NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

JUDITH M. RICH and VINCENT P. VITALE, Plaintiffs

- Appellants,

v. BANK OF AMERICA, N.A., a national bank, individually and as successor in interest to BAC Home Loans Servicing, LP and Countrywide Bank, F.S. B. and BRYAN CAVE LLP, a Missouri Limited Liability Partnership,

Defendants

- Appellees. No. 14

- 17190 15

- 15885
D.C. No. 2:11

- cv - 00511

- DLR

MEMORANDUM *

Appeal from the United States District Court for the District of Arizona Douglas L. Rayes, District Judge, Presiding Submitted November 17, 2016 ** San Francisco, California Before: THOMAS, Chief Judge, and GILMAN *** and FRIEDLAND, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

*** The Honorable Ronald Lee G ilman, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. 

# FILED

NOV 21 2016 MOLLY C. DWYER, CLER K U.S. COURT OF APPEAL S2

Judith Rich and Vincent Vitale sued Bank of America, N.A. (“BANA”) and its counsel Bryan Cave, LLP for allegedly misleading them regarding whether a loan modification would include a “ balloon payment. ”
T heir complaint alleged violations of the Arizona Consumer Fraud Act and the Fair Debt Collection Practices Act, fraud, breach of contract , promissory estoppel, and negligence. They also alleged that BANA had waived its attorney

client privilege regarding certain documents and that Bryan Cave should be disqualified from representing BANA. The district court dismissed some of Plaintiffs’ claims and granted summary judgment to BANA and Bryan Cave on the rest, and it awarded attorneys’ fees to BANA. Rich and Vitale appeal from the dismissal, from the grant of summary judgment, and from the aw ard of attorneys’ fees. We affirm.
I. The Arizona Consumer Fraud Act (“ACFA”), A.R.S. § 44

- 1522, prohibits deception, fraud, misrepresentation, or concealmen t of a material fact “in connection with the sale or advertisement of any merchandise.” The el ements of an ACFA violation are “a false promise or misrepresentation made in connection with the sale or advertisement of merchandise and the hearer’s consequent and proximate injury.” Dunlap v. Jimmy GMC of Tucson, Inc. , 666 P.2d 83, 87 (Ariz.3

Ct. App. 1983). As an initial matter , we observe that the heart of the parties’ dispute was likely due to a misunderstanding rather than a false promise or misrepresentation. The district court noted that what Plaintiffs call a “ balloon payment ” BANA refers

to as a “ deferred principal balance, ” the difference being that the deferred principal balance did not accrue monthly interest. BANA thus contends that its answer that the loan modification did not include a balloon payment was true because Plaintiffs

never as ked about a deferred principal balance. The district court nevertheless concluded that “it was not wholly unreasonable for Plaintiffs to interpret these terms synonymously.”
Even assuming that a false promise or misrepresentation occurred, t he district court correctly concluded that Plaintiffs have not demonstrated “consequent and proximate injury” and therefore cannot satisfy that element of an ACFA claim. Dunlap , 666 P.2d at 87. In reliance on BANA’s statement that the loan modification offer would not contain a balloon payment, Rich and Vitale made three payments pursuant to the Trial Period Plan (“TPP”) . But they already owed this money

— indeed, the payments were less than the p ayments they would have4

owed in those months absent the TPP arrangeme nt. Moreover, BANA has attempted to return these payments. 1
Plaintiffs also argue that their injury arises from BANA’s refusal to provide them with a loan modification that does not in clude a balloon payment. But, on Plaintiffs’ theory, had there been no fraud , i.e., had they been told the modification would include a balloon payment, Plaintiffs would not have made the three TPP payments

