Wieck v. CIT Grp., Inc. (308 F. Supp. 3d 1093, 2018)

J. Michael Seabright, Chief United States District Judge I. INTRODUCTION

In this putative class action, Plaintiff Julia Wieck ("Plaintiff" or "Wieck") seeks damages and injunctive relief on behalf of herself and others similarly situated, alleging several causes of action based on lender-placed insurance ("LPI") or "force-placed" insurance on her reverse mortgage-specifically, hurricane coverage. (Throughout this Order, the court refers to LPI and force-placed insurance interchangeably.) Wieck claims Defendants overcharged her and improperly benefitted from the placement in violation of state and federal laws. Three sets of Defendants have filed Motions to Dismiss the First Amended Complaint ("FAC"). ECF Nos. 55, 56, 59. Based on the following, the Motions are GRANTED in PART and DENIED in PART.

II. BACKGROUND

A. Factual Background

The 73-page FAC, ECF No. 15, makes both individual and class allegations. It bases federal jurisdiction on the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4-it alleges minimal diversity of citizenship under 28 U.S.C. § 1332(d)(2)(A) ; an aggregated amount-in-controversy of over $5,000,000 under 28 U.S.C. § 1332(d)(6) ; and a class of over 100 members under 28 U.S.C. § 1332(d)(5)(B). Given the FAC's length and that it is very premature to address class matters, the court does not reiterate all the pertinent allegations of the FAC. Rather, the court focuses on factual allegations as to Wieck to examine whether she has alleged sufficient facts to withstand the Motions to Dismiss. And in so doing, the court sets forth only the essential allegations as necessary to understand the nature of Wieck's claims. Further details are also provided in the appropriate discussion sections that follow.

For purposes of these Motions, the court assumes the following factual allegations are true. See, e.g., Turner v. City & Cty. of S.F. , 788 F.3d 1206, 1210 (9th Cir. 2015) ("In assessing whether a party has stated a claim upon which relief can be granted, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party[.]").

1. Wieck Obtains a Reverse Mortgage From and Serviced by CIT

Wieck is an 86-year old resident of Lahaina, Maui. FAC ¶ 4. She has lived at her residence ("the Property") for over thirty-eight years, and obtained a reverse mortgage on the Property from Defendant Financial Freedom Senior Funding Corporation ("Financial Freedom") in 2006. Id. ; FAC Ex. A, ECF No. 15-1 ("Home Equity Conversion Mortgage").

Reverse mortgages are government backed loans that allow Americans over the age of sixty-two (62) to borrow against the value of their homes. Borrowers do not have to pay interest on their reverse mortgage loan and can live in their homes for life. A sale of the property can be used to repay the debt. The reverse mortgage loans are backed by insurance from the Federal Housing Administration ("FHA"). When a loan comes due, the loan servicer can earn interest on the loan from the FHA by meeting deadlines for certain tasks such as getting an appraisal and starting the foreclosure process. If the loan servicer misses the FHA deadlines, the service is not entitled to earn interest from the FHA while waiting for the agency to pay its claim.

FAC ¶ 17.

Traditionally, a reverse mortgage is meant to come due and payable when the resident dies. However, there are other events which may cause the reverse mortgage to become due and payable, such as the borrower's failure to pay property taxes or insurance, or the property is deemed vacant, thus enabling the loan servicer to commence foreclosure proceedings.

Id. ¶ 18.

Financial Freedom is a division of Defendant CIT Bank, N.A. ("CIT Bank"). FAC ¶ 5. CIT Bank is a wholly owned subsidiary of Defendant CIT Group, Inc. ("CIT Group"), which is a financial holding company. Id. ¶ 7. Where appropriate, the court refers to Financial Freedom, CIT Bank, and CIT Group collectively as "CIT," and sometimes refers to actions taken by Financial Freedom as taken by CIT.

"Until 2011, Financial Freedom originated and serviced reverse mortgages. Financial Freedom aggressively marketed reverse mortgages to elderly consumers .... In 2011, Financial Freedom stopped making new loans and operated exclusively as a reverse mortgage loan servicer." Id. ¶ 19. Financial Freedom was a subsidiary of IndyMac Bank, FSB, when Wieck's loan was originated. Id. ¶¶ 5, 19, 65 & Ex. A. IndyMac Bank was a predecessor of OneWest Bank FSB, which changed its charter from a federal savings bank to a national association on February 28, 2014, and eventually became CIT Bank, N.A. See Balettie Decl. ¶ 5, ECF No. 55-2.

Among others, Wieck's reverse mortgage with CIT contains the following potentially relevant provisions:

2. Payment of Property Charges . Borrower shall pay all property charges consisting of taxes, ground rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall provide evidence of payment to Lender, unless Lender pays property charges by withholding funds from monthly payments due to the Borrower or by charging such payments to a line of credit as provided for in the Loan Agreement.

3. Fire, Flood and Other Hazard Insurance . Borrower shall insure all improvements on the Property, whether now in existence or subsequently erected, against any hazards, casualties, and contingencies, including fire. This insurance shall be maintained in the amounts, to the extent and for the periods required by the Lender or the Secretary of Housing and Urban Development ("Secretary"). Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretary....

....

5. Charges to Borrower and Protection of Lender's Rights in the Property.

....

If Borrower fails to make these payments or the property charges required by Paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, ... then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in Paragraph 2.

To protect Lender's security in the Property, Lender shall advance and charge to Borrower all amounts due to the Secretary for the Mortgage Insurance Premium as defined in the Loan Agreement as well as all sums due to the loan servicer for servicing activities as defined in the Loan Agreement. Any amounts disbursed by Lender under this Paragraph shall become an additional debt of Borrower as provided for in the Loan Agreement and shall be secured by this Security Instrument.

6. Inspection. Lender or its agent may enter on, inspect or make appraisals of the Property in a reasonable manner and at reasonable times provided that Lender shall give the Borrower notice prior to any inspection or appraisal specifying a purpose for the inspection or appraisal which must be related to Lender's interest in the Property. If the Property is vacant or abandoned or the loan is in default, Lender may take reasonable action to protect and preserve such vacant or abandoned Property without notice to the Borrower.

....

9. Grounds for Acceleration of Debt.

....

(b) Due and Payable with Secretary Approval. Lender may require immediate payment in full of all sums secured by this Security Instrument, upon approval of the Secretary, if:

....

(iii) An obligation of the Borrower under this Security Instrument is not performed.

