6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 JULIAN FLORES, a/k/a JULIAN FLORES Case No. C21-6RSL 10 SANCHEZ, ORDER DENYING 11 Plaintiff, PLAINTIFF’S MOTION TO 12 v. CERTIFY QUESTION TO THE WASHINGTON STATE 13 WELLS FARGO BANK, N.A., SUPREME COURT 14 Defendant. 15
16 This matter comes before the Court on plaintiff’s “Motion to Certify Questions to the 17 Washington State Supreme Court and Motion for Stay Pending Certified Questions” (Dkt. # 38). 18 The Court, having reviewed the submissions of the parties and the remainder of the record, 19 denies plaintiff’s motion to certify for the reasons stated herein. 20 I. Background 21 The current lawsuit centers on plaintiff’s claim that defendant Wells Fargo failed to 22 accurately record and report all payments made on a mortgage loan during plaintiff’s Chapter 13 23 bankruptcy proceeding and unreasonably delayed reconciling the account, resulting in both 24 economic and emotional damages to plaintiff. See Dkt. # 35 at 1-2; Dkt. # 19. In his amended 25 complaint, plaintiff asserts claims of breach of contract, breach of the implied duty of good faith 26 and fair dealing, negligent misrepresentation, negligence, conversion, outrage, and violations of 27 28 1 the Washington Consumer Protection Act, the Washington Equal Credit Opportunity Act, and 2 the federal Real Estate Settlement Procedures Act. Dkt. # 19. 3 On May 7, 2021, defendant Wells Fargo brought a motion to dismiss, seeking dismissal 4 of all of plaintiff’s claims with prejudice. Dkt. # 22. In ruling on the motion, the Court dismissed 5 plaintiff’s negligence, negligent misrepresentation, conversion, and outrage claims (all of 6 plaintiff’s tort claims), finding they were barred by the statute of limitations. Dkt. # 35. The 7 Court permitted plaintiff’s other claims to proceed. Id. 8 Following the dismissal of his tort claims, plaintiff brought the instant motion, asking the 9 Court to certify the following question to the Washington State Supreme Court: 10 Whether emotional distress damages are plausibly recoverable under Breach of Contract and Breach of the Implied Duty of Good Faith and Fair Dealing 11 where a mortgage servicer improperly applies and mishandles payments on 12 a debtor’s mortgage loan that foreseeably led to a deficiency on the loan that could cause sudden impoverishment or bankruptcy? 13 Dkt. # 38 at 1.1 14 II. Legal Standard 15 “[I]f state law permits it, [the court] may exercise [its] discretion to certify a question to 16 the state’s highest court.” Childress v. Costco Wholesale Corp., 978 F.3d 664, 665 (9th Cir. 17 2020). Pursuant to a Washington statute, a federal court may certify certain questions to the 18 Washington Supreme Court as follows: 19 When in the opinion of any federal court before whom a proceeding is 20 pending, it is necessary to ascertain the local law of this state in order to 21 dispose of such proceeding and the local law has not been clearly
22 1 As an initial matter, the Court notes that plaintiff misstates the Court’s findings in its Order on 23 defendant’s motion to dismiss. Plaintiff states that the Court “found that Julian Flores (“Flores”) made plausible allegations in his filed Amended Complaint, Dkt No. 19, that Flores is entitled to emotional 24 distress damages.” Dkt. # 38 at 2. However, the cited portions of the Order simply found that the statute 25 of limitations barred plaintiff from bringing his tort claims. See Dkt. # 35 at 8. The Court did not opine on whether, had they not been barred by the statute of limitations, plaintiff’s tort claims would have 26 survived a motion to dismiss. Id. Additionally, while plaintiff cites to the Order for certain quoted language in his instant motion, see Dkt. # 38 at 2-3, the language he quotes from the Order is actually 27 language the Court quoted from plaintiff’s amended complaint. See Dkt. # 35 at 8 (quoting Dkt. # 19). 28 1 determined, such federal court may certify to the supreme court for the answer to the question of local law involved and the supreme court shall 2 render its opinion in answer thereto. 3 RCW § 2.60.020. The requirements put forth in this statute comport with Supreme Court 4 opinions, which have “approved of the limited use of certified questions to state supreme courts 5 when a federal court case involves an important question of state law which is both unclear 6 under state legal precedent and would be determinative in the instant case.” Pai ‘Ohana v. 7 United States, 875 F. Supp. 680 (D. Haw. 1995), aff’d sub nom., ‘Ohana v. United States, 76 8 F.3d 280 (9th Cir. 1996) (citing Virginia v. Am. Booksellers Ass’n, 484 U.S. 383, 393-98 9 (1988); Bellotti v. Baird, 428 U.S. 132, 150-52 (1976); Lehman Bros. v. Schein, 416 U.S. 386, 10 389-92 (1974); Clay v. Sun Ins. Office, 363 U.S. 207, 212 (1960)). 