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Lilly v. Bank of America, N.A.

United States District Court, D. Colorado

August 31, 2018

LESLIE B. LILLY and DAVID H. WOLLINS, Plaintiffs,
v.
BANK OF AMERICA, N.A., Defendant.

          ORDER ON MOTION TO DISMISS

          R. Brooke Jackson, United States District Judge.

         This matter is before the Court on defendant Bank of America, N.A.'s (BANA) motion to dismiss plaintiffs' complaint.[1] ECF No. 9. For the reasons stated below, the motion is DENIED.

         I. BACKGROUND

         In June 2004, Plaintiff Leslie Lilly obtained a loan from Countrywide Home Loans, Inc. (Countrywide), BANA's predecessor-in-interest. ECF No. 13 at 1. Ms. Lilly secured the loan by her Miami, Florida home.[2] ECF No. 13 at 1. To protect her property against hazards, the loan required Ms. Lilly to continuously maintain property insurance according to such terms and against such hazards as the lender may require. ECF No. 28 at 3-4. Prior to the loan closing, Ms. Lilly provided a copy of the policy to Countrywide for review. Id. at 3. The insurance policy insured the home for $1, 633, 889. Id. Ms. Lilly asserts that Countrywide represented to her that this homeowner's insurance policy would satisfy the loan's hazard insurance requirement, and further stated that Countrywide represented that it would never require her to purchase additional coverage including wind and hurricane protection. Id. at 2. Ms. Lilly states that she adhered to this requirement by maintaining proper and adequate insurance coverage for the entirety of the loan, and Countrywide apparently never objected to her insurance policy. Id. at 2-3.

         Sometime after BANA acquired the loan from Countrywide, BANA sent written notices to Ms. Lilly directing her to purchase additional property insurance to protect against wind and hail. Id. at 4. The letters notified Ms. Lilly that BANA may exercise its option to purchase the additional insurance at Ms. Lilly's expense should she fail to act. Id. According to the amended complaint, BANA purchased additional hazard insurance (with an annual premium of $55, 000 per year) without Ms. Lilly's permission or knowledge. Id.

         In September 2015, Ms. Lilly paid the loan balance in full. Id. at 4. When she called BANA to pay off the loan, she learned that the principal on the $500, 000 loan was actually $787, 000, which meant that BANA had apparently exercised its right to force-place insurance. Id. at 4-5. Until September 2015, plaintiffs argue that they were unaware that BANA purchased additional hazard insurance. Id. at 4. Instead, plaintiffs state that BANA simply threatened to purchase additional insurance and further argue that because BANA did not increase Ms. Lilly's monthly payments and did not otherwise demand additional payment, plaintiffs were not harmed financially until September 2015. Id.

         BANA's motion to dismiss rests solely on statute of limitations grounds. ECF No. 9 at 1. BANA argues that plaintiffs have been aware that BANA purchased additional hazard insurance since at least 2009. Id. at 8-9. In 2009, Mr. Wollins wrote a letter to BANA stating that Countrywide debited Ms. Lilly's account two times for insurance.[3] ECF No. 5-1 at 6, Ex. 4. BANA further argues that plaintiffs were aware of the force-place insurance because plaintiffs disputed the numerous written notices from BANA that demanded plaintiffs obtain additional insurance coverage. ECF No. 9 at 9.

         In response, plaintiffs contend that they were unaware BANA actually exercised its right to force-place insurance until September 2015. ECF No. 28 at 4. Therefore, plaintiffs argue the statute of limitations began to accrue in September 2015. Id. With a three-year statute of limitations, plaintiffs argue their lawsuit is not time-barred.

         Ms. Lilly filed suit in Denver District Court on August 30, 2017, because she believed that BANA unlawfully executed its right to force-place insurance. ECF No. 13 at 3. BANA removed the case to federal court on September 29, 2017. ECF No. 1. BANA subsequently filed a motion to dismiss on October 6, 2017, arguing that the applicable statute of limitations precluded all ten of Ms. Lilly's original claims. ECF No. 9 at 1. Ms. Lilly responded to the motion to dismiss on October 27, 2017, where she agreed to drop each of her claims minus the breach of contract claim. ECF No. 13 at 7. BANA submitted a reply brief on November 9, 2017. ECF No. 15. On August 27, 2018, plaintiffs submitted an unopposed motion for leave to file amended complaint. ECF No. 28. In the same motion, plaintiffs stated that both parties agreed that Plaintiff Wollins should be added as a plaintiff in the case. Id. The Court granted the motion on August 29, 2018. ECF No. 30. Despite the amended complaint, the Court will rule on the motion to dismiss because the contract claim in the amended complaint is essentially the same as in the original complaint.

         II. STANDARD OF REVIEW

         To survive a 12(b)(6) motion to dismiss, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plausible claim is a claim that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002), conclusory allegations are not entitled to be presumed true. Iqbal, 556 U.S. at 681. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See, e.g., Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).

         III. ANALYSIS

         After reviewing BANA's well-drafted motion to dismiss, plaintiffs have one claim remaining: breach of contract. ECF No. 28. BANA's sole argument in its motion to dismiss is that the breach of contract claim is time-barred by the applicable statute of limitations. ECF No. 9 at 8-9. Under Colorado law, all contract actions “shall be commenced within three years after the cause of action accrues . . . .” Colo. Rev. Stat. § 13-80-101(1)(a). The issue in this case is when the cause of action for the breach of contract began to accrue. In Colorado, a “cause of action for breach of any express or implied contract [or] agreement . . . shall be considered to accrue on the date the breach is discovered or should have been discovered by the exercise of reasonable diligence.” Id. § 13-80-108(6). Finally, the Court notes that “[w]hether a statute of limitations bars a particular claim is a question of fact.” Trigg v. State Farm Mut. Auto. Ins., 129 P.3d 1099, 1101 (Colo.App. 2005). “However, if undisputed facts demonstrate that the plaintiff had the requisite information as of a particular date, then the issue of whether the statute of limitations bars a particular claim may be decided as a matter of law.” Id.

         The contract at issue in this case originated in 2004, when Ms. Lilly agreed to a home equity line of credit from Countrywide. ECF No. 28 at 2. During negotiations, Countrywide allegedly represented that Ms. Lilly's existing insurance policy would be adequate throughout the duration of the loan and that Countrywide would never require Ms. Lilly to purchase additional hazard insurance. Id. In reliance upon Countrywide's express representations, Ms. Lilly opened a home equity line of ...


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