 

232, 236 (1974)).

A court granting a motion to dismiss a complaint must then decide whether to 

grant leave to amend. Leave to amend should be “freely given” where there is no 

“undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 

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to the opposing party by virtue of allowance of the amendment, [or] futility of the 

amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 

Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 

be considered when deciding whether to grant leave to amend). Not all of these factors 

merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 

carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 

185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 

“the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 

Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 

1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 

1989) (“Leave need not be granted where the amendment of the complaint . . . 

constitutes an exercise in futility . . . .”)).

ANALYSIS

Defendants Chase and SPS advance several arguments in the pending Motion. 

This Order addresses only those that the Court finds dispositive.4

A. Plaintiffs’ First and Fourth Causes of Action for Promissory Estoppel

1. Plaintiffs’ First Cause of Action against Chase

Plaintiffs’ First Cause of Action for promissory estoppel is based on Chase’s 

alleged promises regarding the First and Second Loan Modification. Plaintiffs allege that 

they relied on Chase’s alleged promises for a loan modification to their detriment. 

Chase seeks dismissal of the claim on the ground that Plaintiffs have failed to allege a 

promise. The Court agrees with Chase.

To properly allege a cause of action for promissory estoppel, a plaintiff must 

adequately plead: (1) a clear and unambiguous promise; (2) reliance by the party to 

 4 Defendants’ Requests for Judicial Notice (ECF Nos. 14, 19) are unopposed and are therefore 

GRANTED. 

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whom the promise is made; (3) reasonable and foreseeable reliance; and (4) injury as a 

result of that reliance. See US Ecology, Inc. v. State, 129 Cal. App. 4th 887, 901 (4th

Dist. 2005); Solomon v. Aurora Loan Serv. LLC, No. CIV. 2:12-209 WBS KJN, 2012 WL 

2577559 (E.D. Cal. July 3, 2012). 

Here, despite Plaintiffs’ allegations that Chase made promises for a loan 

modification, Chase did not make any “clear and unambiguous” promises to Plaintiffs. 

First, Chase informed Plaintiffs that Plaintiffs had to take additional steps “to verify the 

oral statements” to qualify for a loan modification. ECF No. 10 at 3, 5. Such conditional 

“promises” were neither clear nor unambiguous in their terms. In fact, such conditional 

promises immediately placed Plaintiffs on notice that finalization of the loan modification 

would undoubtedly require further approval. Laks v, Coast Fed. Sav. & Loan Assn’s, 

60 Cal. App. 3d 885, 891 (1976) (broker’s letter that contains a conditional commitment 

“immediately places the offeree on notice that finalization of the terms will undoubtedly 

require further negotiations”). 

Second, Chase’s alleged promises were fatally uncertain because they contained 

no essential terms. The Complaint does not allege that Chase provided any essential 

terms such as payment schedules for each loan, identification of the security, 

prepayment conditions, terms for interest calculations, loan disbursement procedures, 

and rights and remedies of the parties in case of default. See id. at 890 (“the fact that so 

many important terms are absent further emphasizes the conditional nature of the 

letter”). Plaintiffs’ failure to allege such essential terms further indicates that the parties 

were still in the negotiation stage, and preliminary discussion and negotiations cannot 

establish a cause of action for promissory estoppel. Garcia v. World Sav., FSB, 183 Cal.

App. 4th 1031, 1044 (2010).

Furthermore, the FAC lacks allegations sufficient to establish the third element of 

promissory estoppel. Although Plaintiffs have provided ample factual allegations to 

assert their reliance on the promise, they have failed to allege that their reliance was 

reasonable and foreseeable. See US Ecology, Inc., 129 Cal. App. 4th at 901. Indeed, 

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because Chase’s promise was conditional, Plaintiffs could not have reasonably relied 

upon it. See Laks, 60 Cal. App. 3d at 893 (before relying on the promise, the plaintiffs 

“should have resolved the ambiguities and obtained a finalized agreement”). 

Accordingly, Plaintiffs have failed to allege an actionable promissory estoppel 

cause of action against Chase.

