LESLIE E. KOBAYASHI, District Judge.
On October 3, 2012, Defendants Citi Mortgage, Inc. ("CMI") and ABN Amro
Plaintiffs filed the instant action on November 8, 2010 against CMI, ABN, American Guardian Financial Group, Inc. ("American Guardian"), and First National Mortgage Services, LLC. ("First National", all collectively, "Defendants"). The instant case arises from the loan origination and eventual mortgage foreclosure upon Plaintiffs' property. Also on November 8, 2010, Plaintiffs filed a Notice of Pendency of Action stating, inter alia, that the case relates to 75-635 Makapono Place, Kailua-Kona, Hawaii 96740, TMK (3)7-5-016-078 ("the Property"). [Dkt. no. 4.] Plaintiffs have not filed any evidence that they served their Complaint on any of the Defendants. CMI and ABN, however, appeared in the action and eventually filed an answer on March 4, 2011.
Plaintiffs state that they spoke with First National in late 2006 about obtaining a single loan to finance the purchase of the Property. According to Plaintiffs, First National represented that it would arrange one loan with one monthly payment. [Complaint at ¶¶ 13-15.] Plaintiffs state that they "were financially unsophisticated and lacked the ability to negotiate loan terms" and therefore they put their "trust and faith" in First National, and any lenders it worked with, to provide Plaintiffs with "a suitable loan product." [Id. at ¶ 16.] First National secured a commitment for a thirty-year, fixed conventional loan for Plaintiffs. Plaintiffs state that they entered into the transaction in reliance on the representations that First National made. [Id. at ¶¶ 17-18.] According to Plaintiffs, they provided First National with a loan application containing accurate information, but First National "prepared a loan application that greatly overstated Plaintiffs [sic] income and assets without Plaintiffs [sic] knowledge or consent." [Id. at ¶ 19.] Plaintiffs also allege that they did not receive an initial truth-in-lending
The closing for Plaintiffs' loan was scheduled on September 25, 2006. On that day, Plaintiffs expected that the transaction would involve one loan, as they requested. First American, ABN, and American Guardian, however, prepared documents for two loans. According to Plaintiffs, prior to that date, none of the Defendants disclosed to Plaintiffs that the transaction would involve two separate loans. [Id. at ¶¶ 21-23.] Plaintiffs questioned why they needed two loans instead of one and why the interest rate was higher than the rate they were promised. Plaintiffs state that "Defendants explained that the specific terms did not matter because Plaintiffs were going to refinance within 2 months at no charge into a jumbo loan." [Id. at ¶ 24.] Plaintiffs signed all of the loan documents that First American, ABN, and American Guardian presented to them, but Plaintiffs allege that First American, ABN, and American Guardian did not explain the documents and did not allow Plaintiffs to read what they were signing. Plaintiffs also claim that, at the time they applied for the loan, they had good credit and should have qualified for a fixed thirty-year loan, which would have been best for Plaintiffs under their financial circumstances. Plaintiffs further allege that they did not receive signed and dated good faith statements in connection with the loans. [Id. at ¶¶ 26-29.] Plaintiffs also complain that the second loan was not "a fully amortized thirty year loan" and that the combined monthly payments for the first loan and the second loan "substantially exceeded Plaintiffs' gross monthly income in 2005 and 2006." [Id. at ¶¶ 38-39.]
Plaintiffs acknowledge that CMI's parent acquired ABN. [Id. at ¶ 31.]
Plaintiffs allege that they experienced "extreme hardship" making their loan payments and asked CMI for a loan modification. CMI represented that it would consider modifying Plaintiffs' loan, but later informed Plaintiffs that the owner of the loan, or loans, would not approve modification. CMI referred the matter to an attorney for foreclosure. At the same time, however, CMI gave Plaintiffs a letter instructing them to submit further financial information to allow CMI to review their loan modification request. [Id. at ¶¶ 32-37.]
The Complaint alleges the following claims: violations of the Federal Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq. ("Count I"); violation of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., ("Count II"); fraudulent misrepresentation ("Count III"); breach of fiduciary duty ("Count IV"); unjust enrichment ("Count V"); civil conspiracy ("Count VI"); complaint to quiet title ("Count VII"); violation of Hawaii Bureau of Conveyances Regulations ("Count VIII"); mistake; ("Count IX"); unconscionability ("Count X"); unfair and deceptive acts or practices ("UDAP"), in violation of Haw.Rev.Stat. §§ 480-2(a) and/or 481A-3 ("Count XI"); failure to act in good faith ("Count XII"); recoupment ("Count XIII"); negligent and/or intentional infliction of emotional distress ("NIED", "IIED" and "Count XIV"); violation of the right to privacy under the Hawai'i Constitution ("Count XV"); violation of Haw.Rev.Stat. Chapter 667 ("Count XVI"); violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p, as amended ("Count XVII"); and violations of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, et seq., and the Home Mortgage Disclosure Act ("HMDA"), 12 U.S.C. § 2801, et seq., ("Count XVIII").
In connection with the instant Motion, the Moving Defendants state that, on or about September 26, 2006, Plaintiffs applied for a loan to purchase the Property. Plaintiffs applied by telephone through First National, a mortgage broker. [Moving Defs.' Concise Statement in Supp. of Motion ("Defs.' CSOF"), filed 3/18/11 (dkt. no. 18), Decl. of Defs.' Agent ("Agent Decl."),
First National prepared two loan applications on Plaintiffs' behalf, the first for a $625,000.00 loan from ABN at a fixed rate of 7.25%, to be secured by a first mortgage on the Property. [Loan Application at 1.] This loan is the subject of the instant Motion.
Plaintiffs executed a promissory note dated September 27, 2006 for the loan from ABN ("First Note"). [Id. at ¶ 4B, Exh. B.] Plaintiffs also executed a Mortgage dated September 27, 2006 ("First Mortgage") in favor of ABN, recorded on October 5, 2006 in the Bureau of Conveyances of the State of Hawai'i ("BOC") as Document No. 2006-182768. [Agent Decl. at ¶ 4C, Exh. C] As part of the loan transaction, Plaintiffs both signed: a Truth-in-Lending Disclosure Statement ("TILA Disclosure"), acknowledging having received and read the disclosure; [Agent Decl. at ¶ 4D, Exh. D;] the Settlement Statement, which authorized the disbursements indicated therein; [Agent Decl. at ¶ 4E, Settlement Statement at 3;] and a Notice of Right to Receive a Copy of Your Appraisal [Agent Decl. at ¶ 4F, Exh. F].