FAC ¶ 66 (language modified as in Mortgage, Ex. A).

2. "Windstorm (including hail/hurricane)" Coverage is Force Placed on Wieck's Mortgage

The FAC makes various allegations about whether Wieck had "windstorm" coverage, whether she initially understood that separate hurricane coverage was required, and whether CIT accepted or approved the mortgage in 2006 without requiring hurricane coverage (which is often excluded from general hazard property insurance, and requires a separate rider). FAC ¶¶ 67-69. But the parties essentially agree (at least for purposes of these Motions) that some kind of coverage against damage from hurricanes is required under the mortgage-and the fundamental dispute alleged in the FAC stems from this requirement. Wieck also does not dispute that CIT is allowed to force-place coverage if necessary. Rather, the dispute centers on the manner and terms upon which such coverage is placed.

"[O]n or around August 24, 2010, Financial Freedom notified Plaintiff that she did not have windstorm coverage, which was incorrect, and that it would force place a windstorm insurance policy (backdated to February 15, 2010), and would charge Plaintiff $10,000 plus for the policy."Id. ¶ 70. "A second notice from Financial Freedom requiring Plaintiff to provide proof of windstorm coverage was mailed on or about September 21, 2010." Id. The actual August 24, 2010 letter from Financial Freedom states in pertinent part: "Financial Freedom Acquisition LLC has been notified by your insurance provider that your current property insurance policy does not include windstorm coverage .... If your property were to incur hurricane or other wind damage it would not be covered." ECF No. 55-4.

After reviewing Wieck's response, FAC ¶ 71, on or about November 15, 2010, CIT notified her that it was placing proper windstorm coverage on her property. Id. ¶ 72. It wrote "our records indicate that you have not provided us with acceptable evidence of windstorm insurance; therefore, in order to protect our collateral interest in the property, we have purchased windstorm coverage in accordance with the terms of your Deed of Trust/Mortgage. You are responsible for the cost of this insurance." Id. CIT told her:

The amount of coverage may be less than the value of your home or real and personal property, and as a result, you may be underinsured. The cost of this insurance may be significantly more than the cost of insurance you can obtain on your own. We and/or our affiliates may have received compensation in connection with the placement of the insurance described in this letter.

Id. It also specifically told her that "The cost of this insurance will be charged to the outstanding balance of your loan, and if there are insufficient funds in your line of credit, arrangement must be made for repayment." Id. "The November 15, 2010 notice stated that the annual premium for the force placed windstorm policy was $10,086.96-more than twenty times more expensive than Plaintiff's hazard policy with First Fire and Casualty Company which provided windstorm and hail coverage." Id. (emphasis omitted). "The accompanying 'Evidence of Wind Insurance' for the force placed windstorm policy was obtained from Defendants [Certain Underwriters of Lloyd's, London; and Great Lakes Reinsurance (UK), PLC], both surplus lines insurance providers which are not required to file their rates with the state insurance departments." Id. (This Order refers to Certain Underwriters of Lloyd's, London as "Lloyd's"; to Great Lakes Reinsurance (UK), PLC as "Great Lakes;" and sometimes refers to them collectively as "the Insurer Defendants.").

In the November 15, 2010 notice, Financial Freedom represented that the Effective Date for the force placed windstorm policy placed on Plaintiff's property was February 15, 2010 through February 15, 2011. Financial Freedom thus had backdated the force placed windstorm policy by nine months to cover a period of time which had already passed during which there was no damage to Plaintiff's Property and no claims had been made. Moreover, on October 19, 2010, Plaintiff had provided Financial Freedom with evidence of her hazard insurance policy which included windstorm coverage.

Id. ¶ 73.

On December 2, 2010, Financial Freedom partially cancelled the force placed windstorm policy for coverage on Plaintiff's property from February 15, 2010 through February 15, 2011. On December 7, 2010, Financial Freedom cancelled this force placed windstorm policy in full and restored Plaintiff's account balance to zero.

Id. ¶ 74.

Similar interactions occurred between Wieck and CIT in 2013 and 2015, where hurricane coverage was placed on Wieck's property (with similarly-worded notices) and where allegedly excessively high and unnecessary premiums charged to her were eventually "refunded." Id. ¶¶ 75-87. These interactions all also involved the Insurer Defendants and Defendant Seattle Specialty Insurance Services, Inc. ("Seattle Specialty"), which is "an intermediate insurance broker." Id. ¶ 27. "Seattle Specialty provides force placed insurance and insurance tracking services to mortgage servicers." Id. ¶ 8.

Since April 2013, Plaintiff has actively attempted to resolve with Financial Freedom the wrongful charges to her reverse mortgage from the backdated, excessively priced and unnecessary force placed wind policy which Financial Freedom placed on her property in March 2013, but which was backdated to cover the period December 10, 2011 through December 10, 2012. Towards this end, Plaintiff has engaged the services of Sandy Jolley, a reverse mortgage suitability and abuse consultant who has provided testimony to the Federal Reserve Board in Los Angeles concerning the wrongful acts of Financial Freedom, its prior parent company, OneWest, and its current parent company, CIT Bank, N.A.

Id. ¶ 88. And,

Since April 2013, Plaintiff has maintained [an] additional Standalone Hurricane policy with Zephyr, even though this additional insurance coverage was not required by her reverse mortgage. The annual premium on the Zephyr policy is approximately $600-a fraction of the $10,362 in annual premiums which Financial Freedom charged to Plaintiff's reverse mortgage for the force placed windstorm policy. Even though Plaintiff has, at all relevant times, maintained her hazard insurance policy with First Fire & Casualty Company which provides the same type of windstorm and hail coverage as the force placed windstorm policy, Plaintiff has renewed the additional and unnecessary standalone hurricane insurance from Zephyr each year solely in an attempt to avoid foreclosure proceedings from Financial Freedom.

Id. ¶ 87.