2. Plaintiffs’ Fourth Cause of Action against SPS and Chase5

Plaintiffs’ Fourth Cause of Action for promissory estoppel is based on the alleged 

promise by SPS in the Third Loan Modification. Plaintiffs allege that SPS promised 

Plaintiffs a loan modification and that they relied on this promise to their detriment. ECF 

No. 10 at 10. SPS seeks dismissal of the claim on the ground that Plaintiffs have failed

to allege a promise. The Court agrees with SPS.

Similar to the analysis above, a SPS representative informed Plaintiffs that they 

would receive a loan modification if the oral information could be verified. Also, SPS 

allegedly “imposed an additional requirement on the Loan Modification” by requiring an 

appraiser to enter Plaintiffs’ home to make an appraisal. ECF No. 10 at 7. These 

additional requirements and conditions to qualify for the loan modification at SPS further 

indicate that the promise was conditional. As with Chase’s conditional promises, the

conditional promise by SPS was unclear and ambiguous. Thus, Plaintiffs’ reliance on 

such promises cannot be deemed reasonable or foreseeable. See Laks, 60 Cal. App. 

3d at 893 (Plaintiffs “should have resolved the ambiguities and obtained a finalized 

agreement and not relied on” the unambiguous offer). 

Given the conditional nature of the alleged promises in connection with Plaintiff’s 

Loan Modification applications, it would be futile for Plaintiffs to amend their claims for 

promissory estoppel. Accordingly, Plaintiffs’ First and Fourth Causes of Action are 

DISMISSED without leave to amend.

///

 5 Plaintiffs state that their action for promissory estoppel against SPS and Chase is a Third Cause 

of Action, but it should be Fourth Cause of Action. ECF No. 10 at 10. This Order reflects the corrected 

information. 

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B. Plaintiffs’ Second and Fifth Causes of Action for Intentional 

Misrepresentation 

Plaintiffs allege that Defendants knew or should have known that Plaintiffs were 

not eligible for a loan modification from the beginning but misrepresented their eligibility 

“with the intention to induce [Plaintiffs] to rely upon them and act accordingly.” ECF 

No. 10 at 9. Defendants move to dismiss Plaintiffs’ Second and Fifth Causes of Action 

on the basis that Plaintiffs have failed to adequately plead intentional misrepresentation. 

The Court again agrees with Defendants. 

A cause of action for fraud based on a false promise must allege: (1) a material 

misrepresentation, (2) knowledge of falsity, (3) intent to defraud or induce reliance,

(4) justifiable reliance, and (5) resulting damage. See First Advantage Background Serv. 

Corp. v. Private Eyes, Inc., 569 F. Supp. 2d 929, 939 (N.D. Cal. Mar. 5, 2008); see

Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). Promissory fraud is a subspecies 

of fraud and deceit, and where a promise is made without the intention to perform, there 

is an implied misrepresentation of fact that may be actionable fraud. Lazar, 12 Cal.4th at 

638. 

Plaintiffs’ fraud-based claims are subject to review under Rule 9(b)’s heightened 

pleading standard. See Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must 

state with particularity the circumstances constituting fraud or mistake.”); Kearns v. Ford 

Motor Co., 567 F.3d 1120, 1124-25 (9th Cir. 2009). Plaintiffs must articulate the “who, 

what, when, where, and how” of the fraud alleged. Kearns, 567 F.3d at 1126.

Additionally, “for corporate defendants, Plaintiffs must allege the names of the 

persons who made the allegedly fraudulent representations, their authority to speak, to 

whom they spoke, what they said or wrote, and when it was said or written.” Flowers v. 

Well Fargo Bank, N.A., No. C 11-1315 PJH, 2011 WL 2748650, at *6 (N.D. Cal. July 13, 

2011). Given this heightened standard of review, Plaintiffs’ causes of action for 

intentional misrepresentation fail.

///

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1. Plaintiffs’ Second Cause of Action against Chase

Plaintiffs’ Second Cause of Action for intentional misrepresentation is based on 

the alleged representations by Chase regarding the First and Second Loan Modifications

that Plaintiffs were preliminarily qualified for a loan modification based on the oral 

information provided. Plaintiffs allege that Chase representatives misrepresented their 

qualification for a loan modification “with the intention to induce the Whites to rely upon 

them and act accordingly.” ECF No. 10 at 9. 