11 However, even if both requirements are met, “[t]he decision to certify a question to a 12 state supreme court rests in the sound discretion of the district court.” Eckard Brandes, Inc. v. 13 Riley, 338 F.3d 1082, 1087 (9th Cir. 2003) (internal citations and quotation marks omitted). As 14 the Ninth Circuit has pointed out, “the certification process” should only be invoked “after 15 careful consideration” and the court should “not do so lightly.” Kremen v. Cohen, 325 F.3d 16 1035, 1037 (9th Cir. 2003). In deciding whether to exercise its discretion, the Court considers 17 the following factors: (1) whether the question presents “important public policy ramifications” 18 yet unresolved by the state court; (2) whether the issue is new, substantial, and of broad 19 application; (3) the state court’s caseload; and (4) “the spirit of comity and federalism.” High 20 Country Paving, Inc. v. United Fire & Casualty Co., 14 F.4th 976, 978 (9th Cir. 21 2021) (quoting Kremen, 325 F.3d at 1037-38). “Additionally, a federal court may consider the 22 timing of the certification, and whether certification will achieve savings to time, money, and 23 resources or promote cooperative judicial federalism.” Carolina Cas. Ins. Co. v. McGhan, 572 24 F. Supp. 2d 1222, 1226 (D. Nev. 2008) (citing Complaint of McLinn, 744 F.2d 677, 681 (9th 25 Cir. 1984)). 26 III. Discussion 27 28 1 The Court finds that plaintiff’s proposed question does not meet either of the criteria 2 identified in RCW § 2.60.020. First, it is not clear that the proposed question would be 3 determinative in the instant case. The Court has already found that plaintiff plausibly alleged 4 breach of contract and breach of implied duty of good faith and fair dealing claims. See Dkt. 5 # 35 at 15-16. Thus, whether plaintiff may also recover emotional distress damages for these 6 claims is not “necessary to . . . dispose of [the] proceeding” at this stage. RCW § 2.60.020. 7 Furthermore, it is possible that defendant will not be able to prove his contract claims, in which 8 case the question of what damages are available will not be reached.
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6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 JULIAN FLORES, a/k/a JULIAN FLORES Case No. C21-6RSL 10 SANCHEZ, ORDER DENYING 11 Plaintiff, PLAINTIFF’S MOTION TO 12 v. CERTIFY QUESTION TO THE WASHINGTON STATE 13 WELLS FARGO BANK, N.A., SUPREME COURT 14 Defendant. 15
16 This matter comes before the Court on plaintiff’s “Motion to Certify Questions to the 17 Washington State Supreme Court and Motion for Stay Pending Certified Questions” (Dkt. # 38). 18 The Court, having reviewed the submissions of the parties and the remainder of the record, 19 denies plaintiff’s motion to certify for the reasons stated herein. 20 I. Background 21 The current lawsuit centers on plaintiff’s claim that defendant Wells Fargo failed to 22 accurately record and report all payments made on a mortgage loan during plaintiff’s Chapter 13 23 bankruptcy proceeding and unreasonably delayed reconciling the account, resulting in both 24 economic and emotional damages to plaintiff. See Dkt. # 35 at 1-2; Dkt. # 19. In his amended 25 complaint, plaintiff asserts claims of breach of contract, breach of the implied duty of good faith 26 and fair dealing, negligent misrepresentation, negligence, conversion, outrage, and violations of 27 28 1 the Washington Consumer Protection Act, the Washington Equal Credit Opportunity Act, and 2 the federal Real Estate Settlement Procedures Act. Dkt. # 19. 3 On May 7, 2021, defendant Wells Fargo brought a motion to dismiss, seeking dismissal 4 of all of plaintiff’s claims with prejudice. Dkt. # 22. In ruling on the motion, the Court dismissed 5 plaintiff’s negligence, negligent misrepresentation, conversion, and outrage claims (all of 6 plaintiff’s tort claims), finding they were barred by the statute of limitations. Dkt. # 35. The 7 Court permitted plaintiff’s other claims to proceed. Id. 8 Following the dismissal of his tort claims, plaintiff brought the instant motion, asking the 9 Court to certify the following question to the Washington State Supreme Court: 10 Whether emotional distress damages are plausibly recoverable under Breach of Contract and Breach of the Implied Duty of Good Faith and Fair Dealing 11 where a mortgage servicer improperly applies and mishandles payments on 12 a debtor’s mortgage loan that foreseeably led to a deficiency on the loan that could cause sudden impoverishment or bankruptcy? 