On September 1, 2007, ABN was merged into CMI. Plaintiffs' loan was not sold to any other party. [Agent Decl. at ¶ 3.] The Moving Defendants state that CMI is "formerly known as" ABN. [Id. at ¶ 9.] CMI filed a Petition for Order Regarding Merger in the Land Court, State of Hawai'i ("Land Court"), on March 17, 2008, and a Land Court judge granted the petition. The petition and order were recorded with the Land Court on March 25, 2008 as order no. 174212. [Id., Exh. J.]
Prior to the merger, the Moving Defendants informed Plaintiffs, via a letter dated August 10, 2007, that the servicing of their loan with ABN was being transferred to CMI. The letter gave Plaintiffs contact information for ABN and CMI, informed them that the transfer would be effective as of September 1, 2007, and provided Plaintiffs with a payment coupon. [Agent Decl. at ¶ 7, Exh. H.] Plaintiffs thereafter made their mortgage payments to CMI. [Agent Decl. at ¶ 8.]
The Moving Defendants state that, "[i]n compliance with and pursuant to Haw.Rev. Stat. §§ 667-5 through 667-10 and the terms of the [First] Note and [First] Mortgage, Defendant CMI exercised its right to foreclose on the Property through a nonjudicial foreclosure[.]" [Id. at ¶ 13.] CMI retained foreclosure counsel, the law firm of Clay Chapman Iwamura Pulice & Nervell ("Clay Chapman"), in Honolulu. [Id.; Defs.' CSOF, Decl. of Foreclosure Counsel ("Counsel Decl."),
The Property was sold to an outside bidder for $508,501.00 at an October 20, 2010 public auction. This was the highest bid at the auction. The required ten percent deposit has been deposited in an escrow account, but no quitclaim deed conveying title to the purchaser has been recorded. [Counsel Decl. at ¶ 6.] The Moving Defendants believe that Plaintiffs filed this action to delay completion of the foreclosure sale. Plaintiffs filed a Notice of Pendency of Action in the BOC, effectively staying the foreclosure proceedings until the resolution of Plaintiffs' claims. [Mem. in Supp. of Motion at 5.]
First, the Moving Defendants argue that Plaintiffs are not financially unsophisticated parties. The Moving Defendants note that, at the time Plaintiffs applied for the loan, Plaintiffs owned three other properties, including the property (valued at $1,300,000.00) that was their personal residence at the time they were purchasing the subject Property, and two rental properties with a combined value of $730,000.00. Plaintiffs owned their residence and one of the rental properties outright, and owed only $36,782.00 on the other rental property, which was valued at $430,000.00. Plaintiffs were also self-employed; their company was called AG Water Hawaii Corporation. [Id. at 6-7 (citing Loan Application at 2-3).]
The Moving Defendants argue that, as a matter of law, Plaintiffs cannot prevail on any of their federal law claims.
Plaintiffs allege that: ABN failed to disclose certain charges in the TILA Disclosure; the TILA Disclosure included a different rate than Plaintiffs were promised; Defendants did not provide them with all of the disclosures required under TILA; and Defendants did not provide them with a good faith estimate within three days of their loan application, as required by RESPA. [Complaint at ¶ 44.] The Moving Defendants emphasize that they were not a party to the conversations that Plaintiffs had with First National. The Moving Defendants
The Moving Defendants argue that TILA rescission is not available because the purpose of Plaintiffs' loan was to purchase the Property. [Mem. in Supp. of Motion at 8-9 (some citations omitted) (citing 15 U.S.C. §§ 1635(a) and (e)(1), § 1602(w); Reg. Z, 12 C.F.R. § 226.23(f)(1), § 226.2(a)(24)).] Even if rescission were available for purchase loans, Plaintiffs' rescission claim is time-barred because Plaintiffs filed suit more than three years after entering into the loan. [Id. at 9 (some citations omitted) (citing 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3)).] In addition, Plaintiffs failed to bring their TILA damages claims within one year of entering into the loan. [Id. (some citations omitted) (citing 15 U.S.C. § 1640(e)).]
The Moving Defendants argue that the RESPA claim fails because RESPA does not provide for a private right of action for failure to provide a good faith estimate. [Id. at 10 (some citations omitted) (citing 12 U.S.C. § 2604(c)).] Further, Plaintiffs failed to bring their RESPA claim within the one-year statute of limitations in 12 U.S.C. § 2614, and they have not asserted any basis for equitable tolling. [Id.]
The Moving Defendants acknowledge that they are providers of information to credit reporting agencies under the FCRA and that they regularly reported credit information about Plaintiffs' mortgage payments. [Id.] The Moving Defendants argue that, under the FCRA, lenders have a duty to report negative information to credit reporting agencies. [Id. at 11 (citing 15 U.S.C. § 1681s-2(a)(5), (a)(7)(G)(i)).] Plaintiffs do not allege that the Moving Defendants reported the incorrect debt amount, nor do they claim that the Moving Defendants incorrectly reported that Plaintiffs were in default. Thus, Plaintiffs cannot prove an FCRA claim because the Moving Defendants' reports were accurate. [Id. at 11-12.]
Plaintiffs allege that they requested that Defendants verify the debt, but Defendants failed to respond and failed to cease collection efforts pending verification, as required by the FDCPA. [Complaint at ¶¶ 140-42.] The Moving Defendants, however, emphasize that CMI did provide Plaintiffs with a July 21, 2010 letter, giving notice of its intent to collect and that Plaintiffs had the right to request verification of the debt, but neither CMI nor its counsel received a timely request for verification. [Agent Decl. at ¶ 14; Counsel Decl. at ¶ 3, Exh. I.] Plaintiffs' counsel sent a letter dated October 24, 2010 to Ms. Parker. The letter, inter alia, requested verification of the debt. [Counsel Decl., Exh. N at 3.] The Moving Defendants argue that they were entitled to ignore this letter because it was not a timely request for verification. [Mem. in Supp. of Motion at 12-13 (citations omitted).]
Plaintiffs alleged that ABN violated the ECOA and the HMDA because it did not obtain a written loan application and did not provide Plaintiffs with a signed and dated loan application. They also allege that ABN violated the ECOA by failing to notify Plaintiffs that a copy of the appraisal would be provided to them upon request. [Complaint at ¶¶ 146-47.] The Moving Defendants argue that these claims fail as a matter of law. First, the HMDA does not provide for a private right
Even if Plaintiffs could allege valid claims under the ECOA, they would be time-barred because Plaintiffs failed to bring them within two years of the date of the alleged violation, which occurred at the closing of the loan. [Mem. in Supp. of Motion at 14 (citing 12 C.F.R. § 202.16(b)(2)).]
The Moving Defendants argue that, because they are entitled to summary judgment on all of Plaintiffs' federal law claims, this Court should decline to exercise supplemental jurisdiction over Plaintiffs remaining state law claims. [Id.] In the alternative, the Moving Defendants argue that each of the state law claims fail as a matter of law.