3. The Alleged Wrongdoing

The FAC alleges that Defendants committed unlawful practices in servicing Wieck's mortgage. See, e.g., id. ¶¶ 2-3. In particular, Wieck contends that the premiums for LPI are unconscionably high not because of their actual cost, but because Financial Freedom has an exclusive relationship with Seattle Specialty to place insurance with Lloyd's and Great Lakes in exchange for unearned "commissions" and low cost or no cost loan tracking and monitoring services from Seattle Specialty. Id. ¶ 3. "Seattle Specialty receives a commission from Lloyd's and Great Lakes as a percentage of the total net written premium of force placed policies on the Financial Freedom loan portfolio, a portion of which Seattle Specialty then kickbacks to Financial Freedom[.]" Id. "These kickbacks are directly tied to the price of the force-placed insurance policies and are usually a percentage of the total net written premium of a policy." Id. ¶ 27. "This arrangement provides the mortgage servicer with an incentive to purchase the highest priced force-placed insurance policy that it can because the higher the cost of the insurance policy, the higher the commission or kickback to the mortgage servicer." Id. ¶ 28. CIT also improperly places "retroactive or backdated force placed insurance policies on Plaintiff and other borrowers' properties to cover periods of time which have passed and during which the property was not damaged and no claims were made[.]" Id. ¶ 3.

The FAC alleges that CIT, in concert with the other Defendants, failed to properly disclose costs and made material misrepresentations to Wieck about these costs when notifying her of the placing of insurance. "When a mortgage servicer notifies a borrower that a force-placed insurance policy has been secured and retroactively placed on the borrower's property, the mortgage servicer routinely fails to disclose the profits or financial windfalls it has derived as a result, and at the borrower's expense. Rather, the mortgage servicer falsely informs the borrower that they are only being charged for the actual 'cost' of the insurance." Id. ¶ 31. "Defendants have chosen insurance policies with excessively priced insurance premiums because of the benefits inuring to Defendants." Id. ¶ 34. "These policies violate the mortgage contract because they exceed the cost of the services and are not reasonable or appropriate to protect the note holder's interest in the property and rights under the security instrument." Id.

More specifically, the FAC alleges that:

Upon information and belief, Financial Freedom has negotiated deals with Seattle Specialty and the surplus line force placed insurance providers, [Lloyd's & Great Lakes], whereby they receive a percentage of the cost of the total net written premium of the force-placed insurance policies purchased for the borrowers. This unearned commission or kickback structure encourages the Defendants to select the most expensive insurance policy, despite not having an interest in the insured collateral.

Id. ¶ 42.

And it alleges, on information and belief, that "Seattle Specialty [provides] improper incentives, including low cost or below market loan tracking and portfolio monitoring services to Financial Freedom as an additional incentive to obtain the surplus lines force placed insurance policies through Seattle Specialty." Id. ¶ 43. "Third party vendors like Seattle Specialty are not authorized to service reverse mortgages," id. , and "[b]y outsourcing loan servicing and insurance tracking to Seattle Specialty, Financial Freedom has skirted its duty to adhere to federal regulations and compliance standards for reverse mortgage servicing." Id. "Financial Freedom charges Plaintiff ... the full amount of the over-priced force placed insurance policy, despite being paid unearned commissions, receiving below cost or discounted loan tracking services, and other kickbacks from Seattle Specialty." Id. ¶ 44.

4. CIT Forecloses on Wieck's Property

In August of 2016, CIT filed a foreclosure complaint against Wieck. Id. ¶ 104. The foreclosure stemmed from accumulated, unpaid charges for forced place insurance. The FAC alleges:

On or around July 1, 2015, Financial Freedom sent Plaintiff a "Property Charge Delinquency Letter" in which it demanded payment for the backdated force placed wind insurance policies in the amount of $13,497.99 for 16 months of "Hurricane Insurance" coverage from the period November 1, 2011 to March 31, 2013. This letter was materially misleading and false because the EOI [ ("Evidence of Insurance") ] indicated that the force placed policy was for windstorm and hail coverage, not "hurricane' insurance."

Id. ¶ 92. Wieck responded (though Jolley) and received certain responses back from Financial Freedom in 2015. Id. ¶¶ 100-03. Nevertheless, "[o]n or around May 24, 2016, Plaintiff received a notice that her loan had been referred to foreclosure," id. ¶ 98, and "a foreclosure complaint was filed by CIT Bank, N.A. against Plaintiff in the Second Circuit Court of the State of Hawaii, in and for the County of Maui. The only reason Plaintiff's loan [was] in 'default'

is because of the wrongfully placed, excessively priced, duplicative, backdated and unlawful force placed wind insurance."Id. ¶ 104.

Thereafter, the coverage dispute that led to the foreclosure was resolved, and the foreclosure proceeding was closed:

On October 28, 2016, Zephyr issued Plaintiff a Standalone Hurricane policy for the period November 30, 2011 through November 30, 2012. Financial Freedom was provided with a copy of the policy. On November 2, 2016, Financial Freedom verbally represented that it would reverse the $13,497.99 in force placed insurance charges on Plaintiff's loan and dismiss the foreclosure proceedings against Plaintiff. A notice of dismissal without prejudice was filed on November 30, 2016 in the foreclosure proceeding against Ms. Wieck. To Plaintiff's knowledge, the charges to her mortgage account resulting from the force placed insurance have yet to be reversed in full.

Id. ¶ 105. Meanwhile, on November 4, 2016, Wieck filed the initial Complaint in this action. ECF No. 1.

The foreclosure proceedings, however, led to an allegedly unnecessary property inspection of Wieck's residence right before she had filed suit. Specifically,

Several days prior to obtaining the Zephyr policy, on October 24, 2016, at 11:15 a.m. Plaintiff was startled at her residence by a tall, thin, white man who had surmounted the six foot fence with a locked gate which surrounds Plaintiff's property, as well as the locked grillwork gate at the foot of the stairs leading to Plaintiff's front door and lanai. This strange man was on Plaintiff's lanai, peering into Plaintiff's home. Plaintiff yelled at the man, stating "Stop right there. How dare you enter my property." The man took a picture of Plaintiff's home and leapt over the fence.

Id. ¶ 106. On November 28, 2016, CIT "informed Plaintiff that because a third party vendor of Financial Freedom had reported her property to be vacant on October 20, 2016, Financial Freedom submitted a request to HUD to call her reverse mortgage loan immediately 'due and payable.' " Id. ¶ 107. According to Wieck,

There is absolutely no reason for Financial Freedom to have ordered an inspection of Ms. Wieck's property, or for its third party vendor to report that the property was vacant. Ms. Wieck has been in constant verbal and written communication with Financial Freedom since her loan was originally charged for force placed insurance. Moreover, Ms. Wieck has certified numerous times to Financial Freedom, both verbally and in writing, that she has continuously occupied the property as her primary residence.

Id. ¶ 108. And "Financial Freedom charged Plaintiff a $30 inspection fee for the unwarranted October 2016 inspection." Id. ¶ 109.

