DERRICK K. WATSON, District Judge.
The Bank of New York Mellon ("BONY Mellon") moves for summary judgment on its claims for quiet title and slander of title, and request for declaratory relief against Defendants Len C. Perry, Nathan J. Lewis, and 3925 Kamehameha Rd Princeville, HI 96722, LLC (the "LLC"). The claims arise from Defendants' improper and fraudulent recordings, which have clouded title to Plaintiff's real property and interfered with its property rights. Defendants, without proper legal authority, filed financing statements misrepresenting debts owed by BONY Mellon, and eventually, recorded deeds purporting to convey title to themselves. Because Defendants falsely held themselves out as owners of record of the property, and deprived Plaintiff of the ability to market, sell and/or collect rent from the property, BONY Mellon continues to incur damages. The uncontroverted summary judgment record establishes that Defendants have no legal basis for claiming title to the property, which is undisputedly vested in BONY Mellon, and accordingly, the Court GRANTS the Motion for Summary Judgment on the second, third, and fifth claims for relief in the Complaint.
BONY Mellon was the foreclosing mortgagee on a Mortgage issued to non-party borrowers who had defaulted on their loan. The $1,129,500 loan to the borrowers was secured by a Mortgage on real property in Princeville, Kauai (the "Property") that was recorded on July 15, 2005 in the State of Hawaii Bureau of Conveyances. Ex. A (Mortgage), Dkt. No. 52-2.
During the same time period, Defendants recorded a number of fraudulent documents in the State of Hawaii Bureau of Conveyances that purported to transfer legal title to the Property to Defendants. On April 26, 2016, for example, Perry recorded a "Notice of Default/Notice of Fault — Opportunity to Cure — Default Affidavit" ("Notice of Fault") in the Bureau of Conveyances.
On June 27, 2016, Perry recorded a UCC Financing Statement ("First UCC Statement") in the Bureau of Conveyances in which he listed himself as both the Debtor and Secured Party in relation to collateral described as "Registered Lien # 1A59600612 for $3,981,377."
Perry recorded several documents with the Bureau of Conveyances on August 22, 2016, again without BONY Mellon's knowledge or consent. He recorded a "Notice of Lien Affidavit and Notice of Default," in which Perry claims that BONY Mellon is indebted to him in the amount of $3,981,377.19 due to its "fail[ure] to answer the. . . . Private Administrate Inquiry" and its "documented attempts to deny and deprive [Perry] of his rights and property[.]" Ex. I (Notice of Lien Affidavit), Dkt. No. 52-10. Perry also recorded a "Substitution of Trustee and Full Reconveyance," asserting that he is the "Beneficiary, under that certain claim number 3925KamehamehaPVH Notice of Default" and that RCO Hawaii, LLLC and Plaintiff are the "Trustee(s)" Ex. H (Substitution and Reconveyance), Dkt. No. 52-9. Perry, acting as Beneficiary, purported to designate the LLC Defendant as "Foreclosure Trustee and [to] hereby RECONVEY thereunder." Id. Defendants also recorded another amended UCC financing statement in the Bureau of Conveyances, without Plaintiff's knowledge or consent. Ex. J. (Am. UCC Statement), Dkt. No. 52-11.
On September 14, 2016, Defendants recorded an "Affidavit of Foreclosure" in which Lewis purported to act as the "foreclosure trustee" pursuant to a "Financing Statement Lien" recorded on July 27, 2016. Ex. K (Aff. of Foreclosure), Dkt. No. 52-12. The Affidavit of Foreclosure, filed without BONY Mellon's knowledge, purports to foreclose on the Lien and take the Property as collateral for the benefit of Perry. Id. The LLC is purportedly substituted "as to the Trustee to liquidate said trust with a Substitution and Full Re-Conveyance Notice," and the "Trustee, substituted [LLC] is moving in accordance with federal and Hawaii Statutes carrying out the Non-Judicial Foreclosure." Id.
On October 14, 2016, Defendants recorded another UCC Financing Statement ("Second UCC Statement") in the Bureau of Conveyances, listing BONY Mellon as the debtor, the Defendant LLC as the secured party with Lewis as an additional secured party, and listing the collateral as the Affidavit of Foreclosure recorded on September 14, 2016, with a total collateral debt of $3,981,377.19. Ex. L. (Second UCC Statement); Dkt. No. 52-13
On November 9, 2016, the LLC recorded in the Bureau of Conveyances a Warranty Deed ("Perry Warranty Deed") purporting to transfer title to the Property from the LLC to Perry. Ex. M, Dkt. No. 52-14. Then, on January 10, 2017, Perry recorded a conveyance ("Lewis Warranty Deed") whereby Perry, as grantor, purportedly transferred title to the Property to Lewis, as grantee. Ex. N, Dkt. No. 52-15.
According to BONY Mellon, it is not indebted to Defendants, and never owed Defendants $3,981,377.19 or any other sum of money. BONY Mellon did not receive any monies, benefit, value, or consideration for the purported conveyances of the Property to Defendants, and did not ever authorize or intend for any Defendant to record any documents relating to the Property. BONY Mellon only became aware of Defendants' fraudulent recordings when its agent, New Penn Financial, LLC dba Shellpoint Mortgage Servicing, as attorney-in-fact, began to attempt to market the Property for sale and discovered Defendants' purported "tenants" residing at the Property. Trinkley Decl. ¶¶ 33-34.