Plaintiffs allege that Defendants misrepresented or concealed material information from Plaintiffs during the loan application process. [Complaint at ¶¶ 55-57.] The Moving Defendants argue that they did not make any representations to Plaintiffs other than what is stated in the terms of the First Note and First Mortgage, and Plaintiffs have not alleged that those documents contain misrepresentations. [Mem. in Supp. of Motion at 15.] Further, the Complaint does not meet the specificity requirements for pleading fraud claims. The Moving Defendants also emphasize that representations based on future events cannot form the basis of a fraud claim. Finally, they note that the elements of fraudulent misrepresentation must be established by clear and convincing evidence, and they assert that Plaintiffs cannot meet this burden. [Id. at 17-18.]
The Moving Defendants argue that this claim fails because ABN only acted as a lender of funds, and lenders generally owe no fiduciary duties to their borrowers. [Id. at 18.]
Plaintiffs essentially argue that Defendants were unjustly enriched by receiving fees that Defendants failed to fully disclose to Plaintiffs and by receiving fees from third parties. [Complaint at ¶¶ 68-71.] The Moving Defendants argue that the TILA Disclosure and the Settlement Statement set forth all of the fees associated with Plaintiffs' loan. [Agent Decl., Exhs. D & E.] The Moving Defendants argue that there was nothing improper about those fees. Plaintiffs have not identified what payments Defendants allegedly received from third parties, but the Moving Defendants deny receiving any such payments. Further, even if Defendants did receive payments from third parties, the benefit to Defendants would not be at Plaintiffs' expense. [Mem. in Supp. of Motion at 19.]
Plaintiffs allege that Defendants conspired among themselves to defraud Plaintiffs. [Complaint at ¶¶ 74-75.] The Moving Defendants reiterate that Plaintiffs' fraud claims fail, and therefore the conspiracy
The Moving Defendants argue that this is a prayer for relief rather than a cause of action; Plaintiffs seek to rescind their loan and to have their title to the Property restored clear of any interest from the First Mortgage. The Moving Defendants reiterate that TILA rescission no longer applies, and they argue that any allegations in Count VII based on another party holding the loan are incorrect because there was no sale or transfer of the loan. [Id. (citing Agent Decl. at ¶ 3).]
Plaintiffs allege that the Hawai'i Administrative Rules require that any transfer of a mortgage interest be recorded. [Complaint at ¶ 88.] The Moving Defendants argue that Haw. Admin. R. § 16-178-2 only requires that, if a transfer of an interest in real property is recorded, it is subject to a special mortgage recording fee ("SMRF"). ABN, however, never transferred its interest in Plaintiffs' mortgage. The Moving Defendants also argue that the Hawai'i Administrative Rules do not provide for a private right of action. [Mem. in Supp. of Motion at 21.]
In addition, the Moving Defendants contend that the filing of the petition and order regarding the merger was sufficient notice of the merger of ABN with CMI. A title search of the Property will reflect the merger. [Agent Decl. at ¶ 10, Exh. K at 8.] Even if the recording of an assignment of Plaintiffs' mortgage to CMI were required, Haw.Rev.Stat. § 502-83 provides that the effect of the failure to record an assignment is to render the assignment void against subsequent purchasers, lessees, or mortgagees who acted in good faith and paid valuable consideration without notice of the unrecorded assignment. Plaintiffs do not fall within those categories. [Mem. in Supp. of Motion at 21.] Plaintiffs also had notice of the assignment. [Id. at 21-22 (citing Agent Decl. at ¶¶ 7-8, Exh. H).]
Plaintiffs allege that, if Defendants' actions in the loan origination did not rise to the level of fraud, then the parties entered into the contract based on mutual mistake, entitling Plaintiffs to rescission. [Complaint at ¶ 96.] The Moving Defendants argue that Plaintiffs cannot state a viable claim of mistake against them because all of the terms of Plaintiffs' loan are clearly set forth in the First Note and First Mortgage. [Mem. in Supp. of Motion at 22.]
Plaintiffs allege that they did not understand their loans or the true terms of the loans, and therefore the terms of the notes and mortgages are unconscionable, entitling Plaintiffs to rescission. [Complaint at ¶¶ 99-100.] The Moving Defendants argue that Plaintiffs have not identified what specific terms or conditions are allegedly unconscionable, nor have Plaintiffs established any factual basis to support this claim. [Mem. in Supp. of Motion at 22.]
The Moving Defendants argue that any alleged UDAP violations associated with the origination of Plaintiffs' loan are time-barred because Haw.Rev.Stat. § 480-24 sets forth a four-year statute of limitations period. The acts that Plaintiffs complain of occurred in September 2006, but they
The Moving Defendants argue that Plaintiffs have not alleged any specific conduct by the Moving Defendants to support this claim. ABN acted solely as the lender, and the terms of the loan are clearly set forth in the First Note and First Mortgage. CMI only dealt with Plaintiffs in the capacity of an entity that merged with Plaintiffs' lender. The Moving Defendants therefore argue that Plaintiffs have not, and cannot, allege any bad faith by the Moving Defendants. [Id. at 24.]
The Moving Defendants argue that, under TILA, recoupment is only available as a defense to an action to collect a debt, [id. at 24 (some citations omitted) (citing 15 U.S.C. § 1640(e)),] and Plaintiffs' allegations do not support a claim for equitable recoupment. [Id.]
The Moving Defendants argue that Plaintiffs' emotional distress claims, which are based on Defendants' alleged actions and omissions in September 2006, are time-barred because Plaintiffs failed to bring this action within two years of the alleged actions and omissions. [Id. at 24-25 (citing Haw.Rev.Stat. § 657-7)).] The Moving Defendants also reiterate that they made no representations to Plaintiffs other than those contained in the First Note, First Mortgage, and the TILA Disclosure. [Id. at 25.]
Plaintiffs allege that Defendants violated their right to privacy under the Hawai'i Constitution by providing private financial information to non-affiliated third-parties to sell asset-backed certificates, shares or bonds. [Complaint at ¶¶ 131-32.] The Moving Defendants argue that the Hawai'i Constitution does not mandate notice to Plaintiffs of such disclosures. Moreover, the Moving Defendants did not disclose any of Plaintiffs' private information as part of the sale of asset-backed certificates, shares or bonds. [Mem. in Supp. of Motion at 25 (citing Agent Decl. at ¶ 18).] The Moving Defendants also point out that ABN provided Plaintiffs with a privacy notice at closing. [Id. (citing Agent Decl. at ¶ 4H, Exh. L).] Finally, to the extent that this claim is based on information that the Moving Defendants provided to credit reporting agencies regarding the status of Plaintiffs' loan, Plaintiffs do not have a right to privacy in any of that information. [Id.]