B. Procedural Background

After the initial Complaint on November 4, 2016, Wieck filed the FAC on January 11, 2017. ECF No. 15. The FAC alleges the following Counts:

• Count One (Breach of Contract) against CIT.

• Count Two (Breach of Implied Covenant of Good Faith and Fair Dealing) against CIT.

• Count Three (Violations of Hawaii Revised Statute ("HRS") § 480-2 ) against CIT.

• Count Four (Violations of HRS § 480-2 ) against Seattle Specialty and the Insurer Defendants.

• Count Five (Tortious Interference with Business Relationship) against Seattle Specialty and the Insurer Defendants.

• Count Six (Violations of Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) against all Defendants.

• Count Seven (Violation of RICO, 18 U.S.C. 1962(d) (conspiracy) against all Defendants.

• Count Eight (Violations of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. against CIT.

After several stipulations extending the time to respond to the FAC, ECF Nos. 46, 47, 48, three separate Motions to Dismiss were filed by CIT, Seattle Specialty, and the Insurer Defendants. ECF Nos. 55, 56, 59. Oppositions were filed on August 7, 2017, ECF Nos. 66, 68, & 69, along with Plaintiff's Motion Requesting Judicial Notice of Official Government Reports. ECF No. 67. Corresponding Replies were filed on August 21, 2017. ECF Nos. 71, 73 & 74. The Motions were heard on September 11, 2017.

Following the hearing, supplemental briefing by CIT was filed on September 25, 2017, ECF No. 85, and September 26, 2017, ECF No. 86. An Opposition was filed by Plaintiff on October 10, 2017, ECF No. 87, with a Reply by CIT on October 17, 2017, ECF No. 88. Further supplemental briefing was filed by Plaintiff and CIT on March 23, 2018. ECF Nos. 94, 95.

III. STANDARDS OF REVIEW

A. Rule 12(b)(1)

A Rule 12(b)(1) motion challenging subject matter jurisdiction may be either facial or factual. Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004). "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id.

If a movant "has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Id. (quoting Savage v. Glendale Union High Sch. , 343 F.3d 1036, 1039 n.2 (9th Cir. 2003) ). "In evaluating the evidence, the court 'need not presume the truthfulness of the plaintiffs' allegations.' " Edison v. United States , 822 F.3d 510, 517 (9th Cir. 2016) (quoting White v. Lee , 227 F.3d 1214, 1242 (9th Cir. 2000) ). "Any factual disputes, however, must be resolved in favor of Plaintiffs." Id. (citing Dreier v. United States , 106 F.3d 844, 847 (9th Cir. 1996) ). That is, the court "will consider items outside the pleading ... but resolve all disputes of fact in favor of the non-movant." Dreier , 106 F.3d at 847. "[T]he standard ... is similar to the summary judgment standard[.]" Id.

B. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for "failure to state a claim upon which relief can be granted[.]" A Rule 12(b)(6) dismissal is proper when there is either a " 'lack of a cognizable legal theory or the absence of sufficient facts alleged.' " UMG Recordings, Inc. v. Shelter Capital Partners, LLC , 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990) ).

Although a plaintiff need not identify the legal theories that are the basis of a pleading, see Johnson v. City of Shelby, Mississippi , --- U.S. ----, 135 S.Ct. 346, 346, 190 L.Ed.2d 309 (2014) (per curiam), a plaintiff must nonetheless allege "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). This tenet-that the court must accept as true all of the allegations contained in the complaint-"is inapplicable to legal conclusions." Id. Accordingly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ); see also Starr v. Baca , 652 F.3d 1202, 1216 (9th Cir. 2011) ("[A]llegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.").

Rather, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). In other words, "the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr , 652 F.3d at 1216. Factual allegations that only permit the court to infer "the mere possibility of misconduct" do not show that the pleader is entitled to relief as required by Rule 8. Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.

IV. DISCUSSION

A. Wieck has Standing to Bring LPI and Foreclosure-Related Claims

Defendants argue that Wieck lacks standing to bring claims "to the extent they are based on LPI and wrongful foreclosure." CIT Mot. at 7; see also Seattle Mot. at 8-9; Lloyd's Mot. at 10. They contend that it is undisputed that all premiums and interest charged to Wieck in connection with LPI were refunded before Wieck filed suit on November 4, 2016, and therefore, she has suffered no "injury in fact" for purposes of Article III standing. The court disagrees.

Under the Constitution, the court's judicial power is limited to "Cases" or "Controversies." U.S. Const. art. III § 2. This limitation requires a plaintiff to demonstrate "the irreducible constitutional minimum of standing." Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Such standing requires three elements: "[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , --- U.S. ----, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (citations omitted). And Spokeo reiterated that an "injury in fact" must be both "concrete and particularized," where "concrete" injury must be "real" and "not abstract." Id. at 1548 (quotation marks omitted). Further, "standing is determined as of the commencement of litigation." Yamada v. Snipes , 786 F.3d 1182, 1203 (9th Cir. 2015) (quoting Biodiversity Legal Found. v. Badgley , 309 F.3d 1166, 1171 (9th Cir. 2002) (brackets omitted) ); see also Lujan , 504 U.S. at 569 n.4, 112 S.Ct. 2130 ("The existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed.") (quoting Newman-Green, Inc. v. Alfonzo-Larrain , 490 U.S. 826, 839, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) ).

In support of the argument that Wieck had suffered no concrete injury when suit was filed, CIT proffers evidence, including a declaration from Gail Balettie, a senior CIT vice president, attesting:

28. ... Plaintiff was sent two letters from Financial Freedom dated November 1, 2016, which stated that the insurance Financial Freedom had placed on the Property for the periods December 10, 2011 through December 10, 2012, and December 10, 2012 through April 1, 2013 had been cancelled, and that she had not been charged the premiums associated with those policies....

29. In November 2016, Plaintiff was fully refunded the $10,362.27 premium that was charged to Plaintiff's account on March 4, 2013 for the insurance placed on the Property for the period December 10, 2011 through December 10, 2012. At the same time, Plaintiff also received a full refund of the interest (totaling $893.06) that had been charged to her account in connection with the placement of insurance for this period.

30. A charge of $3,135.72 (reflecting the cost of lender-placed insurance for the period December 10, 2012 through April 1, 2013) was removed from Plaintiff's account on November 4, 2016. Plaintiff thus received a complete and full refund of the $10,220.72 premium that was charged to Plaintiff's account on April 10, 2013 for the insurance placed on the Property for the period December 10, 2012 through December 10, 2013.