Plaintiff asserts that the Perry and Lewis Warranty Deeds currently prevent it from taking possession of the Property, selling the Property with free and clear title, and collecting any rents on the Property. Trinkley Decl. ¶ 35. According to Plaintiff, these filings have slandered BONY Mellon's title and impaired its use and enjoyment of the Property.
BONY Mellon filed this action on June 21, 2017, seeking cancellation of certain instruments based on Defendants' improper and fraudulent recordings in the land records relating to Plaintiff's title to real property, including the deeds purporting to convey title to Defendants. See Compl., Dkt. No. 1. The Complaint asserts five claims against Defendants for cancellation of instruments, quiet title, slander of title, unjust enrichment, and declaratory judgment. Compl. ¶¶ 39-93.
BONY Mellon seeks summary judgment on its second, third, and fifth causes of action for quiet title, slander of title, and declaratory relief. It contends that Defendants' claim to title, premised on a "Notice of International Claim within the Admiralty Administrative Remedy," is unenforceable. Lewis and Perry did not file timely oppositions to the Motion.
Because Defendants are proceeding pro se, the Court liberally construes their filings. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) ("The Supreme Court has instructed the federal courts to liberally construe the `inartful pleading' of pro se litigants.") (citing Boag v. MacDougall, 454 U.S. 364, 365 (1982) (per curiam)).
Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The burden initially lies with the moving party to show that there is no genuine issue of material fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is material if the resolution of the factual dispute affects the outcome of the claim or defense under the substantive law governing the case. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001). When considering the evidence on a motion for summary judgment, the Court draws all reasonable inferences on behalf of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). There is no genuine issue of material fact if, taking the record as a whole, a rational trier of fact could not find in favor of the non-moving party. Id. at 586.
Although its motion for summary judgment is unopposed, BONY Mellon retains the burden to show the absence of any genuine issue of material fact. See Cristobal v. Siegel, 26 F.3d 1488, 1494-95 (9th Cir. 1994); Matter of Healy Tibbitts Builders, Inc., 290 F.Supp.3d 1126, 1131 (D. Haw. 2017). "Trial courts resolving unopposed summary judgment motions have an obligation to evaluate independently the sufficiency of the moving papers." Lopez-Gomez v. Sessions, 693 Fed. Appx. 729, 731 (9th Cir. 2017). The Court has independently evaluated the Motion, and viewing the evidence in the light most favorable to the non-moving parties, the Court finds that BONY Mellon has met its burden on summary judgment.
The unrebutted record establishes that BONY Mellon is the owner of the Property pursuant to the Commissioner's Deed recorded in the Bureau of Conveyances on October 19, 2016. Despite Perry, Lewis, and/or the LLC's improper recording of numerous sham documents in 2016 and 2017,
Although Defendants assert title to the Property under a fictitious "Notice of International Commercial Claim in Admiralty Administrative Remedy," the claim is legally without merit, and BONY Mellon never consented to any of Defendants' conduct. Courts refuse to recognize this type of patently frivolous "International Commercial Claim." See, e.g., United States v. Wolfe, No. 08-0088 JAM EFB, 2008 WL 4684779, at *3 (E.D. Cal. Oct. 2, 2008), report and recommendation adopted, (E.D. Cal. Oct. 27, 2008) (rejecting federal jurisdiction based on theory that "the failure of the IRS to acknowledge and oppose the Wolfes' `administrative filing' of their `Petition for Agreement and Harmony in the Nature of a Notice of International Commercial Claim Within the Admiralty,'" because such a "theory of estoppel relies entirely upon legal fictions"); Hibben v. Countrywide Home Loans, Inc., No. 05 C 4262, 2005 WL 3262971 (N.D. Ill. Nov. 29, 2005) (dismissing complaint with prejudice after finding that "several courts that have considered `International Commercial Claims' have found them to be without merit").
Because BONY Mellon's title to the Property has been slandered and Defendants have further interfered with Plaintiff's right, use and enjoyment of the Property, BONY Mellon's Motion is granted as to the second, third, and fifth claims in the Complaint.
Section 669-1(a) of the Hawaii Revised Statutes ("HRS") provides a cause of action for quiet title. The statute states that an "[a]ction may be brought by any person against another person who claims, or who may claim adversely to the plaintiff, an estate or interest in real property, for the purpose of determining the adverse claim." HRS § 669-1(a). The plaintiff has the burden to prove title to the land in dispute, Makila Land Co., LLC v. Kapu, 114 Haw. 56, 58, 156 P.3d 482, 484 (App. 2006), either by establishing that it has paper title to the property or that it holds title by adverse possession. Maui Land & Pineapple Co., Inc. v. Infiesto, 76 Haw. 402, 407-08, 879 P.2d 507, 512-13 (1994). While it is not necessary for a plaintiff to have perfect title to establish a prima facie case, it must at least prove that it has a substantial interest in the property and that its title is superior to that of the defendant. Makila Land Co., LLC, 114 Hawai`i at 58, 156 P.3d at 484.