Plaintiffs allege that the Moving Defendants violated Chapter 667 because the Moving Defendants were not represented by an attorney in the foreclosure process, did not properly publish notice of their intent to foreclose, and/or did not provide Plaintiffs with proper notice of the foreclosure sale. [Complaint at ¶ 136.] The Moving Defendants argue that these claims are frivolous. Their foreclosure counsel was Clay Chapman; [Agent Decl. at ¶ 13; Counsel Decl. at ¶ 2;] they recorded a Mortgagee's Affidavit of Foreclosure Sale under Power of Sale ("Foreclosure Affidavit") in the BOC as document no. 2010-176632; [Counsel Decl. at ¶ 4, Exh. M;] and the Foreclosure Affidavit included evidence of personal service on Plaintiffs,
In their memorandum in opposition, Plaintiffs first contend that the Court should deny the Motion because there are numerous issues of disputed material fact and because Plaintiffs need to conduct further discovery, which they believe will uncover additional factual disputes. [Mem. in Opp. at 3.]
In the first section of their Memorandum in Opposition, Plaintiffs address each count of the Complaint individually, but they repeat the same arguments for all counts. For each count, Plaintiffs argue that the declarations that they submitted in support of the Memorandum in Opposition and their Concise Statement of Facts ("Plaintiffs' CSOF"
Count I (TILA and RESPA) is the only count for which Plaintiffs give any further information about what they expect to learn from the audits and/or discovery. Plaintiffs expect to obtain
[Mem. in Opp. at 4-5.]
In the second portion of the Memorandum in Opposition, Plaintiffs address the further audits and discovery generally. They state that they expect to have additional evidence to support their existing claims, as well as additional claims which they may seek to include.
As to the fraud, unconscionability, and mutual mistake claims, Plaintiffs state that they may learn "whether all the required information and notices regarding the entry into, servicing of, and attempting to foreclose on Swartz's loan(s) were intentionally or negligently concealed from Swartzs[.]" [Id. at 20.] They also generally state that they may learn whether
As to the TILA claim and the other federal claims, Plaintiffs state that discovery may uncover disputed issues of fact concerning whether Defendants: made all the required disclosures; followed standard mortgage practices and foreclosure laws; and gave proper notice of their intent to foreclose to Plaintiffs. [Id. at 21.]
As to the NIED/IIED claim, Plaintiffs believe they will discover evidence about whether Defendants caused their emotional distress by placing them in a loan Defendants knew Plaintiffs could not afford and by denying the loan modification. Plaintiffs argue that Defendants knew this would potentially cause them to lose their equity and their home. [Id. at 22-23.]
In their reply, the Moving Defendants first argue that the Court must deny Plaintiffs' Rule 56(d) request. Plaintiffs have not stated who their auditor is, what the expected updated audits pertain to, what the original audits state, and when the updates will be completed. The Moving Defendants argue that the allegations in the Complaint about Mortgage Electronic Registration Systems, Inc. ("MERS") and securitization are inapplicable because Plaintiffs' First Mortgage was never registered with MERS and it was never "securitized" or sold. No securitization audit will change this, and no forensic audit will change the fact that Plaintiffs failed to make payments on their loan. [Reply at 2-3.] The Moving Defendants also argue that the mere hope of discovering further evidence is not sufficient basis to grant a Rule 56(d) continuance, and Plaintiffs have not satisfied the requirements of Rule 56(d). In particular, the Moving Defendants emphasize that Plaintiffs have not been diligent in conducting discovery. [Id. at 3-5.]
The Moving Defendants argue that all Plaintiffs have done is dispute each item in the Moving Defendants' CSOF, but this is not enough to identify a genuine issue of fact for trial. [Id. at 5.] Further, Plaintiffs did not even address the Moving Defendants' legal arguments regarding the federal claims. As to the FDCPA claim, Plaintiffs do not present any testimony or evidence that they timely requested verification of the debt, even though it should be within their possession and/or capability to do so. [Id. at 6-8.]
As to the state law claims, the Moving Defendants argue that no discovery will produce evidence to defeat the arguments in the Motion. In addition, as to the unjust enrichment claim, the Moving Defendants argue that there can be no action for unjust enrichment where there is an express contract. No amount of discovery will change the fact that Plaintiffs' First Note and First Mortgage are express contracts with ABN. [Id. at 8-9.]
Pursuant to Fed.R.Civ.P. 56(d), Plaintiffs ask this Court to either deny the Motion or defer ruling on the motion to allow them more time to conduct discovery. Rule 56(d) states:
Whether to deny a Rule 56(d) request for further discovery by a party opposing
"A party requesting a continuance pursuant to Rule [56(d)] must identify by affidavit the specific facts that further discovery would reveal, and explain why those facts would preclude summary judgment." Tatum v. City & Cnty. of San Francisco, 441 F.3d 1090, 1100 (9th Cir. 2006). Moreover, "[t]he burden is on the party seeking additional discovery to proffer sufficient facts to show that the evidence sought exists." Nidds, 113 F.3d at 921.
"Failure to comply with the requirements of Rule [56(d)] is a proper ground for denying discovery and proceeding to summary judgment." Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439, 1443 (9th Cir.1986); see also Tatum, 441 F.3d at 1100-01 (finding that an attorney's declaration was insufficient to support a Rule 56 continuance where the declaration failed to specify specific facts to be discovered or explain how a continuance would allow the party to produce evidence precluding summary judgment). Further, the requesting party is not entitled to additional discovery if he did not diligently pursue discovery prior to the motion for summary judgment. See Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827-28 (9th Cir.2008).
Plaintiffs fail to comply with the requirements of Rule 56(d), and have not met their burden to proffer sufficient facts to show that the evidence sought exists. Moreover, Plaintiffs have not shown that they diligently pursued discovery prior to the hearing on the instant Motion.
The Court notes that the optional supplemental memorandum in opposition addressing any changes in the relevant factual circumstances or the relevant law was Plaintiffs' opportunity to set forth the efforts that they undertook to diligently pursue discovery in the nineteen months between the filing of the Motion and the hearing. Plaintiffs, however, did not file a supplemental memorandum. At the hearing, Plaintiffs' counsel explained that Plaintiffs are older and Plaintiffs and counsel decided to devote Plaintiffs' resources to attempting to modify the loan at issue rather than to pursuing discovery. While the Court appreciates the financial burden of discovery, the Court cannot find that Plaintiffs have been diligent in pursuing discovery. The Court therefore DENIES Plaintiffs' Rule 56(d) request.
