NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

 FOR THE NINTH CIRCUIT

LISA STRUGALA, an individual, on

behalf of herself and on behalf of the class

of all others similarly situated,

Plaintiff-Appellant,

 v.

FLAGSTAR BANK, FSB, a Federal

Savings Bank,

Defendant-Appellee.

No. 19-16774

D.C. No. 5:13-cv-05927-EJD

MEMORANDUM*

Appeal from the United States District Court

for the Northern District of California

Edward J. Davila, District Judge, Presiding

Argued and Submitted November 19, 2020

San Francisco, California

Before: THOMAS, Chief Judge, and SCHROEDER and BERZON, Circuit

Judges.

Plaintiff-Appellant Lisa Strugala appeals the district court’s decision

dismissing her claims for breach of contract, breach of the implied covenant of

FILED

DEC 11 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

* This disposition is not appropriate for publication and is not precedent

except as provided by Ninth Circuit Rule 36-3.
good faith and fair dealing, and fraud against Defendant-Appellee Flagstar Bank,

FSB (“Flagstar”) without leave to amend. We have jurisdiction pursuant to 28

U.S.C. § 1291, and we affirm. Because the parties are familiar with the facts of

this case, we need not recount them here.

We assess our own jurisdiction de novo. Townsend v. Univ. of Alaska, 543

F.3d 478, 482 (9th Cir. 2008). We review a district court’s order granting a motion

to dismiss under Fed. R. Civ. P. 12(b)(6) de novo. Metzler Inv. GMBH v.

Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). We review a district

court’s denial of leave to amend a complaint for abuse of discretion. DCD

Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). 

1. The district court dismissed all but one of Strugala’s claims without

leave to amend. Her decision not to amend her remaining claim, which she does

not seek to revive on appeal, does not render the district court’s judgment

“manufactured” and does not deprive us of jurisdiction to review the district

court’s dismissal order. See Rodriguez v. Taco Bell Corp., 896 F.3d 952, 955–56

(9th Cir. 2018).

2. Strugala has sufficiently alleged Article III standing. At the pleading

stage, the “irreducible constitutional minimum of standing” requires the plaintiff to

allege an injury in fact that is fairly traceable to the defendant’s conduct and can be

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redressed by a favorable court decision. Lujan v. Defenders of Wildlife, 504 U.S.

555, 560–61 (1992). Strugala’s Second Amended Complaint specifically alleges

the amount of federal taxes she overpaid and the late fees and accounting costs she

incurred as a result of Flagstar’s mortgage-interest reporting practices and its

decision not to disclose the change it made to those practices in 2011. Those

injuries could be redressed by a judgment awarding her damages or restitution. 

Her allegations suffice to establish Article III standing at the pleading stage.

3. The district court properly dismissed Strugala’s claims under

California law for breach of contract, breach of the implied covenant of good faith

and fair dealing, and fraud.

Strugala failed to state a claim for breach of contract. She conceded that her

mortgage contract with Flagstar contained no express terms concerning Flagstar’s

mortgage interest reporting practices, and she instead asserted that Flagstar’s

compliance with 26 U.S.C. § 6050H was an implied term of the contract. Under

California law, implied terms are disfavored “and should be read into contracts

only upon grounds of obvious necessity,” which is shown by satisfying a fiveelement test. In re Marriage of Corona, 92 Cal. Rptr. 3d 17, 31 (Cal. Ct. App.

2009). The district court correctly concluded that compliance with 26 U.S.C.

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§ 6050H was not an implied term of the mortgage contract because Strugala’s

claim did not satisfy that test.

Under California law, the implied covenant “cannot impose substantive

duties or limits on the contracting parties beyond those incorporated in the specific

terms of their agreement,” and it “exists merely to prevent one contracting party

from unfairly frustrating the other party’s right to receive the benefits of the

agreement actually made.” Guz v. Bechtel Nat’l Inc., 8 P.3d 1089, 1110 (Cal.

2000). The district court correctly concluded that Strugala’s theory of breach

would improperly impose new substantive duties on Flagstar, and that her alleged

loss of tax benefits and related injuries were not deprivations of benefits of the

mortgage contract.

The district court correctly concluded that Strugala did not allege a plausible

claim of fraud. The defendant’s knowledge of falsity is an essential element of a

fraud claim under California law. Brakke v. Econ. Concepts, Inc., 153 Cal. Rptr.

3d 1, 4 (Cal. Ct. App. 2013). “To survive a motion to dismiss, a complaint must

contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[T]he tenet that a court must

accept as true all of the allegations in a complaint is inapplicable to legal

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conclusions.” Id. The only facts Strugala alleged concerning Flagstar’s

knowledge of falsity were that it changed its mortgage interest reporting practices

in 2011 and that it did not inform borrowers of the change. These facts are

“consistent with” knowing deception, but they are “just as much in line” with a

lawful change in business practices. Twombly, 550 U.S. at 554. “[W]here the

well-pleaded facts do not permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged —but it has not ‘show[n]’—‘that the pleader

is entitled to relief.’” Iqbal, 556 U.S. at 679 (alteration in original) (quoting Fed.

R. Civ. P. 8(a)(2)). The district court properly dismissed her fraud claim.

4. The district court did not abuse its discretion by denying Strugala

leave to file a Third Amended Complaint, which would have based her breach of

contract claim on her deed of trust with Flagstar rather than her mortgage contract. 

The district court expressly considered each of the relevant factors governing

whether to grant leave to amend and found undue delay and prejudice because

Strugala sought to allege a new theory of liability nearly five years into the

litigation based on facts that should have been apparent to her much earlier. A

district court does not abuse its discretion by denying leave to amend based on

undue delay where the facts underlying the proposed amendment were available to

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the plaintiff throughout the litigation. Chodos v. West Publ’g Co., 292 F.3d 992,

1003 (9th Cir. 2002).

AFFIRMED.

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