13 Dkt. # 38 at 1.1 14 II. Legal Standard 15 “[I]f state law permits it, [the court] may exercise [its] discretion to certify a question to 16 the state’s highest court.” Childress v. Costco Wholesale Corp., 978 F.3d 664, 665 (9th Cir. 17 2020). Pursuant to a Washington statute, a federal court may certify certain questions to the 18 Washington Supreme Court as follows: 19 When in the opinion of any federal court before whom a proceeding is 20 pending, it is necessary to ascertain the local law of this state in order to 21 dispose of such proceeding and the local law has not been clearly
22 1 As an initial matter, the Court notes that plaintiff misstates the Court’s findings in its Order on 23 defendant’s motion to dismiss. Plaintiff states that the Court “found that Julian Flores (“Flores”) made plausible allegations in his filed Amended Complaint, Dkt No. 19, that Flores is entitled to emotional 24 distress damages.” Dkt. # 38 at 2. However, the cited portions of the Order simply found that the statute 25 of limitations barred plaintiff from bringing his tort claims. See Dkt. # 35 at 8. The Court did not opine on whether, had they not been barred by the statute of limitations, plaintiff’s tort claims would have 26 survived a motion to dismiss. Id. Additionally, while plaintiff cites to the Order for certain quoted language in his instant motion, see Dkt. # 38 at 2-3, the language he quotes from the Order is actually 27 language the Court quoted from plaintiff’s amended complaint. See Dkt. # 35 at 8 (quoting Dkt. # 19). 28 1 determined, such federal court may certify to the supreme court for the answer to the question of local law involved and the supreme court shall 2 render its opinion in answer thereto. 3 RCW § 2.60.020. The requirements put forth in this statute comport with Supreme Court 4 opinions, which have “approved of the limited use of certified questions to state supreme courts 5 when a federal court case involves an important question of state law which is both unclear 6 under state legal precedent and would be determinative in the instant case.” Pai ‘Ohana v. 7 United States, 875 F. Supp. 680 (D. Haw. 1995), aff’d sub nom., ‘Ohana v. United States, 76 8 F.3d 280 (9th Cir. 1996) (citing Virginia v. Am. Booksellers Ass’n, 484 U.S. 383, 393-98 9 (1988); Bellotti v. Baird, 428 U.S. 132, 150-52 (1976); Lehman Bros. v. Schein, 416 U.S. 386, 10 389-92 (1974); Clay v. Sun Ins. Office, 363 U.S. 207, 212 (1960)). 11 However, even if both requirements are met, “[t]he decision to certify a question to a 12 state supreme court rests in the sound discretion of the district court.” Eckard Brandes, Inc. v. 13 Riley, 338 F.3d 1082, 1087 (9th Cir. 2003) (internal citations and quotation marks omitted). As 14 the Ninth Circuit has pointed out, “the certification process” should only be invoked “after 15 careful consideration” and the court should “not do so lightly.” Kremen v. Cohen, 325 F.3d 16 1035, 1037 (9th Cir. 2003). In deciding whether to exercise its discretion, the Court considers 17 the following factors: (1) whether the question presents “important public policy ramifications” 18 yet unresolved by the state court; (2) whether the issue is new, substantial, and of broad 19 application; (3) the state court’s caseload; and (4) “the spirit of comity and federalism.” High 20 Country Paving, Inc. v. United Fire & Casualty Co., 14 F.4th 976, 978 (9th Cir. 21 2021) (quoting Kremen, 325 F.3d at 1037-38). “Additionally, a federal court may consider the 22 timing of the certification, and whether certification will achieve savings to time, money, and 23 resources or promote cooperative judicial federalism.” Carolina Cas. Ins. Co. v. McGhan, 572 24 F. Supp. 2d 1222, 1226 (D. Nev. 2008) (citing Complaint of McLinn, 744 F.2d 677, 681 (9th 25 Cir. 1984)). 26 III. Discussion 27 28 1 The Court finds that plaintiff’s proposed question does not meet either of the criteria 2 identified in RCW § 2.60.020. First, it is not clear that the proposed question would be 3 determinative in the instant case. The Court has already found that plaintiff plausibly alleged 4 breach of contract and breach of implied duty of good faith and fair dealing claims. See Dkt. 5 # 35 at 15-16. Thus, whether plaintiff may also recover emotional distress damages for these 6 claims is not “necessary to . . . dispose of [the] proceeding” at this stage. RCW § 2.60.020. 