— and thus there would have been no modification o ffer at all. In this alternat iv e universe, Plaintiffs would presumably still have their original loan (in default), not a loan modification sans balloon payment. See Arrington v. Merrill Lynch, Pierce, Fenner & Smith, Inc. , 651 F.2d 615, 621 (9th Cir. 19 81) (explaining that a plaintiff who was fraudulently induced to buy stock was not entitled to dividends paid on the stock because “[h]ad there been no fraud, plaintiffs would not have owned the stocks”) . Because Plaintiffs were never entitled to a loan

m odification without a balloon payment, their failure to receive one thus cannot constitute the type of “actual and consequent injury” the ACFA requires. Finally, Bryan Cave merely acted as a conduit in transmitting information between Plaintiffs and BAN A; it had “no financial interest in the actual sale of

1 We reject Plaintiffs’ argument that Shaw v. BAC Home Loans Servicing, LP , No. 10

- CV

- 2041, 2011 WL 805938 (S.D. Cal. Feb. 28, 2011), has issue

- preclusive effect here . The facts and governing law in Shaw caused the issues decided there to be different from those presented here

.5

merchandise.” Powers v. Guaranty RV, Inc. , 278 P.3d 333, 339 (Ariz. Ct. App. 2012). Accordingly, t here is no evidence that Bryan Cave attempted to sell Plaintiffs anything, as required for coverage u nder the ACFA.
II. The Fair Debt Collection Practices Act (“FDCPA”) regulates the conduct of debt collectors with the goal of “ eliminat[ing] abusive debt collection practices by debt collectors .” 15 U.S.C. § 1692 (e) . The FDCPA excludes from the definition of “debt collector , ” and therefore does not apply to, “any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity

. . . concerns a debt which was not in default at the ti me it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii); see also De Dios v. Int’l Realty & Invs. , 641 F.3d 1071, 1074 (9th Cir. 2011) (holding that the FDCPA did not apply to a property manager responsible for collecting rent on behalf of the

ow ner when the property manager had this responsibility before the debt was payable). Despite Plaintiffs’ arguments to the contrary, the evidence shows that BANA or its subsidiaries have serviced the loan at issue since 2006, well before Plaint iffs’ defa

ult in October 2010. Plaintiffs suggest that various documents identify entities other than BANA as the beneficiary or servicer of the loan. But they offer no admissible evidence to counter BANA’s evidence that, while mergers6

and acquisitions may have re sulted in the servicer’s name changing, no transfer of servicing rights has occurred.
Because the admissible evidence shows that BANA has serviced the loan since before Rich and Vitale’s default, the FDCPA does not apply to BANA pursuant to 15 U.S.C. § 1 692a(6)(F)(iii)

. See De Dios , 641 F.3d at 1074.
III. In Arizona, a plaintiff must prove the following nine elements to succeed on a fraud claim:

(1) a representation, (2) its falsity, (3) its materiality, (4) the speaker’s knowledge of its falsity or ign orance of its truth, (5) the speaker’s intent that the information should be acted upon by the hearer and in a manner reasonably contemplated, (6) the hearer’s ignorance of the information’s falsity, (7) the hearer’s reliance on its truth, (8) the hearer’s right to rely thereon, and (9) the hearer’s consequent and proximate injury. Green v. Lisa Frank, Inc. , 211 P.3d 16, 34 (Ariz. Ct. App. 2009) (quoting Taeger v. Catholic Family & Cmty. Servs. , 995 P.2d 721, 730 (Ariz. Ct. App. 1999)). In addition, plain tiffs can recover only pecuniary damages. Med. Lab. Mgmt. Consultants v. Am. Broad. Co. , 30 F. Supp. 2d 1182, 1200 (D. Ariz. 1998).
Even a ssuming that the other elements could be satisfied, Plaintiffs’ fraud claim fails because, as explained above, they have not shown a “consequent and proximate injury.” There is no evidence that Plaintiffs have suffered pecuniary damages

— other than the three TPP payments, money that they already owe d and7

that BANA has offered to return

— b y relying on BANA’s allegedly fal se
statements.
IV. Arizona law follows the basic contract principle that “before there can be a binding contract there must be mutual consent of the parties to the terms thereof.” Heywood v. Ziol , 372 P.2d 200, 203 (Ariz. 1962) (citing Spellman Lumber C o. v. Hall Lumber Co. , 241 P.2d 196 (Ariz. 1952))

