February 22, 2014
Federal District Court of Nevada Dismisses Homeowners’ Lawsuit Against Banks for not Pleading Enough Facts
In October 2013, the Federal District Court of Nevada in Prince v. Loop Capital Markets, LLC held that Plaintiff homeowners had failed to plead enough facts in their complaint against Defendants Wells Fargo Bank, N.A. and Bank of America, N.A. and dismissed Plaintiffs’ complaint with prejudice.
In August 2009, Thomas Prince and, his wife, Sarah Prince (“Plaintiffs”) bought a home in Las Vegas with a mortgage from New Line Mortgage, Div. Republic Mortgage Home Loans, LLC (“New Line”) as the lender on the deed and Equity Title of Nevada (“Equity”) as the deed trustee. MERS was listed as the nominee for New Line. In August 2012, MERS securitized and pooled the mortgage and sold it as a security to Bank of America, N.A.. Bank of America and Wells Fargo Bank, N.A. (“Defendants”), later initiated a foreclosure action against Plaintiffs, and Plaintiffs later sued Defendants. Plaintiffs sued the Defendants for intentional misrepresentation and negligent misrepresentation in the Defendants’ purchase of Plaintiffs’ mortgage, and sought to stop the foreclosure action. In March 2013, Defendants moved to remove the case from state to federal court and made a motion to dismiss the complaint for failure to state a claim upon which relief could be granted.
The District Court granted the Defendants’ motion to dismiss and held that Plaintiffs’ complaint failed to plead intentional and negligent misrepresentation with specificity under Federal Rules of Civil Procedure Rule 9(b). The Court found that the complaint did not identify a false or misleading statement by Defendants or explain why any alleged statements by Defendants were false. The Court also found that Plaintiffs did not identify the “who, what, when, where, or how of the alleged misconduct” and instead referred to a blanket statement that the discovery in the case revealed that the alleged misconduct occurred. The Court also denied Plaintiffs’ request to amend the complaint to change its argument that the securitization of the mortgage in this case inherently changed the existing legal relationship between the parties to the extent that the original parties ceased to occupy the roles that they did at closing. The Court found that case precedent held that “securitization of a loan does not in fact alter or affect the legal beneficiary’s standing to enforce the deed of trust.” The Court therefore denied Plaintiffs’ request to amend the complaint and granted Defendants’ motion to dismiss with prejudice.
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