Balettie Decl. ¶¶ 28-30, ECF No. 55-2. Defendants emphasize that they are making a factual (not a facial) attack on jurisdiction under Rule 12(b)(1), and thus "[t]he court need not presume the truthfulness of the plaintiff's allegations." Safe Air for Everyone , 373 F.3d at 1039 (citation omitted). Wieck did not proffer any evidence to contradict Balettie's or Carruthers' declarations. Defendants thus argue that it is conclusively established that Wieck had suffered no concrete and particularized injury under Spokeo when suit was filed because it is undisputed that she had been fully "refunded" any allegedly wrongful LPI charges and related interest.

Defendants' argument fails because the evidence does not affirmatively establish that Wieck lacks standing. Even unchallenged, it is far from clear from the proffered evidence that Wieck was made completely whole-prior to the filing of the Complaint-for all LPI and foreclosure-related premiums, expenses, and alleged damages. For example, Balettie only proffers letters dated November 1, 2016, stating that the LPI policies were cancelled and that Wieck had not been charged premiums associated with those policies. Balettie Decl. ¶ 28, ECF No. 55-2. But it is undisputed that Wieck had a prior outstanding balance of $13,497.00 on her account for those policies, id. ¶ 26, and it is unclear exactly when that total amount was actually "refunded" (that is, whether before or after suit was filed). See id. ¶ 29 (stating that Wieck was "fully refunded" a $10,362.27 premium "[i]n November 2016") & ¶ 30 (stating that a charge of $3,135.72 "was removed from Plaintiff's account on November 4, 2016"). In evaluating Balettie's statements, the court is still required to resolve questions of fact in favor of Plaintiff. Edison , 822 F.3d at 517.

More important, the Declarations do not address foreclosure-related damages-CIT does not presently contest that (1) on August 8, 2016, CIT filed a foreclosure complaint in state court based on the accrued LPI charges, FAC ¶ 104; and (2) the foreclosure complaint remained pending at least until November 30, 2016 (after suit was filed), id. ¶ 105. And Wieck seeks additional damages and costs-which remain at issue even if premiums and interest were "refunded"-related to defending against this foreclosure, as well as expenses for having "engaged the services of Sandy Jolley, a reverse mortgage suitability and abuse consultant," id. ¶ 88, to resolve the allegedly wrongful LPI charges. Defendants also do not contest that an alleged $30 inspection fee related to the foreclosure has not been tendered to Wieck. Id. ¶ 109.

Furthermore, Wieck alleges claims for violations of Hawaii's unfair or deceptive trade practices statutes, HRS chapter 480. "Hawaii courts have not set a high bar for proving [either 'injury' or 'damages']. The plaintiff must show only that the alleged violations of section 480-2(a) caused private damage, and that the plaintiff's injury is fairly traceable to the defendant's actions." Compton v. Countrywide Fin. Corp. , 761 F.3d 1046, 1053 (9th Cir. 2014) (citations and internal quotation marks omitted). The chapter includes potential statutory or treble damages, even where actual damages might otherwise be considered minimal (although still "concrete"). See HRS § 480-13(b)(1) (allowing for statutory damages of "not less than $1,000 or threefold damages," or "a sum not less than $5,000 or threefold any damages" if a plaintiff is an elder); § 480-13.5 (allowing for a civil penalty not to exceed $10,000 for each violation for violations committed against elders); Zanakis-Pico v. Cutter Dodge, Inc. , 98 Haw. 309, 317, 47 P.3d 1222, 1230 (2002) ("If a consumer can establish a resulting injury, HRS § 480-13(b)(1) entitles him or her to the greater of $1,000.00 or treble damages."). The suit also seeks injunctive relief to keep "Defendants from continuing the acts and practices described [in the FAC]." FAC at 72. Although Spokeo reiterated that "concrete"

injury must be "real" and "not abstract," 136 S.Ct. at 1548, it also recognized that some intangible injuries can still be concrete. Id. at 1549-50.

In short, Wieck seeks enough damages and other relief to support having standing to bring LPI and foreclosure-related claims. Whether her claims might otherwise fail does not mean there is no standing to assert them. See Bernhardt v. Cty. of L.A. , 279 F.3d 862, 868 n.4 (9th Cir. 2002) ("Whether a party has standing is distinct from whether she has asserted a cause of action.") (citation omitted).

B. Preemption Under the Home Owners' Loan Act of 1933 ("HOLA")

CIT argues that Wieck's state-law claims against it (breach of contract, violations of HRS chapter 480) are preempted by HOLA, which has implementing regulations that the Ninth Circuit describes as "so pervasive as to leave no room for state regulatory control." Campidoglio LLC v. Wells Fargo & Co. , 870 F.3d 963, 971 (9th Cir. 2017) (quoting Silvas v. E*Trade Mortg. Corp. , 514 F.3d 1001, 1004-05 (9th Cir. 2008) ). Despite this pervasiveness, however, "HOLA does not preempt all state laws." Id. Determining which laws survive requires a complex analysis on an as-applied basis. Id. at 972. The court begins by explaining the necessary background and framework for considering the arguments.

1. HOLA's Preemption Analysis

"Congress enacted [HOLA] to charter savings associations under federal law, at a time when record numbers of home loans were in default and a staggering number of state-chartered savings associations were insolvent." Silvas , 514 F.3d at 1004. "HOLA empowered the regulatory body, which became the OTS [ (Office of Thrift Supervision) ], to authorize the creation of federal savings and loan associations, to regulate them, and, by its regulations, to preempt conflicting state law." Campidoglio , 870 F.3d at 971 (citing Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta , 458 U.S. 141, 161-62, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982) ). To that end, in 1996, OTS promulgated 12 C.F.R. § 560.2 -a comprehensive regulation that occupies the field of lending regulations of federal savings associations. Silvas , 514 F.3d at 1004-05. Specifically, § 560.2(a) provides in pertinent part:

OTS hereby occupies the entire field of lending regulation for federal savings associations. OTS intends to give federal savings associations maximum flexibility to exercise their lending powers in accordance with a uniform federal scheme of regulation. Accordingly, federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) of this section .... For purposes of this section, "state law" includes any state statute, regulation, ruling, order or judicial decision.