Here, the FAC’s vague allegations do not provide sufficient notice to Chase 

because Plaintiffs have failed to allege the names of the purported Chase employees or 

their authority to speak. Celebrity Chefs Tour, LLC v. Macy’s, Inc., 16 F. Supp. 3d 1123, 

1134 (S.D. Cal. April 25, 2014) (“merely attributing misrepresentation to a corporate 

entity is inadequate; a specific person must be named, or at least identified”). 

Moreover, the FAC is devoid of any facts demonstrating that Chase ever 

represented to Plaintiffs that they would receive a loan modification. In fact, Chase 

repeatedly told Plaintiffs that the oral information would have to be verified to approve a 

loan modification. The fact that Chase sent a Loan Modification package to Plaintiffs for 

verification process further supports that no affirmative representation for a loan 

modification was made during a telephonic conversation. See Tomek v. Apple, Inc., 

No. 2:11-cv-02700-MCE-DAD, 2013 WL 394723 at *4 (E.D. Cal. Jan. 30, 2013). 

Accordingly, Plaintiffs have failed to identify any representation by Chase that Plaintiffs 

would receive a loan modification. 

Moreover, Plaintiffs have failed to allege Chase’s knowledge and intent to 

defraud. No factual allegations in the Complaint show that the Chase representative 

knew the representation was false at the time it was made. See First Advantage 

Background Serv. Corp., 569 F. Supp. 2d at 939. Further, the Complaint does not allege 

that Defendants did not intend on performing the promises even if the oral information 

were to be verified. See Tomek v. Apple, Inc., No. 2:11-cv-02700-MCE-DAD, 2013 WL 

394723 at *4 (E.D. Cal. Jan. 30, 2013). Finally, Plaintiffs have failed to allege that their 

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reliance was justified because the conditional promise was not sufficient to justify 

reliance. See Id. Consequently, Plaintiffs have failed to state a claim for intentional 

misrepresentation against Chase. 

2. Plaintiffs’ Fifth Cause of Action against SPS and Chase 

Plaintiffs’ Fifth Cause of Action for intentional misrepresentation against SPS and 

Chase is based on the alleged representations regarding the Third Loan Modification. 

Plaintiffs identify three misrepresentations. First, Plaintiffs allege that on August 29, 

2013, at 12:36 P.M., an SPS representative, possibly named Colleen, called Mr. White 

and stated that “the Whites were eligible for a Loan Modification program and the 

Whites, based upon the oral information supplied by Mr. White, qualified for a Loan 

Modification.” ECF No. 10 at 6. The SPS representative further stated that “the only 

step was to verify the oral statements of Mr. White.” Id. However, “[D]efendants now 

claim that the Whites were never eligible or qualified for any Loan Modification.” Id. at 7.

Plaintiffs have failed to identify an affirmative representation by SPS that Plaintiffs 

would receive a loan modification. SPS expressly disclosed to Plaintiffs that the oral 

information must be verified and the Loan Modification package must be completed. 

Further, no factual allegations in the FAC suggest that SPS knew Plaintiffs were not 

eligible for a loan modification when SPS initially contacted Mr. White on August 29. 

Additionally, Plaintiffs cannot rely on a conditional promise. See Tomek, 2013 WL 

394723 at *4 (“generalized, vague, and unspecified assertions constitute ‘mere puffery’ 

upon which a reasonable consumer could not rely”). Accordingly, Plaintiffs cannot state 

a cause of action for intentional misrepresentation based on any oral representations 

regarding loan modification when those representations were expressly made subject to 

further verification. 

The second alleged misrepresentation is SPS’s statement during the telephonic 

conversation on August 29, 2013. Plaintiffs allege that “SPS specifically informed the 

Whites that SPS had the authority to determine eligibility and qualification for a Loan 

Modification and to issue the Whites a Loan Modification.” Plaintiffs allege that “this 

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representation was untrue.” Id. at 6. The third alleged misrepresentation is SPS’s 

representation that appraisal of the property was necessary for a loan modification but 

Plaintiffs allege that the appraisal was not a condition for any loan modification. Id. at 7.