. This mutual consent exists when the parties share a common understanding of the terms of the contract. See i d. By contrast, when the parties ha ve different understandings and “ neither party kn[ows]

nor ha[s] reason to know the meaning intended by the other, there [i] s no ‘meeting of the minds’ as to an essential term of the contract.” Buckmaster v. Dent , 707 P.2d 319, 321 (Ariz. Ct. App. 1985) (citing Rest atement (Second) of Contracts § 20 (1979)). And “ [w] ithout the required meeting of the minds

. . . [a] contract [i]s void.” Id. (citing Heywood , 372 P.2d at 203). Here, as the district court explained, “[t]he dispute over the [unpaid principal balance] and the deferred principal balance (or, as Plai ntiffs call it, the balloon payment) appears to result from the parties applying different definitions to certain
terms.” Because there was no “meeting of the minds” as to these centrally important terms , no binding contract promising debt forgiveness for med

. T he8

district court therefore did not err in dismissing Plaintiffs’ contract claim against
BANA.
V. To prevail on a claim of promissory estoppel, a plaintiff must prove that the defendant made a promise, that it was reasonably foreseeable that the plaintiff would rely on that promise, and that the plaintiff did rely on that promise to his detriment. See Diaz

-

Amador v. Wells Fargo Home Mortg s
. , 856 F. Supp. 2d 1074, 1079 (D. Ariz. 2012). The reliance must resu lt in a “substantial and material change of position.” Weiner v. Romley , 381 P.2d 581, 584 (Ariz. 1963).
A ssuming that BANA promised Rich and Vitale a specific loan modification offer, and assuming that it was reasonably foreseeable that Rich and Vitale would rely on that promise, Plaintiffs’ promissory estoppel claim fails because they have not shown that they relied on that promise to their detriment

. 2 In reliance on BANA’s statements, Plaintiffs made three trial payments, which were less than the

nor mal monthly payments that they already owed. Plaintiffs argue that by making the payments, they gave up the possibility of an efficient breach. But Plaintiffs had already breached by defaulting on the loan

2 Plaintiffs also assert a claim for promissory estoppel based on statements that BANA allegedly made regarding Plaintif fs’ eligibility for a loan modification program. Even if BANA made these statements, there is no evidence that BANA promised Plaintiffs anything . Without a promise by the defendant, the promissory estoppel claim must fail.9

before they made the payments, and they remaine d in breach after they made the payments. To the extent Plaintiffs are arguing that they could have remained in breach and not paid the three TPP payments , p romissory estoppel is not available because enforcement of the alleged promise would not be the on ly way to remedy
P laintiff s’ injury. See Double AA Builders, Ltd. v. Grand State Constr. LLC , 114 P.3d 835, 838 (Ariz. Ct. App. 2005). Here, Plaintiffs’ alleged injury could be remedied if BANA return ed the three TPP payments to Plaintiffs

— something
BANA has already offered to do. Finally, although Plaintiffs argue that they lost the opportunity to apply for alternative financing, they identify no program that they would have qualified for. Because there is no evidence that Plaintiffs relied on BANA’s alleged promises to their detriment, the district court did not err in granting summary judgment to BANA on Plaintiffs’ promissory estoppel claim.
VI. In Arizona, negligence has four elements: “(1) a duty requiring the defendant to conform to a certain s tandard of care; (2) a breach by the defendant of that standard; (3) a causal connection between the defendant’s conduct and the resulting injury; and (4) actual damages.” Gipson v. Kasey , 150 P.3d 228, 230 ( Ariz. 2007) (citing Ontiveros v. Borak , 667 P.2d 200, 204 (Ariz. 1983) ).10

Because, as discussed above, P laintiffs have failed to demonstrate that they suffered actual damages as a result of BANA’s statements about the loan modification offer, the district court did not err in granting summary judgme nt on this claim.
VII. Under Arizona law, i mplied waiver of the attorney

