NOT FOR PUBLICATION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 Gilman, 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, CLERK

U.S. COURT OF APPEALS
 2 

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.” 

Their 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 attorneyclient 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 award of attorneys’ 

fees. We affirm. 

I.

The Arizona Consumer Fraud Act (“ACFA”), A.R.S. § 44-1522, prohibits 

deception, fraud, misrepresentation, or concealment of a material fact “in 

connection with the sale or advertisement of any merchandise.” The elements 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 asked 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, the 

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 payments they would have 
 4 

owed in those months absent the TPP arrangement. 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 include 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 offer at all. In this 

alternative 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. 1981) (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 

modification 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 BANA; 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, there is no evidence that Bryan Cave attempted to sell 

Plaintiffs anything, as required for coverage under 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 time 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 

owner 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 

Plaintiffs’ default 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 mergers 
 6 

and acquisitions may have resulted 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. § 1692a(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 ignorance 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, plaintiffs can recover only pecuniary damages. Med. Lab. Mgmt. 

Consultants v. Am. Broad. Co., 30 F. Supp. 2d 1182, 1200 (D. Ariz. 1998). 

Even assuming 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 owed and 
 7 

that BANA has offered to return—by relying on BANA’s allegedly false 

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 Co. 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 id. By 

contrast, when the parties have 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 Restatement (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 Plaintiffs 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 formed. The 
 8 

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 Mortgs., 856 F. Supp. 2d 1074, 

1079 (D. Ariz. 2012). The reliance must result in a “substantial and material 

change of position.” Weiner v. Romley, 381 P.2d 581, 584 (Ariz. 1963). 

Assuming 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 

normal 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 Plaintiffs’ 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 remained 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, promissory estoppel is not available 

because enforcement of the alleged promise would not be the only way to remedy 

Plaintiffs’ 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 returned 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 standard 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, Plaintiffs 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 judgment on 

this claim. 

VII.

Under Arizona law, implied 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 affirmative 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 information vital to his defense.

State Farm Mut. Auto. Ins. Co. v. Lee, 13 P.3d 1169, 1173 (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. Cty. of Maricopa, 319 P.3d 231, 234 (Ariz. Ct. App. 2014). 

Contrary to Plaintiffs’ assertions otherwise, BANA did not commit an 

affirmative act that put the protected information in its communications with Bryan 

Cave at issue. Although BANA discussed 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 Plaintiffs’ motion seeking a 
 11 

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 district 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 codefendant 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. Plaintiffs’ 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 law 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 successful party reasonable attorney[s’] fees.” 

A.R.S. § 12-341.01(A). 

In Arizona, “when a contract has an attorney[s’] fees 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 therefore 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 either 
 13 

under the Note and Deed of Trust or under 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 that 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).