The Court first notes that, despite Plaintiffs' bare assertion that there are genuine issues of material fact precluding summary judgment, they fail to point to any evidence in the record demonstrating as much. Rather, the Moving Defendants have met their burden on summary judgment as to each claim by demonstrating that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). Even drawing all justifiable inferences in Plaintiffs' favor, see Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.2006) (stating that, on a summary judgment motion, "the nonmoving party's evidence is to be believed, and all justifiable inferences are to be drawn in that party's favor" (citations, quotation marks, and brackets omitted)), the Court concludes that the Moving Defendants are entitled to summary judgment on each claim, as set forth more fully below.
Count I seeks damages pursuant to TILA and RESPA. [Complaint at
According to the Complaint, Plaintiffs signed their loan documents on September 25, 2006, [Complaint at ¶ 21,] and the First Note and First Mortgage are dated either September 27, 2006 and September 28, 2006 [Counsel Decl., Exhs. B, C]. Plaintiffs filed this action on November 8, 2010. The TILA statute of limitations is subject to equitable tolling, Cannon, 2011 WL 1637415, at *5, and equitable tolling may also apply to RESPA claims. Phillips v. Bank of Am., Civil No. 10-00551 JMS-KSC, 2011 WL 240813, at *9 (D.Hawai'i Jan. 21, 2011). Plaintiffs, however, have not presented any evidence that would justify equitable tolling in this case. This Court therefore CONCLUDES that Plaintiffs' TILA and RESPA damages claims are time-barred and that the Moving Defendants are entitled to judgment as a matter of law.
Further, insofar as Plaintiffs allege a claim for rescission pursuant to TILA, this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law because Plaintiffs failed to bring their TILA rescission claim, which allege failure to make the required TILA disclosures at the time of the loan, within the three-year statute of repose. See Wood v. Greenberry Fin. Servs., Inc., Civil No. 11-00150 LEK-KSC, 907 F.Supp.2d 1165, 1176-77, 2012 WL 5381817, at *8 (D.Hawai'i Oct. 30, 2012) ("Where the borrower allegedly did not receive the required TILA disclosures, the borrower must bring his rescission claim within three years after the loan consummation. The three-year period is a statute of repose, which is not subject to equitable tolling." (citing 15 U.S.C. § 1635(f); Cannon, 2011 WL 1637415, at *6 (citing Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir.2002)))).
Insofar as these grounds are sufficient to grant summary judgment in favor of the Moving Defendants as to Count I, the Court need not address their remaining arguments. The Motion is therefore GRANTED as to Count I.
The Moving Defendants acknowledge that they are subject to the FCRA because they provide information to credit reporting agencies and they reported credit information about Plaintiffs' mortgage payments. [Mem. in Supp. of Motion at 10.] This district court has rejected FCRA claims that are almost identical to Plaintiffs' claim in the instant case. For example, in Amina v. WMC Mortgage Corp., the district court stated:
Civil No. 10-00165 JMS/KSC, 2011 WL 1869835, at *11 (D.Hawai'i May 16, 2011) (alterations in Amina).
In the instant case, Plaintiffs failed to plead these elements in the Complaint, nor have they presented any evidence in connection with the instant Motion to establish a genuine issue of fact as to these elements. This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' FCRA claim, and the Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count II.
In Count XVII, Plaintiffs allege that Defendants violated the FDCPA because Plaintiffs requested that Defendants verify the debt in this case, but Defendants failed to respond in writing and Defendants continued their collection efforts pending verification of the debt. [Complaint at ¶¶ 140-42.]
15 U.S.C. § 1692g states, in pertinent part:
(Emphases added.) This district court has noted that "some courts have recognized that a Mebt collector' may encompass a party that seeks to enforce a security interest through foreclosure[.]" Sakugawa v. IndyMac Bank, F.S.B., Civil No. 10-00504 JMS/LEK, 2010 WL 4909574, *5 n. 3 (D.Hawai'i Nov. 24, 2010) (citing Wilson v. Draper & Goldberg, 443 F.3d 373, 376-77 (4th Cir.2006); Selby v. Bank of Am., 2010 WL 4347629 (S.D.Cal. Oct. 27, 2010)).
CMI's foreclosure counsel sent Plaintiffs a letter dated July 21, 2010 providing them with notice of the debt and informing them that they had a right to request verification of the debt within thirty days.
Plaintiffs did not present any evidence to create a genuine issue of material fact as to whether their October 24, 2010 request for verification was timely. Plaintiffs present only their declarations that: "We dispute that we did not ask for debt verification as described in Defendants' CSF ¶ 18,[
Plaintiffs failed to make a timely request for verification of the debt, and CMI was entitled to ignore Plaintiffs' untimely request for verification, which was dated October 24, 2010. This Court is persuaded by the district court's reasoning in Agu v. Rhea, No. 09-CV-4732(JS)(AKT), 2010 WL 5186839 (E.D.N.Y. Dec. 15, 2010). In that case, the district court stated:
Id. at *5 (emphasis added). Similarly, this Court agrees with the Moving Defendants that CMI was entitled to ignore Plaintiffs' untimely request for verification of the debt and was entitled to continue its foreclosure efforts. Thus, Plaintiffs have failed to identify a genuine issue of material fact as to their FDCPA claim, and the Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count XVII.
Count XVIII alleges that Defendants violated the ECOA — Regulation B and the HMDA — Regulation C by: 1) failing to obtain a written loan application; 2) failing to provide Plaintiffs in timely manner with a signed and dated loan application; and 3) failing to provide Plaintiffs with an appraisal disclosure. [Complaint at ¶¶ 145-48.]
This district court has rejected ECOA claims that are almost identical to the claim in the instant case. For example, in Letvin v. Amera Mortgage Corp., the district court stated:
Civil No. 10-00539 JMS/KSC, 2011 WL 1603635, at *12-13 (D.Hawai'i Apr. 27, 2011).
In the instant case, Plaintiffs have neither alleged in the Complaint nor identified any evidence in connection with the instant Motion that they made a written request for an appraisal report. Further, Plaintiffs failed to file this action within two years of when the alleged violations purportedly occurred during the 2006 loan application process, and Plaintiffs have not identified any evidence that would indicate that equitable tolling is appropriate in this case.
Further, Plaintiffs' HMDA claim fails as a matter of law because the HMDA only provides for administrative enforcement. See, e.g., Wellman v. First Franklin Home Loan Servs., No. 09 CV 1257 JM (NLS), 2009 WL 2423961, at *2 (S.D.Cal. Aug. 4, 2009) (citing 12 C.F.R. § 203.6).
This Court therefore FINDS that there is no genuine issue of material fact as to either Plaintiffs' ECOA claim or their HMDA claim, and the Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law as to both of those claims. The Motion is GRANTED as to Count XVIII.