Id. Paragraph (b) then lists "[i]llustrative examples" of "the types of state laws preempted by paragraph (a)," which "include, without limitation, state laws purporting to impose requirements regarding" the following:

(1) Licensing, registration, filings, or reports by creditors;

(2) The ability of a creditor to require or obtain private mortgage insurance, insurance for other collateral, or other credit enhancements;

....

(4) The terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable upon the passage of time or a specified event external to the loan;

(5) Loan-related fees, including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and overlimit fees;

(6) Escrow accounts, impound accounts, and similar accounts;

....

(9) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants;

(10) Processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages;

(11) Disbursements and repayments;

....

Id. § 560.2(b).

Next, paragraph (c) of the regulation lists types of state laws that are not preempted, at least "to the extent that they only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purposes of paragraph (a) of this section." Id. § 560.2(c). The list includes state "[c]ontract and commercial law," id. § 560.2(c)(1); "[t]ort law," id. § 560.2(c)(4); and "[a]ny other law that OTS, upon review, finds: (i) Furthers a vital state interest; and (ii) Either has only an incidental effect on lending operations or is not otherwise contrary to the purposes expressed in paragraph (a) of this section," id. § 560.2(c)(6).

In adopting § 560.2(c), OTS explained that "OTS wants to make clear that it does not intend to preempt basic state laws such as state uniform commercial codes and state laws governing real property, contracts, torts, and crimes," OTS, Final Rule, 61 Fed. Reg. 50951-01, 50966 (Sept. 30, 1996), and that "the purpose of paragraph (c) is to preserve the traditional infrastructure of basic state laws that undergird commercial transactions, not to open the door to state regulation of lending by federal savings associations." Id.

Courts follow a three-step process outlined by OTS to analyze whether HOLA preempts a state law:

[T]he first step will be to determine whether the type of law in question is listed in paragraph (b). If so, the analysis will end there; the law is preempted. If the law is not covered by paragraph (b), the next question is whether the law affects lending. If it does, then, in accordance with paragraph (a), the presumption arises that the law is preempted. This presumption can be reversed only if the law can clearly be shown to fit within the confines of paragraph (c). For these purposes, paragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved in favor of preemption.

Silvas , 514 F.3d at 1005 (quoting 61 Fed. Reg. at 50966-67). "In conducting this analysis, [courts] are not limited to assessing whether the state law on its face comes within paragraph (b) of the regulation. Instead, [courts] ask whether the state law, 'as applied, is a type of state law contemplated in the list under paragraph (b).... If it is, the preemption analysis ends.' " Campidoglio , 870 F.3d at 971-72 (quoting Silvas , 514 F.3d at 1006 ).

2. Preemption Depends on the Status of the Financial Institution

It's important to keep in mind that HOLA applies to federal savings and loan associations (not to national banking associations, which are covered by the National Banking Act). This could complicate the preemption analysis, where a loan changes hands from a savings and loan to a national bank, or where-as is the case here-an institution changes its charter. Here, Wieck obtained her mortgage from Financial Freedom Senior Funding Corporation, then a division of IndyMac Bank, FSB (a predecessor to OneWest Bank FSB, and a federal savings bank to which HOLA applies). But OneWest Bank changed its charter from a federal savings bank to a national banking association on February 28, 2014, after which it was eventually renamed CIT Bank, N.A. See Balettie Decl. ¶ 5, ECF No. 55-2. And "[w]hether, and to what extent, HOLA applies to claims against a national bank when that bank has acquired a loan executed by a federal savings association is an open question in [the Ninth Circuit]." Campidoglio , 870 F.3d at 971.

Many district courts have found that national banking institutions may assert HOLA preemption if the subject loans were originated by savings associations. See, e.g., Stewart v. Wells Fargo Bank , N.A., 2014 WL 12586072, at *4 (C.D. Cal. Dec. 1, 2014) (concluding that "successors in interest ... may properly assert preemption under the HOLA even if the successor entity is not a federally charted saving institution") (citing cases); Heagler v. Wells Fargo Bank, N.A. , 2017 WL 1213370, at *4 (E.D. Cal. Mar. 31, 2017) ("HOLA preemption attaches to the loan.") (citing cases). But many courts conclude otherwise. See, e.g., Pimentel v. Wells Fargo, N.A. , 2015 WL 2184305, at *3 (N.D. Cal. May 7, 2015) ("[C]laims against a national bank based on conduct occurring before its merger with a federally charted savings bank are preempted [by HOLA], while claims based on the bank's own conduct after the merger are not preempted.") (citing cases); Rijhwani v. Wells Fargo Home Mortg., Inc. , 2014 WL 890016, at *7 (N.D. Cal. Mar. 3, 2014) ("HOLA preemption [applies] only to conduct occurring before the loan changed hands from the federal savings association or bank to the entity not governed by HOLA.") (citing cases). And "there is a growing divide in the district courts' treatment of this issue." Kenery v. Wells Fargo, N.A. , 2014 WL 129262, at *4 (N.D. Cal. Jan. 14, 2014) (citing Leghorn v. Wells Fargo Bank, N.A. , 950 F.Supp.2d 1093 (N.D. Cal. 2013) ). Whether, or to what extent, this court needs to reach this issue depends on whether HOLA preemption applies at all, a question the court turns to next.

3. Application to Breach of Contract Claim (Count One)

Count One alleges that CIT breached the following provision in the mortgage agreement:

If Borrower fails to make ... the property charges required by Paragraph 2 [regarding "fire, flood and other hazard insurance"] ... then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property , including payment of taxes, hazard insurance and other items mentioned in Paragraph 2.

FAC, Ex. A at 3, ECF No. 15-1 (emphasis added). Wieck's theory is that CIT breached this provision because (although conceding that CIT generally had a right to procure hurricane insurance to protect the property) it was not "necessary" for it to charge her for amounts well in excess of what was required (the actual cost of insurance) and for expenses unrelated to the insurance (such as unearned compensation or a portion of the premium paid to the insurer). She also alleges that it was not necessary for the forced-place insurance to be "backdated" or made "retroactive" to cover past periods of time during which no loss could have occurred because no hurricanes struck Hawaii during those periods. Further, she alleges it was not necessary to charge her a fee to inspect her property during the subsequent, wrongful, foreclosure process (as if the property was vacant) when she was still living in the property.