With respect to both alleged misrepresentations, Plaintiffs have failed to allege the 

specific person who made the misrepresentation to Plaintiffs. See Flowers, 2011 WL 

2728650, at *6. Moreover, the allegations found in the Complaint failed to allege

Defendants’ knowledge of falsity, intent to defraud, and Plaintiffs’ reliance and damages 

stemming from such misrepresentations. See First Advantage Background Serv. Corp., 

569 F. Supp. 2d at 939.

Accordingly, Defendants’ Motions to Dismiss for intentional misrepresentation are 

GRANTED. Because the conditional nature of Defendants’ representations regarding 

Plaintiffs’ qualifications for a loan modification would make amendment futile, Plaintiffs’ 

Second and Fifth Causes of Action are DISMISSED without leave to amend.

C. Plaintiffs’ Third and Sixth Cause of Action for Negligent 

Misrepresentation 

Defendants Chase and SPS move to dismiss Plaintiffs’ Third and Sixth Causes of 

Action on the basis that Plaintiffs have failed to adequately plead actionable negligent

misrepresentation. To state a cause of action for negligent misrepresentation, Plaintiffs 

must allege: (1) a misrepresentation of a past or existing material fact, (2) made without 

reasonable grounds for believing it to be true, (3) with intent to induce another’s reliance 

on the fact misrepresented, (4) in the face of ignorance of the truth and justifiable 

reliance thereon by the party to whom the misrepresentation was directed, and 

(5) resulting damage. Fox v. Pollack, 181 Cal. App. 3d 954, 962 (1986). 

Plaintiffs’ Third Cause of Action for negligent misrepresentation is based on 

Chase’s alleged representation that Plaintiffs qualified for a loan modification based on 

the oral information they provided regarding the First and Second Loan Modifications. 

Plaintiffs’ Sixth Cause of Action is based on the same alleged representation made by 

SPS regarding the Third Loan Modification. Plaintiffs allege that Chase and SPS made 

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representations “negligently, without a reasonable basis for believing that the 

representations were true and with intention to induce the Whites to rely upon them and 

act accordingly.” ECF No. 10 at 9, 11. 

Here, Plaintiffs again fail to allege which specific individuals made representations

regarding their loan modification or that the individuals knew the representation was 

untrue. See Fox, 181 Cal. at 962. Furthermore, the representations allegedly made by 

Chase and SPS involved future events related to the loan modifications. Indeed, 

Defendants’ representations that Plaintiffs would receive a loan modification once the 

oral information was approved were promises as to future action. See Garcia, 2010 WL 

1881098 at *2 (“Because Plaintiff has not alleged any misrepresentation of a past or 

existing material fact, dismissal of his cause of action for negligent misrepresentation is 

warranted”); Helo v. Bank of America Servicing Co., No. 1:14-cv-01522-LJO-JLT, 2015 

WL 4673890, at *4 (E.D. Cal. Aug. 6, 2015) (“Predictions as to future events, or 

statements as to future action by some third party, are deemed opinions, and not 

actionable fraud”). Accordingly, because Plaintiffs’ negligent misrepresentation causes 

of action do not involve the misrepresentation of a past or existing material fact, Plaintiffs 

have failed to establish the first requisite for negligent misrepresentation. 

Accordingly, the Court GRANTS Defendants’ Motions with respect to Plaintiffs’ 

Third and Sixth Causes of Action. Because the alleged misrepresentations were 

predictions about future events contingent on the verification of Plaintiffs’ financial status, 

granting leave to amend would be futile. Plaintiffs’ Third and Sixth Causes of Action are 

therefore DISMISSED without leave to amend. 

///

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///

///

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CONCLUSION

Defendants’ Motions to Dismiss (ECF Nos. 13, 18) are GRANTED. Plaintiffs’ First 

Amended Complaint (ECF No. 10) is DISMISSED in its entirety without leave to amend. 

The Clerk of Court is hereby directed to close the case. 

IT IS SO ORDERED. 

Dated: March 3, 2016

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