Insofar as this Court has granted summary judgment in favor of the Moving Defendants as to all of Plaintiffs' claims under federal law, the Moving Defendants argue that this Court should decline to exercise supplemental jurisdiction over Plaintiffs remaining state law claims. [Mem. in Supp. of Motion at 14.] This Court, however, in the exercise of its discretion, elects to exercise supplemental jurisdiction over Plaintiffs' state law claims. See Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639, 129 S.Ct. 1862, 173 L.Ed.2d 843 (2009) ("A district court's decision whether to exercise [supplemental] jurisdiction after dismissing every claim over which it had original jurisdiction is purely discretionary." (citations omitted)). That being said, as this Court previously stated, the Moving Defendants are entitled to summary judgment as to each of Plaintiffs' claims.
Count III alleges that Defendants made fraudulent misrepresentations about various matters in the loan origination process and about their reporting negative information about Plaintiffs' loan to credit reporting agencies. [Complaint at ¶¶ 56-57.8.]
Under Hawai'i law, the elements of a fraudulent or intentional misrepresentation claim are: "(1) false representations made by the defendant; (2) with knowledge of their falsity (or without knowledge of their truth or falsity); (3) in contemplation of plaintiff's reliance upon them; and (4) plaintiff's detrimental reliance." Miyashiro v. Roehrig, Roehriq, Wilson & Hara, 122 Haw. 461, 482-83, 228 P.3d 341, 362-63 (Ct.App.2010) (citing Hawaii's Thousand Friends v. Anderson, 70 Haw. 276, 286, 768 P.2d 1293, 1301 (1989)). In order
122 Hawai'i at 483 n. 24, 228 P.3d at 363 n. 24 (alteration in Miyashiro).
The Complaint does not identify which of the Defendants allegedly made the representations identified in the Complaint.
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' fraudulent misrepresentation claim against the Moving Defendants, and the Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count III.
Count IV alleges that Defendants "breached their fiduciary duties to the Plaintiffs by fraudulently inducing Plaintiffs to enter into a mortgage transaction which was contrary to the Plaintiffs [sic] stated intentions; contrary to the Plaintiffs' interest; and contrary to the Plaintiffs' preservation of their home." [Complaint at ¶ 64.]
ABN was the original lender of the loan at issue in this case, and ABN was later
McCarty v. GCP Mgmt., LLC, Civil No. 10-00133 JMS/KSC, 2010 WL 4812763, at *5 (D.Hawai'i Nov. 17, 2010). The district court in McCarty recognized that such a special relationship "might arise where there is inequality of bargaining power." Id. (citing Miller, 865 P.2d at 543 ("A quasi-fiduciary relationship may exist where the lender has superior knowledge and information, the borrower lacks such knowledge or business experience, the borrower relies on the lender' [sic] advice, and the lender knew the borrower was relying on the advice.")).
Although Plaintiffs dispute that the Moving Defendants acted solely in the role of a lender, Plaintiffs have not identified any evidence supporting their position. [B. Swartz Decl. at ¶¶ 20, 38; N. Swartz Decl. at ¶¶ 20, 38.] The Court also notes that the Moving Defendants have presented evidence that, at the time Plaintiffs applied for the loan in question, Plaintiffs were business owners and they owned multiple properties. [Loan Application at 2-3.] Plaintiffs dispute the authenticity of the Moving Defendants' exhibit because they state that no one provided them with the original Loan Application, but Plaintiffs have not identified any contrary evidence regarding their business or their other properties. [B. Swartz Decl. at ¶ 17; N. Swartz Decl. at ¶ 17.] Plaintiffs' self-serving declarations alone do not create genuine issues of material fact as to whether the Moving Defendants exceeded the role as a mere lender. See Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002) (explaining that uncorroborated allegations and "self-serving testimony" do not create a genuine issue of material fact); F.T.C. v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997) ("A conclusory, self-serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact.").
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' breach of fiduciary duty claim, and this Court also FINDS that the Moving Defendants' relationship with Plaintiffs was merely that of a lender and a borrower. The Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law because the Moving Defendants did not owe fiduciary duties to Plaintiffs. The Motion is GRANTED as to Count IV.
Plaintiffs' unjust enrichment claim fails because Plaintiffs have an express
CV. No. 08-00299 DAE-BMK, 2008 WL 4907976, at *3 (D.Hawai'i Nov. 12, 2008). For the same reasons, this Court FINDS that there is no genuine issue of material fact as to Plaintiffs' unjust enrichment claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count V.
Plaintiffs' civil conspiracy claim fails as a matter of law because Hawai'i does not recognize an independent cause of action for "civil conspiracy". Such a theory of potential liability is derivative of other wrongs. See, e.g., Chung v. McCabe Hamilton & Renny Co., 109 Haw. 520, 530, 128 P.3d 833, 843 (2006); Weinberg v. Mauch, 78 Haw. 40, 49, 890 P.2d 277, 286 (1995). This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' civil conspiracy claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count VI.
In Count VII, Plaintiffs seek, inter alia, an order compelling Defendants "to transfer or release legal title and alleged encumbrances thereon and possession of the" Property to Plaintiffs, as well as "a declaration and determination that Plaintiffs are the rightful holders of title to the" Property. [Complaint at ¶¶ 86.1-86.2.]
This district court has construed similar allegations as attempts to assert a claim pursuant to Haw.Rev.Stat. § 669-1(a). See, e.g., Phillips v. Bank of Am., Civil No.
In Phillips, the district court noted:
2011 WL 240813, at *13.
In the present case, Plaintiffs have not presented any evidence indicating that they are able to tender the outstanding amount on their loan. This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' quiet title claim, and the Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count VII.
Count VIII discusses the Haw. Admin. R. Chapter 178 SMRF and other requirements upon the assignment of a mortgage. [Complaint at ¶¶ 87-94.] The Moving Defendants, however, have presented evidence that there was never an assignment of Plaintiffs' First Mortgage. [Defs.' CSOF No. 10 (citing Agent Decl. at ¶¶ 2-3, Exh. K at 8).] Plaintiffs' counsel may have erroneously included this count because it alleges that "MERS should have filed a SMRF and an assignment of mortgage for each assignment of sale." [Complaint at ¶ 88.] MERS, however, is not a party to this action, and the mortgage at issue was not part of the MERS system. [Defs.' CSOF No. 9 (citing Agent Decl. at ¶¶ 3, 9, Exh. J).] Plaintiffs make the bald statement that they dispute that ARB merged with CMI, and they dispute whether CMI is the holder of the First Note and the First Mortgage. [B. Swartz Decl. at ¶ 25; N. Swartz Decl. at ¶ 25.] As previously stated, however, Plaintiffs' unsubstantiated, self-serving declarations by themselves do not establish a genuine issue of material fact. See Villiarimo, 281 F.3d at 1061; Publ'g Clearing House, 104 F.3d at 1171.