Shayefar v. Kaleleiki, No. CIV. 14-00322 HG-KSC, 2015 WL 4254857, at *5 (D. Haw. July 13, 2015) (citing Alexander & Baldwin, Inc. v. Silva, 248 P.3d 1207, 1213-15 (Haw. App. 2011)).
BONY Mellon has met its burden of establishing paper title to the Property pursuant to the Commissioner's Deed, recorded on October 19, 2016. See Ex. D. In opposition, Defendants fail to raise any genuine issue of material fact as to the superiority of Plaintiff's title to the Property. Moreover, Defendants have no lawful claim to title, nor any right, lien, or interest in or to the Property by virtue of the sham documents improperly recorded at the Bureau of Conveyances. There is no genuine dispute of fact that Plaintiff did not convey any right, interest, or title to the Property to Lewis, Perry, or the LLC. Trinkley Decl. ¶¶ 33-35. BONY Mellon is entitled to a judgment, as requested, quieting title in and to the Property in favor of itself and against Defendants, nunc pro tunc as of October 2016, when the Commissioner's Deed was recorded. See Mem. in Supp. at 14, Dkt. No. 51-1. The Motion is therefore granted on the second claim for relief in the Complaint.
The Court next addresses BONY Mellon's claim for slander of title. Under Hawaii law, the following elements are required to establish a claim for slander of title: (1) ownership of or interest in the property by the plaintiff; (2) falsity of the words published; (3) malice of the defendant in publishing the false statements; (4) publication to some person other than the owner; (5) publication in disparagement of plaintiff's property or the title to it; and (6) special damages proximately resulting from such publication. Shayefar v. Kaleleiki, No. CIV. 14-00322 HG-KSC, 2014 WL 5023498, at *8 (D. Haw. Oct. 7, 2014) (citing Isobe v. Sakatani, 127 Haw. 368, 279 P.3d 33, 42-43 (App. 2012)).
Defendants, as noted above, have no title or interest in the Property. The numerous improper filings and documents recorded with the Bureau of Conveyances include false statements attested to by Lewis and Perry—purportedly sworn under penalty of perjury—which were knowingly and demonstrably untrue when made. For example, the Notice of Lien falsely states BONY Mellon is indebted to Perry in the amount of $3,981,377.19, due to its failure to answer earlier fraudulent communications and resulting default. Ex. I. The September 14, 2016 Affidavit of Foreclosure is likewise false because Lewis had no lawful authority to act as "foreclosure trustee" pursuant to improperly filed financing statements or liens, and was without authority to take the Property as collateral for the benefit of Perry. Ex. K. In short, these recordings, among others published by Defendants, include false statements disparaging Plaintiff's title to the Property.
BONY Mellon further established that the false statements were made with malice.
As demonstrated by BONY Mellon: (1) the false publications were not executed by or at its direction, (2) it did not agree, consent, or enter into any agreement or contract to convey or transfer title to the Property to Defendants; (3) it was not indebted to Defendants for any sum of money and did not pledge the Property as collateral for any debt purportedly owed to Defendants; (4) it did not receive any monies, benefit, value, or consideration to support the purported conveyances to Defendants; (5) the false publications were recorded with the intent to deprive it of its right, title and interest in the Property; and (6) the Perry and Lewis Warranty Deeds cloud its title, impair the marketability of the Property, and prevent it from taking possession of and from collecting any rents on the Property. See Mem. in Supp. at 16-17; Trinkley Decl. ¶¶ 34-33. In light of the Court's independent review of the summary judgment record, the uncontroverted facts establish that Defendants improperly published, by recording with the Bureau of Conveyances, numerous sham instruments without justification and did so with malice, causing Plaintiff to incur damages.
Because BONY Mellon has met its burden of establishing that there is no genuine issue of material fact for trial, the Court grants the Motion on the third claim for slander of title.
Because no issues of material fact remain as to the claims for quiet title and slander of title, the Court grants BONY Mellon's request for declaratory relief.
The Court further declares and orders as follows: (1) Defendants have no right, title, estate, lien, or interest in or to the Property; (2) BONY Mellon is the true owner of the Property, free and clear of any claims by Defendants; and (3) Defendants, and their agents, servants, employees, and any and all persons acting under, in concert with, or on their behalf are enjoined from recording any further fraudulent instruments in the Bureau of Conveyances relating to the Property, absent leave of Court.
For the foregoing reasons, Plaintiff's Motion for Summary Judgment, Dkt. No. 51, is GRANTED. The Court grants summary judgment to BONY Mellon against Lewis and Perry on the second, third, and fifth claims for relief in the Complaint.
IT IS SO ORDERED.
Decl. of Caroline Trinkley ¶ 12.
Ex. K at 3.
Isobe, 127 Hawai`i at 380, 279 P.3d at 45 (quoting 50 Am.Jur.2d Libel and Slander § 531 (2006) (internal footnotes omitted)).