7 Furthermore, it is possible that defendant will not be able to prove his contract claims, in which 8 case the question of what damages are available will not be reached. The Court accordingly 9 finds the motion to certify “premature as it would necessarily require the Court to assume facts 10 regarding the substantive claims that have not yet been established.” YWS Architects, LLC v. 11 Alon Las Vegas Resort, LLC, No. C17-1417RFB, 2018 WL 4615983, at *5 (D. Nev. Sept. 26, 12 2018). 13 Additionally, the Court is not convinced that “local law has not been clearly determined” 14 on this issue. RCW § 2.60.020. Where there is “sufficient state law to enable this court to make 15 an informed decision on [the] issues[,]” certification is inappropriate. Richardson v. City & 16 Cnty. of Honolulu, 802 F. Supp. 326, 344 n.30 (D. Haw. 1992), aff’d, 124 F.3d 1150 (9th Cir. 17 1997); see also Pai ‘Ohana, 875 F. Supp. at 700 (“Questions should not be certified if the 18 answer is reasonably clear”). Here, plaintiff acknowledges that “it is generally true that parties 19 cannot recover emotional distress damages for breach of contract,” Dkt. # 38 at 3, but argues 20 that it is not clear that emotional distress damages would be foreclosed under the circumstances 21 presented by his case. See generally Dkt. # 38. 22 It is true that Washington courts have recognized that an exception to the general rule 23 barring emotional distress damages for breach of contract can arise where “the contract or the 24 breach is of such a kind that serious emotional disturbance was a particularly likely result.” 25 Repin v. State, 198 Wn. App. 243, 256 (2017) (quoting RESTATEMENT (SECOND) OF 26 CONTRACTS § 353 (AM. L. INST. 1981)). Relying on the Restatement, the Washington Supreme 27 Court has made clear that when analyzing whether this narrow exception applies, courts must 28 1 look at the “type of contract.” Gaglidari v. Denny’s Restaurants, Inc., 117 Wn. 2d 426, 443 2 (1991). Notably, “most courts have generally limited emotional distress damages to contracts 3 uniquely intended to protect some personal interest or security and which are incapable of 4 compensation by reference to the terms of the contract.” Id. at 446. Examples of the “type of 5 contract” that qualify under this exception include “contracts of carriers and innkeepers with 6 passengers and guests, contracts for the carriage or proper disposition of dead bodies, and 7 contracts for the delivery of messages concerning death.” Id. (quoting RESTATEMENT (SECOND) 8 OF CONTRACTS § 353 cmt. a (AM. L. INST. 1981)). 9 Here, plaintiff’s contract – a mortgage contract for a residential home – is decidedly 10 distinct from the examples in the Restatement.2 Furthermore, Washington courts have declined 11 to make emotional distress damages available for breach of contract claims under circumstances 12 much more analogous to the examples in the Restatement than the circumstances presented here. 13 See Repin, 198 Wn. App. 243 (denying emotional distress damages for claim that veterinarian 14 breached euthanasia contract when euthanizing plaintiff’s dog); Gaglidari, 117 Wn. 2d 426 15 (denying emotional distress damages for breach of employment contract claim where plaintiff 16 alleged wrongful discharge); Hendrickson v. Tender Care Animal Hospital, Corp., 176 Wn. 17 App. 757 (2013) (denying emotional distress damages where dog owner brought a breach of 18 bailment contract claim against animal hospital that failed to accurately diagnose her dog, which 19 later died as a result of the undiagnosed ailment). 20
21 2 Further undercutting plaintiff’s claim, the first illustration to the comment in the Restatement 22 specifically addresses a contract concerning a residential home and concludes that emotional distress damages would not be permitted: 23 A contracts to construct a house for B. A knows when the contract is made that B 24 is in delicate health and that proper completion of the work is of great importance to him. Because of delays and departures from specifications, B suffers 25 nervousness and emotional distress. In an action by B against A for breach of 26 contract, the element of emotional disturbance will not be included as loss for which damages may be awarded. 27 RESTATEMENT (SECOND) OF CONTRACTS § 353 cmt. a, illus. 