This breach of contract claim is not preempted. At the first step of the analysis-as applied to Wieck's mortgage contract-it is not a type of state-law claim contemplated in § 560.2(b) as "impos[ing] requirements" on lending. Such a claim, for example, would not impose requirements on CIT as to (1) licensing, (2) the ability to require or obtain private mortgage insurance, (3) the terms of credit, (4) disclosure and advertising, or (5) loan processing.

Instead, "it is the parties' own agreement, rather than [Hawaii] state law, that imposes any requirements on [CIT]." Campidoglio , 870 F.3d at 972 (holding that a particular breach-of-contract claim under Washington law regarding contractual interest rates in a mortgage loan was not preempted by HOLA). That is, the claim "seeks to impose only the state law requirement that [CIT] honor a contractual promise made by its predecessor-in-interest." Id.

It's true that, at the most general level, questioning an LPI premium might relate to "insurance for other collateral," under § 560.2(b)(2), or a "loan related fee" under § 560.2(b)(5). But, as even CIT emphasizes, the court is not limited to considering whether the state law "on its face comes within paragraph (b) of the regulation." Campidolgio , 870 F.3d at 971-72. Rather, the court analyzes "whether the state law, 'as applied, is a type of state law contemplated in the list under paragraph (b).' " Id. at 972. Doing so, Wieck's breach of contract claim would not impose any new requirement on CIT-instead, "it is the contract, not the law, that regulates [CIT's] conduct." Id. ; see also, e.g., Barzelis v. Flagstar Bank, F.S.B. , 784 F.3d 971, 974-75 (5th Cir. 2015) (distinguishing "between breach-of-contract claims based on provisions of the [security] agreement and those based on independent statutory obligations," and holding that HOLA did not preempt "breach-of-contract claims based on the parties' voluntary agreement"); Tinsley v. OneWest Bank, F.S.B. , 4 F.Supp.3d 805, 824-25 (S.D. W. Va. 2014) (concluding that "Plaintiff's first claim [regarding force-placed insurance] properly alleges a breach of contract, in that the claim arises out of the Deed of Trust and does not attack any of Defendant's underlying policies or practices," and finding no HOLA preemption); Sovereign Bank v. Sturgis , 863 F.Supp.2d 75, 94 (D. Mass. 2012) ("[C]ourts have regularly held that when a federally chartered bank violates a specific clause of a mortgage contract, HOLA will not preempt the resulting breach of contract claim.") (citing cases).

At the next steps, although Wieck's breach-of-contract claim would likely "affect" lending-leading to a presumption of preemption in accordance with § 560.2(a) -it fits squarely within the "[c]ontract and commercial law" exception under § 560.2(c)(1), and would only incidentally affect lending operations. See, e.g. , Molosky v. Wash. Mut., Inc. , 664 F.3d 109, 116 (6th Cir. 2011) ("Lending practices cannot be more than incidentally affected by claims that 'merely seek to make defendants live up to the word of their agreements they sign with their customers.' ") (quoting McAnaney v. Astoria Fin. Corp. , 665 F.Supp.2d 132, 164 (E.D.N.Y. 2009) (brackets omitted) ). "[A] breach of contract claim which, as here, does not purport to impose additional terms on a contract, but only to hold federal savings and loan associations to 'the basic norms that undergird commercial transactions,' only incidentally affects lending operations, and so is not preempted." Id. (quoting Preemption of State Laws Applicable to Credit Card Transactions, OTS Op. Letter (Dec. 24, 1996), at 10, 1996 WL 767462 at *5 ("1996 OTS Opinion") ). As Campidoglio reasoned, "because the [breach of contract] law 'can clearly be shown to fit within the confines of paragraph (c) [of § 560.2 ],' HOLA does not preempt it." 870 F.3d at 972-73 (quoting Silvas , 514 F.3d at 1005 ).

4. Application to Unfair or Deceptive Acts or Practices Claims (HRS chapter 480) Against CIT (Count Three)

CIT next contends that HOLA preempts Wieck's HRS chapter 480 claims. It argues that the chapter 480 claims are covered by § 560.2(b) and would impose requirements on lending by, for example, (1) requiring it to disclose insurance costs, (2) changing the manner in which it procures and places insurance (and thereby services mortgages), (3) restricting its ability to enter agreements with insurance agents, and (4) affecting its ability to charge loan-related fees to borrowers. CIT Supp. Mem. at 13, ECF No. 86. The court agrees, but not fully. Some of the chapter 480 claims are preempted, some are not.

Preemption depends on the specific allegations of the FAC. To review, the FAC alleges that Financial Freedom (i.e., CIT) engaged in unfair or deceptive acts or practices by placing "unnecessary" insurance on her property, with "unreasonable and inflated premiums" that included "improper compensation through illegal kickback or captive reinsurance arrangements," which were charged to Wieck. FAC ¶¶ 143, 151. It focuses on "numerous misrepresentations and deceptive statements in the form notice letters drafted and sent by Seattle Specialty with the approval of Financial Freedom[.]" Id. ¶ 144. It claims, for example, that a March 6, 2013 notice from Financial Freedom was "materially false, misleading and deceptive and omitted material information." Id. ¶ 147. Financial Freedom represented that the "cost" of the LPI was $10,362.27, when that amount was not the actual cost, but included "extraneous kickbacks and other financial inducements shared among the Defendants and charged to Plaintiff." Id. ¶ 147b.

The FAC alleges the same type of affirmative misrepresentations and omissions as to an April 12, 2013 letter-Financial Freedom "failed to disclose" that the reason for a cost that was "twenty times" higher that comparable coverage "was because Financial Freedom had selected a significantly more expensive policy in order to receive kickbacks, reinsurance profits and other wrongful benefits from Lloyd's, Great Lakes and Seattle Specialty." Id. ¶ 149. "Financial Freedom deceived and misrepresented facts ... in making these statements, creating the impression that borrowers were being charged for the cost of the necessary insurance coverage only." Id. ¶ 151.

In examining whether these types of misrepresentation or deceptive-practice claims are preempted by HOLA, courts often distinguish between claims for failure to disclose terms (which are preempted) and claims based on misrepresentation or "affirmative deception" (which are not). See, e.g., McCauley , 710 F.3d at 557 (reasoning that "[plaintiff's] complaint alleges an affirmative deception by the issuer of her mortgage, an act outside the scope of § 560.2(b)," and holding that a fraud claim is not preempted by HOLA). For example, in Barzelis , the Fifth Circuit concluded that a misrepresentation claim based on inadequate disclosures was preempted by HOLA, distinguishing a claim based on affirmatively misrepresenting facts:

Negligent misrepresentation-like fraud, intentional misrepresentation, and similar tort claims-relies on a generally applicable duty not to misrepresent material facts, and to that extent, the claim would typically not be preempted by HOLA. Yet courts have recognized that where a negligent-misrepresentation claim is predicated not on affirmative misstatements but instead on the inadequacy of disclosures or credit notices, it has a specific regulatory effect on lending operations and is preempted.

