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Stanley Kolbe v. Bac Home Loans Servicing, Lp, D/B/A Bank of America, N.A

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Before Boudin, Lipez, and Thompson, Circuit Judges.

This putative class action is one of a number of breach-of-contract suits being brought against financial institutions nationwide by mortgagors who claim that they were improperly forced to increase flood insurance coverage on their properties.*fn1 The plaintiff in this case, Stanley Kolbe, asserts that Bank of America’s demand that he increase his flood coverage by $46,000 breached both the terms of his mortgage contract and the contract’s implied covenant of good faith and fair dealing. The district court concluded that the pertinent provision of the mortgage unambiguously permitted the lender to require the increased flood coverage and, hence, it granted the defendants’ motion to dismiss the complaint.

Having closely examined the mortgage language at issue and the relevant context, we are persuaded that the mortgage is reasonably susceptible to an understanding that supports Kolbe’s breach of contract and implied covenant claims. We therefore vacate the judgment of dismissal in favor of the Bank.*fn2

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