## Facts

- Homeowners obtained home-improvement financing through Property Assessed Clean Energy (PACE) programs administered by Ygrene entities.
- Repayment occurred through special assessments added to annual property-tax bills, secured by a lien on the property.
- Plaintiffs alleged federal housing-finance guidance effectively prevented refinancing or sale without first paying off the PACE obligation, including fees and penalties.
- Ygrene provided written agreements and notices stating that federal guidance “appeared” to discourage purchasing/refinancing encumbered properties and that borrowers “may” need to prepay the assessment to sell or refinance.
- Plaintiffs alleged this conditional wording understated a practically near-certain payoff requirement.
- Plaintiffs also alleged contractors or sales agents associated with Ygrene made oral statements that the assessment would “run with the land,” could be transferred to a buyer, and would not have to be paid off on sale or refinance.
- Plaintiffs brought a putative nationwide class action asserting fraud-based and consumer-protection claims under California and Florida law, including UCL and FDUTPA theories.
- Defendants moved to dismiss, arguing the written disclosures defeated deception and that fraud allegations lacked particularity and reliance.

## Issues

1. Whether plaintiffs plausibly alleged material misrepresentations or omissions about the consequences of PACE liens for refinancing or selling a home.
2. Whether conditional written disclosures about payoff risk were sufficient, as a matter of law, to defeat deception and fraud-based claims at the pleading stage.
3. Whether allegations about contractors’ oral sales statements satisfied Rule 9(b) and plausibly supported reliance and causation.
4. Whether certain claims or theories required dismissal because they were conclusory, insufficiently specific, or inadequately tied to particular plaintiffs and injuries.

## Decision

- The court granted the motion to dismiss in part and denied it in part.
- The court declined to hold, on the pleadings, that Ygrene’s written disclosures were categorically adequate to bar fraud and consumer-protection claims.
- The court allowed core misrepresentation and omission theories to proceed where plaintiffs plausibly alleged the disclosures’ conditional language could mislead reasonable consumers given the alleged practical certainty of required prepayment.
- The court treated the adequacy and effect of the disclosures as fact-dependent and not suitable for wholesale resolution on a Rule 12(b)(6) motion.
- The court accepted that alleged contradictory oral statements by contractors or agents could support deception theories despite written materials, at least where pled with sufficient specificity.
- The court dismissed or narrowed certain allegations or theories that were insufficiently particular or conclusory, in some instances with leave to amend.

## Legal Principles

- A disclosure may be actionable if it is technically accurate yet misleading because it is materially incomplete or frames an outcome as merely possible when it is plausibly alleged to be effectively inevitable and known to the defendant.
- On a motion to dismiss, whether a reasonable consumer would be misled by conditional risk disclosures is commonly a fact question not resolved categorically from the pleadings.
- Alleged oral misrepresentations by agents or contractors can support fraud and deceptive-practices claims even when written documents include risk warnings, if the oral statements plausibly contradict or negate the warnings.
- Fraud-based claims must satisfy Rule 9(b) by alleging the who/what/when/where/how of the misrepresentation with sufficient detail to provide notice and plausibly connect statements to plaintiffs’ decisions.
- Reliance and causation are plausibly pled where plaintiffs allege they would not have entered the transaction had they known material facts and that they suffered economic injury from the challenged practice.

## Conclusion

The court’s order largely preserved borrowers’ fraud and consumer-protection claims challenging PACE-loan marketing and disclosures about payoff requirements on sale or refinance, while trimming inadequately particularized or conclusory theories at the pleading stage.


Wooley v. Ygrene Energy Fund, Inc., No. 17-cv-01258-LB, 2017 WL 5068573 (N.D. Cal. Nov. 3, 2017)