- client privilege occurs when the following conditions are satisfied: (1) assertion of the privilege was a result of some affirmative act, such as filing suit [or raising an affirm ative defense], by the asserting party; (2) through this affirmative act, the asserting party put the protected information at issue by making it relevant to the case; and (3) application of the privilege would have denied the opposing party access to info rmation vital to his defense.
State Farm Mut. Auto

. Ins. Co. v. Lee , 13 P.3d 1169, 11 73 (Ariz. 2000) (alteration in original) (quoting Hearn v. Rhay , 68 F.R.D. 574, 581 (E.D. Wash. 1975)). “[T]he mere fact that privileged communications would be relevant to the issues before the court is of no consequence to the issue of waiver.” Accomazzo v. Kemp, ex rel. C ty

. of Maricopa , 319 P.3d 231, 234 (Ariz. Ct. App. 2014). Contrary to Plaintiffs’ assertions otherwise, BANA did not commit an affirmative act th at put the protected information in its communications with Bryan Cave at issue. Although BANA d iscussed the existence of these communications,
it did not use their contents as a basis for any claims or defenses. The district court thus did not abuse its discretion in denying P laintiffs’ motion seeking a11

determination that BANA waived its attorney

- client privilege for the communications between BANA and Bryan Cave. The district court likewise did not abuse its discretion in denying the motion regarding BANA’s electronic notes. Plaintiffs’ motion for reconsideration of BANA’s waiver of attorney

- client privilege raised this issue for the first time. The district court did not address this claim. “ [A] buse of discretion review precludes reversing the dist rict court for declining to address an issue raised for the first time in a motion for reconsideration.” 389 Orange Street Partners v. Arnold , 179 F.3d 656, 665 ( 9th Cir. 1999).
VIII. According to Plaintiffs, Bryan Cave should be disqualified because it is a co

defendant with BANA and represents clients with conflicting interests. The district court concluded that Plaintiffs lacked standing to bring such a motion. We
agree. See Kasza v. Browner , 133 F.3d 1159, 1171 (9th Cir. 1998). Plaintiffs argue that they have suffered an injury because “[i]f BANA is not required to pay Bryan Cave, then Homeowners are not required to pay BANA.” Even if true, this injury

— the payment of attorneys’ fees

— is not caused by the alleged conflict of interest. Plain tiffs’ alleged injury thus lacks the causal connection required for a plaintiff to have standing to bring a disqualification motion.12

Plaintiffs further assert that Vitale has standing “because he is an attorney in good standing.” That Vitale may have a duty to report ethical violations by other attorneys does not establish that he has suffered an injury sufficient to establish standing to force disqualification

. IX. The district court held that BANA was entitled to attorneys’ fees under both Arizona la w and the Note and Deed of Trust. The Note states, “[T]he Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note

. . . . Those expenses include, for example reasonable attorneys’ fees.” The Deed of Trust similarly provides that the lender can recover reasonable attorneys’ fees for defending its interest in Plaintiffs’ home. Under Arizona law, “ [i] n any contested action arising out of a contract, express or implied, the court may award the successfu l party reasonable attorney[s’] fees.”
A.R.S. § 12

- 341.01(A). In Arizona, “when a contract has an attorney [ s ’] fee s provision it controls to the exclusion of the statute.” Lisa v. Strom , 904 P.2d 1239, 1242 n.2 (Ariz. Ct. App. 1995). Plaintiffs are th erefore correct that courts cannot award fees under A.R.S. § 12

- 341.01(A) if the parties provided for attorneys’ fees in their contract. Because the district court held that BANA was entitled to attorneys’ fees either13

under the Note and Deed of Trust or u nder A.R.S. § 12

- 341.01(A), though, we affirm the award under the Note and Deed of Trust. 3
X. For the foregoing reasons , we AFFIRM

.

3 Plaintiffs also argue th at the district court erred in considering settlement discussions when deciding whether to award attorneys’ fees. But a court may consider settlement discussions in determining an award of attorneys’ fees. See Ingram v. Oroudjian , 647 F.3d 925, 927 (9th Cir. 2011).