784 F.3d at 975-76 (citations omitted). See also, e.g., Susilo v. Wells Fargo Bank, N.A. , 796 F.Supp.2d 1177, 1186 (C.D. Cal. 2011) ("[P]laintiff's state law claims are based in part on affirmative misrepresentations and concealment, and only incidentally affect lending activity. Accordingly, the Court finds that insofar as they do not impose requirements to provide specific notices or disclosures during the foreclosure process, plaintiff's claims are not preempted by HOLA.") (citations omitted); Romero v. Wells Fargo Bank, N.A. , 2016 WL 6823490, at *5 (C.D. Cal. June 20, 2016) ("As alleged ... this [misrepresentation] claim is not preempted by HOLA. The basis for the claim is that Defendant made affirmative misrepresentations that were not true when made. To allow Plaintiff's claims to proceed based on these allegations would not impose on Defendant any affirmative duties or obligations. Instead, it would be required to speak truthfully.... The [California Unfair Competition Law] claim is based on the allegations underlying the negligent misrepresentation claim. Therefore, it is not preempted to the extent it relies on this factual basis") (citations omitted); Tinsley , 4 F.Supp.3d at 827 (upholding against a HOLA preemption challenge state unfair competition claims based on affirmatively deceptive behavior, but preempting claims based on omissions in disclosure documents); Kajitani v. Downey Sav. & Loan Ass'n, F.A. , 647 F.Supp.2d 1208, 1220 (D. Haw. 2008) (similar).

This distinction makes sense-"[i]f these causes of action were preempted, federal savings associations would be free to lie to their customers with impunity." Rumbaua v. Wells Fargo Bank, N.A. , 2011 WL 3740828, at *7 (N.D. Cal. Aug. 25, 2011). "Lending practices cannot be more than incidentally affected by claims that 'merely seek to make defendants live up to the word of their agreements they sign with their customers.' " Molosky , 664 F.3d at 116 (quoting McAnaney , 665 F.Supp.2d at 164 ).

And it is grounded in the OTS's own guidance. "The OTS itself has said that such claims only incidentally affect lending practices, 'because federal thrifts are presumed to interact with their borrowers in a truthful manner.' " Id. (quoting 1996 OTS Opinion at 10, 1996 WL 767462, at *5 ). "The opinion letter goes on to say that interpreting and applying the deceptive practices laws of multiple states presents no issue as far as preemption is concerned." Id. ; see also, e.g., Barzelis , 784 F.3d at 976-77 ("We agree with the consensus, concluding that similar state consumer-protection laws-those 'that establish the basic norms that undergird commercial transactions'-do not have more than an incidental effect on lending and thus escape [HOLA] preemption.") (quoting 1996 OTS Opinion) (footnote and citations omitted); McCauley , 710 F.3d at 558 ("Determining [for example] that the tort of fraud falls within the scope of § 560.2 [preemption] would preclude fundamental state regulation of deceptive practices in which unscrupulous savings and loan associations might engage [in contravention of] the intent of OTS, whose 'assertion of plenary regulatory authority does not deprive persons harmed by the wrongful acts of savings and loan associations of their basic state common-law-type remedies.' ") (quoting In re Ocwen Loan Servicing, LLC Mortg. Servicing Litig. , 491 F.3d 638, 643 (7th Cir. 2007) ).

In 1999, the OTS issued an opinion letter specific to force-placed insurance, concluding that HOLA preempts certain statutory unfair competition claims challenging aspects of such insurance. See Opinion of OTS Chief Counsel, P-99-3, California Unfair Competition Act (Mar. 10, 1999), 1999 WL 413698 ("1999 OTS Opinion"). And after discussing its earlier 1996 OTS Opinion regarding the Indiana Deceptive Acts and Practices Statute, the 1999 OTS Opinion concluded:

[T]o the extent that the [California Unfair Competition Act ("UCA") ] is being used either to limit the [Savings & Loan Associations'] ability to force place insurance on properties securing loans, or the Associations' choice of insurers or premiums to be charged on the forced placement of insurance, the UCA is preempted as an impermissible interference with the Associations' lending programs.

1999 WL 413698, at *8. The OTS, however, "emphasize[d] the extremely limited nature of [its] preemption determination." Id. at *10. It does "not preempt the entire UCA or its general application to federal savings associations in a manner that only incidentally affects lending and is consistent with the objective of allowing federal savings associations to operate in accordance with uniform standards." Id. And it further emphasized that "[t]he plaintiffs' claims described herein based on the forced placing of insurance or the charging of loan fees may still be brought in state court based on traditional contract claims or other causes of action[.]" Id.

The court gives deference to the OTS's interpretation of ambiguities in its own regulations under Auer v. Robbins , 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (reiterating that the agency's interpretation is "controlling unless 'plainly erroneous or inconsistent with the regulation.' ") (quoting Robertson v. Methow Valley Citizens Council , 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989) ). Section 560.2 is multifaceted, and in that sense ambiguous. Neither the 1996 nor the 1999 OTS Opinion is "plainly erroneous or inconsistent" with § 560.2. Rather, they reflect careful application to specific facts of a complex three-part test outlined by the OTS and adopted by the courts. Further, there is "no reason to suspect that the interpretation[s] [do] not reflect the agency's fair and considered judgment," Auer , 519 U.S. at 462, 117 S.Ct. 905, which might provide reason not to give such deference. And giving Auer deference, Wieck's chapter 480 claims are preempted "to the extent that [chapter 480] is being used either to limit [CIT's] ability to force place insurance on properties securing loans, or [CIT's] choice of insurers or premiums to be charged on the forced placement of insurance." 1999 OTS Opinion, 1999 WL 413698, at *8.

But even with the 1999 OTS Opinion's guidance, chapter 480 claims otherwise based on affirmative misrepresentations (even as to LPI) are not preempted. Such claims-such as the allegation that Financial Freedom misrepresented that it was charging Wieck necessary costs, when it was allegedly purcha