Moreover, this Court agrees with the Moving Defendants that, even if the merger of ARB into CMI effectuated an assignment, and CMI was required to record an assignment of Plaintiffs' First Mortgage to CMI, Haw.Rev.Stat. § 502-83 only renders the assignment "void as against any subsequent purchaser, lessee, or mortgagee, in good faith and for a valuable consideration, not having actual notice of the conveyance of the same real estate, or any portion thereof, or interest therein, whose conveyance is first duly recorded." Plaintiffs did not purchase, lease, or mortgage the Property after the unrecorded assignment, and therefore they
This Court FINDS that there is no genuine issue of material fact as to Plaintiffs' claim for violation of BOC regulations, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count VIII.
Count IX alleges that, if Defendants' statements and/or omissions were neither fraudulent misrepresentations nor omissions of material fact, the parties entered into the mortgage contract based on mutual mistake. Plaintiffs assert that they are entitled to, inter alia, rescission of the First Note and the First Mortgage. [Complaint at ¶ 96.] Plaintiffs, however, have not presented any evidence that the Moving Defendants made any other representations about the terms of the First Note and the First Mortgage other than what is contained in the documents themselves.
The Hawai'i appellate courts have recognized that:
Liberty Bank v. Shimokawa, 2 Haw.App. 280, 283, 632 P.2d 289, 292 (Ct.App.1981) (citations omitted). The Hawai'i Supreme Court has adopted Restatement (Second) of Contracts § 152 as the proper test to determine whether rescission of a contract is warranted based on mutual mistake. Thompson v. AIG Hawaii Ins. Co., Inc., 111 Haw. 413, 424, 142 P.3d 277, 288 (2006) (citing AIG Hawai'i Ins. Co. v. Bateman, 82 Haw. 453, 456-57, 923 P.2d 395, 398-99 (1996)). Section 152(1) states:
Even assuming, arguendo, that Plaintiffs' declarations are sufficient to raise a genuine issue of material fact as to whether they made a mistake as to a basic assumption of the mortgage agreement, Plaintiffs have offered no evidence that raises a genuine issue of material fact as to whether the Moving Defendants also made a mistake as to a basic assumption of the mortgage agreement. Insofar as Plaintiffs have not identified sufficient evidence to survive summary judgment as to the alleged mutual mistake, Plaintiffs' failure to read or comprehend the terms of the First Note and the First Mortgage do not relieve them from their obligations under those documents.
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' mistake claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count IX.
Count X alleges that the terms and conditions of the First Note and the First Mortgage are unconscionable and that Plaintiffs are entitled to, inter alia, rescission of those documents. [Complaint at ¶ 100.]
This district court has recognized that:
Phillips, 2011 WL 240813, at *12 (footnote omitted). Further,
Id. at *12 n. 9.
This Court agrees that Plaintiffs cannot pursue a stand-alone claim of "unconscionability" and therefore the Moving Defendants are entitled to judgment as a matter of law as to Plaintiffs' purported unconscionability claim. The Motion is GRANTED as to Count X.
Count XI alleges that Defendants engaged in various UDAPs in connection with the loan origination, including inducing Plaintiffs to accept a loan product that Plaintiffs could not afford. [Complaint at ¶¶ 106-106.14.]
First, the Court notes that claims under § 480-2 are subject to a four-year statute of limitations. Haw.Rev.Stat. § 480-24(a). The Complaint states that Plaintiffs signed the loan documents on September 25, 2006, [Complaint at ¶ 21,] and the First Note and First Mortgage are dated either September 27, 2006 or September 28, 2006 [Counsel Decl., Exhs. B, C]. Plaintiffs filed the Complaint on November 8, 2010. None of the tolling provisions in § 480-24(b) apply in the instant case. This district court has ruled "to construe HRS Ch. 480 in accordance
Further, this district court has stated that:
Casino v. Bank of Am., Civil No. 10-00728 SOM/BMK, 2011 WL 1704100, at *12-13 (D.Hawai'i May 4, 2011) (some alterations in Casino). This Court has previously found that Plaintiffs have not established a genuine issue of material fact as to the existence of any special circumstances that would give rise to a fiduciary duty that the Moving Defendants owed to them. See supra Section II.B.2. This Court also finds that Plaintiffs have not established that the Moving Defendants made any misrepresentations that amount to violations of Haw.Rev.Stat. Chapter 480.
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' UDAP claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count XI.
Count XII alleges that Defendants failed to deal with Plaintiffs in good faith in the loan origination process and in Plaintiffs' attempts to seek loan relief and/or loan modification. [Complaint at ¶ 120.]
This district court has characterized similar claims as attempts to allege claims for the tort of bad faith. See, e.g., Phillips, 2011 WL 240813, at *5 (citing Best Place v. Penn Am. Ins. Co., 82 Haw. 120, 128, 920 P.2d 334, 342 (1996) (adopting tort of bad faith for breach of implied covenant of good faith and fair dealing in an insurance contract)).
Id. at *5-6 (some alterations in Phillips).
The majority of the alleged failures to act in good faith deal with pre-loan consummation activities. Even if Hawai'i law did recognize such a claim, a plaintiff cannot establish a breach of the covenant of good faith and fair dealing with actions prior to contract formation. Plaintiffs also base Count XII on Defendants' alleged actions in the loan modification process, but those are also pre-contract activities because essentially what Plaintiffs sought in the loan modification process was to negotiate a new loan contract.
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' claim alleging failure to act in good faith, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count XII.
TILA provides for recoupment, 15 U.S.C. § 1640, but Count XIII expressly asserts "equitable recoupment". [Complaint at ¶ 124.]
This district court has recognized:
Rymal v. Bank of Am., CV. No. 10-00280 DAE-BMK, 2011 WL 1361441, at *9 (D.Hawai'i Apr. 11, 2011) (some alterations in Rymal).
Thus, to the extent that Count XIII does seek recoupment pursuant to TILA, this claim is duplicative of the TILA claim. It is time-barred for the same reasons discussed in connection with Count I and because Plaintiffs are not asserting TILA recoupment as a defense in an action to collect a debt. Even if the claim were not time-barred, it fails on the merits for the same reasons that the TILA claim in Count I fails on the merits. See supra Section II.A.1.
To the extent that Count XIII is based on equitable recoupment, that is a defense, not an affirmative claim for relief. See Rey v. Countrywide Home Loans, Inc., Civil No. 11-00142 JMS/KSC, 2011 WL 2160679, at *13 (D.Hawai'i June 1, 2011) (citing City of Saint Paul, Alaska v. Evans, 344 F.3d 1029, 1034 (9th Cir.2003) ("[E]quitable recoupment has been allowed by state courts as well, but it has always been recognized as a defense, not a claim.")).