1 (AM. L. INST. 1981)). 28 1 Plaintiff also argues that emotional distress damages should be permitted here because a 2 mortgage contract for a residential home has “elements of personality.” Dkt. # 38 at 5. However, 3 the citations plaintiff provides do not compel this conclusion.3 Furthermore, a review of 4 Valentine v. General American Credit, Inc., 362 N.W.2d 628 (Mich. 1986), the Michigan 5 Supreme Court case discussed in depth by the Washington Supreme Court in Gaglidari and 6 cited to for the proposition that emotional distress damages may be available for breach of 7 contract where the contract has elements of personality, 117 Wn. 2d at 440-48, demonstrates 8 that plaintiff’s argument is far afield. In Valentine, the court found that although employment 9 contracts “will often have a personal element . . . the primary purpose . . . is economic and not to 10 secure the protection of personal interests.” 362 N.W.2d at 631. The Court concluded that 11 “[l]oss of a job is not comparable to the loss of a marriage or a child” or loss of “personal 12 liberty” – the circumstances under which emotional distress damages had previously been 13 permitted for breach of contract. Id. Because loss of job “generally results in estimable monetary 14 damages,” the Court concluded that emotional distress damages were not recoverable. Id. 15 Similarly, plaintiff here has not shown that mortgage contracts have sufficient “elements of 16 personality” to warrant emotional distress damages. 17 Finally, the cases plaintiff cites to as examples of instances where “Washington courts 18 have recognized that emotional distress damages were found in a contractual agreement” are, in 19 fact, all examples of tort cases in which Washington courts permitted “damages for emotional 20 distress in the absence of physical injury.” Bylsma v. Burger King Corp., 176 Wn. 2d 555, 561 21 (2013); see also Wright v. Beardsley, 46 Wash. 16, 19 (1907) (construing breach of contract 22 23 3 Plaintiff cites to Federal Rule of Civil Procedure 62(b), which discusses “Stay by Bond or 24 Other Security” and Federal Rule of Appellate Procedure 8(a), which discusses motions for a stay. Dkt. 25 # 38 at 5. Plaintiff also cites to two Nevada cases (one from the Nevada Supreme Court and one from the District of Nevada, neither of which are binding on this Court), which discuss the remedy of specific 26 performance in the context of a land sales contract. Id. None of these sources compel a conclusion that a mortgage contract has “elements of personality” such that emotional distress damages should be 27 available for a breach of contract claim. 28 1 action for improper burial of a child as an action “for a wrong against the feelings of the 2 plaintiffs inflicted by a wrongful and improper burial of their dead; in other words, a tort”); 3 Brillhardt v. Ben Tipp, Inc., 48 Wn. 2d 722, 727 (1956) (permitting emotional distress damages 4 where plaintiff had shown an “actual invasion of [her] right to enjoy her property without 5 unreasonable interference” – in other words, an action for the tort of nuisance); Corrigal v. Ball 6 & Dodd Funeral Home, Inc., 89 Wn. 2d 959, 962 (1978) (finding plaintiff can recover damages 7 for emotional distress where she brought “a cause of action for negligent infliction of mental 8 distress”). 9 Indeed, plaintiff has failed to provide the Court with a single instance where Washington 10 courts permitted emotional distress damages for a breach of contract claim. While Washington 11 courts have stated that this may be permissible in some instances (such as the examples listed in 12 the comment to the Restatement), they have been hesitant to permit such damages. Because the 13 mortgage contract at issue here does not have sufficient “elements of personality” to be a close 14 call, the Court finds that there is sufficient state law to enable this court to make an informed 15 decision on the issue, and certification would be inappropriate. 16 In summary, the Court finds that plaintiff’s proposed question for certification does not 17 meet the criteria required by RCW § 2.60.020 and accordingly denies plaintiff’s motion. 18 IV. Conclusion 19 For all the foregoing reasons, plaintiff’s “Motion to Certify Questions to the Washington 20 State Supreme Court and Motion for Stay Pending Certified Questions” (Dkt. # 38) is DENIED. 21 IT IS SO ORDERED. 22 23 DATED this 13th day of February, 2023. 24 25 A
26 Robert S. Lasnik 27 United States District Judge 28