Editor: David Reiss
Brooklyn Law School

December 3, 2013

Washington District Court Dismisses Consumer Protection Case Against MERS and Bank of America as Plaintiff-Homeowners Failed to Allege Enough Facts to Support their Claims

By Karume James

The federal district court of Washington in Montgomery v. Soma Fin. Corp., 2013 WL 5775637 (W.D.Wash. 2013) dismissed several consumer protection claims against MERS and Bank of America because the Plaintiffs-homeowners failed to allege sufficient facts to support their claims.

On September 5, 2006, the Plaintiffs, Dennis and Brenda Montgomery, entered a home mortgage for $2.28 million with MERS as the mortgage trustee and SOMA Financial as the lender beneficiary. The loan was eventually sold to Countrywide Home Loans, Inc., and was subsequently taken over by Bank of America through its merger with Countrywide. On June 26, 2009, the Plaintiffs filed for Chapter 7 bankruptcy. On April 4, 2013, the Montgomerys sold their property to co-Plaintiff Michael Flynn. At some point prior to 2013, the lender initiated foreclosure proceedings against the Montgomerys.

On February 27, 2013 the Plaintiffs sued SOMA Financial and Bank of America, as the successor to Countrywide (collectively, “Defendants”), claiming violations of the Consumer Protection Act (“CPA”) with respect to loan servicing, loan modification, foreclosure processing, and loan origination, violation of the False Claims Act (“FCA”), violation of the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”), violation of the Racketeer Corrupt and Influenced Organizations Act (“RICO”), and tortious infliction of emotional distress. On May 1, 2013, the Defendants filed a motion to dismiss the Plaintiff’s complaint for failure to state a claim on which relief can be granted. On October 24, 2013, the Western District Court of Washington granted Defendant’s motion and dismissed Plaintiff’s complaint.

The District Court assessed each of the Plaintiff’s claims.

CPA claim

For the CPA claim, the Plaintiff’s made several allegations including that the “defendants (a) represented to the Montgomerys that their loan documents were lost and could not be given to them, and that those representations were false; (b) presented an inapplicable loan modification program they claimed would only remove interest and penalties, which was false because the Montgomerys were entitled to a full reduction of all principal and interest “because of systemic frauds involved in their Loan”; (c) failed to perform proper loan modification underwriting based on applicable loan modification programs; (d) failed to provide adequate staffing, training to staff, or processes for loan modification programs; (e) allowed the Montgomerys to stay in trial modifications for excessive periods of time; (f) failed to respond to inquiries from the Montgomerys; (g) provided “false or misleading information” while referring their loan to foreclosure or initiating foreclosure during the loan modification process; (h) represented that loss mitigation programs would provide relief from foreclosure, which was a misrepresentation, and failed to provide information regarding loss mitigation services, including loan modifications of full principal and interest; (i) advised that the Montgomerys must be at least 60 days delinquent in loan payments to qualify for a loan modification, which was false; and (j) represented that loan modification applications would be handled promptly, but delayed the loan modification for over three years.” Plaintiffs further alleged that they adequately pled unfair or deceptive acts with respect to the loan modification by alleging that Defendants made material misrepresentations during the loan origination and foreclosure proceedings.

In response, Defendants alleged that Plaintiffs failed to state “an unfair or deceptive act or practice, an impact on public interest, or injury to business or property.” The Court found Defendant’s response persuasive and further found that Plaintiff’s allegations were identical to the allegations outlined in another case called United States v. Bank of America Corp., a District of Columbia case.  The Court here noted that it could not distinguish the facts of this case from the Bank of America, or to which defendants the allegations apply, which supported Defendant’s argument that Plaintiffs had failed to allege sufficient facts to prove their claims.

False Claims Act and FIRREA

The Court found that Plaintiffs failed to offer facts to oppose Defendants’ dismissal arguments against their FIRREA and False Claims Act claims and therefore granted Defendants’ motion to dismiss those claims.  


For their RICO claim, Plaintiffs alleged that Defendant’s carried out acts as an enterprise to obtain improper relief and hide Bank of America’s illegal conduct as the lender and underwriter through the misuse of the bankruptcy system. However, the Court found that Plaintiff failed to allege sufficient facts to show Bank of America’s “predicate acts” to establish the RICO claim. Further, the Court found that Plaintiff improperly alleged wire and bankruptcy fraud under the RICO claim, rather than under the relevant statute. The Court therefore dismissed this claim.

Tortious Infliction of Emotional Distress

Finally, the Court assessed Plaintiff’s tort claim. Here, Plaintiffs argued that Defendants engaged in conduct that was solely driven by greed and disregarded the interests of Plaintiffs, and other borrowers and investors that ultimately led to numerous lawsuits and the recent recession. Here, the Court again noted that Plaintiffs made conclusory allegations that mirrored the Bank of America case described in the CPA claim. As Plaintiffs failed to allege sufficient facts to meet this claim, the Court granted Defendant’s motion and dismissed this claim and Plaintiff’s complaint.

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