This Court therefore FINDS that there is no genuine issue of material fact as to Plaintiffs' recoupment claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is GRANTED as to Count XIII.
This district court has stated:
Dowkin v. Honolulu Police Dep't, Civ. No. 10-00087 SOM-LEK, 2010 WL 4961135, at *9 (D.Hawai'i Nov. 30, 2010). Duty and
As a general rule, lenders do not owe their borrowers a duty of care sounding in negligence. McCarty, 2010 WL 4812763, at *6 (some citations omitted) (citing Champlaie v. BAC Home Loans Servicing, LP, 706 F.Supp.2d 1029, 1061 (E.D.Cal.2009); Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal.App.3d 1089, 283 Cal.Rptr. 53, 56 (Cal.App.1991)). Similar to the special circumstances exception to the general rule that a borrower-lender relationship does not give rise to a fiduciary relationship, "a lender may owe to a borrower a duty of care sounding in negligence when the lender's activities exceed those of a conventional lender." Champlaie, 706 F.Supp.2d at 1060 (discussing Nymark).
For the same reasons discussed with regard to Plaintiffs' breach of fiduciary duty claim, see supra Section II.B.2, this Court also finds that Plaintiffs have not identified a genuine issue of material fact as to whether there are special circumstances that would give rise to duty of care sounding in negligence between Plaintiffs and the Moving Defendants. Insofar as Plaintiffs cannot establish a duty of care, they cannot establish a prima facie case for NIED. This Court therefore FINDS that there is no genuine issue of material fact as to the portion of Count XIV alleging an NIED claim against the Moving Defendants, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law.
Under Hawai'i law, there are four elements of an IIED claim. First, the plaintiff must prove that the conduct was either intentional or reckless. Second, the conduct in question must have been "outrageous." Next, the plaintiff must establish causation, and finally, there must be evidence that the plaintiff suffered extreme emotional distress. See Young v. Allstate Ins. Co., 119 Haw. 403, 425, 198 P.3d 666, 688 (2008). A determination of "outrageous" conduct is fact specific. Hawai'i courts have defined outrageous conduct as conduct "`without just cause or excuse and beyond all bounds of decency.'" Chin v. Carpenter-Asui, No. 28654, 123 Haw. 299, 2010 WL 2543613, at *4 (Hawai'i Ct.App. June 24, 2010) (some citations omitted) (quoting Lee v. Aiu, 85 Haw. 19, 34 n. 12, 936 P.2d 655, 670 n. 12 (1997)). If a plaintiff fails to prove that the alleged conduct rose to the level of "outrageous," summary judgment is proper. See Farmer ex rel. Keomalu v. Hickam Fed. Credit Union, No. 27868, 122 Haw. 201, 2010 WL 466007, at *14 (Hawai'i.Ct.App. Feb. 2, 2010) (citing Shoppe v. Gucci America Inc., 94 Haw. 368, 387, 14 P.3d 1049, 1068 (2000)), cert. denied, 2010 WL 2625261 (Hawai'i June 29, 2010).
Uy v. Wells Fargo Bank, N.A., Civ. No. 10-00204 ACK-RLP, 2011 WL 1235590, at *14 (D.Hawai'i Mar. 28, 2011) (alterations in Uy).
Based upon the foregoing principles, this Court finds that Plaintiffs have failed to identify evidence that would raise a genuine issue of material fact as to whether the actions taken, and representations made, by the Moving Defendants constituted outrageous conduct. This Court therefore FINDS that there is no genuine issue of material fact as to the portion of Count XIV alleging an IIED claim against the Moving Defendants, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law.
The Motion is GRANTED as to Count XIV.
Count XV alleges that Defendants failed to provide Plaintiffs with notices of their right to privacy under the Hawai'i State Constitution and that Defendants failed to protect Plaintiffs' right to privacy in the personal and financial information that Defendants "disclosed to non affiliated third parties in an egregious and ongoing and far-reaching fraudulent scheme to improperly use the Plaintiff's [sic] identify, and private financial information to sell asset-backed certificates, shares or bonds...." [Complaint at ¶ 131.]
This district court has recognized that there is "no independent state law claim for a violation of privacy in bank records under the Hawaii State Constitution." Flowers v. First Hawaiian Bank, 289 F.Supp.2d 1213, 1221 (D.Hawai'i 2003) (citing State v. Klattenhoff, 71 Haw. 598, 801 P.2d 548, 552 (1990) ("we adopt the rule set forth in United States v. Miller, [425 U.S. 435, 440-43, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976),] and follow the majority of states in finding no reasonable expectation of privacy in personal bank records")).
Insofar as there is no private right of action, this Court FINDS that there is no genuine issue of material fact as to Plaintiffs' privacy claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is therefore GRANTED as to Count XV.
The Moving Defendants seek summary judgment on Count XVI, arguing that CMI completed the foreclosure sale in complete compliance with Haw.Rev.Stat. Chapter 667, as evidenced by the Foreclosure's Affidavit. They assert that CMI: (1) was represented by an attorney licensed to practice in Hawai'i; (2) published the required advertisement in The Honolulu Star-Advertiser on three separate occasions, at least fourteen days before the public auction; (3) timely posted notice on the Property; and (4) recorded the Foreclosure Affidavit. Plaintiffs present no evidence to the contrary and fail to establish a genuine issue of material fact with respect to CMI's foreclosure-related conduct.
This district court has explained that a wrongful foreclosure claim will not lie where the foreclosing party properly provided all required notices.
Matsumura v. Bank of Am., N.A., CIV. No. 11-00608 JMS-BMK, 2012 WL 463933, at *3 (D.Hawai'i Feb. 10, 2012).
For the same reasons, the Court FINDS that Plaintiffs have not established a genuine issue of material fact with respect to their Chapter 667 claim, and this Court CONCLUDES that the Moving Defendants are entitled to judgment as a matter of law. The Motion is therefore GRANTED as to Count XVI.
Plaintiffs' Complaint also alleges claims against American Guardian and First National. This Court expresses no opinion as to the merits of Plaintiffs' claims against these Defendants. The Court notes that there is no evidence in the record that Plaintiffs ever completed service of the Complaint on either American Guardian or First National. The Court, however, will address this issue in a separate order.
On the basis of the foregoing, Defendants' Motion for Summary Judgment on All Claims Against Movants in the Complaint Filed on November 8, 2010, which Defendants originally filed on March 18, 2011 and re-filed on October 3, 2012, is HEREBY GRANTED.
IT IS SO ORDERED.
